CPI Misses (Again) In Blow To Fed’s ‘Transitory’ Narrative

Ok, well there’s one more thing to worry about this week before you can get “jacked to the tits!” about the weekend.

it's friday…https://t.co/sWd9i8UWq6

— Heisenberg Report (@heisenbergrpt) July 14, 2017

CPI is all that matters today (and to a certain extent, it’s all that matters in the universe given that the Fed’s aggressive pursuit of their “third,” “shadow” mandate aimed at curbing excessively loose financial conditions is predicated upon the notion that lackluster inflation is “transitory”). And that means the print will be parsed incessantly by pundits and analysts trying to discern what they think the Fed thinks about the data.

In May, CPI dipped 0.1% – that was the second decline in three months – while core CPI rose just 0.1%.

Technically, this is only the second most important thing in the universe (PCE being the first), but you know, “correlated” and shit…

“If we don’t get a bounceback, and we get a fourth straight month of a softer print, people are going to assume that it’s going to be hard for the Fed to stay on their rate hike path,” Omair Sharif, senior U.S. economist at Societe Generale in New York said earlier this week, adding that “they need a rebound to confirm what they’ve been saying about the transitory weakness in inflation.”

Right. Of course the difficult thing is figuring out how to trade this. Because if you’re long risk, you don’t want a print that’s too good, otherwise the Fed has the green light to squeeze you by getting more aggressive with the normalization push, but then again, you don’t want it to be too bad either, because that means the economy might be going to shit.

Anyway, here are the estimates and priors (we’ll get retail sales too):

• US CPI MoM, est. 0.1%, prior -0.1%
• US CPI Ex Food and Energy MoM, est. 0.2%, prior 0.1%
• US CPI YoY, est. 1.7%, prior 1.9%
• US CPI Ex Food and Energy YoY, est. 1.7%, prior 1.7%
• US CPI Core Index SA, est. 251.7, prior 251.3
• US CPI Index NSA, est. 245.1, prior 244.7
• Real Avg Weekly Earnings YoY, prior 0.58%
• Real Avg Hourly Earning YoY, prior 0.6%
• Retail Sales Advance MoM, est. 0.1%, prior -0.3%
• Retail Sales Ex Auto MoM, est. 0.2%, prior -0.3%
• Retail Sales Ex Auto and Gas, est. 0.4%, prior 0.0%
• Retail Sales Control Group, est. 0.3%, prior 0.0%

And here are the numbers, just out:

• CPI unchanged vs est. 0.1%, according to the BLS.
• Forecast range from down 0.2% to up 0.2% from 79 estimates
• Ex. food, energy up 0.1% vs est. 0.2%
• CPI y/y rose 1.6% vs est. 1.7%
• CPI NSA index level at 244.955
• U.S. June Real Average Weekly Earnings Up 1.1% Y/y
• Real avg. weekly earnings rose 0.5% M/m in June, according to the BLS.
• Real avg. hourly earnings rose 0.2% M/m in June
• Real avg. hourly earnings rose 0.8% Y/y in June
• Real average weekly earnings up $4.02 from a year earlier