Holding patterns prevail - as desired on Tuesday, with moderate recoveries from early S&P declines. It's really pretty good with respect to digest the wild upside thrust late last Friday. So we have an ongoing intraweek rally of sorts.

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The economic data continues learning in the difficult condition I've described, a variation on 'stagflation' and a variation only because of societal bifurcation. You see rollovers in a lot of stocks that are sensitive to this, or figure it out.

I'm not expecting a broad banking crisis or the like, but do believe concerns at this point go beyond 'consumer retail' stocks, and including regional banks or so on, depending on who is 'stuck' with non-performing commercial portfolios of loans that really can't be easily restructured when there's no interest in the particular properties (primarily -not exclusively- office buildings and old malls).

There is a conflicting tailwind as many of the lenders are trying to shift into the realm of 'private capital' investment, which sound like a 'basket of PIPES', and something like that might become another less-regulated boondoggle (later). I think it's not an issue not, but reflects limited areas with regard to 'valuation'.

Market X-ray: 

Most investors are already leery of chasing stocks, certainly do not have interest in assuming others headaches in property, and increasingly understand the point we've made for a long time about excess valuation in the mega-caps, over-valuation in much of residential real estate, and broad jitters about price levels, that the majority of society now realizes about inflation that has barely slowed its pace, but definitely is not in a declining price mode.

Oil

Oil declining is somewhat reflective of Saudi OPEC+ policies, the U.S. trying to press petroleum product prices lower, and maybe what the Saudis are now doing is at the behest of 'political' leverage from Washington, given security as relates to U.S. Forces, and the still-simmering prospects of a deal with Israel, and Saudi Arabia, noting that the Gaza war hadn't derailed only delayed, that.

Oil down and GDP estimates, plus flat jobs opening (JOLTS) are ammo 'for' the bulls on lower rates, but the flip side is worry about growth and earnings. Perhaps the drop in car sales and sluggish existing Home Sales (no surprise) and especially in Florida we are concerned for a more serious 'evacuation' (at least of housing prices, hopefully not for hurricanes or departing insurers).

Whether the AI hype is overdone or not, share prices of the AI leaders sure is a trend not yet breaking down, but vulnerable at some point. Of course that's unlikely to be right now, with Nivida's (NVDA) 10x1 split just ahead, and Apple's (AAPL) own AI plans to be better outlined early next week.

Meanwhile 'Yields' have been in a 'peaking process' for some time, as 10 year Treasuries (SPTL) are not merely suspect, but probably in a pattern favoring lower in a reasonable period of time. Lower yields presumably benefit 'small-caps' and growth stocks emerging from hibernation more than the big-cap stocks. It is hard to say how much that favors Indexes, given the aforementioned woes or risks, as well as the argument that the big stocks are amply priced, others of course barely awakened from long slumbers...so it isn't clear as to downside prospects, and is clear S&P (SPY) remains high.

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