The stock market rally looks a bit squirrely

This is Bloomberg Opinion Today, a bone-dry bonanza of Bloomberg Opinion’s opinions. Sign up here. Today’s Agenda What came down could conti [Bloomberg]( Follow Us [Get the newsletter]( This is Bloomberg Opinion Today, a bone-dry bonanza of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - What came down could [continue to go up](. Or not. - A [winter of discontent]( is brewing in the energy markets. - A £50 billion [cure for heartburn](. - The world’s gloomiest central bank is taking [a $100 billion leap into the unknown](. Follow the (Smart) Money David Kelly, the chief global strategist at JPMorgan Asset Management, reckons the equity market could rally to record highs in the next few years as softer inflation and a slowing economy restrain Federal Reserve interest-rate hikes. With the benchmark S&P 500 index reaching a three-month high this week, Robert Burgess [has a chart](for those investors skeptical that the gains can be maintained. It’s the Smart Money Flow Index: The index, based on the Dow Jones Industrial Average, compares the first 30 minutes of a trading session — when prices are driven by emotion, news flow, market orders and short covering — with the final hour of action, when the smart money in the shape of institutional investors dominates. “The latest trading patterns should provide some confidence that the nasty selloff in the first half of the year, which pushed stocks into a bear market, may be over,” Robert argues. But John Authers is concerned by the bearish market reaction to Thursday’s benign producer price numbers, which came a day after figures showing consumer prices rose less than expected in July. If the data suggests inflation has been tamed, in turn prompting less monetary tightening from the Fed, then bond yields should have dropped and the S&P should have climbed above its 50% retracement since January. [Neither happened.]( “There will be plenty more opportunities to test resistance levels, and the market may not balk at the next one,” John writes. “But it’s very interesting that a raft of good news on the economy was treated as an opportunity to sell both bonds and stocks while they were still at good prices.” Winter Is Coming Europe is melting in a heat wave. The UK Environment Agency has officially declared a drought across much of the country, after the driest July since 1935. On Friday, water levels in the Rhine River dropped so low that barges servicing the industrial German heartland, transporting cargoes ranging from diesel to steel to chemicals, can’t navigate the waterway. So what are Germans looking up on Google? The warmer spring and summer months are typically when the US and Europe rebuild their stocks of heating oil and diesel, in preparation for colder times ahead. US inventories typically climb by 20 million barrels from mid-April to mid-September; this year, the increase is just 2 million barrels. The situation in Europe is similar. On the US East Coast, inventories are at their lowest since at least 1992. In Europe, reliance on Russian diesel will have to end early next year as sanctions kick in. “The industry has all but run out of time to rebuild the buffer,” writes Javier Blas in [Elements](, Bloomberg’s new energy and commodities newsletter (sign up for it [here](). By February, “the heating oil market may feel as hot as the weather does now,” Javier warns. Bonus Mercury Rising Reading: Soaring temperatures have been great for British pubs, shops and staycations. [Soak it up]( before a very long winter kicks in. — Andrea Felsted More Climate Crisis Analysis: Why energy-rich Texas should [love the US climate bill](. — Liam Denning A Bad Case of Non-Seller’s Remorse In December, GSK Plc rejected a £50 billion ($61 billion) bid from Unilever Plc for its consumer-healthcare division. The unit, a joint venture between majority owner GSK and Pfizer Inc., was instead spun off in July as Haleon Plc. This week, the prospective multi-billion-dollar cost of settling lawsuits concerning Zantac, a heartburn treatment that was withdrawn in 2019, has wiped billions of pounds off the value of both companies. [GSK will rue not exploring a sale]( of the business, Chris Hughes argues. Haleon’s market capitalization is currently about half of what Unilever offered. Moreover, private equity firms were also sniffing around at the time. “You can never see the future,” Chris concedes. “But that’s why a substantially cash-based offer for all of an asset — as was being dangled — is so attractive versus the option of spinning it off to your own shareholders and keeping a minority stake.” Telltale Charts The Bank of England is [heading into uncharted territory](, planning to reduce its balance sheet while simultaneously raising interest rates even as it forecasts a long recession. It’s far from certain that “the already struggling UK economy can handle the twin headwinds of stimulus withdrawal and higher borrowing costs,” writes Marcus Ashworth. Further Reading The assassination plot against John Bolton should [warn the US of Iran’s depravity]( amid nuclear talks. — Bobby Ghosh Free TV is a rerun that [investors should be watching](. — Martin Peers Singapore’s next big [economic challenge]( is already here. — Dan Moss Modern India’s 75th anniversary of independence is [one to forget](. — Mihir Sharma ICYMI In an eerie twist, volatile weather and heat-induced drought are unearthing glimpses of [lost archaeological treasures and forgotten history](. Russia is defying international pressure to grant [United Nations inspectors immediate access to Europe’s largest nuclear plant](. Apple sees [sustained iPhone sales]( in 2022 even as the market slows. Kickers What [the great mayonnaise inflation mystery]( can tell us about the difficulty of measuring price increases. New York’s parks department tells people not to get hot and bothered about [splooting squrrels]( (which is what this furry creature is doing). Photo by Eric Kayne/Getty Images Worried about the impact of your eating habits on the climate? [Choose chips and onion rings for guilt-free munching](. Source: The Proceedings of the National Academy of Sciences The new Louis Vuitton Paint Can bag is a snip at just £1,980. (h/t Andrea Felsted) Notes: Please send firewood and complaints to Mark Gilbert at magilbert@bloomberg.net. [Sign up here]( and follow us on [Instagram](, [TikTok](, [Twitter]( and [Facebook](. Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. 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