As if the hotter than expected inflation was not enough, the sharply declining consumer sentiment report came along to kick the market while it was down on Friday morning.  The threat of Russian invasion only adds to the uncertainty keeping the price volatility high waiting for the next shoe to drop.  The PPI report on Tuesday, Retail Sales, and FOMC minutes Wednesday, with housing data later in the week, also clouds this week’s path forward.  We have a few potential market-moving as we progress through the week to add to the highly emotional price action likely in the week ahead.

Asian markets closed mostly lower, with the Nikkei leading the selling down 616.49 points or -2.23%.  This morning, European markets trade decidedly bearish with red across the board and the DAX and CAC down 3% or more.  In addition, U.S. futures that opened traded last night trying to put on a brave face now point to a gap down open with Russia-Ukraine tensions and Fed rate hikes, worrying both traders and investors.  As a result, expect price volatility to remain challenging throughout the week.

Economic Calendar

Earnings Calendar

We have around 100 companies listed, with many unconfirmed to begin the new trading week.  Notable reports include AAP, ALX, AMKR, ANET, CAR, CLR, KRG, OTTR, SRG, VNO, WEBR.

News & Technicals’

On Sunday evening, Ukrainian Foreign Minister Dmytro Kuleba said that Ukraine had requested a meeting with Russia within 48 hours.  German Chancellor Olaf Scholz will hold talks with the presidents of Ukraine and Russia on Monday and Tuesday.  U.S. national security advisor Jake Sullivan told CNN on Sunday that a Russian attack on Ukraine could happen this week.  Every indication suggests that Putin continues to build up troops at the border Russia shares with Ukraine, said Michael McFaul, a former U.S. ambassador.  “There’s no indication at all that Putin has stopped his march towards war, his preparedness towards war,” said McFaul, who is now a director at the Freeman Spogli Institute for International Studies.  However, there remains a lot of uncertainty over what will happen with Ukraine because Putin is “isolated” and rarely speaks to his advisors.  The Federal Reserve should be measured in its path to raise interest rates, San Francisco Fed President Mary Daly said Sunday.  “History tells us with Fed policy, that abrupt and aggressive action can actually have a destabilizing effect on the very growth and price stability we’re trying to achieve,” Daly said.  Daly supports the Fed raising rates in March and said “it’s too early to call” how many times the central bank will hike rates this year.  Treasury Yields moved slightly lower in early Monday trading, with the 10-year pricing at 1.9371% and the 30-year dipping slightly to 2.2399%.

The hotter than expected inflation coupled with the sharply declining consumer sentiment brought out the bears Friday, creating lower highs and breaking support levels in the index chart.  Unfortunately, the Russian / Ukraine tensions only add to the uncertainty of the path forward in the market.  In this week’s economic calendar, we have PPI, Retail Sales, FOMC minutes, and housing data that will likely keep price volatility high and uneasy traders guessing.  At this point, we can not rule out a retest of the January low intraday whipsaws and overnight reversals.  We still have a few potential market-moving earnings reports this week that could inspire the bulls, but if Russia invades, all bets are off, and anything is possible.  A dangerous market condition may be an understatement, so if you plan to trade, plan carefully and be willing to take any profits quickly because they could easily evaporate in the subsequent price gyration.  Having an edge as a swing or position trader could be slim to none, while experienced day traders could have the upper hand as the market searched for clarity.

Trade Wisely,

Doug