The pullback in retail gasoline prices was the talk of the town over the weekend, with even President Joe Biden calling attention to it. Drawing an inference from the data, an analyst stepped up his call for the Fed to step away.
What Happened: Inflation is gone and prices are falling, Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, said. He made his point by sharing a picture of gas prices at a Chevron outlet.
The nationwide average retail gas price dropped to $3.413, according to data provided by the American Automobile Association. This marked a significant retreat from the $5+ level that prevailed amid the summer driving season.
President Biden himself tweeted about the drop and called it "great news."
Gerber said the Fed now needs to stay away, adding, “We need to work to avoid a US Fed-induced recession.”
Why It’s Important: Since the Federal Reserve began tightening monetary policy in March, it has ratcheted up rates by a cumulative 3.75 percentage points to fight inflationary pressure. The specter of higher rates has kept market sentiment subdued for much of the year. Equities began picking up some momentum only after the central bank started vaguely hinting at a let-up following the November monetary policy meeting.
Not all were convinced of the let-up in pricing pressure. One of Gerber’s Twitter followers pointed out that the easing was only seen in gas stations and that prices were still going up in the grocery and restaurant sectors. Gerber replied that prices in these sectors would come down next.
One of them even cried foul over the gas price drop. “What happens when the US stops releasing strategic reserves and starts buying putting in a floor of $70,” said the follower.
The Energy Select Sector SPDR Fund XLE is still up as the markets are forward-looking, the follower added.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.