Volatility versus liquidity seems to be a debate, while some view crypto's collapse as a potential systemic event. 

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Plus you do have work to do but some progress with Chinese-American relations, as we suspected would occur with the Presidents gathering in Bali. Also there are back-channel moves towards a peace-accord or at least ceasefire in Ukraine, which we've also suspected.

All these 'conflicts' and 'conferences' being understood are helpful. We'll likely get a high but not higher PPI tomorrow, and some inflation-related roiling. But what's interesting is that almost all strategists continue advocating defense as opposed to offense. And while I don't dispute the underlying concerns, where that leaves markets is similar with regard to a still-crowded short-side.

You might get an outsized move one day this week, but generally suspect no chance of big failure this week, and we might even firm into Thanksgiving. It's a seasonal norm, and it's been our projection coming-off a complex bottom.

A slower pace of increases by the Fed is also on the plate, but not the key. As to that it's the Dollar and Oil, both sensitive to what happens with Ukraine now that they soundly beat Russia back. More to come.

As to crypto, that restrains 'tech' in the big graphics (especially) chip makers, it does not harm the Silicon Carbide or EV-related stocks. To the contrary, this likely helps them, because computers were heavily depending not just on the 'cloud', but on 'data mining', which meant crypto, and that's eviscerated for the next few quarters presumably.

So big tech money wants to a) go to domestic-centric business, on-shoring, b) that means funds may shift increasingly into Semiconductors focused on EV's or similar, and that includes ON Semi, ST Micro and of course support from a rather unique player in testing those wafers, AEHR Test Systems. Then we have SkyWater Technologies, very small, it's Dept. of Defense concentrated and thus working on Radiation-hardened processors as well as more (much of it is likely classified and I'm expecting to visit the company personally soon although it's fine if I don't).

In-sum: 

cooling down was not just normal and looked-for, but welcomed. As well the semi-rapprochement between China and the U.S. (though their press releases differed with China's being tough than that from the U.S. side).

Earnings compression is the main fear out there. Economic reverberations for next year from the Fed's tightening is conventional wisdom, and we don't tend to disagree... because that was our view many months (6-12 or more) ago. It's not to say you won't have problems, but some of the more bearish forecasts it seems do 'not' have to materialize.

In-part that's because the Fed might slowdown their torrid pace of hikes, the inflation actually superficially helps some earnings, at the same time there was almost a monolithic character to the market (Apple of course led a small pack to give an illusion of strength) while it actually did top out last year (under cover of the strong S&P and NDX).

Active rather than passive management has been our view towards this, while yes there is some selling into the tech rally, and top and bottom line growth in the major techs is or should slow for awhile. So that means a valuation 'fever' isn't exhausted for the mega-caps, as those companies were over-inflated for years, but relative to earnings of course they are still at fairly high multiples.

Keep in mind PE's are not a great way to play stocks, but do better in what is an 'aggregate' way, although the big-cap concentration minimizes that too as far as predictive value (hence we don't overly focus on it). Cutting jobs and as possible overhead is cut you have some productivity reductions and impacts on the broader economy.. and that is part of what tames the Fed's zeal.

Higher rates will remain overall, while in-reality it was the overly low rates for too long that got stocks too high a couple years ago, and excessive Housing activity too, as people grabbed (wisely) low mortgage rates while they could. It is a different world now, nobody wants to part with a paid-for home or low rate mortgage (depends on circumstances obviously), and so much is known now, you have to ponder who is going to buy the S&P at 4000 if they envision 3000 (that is metaphoric in a sense, as neither round number is likely precise).

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