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CPI Comes In Soft

After waiting for a few months we finally get some directionally favorable inflation news. Markets are flying.

Inflation came at 7.7% year over year–below the 7.9% expectation. The core month over month change came at .3% versus versus .5% expected.

Equities are partying hard–up 2.7%. The 10 year treasury is at 3.95%–seems like we will see a decent rally today in preferreds and baby bonds today.

So we get 1 ‘vote’ for a reduced Fed Funds rate hike in December –but it is just one piece of data and much more is to be seen in the next 30 days leading up to the FOMC meeting.

9 thoughts on “CPI Comes In Soft”

  1. A .2% drop in inflation is nothing to get excited about and interesting what markets are doing. It is welcoming to see a lot of green. I am up over $64,000 in 1 day. Easy to get giddy from today. That probably tells you how much in a sea of red I was in. It is sometimes a challenge to look at the red each day over the past several weeks. A very slow escalator down. And more than likely another month or two of that. The ride up is always an elevator.

    I try to focus on the several weeks of purchasing IG preffereds and bb and continue to grab 6%-7% when the fear was high. Timing the bottom is near impossible. Using the VIX did help a little when that was very high and I bought more over those few weeks. Today is only a blip and it is probably based on irrational exuberance. It is amazing what seems like a 4% investment was the liking, and now they are ~7%. The idea is that this is an anomaly spread over time and to capitalize on that.

    In the end, I am planning on the next 30 yrs of investment income. Buying many in the $16-$20 range, hopefully I can simply set back and collect the interest and dividends on the IG investments. Happy investing.

    1. Mr Conservative–certainly agree that the drop in inflation is nothing spectacular–but you got to know a crazy upside day was coming with the miniscule drop. It is hard to not be happy with the day of gains–but then again ‘easy come, easy go’.

    2. I think your looking at this in the wrong way. The 7.7% is the sensational number that the media likes to use, but multiply out the .3% over one year and you have a 3.6% anual inflation rate. Tell me if I’m not looking at this right or just being to possitive. The 7.7 is a looking backward , which is meaningless to me.

      1. Probably a bit on the euphoric side. I’ll just use my local meat market as the canary. Until they reduce ribeye steaks from $26/lb to something more reasonable… Last week my wife came home and she said, “I got a great deal! She bought from another grocery store at $24/lb.” Eeeh. A few years ago they were $7.99 to $9.99.

        1. In the meat cutting biz , I can set you up with $ 8.99 lb , meat prices in our area ( in Missouri ) have drop !!!

  2. 7.7% inflation is soft. I understand your context here, but who would have ever imagined that an inflation rate of 7.7% would ever be celebrated?

  3. Well Tim after yesterday with the drop in the market My wife’s IRA had a 1% drop. Be nice to see a couple green days going into the weekend.
    Finished rounding out my holdings in NYCB-PA with 6 shares at 40.76ea
    No other buys the last couple days

    1. Charles – you should have gotten a nice gain today – hard not to be in the green today.

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