It’s a huge week for getting sight of many threats and opportunities to our wealth, jobs, profits, stock prices and our super. Companies on the stock market start reporting, the RBA has its monthly meeting on interest rates on Tuesday (when we could hear about future rate rises) and we see important economic data on covering retail, car sales, trade and building approvals.

Did I say it was a huge week?

And it comes after stocks were smashed by 4.6% until a big rally on Friday gave us back 2.2%. But futures still predict a negative start to today’s trading in shares.

For professional players and amateur economy watchers, here’s the nagging question: is all this bad market news a prelude to something really scary? History says it could be but I’m betting it’s not. However, it does rest on a number of matters no one can be 100% certain about.

The old Wall Street stagers say that “stocks climb a wall of worry” and that’s what’s probably happening right now. There’s also a ‘little’ concern that’s worrying European stock markets, linked to the Ukraine-Russia political situation, with Vladimir Putin making chess-like moves on the border between the two countries!

On the plus side, our stock market rebounded 2.2% on Friday and US share markets were firmer on Friday, with CommSec’s Craig James saying they were "the best gains so far in 2022. The S&P 500 index rose by 2.4% and the Nasdaq index gained 418 points or 3.1%. Over the week the Dow rose by 1.3%, the S&P 500 added 0.8% and the Nasdaq was flat”.

However, local futures say our stock market will open 0.2% down today. And while interest rate speculation remains bordering on the crazy, I can’t see stock markets getting comfortable any time soon.

Right now, chief economists at Westpac, CBA and AMP Capital all see our first interest rate rise in August and some think the cash rate could be 1% by December! Others think rates will rise 1% over the year that follows the first rate rise.

Meanwhile in the US, rate rise talk has become so panicky that instead of three or four rate rises being predicted (which was the previous expectation), recent high inflation numbers have some economists expecting eight rises!

No wonder stocks have been plunging in the US since January. And over the weekend The Financial Times was talking about “supersized rate rises”, which was code for potential 0.5% rises in official cash rates! If that’s true, it wouldn’t be easily digested by stock markets.

Of course, all this is market and media speculation about what will happen to economic data such as inflation and how central banks respond. Right now, the worst-case scenarios, and a view that central banks such as the Fed and the RBA will act like dummies and raise too quickly, prevail. This explains why stocks have been sliding.

I don’t subscribe to that view. I also think the critical issue could be underestimated — the dissipation of the big O — Omicron.

If it becomes less of an issue, say by March, then the economy will start to rebound making interest rate rises a valid policy option. However, less Omicron means over 2022 the supply chain problems could become less inflationary so central banks could afford to be less aggressive with rate rises.

Right now, the markets are taking the worst-case scenario. But if that proves to be a bad guess and things turn out as I speculate (i.e. less Omicron, lower inflation and good but not excessive economic growth), then the ‘smarties’ or influencers in the stock market will start buying again.

So what lies ahead this week?

Try these notable revelations:

1. Tomorrow the RBA reveals its current thinking on inflation, interest rates and the economy. We see leading indicators for the economy and retail sales figures for December.

2. Wednesday, the RBA boss Dr Phil Lowe has a speech.

3. Thursday we see car sales for January.

4. Friday brings our latest trade performance and building approvals.

Meanwhile, 10 companies start the reporting season. But the really big businesses that will tell a tale of what the economy is doing with Omicron’s impact and how’s it has been affecting profits, start reporting next week.

The outlook statements of these companies will either hit or help stock prices, while the speculation about inflation and interest rates is likely to feed into negativity and volatility until some good news happens.

Like what? Try a lesser Omicron threat and maybe Vladimir Putin stops spooking the Ukrainians and the stock market!

Short term, I expect more worrying days for stocks but I expect sometime this year sentiment will turn and stocks will surge again. I’ll do my best to pick the turning point because our wealth-building, jobs, profits, stock prices and super depend on it turning, but it isn’t easy.