Inflation: July CPI Not to Bad, or Not to Good

#inflation #CPI

$DIA $QQQ $SPY $RUT

"There is enough in the CPI report to spin the inflation narrative either way" -- Paul Ebeling

DJIA +220.30 at 35484.97, Nasdaq -22.95 to 14765.12, S&P 500 +10.95 at 4447.70

The S&P 500 (+0.3%) and DJIA (+0.6%) set intraday and closing record highs Wednesday, as value/cyclical stocks continued to sport a Pullish bias following a better-than-feared Consumer Price Index (CPI) report for July. 

The Russell 2000 increased 0.5% after being down as much as 0.8% intraday. The NAS Comp declined 0.2%

Specifying the data, total CPI increased 0.5% M-M in July, as expected, while core CPI, which excludes food and energy, increased 0.3% M-M. On a Y-Y basis, total CPI was unchanged at 5.4% and core CPI lessened a bit to 4.3% from 4.5%.

Note that total CPI, driven by increases in the indexes for shelter, food, energy, and new vehicle, increased 0.5% M-M, as expected, while core CPI, which excludes food and energy, rose 0.3%. On a Y-Y basis, total CPI was unchanged at 5.4% and core CPI moderated to 4.3% from 4.5%.

The Key takeaway for the market is the moderation in the Y-Y readings, which feeds into the fake "peak inflation" narrative.

Shayne, Bruce and I do not expect that inflation rates will lessen much if an in coming months. They can remain at high marks given continued disruptions in supply chains and a good bit of anecdotal evidence from companies talking about raising prices to combat higher input costs and raising wages to attract employees.

Again, there is enough in the CPI report to spin the inflation narrative either way.

Have a prosperous day, Keep the Faith!