The number of negative narratives impacting the markets are well known at this point. And while long term views differ on the ultimate economic impact of a tightening Fed, short term opportunities do exist. Question is how short will those rallies be, and if they are the start of something more meaningful. After last week’s poor performance by the broader indexes, this week has been met with some cautious buying. Obviously inflation remains forefront to both the Fed (and investors), and today’s calendar was busy with speakers.

The Nasdaq’s down -1.2% final today may incite a bit of PTSD from the past few weeks of losses. But despite the weakness, there was a real lack of conviction that left investors feeling unsettled. Pre-open, some were still trying to determine whether Friday’s relief rally was the start of something real or barely a blip. For perspective, CCMP’s (+3.8%) best day since 2020 left it -2.8% for last week, which marked 6 consecutive weekly losses of more than -1% (first time since 2001).

We’ll take it – a green end to an incredibly volatile week, and on Friday the 13th nonetheless. With the week’s headline economic data in the rearview mirror investors can start to look forward, and while CPI/PPI didn’t quell inflation concerns, that wasn’t today’s focus. The next Fed meeting is creeping up, but there’s enough time that it hasn’t yet dominated the debate.

At this point, investors do not need any more reminding of the headwinds that the economy and markets are confronting. Today’s PPI reading, while inline with estimates on a monthly basis (+0.5%), still showed a y/y gain of 11% (down from 11.5% in March). The Fed remains committed to their 50bps approach with even Bullard backing that in statements last night. So that means markets continue to price in a higher rate environment, and a potential recession, and the fact that the Fed will also be reducing their balance sheet (making the Fed put gone for now).

The word “dominoes” was mentioned in conversation today and it was not in reference to that of the cheesy crust (ahem, the pizza we can no longer afford).The reference was in regard to market signals – as in, dominoes falling. Today’s moves led us back to ‘Extreme Fear’…21/100, the VXN (NDX Volatility Index) above 40, Bitcoin nearing 29kn, AUDUSD < 0.70 and all 5 FAANG stocks in a bear market (MSFT broke $263 with next support 10% lower). Dominoes. Falling.

After the stomach-churning losses of the previous 3 sessions, investors can’t afford to be choosy about their green days… It’s a “take what you can get” situation for sure – anything to provide a pause to the relentless selling pressure – but did today’s session really need to be so obvious in spelling out how little conviction there was behind today’s gains?

Last week’s annual Met Gala was themed the Gilded Age. Tonight Christie’s will hold an auction for Andy Warhol’s iconic silk-screen of Marilyn Monroe with estimates suggesting it could go for a record $200mm. And this past Saturday, the owners of Rich Strike struck it rich after their 80-1 longshot had one of the great races/upsets in the long illustrious history of the Derby. So it seems there are asset classes doing just fine these days, just not the ones we traffic in on a daily basis.

Today was certainly a tough end to a relentless week, but at least now it can be put in the rear-view mirror. It seems everywhere we turn there is disheartening stat after disheartening stat, so this View will try to avoid repeating those as much as possible (although not entirely). While yesterday’s sell off left a foul taste in investors’ mouths and pushed indices back on to the doorstep of year to date lows, no important technical levels were broken (although the NDX did make a bearish new price low for the first since December ‘20).

May the fourth be with you, and May the fifth take it away. Powell’s comments regarding 75bps not in the mix for the June meeting sent markets rocketing higher yesterday, but after a night of reflection, and economic/ central bank data (China, US and the BOE), traders decided they did not like what they heard from Chairman Powell, and drove assets (ex-commodities) lower.

I’ll be honest here – I shouldn’t be writing today. There are far more accomplished fans of the Star Wars series that could take advantage of the date and its near identical annunciation to one of the greatest phrases in cinema history. Someone with genuine bona fides might mention the force was with Chairman Powell today. Or perhaps one could make a dual analogy, Jerome entering the day dressed as Darth Vader, leaving it more like Obi Wan…or would it be Luke? See what I mean?