Markets Are Biting Their Lips over Global Chaos
And Fed Chair Powell is joining them because suddenly nothing is going right for his soft-landing plans!
Rising Middle-East tensions are driving up the price of crude oil and driving down the price of stocks and value of bonds. Analysts are saying oil could go to $100/bbl if the conflict between Israel and Iran goes any further. If Israel responds to the recent attack by Iran, some think Iran is likely to fight back with the West in a variation of what it has already done via its proxies. In the worst-case scenario for oil, Iran will block the Strait of Hormuz to tanker traffic, using its proxies to do there as they have already done on the other side of the Arabian Peninsula (or doing that directly, themselves, from Iran). That could raise oil to $130/bbl, which would blow the doors off inflation. Societe Generale puts the risk at $140/bbl if the US gets involved. For now, however, the oil market is just biting its lips … like this:
Well, that’s Fed Chair Jerome Powell, but he is biting his, too, as everything turns against his flight plans for a soft landing at the end of his own war … with inflation.
That’s because the Fed pumped so much money into the economy during the Covid lockdown fiasco that he can’t get the surplus money out quickly enough. As noted yesterday, and caught in the news again today, Powell has clearly pushed rate cuts back once again. In fact, Bank of America is now resetting its calendar for the first cut to March of next year (going for a different March than the one most analysts originally thought they would get…
…click on the above link to read the rest of the article…
