Macro Dashes: SPY Should Double Bottom Or Worse On Energy Inflation

Sep. 08, 2022 2:48 PM ETSPDR S&P 500 Trust ETF (SPY)VOO59 Comments

Summary

  • Energy is the primary cause of inflation, which limits the impact of central banks' attempts to lower inflation.
  • The only way central bank tightening can slow inflation is to kill aggregate demand, that is, cause a recession - especially in Europe.
  • Europe already seems headed into recession and that is likely to damage the global economy and markets.
  • Equity markets will feel the pain of tighter monetary conditions soon as liquidity is no longer cheap and easy to get.
  • Q4 earnings outlooks promise to be less favorable than recent quarters and that will lead to downward revisions.
  • This idea was discussed in more depth with members of my private investing community, Margin of Safety Investing. Learn More »

Federal Reserve Chair Jerome Powell Holds News Conference Following Federal Open Market Committee Meeting

Drew Angerer

Federal Reserve Chairman Jerome Powell has a tough job to begin with, but when monetary conditions aren't the primary driver of inflation, it's even tougher.

In evaluating inflation and central bank responses, we need to understand the primary cause

Where Inflation Is From

Where Inflation Is From (BLS)

Energy impact on inflation

Energy impact on inflation (BLS via Trading Economics)

Powell hawkish

Powell hawkish (Bloomberg)

Tighter Fed impact

Tighter Fed impact (Goldman Sachs)

Europe natural gas prices

Europe natural gas prices (U.S. Chamber)

ECB tightens

ECB tightens (New York Times)

German industrial slowdown

German industrial slowdown (Financial Times)

Crab Man tracking European energy bills

Crab Man tracking European energy bills (Twitter @crabcrawler1)

Soaring European Energy Prices

Soaring European Energy Prices (BBC)

European Risk

European Risk (Bloomberg)

Citi's Wilson on earnings

Citi's Wilson on earnings (Investing.com)

Citigroup on earnings

Citigroup on earnings (Bloomberg)

Yardeni on earnings

Yardeni on earnings (Yardeni Research)

Morgan Stanley on earnings

Morgan Stanley on earnings (Investing.com)

SPY Elliott Wave

SPY Elliott Wave (Scott "Shooter" Henderson)

SPY Weekly Chart

SPY Weekly Chart (Kirk Spano)

SPY Monthly Chart

SPY Monthly Chart (Kirk Spano)

RSI Monthly Charts

RSI Monthly Charts (Kirk Spano)

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This article was written by

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