Here's the Punch Line

Stocks are slipping a bit further down this afternoon after a session full of whacky swings up until this point, as we await the FOMC later this week. 

Despite the giveback in equities, however, and in support of my morning blog post where I argued The Fed is likely continue down its fast-hike cycle in a hawkish manner, here's the punch line: Consider the UGA ETF daily chart, updated below. 

For reference, the UGA seeks to track the daily changes in percentage terms of the spot price of gasoline. As you can see, UGA remains firm and is not giving relief to those looking for imminent deflationary forces to undermine the inflation we have seen at the gas pump. 

Overall, the supply-oriented dynamics of this inflation could undermine the effects of demand destruction, which means inflation will remain stickier, hotter, and more of a nuisance than many expect as The Fed contends with that part of their mandate for the foreseeable future. 

Also note we are headed into the belly of the beast of summer driving season in the next few months, which provides an organic boost to demand, anyway, especially given the cabin fever many experienced during the pandemic. Even if money is tight for the consumer, I imagine plenty of modest summer road trips will be arranged. 

Going forward, even if not trading UGA, I am going to continue to key off it as a gauge of just how sticky inflation at the pump truly is, as it represents a valuable insight into the struggles of the consumer across the country.