First, the good news.
Israel says it does not plan to target Hezbollah’s sponsors, Iran and Syria. According to CNN, Israel’s UN ambassador said, “This is an operation which is very measured, very local.”
Companies reporting strong earnings comparisons may get some play, but I think strong earnings are old news after years of strong earnings.
Now the bad news.
The CPI core rate (ex-food and energy) rose at a 2.6% annual rate, which is more that the Fed likes. Bonds are under pressure: prices are falling and yields are rising.
Housing Starts fell 5.3%, so the economy is heading down.
Disappointing earnings from YHOO probably will be a drag on tech stocks.
Stagflation is a tough problem, and that looks like the path we are on.
I’m still Bearish, but I know that reversals are possible in such a highly news charged environment. I plan to trade with maximum flexibility in days ahead.