Sujata Rao gives a glimpse at what lies ahead.

While bears roam the markets, a new type of threat is lurking on Europe’s eastern flank.

The Russian bear is unlikely to retreat as Wall Street bears expected. Sentiment turned on a dime on Monday night, and sentiment turned on a dime.

Evidently dip-buyers still haven’t totally fled the equity markets. Was it due to all the short Nasdaq position holders, who suddenly found themselves in cash?

However, the impulse didn’t last long with Asia in red and Wall Street futures falling almost 2%. Options market data aren’t encouraging. Monday’s trading of put options was 1.1 times more bearish than bullish call options. This ratio is apparently the worst since March 2020.

However, markets aside, global economic conditions are not too dire. The PMI’s Monday advance readings did not show a slowdown in December business activities due to Omicron, but indicated an increase in delay in the supply chain. South Korean GDP increased at the fastest rate in eleven years, and 77% of U.S. companies reported Q4 earnings that beat predictions.

This market turmoil is causing the Fed to hold a meeting for two days. It may not be the final before the March rate hikeoff. It is hoped that it will be more attentive to tightening financial conditions caused by large equity sales. JPMorgan (NYSE 🙂 uses the strong earnings season to support their argument that the bearishness has been exaggerated. After all, JPMorgan (NYSE:) adds that the worst-case scenario could lead to the Fed putting its money back.

Graphic: Nasdaq mktcap, https://fingfx.thomsonreuters.com/gfx/mkt/xmvjobazqpr/nasdaq%20mktcap.JPG Key developments that should provide more direction to markets on Tuesday:

Singapore made its seventh out-of-cycle adjustment in monetary policy

South Korea’s economy grew at an unprecedented rate in the past 11 years, and will continue to grow in 2021

Inflation in Australia’s core rose to its highest pace of inflation since 2014 during the December quarter

Credit Suisse warns about Q4 net losses

IFO Survey in Germany

-Emerging markets: Hungary central bank

January/2008 – U.S. Consumer Confidence

U.S. $55 Bln 5 Year Note Auction

-U.S. earnings: General Electric (NYSE:), Johnson & Johnson (NYSE:), 3M, Xerox (NASDAQ:), Invesco, American Express (NYSE:), Verizon (NYSE:), Microsoft (NASDAQ:), Capital One

European earnings: SEB. Remy Cointreau. Logitech. (NASDAQ:), Ericsson. (BS:).