Mainstream media remain fixated on ‘debt ceiling’ negotiations – warning of a “financial catastrophe” if this doesn’t get done. This is the 78th time we have hit the so-called debt ceiling. And how many defaults has there been? Zero. A deal will get done. And if we are presented with a sell-off in markets – then it represents an opportunity.
Inflation
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Should We Cheer the Latest Inflation Report?
April Consumer Price Inflation (CPI) headline came in at 4.9% – its lowest level since Feb 21. However, Core CPI was 5.5%. As we know the Fed are more focused on Core. Here’s what the Fed will be watching – it’s all about labor and shelter.
Pop then Drop! Green Light for Fed Hike
Investors cheered the news of a slightly lower than expected CPI print from March. However, Core Inflation exceeded expectations and actually increased. That’s important – as that’s what the Fed are focused on. Here’s the thing: with Core inflation running at 5.6% YoY – don’t expect cuts anytime soon. It’s almost 3x the Fed’s target. Yes inflation is cooling – slowly – but not where the Fed need it to be. From mine, you can lock in another 25 bps for May 2nd. Bond markets see that. Equities are yet to get the memo