Mar. 4 at 3:51 PM
-- US avg gasoline price now at
$3.20 vs avg in Feb of
$2.93
Back of napkin:
Gasoline weight in CPI = 2.91%
m/m change = +9.2%
Therefore, gasoline could increase March CPI by +0.27% should gasoline stay at avg of
$3.20 for the month of March
-- Fed Fund Futures probability of a rate cut continue to deteriorate down from 3.6% yesterday to 2.7%
-- Krugman:
$10–
$15/barrel rise typically adds +0.2 to +0.4% to headline inflation/price levels, scaling up to +1% for larger shocks like
$50/barrel. He contrasts this w/ past (eg: 1970s) spirals, noting lower pass-thru today due to anchored expectations & reduced energy weight in CPI
-- A temporary export ban on crude & LNG would hit domestic prices but would spike global prices - irrespective to the geopolitical/diplomatic backlash
2022 Freeport LNG fire/outage (halting 2Bcf/d exports) caused Henry Hub prices to drop -20% to -30%
WTI relative to global Brent: -7% to -20% discount to Brent, recreating pre-2015 export ban dynamics
$USO $LNG $XOM $VG $SHY