Biden's SPR release has dropped energy inflation (slightly) in the U.S. Food and natural gas/electricity are still spiking. Markets are now rallying above the "Powell Put" on the Fed's denial and confusion.
Yes, I admit that I underestimated the impact that the President Biden's Strategic Petroleum release (SPR) would have on the core Consumer Price Index (CPI) for the American consumer. That the SPR release of 180 million barrels over 180 days = 1 million barrels a day, would indeed tip energy prices slightly down, that being the price at the pump.
Fuel/oil % rates as follows from the bls.gov July 2022 CPI report: (April) 2.7 (March) 16.9 (June) -1.2 (July) -11.0
As you can see the impact that the SPR has had on the July Fuel/oil rates for July 2022, which is very significant in reducing energy inflation in the short tern, although not by much overall, as noted from the bls.gov: "...The energy index rose 32.9 percent over the past 12 months..."
However, as I have noted in this post : (June 29, 2022) "STAGFLATION PRIMER. COPPER PRICE DOWN (SLOWING GLOBAL ECONOMY), NATURAL GAS PRICES UP, WHICH ALWAYS CORRELATES WITH ELECTRICITY USE = INFLATION." The CPI for July in relation to falling energy prices noted that electricity is actually going upward, which would make sense as the electricity and natural gas work in tandem, from bls.gov: "...The index for electricity rose 15.2 percent, the largest 12-month increase since the period ending February 2006. The index for natural gas increased 30.5 percent over the last 12 months..."
Also, food inflation spiked. bls.gov: "...The food at home index rose 13.1 percent over the last 12 months, the largest 12-month increase since the period ending March 1979..."
Is inflation trending down? No. But, very hard to trade this in a bearish manner re: stock markets, as long as the Federal Reserve ala Jerome Powell continue with playing down and playin up inflation/recession denial and confusion. So, the Powell "Put" is now in play, as noted with Chart 1 and Chart 2 above showing the S&P 500 (with the CPI overlaid) the put is sitting above the price support line at 3930 at 3968, when on July the 27th the Fed reignited to the markets with its denial and confusion, which ends up implying an inaction.
With inflation still at four decades high/s and Biden exhausting America's SPR, just to drop the price at the pump down, while natural gas and food prices remain elevated. The Fed interest rates at 2.50% are meaningless as long as equities are still rallying and the U.S. dollar is sunk.
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