Peak CPI... The Half Way Point
Peak CPI... The Half Way Point
The last 9 months have been all about inflation.
“HAVE YOU SEEN THE PRICE OF _________ (insert item)?”
Predicting the peak has been a fools errand.
Im guilty.
We’re all guilty.
I think today, we reached the half way mark.
see… guilty
The half way point has some significance.
Growing up playing hockey we would go for warm up runs before our games.
These runs weren’t terribly long but served a purpose.
They prevented injury.
On my team we had a player who was as lazy as he was smart.
He would always turn back at half way and go back to the room, only to get there at the same time as the rest of us…
This strategy makes no sense… you cause reputational damage all while running the same distance you so badly wanted to avoid.
Jay Powell and Tiff Macklem can’t turn back now.
Their reputation and their economies need them to finish.
I think the central banks are half way.
Inflation has peaked. And headed down.
Dont believe me?
The Food & Agriculture World Food Price Index has fallen for 6 straight months. Every major category within the index continues to see material price declinesThe target is 2%
Freight rates continue to tank. Specifically, shipping rates fell 29% in September vs. August & fell 61% YoY:
The terribly sticky Apartment List's National Rent Index is showing meaningful signs of multi-month improvement:
News of shortages across most sectors (not all) are becoming less common. These headlines are being replaced with inventory gluts for firms like $NKE & $TGT which are aggressively marking down prices to clear goods.
Used car prices are rolling over -- data per @CarGurus
Now the above isn’t meant to show that things are roses.
They ARE NOT.
Russia/Ukraine
Lockdowns in China
Midterm elections
I’m only trying to point out that the worst of inflation is behind us.
90% of the rate hikes are in place.
High for longer?
Maybe
But, we’ve crossed that half way mark. And there’s no going back.
….
The only way to build wealth is to have a gap between your ego and your income.
Markets price the future.
Not the past.