Equities rebounded strongly on Thursday despite a much weaker than expected GDP figure. The first read on Q1 2022 GDP came in at -1.4% versus the expected gain of 1.0%. The news was largely shrugged off by the market but it is not a data point to be complacent about. With the economy already contracting versus last year there is a real chance the FOMC could and will throw the U.S. economy into a recession when it begins raising rates.

The question that needs to be answered is if it will be a hard or soft landing and the evidence is mounting for a hard landing. The real risk for the market is today's read on the PCE price index. If PCE prices continue to rise at the pace they have been or hotter the Fed will have no choice but to act quickly and aggressively to fight inflation and we don't think the market is pricing that into stocks yet.