With significant daily gaps and multiple big point, intraday whipsaws make for a dangerous market condition.  Moreover, the sharply rising oil prices add inflationary pressures to an already struggling consumer.  So today, Powel will have to tiptoe through a minefield wearing magnetic shoes as he testifies in Congress.  Plan for more price volatility and prepare for just about anything with the market sensitive to the news cycle as Russia tightens its grip on Ukraine. 

During the night, Asian markets traded decidedly bearish after stating they would not join the sanctions against Russia.  But, across the pond, European markets rally, seeing green across the board as they monitor developments of the Russian advance.  Ahead of Powell’s testimony in Congress, U.S. futures point to a gap up open, choosing to ignore the surging oil prices now topping $111 a barrel. 

Economic Calendar

Earnings Calendar

We have a slightly lighter day with just under 150 companies listed on the midweek earnings calendar.  Notable reports include DLTR, ANF, AEO, BILI, BOX, DIN, DCI, GSL, GEF, NTNX, PDCO, PBPB, PSTG, RSI, SGFY, SPLK, HEAR, VEEV, VSCO, & WMC.

News & Technicals’

Netflix has offered to buy mobile game maker Next Games as the streaming giant pushes further into gaming.  Netflix plans to pay 2.10 euros ($2.33) in cash per share of Next Games, for a total value of approximately 65 million euros ($72 million).  Next Games is the Finnish studio behind a mobile game based on Netflix’s hit show “Stranger Things.”  When Russian President Vladimir Putin launched his first invasion of Ukraine in 2014, Crimea was annexed, his popularity ratings soared in Russia.  However, massive sanctions imposed on Russia that have prompted the Russian ruble to slump against the dollar, causing living costs to rise for many Russians, could mean that he doesn’t see a boost this time.  On Wednesday, China’s banking and insurance regulator said that the country opposes and will not join financial sanctions against Russia.  “China’s position has been stated clearly by the Ministry of Foreign Affairs.  According to a CNBC translation, our international policies are consistent,” said Guo Shuqing, Chairman of the China Banking and Insurance Regulatory Commission.  Guo, who is also the Chinese Communist Party secretary of the People’s Bank of China, added that he hopes all sides will maintain normal economic exchanges and that the sanctions have had no apparent impact on China so far.  “Nobody is watching the State of the Union,” Musk said in an email to CNBC.  Biden’s lack of a mention leading into Musk’s latest comments comes after CNBC reported on the ongoing battle between a billionaire and a commander in chief.  In its fiscal fourth-quarter earnings report, Salesforce beat on the top and bottom lines.  The company appointed Bret Taylor as co-CEO alongside Marc Benioff in the quarter.  Treasury yields trade slightly higher in early Wednesday trading, with the 10-year trading at 1.7292% and the 30-year ticking higher to 2.115%. 

The violent large point whipsaws continue to make a challenging and dangerous market condition.  Oil prices surged Tuesday, rising above $105 a barrel, and this morning the futures seem to be ignoring prices jumping again to $110.  As the energy rises, so does the prospect of higher inflation pinching the consumer wallet on just about everything we buy, sell, or do.  Fear remains high with the Vix closing the day above a 33 handle, but the wild price action in the market suggests anything is possible, and the investors sort through the uncertainty of what comes next.  Today we will turn our attention to ADP numbers and the beginning of the Powel 2-day testimony in Congress.  The Chairman has a complicated task navigating the minefield of inflation during high geopolitical pressures weighing heavily on the market.  Expect the volatile whipsaws to continue, and the high sensitivity to the news cycle as Russia continues to gain ground in Ukraine.  Respect overhead resistance levels, and as you plan forward, remember the Friday Employment Situation before the open. 

Trade Wisely,

Doug