The third week of May 2022 came and went with Federal Reserve officials signaling their willingness to hike interest rates higher than they've previously suggested. S&P 500 (Index: SPX) investors locked their forward-looking focus on the current quarter of 2022-Q2 in response, held there by the uncertainty of what will come from the decisions the Fed will make before its end.

That's what we read in the latest update to the alternative futures chart, which reveals the index is tracking remarkably closely to the alternative trajectory associated with investors focusing their attention on the current quarter according to the dividend futures-based model.

It's unusual for the actual trajectory of stock prices to track so closely along with a particular projection for investors focusing on a given quarter. We normally see more noise in day-to-day trading than we've had during the past week. That said, the clock is ticking down for how long investors can continue to fix their focus on 2022-Q2, which points to a potential investing opportunity that will exist until their forward-looking attention does shift to another point of time in the future in what will be the stock market's next Lévy flight event.

This assumes we don't see significant erosion in the expectations for dividends expected in the upcoming quarters to which investors might next shift their attention. Fortunately, that prospect is so far a low risk consideration for the near term.

Here are the market-moving news headlines that helped shape investor expectations in the week that was.

Monday, 16 May 2022

• Signs and portents for the U.S. economy:
• Biden team sees few options on inflation before November midterms
• Bezos and White House battle over taxes and inflation
• New York state factory activity slumps again in May; price pressures easing
• Fed minions thinking about undoing their overstimulus of U.S. housing market:
• Sales of Fed's mortgage-backed securities may be future option, Williams says
• Bigger trouble developing in China, Eurozone:
• China's economy skids as lockdowns hit factories, retailers
• China April property sales post steepest drop since 2006
• Hungary PM Orban warns of "era of recession" in Europe
• S&P 500 ends lower as Tesla falls, while energy rallies
• Yields slip, stocks struggle as economic fears grow

Tuesday, 17 May 2022

• Signs and portents for the U.S. economy:
• Strong U.S. retail sales, manufacturing output boost economic outlook
• U.S. manufacturing output rises more than expected in April
• Oil falls 2% on hopes for Venezuela supply
• Chief minion gets to keep collecting paycheck, says will turn screws as needed; other Fed minions say no recession over next 18 months and that fixing supply chain would fix inflation:
• Federal Reserve Chair Jerome Powell confirmed by Senate for a second term
• Fed's Powell vows to raise rates as high as needed to kill inflation surge
• Quotes: Powell says Fed won't hesitate to move past neutral
• Bullard: U.S. growth likely to continue above trend amid strong consumption
• Fed's Kashkari: how high rates need to go depends on supply side
• Bigger trouble developing in China:
• Beijing's retail, industry upended by COVID restrictions
• Analysis: China faces uphill battle to repeat 2020 miracle as exports falter
• Eurozone economy less bad than previously thought:
• Euro zone Q1 GDP growth rate revised upward to end-2021 pace
• BOJ minions got a fever, the only prescription is more stimulus cowbell:
• BOJ deputy vows to maintain monetary stimulus despite price pressures
• ECB minions thinking some more about hiking rates to combat Eurozone inflation, will devote more time to listening to central bank heads:
• ECB to hike deposit rate 25 bps in July, ditch negative rates by end-September: Reuters poll
• ECB's Centeno says policy normalisation must happen in sustainable way
• Exclusive-ECB's Lagarde gives national central bank chiefs louder voice on policy
• Wall Street ends sharply higher, fueled by Apple
• Consumer stocks diverge as Walmart disappoints, citing inflation

Wednesday, 18 May 2022

• Signs and portents for the U.S. economy:
• Wells Fargo sees end-of-year U.S. recession, cuts GDP view
• Oil falls 2.5% as U.S. refiners ramp up output, equities retreat
• U.S. housing market cooling as building permits tumble, starts fall
• Prospective Fed minion wants to fight inflation, established Fed minions claim they want smaller rate hikes:
• Fed nominee Barr says he's committed to bringing down inflation
• Fed's Evans wants smaller U.S. rate hikes by July or Sept
• Fed's Harker sees 50 bps rate hikes in June, July, then 'measured' hikes
• Bigger trouble developing in China, Japan:
• China lockdowns impeding supply chain recovery, slowdown risks spillovers, Yellen says
• Japan's GDP shrinks as surging costs raise spectre of deeper downturn
• ECB minions still thinking about hiking interest rates someday, worry about Ukraine war's effect on Eurozone economy:
• ECB policymakers push for quick monetary policy normalisation
• Euro zone April inflation revised down to 7.4%; still a record high
• ECB tells banks to buckle up as Ukraine war hits economy
• Wall Street ends sharply lower as Target and growth stocks sink
• Instant View: Wall Street recoils 3% on Target, tightening concerns

Thursday, 19 May 2022

• Signs and portents for the U.S. economy:
• U.S. existing home sales fall for third straight month; house prices at record high
• Investors jolted as U.S. retailers show inflation hitting consumers
• U.S. labor market in spotlight as weekly jobless claims hit 4-month high
• Oil swings wildly, rebounding to gains after steep losses
• Fed minions say they're not worried about falling stock prices:
• Fed's George: Policy "not aimed" at equity markets, but it will be felt there - CNBC
• Bigger trouble, stimulus developing in China:
• China's zero-COVID policy dashes global hopes for quick economic return to normal
• China seen lowering lending benchmark LPR to support economy: Reuters Poll
• Egypt's central bank launches serious assault against inflation:
• Egypt's central bank, citing inflation, hikes interest rates 200 bps
• ECB minions put credibility on the line while thinking about hiking rates to fight inflation someday:
• As ECB pares back stimulus, investors alert for fragmentation risk
• ECB accounts show debate over speed of policy tightening
• S&P 500 ends lower as Cisco and Apple sink
• Cisco crashes to 18-month low as China lockdown raises supply doubts
• Rare double whammy hits retail investors: steep slumps for both stocks and bonds

Friday, 20 May 2022

• Signs and portents for the U.S. economy:
• Oil settles up as supply risks outweigh economic worries
• Most dovish Fed minion now setting expectations for bigger rate hikes:
• Strong household finances may mean Fed must to do more -Kashkari
• Bigger trouble, stimulus developing in China:
• Taiwan export orders fall for first time in 2 years, hurt by China lockdowns, global weakness
• Shanghai economy hit on all sides in April by COVID lockdown
• China cuts borrowing rate more than expected to revive housing sector
• China pledges to give virus-hit companies easier access to capital markets
• BOJ minions elated to finally hit their inflation target after years of deflationary conditions, pledge to keep stimulus going:
• Japan April consumer inflation beats BOJ target for 1st time in 7 years
• BOJ's Kuroda vows to keep easy policy, remain dovish G7 outlier
• Former central banker says central banks share blame in creating inflation:
• Ex-Bank of England governor King says central banks share blame for inflation
• ECB minions thinking they can safely hike rates to combat inflation:
• ECB can move rates back into positive territory: Visco
• ECB can safely raise rates out of negative territory, Visco says
• Money markets price in 50-50 chance of 50 bps July ECB hike
• Wall Street ends mixed, Tesla falls
• Retail sell-off: discounters, auto stores lead losses

The CME Group's FedWatch Tool continues to project 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). After which, the tool projects the Fed will slow down, hiking rates by just a quarter point each in November and December 2022 (2022-Q4) to close out the year.

The Atlanta Fed's GDPNow tool projects real GDP growth of 2.4% in 2022-Q2, up from last week's projection of 1.8%.

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:
• China's central bank pledges to step up policy support for slowing economy
• ECB minions suggest they may someday combat inflation:
• Two or three rate hikes this year appropriate -ECB's Holzmann
• BOJ minions doubling down on keeping stimulus policies going:
• BOJ policymakers unwavering on easy policy stance - March meeting minutes
• S&P 500 ends below 4,000 for 1st time since March 2021; growth shares lead decline
• Wall Street slides as higher bond yields hit growth stocks

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 Williams: 'soft landing' would still see unemployment rate rise
• 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
• Fed's Waller promises to tackle inflation, says mistakes of the '70s won't be repeated
• 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:
• Brazil's central bank acknowledges further deterioration in inflation despite 'intense' rate hike cycle
• S&P 500, Nasdaq end up but investors cautious before inflation data
• Stocks Spike, VIX Plunges On Fed's Waller Comments

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
• Nearly 5 million jobs lost in Ukraine as war pummels economy - ILO
• 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:
• ECB firms up expectations for July interest rate hike
• 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:
• China to roll out new policies when needed to support economy - party official
• ECB minions still thinking about doing something about Eurozone inflation:
• ECB's Makhlouf says it is time for Governing Council to act
• S&P drops on fears of prolonged inflation
• Wall Street falls on rate hike worries
• U.S. retail investors turn bearish and elusive in latest selloff

Friday, 13 May 2022

• Signs and portents for the U.S. economy:
• U.S. consumer sentiment approaches 11-year low, monthly import prices unchanged
• Why are food prices going up? Key questions answered
• Oil jumps 4% as U.S. gasoline prices hit record high, stock markets soar
• U.S. economic outlook weakens, inflation set to persist - Philly Fed survey
• 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:
• China looks to spur job prospects for record number of new graduates
• 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%.

We had a lot of fun watching the S&P 500 (Index: SPX) during the first week of May 2022. In case you missed it, the index swung through relatively rare 3%+ changes in its daily value.

And all of it was well telegraphed! Or rather, it was consistent with how the dividend futures-based model says the index would act given the new information investors have had to absorb in recent weeks. Here's a quick recap of our relevant coverage:

• The "Mystifying" Moves of the S&P 500
• The S&P 500 on the Edge
• The S&P 500 Falls Off the Edge
• Increasing Day-to-Day Volatility for the S&P 500
• Third Lévy Flight of 2022 Sends S&P 500 Much Lower

That last post contains updates addressing the specific causes of last week's wild market action, which added two more Lévy flight events to 2022's tally! Here's how they look on the latest update to the alternative futures spaghetti forecast chart:

Through Friday, 6 May 2022, we find investors are mainly focusing on the current quarter of 2022-Q2 in setting current day stock prices. Investors are betting the Fed will be compelled to hike interest rates by a bigger amount before the end of the quarter than they've been willing to publicly commit, completely reversing the expectation the Fed set on Wednesday, 4 May 2022 that 2022-Q2 would not see such a larger hike.

If you've been following the S&P 500 chaos series, you already know the importance of following the random onset of new, market-moving information. Although we've discussed the specific triggers for last week's market volatility via updates to last Monday's regular entry to the series, here's a more comprehensive picture of what was new and noteworthy during the week that was.

Monday, 2 May 2022

• Signs and portents for the U.S. economy:
• U.S. manufacturing activity slowest in more than 1-1/2 years as workers quit
• Fed minions want U.S. housing market to "cool it":
• The Fed wants to cool the U.S. housing market. Here's what that feels like
• Bigger trouble developing in the Eurozone, Japan, China, Mexico:
• Euro zone factory output growth stalled in April - PMI
• German retail sales unexpectedly fall in March
• Supply disruption, weaker demand cloud outlook for German manufacturers - PMI
• Japan's April factory activity expands at slower rate -PMI
• China April factory activity contracts at steeper pace as lockdowns bite
• Mexico's factories contract for 26th straight month, inflation near four-year high
• Wall Street ends higher amid topsy-turvy trade before Fed meeting
• U.S. Treasury 10-year yield hits 3% for first time in more than three years
• Bond investors go for safety, brace for ultra-hawkish Fed

Tuesday, 3 May 2022

• Signs and portents for the U.S. economy:
• U.S. job openings, resignations hit record highs in March
• Bigger trouble developing in China:
• Hong Kong Q1 GDP shrinks more than expected on COVID curbs
• Snarled-up ports point to worsening global supply chain woes - report
• Bigger inflation developing in South Korea:
• S.Korea inflation hits 13-yr high, fans rate hike expectations
• Central bankers getting serious about hiking rates to combat inflation:
• Australia's central bank hikes interest rates, flags more to come
• Czech central bank seen raising main rate to 5.50%, highest since 1999: Reuters poll
• ECB may hike rates in July to combat extreme inflation -Schnabel
• Analysis-Barely visible wage growth already a trigger for ECB
• Wall Street ends higher after choppy session ahead of Fed
• U.S. junk bonds drop to lowest in over two years ahead of Fed meeting

Wednesday, 4 May 2022

• Signs and portents for the U.S. economy:
• Record high U.S. job openings, resignations likely to fuel wage inflation
• From coffee to ketchup, retailers seek price 'shields' as inflation runs riot
• U.S. service sector slows; input prices measure at record high - ISM survey
• Inflation pushing more borrowers with low FICO scores to default -study
• Robust imports push U.S. trade deficit to record high in March
• Fed hikes rates by half percentage point, starts balance sheet reduction June 1
• Rrrrrrb: Quantitative Tightening Begins June 1, Capped Initially At $47.5BN And Growing To $95BN
• Fed's Powell: 75 basis point rate hike not being 'actively considered'
• Instant View: Fed hikes 50 bp, Powell tamps down speculation of 75 bp hike
• Growth signs in Eurozone:
• Euro zone business growth got boost from reopened services in April - PMI
• Central bank minions hiking rates to combat inflation:
• India raises rates at surprise monetary policy meeting, bond yields jump
• Wall Street rallies to end higher after Fed's interest rate hike
• Stocks, Bonds, Gold, & Crypto Rip After Powell Takes 75bps Hike 'Off The Table'

Thursday, 5 May 2022

• Signs and portents for the U.S. economy:
• U.S. weekly jobless claims rise; productivity plunges at fastest pace in 74 years
• Oil steadies near $110/bbl as strong dollar offsets Russian oil ban
• Bigger trouble developing in China:
• China's services activity falls at second sharpest rate on record - Caixin PMI
• Bigger stimulus developing in China:
• China will roll out more support measures to stabilise jobs - cabinet
• Central bank minions hiking rates to combat inflation:
• Czech central bank surprises with big rate hike, says more may come
• Bank of England raises rates to 1% despite looming recession risk
• BoE flags risk of recession and 10% inflation as it raises rates again
• Cash handouts to Danes could worsen inflation, central banker warns
• Norway keeps rates on hold, remains on track for June hike
• Economists expect higher rate hikes after RBI's hike to tame inflation
• ECB minions standing by to take action to combat inflation:
• ECB sees sequence of moves to lift rates into positive territory: Lane
• ECB should not raise rates in July before Q2 GDP data: Panetta
• Wall Street slumps as investors fear bigger Fed rate hikes
• U.S. rate futures price in 75% chance of 75 bps Fed hike in June

Friday, 6 May 2022

• Signs and portents for the U.S. economy:
• Manufacturing drives strong U.S. hiring; wage growth cools
• Fed minion try to shape expectations for lesser rate hikes, former Fed minions call for bigger rate hikes:
• Fed's Kashkari Op-Ed: Policy Has Tightened a Lot. Is It Enough?
• Fed's Kashkari says supply chain progress key to avoiding recession
• Former Fed policymakers call for sharp U.S. rate hikes, warn of recession
• Bigger trouble developing in the Eurozone, China:
• German industrial output falls more than expected in March
• China's trade seen faltering in April as COVID curbs hit output: Reuters poll
• Japanese factories in Shanghai struggling to resume operations, survey shows
• Bigger stimulus developing in China:
• China central bank to launch relending facility to aid transport, logistics
• ECB minions still thinking about doing something to combat inflation:
• ECB must quickly raise key rates, says head of Germany's Ifo institute
• ECB must keep inflation expectations at bay - Elderson
• ECB rate should be back in positive territory by year end: Villeroy
• Wall St falls as rate hike fears overshadow strong jobs data
• Wild swing roil markets as hawkish Fed unleashes volatility

The CME Group's FedWatch Tool projects the Fed will hike rates by three-quarters of a point in June (2022-Q2) and by another half point in July (2022-Q3), followed by a quarter point hike in September (2022-Q3). The prospects for a larger-than-half-point rate hike in June is why investors are now mainly focusing their attention on 2022-Q2 in setting current day stock prices.

The Atlanta Fed's GDPNow tool's is forecasting 2022-Q2 will rebound with a positive 2.3% real growth rate following 2022-Q1's negative growth.

Update 9 May 2022

Another exciting day for the S&P 500, which dropped more than three percent again! But as you'll see, that drop moved the level of the index right toward the middle of the redzone forecast range associated with investors focusing on the current quarter of 2022-Q2:

Big movement, but not a new Lévy flight because it is really a continuation of 2022's fifth event.

At this level, provided investors maintain their forward-looking focus on 2022-Q2, much of the wild swings should become relatively tempered. As you can see from the projected alternative future trajectory corresponding to this time horizon, there could still be significant declines ahead of up to 200-300 points, but that would come without the big upward movements associated with a new Lévy flight event.

Now, here's the catch. There's only a finite amount of time investors can maintain their focus on 2022-Q2. As the current quarter, the clock is already ticking down on it, which means investors will be forced to shift their attention to a different point of time in the future at some point on or before the third Friday of June 2022. That potentially forced shift of focus will trigger a new Lévy flight event. It's just a question of when, with its magnitude determined according to which other quarter investors might shift their attention and what the associated expectations for dividend growth are for that future quarter at the time when it happens.

Looking forward, the big market-moving news event for this week will likely come on Wednesday, 11 May 2022 when the next official report on inflation comes out. That will be early in the day, so we shouldn't have long to wait to find out what kind of impact it will have, especially if the actual figure reported for April 2022 is significantly different from what is expected going into the trading day.

It didn't take long for the S&P 500 (Index: SPX) to have a trading day qualify as "really interesting" by our standards, as Friday, 29 April 2022 delivered.

But what did it deliver after having already fallen off the proverbial edge? Simply put, investors have much more fully shifted their forward looking focus to 2022-Q2, thanks to increasing prospects the Fed will hike rates by three quarters of a point in June 2022. Here's how that growing realization looks on the dividend futures-based model alternative futures chart:

There's still room for the S&P 500 to fall lower, but without any erosion as yet in the expectations for future dividends, there's less immediate downside now than there was a week ago. The following market-moving headlines recap the random onset of new information that influenced the S&P 500's direction during the exciting and volatile week that was....

Monday, 25 April 2022

• Signs and portents for the U.S. economy:
• Oil slumps 4% as Shanghai lockdowns stoke demand fears
• U.S. refiners set for strong start to 2022 as fuel prices surge worldwide
• U.S. homebuilders to feel pricing pinch from rising mortgage rates, inflation
• Fed minions looking to get confirmed by Senate:
• Fed's Brainard confirmation set to move step closer, others wait in wings
• White House calls on Senate to vote on Fed nominees this week
• Bigger trouble developing in Eurozone:
• Morgan Stanley cuts euro zone GDP forecasts
• Exclusive-Germany to hike 2022 inflation forecast to 6.1% - document
• Bigger stimulus developing in China:
• Some Chinese state banks will cut deposit rates on Monday - sources
• China property firms joined c. bank talks on ways to help sector, sources say
• BOJ minions dig in on continuing stimulus policies:
• BOJ to keep ultra-low rates, dovish stance as inflation clouds recovery
• Japan's ex-PM Abe says 'wrong' for BOJ to hike rates to stem yen falls
• Japan readies $48 billion package to help with fuel and materials cost spikes
• ECB minions thinking about stopping stimulus policies:
• ECB policymakers keen for quick end to bond buys, early rate hike -sources
• Nasdaq ends sharply higher after Twitter agrees to be bought by Musk
• Wall Street strategists sound gloomy note as stocks drop again

Tuesday, 26 April 2022

• Signs and portents for the U.S. economy:
• U.S. new home sales dive in March; prices surge
• Oil rebounds on China's plans to support its economy
• Fed minions have a new Number 2:
• Brainard wins enough Senate votes to be Fed's vice chair
• Bigger trouble developing in Asia:
• IMF warns of 'stagflationary' risks in Asia, cuts growth outlook
• S.Korea Q1 GDP growth slows, China risks cloud outlook
• Bigger stimulus developing in China:
• China will step up infrastructure construction to boost growth - President Xi
• ECB minions trying to create impression they'll hike rates:
• ECB has room for 2-3 rate hikes this year, says Kazaks
• BOJ minions told to keep stimulus going by new Japanese PM
• Japan PM Kishida urges BOJ to keep ultra-low rate policy
• Wall Street ends sharply lower, Nasdaq tumbles
• QUOTES-Wall Street clobbered, dragged down by Nasdaq and growth stocks

Wednesday, 27 April 2022

• Signs and portents for the U.S. economy:
• U.S. pending home sales post 5th straight monthly decline in March
• Column-'Peak subscription' a red flag for U.S. economy and markets: McGeever
• U.S. goods trade deficit hits record high; Q1 GDP growth estimates slashed
• Oil prices edge up as worldwide supply concerns remain at the fore
• Bigger trouble developing in China, Russia, Eurozone:
• China Q1 consumption lags in key coastal provinces; Q2 off to weak start
• Russia's GDP decline could hit 12.4% this year, economy ministry document shows
• Exclusive-Russia sees its oil output falling by up to 17% in 2022 -document
• Europe decries 'blackmail' as Russia halts gas to Poland, Bulgaria
• Germany would go into recession with Russian energy embargo - minister
• Central bank minions plotting rate hikes:
• Australian inflation hits 20-yr high, May rate rise seen in play
• Norway's central bank to hold rates next week, raise in June- Reuters poll
• Wall Street ends higher supported by Microsoft

Thursday, 28 April 2022

• Signs and portents for the U.S. economy:
• Oil prices rally on report that Germany drops opposition to Russian oil embargo
• OPEC+ likely to stick to existing deal and raise June output -sources
• U.S. economy shrinks in first quarter; trade, inventories mask underlying strength
• Uncertainty around what Fed minions will do:
• The Fed's racing to raise rates, but how high remains an open bid
• Bigger trouble developing in Asia:
• S.Korea April export growth to hit 14-mth low; inflation near 11-yr high: Reuters poll
• Analysis-China struggles for options as COVID threatens economic goals
• Bigger inflation developing in Eurozone:
• Energy prices bump German inflation to four-decade high
• BOJ minions double down on stimulus:
• BOJ bolsters commitment to ultra-easy policy, triggers yen sell-off
• Bank of Japan vows limitless defence of yield target
• Leading gauge of Japan consumer inflation to creep to near 2% in April- Reuters poll
• BOJ Governor Kuroda's comments at news conference
• ECB minions ready to stand by to watch inflation expectations surge:
• ECB must watch surge in inflation expectations -de Guindos
• Wall Street ends sharply higher, lifted by Meta and Apple

Friday, 29 April 2022

• Signs and portents for the U.S. economy:
• Oil prices reverse late in session as heating oil contract plunges
• U.S. consumers shrug off high inflation, lean on savings to boost spending
• U.S. consumer sector braces for slowing demand as inflation bites
• Expectations Fed minions' bigger rate hikes taking hold:
• Big Fed rate hikes ahead, amid early signs hot inflation is peaking
• Bigger trouble developing in the Eurozone, China:
• Ukraine war curbs euro zone growth, inflation hits new high
• Broad-based euro zone inflation at record high 7.5% in April
• Negative-yielding corporate debt disappears as euro yields hit 8-year high
• German economy grew slightly in Q1, but Ukraine impact growing
• Spain's GDP growth slows to 0.3% in Q1 as Madrid readies cut to 2022 outlook
• French economy stalls in first quarter, inflation hits new record
• China's PMI likely to show steeper factory activity decline in April - Reuters poll
• Bigger stimulus developing in China:
• China signals easing of tech squeeze in bid to lift economy
• ECB minions trying to act all casual about hiking rates:
• ECB's Lane say first rate hike is no big deal, cautious on further moves
• Wall Street closes sharply lower on Amazon slump, inflation worries
• Nasdaq Collapses To Worst Month Since Lehman As Market Starts Pricing 75bps Hike In June
• Cruelest Indeed: There Have Been Just 4 Months Since 1973 As Horrific As April

The CME Group's FedWatch Tool projects the Fed will hike rates by a half point in May and June (2022-Q2) and again in July and September (2022-Q3). After that, the FedWatch tool anticipates quarter point rate hikes at six-week intervals through March 2023.

The BEA reported real GDP in 2022-Q1 fell by 1.4%, which was quite different from the Atlanta Fed's GDPNow tool's final forecast for a real gain of 1.3%. As expected, the GDPNow tool has shifted its focus toward 2022-Q2, where it anticipates a positive 1.9% real growth rate with respect to the level of 2022-Q1's real GDP level.

Update 4 May 2022

The day-over-day change in the S&P 500 definitely qualified as interesting today, after Fed Chair Jerome Powell took a 3/4% rate hike "off the table" for 2022-Q2 and possibly for 2022-Q3 as well. Investors immediately refocused their forward looking attention back toward 2022-Q3 in response. Here's how that change looks on the alternative futures chart whose purpose is to track these dynamics:

The Fed triggered the fourth Lévy flight of 2022 with investors shifting their future-oriented focus back toward 2022-Q3. With the Fed's expectation-setting actions now behind us and Q2 earnings season half over, we think it would take an exceptional development for investors to re-shift their focus back to the current quarter of 2022-Q2. Since such a shift would be accompanied by a large downward movement in the S&P 500, that now much lower probability represents a positive development in our book as we should now be on the opposite side of the volatility cluster.

So if such an apparently unlikely event happens, it won't be by accident. What could trigger such a reaction?

Update 5 May 2022

That last question was, in fact, a trick question. The thing that could trigger such a reaction is a sudden shift in the time horizon for investors, which on 5 May 2022, shifted strongly back toward 2022-Q2 from 2022-Q3. The reason: investors absorbed the new information of other nation's central banks implementing surprise rate hikes and called Jerome Powell's bluff that the Fed won't hike rates higher and faster to deal with the U.S.' higher relative rate of inflation. They've made new bets the Fed will be forced into a larger-than-half-point rate hike before the end of 2022-Q2. Here's what that looks like on the alternative futures chart:

Every time the forward-looking attention of investors strongly shifts from one point of time in the future to another, it qualifies as a new Lévy flight event by our definition. We're now up to five such events in 2022 and the only thing we'll guarantee at this point is that 2022 will experience at least one more Lévy flight event, which will happen sometime before the third Friday of June 2022. (When you read the previous sentence, put the emphasis on "at least one more"....)

This will be our last update to this post. We'll catch whatever happens on Friday, 6 May 2022 up with our next regular S&P 500 chaos series entry early on Monday, 9 May 2022. If you've been regularly following the series over the last several weeks, you're fully up-to-speed with the factors behind the U.S. stock market's recent volatility cluster.