Morning Notes — Extreme Bearish Sentiment

The near-term path of least resistance is still aimed lower, but important to watch for a developing bullish narrative with sentiment readings now in extreme bearish territory. The Omicron wave has peaked in the UK and EU with signs of a US peak in all metrics. US card spending data reaccelerated last week and retail checks show increased foot traffic, little sign of staffing/supply shortages.  The Fed is starting a tightening cycle, but the near-term monetary narrative has reached hawkish extremes, setting the stage for a potential relief rally following Wednesday’s meeting.