$SPY: A Hawkish Warsh Could Trigger a 2–3% Pullback
Kevin Warsh is the richest FED CHAIR with over $100,000,000+ in assets.
The truth is, $SPDR S&P 500 ETF Trust(SPY)$ could easily crash 2-3% due to the Us-Iran war, inflation and oil prices being so high.
Don't miss this, everyone knows the rate will be held the same, so basically priced in at 3.50–3.75%, fifth straight. That's not the trade. The trade is 2:30pm.
Remember, Warsh isn't Powell. He killed forward guidance. He didn't submit a dot in June first chair to sit out the dot plot since 2012. He gutted the statement down to almost nothing. Only his words will move the market now.
Let's be clear, June CPI printed 3.5% headline, 2.6% core. Beautiful numbers. But that was a gift from a ceasefire that no longer exists. Oil's ripped ~30%+ this month, Brent tagged $100, gas is back to $4. Prices are high.
For the record, every banker knows an oil shock is a relative price change, not inflation. The textbook answer is look through it.
And that's where it gets interesting, Warsh can't say that out loud. He's spent two months building his entire identity on "prices are too high" and "no tolerance for persistently elevated inflation." He dropped the maximum employment reference in June. He staked his credibility on 2% back when falling energy was doing the work for him.
Now the war is doing the opposite. So he either sounds tolerant of a supply shock and torches his credibility in week nine, or he sounds hawkish in a Trump-appointed chair's first real test.
My read: hawkish and vague. Refuses to rule out September. That's already 82% priced. I'm betting short-term shake out bleed the market but its another great dip buy opportunity.
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