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Many commodities are in short supply these days. Car manufacturers can produce enough cars due to chip shortages. Ask any contractor and they’ll tell you how dear lumber was, earlier this year. I even read somewhere that the price of window coverings went up over 17% in just the month of August. But if you ask me, the one thing that we are in very short supply of these days is context.

Given the rapid upward trajectory of the stock market since the March 2020 lows, recent market behavior has felt a little like a wet blanket. The headline S&P 500 index has continued to push higher, and the large-cap tech index Nasdaq 100 has followed along. But for those seeking equity allocation away from large-cap US stocks the returns have been much more challenging.

My kids went back to school this week, and despite the 90 plus degree temps outside, summer is officially over for them. However, for the stock market, the summer season doesn’t really end until post-Labor Day. That means that we are likely to see at least another week of benign, low volume market action.

This week we saw some pretty choppy price action for the major US indices. The large-cap S&P 500 was up about 0.50% for the week after today’s rally. The Nasdaq 100 finished the week up 0.73%. But the small-cap Russell 2000 was lower by -1.34%.

The stock market rebounded nicely this week, with the headline S&P 500 index jumping more than 2.75%. The Russell 2000 also strongly rallied, closing up nearly 5%. Following last week’s Fed induced “freak out” that rates may be rising sometime two years from now, Fed Chair Jerome Powell, eased the market’s concern on Monday reiterating that the Fed will still remain accommodating in the near term.

This week we saw a pretty big shift in the market. Following the Federal Reserve meeting Wednesday, the market witnessed a fairly substantial rotation out of small cap, value, and industrial stocks and back into technology names. During the meeting, the Fed announced that they are now forecasting two rate hikes in 2023, which represents a subtle shift away from their ultra-loose monetary policy.

As I prepared to write today’s letter the U2 lyric, which I used as the title for this paper, kept running through my head. Sometimes writing a weekly market note can be challenging, especially when not much is going on in the markets. Sure, yesterday we got the monthly Consumer Price Index report which showed a scorching 5% year over year increase in inflation, a number we haven’t seen since 2007.

While the general market seemed dressed in its summer cruise wear, the amped-up meme momentum stocks continued into overdrive. Joining AMC this week at the glutton’s banquet were some high flying names from month’s past. Blackberry was up 40%. Nikola Motors was up 12.6%, Workhorse was up 38.4%. Each of these have been previously loved stocks that had recently fallen out of favor, but now, for whatever reason, the love affair has been rekindled.

It was another lather, rinse, and repeat week in the markets. The S&P 500 finished up 1.37%, 10-year US Treasury notes rose 0.3%, gold gained 1.17%, and the Nasdaq 100 added 2.23%. Notably, Bitcoin has continued to struggle, falling midweek to $33,000, or roughly 50% below its all time high. Similarly, Dogecoin is currently 57% below its all time high.

One of the most common questions that I get asked is, “Where do you think the stock market is going?” While I understand it is human nature’s desperate need for answers and clarity during periods of heightened uncertainty, just look at the geo-politics in the 1930’s, but unfortunately answers are difficult to provide.