Morning Note: Fed target not in reach...

While there'll be lots of data to parse this week, the ultimate market mover -- one might surmise -- will be J. Powell's speech in Jackson Hole on Friday.

Judging by the commentary from Fed governors post the last policy meeting, a firmly hawkish speech should come as no surprise. Although I must say, when it comes to the Chairman himself, that just seems to be a difficult pose for him to strike. We'll see...

Longer-term, while we indeed expect inflation to come notably off the boil, we don't see 2% (the Fed's stated target) on the foreseeable horizon -- not, at a minimum, without the Fed remaining in tightening mode further out than markets are presently discounting. 

I.e., we agree with BCA's bonds team:

"The easing of supply-driven inflation alone could see inflation moderate towards an underlying 4%-5% range. Our US Bond strategists argue that bringing inflation down from this range to the Fed’s 2% target will require an unwinding of some more sticky components of inflation, which seems unlikely in the near term. This will force the Fed to keep tightening well into 2023 (versus current market expectations of rate cuts next year)."

Asian equities struggled overnight, with 11 of the 16 markets we track closing lower.

Europe's in the red as well so far this morning, down across the board as I type.

US stocks are trading lower to start the session: Dow down 391 points (1.16%), SP500 down 1.33%, SP500 Equal Weight down 1.26%, Nasdaq 100 down 1.47%, Nasdaq Comp down 1.49%, Russell 2000 down 1.24%

The VIX sits at 23.08 up 12.04%.

Oil futures are down 3.83%, gold's down 0.57%, silver's down 0.83%, copper futures are down 1.21% and the ag complex (DBA) is up 0.20%.

The 10-year treasury is flat (yield flat) and the dollar is up 0.30%.

Among our 35 core positions (excluding options hedges, cash and short-term bond ETF), only 2 -- ag futures and Albemarle -- are in the green so far this morning. The losers are being led lower Carbon Credits, Sweden equities, Eurozone equities, oil services stocks and MP Materials.

"In the financial world, risk, reward, and catastrophe come in irregular cycles witnessed by every generation. Greed, hubris, and systemic fluctuations have given us the tulip mania, the South Sea bubble, the land booms in the 1920s and 1980s, the U.S. stock market and great crash in 1929, and the October 1987 crash, to name just a few of the hundreds of ready examples."

--Sornette, Didier. Why Stock Markets Crash 

Have a great day!
Marty