After a long three-day weekend, the market is looking to open much lower. Bond yields are rocketing higher, as the street braces for at least four rate hikes.

Also pressuring the market is the huge earnings miss with Goldman Sachs (GS), which posted earnings of $10.81 against consensus of $11.76.  There was weakness with some units, but the narrative is the wage spiral is the main reason the bottom line was lighter.

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This is the part of the inflation picture where the Fed has limited ability to curtail, but its adding fuel to the new debate over whether those four rate hikes should all be only 25 bps. Many well-known names on the street are saying Powell & Co should come out the gate with 50 bps.  Right now, that would be a huge error with respect to messaging and would actually spook the markets when the Fed is hoping for small nudges.

The script is the same with higher rates growth names under pressure – especially Technology names.  At the pace the two year is galloping, the yield curve is flattening, and that suggest economic weakness later in the year.

It is a conundrum for sure.

Meanwhile, crude keeps gushing as West Texas Intermediate is taking out a very important resistance point.  The Biden administration is working on a new package to push renewable energy, which probably only helps fossil fuels in the near timer (see chart clean energy ETF versus WTI since election).

The deal of the day is Microsoft (MSFT) buying Activision (ATVI) for $95.00 a share, a monster deal that should spark similar acquisitions.

We closed four positions this morning to raise cash and mitigate downside.  If you are not a current subscriber to our premium Hotline service, email Info@wstreet.com to join today.