Through All the Market Gyrations, the Asset Manager Stocks Have Headed into an Official Correction

Walmart's comments on the consumer and pricing should help kybosh the “resilience” narrative and incipient inflation concerns.

Key Takeaways

• Oil Rally Pauses as Iran “Deal” Talk Builds: The appearance of reduced tensions between the U.S. and Iran (a reported 10-day window to sign a “deal”) has calmed some of the jitters in the equity market, and the big rally in the oil price has stalled out, at least for now.

• Treasuries Cautious Ahead of the PCE Data: The Treasury market has a case of the jitters because of all the recent “hawkish” rhetoric out of the Fed, and views that today’s core PCE deflator for December could ring in at +0.3%. We wonder how “inflation” is still seen as such a threat when Walmart tells us that “We’ll just continue to focus on low prices.”

• Fed Minutes Signal Optionality, Not Hawkishness: What really happened in those FOMC minutes was that “several” policymakers would have preferred to have had a balanced “two-sided” directive. That does not equate to anyone wanting to raise rates, but rather to signal to the markets that there could be factors that cause such a shift, and what those factors would be. That is all the minutes were about in terms of this shift in tone — in two words or less: risk management. In that light, all the commentary about how there is rising dissension about the next move being a policy tightening looks to be overblown.