Yesterday, the Fed woke up and chose violence. Speaker after speaker slammed the market, which had fended off wave after wave of selling until the final blow – comments (below) from Chicago Fed President Charles Evans.

“The kinds of things that would make larger rate increases more important, like in September, would be if you really thought things weren’t improving,” Mr. Evans told reporters at a briefing Tuesday. “I think that there’s enough time to play out that 50 is a reasonable assessment, but 75 could also be OK.”

Observers not looking to curry favor and get questions answered at the Federal Open Market Committee (FOMC) gathering noticed the absurdity of the Fed that couldn’t stop pumping less than a year ago is now consumed with non-stop hiking. Rudy Havenstein laid it out perfectly.

Lights Out

Fed's Mester: Haven't Seen Inflation Cool ‘At All,’ Reiterates Commitment to Bringing Inflation Under Control.

Fed’s Daly: It would be a mistake to get overconfident that we have already found the solution.

They just kept lining up and punching as hard as they could as if they were swinging at one of the arcade games. 

We Get the Message

The ten-year bond yield was on the cusp of crashing through key support when it finally heard the chorus of Fed speakers saying inflation is still a beast and they were going to slay it no matter what the collateral damage is.

Major indices limped into the close, but market breadth held up relatively well.

Market Breadth	NYSE	NASDAQ
Advancers	1,450	2,348
Decliners	1,755	2,236
New Highs	35	54
New Lows	32	95
Up Volume	2.20 billion	3.09 billion
Down Volume	2.50 billion	1.68 billion

It was a tough session, but the market exhibited a fair amount of grit and spunk.

Portfolio Approach

Yesterday, we added a new position in Consumer Discretionary and closed a position in Materials in our Hotline Model Portfolio. If you are not a current subscriber to our premium Hotline service, call your rep or email Info@wstreet.com to sign up today. 

Today’s Session

Looking for a reversal from yesterday’s action, but right now, yields are still edging higher and Fed members talking tough (Bullard has already been on TV this morning).

Earnings continue to come in better than expected, and while below the past of the prior four quarters, the street was bracing for disaster, and this is far from disaster.

Watch those bond yields.

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