Our messaging herein, with regard to the immediate general setup, is getting redundant. I.e., the Fed doesn’t seem to be backing down from its signaling that a rate hike, that a halting of QE, and that QT (quantitative tightening [balance sheet “shrinking”]) is on the near-term horizon. Other central banks, however, the EU’s and Australia’s come to mind, are sounding a bit of a (relatively) dovish tune due to the dynamics around Russia/Ukraine.

Many, yours truly included, anticipated the latter from the Fed as well, and, make no mistake, there’s a level of equity market pain where they’ll indeed cry uncle, but, presently, the issue is inflation! And while, indeed, sufficient global angst will provide a reflexive tightening that would typically alleviate inflation pressures, the nature of today’s particular angst has natural resource implications that serve to potentially offset whatever fear-inspired relief may be in the offing.

The sum of that assumption would be the term “stagflation.” High inflation amid stagnant economic conditions.

You’ll begin hearing that word aplenty the longer present circumstances prevail…

Just now skimmed through this morning’s release of the February ISM Manufacturing Survey, and, like the balance of the global PMIs (purchasing managers indices) released overnight, the signal from the US manufacturing space does not spark fears of stagflation (inflation yes) right here. In fact, in general, optimism remains high. Of course these surveys were conducted prior to Russia invading Ukraine…

Here’s the overall gist directly from the US ISM report:

“The February Manufacturing PMI® registered 58.6 percent, an increase of 1 percentage point from the January reading of 57.6 percent. This figure indicates expansion in the overall economy for the 21st month in a row after a contraction in April and May 2020.

The New Orders Index registered 61.7 percent, up 3.8 percentage points compared to the January reading of 57.9 percent. The Production Index registered 58.5 percent, an increase of 0.7 percentage point compared to the January reading of 57.8 percent.

The Prices Index registered 75.6 percent, down 0.5 percentage point compared to the January figure of 76.1 percent. The Backlog of Orders Index registered 65 percent, 8.6 percentage points higher than the January reading of 56.4 percent.

The Employment Index registered 52.9 percent, 1.6 percentage points lower than the January reading of 54.5 percent.

The Supplier Deliveries Index registered 66.1 percent, an increase of 1.5 percentage points compared to the January figure of 64.6 percent.

The Inventories Index registered 53.6 percent, 0.4 percentage point higher than the January reading of 53.2 percent.

The New Export Orders Index registered 57.1 percent, up 3.4 percentage points compared to the January reading of 53.7 percent. The Imports Index registered 55.4 percent, a 0.3-percentage point increase from the January reading of 55.1 percent.”

And here’s what respondents are saying:

• “Electronic supply chain is still a mess.” [Computer & Electronic Products]
• “Strong sales growth as retail continues to return.” [Chemical Products]
• “Demand for transportation equipment remains strong. Supply of transportation services continues to be a major issue for the supply chain.” [Transportation Equipment]
• “Strong demand has continued beyond our traditional seasonality curves. Coupled with the continuing difficulties in procurement of ocean freight, operational planning and managing costs are our biggest challenges.” [Food, Beverage & Tobacco Products]
• “We have seen year-over-year revenue growth of about 10 percent due to markets coming back. However, in the automotive area, the microchip shortage is causing slowness in growth.” [Machinery]
• “Demand for steel products has increased to historic levels, driven by the automotive and energy industries.” [Fabricated Metal Products]
• “We are expecting a year of strong demand, higher prices and continued supply chain challenges.” [Textile Mills]
• “Demand continues to be strong, increasing our backlog. Production has been more consistent due to availability of parts, but we are not able to increase builds to cut into the backlog.” [Electrical Equipment, Appliances & Components]
• “Business conditions are good, demand remains strong, and we continue to be challenged to keep up with demand.” [Miscellaneous Manufacturing]
• “Business is still strong. Facing logistics and raw material supply chain issues with some products.” [Plastics & Rubber Products]

Asian equities leaned green overnight, with all but 2 of the 16 markets we track closing higher.

Among our 38 core positions (excluding cash and short-term bond ETF), 12 — led by PARA (formerly Viacom), metals miners, solar stocks, ag futures and silver — are in the green so far this morning. The losers are being led lower by carbon credits, MP (rare earth miner), bank stocks, AMD and Eurozone equities.