The equities market slipped again on Wednesday, although the move was muted in relation to the prior session. The S&P 500 shed about 0.25% at the low of the session but closed with a small gain following a mixed PPI report. The PPI data fell slightly on a month-to-month basis but remains very hot on a core and YOY basis and points to additional price increases for consumers down the road. The news was not-as-bad as feared but bad enough and should help seal the deal on a 75 basis point rate hike at the next FOMC meeting in just 7 days.

With the CPI and PPI still running hot and the FOMC on track to raise rates another 150 bps by the end of the year the odds of a major recession have grown very high. The first glimmers of that recession can be seen in the housing market, which is seeing a high double-digit decline in the pace of mortgage apps and new and existing home sales.

Equities plummeted on Tuesday following a much hotter than expected reading of the CPI. The CPI came in hotter than expected in all comparisons belying the idea that consumer inflation had peaked which puts increased pressure on the FOMC to act. The news not only points to hot inflation but an acceleration at the consumer level that may not be finished. The FOMC is meeting next week and has been indicating a willingness to fight inflation that could lead to another 75 basis point hike or more. The odds of a 75 basis point hike hit 100% following the CPI news and the CMEs FedWatch Tool is pricing in a 35% chance for an historically high 100 basis point interest rate hike.

The takeaway from the news is far-reaching and ends with the earnings outlook for the S&P 500. Inflation is cutting into the bottom line for most companies and FOMC interest rate hikes are going to cap business and other economic activities which means lower revenues and lower earnings. The bottom line is the hurricane predicted by Jamie Dimon last spring is now upon us and it looks like it's a bad one.

Equities extended their rebound on Monday taking the S&P 500 up a full percent at the height of the day. The rally, a relief rally, is driven by an expectation for economic improvement that is likely misplaced given the consensus figure for the CPI data. The analysts are expecting CPI to hold flat versus last month but the core and YOY figures will be hot. Core inflation is expected to rise by 0.3% which is the same as the prior month and it will drive an acceleration in the YOY figure as well. Core consumer inflation is expected to accelerate to 6.0% from last month's high of 5.9% and push the Fed to act aggressively at next week's FOMC meeting.

It is near given the FOMC will raise rates by another 75 basis points next week so the most important news will be the tone of the statement and the outlook for future hikes. The FOMC is already in uncharted territory so it is possible, however unlikely, that a 4th 75 basis point hike could be on the table.

Equity markets rebounded last week but investors are cautioned not to read too much between the lines. The move was not supported by any kind of good news so is nothing more than a relief rally within the greater bear market. The news that did come out was not positive for the index as it all points to an overly aggressive Fed and the prospect of another 75 basis point interest rate hike at the FOMC meeting next week.

This week will be another challenge for the market. The CPI and retail sales data are due out and either could move the market. The takeaway is that weak CPI points to weakening economics and recession while a strong retail sales figure would support the idea of aggressive Fed action so the market may be in a no-win situation.

The S&P 500 wobbled on Thursday but managed to end the day higher despite hawkish commentary from the FOMC. The FOMC Chief Jerome Powell reiterated once again the committee's commitment to fighting inflation and bringing it back down to the 2.0% range. Based on the recent string of inflation data, this means a high probability for another 75 basis point hike making this the most aggressive FOMC on record.

Next week, the market will face its final hurdle before the September FOMC meeting. The CPI report is due out on Wednesday and may show a month-to-month decline in inflation due to lower gas prices but the core YOY figures are expected to remain hot. This data will support another rate hike if not a 75 basis point hike so there is a chance for market volatility. Weak data (better than expected) or strong data (worse than expected) will move the market.

Equity markets rebounded 2.0% on Wednesday despite a souring outlook for economic growth. The Fed's Beige Book was released at 2 PM and confirmed economic activity was little changed from the prior reading and the outlook for growth was dim. The news comes in contrast to the ISM services index release on Monday which suggests an acceleration in the services sector at least. The takeaway from the two reports, however, is that conditions are still in favor of aggressive FOMC policy action and that is seen in the Fed Funds Futures data as well. The odds for another 75 basis point rate hike rose to 75% according to the CMEs FedWatch Tool and it will likely trend higher following next week's read of the CPI. Consumer Level Inflation may have tamed on a month-to-month basis but is still expected to have run at a high mid-single-digit rate versus last year.

The biggest risk for the market for the remainder of the week is Fedspeak. There are a number of Fed members slated to make public remarks and they may all include hawkish commentary. The bottom line for traders, the Wednesday rebound is nothing more than a relief rally within the latest downdraft and it is not one that is expected to last long.

Equity markets started a holiday-shortened week on a cautious note. The S&P 500 fell 0.40% at the close of the session following a stronger-than-expected ISM Services Figure. The ISM came in not only better than expected but it advanced from the previous month suggesting economic activity accelerated in the services sector. The takeaway from the report, however, is that economic activity is strongly and inflationary and thereby supports the idea of aggressive FOMC interest rate actions. In regard to the outlook for interest rate hikes; the CMEs FedWath Tool strengthened to show a 75% chance for a 75 basis point hike at the next meeting in two weeks.

The remainder of the week could be iffy for the market due to a lack of news on both the economic and earnings front. This is a bad situation for an edgy market and could lead to increased volatility if not an outright selloff. As it is, the S&P 500 is poised for another drop and could easily retest the 3,660 level by the end of the month.

The S&P 500 fell for another week shedding more than 1.5% at the low of the day on Friday alone making this the 3rd consecutive week of declines. The S&P 500 is down more than 10% from the recent high and heading lower if the recent signals are to be believed. The next target for support for the S&P 500 is near the 3,650 level and it may not be strong enough to keep the market from setting a new low. A move below the 3,650 level would open the door to 3,525 and the potential for a bigger move down to 2,800.

The hurdle for the market this week will be the Fed's Beige Book on Wednesday. The Beige Book is not expected to give any insight into the psyche of the Fed but it will give a broad view of economic conditions. The takeaway is likely to be tight labor markets, tight supply chains, and rising inflation which will all underpin the outlook for FOMC policy tightening.

The S&P 500 fell for another week shedding more than 1.5% at the low of the day on Friday alone making this the 3rd consecutive week of declines. The S&P 500 is down more than 10% from the recent high and heading lower if the recent signals are to be believed. The next target for support for the S&P 500 is near the 3,650 level and it may not be strong enough to keep the market from setting a new low. A move below the 3,650 level would open the door to 3,525 and the potential for a bigger move down to 2,800.

The hurdle for the market this week will be the Fed's Beige Book on Wednesday. The Beige Book is not expected to give any insight into the psyche of the Fed but it will give a broad view of economic conditions. The takeaway is likely to be tight labor markets, tight supply chains, and rising inflation which will all underpin the outlook for FOMC policy tightening.

Equities sold off for a 5th straight day extending the downdraft to nearly 9.0% from the recent peak. The upshot is the market bounced off the low to close with a gain of 0.3%. The latest round of selling is being driven by the growing acceptance that inflation is not coming down appreciably and the FOMC is about to spark a major recession. The FOMC, through its many mouthpieces, has indicated an aggressive pace of interest hikes will continue until inflation is down and that could mean as many as 8 more 25 basis point hikes before the hiking cycle is over.

With the S&P 500 moving lower and firing off strong sell signals the odds the index will retest the 3,600 level are very strong. The risk now is the index will move below the 3,600 level and extend the sell-off to a new low in the range of 3,500 or lower. If the market can't get its feet back under by then, the selling could continue until the index reaches its long-term secular trend line near the 2,800 level.