A Hawkish Fed Eyes Inflation (and Not Much Else)

Real Vision: Finance & Investing

Real Vision

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🗓️ 24 March 2022

⏱️ 35 minutes

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Summary

In another sign energy is now a second front in the Eastern European war, President Vladimir Putin has said he wants “unfriendly countries” to pay for Russian oil and gas in rubles. Putin’s move follows reports that European Union nations are considering joining the U.S. boycott of Russian oil and in the aftermath of a weekend attack on Saudi production facilities. Brent crude, the European benchmark, has surged again, rising nearly 5% Wednesday to $121. Energy costs will surely have the attention of an inflation-obsessed Federal Reserve. Cleveland Fed President Loretta Meester said she supports front-loading rate hikes, while San Francisco Fed President Mary Daly said she sees room for a 50-basis-point hike at the next Federal Open Market Committee meeting in May. That’s despite the fact that market rates are already negatively impacting the housing market, with new home sales down for a second straight month in February and mortgage refinance applications down 14% week over week. Darius Dale, founder and CEO of 42 Macro, joins Maggie Lake to talk about energy, inflation, and the Fed. Want to submit questions? Drop them right here on the Exchange: https://rvtv.io/36C4JE6 Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:00.0	Hello, and welcome to the Real Vision Daily briefing. It is Wednesday, March 23rd, 2022.
0:10.2	I'm Maggie Lake here with Darius, Dale founder of 42 macro. Hi, Darius. Hey, Maggie,
0:15.2	what's up? It's going to see you. Yeah, it's good to see you too. Um, and, you know,
0:18.9	we were just talking right before we came on air. Gosh, she's so much going on every
0:22.5	day with these markets. We saw big moves again today, primarily in oil, right? We had
0:27.5	bigger than expected drop in US oil inventories, talking more sanctions, Russia throttling a pipeline,
0:33.2	all combining the news about pricing and rubles, all combining, uh, to send oil higher WTI back
0:39.3	to 114 Brent to 121. Um, we had the bond route, continuing Fed officials speaking today,
0:46.8	multiple ones, sangling. Hey, we're comfortable with 50 basis points, everything's on the table.
0:51.8	Um, that US 10 year briefly went above 2.4. It's amazing how quickly this is moving for people
0:57.6	don't always watch this market. But it does, it does look like it's coming down a little bit here,
1:02.3	backing off that level as we go into the close. And of course, US equities getting wrapped up in
1:06.6	all of this down across the board here as we close the session. Um, what are you watching? I mean,
1:11.9	what's, what's top of mind for you since everything's moving? Yeah, no, so number one, it's this
1:17.2	move in crude oil. Um, so I think we're up another route right around 5% day over day. I think
1:22.4	we're 20, up 20% week over week. That's a massive move. To me, I think the, um, that sort of geopolitical
1:28.4	tensions with respect to the Russia Ukraine saga, um, are heating up a little bit at the margins.
1:33.7	Today, I thought there was an enormous, um, you know, kind of, you know, from a longer term,
1:37.6	strategic perspective. I thought there was an enormous headline that really needs to be unpacked.
1:42.6	Putin effectively told gas prom, which surprised, uh, and a considerable amount of Russia,
1:46.8	of you have, you have, of gas to your, uh, your continental Europe. Yeah, I think they're
1:51.1	roughly around, not maybe gas prom, Russia somewhere around 30% of Europe's gas or 40% of Europe's gas.
	...

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