Wonderful CPI Day


My Post-CPI Tweets 

  • Good morning and welcome to another wonderful CPI day!
  • Three notes before CPI prints in 17 minutes: First, the market is expecting a “soft” 0.2% core (something like 0.16%, rounding up)
  • Second: If we get exactly 0.2% core, then y/y will round higher to 2.3%. Third: if we get exactly 0.3%, y/y core will round to 2.4%.
  • Highest core print since the crisis was 2.32% in 2012. We have a shot of exceeding that today with a robust print.
  • Ten minutes to CPI and time for 1 more coffee and a commercial message: please buy my new book!
  • whoopsie, core CPI +0.3%. Actually 0.28%, puts y/y at 2.34%. Yayy, a new post-crisis record!
  • Ouch, seems like a big jump in y/y Medical Care, waiting for the breakdown. If so, that makes core PCE jump even more (again).
  • So back to back months we’ve had 0.29% and 0.28%. I hate to say I told you so but…
  • I said 2.33%, Actually 2.34%. We were VERY close to printing 2.4% y/y & setting off panic at the Fed. Which is abt 4 yrs overdue.
  • I should say 4 years and $2 trillion overdue.
  • [retweet from @boes_] Core consumer price inflation ex-shelter really accelerating: was 1.6% year over year in February
  • Cdq368CW8AALaxb

  • core cpi. What, me worry?
  • whatmeworry

  • while I wait for my sheets to calculate, let me stress this is not meaningless for the FOMC meeting today.
  • Arguments for waiting another meeting before raising rates are very thin.
  • i have got to put this database on a faster computer. OK, core services 3.1% from 3% and core goods +0.1% from -0.1%.
  • first positive y/y in core goods in two years.
  • Housing: 2.12% from 2.10%. Primary rents (3.68% from 3.71%) and OER (unch at 3.16%) are NOT the drivers of the core jump.
  • Lodging away from home 4.19% vs 2.67%, but that’s a small piece of CPI (<1%)
  • Apparel had big jump in y/y rate to 0.89% from -0.53%, but again Apparel as a whole is 3% of headline, 4% of core.
  • Medical care: 3.50% from 3.00%. Yep.
  • Drugs 2.34% from 2.21%. Professional svcs 2.54% from 2.08%. Hospital svcs 4.90% from 4.32%. Health insurance 5.97% from 4.76%. Ouch.
  • Med care is ~10% of core, so that 50bp jump is 0.05% on core.
  • And remember, Medical care gets a HIGHER WEIGHT in the Fed’s preferred measure, core PCE.
  • U-G-L-Y CPI ain’t got no alibi. It’s ugly (woot! woot!) it’s ugly.
  • The good news is pretty thin gruel. Median CPI should be +0.22% or so, keeping y/y around 2.42%. At least it isn’t running away yet.
  • Also, NEXT month we roll off an 0.21% from the y/y figure. So the hurdle will be higher for an uptick in core CPI.
  • Like I said, thin gruel. There can be no doubt whatsoever that deflation risks are zero for the foreseeable future.
  • Stocks are doing tremendously well with this, only -9 points or so S&P futures. This is awful news for equities.
  • …but some observers like to spin “rising inflation” as “sign of robust growth.” Nope. See “1970s” in your encyclopedia.
  • The only way this is good news is if you recently wrote a book on inflation. Which, as it turns out, I did.
  • Distribution of price changes. You can be forgiven for seeing this as giving the Fed the finger.
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