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DoubleLine Podcasts

MMM Episode 41: Broad, Sticky Inflation and the Not-So “Strategic” Petroleum Reserve

After reviewing the markets and macro news for the week of Nov. 8-12, Jeff Mayberry and Sam Lau turn to an in-depth discussion of the Strategic Petroleum Reserve (14:48) and proposals to not only draw down the SRP but also to revive a ban, lifted in 2015, on the export of U.S. oil. The MMM hosts note the U.S. presidents have used their executive authority to release SRP crude into the market not only to lower energy prices, as is being proposed now, but also in response to dislocations and shortages in the energy sector due to natural disasters (most often hurricanes) and wars involving oil-producing countries in the Middle East. Drawdowns have even been used to paper over the federal deficit, causing the hosts to question how “strategic” the petroleum reserve really is.

Jeff and Sam also survey the latest readings on the Producer Price Index and the Consumer Price Index as well as a variety of other inflation indicators (7:01). The verdict from those gauges, they conclude, is that rising prices are not only high but persistent, rebutting central bank officials’ earlier reassurances that high inflation would prove “transitory.” Given the accumulating data of high and sticky inflation, Jeff and Sam will be watching scheduled speeches by Federal Reserve officials the week of Nov. 15-19 for signs of a rethinking in monetary policy (38:44).

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