Equities rebounded on Wednesday despite another round of bearish news that included the PPI data and earnings from JPMorgan Chase. The PPI data shows producer prices accelerating more than expected to the fastest pace on record. This data is sure to lead to another increase in the CPI data next month or later in the year which brings us to the JPMorgan Chase report. The company says it is bracing for increased economic risks and we think it is a wise decision.

The impacts of Russia's invasion of Ukraine are only beginning to show up in the data and results and those impacts are not good. Rising fuel costs and disruptions to trade are only the tip of the iceberg and threaten to throw the global economy into a recession. The next hurdle for the market will come today with an earnings report from at least half a dozen of the world's largest financial institutions. If they report more of what JPMorgan Chase reported the market sell-off could resume with increased vigor.

Equities tried to rebound from Monday's selloff on Tuesday after the CPI data came in only as expected but the threat of rising inflation outweighed any relief felt by the market. The takeaway from the CPI report is that inflation is still on the rise, rising at a record, and accelerating with no sign of letting up. In this paradigm, the FOMC is expected to aggressively hike interest rates and that is being seen in the Fed Funds Futures data. According to the CME data, the FOMC will raise rates by at least 100 basis points over the next two meetings and there is a chance for 125 basis points.

The risk for the market on Wednesday is the PPI data. The PPI is a leading indicator for CPI and it is expected to accelerate on a month over month and year over year basis. Later this week, earnings season will kick off with reports from JPMorgan Chase on Thursday and a handful of other big banks on Friday.

Equities pulled back on Monday on the combination of inflation fear and falling oil prices. The price of WTI fell more than 3.75% intraday to drive a similar decline in the energy sector. With the energy sector expected to post the largest increase in YOY earnings the move in oil prices and the XLE could alter the outlook for the entire reporting season. As for inflation, the March read of the Consumer Price Index is due on Tuesday and it is expected to be historic.

The pace of consumer inflation is expected to hold steady at 0.5% month to month and it could easily top those expectations. the risk for the market is in the YOY comparisons which are expected to accelerate as well. With consumer-level inflation expected to top 6.5% at the core level, the expectations for aggressive FOMC interest rate hikes are going to go through the roof.

Equities tumbled last week on growing fear of overly aggressive interest rate hikes from the FOMC. The minutes from the last meeting reveal the committee is looking at a series of large interest rate hikes as well as the beginning of the balance sheet runoff. The CME's Fedwatch Tool is pricing in 3 consecutive 50 basis point hikes with a chance of 10 more 25 basis point bumps this year. At this pace, interest rates will be well above their pre-pandemic level and their effects will be felt throughout the economy.

The risk for the market this week is twofold. On the one hand, we'll be getting both the CPI and PPI data for March and we expect the data to be hot. On the other, the peak of the earnings season begins with reports from the big banks and they are expected to see earnings decline versus last year.

Equities wobbled on Thursday after comments from several Fed members and the FOMC meeting minutes pointed to a series of aggressive interest rate hikes. The move put the S&P 500 at the lowest level in three weeks and the selling may not be over even with Thursday's bounce. There are growing indications that economic headwinds worsened in Q1 and will worsen again in Q2. That situation is having a negative impact on guidance and the outlook for earnings growth which is the primary driver of stock market action. while the consensus estimate for Q1 earnings growth continues to rise, it is due entirely to the high price of oil and should be looked at with caution.

The risk for the market next week will be earnings and the economy. Not only is it the start of peak earnings reporting season but the CPI for March is due out as well as retail sales. The CPI is expected to rise from the previous month, the question is by how much and how will it affect the outlook for interest rate hikes?

Equities deepened their sell-off on Wednesday both in anticipation and because of the FOMC meeting minutes released Wednesday afternoon. The minutes confirmed what the market was expecting which is the committee is considering a series of 50 basis point interest rate increases as well as the onset of balance sheet reduction. The committee sees a $95 billion per month reduction which would shrink the balance sheet by about $1 trillion within the first 12 months. The news is a bit weaker than expected but, with the pace of inflation what it is, the pace is likely to accelerate over the next few meetings.

The S&P 500 fell more than 1.0% on the news but found support at the short-term moving average. If this level is able to hold the index is likely to make a move up to retest the all-time highs for resistance. If not, this market will most likely head down to retest support at the recent lows near 4,150.

Equities retreated on Tuesday on fears the FOMC will get even more aggressive with policy change and interest rate hikes. The move came just a day before the minutes from the latest FOMC are due to be released and may foreshadow what's to come. With inflation rising at the fastest pace in decades the Fed is being forced into actions that may stall the economy. The S&P 500 fell more than 1.25% at the low of the day, led by a 2.0% decline in the interest rate heavy NASDAQ Composite.

Earnings are also coming into focus with JPMorgan Chase set to release its calendar Q1 report next week. The big banks are expected to post sequential increases in revenue and the impacts of rising costs. Banks are positioned to benefit from rising interest rates but the impacts of inflation are offsetting the outlook. Higher rates will help profitability but a stalled economy will cut into the top and bottom lines.

The melt-up in equities continued on Monday with the S&P 500 gaining more than 0.75% at the high of the day. The move was driven in large part by the energy sector, however, as oil prices gained nearly 4.0% to trade above the $104 level. With oil prices trending near record levels, the energy sector is expected to post windfall earnings this reporting season. The rest of the index may not fare so well, 7 of the 11 sectors have a declining consensus estimate for earnings while 4 are expected to post an outright earnings decline.

The risk for the market is that earnings will be worse than expected and guidance will be lowered. In that scenario, the bear market will enter a new phase in which recent lows will be tested and possibly exceeded. The test for the market this week, however, will be the minutes from the last FOMC meeting which are due for release on Wednesday. Investors should be prepared for a very hawkish FOMC and at least 50 basis points of interest rate increase at the next meeting.

Equity markets started the 2nd quarter on shaky footing with the S&P 500 hovering near break-even on Friday. The move was driven by weaker than expected labor data amplified by the ever-rising threat of inflation. Job creation topped 400,000 for March but fell short of the consensus while wages rose at the fastest YOY pace since the first months of the pandemic. The data points to both tightening labor conditions and accelerating inflation that more than suggest Fed action is needed.

This week will be a quiet week for the market with little on either the economic or earnings calendar. The biggest news of the week, other than geopolitical, will be the FOMC minutes on Wednesday. The minutes will most likely reveal a more hawkish than previously expected FOMC and up the stakes in regards to interest rate hikes. At this point, the FOMC is expected to raise rates by 50 basis points at the next two meetings and that could extend to three meetings if there is no real deceleration in consumer-level price increases.

Equities began to pull back again on Thursday ending what was otherwise a good March for stocks. The S&P 500 shed more than 1.5% at the low of the day and closed near the low of the session after the PCE price index came in at a new high. While the pace of acceleration cooled off on a month-to-month basis the YOY data shows both headline and core inflation have accelerated to new highs and the highest levels in four decades. With oil prices hovering above $100, it doesn't look like inflation is going to be tamed any time soon and the FOMC will need to be aggressive. The next FOMC meeting is only a month away and the market is pricing in a 50 basis point interest rate increase then and at the next meeting.

In other news, the non-farm payroll report is due out today and could drive market action. The report is expected to show a strong 490,000 new jobs in March and an uptick in wage growth. The risk for the market lay in the wage growth and a hot number could intensify fears of FOMC intervention.