Equities went on a wild ride on Wednesday first moving higher, then lower, and then higher again as the FOMC initiates the first interest rate hike in four years. The FOMC raised the benchmark rate by 25 basis points despite calls for a much larger hike. The news that spooked the market is the outlook for rate hikes and inflation, an outlook that now includes as many as seven more interest rate hikes this year and for inflation to remain hot well into 2023. What this means for consumers is higher prices, what it means for businesses is tighter margins and slowly eroding business as prices creep higher.

The risk for the market now is twofold. On the one hand the FOMC is still behind the curve in regards to inflation. This mean's inflation will remain a risk for S&P 500 earnings and will likely cut into the earnings growth outlook for the year. On the other hand, a mere 25 basis points will do nothing to slow inflation and will only spur it to new heights in the near term. IF the FOMC were to actually tackle inflation in a meaningful way they'd be forced to spur a recession in the economy.

Equity markets rebounded on Tuesday after some better than expected inflation data but don't read too much into the move. The PPI data was better than expected at the headline level but still up 0.8% from last month and 10% from last year. With input prices still on the rise and oil trading near $100, producer prices and consumer prices are still going higher and there is the FOMC to consider as well. The FOMC will release the March policy statement Wednesday afternoon and is virtually guaranteed to hike rates by at least 25 basis points.

The biggest risk for the market is the first hike will be larger than expected and/or come with a more hawkish than expected outlook. In that scenario, the odds of stalling the economy will rise because higher interest rates could lead to higher inflation in the near term at least. A stalled economy could easily turn into a recession.

Equities fell to start the week confirming the downtrend that has been place for the last two and half months. The S&P 500 fell about 0.75% at the close of the session and below the 4,200 level with lower levels in sight. A move below Monday's close would be bearish and could easily take the market down another several percentage points.

The risk for the market this week is the FOMC although there are other issues at hand. The FOMC is expected to hike interest rates for the first time since the pandemic began and the committee could shock the market. The CME Fedwatch Tool shows the market is pricing in only a single 25 basis point hike but there is a real risk the committee could hike by 50 basis points and/or issue a more hawkish than expected statement. Also, a spike in COVID cases in China has sparked another round of business closures in the key Shenzen manufacturing hub and could cause another massive disruption to the global supply chain.

Equity markets continued to fall last week in the wake of Russian aggression and the fallout from it. The S&P 500 fell more than 1.0% on Friday alone putting the index in danger of breaking below the 4,200 level for the 3rd time in as many weeks. If this level is broken again it could lead to a capitulation and full reversal in the market. With no reason to buy, the bulls are more likely to pully their cash out of the market than sit around waiting to see what happens.

This is going to be another tough week for the market with or without the war in Ukraine. Not only is the PPI data due on Tuesday but the FOMC is slated to issue its first interest rate hike since the pandemic started on Wednesday afternoon. The market is pricing in a 25 basis point hike but a hot PPI figure could lead them to a more aggressive posture.

Equities tried to rebound in a volatile session on Thursday but the move was without much strength. The S&P 500 ended the day in the red if above the opening level and well off the lows of the day. The market is trying hard to build a base of support at the 4,200 level but it will likely be short-lived. The S&P 500 is about to experience a massive earnings-based re-evaluation that could take it down another 20% or more if conditions don't improve.

Among the driving factors for today's market is inflation. The CPI index came in well above expectation for February and points to not only mounting headwinds for the consumer but increasing pressure on corporate margins. The FOMC is expected to act to curb inflation at the March meeting but any move now carries as much risk for harming the economy as saving it. What this means for the market is still unclear but one thing is certain; the FOMC is going to hike interest rates in March and they may surprise the market with a bigger hike than is currently priced in.

Equity markets rebounded on Wednesday but it is far too soon to call the bottom. The move comes in tandem with a top in oil prices but it is far too soon to call it the end of higher prices as well. The key takeaway for traders is that WTI is still trading well above the $100 level and will be a driving force for inflation while the S&P 500 are trading below a key resistance point. The S&P 500 broke through the 4,300 level on Monday and there is still evidence of downward pressure in the charts.

The next test for the market could come as soon as Thursday in the form of the CPI. The CPI is expected to accelerate at the headline and core levels and to levels not seen in decades. The news will put added pressure on the FOMC in the face of rising wages and higher oil prices that are sure to drive inflation as soon as the present quarter.

Equity markets tried to stage a rebound on Tuesday despite rising oil prices and fear Putin will escalate the Ukrainian invasion to another level. By the end of the day however, the move had turned into a dead cat bounce leaving the index down for the session and at the lowest closing level in over 6 months.

In oil news, the price of West Texas Intermediate rose more than 5% intraday to peak above $130 per barrel. The price is rising because Russian capacity is getting priced out of the market and there is no indication yet where the shortfalls will be made up. For consumers, this means a summer of record-high gas prices and another year of near-double-digit inflation. In regards to inflation, the CPI data is due out on Thursday and is not expected to soothe fears. The market has backtracked on its expectations for FOMC rate hikes and now sees the possibility for no hike at the next meeting, we think the CPI data will put those hopes to rest.

Equities started the weak falling nearly 3.0% to the lowest levels in over two weeks as fighting in Ukraine intensifies. While Ukrainian forces are putting up a solid fight, the Russian advance is largely unchecked and moving forward step by step. With fighting expected to enter population centers at any time, the odds of a Ukrainian collapse grow daily. The economic fallout from Russia's offensive also grows on a daily basis with the price of gold and oil rising in the face of a strengthening dollar. The price of WTI rose more than 6% intraday on Monday to hit the $130 level and we think it will move even higher.

The biggest risk this week, however, is on Thursday with the CPI data. The CPI is expected to accelerate to 0.7% month-over-month and to 7.8% YOY and there is a risk both figures could be hotter than expected. Regardless, with oil prices near record highs, there is no reason to think inflation will slow, and every reason to believe an economic slowdown is at hand.

Equities wobbled last week and well off the recent lows but it looks like those lows will be tested again. The markets ended the week on a down note and at the low of the period after an escalation in the fighting over Ukrainian sovereignty. The key takeaway from the fighting is that Putin is bent on taking Kyiv and the Ukrainians aren't giving it up easily. What this means for the markets is for geopolitical tensions and oil prices to remain high. With Russian capacity off the market and OPEC sticking to its plans there is no top in sight for oil prices.

This week the market will be focused on the fallout from the fighting in Ukraine. While Russia is not a major economic power it is the tenth-largest nation by GDP and its exclusion from global financial systems will have far-reaching effects. In market news, traders and investors will be on high alert with the CPI due out on Friday. It is our expectation consumer-level inflation accelerated for the 11th month and will put added pressure on the FOMC.

Equity markets wavered on Thursday following several days of upward action. The S&P 500, however, remains below its 30-day EMA and in a downward trend driven by an increasingly cloudy near-term outlook for earnings growth. While there is increasing chatter about improvement in the economy in the back half of the year there is an equal amount cautioning the current quarter and 2nd quarter of 2022 could be disappointing. Not only are inflationary pressures cutting into earnings but supply chain headwinds persist and are impeding top-line growth as well.

Also on tap is the February Non-farm payrolls report. The report is expected to show upward of 400,000 new jobs added and could easily top that number with revisions. The biggest risk for the market, however, is in the wage data. Wage growth is expected to accelerate to 6.0% or higher and points to rising costs for businesses.