Fed Chair Jerome Powell was the second piece of the puzzle for the bulls. The first piece was trying to convince everyone that an earnings apocalypse was unlikely. That is becoming a bit more believable as second quarter earnings season progresses. Third and fourth quarter earnings estimates are slightly lower than the start of this quarter, but still showing healthy gains are expected in the second half. For Powell, the big question traders kept asking was, "What version of Jay Powell will show up for the press conference?" Would the fire-breathing "I'm going to kill inflation and I don't care if a recession ensures" Jay Powell show up, or would the "I think we can kill inflation and avoid a recession" Jay Powell materialize? Within minutes of the press conference starting Wednesday, everyone realized it was the latter. The bulls wanted to hear him say that we could avoid a serious recession, and he said we could. He didn't even think we were in a recession now. Bulls wanted some signs that the Fed might be able to stop its rate hike campaign by the end of the year. Powell implied that the fed funds rate could stand at 3.25% to 3.5% by then, inline with what the market believes. He did, however, reiterate that there were expectations of still more rate hikes in 2023, but that is far off. We can avoid a recession. Rate hikes in line with expectations. And what about those pesky levels of inflation? "We are not trying to have a recession, and we don't think we have to ... there's a path for us to bring inflation down while sustaining a strong labor market." No one seemed to be bothered that Powell insisted we would be "data dependent." Sure, the Fed could hike another 75 basis points in September, but there's two jobs reports and a CPI report between now and then. Bulls are hanging their hat on hopes job growth will slow down and inflation will begin to moderate. The "at worst it's a mild recession" narrative seems to be gaining new adherents. "That's the best possible outcome for the markets — a mild recession," fixed income guru Jeff Gundlach said on CNBC late Wednesday, praising Powell's performance. There's even talk of a "soft landing." Former Goldman Sachs president Gary Cohn, when asked by our Sarah Eisen if a soft landing was achievable, said "We don't know what will happen, but it feels like the impact of higher rates are in the system." The result: a powerful combination of earnings holding up and Powell's comments are pushing the S & P 500 out of a six-week trading range. The leadership has been Technology in general. In fact, the market switched to a preference for growth after prices bottomed on June 16. Since the June 16th Market Bottom ARK Innovation Fund: +25% Consumer Discretionary: +14% Tech: +13% Health Care: +10% REITs: +9.5% Utilities: +8% Communication Services: +7% Consumer Staples: +7% Industrials: +7% Financials: +7% Materials: +1% Energy: -4% Bottom line: There's a good chance of another summer swoon in August-September, but so far the bulls have correctly calculated that earnings would decline but not collapse (and certainly not go negative), that much of the damage has already been done and that the Fed would likely stay within the range of rate hikes the market had come to expect.