Stocks Spike, VIX Plunges On Fed's Waller Comments

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by Tyler Durden
Tuesday, May 10, 2022 - 05:46 PM

With the market anxiously awaiting tomorrow's CPI print for any hopeful signs that The Fed has an excuse to back away from its hawkish corner, Fed Governor Christopher Waller offered some hope with the following:

“We have a labor market that’s so hot, so overstimulated, that it’s a market where you can pull back a lot of demand for labor, and it would actually be a good thing,” adding that “I don’t care what the reasons are, inflation’s too high and it’s my job to get it down.”

And then capped it off with this brief comment on why The Fed doesn't want to surprise markets...

"This is not a 'shock and awe' Volcker moment..."

No, you're right Chris, you seem like you're all over credibility gap there at all...

And that's all the algos needed with its extreme positioning and overhedged nature. Stocks spiked...

And VIX was smashed lower...

Waller had some other unremarkable comments but this one stuck in our minds a little. He appeared to proudly proclaim that "Trump picked me because he thought I was a total dove."

An odd thing to say for a member of the 'independent' Fed - and not exactly helpful if it is a partisan shot, since his apparently hidden hawkishness is now going to hurt Biden's economy... not Trump's?

Additionally, seemingly ignoring The Fed's unwritten rule on commenting on Congressional policies, Waller opined openly that labor supply is lower "because we have shut down immigration." Perhaps Mr Waller has not been paying attention... America's southern border just saw the greatest year of immigration (mostly illegal) in decades... and if Biden lifts Title 42, will that solve the wage spiral inflationary effects?