The Fed minutes confirmed the Fed plans to fight inflation aggressively, creating a bit of Wednesday volatility.  The question is, will this prick the bubble of high stock valuations and home prices inflated by all the money printing?  Only time will tell, but one thing seems inevitable, the Fed may have to sacrifice the market growth they have long defended to get the job done.  Today we will hear from James Bullard, that pointed to Fed credibility when asking for a one-point increase in rates last month!  Could we see another dose of price volatility this morning as a result? 

Overnight Asian markets struggled to close the session with red across the board.  However, this morning, European markets are cautiously higher as they monitor the hawkish Fed and Russian aggression.  With Jobless claims and more Fed speak pending, U.S. futures point to modest gains at the open. 

Economic Calendar

Earnings Calendar

The Thursday earnings calendar lists about 40 companies, but many of them remain unconfirmed.  Notable reports include ANGO, APOG, CAG, STZ, NTIC, PSMT & WDFC.

News & Technicals’

Members of the NATO military alliance have been supplying Kyiv with weapons since Russia’s unprovoked invasion of Ukraine in February.  However, this is not enough for Ukraine’s Foreign Affairs Minister, Dmytro Kuleba.  NATO Secretary-General Jens Stoltenberg said Wednesday: “We need to be prepared for the long haul.”  Shell has announced that it will write off between $4 and $5 billion in the value of its assets after pulling out of Russia.  The announcement offers a first glimpse at the potential financial impact to Western oil majors of exiting Russia.  Shell was forced to apologize on March 8 for buying a heavily discounted consignment of Russian oil.  It subsequently announced that it was withdrawing from Russia.  China warned on Thursday it would take strong measures if U.S. House of Representatives Speaker Nancy Pelosi visited Taiwan and said such a visit would severely impact Chinese-U.S. relations, following media reports she would go next week.  The possible visit has not been confirmed by Pelosi’s office or Taiwan’s government, but some Japanese and Taiwanese media reported it would take place after she visits Japan this weekend.  Chinese Foreign Ministry spokesperson Zhao Lijian told reporters that Beijing firmly opposed all forms of official interactions between the United States and Taiwan, and Washington should cancel the trip.  Denim retailer Levi Strauss reported fiscal first-quarter earnings, and revenue topped analysts’ estimates.  The company sold more jeans and T-shirts at higher price points, often directly to customers.  Levi reaffirmed its forecast for fiscal 2022, assuming no significant worsening of inflationary pressures or closures of global economies.  Levi CEO Chip Bergh told CNBC that consumers have yet to trade down for less expensive apparel.  Treasury yields fell slightly in early Thursday trading, with the 5-year dropping to 2.6381%, the 10-year dipping to 2.5659%, and the 30-year slightly lower to 2.6046%.

The confirmation that the Fed plans to fight inflation aggressively in the minutes provides some volatility in an overall bearish day that created lower lows to follow the lower high made on Tuesday.  The good news is the DIA, SPY, and QQQ held above their 50-day averages at the end of the day, providing hope of a bullish defense.  However, with the most hawkish Fed member, James Bullard, set to speak at 9:00 AM this morning, another dose of volatility could be on the way.  Remember the last meeting Bullard was calling for a full 1 point increase in rates, calling it a matter of Fed credibility.  The bond yield inversion also weighs on investors’ minds as Janet Yellen warns of energy and food shortages continuing to pressure inflation.  That said, I would not be surprised to see a bit of a relief rally by the end of the week unless more geopolitical issues arise.

Trade Wisley,

Doug