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Inflation data, supply chain problems brewing, and oil’s at a 2-month high. Price risesThis morning’s CPI data is expected to show the annua [View in browser]( [Bloomberg]( Inflation data, supply chain problems brewing, and oil’s at a 2-month high. Price rises This morning’s CPI data is expected to show the annual inflation rate in the U.S. rose to [7% in December](, the fastest pace in four decades. In Congress yesterday Federal Reserve Chair Jerome Powell [sought to reassure]( that the central bank can reduce the pace of price rises [without damaging the economy](. There are, however, an increasing number of economists and analysts saying that the Fed is already [behind the curve](, with billionaire money manager Jeffrey Gundlach saying on Tuesday he sees “[recessionary pressure](” building. Delays The rapid spread of the omicron variant of Covid-19 has already led to [shortages of workers]( in many [key industries]( in the U.S., and economists are now becoming increasingly concerned that outbreaks in China may cause new [supply chain difficulties](. With authorities there sticking to their [Covid-zero policy]( and preparing for next month’s [Winter Olympics](, further disruptions [seem likely](. Elsewhere in virus news, European Union regulators warned that frequent boosters could [weaken the immune system](. British Prime Minister Boris Johnson faces [questions in parliament]( this morning over a party at his official residence during lockdown. New York Governor Kathy Hochul said cases in the state [are plateauing](. Crude rise  Oil is rallying again, with a barrel of West Texas Intermediate for February delivery coming [within one cent of $82]( this morning, the highest level in two months. A report yesterday from the EIA showed global oil stockpiles will decline slightly in the first quarter of this year, compared to a previous forecast of an expansion. Inventory data released this morning is expected to show a drop of about 1 million barrels last week. Global benchmark Brent held yesterday’s rally. Reassurances yesterday from Oman’s oil minister than OPEC+ do not [want to see $100 oil]( did little to calm investors who are becoming increasingly doubtful about the cartel’s ability to [reach output goals](. Markets rise Global equity markets are moving higher as investors await today’s inflation numbers. Overnight the MSCI Asia Pacific Index gained 1.6% with Japan’s Topix index closing 1.6% higher. In Europe, the Stoxx 600 Index had added 0.5% by 5:50 a.m. Eastern Time with miners among the best performers as [base metal prices rallied](. S&P 500 futures pointed to a [small move higher]( at the open, the 10-year Treasury yield was at 1.745%, gold eased and Bitcoin held close to $43,000. Coming up... Inflation data is at 8:30 a.m. The crude oil inventories number is at 10:30 a.m. The U.S. sells $36 billion 10-year notes at 1:00 p.m. Minneapolis Fed President Neel Kashkari is the only Fed speaker today, and the Beige Book is published at 2:00 p.m.  The U.S. December budget statement is also at that time. Shaw Communications Inc., Infosys Ltd. and Jefferies Financial Group Inc. are among the companies reporting results. What we've been reading Here's what caught our eye over the last 24 hours. - [Central banks](, not Covid, will drive global economics in 2022. - Biden demands voting-rights action as allies rip “[empty gesture](.” - Housing analysts already see a [blistering start]( to the market in 2022. - The crypto VC Paradigm is the perfect investor in [Citadel securities](. - China’s crackdown leaves the world’s [biggest gaming hub]( on the brink. - Anthony Fauci calls Senator Roger Marshall a “[moron](.” - The Milky Way’s [feeding habits]( shine a light on dark matter. And finally, here’s what Joe’s interested in this morning Hello, and happy CPI day. The consensus estimate is for an acceleration of the headline number from 6.8% to 7.0%. Core is expected to rise from 4.9% to 5.4%. While a 7% number will get a lot of attention (if it happens), at this point, the sequential pace is probably more important to watch. Economists expect a 0.5% gain month-over-month, which would match last month. That is a very hot number. Here’s a few things I’m thinking about going into the number. -- CPI Day really is the new Jobs Day. That’s been true for a while, but it’s only getting more obvious that this is the main event right now, in terms of what people are thinking about in markets and at the Fed, and arguably among the general public. -- At the end of last year, there was a lot of attention paid to when Jerome Powell said the word “transitory” had outlived its purpose. That was kind of overblown, in part because he was mostly saying that it wasn’t useful from a comms perspective. That being said, in his testimony yesterday, Powell said this: “We can begin to see that the post-pandemic economy is likely to be different in some respects.” To some extent, this could be interpreted as a signal that even when the pandemic fades, it’s not so obvious to him that inflation will come down. -- Many parts of the market are still running crazy hot. [Apparently it’s almost impossible]( to get a new garage door right now. If you wanted to make the case that rate hikes are helpful, perhaps you could argue the [housing market is insane]( and that higher rates would cool things down. The counterargument is that raising rates at the short end wouldn’t necessarily make mortgage rates go up, and as such it’s hard to surgically strike housing. Before the financial crisis, some of the craziest years for housing activity occurred during the hiking cycle. And what’s more, the U.S. is arguably extremely underhoused (and under garage doored etc.) and so slowing things down might discourage investment in the space, which would be a long-term blunder. -- Prices for transportation continue to rise. [Trucking prices are going up](, and shipping rates from Shanghai to Los Angeles are up over the last month, after a slight dip in 4Q. -- An interesting point that Powell made yesterday (as well as in other venues) is that higher labor costs are not driving inflation. In other words, higher prices are not the result (by and large) of companies passing on the cost of labor. However, to the extent that supply is having trouble catching up with demand, higher wages (particularly at the low end) may be helping to spur persistently booming demand. -- Speaking of rising wages at the low end, I’ve been thinking about something that Goldman’s top commodity strategist [Jeff Currie said in an Odd Lots interview]( back in October. He noted that previous commodity supercycles have been driven, in part, by booming demand among lower income groups, whose consumption (he argues) is more commodity intensive than the consumption of wealthier consumers. -- BTW, if you haven’t seen the chart, it’s really striking the degree to which the 1st quartile (the lowest) of wage earners are seeing gains rapidly oustripping the other quartiles. You can see this is basically the opposite of the several years post-Great Financial Crisis. There’s an interesting question of whether this is a new normal, or something distinct to the pandemic economy, and the difficulty it’s created in hiring for things like restaurants, warehouses, and elder care homes. -- A quick note on cars. Used car prices (white line) continue to go straight up (though the pace is slowing a bit). Meanwhile, due to the the chip shortage, U.S. new car sales (yellow line) are way below pre-pandemic levels. This is probably one of the cleanest examples of something that should “normalize” at some point, as the big manufacturers catch up on production. -- Finally, it’s striking to me (and I mentioned this yesterday) how hard it is to anticipate the relationship between inflation/Fed/macro and the markets. Despite rocketing inflation, and the Fed changing its posture over the course of 2021, the stock market did fantastically. Yes, a lot of growth tech got clobbered, and higher rates may be part of that, but also a lot of that is just crowd behavior. There’s only so far you can go connecting the performance of various SPACs, AMC, and Dogecoin to increases in the dot plot. Of course, there’s plenty more to talk about. But will save it for tomorrow after the number comes out. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Follow Us Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. You received this message because you are subscribed to Bloomberg's Five Things - Americas newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](