At least for now, still looking like a rate tweaking cycle and other notable stuff

The big story from late yesterday is certainly the drop in oil prices on the Washington Post report of Israel sparing Iran's oil and nuclear installations in their still inevitable retaliation. If the story is true, this will be a good test of what geopolitical premium, if really much at all, was in the price. We still remain bullish and long oil and gas stocks. 

I've argued over the past few months that what we were going to see from the Fed would be, for now and until the data changes, a rate tweaking cycle rather than a typical rate cutting cycle where zero is the only bottom they know in rates. Well, it started with voting member Mary Daly's comments a few weeks ago when she held out the possibility they would only cut once more this year. Voting member Bostic said something similar last week. And Governor Waller did yesterday. I'm not including here those that don't vote at the remaining two meetings. 

After going through his view on the economy and inflation in his speech, which has surprised him to the upside with the data seen over the past few weeks, and theoretical ways of setting interest rates, he laid out three scenarios from here with respect to policy. 

1)"one where the overall strong economic developments that I have described today continue, with inflation nearing the FOMC's target and the unemployment rate moving up only slightly. This scenario implies to me that we can proceed with moving policy toward a neutral stance at a deliberate path."

2)"Another scenario, less likely in light of recent data, is that inflation falls materially below 2% for some time, and/or the labor market significantly deteriorates. The message here is that demand is falling, the FOMC may suddenly be behind the curve, and that message would argue for moving to neutral more quickly by front loading cuts to the policy rate." Meanwhile, still no one knows what the neutral rate is, I say.