Equities face an important hurdle today in the form of the Consumer Price Index. The CPI data is expected to moderate from the previous month but remain high and in favor of aggressive FOMC action. The obvious risk for the market is the data will be hotter than expected, the real risk is that CPI data no longer matters. It is clear to the market that inflation is out of control and will continue to rise over the next several quarters at a very robust pace. In this light, the FOMC can be expected to hike rates for an open-ended amount of time and alter the face of the economic world for the next decade or longer. In this scenario, the market is set up for a fall and will most likely retest 3,900 on the S&P 500 within the next week.

Next week, the risk for the market will be the FOMC meeting. The FOMC meeting should bring a 50-basis point interest rate hike with the possibility the timeline for follow on rate hikes will be accelerated. The takeaway is that without some major change to the economic fundamentals (and we don't see one coming) the S&P 500 will spend the next few years recovering from the pandemic and nearly 15 years of easy money policy.