Inflation is a mixed bag

an illustration of the wall street stock bull market

Inflation is a mixed bag of statistical noise. Today I want to highlight an interesting divergence between two key energy markets.

The chart below shows to collapse in oil prices today after the FED announced it was starting to taper QE by 20 billion per month. To be sure, prices are pretty lofty at these levels so a pull back is warranted. But, is this a change in the narrative driving the oil market? Is this the pin in the inflation bubble?

us oil market price chart — **A collapse in oil prices after the FED announces QE tapering**

For now, I believe the bulls still have the upper hand. However, I base this opinion one market which is arguably propping up this theory to a large extent as the XLE held a series of lows today, even in the face of tremendous selling pressure on oil itself. This is bullish, but tomorrows reaction will be more telling, IMO.

xle energy select sector price chart — Energy stocks did not follow oil lower. An anomaly? Maybe

Conclusion

In the end, equities are digesting today’s big Fed announcement. Often times around big events like this participants need to step back and reevaluate positioning into year end. For sure, today’s announcement was expected but we still don’t know if Powell will be re-nominated. More fuel for the fire.

This debate around whether inflation is transitory continues to rage. Stay tuned.

Interested in Bitcoin or Ethereum, checkout this post.

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