Tuesday, August 23, 2016

We Know, We Know Inflation Can Never Ever In A Million Years Happen

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*Many Fed officials think something is wrong with inflation. It hasn't picked up.
*Maybe oil going from 130 to 30 had something to do with it.
*Oh by the way oil is up and the dollar is down and here we go again back to an inflation norm.
We recently heard the Fed talk about raising their inflation bar. It has boggled the Fed that all the rate cuts, global QE and every monetary tool in the shed hasn't sparked inflation. With all that said, transitory factors are currently moving inflationary. The dollar has been going down and oil has been going up. What would inflation mean for 50bp Fed Funds Rates? We think that would mean multiple rate hikes in succession which would be bad news for stocks (NYSEARCA:SPY).
The Dollar And Oil Impact Inflation All The Time: Let's Not Forget
Two of our favorite inflation factors are import prices and energy. They change all the time and can affect the numbers. We actually said the last CPI reportcould be low because energy dropped sequentially in July. CPI reported below expectations. Oil affects inflation. It's pure rocket science, we know.
Now oil is moving back up so CPI and PCE could get affected on the upside if oil holds.
Here's oil's average monthly prices.
JanFebMarAprMayJunJulAug (So far)But Current
Oil P29.7831.0337.3440.7545.9447.6944.1344.549
mtm4%20%9%13%4%-7%1%11%

Source: YCharts
July oil was down 7% month to month.
Here's CPI. CPI saw its first slower month in a while due in part to oil.
16
NovDecJanFebMarAprMayJunJul
CPI Topline0.1-0.10-0.20.10.40.20.20
Core0.20.20.30.30.10.20.20.20.1

Hmm, that's funny. Just when oil dropped CPI also slowed.
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Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS

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