If gasoline prices remain where they are or continue to rise, Powell will be just plain wrong about inflation being transitory. This is what to expect if gas prices were to flatline at this level through December. Unless most of the other components of inflation were to nosedive, CPI will remain well above 2% for the remainder of the year.

Persistent enough for you, Mr. Powell?

But it doesn’t matter. At least not yet. Although the (flawed) CPI data is more relevant to almost everybody, the Fed focuses on PCE, which mutes the reported inflation even more than CPI.  March PCE is due out tomorrow, and should continue not to alarm anyone.

In addition, the blowout 3%+ April CPI won’t be reported until May 12. The Fed might roll the dice and leave prices where they are, hoping that they can control the fallout from truly alarming numbers.

Or, we could see some preventative price action in the futures starting as soon as Sunday. The third option, of course, is the good old “miscalculation” of oil/gas prices, resulting in a CPI print that’s not so scary. They’ve done it plenty of times before.

continued for members…As things stand now, it appears as though the Fed believes they can control the fallout from 3%+ CPI and are willing to roll the dice.

Futures are up sharply this morning on Powell’s continuing accommodative outlook and positive earnings reports from AAPL and others – not to mention VIX’s nightly breakdown. It’s worth mentioning that VIX experienced a bullish (bearish for stocks) 10/20 cross this morning.

The current state of affairs for ES…

…and a reminder that DJIA and NKD are still suggesting a selloff here…DJIA by 5% to 32657 or 14% to 29568 and NKD by about 9.3% to 26463.  May 12, when CPI is reported, would work nicely.

Oil and gas continue to conduct ridiculous melt ups – a headfake in my opinion.

Note that CL is back to the bottom of the rising white channel that broke down in Feb 2020, resulting in the big crash.

The other thing worth pointing out is that CL is back in that price range that has been very problematic for the past two years.

This chart shows the peaks and the associated events.

And this one strips out the distracting chart drawings. Note that the SMA200 is almost up the bottom of the price range (should be there by May 12) which also happens to be the .618 Fib retracement – a common fallback position after a reversal at the .886.

This one is perhaps even easier to take in.  Remember, we already had a near tag of the .886 back on Mar 8 (within 89 cents.)  Bottom line: I’m still very bearish.

Note that BTC’s bounce might be running into problems here at the top of the cloud.

UPDATE:  3:50 PM

After turning red for a few minutes, ES is back to its morning highs on a collapse in VIX and a bump in USDJPY and CL/RB.

Note that VIX is still in a bullish 10/20 cross and seems likely to close at or around its SMA10.CL and RB are still threatening higher, but I believe they’re done. DXY has finally reached the bottom of its little white channel again… …on a TL test in EURUSD… …and a backtest by USDJPY of the purple channel top. TNX is only slightly higher on well-founded inflation fears and Biden’s spending plans.Bitcoin’s cloud problems are confirmed by its RSI. It’s perhaps time for the channel to break down and for BTC to start eyeing its SMA200.

GLTA.