re: Is October when the bottom falls out of the market?

After looking at the m/m core chart, I'd say .4 would be a terrible outcome and would likely be received poorly by markets. So .3 or less gets the rally with .2 or less being fantastic as that would put in a "lower low" on that particular chart's wave.

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If we get .3 (probably even .4) or less and no nukes, the Dow will be up 1000s of points from its current position.

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MoM Core was up .3 and just before the announcement Dow futures were up 200, at open it was down 514, as of this writing it's still down a bit over 200 points. That's a net swing of just over 400 points in the exact opposite direction you predicted. Normally I wouldn't worry about someone's wrong prediction here, but there was this...

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I'm torn between being polite vs being direct. If this were a face to face conversation I would smile and nod and let you say your opinions and then change the subject to something you knew more about or something I knew less about.

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Apparently, you know less about this than you think.



Pro tip: People who have a solid grasp don't need to be condescending pricks to others who aren't already being pricks to them. Responding to a polite, respectful difference of view with this sort of douchebaggery pretty much guarantees you are going to be wrong. The inference is that you really don't understand what the frick you're doing and are hoping you can just bullshite your way through it with bluster.

With that said, perhaps you should focus more on forums which you seem to know more about. The OT is always looking for more baws.

And now for why you were wrong and why I (and others) knew it.

Core CPI was created because food and fuel can have more volatile prices than the rest so they can often imbalance CPI with large, quick changes which don't last long enough to ripple out to the rest of the economy. This is the root of the problem you don’t seem to comprehend: Core CPI is fairly worthless in our current environment, which is why your stance was so hilariously wrong. It’s worthless because the ongoing cumulative impact of such long-sustained, large increases in food and fuel are the primary drivers (thus can be considered leading indicators) of current CPI. This will continue as long as their increases are so disproportionally large. Core removes food and energy (which includes fuel) from CPI, so trying to view the current economy without those is suggestive of ignorance. In essence, it seems you were trying to use a tool without seeming to understand how, why or when it should be used.



Look back on Core vs CPI over the last dozen years or so, what we see is Core usually being lower than overall CPI. From May 2021 – May 2022 Core outpaced overall CPI. Why did that happen? Because of COVID-caused supply chain issues while still having surpluses of food and energy (mainly oil/gasoline). As those surpluses disappeared, we saw Core and overall CPI mirror one another, then Core fell once again as food and fuel prices began sharp, fast increases and have continued to stay high (oil/gas fell for a bit, but that was due to draining the SPR, now that it's about to stop and OPEC+ has decided to cut oil production we see oil/gasoline going back up). Going that high, that quickly and for that long impacts everything. The price of gasoline/diesel touches every product or service in the economy from multiple vectors, which is why their sustained high prices are now the primary drivers of CPI (you can see this by modifying the chart I linked above to show only Core vs all Energy categories and then doing the same vs all Food categories, they all far outpace Core and have for a good while).

On the market side, it seems that traders have been trying to wishcast the Fed into pivoting or pausing all year and all year the Fed has stuck to their stated plans. This is why the market has been taking a massive shite after rate hike announcements (aside from August, but only because economic news came out in time to move the expectation from .5 back to .75 about a week before the meeting); they haven’t been pricing in the Fed sticking to their guns, they’ve been pricing in their faux reality of pause/pivot or even just a lower-than-expected increase. MoM overall CPI being up .4% was above what the market was expecting, thus why we aren't seeing the Dow being up "1000s" now, nor will it be for the rest of the year. There is no good economic news on the horizon so there's not going to be any good market activity other than occasional bounces. The market will continue to trend downward for the rest of the year and a large part of that will be due to the very factors Core CPI excludes.