After starting the week with a bang, the S&P 500 (Index: SPX) saw its level of volatility die down as investors solidified their forward-looking attention on 2022-Q2.
How long it might stay there is a question that remains to be answered, but the latest update of the alternative futures chart shows the level of stock prices is fully consistent with that assessment.
Better still, we've moved out of the period where the echoes of the past volatility of stock prices affected the accuracy of the dividend futures-based model's projections, which had required us to add redzone forecast ranges to the chart to compensate in helping track the S&P 500's latest Lévy flight events.
Since we've already outlined what may come next for the S&P 500 in an update to the previous entry of our ongoing S&P 500 chaos series, let's recap the market-moving news headlines from the week that was:
- Monday, 9 May 2022
- Signs and portents for the U.S. economy:
- U.S. yields ease after hitting 3-1/2 year highs on rate hike unease
- Oil tumbles about 6% as China COVID lockdowns weigh
- Exclusive-Biden sidelined global energy partners with record emergency oil release -sources
- Fed minions claim Fed hasn't missed boat to keep inflation under its control, starting to think supply chain constraints won't go away, hope 75 bps rates won't be needed:
- Fed hawks Waller, Bullard push back on 'behind the curve' view
- Fed may have to carry bulk of burden in hitting inflation goal - Kashkari
- Bostic sees no 75 bps rate hike, hopeful inflation cools
- Bigger trouble developing in China:
- China's exports growth hits two year-low as virus curbs hit factories
- China's April new yuan loans seen falling as demand weakens-Reuters Poll
- Bigger stimulus developing in China:
- ECB minions suggest they may someday combat inflation:
- BOJ minions doubling down on keeping stimulus policies going:
- S&P 500 ends below 4,000 for 1st time since March 2021; growth shares lead decline
- Tuesday, 10 May 2022
- Signs and portents for the U.S. economy:
- U.S. producers undo years of efficiency gains in fight for supplies
- U.S. oil settles below $100 a barrel on economic worries, strong dollar
- Biden says Fed targeting inflation, China tariffs could fall
- Fed minions anticipate rising unemployment in best case scenario, trying to set expectations for half-point future rate hikes:
- Fed's Williams: 50 bps interest rate hikes at next two meetings "makes sense"
- Fed's Barkin says central bank can tweak path once its gets to neutral rate
- Fed's Mester backs 50 bps rate hikes, sees no sustained downturn
- Fed's Mester: Will need "compelling" drop of inflation to slow rate hikes
- Mester: MBS sales could mean market losses for Fed
- Fed's Waller says now is the time to 'hit it' on raising rates
- BOJ minions doubling down on keeping stimulus going, indications it is no longer independent of Japanese government:
- BOJ rules out widening yield band to stem yen fall
- BOJ's bond buying draws scrutiny after ex-PM calls central bank a govt 'subsidiary'
- Brazil central bankers anticipate more aggressive action to combat inflation:
- S&P 500, Nasdaq end up but investors cautious before inflation data
- Wednesday, 11 May 2022
- Signs and portents for the U.S. economy:
- U.S. inflation simmers, worst of price gains likely behind
- Oil up more than 5%, as Russia-EU energy quarrel intensifies
- Average U.S. mortgage interest rate rises to 5.53%, applications up
- Bigger trouble developing in Japan, Ukraine:
- Japan's economy to suffer Q1 slump on lower consumption
- Ukraine Finance Minister forecasts 45% GDP drop, committed to servicing debt
- Central banks acting to hike interest rates to combat inflation:
- India's cbank likely to raise inflation projection in June meeting, consider more rate hikes-source
- Hungary cenbank raised interest rates by 100 bps in unanimous April vote -minutes
- Bank of England interest rate could hit 4% or more, ex-policymakers warn
- ECB minions waiting until July 2022 to hike rates to combat inflation:
- Wall Street ends lower as U.S. inflation data offers little relief to investors
- Thursday, 12 May 2022
- Signs and portents for the U.S. economy:
- Oil rises as supply concerns outweigh reduced demand, recession risks
- U.S. Treasury's Yellen says Fed can bring down inflation without causing recession
- U.S. labor market still tightening; producer price gains moderate
- Cass Freight Index sees 'considerable' U.S. freight recession risk
- Fed minions still trying to say only half point rate hikes in the future, start looking to shift blame if U.S. economy experiences a "hard landing" from their policies:
- Fed's Daly backs half-percentage-point rate hikes at next meetings
- Fed Chair Jerome Powell: “Whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.”
- Bigger trouble developing in the U.K., Eurozone:
- UK economy shrinks in March as recession risks mount
- Europe's gas supply crisis grows after Russia imposes sanctions
- Bigger stimulus developing in China:
- ECB minions still thinking about doing something about Eurozone inflation:
- S&P drops on fears of prolonged inflation
- Friday, 13 May 2022
- Signs and portents for the U.S. economy:
- Fed minions not doing much to boost confidence in their actions:
- How much Fed must do depends on supply outlook: Kashkari
- Fed's Mester: Need "several months" of inflation moving down to call the peak
- Bigger trouble developing in China:
- China April new bank loans tumble as COVID jolts economy
- Headline fix: That should read "China April new bank loans tumble as government's COVID lockdowns jolt economy"
- Bigger stimulus developing in China:
- BOJ minions struggling with inflation and falling yen:
- Japan April consumer inflation seen exceeding central bank's 2% goal: Reuters poll
- Japan warns again about sharp yen moves, BOJ focuses on speed of change
- Wall Street ends tumultuous week with broad rally
According to the CME Group's FedWatch Tool, the Fed will hike rates by a half-point in June (2022-Q2), followed by a two more half-point hikes in July and September (2022-Q3). The Atlanta Fed's GDPNow tool projects real GDP growth of 1.8% in 2022-Q2, down from last week's projection of 2.3%.
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