Remarkable shift in market conversation from AI/rate cuts to pricing higher likelihood of Fed hike due to oil prices, tariffs, and strong economy.

Notes market putting weight on higher oil prices, upward inflation pressure from tariffs, and generally strong economy creating difficult spot for Fed.

Still thinks Fed hike extremely unlikely because oil price shocks come with risk of demand destruction and growth slowdown.

ECB has one goal (inflation to 2%) while Fed has two (inflation and full employment), giving Fed more flexibility.

Notes downside risks to growth if shock persists, creating challenge for ECB: inflation going up while economy slows.

Points to strong incoming data: TSA passenger throughput at record highs, strong same-store retail sales, strong hotel demand and occupancy.

Acknowledges if shock continues, demand destruction could slow things, but tailwinds from AI spending and infrastructure bill suggest stability if shock is temporary.