Let’s toss more fuel on the fire with a red hot Consumer Price Index number.
Forecasters are looking for 7.8% year over year–of course we know it will trend higher in the months ahead with energy prices as high as they are right now.
I’m not so certain that anyone will care much about this reading unless it is way high–say 9% in which case we might get a little extra shove higher in interest rates.
Trying to forecast stock market movements is a fools errand so it goes unmentioned.
As always I watch and wait.
9 thoughts on “CPI in 1 Hour”
Energy is the place to be.
Tim – I agree it’s difficult predicting where the market will go. It’s all about probabilities. Assuming the fed doesn’t invert the yield curve and we don’t go into a recession I have multiple targets between 4055 – 3800 SPX. I would like to see VIX in the 40’s and the put/call ratio spike on a 90% down day with positive divergences on the technicals to get long the market. Not much to ask for, lol. I think its highly probable we see a new all time high before this bull ends. ATB
This months CPI print makes next IBond cycle already at 6.86% with one month to go. And that is assuming 0% CPI next month. With next month CPI anticipating a 20% or so gasoline pump increase, I think its a safe bet it wont be 0%. If next month report projects out on current 5 months, next Ibond will be paying 8.26%.
Camroc will be clutching his 3% fixed Ibonds even harder in his cold dead hands as he could be getting over an 11%, 100% guaranteed yield and protection of principal…Incredible.
Sleep with one eye open Camroc, as I am coming to pry them out of your hands!
Math is interesting here. Those who are married and have accounts may consider gifting another 10k to each other now for your 2024 purchase. The math is such that if you take the 7.12% now from a March purchase, get 8% next cycle, and then get 0% for following 9 months and deliver gift 1/1/2024, and then withdraw it your return is still 4.12%. That is with 9 months 0% inflation which is about Nil odds. I dont know of any 2 year 4% CDs anywhere.
Continuing this math to 2025, a not-unreasonable assumption is that after the next 8% cycle you will get an avg of at least 3% in the next 4 cycles, then if you gift yet another 10k now your return if cashing on 1/1/2025 would still be 4%. Obviously, if after the 8% inflation goes to 0 (nil odds), the return would be only 1.6% (still better than most 3 year fixed income). Conversely, if inflation stays >3%, then your avg will be >4%. How happy would you be if we are entering several cycles of high inflation?
I am buying 3 gifts/person in my family.
HOWEVER: although making 8% sounds great for us in III, the truth is that it is very, very bad news, meaning that any other investment would need to be of significant risk to match inflation (which I am unlikely to take). So at the end of these high inflation cycles, we would not be richer, but only at best we would have just preserved capital. right?
Hi Gridbird, great to see some I-bond chatter on here! I have a pretty big holding of I-bonds and cannot believe the rates I’m getting on bonds going back into the early 2000’s and 2010’s. I’m working hard to get the full allocation I can for 2022, dumping most dividend payments, BB payments, and Preferred payments that hit my unqual accounts into I-bonds until I hit the yearly limit for myself and spouse. I knew IBonds were a good thing when the investment professional community lobbied against them to restrict yearly contribution limits 🙂
Yes, Surfer, congrats on buying them when they had meaty fixed rates added to inflation component! As you know, they originally were 30k annual limits. Govt became aware of more wealthier people using them as a secondary default retirement accounts due to their deferrable tax features and state tax free status. You should consider you and wifey front loading 2023 contribution by gifting each other 10k now and taking the 7% plus lay up now, too.
Im not married so I can only do the 2023 contribution plus 5k more to stay under gift tax limit with my GF.
3 month Libor unsurprisingly is rising. In past 2 weeks it has went from .5% to .745% yesterday.
Something to follow if your interested in Libor backed issues. Typically there is a lag process from rising to being implemented into the issues payout amount though.
Tim, I have a very good source for all the S1 IPO registrations and just didn’t know where or if you would like me to post them. I do it see an IPO header area. This AM another SPAC was filed https://sec.report/Document/0001213900-22-011395/
Please let me know if you would like me to post some of these that may be of interest or none of these IPO filings (no issues either way, as I’m unsure if this is the right forum). Hoping you find your treasure, Azure