Will Powell go Deep?
The major refining area stretching from Beamont, TX to Lake Charles, LA was hammered by Laura early on Thursday. The storm made landfall with higher windspeeds than either Katrina or Harvey – the two most-costly storms in US history. It's far too early to evaluate this storm and it's hitting a less-populated area but it went through the heart of US offshore production and at least 10 refineries are in its path.
The day ahead though belongs to Powell. Expect him to recommit to doing everything in the Fed's power to cushion the pandemic blow. Anything less than that would sour the market. At the same time, you have to wonder if the Fed is considering the potential consequences of what looks to be a massive leveraging in the financial system. Retail margin costs are as low as 0.75% and those rates almost beg mom-and-pop investors to lever up.
The topic of Powell's speech at 1310 GMT is the Fed's framework review and the big question is whether he will support a shift to average inflation targeting; meaning prices would be allowed to run hotter than usual after periods of undershooting. That would add more fuel to the risk fire and it could reinvigorate precious metals.The larger risks may be on the downside though if he offers less than expected. The latest equity market moves show signs of classic euphoria with (for example) Netflix jumping nearly 10% Wednesday on no news.
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