CPI numbers today

Welp

I was wrong

The markets are reacting very positively

Futures initially went negative after the release.

Now, futures indicate Opening up over 1% on the 3 major indices

Happy to see that

After 4 green days in a row, we were due for a red day. Still up roughly 3% over the last 5 trading days and pretty much flat over the past month.

If you remember the season had following this clip, this means more to you in context of the markets

True

There’s some sorting out to do

Good is bad for now

quote:

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Looks like cpi numbers are as expected. 6.5% and Core 5.7% as expected.

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The devil is in the details.

Shelter is shifting due to the warping effect of OER (Owner's Equivalent of Rent, basically what a homeowner would be paying in rent for their home if they rented it instead of owning/paying a mortgage). This is skewing shelter upward as rents spike even though home prices on existing homes have been dropping since June and prices on new homes have been dropping since October.

This is the reverse of what we had been seeing (OER skewing Shelter lower as the small rise in rents obscured the rise in home prices).

Energy was dampened by fuel's price drop (see: SPR draining).

Food...



Overall, the drop is on the backs of Commodities Less Food And Energy (most notably used car prices, apparel, medical care commodities and new vehicles, in that order). The massive drop in used vehicles and the soft sales in other categories over Christmas (jewelry and electronics actually had fewer unit sales in YoY December, for example) carried much of this.

The problem is that food, shelter and energy are economic necessities. As long as they continue to rise (or just remain high), we will continue to have economic problems.