We’ve talked about the base-effect distortion of the latest data when compared to where we were a year ago. So, sure, when we look at year-on-year CPI north of 4% (core [ex-food and energy] at 3%) no sweat. Ah, but month-over-month? Of course that’s meaningful.
Keeping this morning’s note brief and to the point (we’ll dig deeper into the inflation topic in this week’s main message later today [tomorrow at the latest], as it’s potentially the most important thing for investors to get right going forward), I’ll just point out that a .8% jump (.9% for core) in a single month is no small deal, to put it mildly!
Bonds responded accordingly (10-year yield this morning):
As did tech stocks (Nasdaq 100 futures this morning):
Asian stocks struggled overnight, with 10 of the 16 markets we track closing lower.
Europe, after trading mostly in the red during the session, is bouncing a bit as I type, with 11 of the 19 bourses we follow now in the green.
U.S. equities are struggling to start the day: Dow down 211 points (0.60%), SP500 down 0.79%, SP500 Equal Weight down 0.51%, Nasdaq 100 down 1.56%, Nasdaq Comp down 1.38%, Russell 2000 down 0.88%.
The VIX (SP500 implied volatility) is up 7.46%. VXN (Nasdaq i.v. is up 5.53%).
Oil futures are up 1.62%, gold’s down 0.41%, silver’s down 0.78%, copper futures are up 0.04% and the ag complex is up 0.10%.
The 10-year treasury is down (yield up) and the dollar is up a big 0.50%.
Led by energy stocks, banks, financials, TIP (treasury inflation protected securities) and Verizon — but dragged by MP (rare earth miner), solar stocks, Asia Pac stocks, tech stocks and ALB (lithium miner) — our core mix is down 0.41% to start the session.
While these days the inflation conversation can nearly rival politics and cryptocurrencies when it comes to the polarization of macro thinkers, I’m thinking, for now, that we heed our seeing eyes and soaring grocery bills and consider the wisdom of early-20th Century Royal Dutch Shell CEO Henri Deterding:
“Simplicity rules everything worth while, and whenever I have been up against a business proposition which, after taking thought, I could not reduce to simplicity, I have realized that it was hopelessly wrong and I have let it alone.”
