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How Energy Investors Should Read The Fed’s Latest Notes

As somebody whose start in markets came in interbank foreign exchange, I am used to a degree of obsession with central banks. Back when I started in that market, which was longer ago than I care to admit, central banks still believed that they controlled the fate of their own currencies. They seemed to take delight at that time in surprising us all, whether that be with interest rate changes or direct intervention, and we all spent an inordinate amount of time parsing everything they said and trying to predict what they would do. That said, though, I have never seen global markets quite as obsessed with one central bank as they are now with the Fed.

Every market, from stocks to bonds to commodities to crypto, seems to be reacting to things based on how they might influence the Fed's decisions, and every trader is giving a massive amount of weight to the words of a man who told us that inflation was "transient", then "sticky", and whose view of the situation seems to change every time he opens his mouth. That is not a criticism of Jay Powell, no matter how much it may read as one. He has, on each occasion, called it as he saw it, which is an admirable thing. However, the fact is that economic conditions change. I would rather have someone in charge who understands that than someone who sticks to an outdated view, but to base long-term trading and investing decisions on how he currently views things makes very little sense.

Still, that is where we are, so even those…

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