Inflation is the main Tuesday morning concern and treasury yields are rising 10 basis points as a result. Despite the rate rise, rates are still about 40 basis points lower than the May peak, so more pain potentially in store. German inflation and potential ECB tightening are front and center inflation-wise. No surprise as equity futures are down approximately -30 bps across the board: S&P500, Nasdaq, Russell2000 and Stoxx Europe 600 down in the 30 basis point range.

Last weeks +6.6% rally in the S&P was unusual as there have only been 25 rallies of this magnitude in the last 50 years, or 1 every 2nd year. On average, stocks have been up 2.2% two weeks later and up 5.6% thirteen weeks later, but performance was terrible in the snapback rallies of 1974, 2001 and 2008 - so its still a scary time to buy.

As we have been saying for a week now, Brent is the big story - its up $1.99 to $123.66 in London morning trading. The EU ban on most Russian oil coinciding with China's re-opening can't be good for short-term markets. WTI is trading up to almost $119 - we noted that anything above $115 would be worrisome, and we broke through that easily. Inflation can't be under control with oil spiking upward like that. A month ago, oil was hovering around $105. Now that its up 10%, what do you think that does at the pump? Well, a 10% increase on $4.50 gasoline is $0.45, which is a massive hike in a month. We are almost certainly looking at $5 gas nationwide, further exacerbating problems on the low end. Nobody's talking about it, but what about next year's wheat crop with the Ukraine literally destroyed? Food & energy dominate inflation. Until oil stops rising or things get extremely cheap, you can't get bullish.

In response to all of this, our technicians have advised profit taking in the short term. In pre-market action, energy stocks are trading up, as are Chinese names ( BABA +4% & JD +6% ). Crypto is strong, with Bitcoin trading above $31,500 but as we noted last week, crypto is weak during trading hours and strong on weekends. Traders should wait until the close today as confirmation of renewed BTC strength.

Without a doubt, the economy is slowing down. Look at lumber futures:

Now is not the best time for predictions. Instead, traders & investors should be paying attention to the data and changes in the data. The data tells us that there are still supply chain disruptions, and with China just opening up now, those disruptions are not likely to be fixed in the next few months. Energy prices are still rising, so inflation is not tamed. The recent retailing earnigns show that the high end consumer is strong and lower end consumers are pulling back. The WSJ just published a story that said the median worker at Google now makes approximately $300,000. Wow - we definitely have inflation both at the low end ( no more $9 an hour jobs - they are all $14 ) and inflation at the high end. Unfortunately, lower end people are needing to cut back whereas higher end people are not squeezed. The data tells us that the EU has a serious problem and that European economies could be slow for a long time. Things are not good in the UK and Germany is no better. China's government is panicking due to their slowdown. None of this is good for the USA. After the 9% bounce off last week's bottom, risk assets don't look too attractive. Its gonna be a long summer: look for homerun trades as the market presents them. No need to over-trade.