CPI Remains Stubbornly High
Granted, CPI is backward-looking, yet the Government measure remains stubbornly high, both on the Headline CPI number (2.9%) and on the Core CPI number (3.2%).
Core CPI (3.2%) is the Fed’s preferred measure. Both Core and Headline CPI moved higher month-to-month.
Our view is that Powell’s December 13th dovishness was premature. Powell talks too much, he provides too much detail allowing market participants to cherry pick what they want to hear. This contributes to market volatility (along with excessive leverage). It would be better for the Fed to paint a picture of a rate cut path after it achieved its inflation target (I would not have a published target, but that is another story. Chances are if Powell would do “X”, I would do the opposite were I in his chair).
Our view is that Congress/Treasury, the Executive Branch and the Fed wish to inflate the $35 Trillion debt mountain away, therefore the Fed will continue to ease despite price inflation not being conquered.
