With sentiment and positioning deep in the basement:

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And the sell-side almost uniformly in BofA’s camp that the next leg lower awaits:

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I’ve got to give Dillian a shoutout for a bold call ahead of Wed’s CPI print (still the best value in financial newsletters IMHO):

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And while not quite the all clear I’ve been looking for, headline pain is part of the checklist:

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So assuming this rally has legs, what’s the next bogeyman for markets?  The inventory cycle of course.  I think the only question is whether this is fully discounted in the individual equities:

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Combine the above with lapping last year’s strong inflationary impulse and 2% core CPI at year-end doesn’t seem far-fetched:

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Unlike the last hiking cycle, the market is doing the heavy lifting for the Fed already:

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And again, this inflationary impulse does not look like a regime break:

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But one off shocks like Airfares in this month’s report are going to keep the upside surprise risks elevated over the next few months:

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For those looking to catch a falling knife domestically, there’s an opportunity set in biotech:

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And Aussie Materials are a coiled spring should China ever move past Covid zero:

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