The Fed is about to become more aggressive as Powell changes his mind after inflation data changes.

You have to hand it to Fed Chairman Jerome Powell: He’s not afraid to change his mind, either.

The Fed is now signalling (via the Wall Street Journal and CNBC) that rates will be raised by three-quarters of a point on Wednesday. So much for the Federal Reserve blackout.

What has changed? The facts had shifted. The inflation data is not working in their favour.

Is this adaptability indicative of resilience (strength) or fragility (weakness)?

If Keynes is correct, it is unquestionably a sign of resilience. Others will argue that Powell is being manipulated by the market. It remains to be seen whether the market gives the Fed credit for changing its mind so late in the game.

The S&P 500 closing in bear market territory (down 20%) was the big news on Monday, but it was a latecomer. With the exception of the Dow Industrials, most other major indices have been members for a long time:

Major Indicators ( percent from 52-week high)

Dow Transports is up 29%.

Nasdaq 100 three-thirds

S&P Small Cap 23 percent

22 percent for the S&P Mid Cap

72 percent ARK Innovation Fund

At the very least, fund managers are aware that earnings are declining. Bank of America conducts a monthly survey of global fund managers. These sentiment indicators are most useful when sentiment is extreme, and we have some pretty extreme readings here.

The June survey found widespread pessimism: 72 percent believe global profits will fall, the lowest reading since September 2008, at the height of the Great Financial Crisis.

The most popular description of the next 12 months' economic backdrop is "stagflation" (83 percent, up from 77 percent), the highest level since June 2008.

Investors are long cash, commodities, and healthcare, and very short equities, technology, the Eurozone, and emerging markets.

Another useful question to consider is "most crowded trades," which is usually a good indicator when a trend has peaked. Long oil/commodities (38 percent), which replaced "Long tech" months ago, Long dollar (19 percent), and Short Treasuries are the most crowded trades (13 percent ).

Look at the "biggest risk to markets" category to see how much inflation concerns have muddled the outlook for managers. The following factors pose the greatest risk to markets: hawkish central banks (32%), global recession (25%), inflation (22%), and a systemic credit event (9 percent ).

Russia/Ukraine, which was the top risk to markets not long ago, is now a distant fifth. Only 6% thought it was the greatest risk.