In defiance of surging inflation, the bulls took it as a buying battle cry and squeaked out a new record high close on the SPY Friday.  Although the premarket is pushing for more with a gap open, it would be wise to remember the Fed may double the taper rate on Wednesday as the committee appears to learn more hawkish going forward.  That said, we can’t rule out price volatility, so watch for the possibility of a pop and drop, whipsaws, and overnight reversals as we wait.

Asian markets began the week trading mixed, pondering the outcome of central bank meetings.  This morning, European markets trade mixed but mostly green with monetary policy decisions in focus.  With a light day of earnings and economic data, the U.S. tries to follow through on Friday’s record, pushing for a bullish gap up open.

Economic Calendar

Earnings Calendar

Kicking off a new week, we have a very light day with 15 companies listed, but several are unconfirmed.  Notable reports include JILL, PHX & REPX. 

News & Technicals’

A new study says that the commercial real estate industry faces an intensifying threat from flooding, likely leading to billions of dollars in increased costs.  Approximately 730,000 retail, office, and multi-unit residential properties face an annualized risk of flood damage in the United States.  The structural damage from flooding is projected to cost $13.5 billion in 2022, according to First Street Foundation, a nonprofit group, and global commercial engineering firm Arup.  The research incorporated sea-level rise but focused more on flash floods, also known as pluvial flooding.  Chinese President Xi Jinping is set to meet virtually with Russian President Vladimir Putin on Wednesday, China’s Ministry of Foreign Affairs said Monday.  The U.S. and other G-7 leaders issued a statement Sunday condemning “Russia’s military build-up and aggressive rhetoric towards Ukraine.”  The lira was trading at 14.33 to the dollar at 1:25 p.m. in Istanbul, a slight recovery from the record low of 14.99 earlier in the day.  Turkey’s central bank has subsequently announced it will intervene directly in the foreign exchange market, selling dollars to prop up the lira.  MotorTrend named the all-electric Rivian R1T the publication’s 2022 truck of the year, beating out other pickups from Ford, General Motors, and Hyundai.  MotorTrend called the R1T “the most remarkable pickup truck we’ve ever driven” in a release announcing the award.  Treasury yields trade slightly lower in early Monday trading, with the 10-year dipping to 1.4735% and the 30-year sliding to 1.8627%. 

With the SPY squeaking out a new record high close on Friday, it could do the job of attracting more money to the market as we move toward the end of the year.  The SP-500 PE ratio is 96% above the historical average, and the Buffet Indicator puts the composite market values to GDP 213% above the historical trend.  That said, the bulls are in control, and bad jobs data, soaring inflation, low productivity numbers will not stand in the way of more buying!  U.S futures point to more records at the open but be careful chasing until you see some follow-through buying.  We can not rule out the possibility of pop and drop with the investors eyeing a Fed taper on Wednesday. 

Trade Wisely,

Doug