The Fed Just Hit the Panic Button.

Inflationary Warnings from the Fed [0:00]

• Federal Reserve Governor Goolsby indicated that further interest rate hikes are likely due to persistent inflation, even if the conflict in the Middle East is resolved.
• The need to resolve the war was cited as a minimum requirement, but even then, oil and gas prices might not immediately decrease due to the time needed to bring new capacity online.

  "we need at the very least to resolve the war."

Economic Data Points to Rising Inflation [1:15]

• Recent CPI and PPI numbers show a significant increase in inflation, with oil prices climbing back to $96 per barrel from around $89.90.
• Bitcoin's price dropped below $70,000 as markets reacted to the negative economic indicators and the perceived unlikelihood of a swift deal with Iran.

  "And when you look at the numbers, CPI and the PPI numbers we just got, they are."

Shifting Stance on Iran Deal [3:05]

• Reports suggest Donald Trump has indicated that a deal with Iran is no longer a priority, stating that the opportunity for such a deal has passed and that the focus should be on existing sanctions and financial leverage.
• This contradicts previous suggestions of being close to a deal and signals a potential shift in U.S. foreign policy regarding Iran, especially with the election cycle concluded.

  "The election's over. Any hope of doing a deal before the election is obviously dead."

Escalating Iran-U.S. Tensions [5:37]

• Iran claims to have attacked a U.S. early warning system in Bahrain in response to a U.S. strike, while U.S. CENTCOM denies these claims and states they intercepted an Iranian drone strike.
• The IAEA has expressed concern about potential proliferation issues at Iran's Esfahan facility, noting a lack of access and uncertainty about its nuclear material status.

  "inspectors still do not know the plant’s precise location, whether it holds nuclear material or its status under international monitoring rules."

Persistent Inflation and Fed's Response [8:53]

• Both CPI and PPI data came in hotter than expected, with core services, particularly freight transportation, contributing significantly to the PPI increase.
• Federal Reserve officials, including Goolsby, are signaling a readiness to implement further rate hikes to combat inflation, with Goolsby stating they are not on track to reach the 2% target and may need to act aggressively.

  "My feeling is we are not on track. We have to deal with that."

Stalled Trade Negotiations and Export Controls [12:28]

• Treasury Secretary Bessett expressed disappointment with the lack of progress on tariff deals with Mexico and Canada, noting that agreements expected within 90 days are still pending over a year later.
• Bessett also alluded to disagreements within the administration regarding export controls, suggesting that Howard Lutnick may have allowed chip exports to proceed despite Treasury's preference for controls.

  "The Treasury has always been in favor of export controls. The Commerce Department wasn't."