KYHBKO
2023-10-13

The CPI affirms that inflation remains sticky. With the PPI showing marked increase, we should see inflation seeping into the economy in the coming weeks. 

With the CPI, will the Fed maintain the interest rate or raise it? From the various interviews of the Fed, there seems to be a split of views - some suggesting the raising of rates and some suggesting the rates should remain.

Yet, let's not forget that Fed's preferred inflation indicator is PCE, core PCE to be exact.  It needs to be reviewed through the lens of unemployment, inflation and also the broader economy.

Go for great companies with good margin of safety. There is money to be made in every market, bull, bear or baboon. 

Sep. CPI: Will rate hike pause in November?
September headline CPI is 3.7%, slightly higher than consensus of 3.6%; core CPI is 4.1%, lower than previous data of 4.3%. ---------------------------- Any thoughts on the CPI data? Will rate hike pause in November? How to trade after the CPI report?
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Comments

  • BorgPetty
    2023-10-13
    BorgPetty

    Where would last month's core PCE be if they stopped rate hikes at 2.5%? Valid question I think as yields on long bonds wouldn't be too much lower than they would be today.

    • KYHBKO: 
      I think that this is a tough scenario as the Fed should cut rates gradually. as interest rate falls, people move from bonds to equities or other asset classes like real estate and even crypto. where there is more credit, people should take more risks.
  • BenedictMill
    2023-10-13
    BenedictMill

    M/M core PCE is tracking right into 2% annually. Sometime in the reasonably near future, the Fed is going to start realizing that the second leg of their mandate also needs attention.

    • KYHBKO: 
      good point. with the war, crude oil production cut, inflation can get sticky too. I recommend caution and close monitoring
    • KYHBKO: 
      good point. with the war, crude oil production cut, inflation can get sticky too. I recommend caution and close monitoring
  • delusion梦碎
    2023-10-13
    delusion梦碎

    Yep. Fed maybe will look at PCE and as long as consumers are cutting back, they determine inflation is contained.

    • KYHBKO: 
      thus, I prefer to monitor till things are more clear.
    • KYHBKO: 
      thus, I prefer to monitor till things are more clear.
  • Asphen
    2023-10-14
    Asphen
    as they say.... don't fight the FED 😉
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