I Feel Sorry for Your Thesis

A clip of Jerome Powell giving testimony on Capitol Hill has been making the rounds on Twitter of late.

In the clip, he responds to a, "why does The Fed have a 2% inflation target, anyway?" question unimpressively, to say the least. If nothing else, it drives home the point about just how clueless these Central Bankers truly are and how incredible it has been to see markets give them the benefit of the doubt and tons of deference at virtually every single juncture since 2008.

But, then again, that is what a barrage of liquidity will do...until inflation comes along and begins to slowly but surely sap the system of said liquidity. 

With the PPI coming in slightly hot this morning to offset yesterday morning's slightly cool headline CPI print, the thesis that having full faith in The Fed to conquer inflation is absurd and, not to mention, historically a bad bet. 

While the "flows" traders will wait until after options exportation next week, I see semiconductors getting rejected from their 50-day moving average on the SMH ETF as NVDA finally slips. 

In addition, note Cathie Wood's ARKK completely ignoring its own 50-day m.a. (dark blue line) on the daily chart, below, as buyers suddenly went on a summer strike. 

Gasoline futures and rates are on the move higher today, both of which will continue to negatively impact the consumer just when it seemed like nothing ever would derail American spending. 

Overall, my clear and unequivocal bet is that the era of having full faith in The Fed is coming to an end. The Fed's lucky streak of constantly stepping in to print money into any market correction, which started with Bernanke, then Yellen, and now Powell, has finally met its match with entrenched inflation and a business cycle which became long in the tooth.

Expect a much different opinion of The Fed to be widely held within the next three-to-six months.