Let's get to the big story.
Breakdown today is that day, and Americans eager for lower borrowing costs may have a long way ahead of them.
The escalating war in Iran is severely complicating the picture for the central bank ahead of its rate decision.
Now the Fed's preferred inflation gauge, DPC index, already crept higher in January before the latest energy stock even hit.
Now oil seeing extreme volatility due to concerns.
Over the Strait of Hormuz and all of this comes at a time when the labor market is flashing yellow.
Well joining me ahead of the Fed announcement today is Matt Cheslock, an Equity Trader at Virtu Financial.
Matt, good morning.
Thank you so much for joining me.
I don't know what's good about it.
I know absolutely we are looking at oil prices elevated and there's still a lot of uncertainty about how this conflict in the Middle East. unfold in the upcoming weeks.
So what do you make of what we're seeing in terms of market reaction ahead of the Fed?
Well, I mean, it's definitely headline risk and we see that today, you know, the futures were flat.
PC comes out, market comes in.
Futures are down, you know, almost 30, 40 points now.
That's how quick it happens.
So these headlines are just going to continue to drive markets, continue to drive volatility.
And as an investor you just have to be prepared for it.
It's not just one particular sector like we had seen previously where maybe one software would roll over, something else would take its place as far as investors favor.
That's not happening anymore.
We're seeing softness or ambivalence in the rest of the sectors while one sector particularly moves.
So while oil moves higher, the rest of the market is not seeing any kind of rotation.
Maybe into it so we're not seeing any bounce.
Yesterday was kind of a relief bounce but probably nothing more than that and you just mentioned the producer prices which were released this morning and that was data for the previous month even before the conflict began so the Federal Reserve has a lot to balance given the economic conditions.
So what are your expectations.
As we head into this afternoon, well, we've seen some employment issues, you know, going on.
Some major firms have announced layoffs and things like that, so that's not helpful for what the Fed's looking at.
We talk about oil, obviously up, you know, 50%.
You know, is that baked in?
How much is baked in.
To the inflation side of this, so I would expect the number to be even higher in March and then we have, you know, a Fed chair who may only have one more meeting after this.
So what do we take out of his speech, you know how much is he going to have.
How much is his actions and talk way into what he's actually saying or is it the whole committee as a whole so a lot of this is to be undecided again watch the markets again as as Fed chair talks at 2:30 today we're going to see gyrations with the market on every word that he says and one thing I do want to ask you is of course we will be paying attention to power later this afternoon, but we are also looking at the average price of a gallon of regular gas.
Gasoline here in the US, given elevated oil prices and as of yesterday we are looking at $3.84 and that is the average.
So Americans have a lot to contend with right now.
But when it comes to market reaction you mentioned sector and what we're seeing in energy versus the laggard say financial.
So what is actually happening below the surface you know Main Street is going to have a lot to take on here you know so if you're starting to pay 380 a gallon for gas, you know how much is.
Going to be able to invest in the market.
They've been a huge driver in this market, so some of that disposable money that we may see that may be funneled into the market may be put into play just to drive your car, just to pay for food.
You know, we've seen prices of food go up here a little bit.
This is certainly something this administration does not want over the first year, you know, we saw gas prices come down, so to see them tick up a little bit is obviously not where we want.
Especially as we get into the bigger driving season and there's more demand for gas, does it spike even higher?
So I think as a consumer, as Main Street, you know, we want the trait open as fast as we can.
We want oil flowing, obviously, you know, but you know I don't know if that's going to happen overnight.
Nothing in the Middle East seems to happen that way and we'll continue to monitor what develops in the Middle East, but when it comes to what's happening in the market.
It's one sector we've been paying attention to is tech and artificial intelligence of course and in video had their GTC event is still ongoing and we're paying attention to the announcements coming out of that but what did you make of that and why are we not seeing much movement when it comes to the stock price here.
It's amazing.
I mean what they've released all their news headlines all seemingly so positive and we're not seeing that reaction to it so.
You know, right now I think people are Any buyer that comes in is being met with someone that may be unwinding a position that's been so successful for them.
Maybe they're waiting for a retracement to buy back in, but the news has been outstanding.
You would think that the market will be rocketing higher.
You know, we do have Micron coming out and maybe that will help.
We'll have a combination of two like stocks.
Moving in the same direction, so maybe that's what the market is waiting for.
They want just more clarity and not just one particular stock that's dominating the headlines.
And finally before I let you go, when it comes to the outlook for the rest of the year, we are only in Q1, which is hard to believe given all the volatility and everything that has happened in terms of politics.
Politics and policy here, but we do have to keep in mind that it is midterm election year and we have a lot to contend with looking forward so what is your big picture scenario you know you just wish you know the political side would just firm up, you know, I mean all all of the the partisan politics that's taking place right now, both sides fighting to gain some kind of toehold going into midterms.
So you know if we get a reduction in the gas prices and the economy seems to be on firm footing.
Other than that, you know, earnings have been pretty good, um, but that doesn't benefit one particular side, so you know this fighting is going to occur probably through summer.
I just can't imagine letting it up um but as someone who's getting ready to fly next week, you know, we're hoping that you know some of the stuff can go on in Congress where we can get these airports open and get mainstream America feeling good again, and that's, I think.
What we need to look forward to, I can't forecast what's going to go on in the 3rd and 4th quarter because there's so much out there, but certainly we're looking for baby steps right now, and I think that would be comforting to most investors.
Well, Matt, always great having you here.
Thank you so much for joining me and thank you so much for sharing your insights.
All righty, have a good day.
