Week Ahead on Wall Street (SPX) (QQQ): Mr. Market prices inflation as transitory, we know how that worked out

• Inflation spikes again confounding investors and policymakers.
• 100 basis point hike priced to near certainty before Waller and Bostic get all doveish.
• Recession is now priced to near certainty by money and commodity markets but not yet equities.

Interesting to always note how the narrative is twisted to support exactly what the market wants to do. Last month the University of Michigan's Inflation expectations were cited by the Fed for its knee-jerk panic into hiking rates by 75 basis points. In the immediate aftermath, commentators pointed out how limited the survey is in its scope being based as it is on a few hundred survey responses. Now that the same survey this month shows a modest and it is very modest reduction, everyone is citing it as gospel. Inflation is cured, it's transitory, rally back on for risk assets. Excuse the sarcasm but we are not out of the woods by a long long long way. Equity markets are always the last ones to know and it looks like that feat is repeating itself if the latest developments are anything to go by. Inflation remains on fire and in fact rising and broadening its base. That broadening is the most worrying aspect as it means it will likely last longer than most expect. Transitory is now on the lexicon of investors who are pricing inflation to be brought to its knees by a recession in 2023.