evening wrap, march 18
market vibes
In Washington DC this afternoon, the Chair of the Federal Reserve fielded a question on tenure and he replied “I will remain in this chair until the case before the courts is resolved and I intend to remain on the board in any case going forward.”
In other words (I paraphrase)… “I plan to be a pro-tem “shadow chairman” until the DOJ drops all charges.” S&Ps went into the press conference down 70 and fell another 70 on his statement. With respect to inflation, he said, “We are dealing with an energy shock of some size and duration,” which is Fed-speak for “I’m not cutting rates.”
Fwiw…Nothing about the rally in crude oil is shocking so far, except its brevity above $100/barrel. In this monthly chart of WTI, prices were => $100.00/barrel for 5.5 years of the last 19 years or 26% of the time.
In the day structure, a curious rally in WTI correlated neatly with Powell’s declaration to stay. The substance of the press conference was heavily focused on an oil driven surge in inflation, especially with Powell hinting he expected elevated crude prices for a long time. It seems a short 2 year/long crude pair is becoming a thing.
in the markets
Stocks had a bad day.PPI came in hot without data after the oil spike. Powell’s declaration to stay ad infinitum (pro-tem chair if Warsh is not confirmed) dashed any hopes for a rate cut for “some considerable time.” In my opinion the American people and the Fed would both be better off if Fed Press conferences were not on TV.
