Mind the fifth decimal place! Parse the nuance! Run the whole thing through a supercomputer! Ask ChatGPT!
Traders, investors and market participants of all shapes and sizes (carbon-based and otherwise), as well as dismal science practitioners and financial journalists everywhere, were glued to their monitors (and their social media feeds) at 8:30 AM New York time on Wednesday, when the BLS released the most important US CPI report since… well, since the last one.
The circus around these releases is — and I don’t see any reason to be diplomatic anymore — stupid as hell. Flat out ridiculous. Thousands (tens of thousands, hundreds of thousands, millions maybe) of people were sweating bullets this morning over a statistical bulletin. Must be nice! Said someone dodging bullets in one of the world’s conflict zones.
Now to the numbers. And the decimals. Core prices rose 0.29176% unrounded in the US last month. Consensus was 0.3%. (Buy! Sell! Hoooooold…. now buy some more! Wait, sell! Buy!)
The YoY reading was 3.60998%. (Buy! Sell! Hoooooold…. now buy some more! Wait, sell! Buy!)
The headline gauge rose 0.31291% MoM and 3.35736% YoY. (Buy! Sell! Hoooooold…. now buy some more! Wait, sell! Buy!)
Gas and shelter accounted for more than 70% of the all-items increase. The shelter gauge rose 0.4% MoM. It was the sixth straight month during which the index rose at least 0.4%. Fed officials are vexed by the stubborn character of housing inflation. But not as vexed as people who can’t afford houses. Thankfully, being homeless is fashionable now. You can tell by how many Americans are trying it. (That’d pass for logic at a GOP fundraiser.)
Gallows humor aside, OER actually printed a relatively benign 0.34051% for April. That was the lowest since August of 2021 and not too far off pre-pandemic levels, although if you pan out to a longer-term view, it’s still elevated. The rent of primary residence print was 0.35225%, likewise the lowest since summer of 2021.
The food at home gauge was favorable, showing a 0.2% month-to-month decline. That, after two consecutive months of no growth. On a YoY basis, grocery price inflation’s down to just 1.1%. That’s great news (no sarcasm) but… well, as my old friend put it over dinner a while back, “it’s cumulative.”
Electricity prices slipped 0.1% and both used and new vehicle prices fell in April from March. Apparel prices rose, as did the cost of transportation and medical care services.
As to the CPI-derived “supercore” measures, core services ex-shelter printed 0.464% and 0.422% ex-OER/rent. Those were marked downshifts versus March’s sequential readings.
The Fed uses a PCE-derived version of the “supercore” aggregate, but in lieu of that update (two weeks from now) markets can take some solace in the “cool” (a relative term) CPI supercore readings.
All in all, the April CPI report will give traders and investors an excuse to bid up asset prices if they’re so inclined. (And they usually are.) Because the figures will give the Fed an excuse to keep rate-cut hopes alive if they’re so inclined. (And they always are.)
Now, somebody go spread the good news in Gaza. And in Ukraine. And in Yemen. And in Syria. And in Sudan. Climb up to the top of a bombed-out building and shout: “Your suffering is near an end, good people! Core CPI ran 0.3% in the US last month!” Way down below, on the street, an emaciated local with one leg will shout back: “What was the unrounded print?”
This article was funny, yet sad all at once.
Yes, the patented Heisenberg touch. Report on the same things everyone else does, but make it uniquely engaging and poignant and snarky all at once. Well worth the price of admission.
Hilarious
Feeling spicy today H
First world problems, as they say.
The fact that these slowdowns in the level of price increases is just that – a slowdown from ridiculously high levels – seems lost on a lot of the Street.
I have spent 60 years building empirical data models to predict the future in politics (where I started), rates, inflation and commodities in the 70’s I was (am) among the best, making billions. However as H points out, these numbers are all basically BS – certainly more art than science. What is scary is that AI and Blockchain, all crypto badrock, is a kind of fluff and the more weight we put on these things, the more we are kidding ourselves. Of course we can make returns using these mathematical tecniques, but when they are applied to human mental processes and decisions, it is all a mirage. We humans are more f…ed up than ever and more ignorant than ever, but are still in charge.