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Market worry mostly focused on energy infrastructure, says Payne Capital's Garcia
CNBC Televisionยท2025-06-23 20:45

Market Concerns & Inflation - Markets were initially concerned about the Middle East situation, particularly potential Strait of Hormuz closure or energy infrastructure damage, which could significantly increase inflation [1] - Oil prices potentially rising above $100 per barrel due to Strait closure could push inflation back above 5% and gas prices above $5 per gallon [2] - Easing Middle East tensions are causing oil prices to decline, suggesting a more positive inflation outlook and potentially allowing the Federal Reserve to lower interest rates [2][8] - Lower energy prices could offset some inflationary impact from tariffs [2] - Markets are currently more relieved by developments in Iran than concerned about upcoming tariffs [3] Federal Reserve & Tariffs - Federal Reserve Chair Powell is maintaining a "wait and see" approach regarding tariffs [4] - Recent economic data, including weaker economic surprise indexes, decelerating job growth, and friendly inflation prints, may be pushing the Federal Reserve towards easier monetary policy and another rate cut [5] - The final tariff terms, implementation, and pass-through to inflation are still unknown [6] - The debate now includes more voices on the dovish side, which is net bullish for investors [7] Market Sentiment - Market recovery is driven by optimism regarding no further escalation or potential resolution in the Middle East [8] - Lower energy prices are bullish for the markets [8] - Market pricing is heavily influenced by day-to-day news [9]