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The CML Close - Stocks drop, Powell testified, oil prices dropped on tax holiday, the Fed might not be able to control inflation - 06-22-2022




Date Published:



Markets
Stocks dropped into the close after showing green for most of the day. Fed Chair Powell testified to Congress. Oil prices dropped on a possible federal gas tax holiday.

Chairman Powell noted that some of the inflationary pressures are out of the Fed's control.
Supply constraints, exacerbated by Russia’s war in Ukraine this year, account for about half of the surge in US inflation, according to new research from the Federal Reserve Bank of San Francisco.

SPX 3,759.89 -4.90 (-0.13%)
NASD 11,053.08 -16.22 (-0.15%)
DJIA 30,483.13 -47.12 (-0.15%)
R2K 1,688.17 -5.86 (-0.35%)
VIX 29.20 -0.99 (-3.28%)
Oil 105.38 -4.14 (-3.78%)


• US rents surged by another record according to Bloomberg.

• Daimler Truck's CEO told CNBC on Wednesday that shortages of parts are slowing the production of thousands of its vehicles.

• Asia’s shortage of empty containers may worsen due to the Rotterdam Jam.

• Maybe the Fed can't do much about inflation.

Headlines of the Day
There Really Is Such a Thing as a Powell Boost.
Investors are back to worrying that the Federal Reserve's aggressive plans to tighten monetary policy could lead the U.S. into a recession. Fed Chairman Jerome Powell appeared before Congress on Wednesday.

Oil Prices Decline as Biden Moves to Suspend Gas Tax
President Biden is calling on lawmakers to lift the federal tax on gasoline for three months and is asking states to take similar measures.

The World’s Bubbliest Housing Markets Are Flashing Warning Signs
Global monetary tightening is squeezing homebuyers, adding risks that a slowdown could ripple through the economy.

Waiting for the IPO Market to Reopen
More than 300 companies are waiting in the wings for the IPO market to reopen so they can go public. But when that will happen is anyone’s guess.

Supply Issues Account for Half of Surge in US Inflation, Study Says
Supply constraints, exacerbated by Russia’s war in Ukraine this year, account for about half of the surge in US inflation, with demand currently making up a third of the increase, according to new research from the Federal Reserve Bank of San Francisco.

Economic Data Results for 6-22-2022
MBA Mortgage Applications
Mortgage applications in the US increased 4.2% in the week ended June 17th, following a 6.6% rise in the previous period driven by a 7.9% rise in conventional applications.

United States MBA Mortgage Refinance Index
The MBA mortgage refinince index in the US fell 3.1% to 712.7 points in the week ended June 17th and was 77% lower than the same week one year ago.

Fed Chair Powell Testimony
In testimony to the Senate banking committee on Wednesday, Fed Chair Powell acknowledged that steep interest rate hikes may cause a recession in the US, and avoiding it mostly depends on the factors beyond Fed control.

“The other risk, though, is that we would not manage to restore price stability and that we would allow this high inflation to get entrenched in the economy,” Powell added. “We can’t fail on that task. We have to get back to 2% inflation.”

In regards to recent rate hikes Chair also said "We anticipate that ongoing rate increases will be appropriate", "Inflation has obviously surprised to the upside over the past year, and further surprises could be in store. We, therefore, will need to be nimble in responding to incoming data and the evolving outlook."

Economic Data Due Tomorrow on 6-23-2022
Initial Jobless Claims

S&P Global Manufacturing PMI Flash

S&P Global Services PMI Flash

Kansas Fed Manufacturing Index



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