Soaring rents are a nightmare for the Fed, markets, humanity

Plus: Ukraine still needs help. [Bloomberg]( Follow Us [Get the newsletter]( This is Bloomberg Opinion Today, a Christmas surprise of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - There’s [hope for inflation]( yet. - Ukraine still [needs a lot of help](. - [Oil producers could use some](, too. - The [midterms are a coin toss](. Finding the Pony in the CPI Report Today’s CPI report reminded me of the old joke about the kid who wakes up on Christmas morning, sees a huge pile of horse manure under the tree and begins digging through it. When his parents ask him what on earth he’s thinking, he says, “There’s got to be a pony in here somewhere!” Driven by soaring [rents](, consumer inflation in August was certainly a mountain of [unpleasantness]( for both Wall Street and Main Street. It dashed hopes the Fed would ease off on rate hikes and painted a picture of an economy besieged by stubbornly rising prices everywhere. We all dug through it looking for the pony, but just came up empty. And dirty. Except maybe we were looking in the wrong pile. The inflation measure the Fed watches more closely, the [PCE, has been tamer than CPI]( and is expected to keep behaving, writes Jonathan Levin: Jonathan notes the PCE gives less weight than the CPI does to housing and auto prices, which have been awful lately. Could it be the more realistic measure? Let’s hope! The net result of all of this is that Teams Transitory and Soft Landing took a big L today, along with Wall Street. The Fed won’t be “pivoting” anytime soon, unless it’s to pick up an even heavier rate-hike stick. At the same time, we’re not facing a catastrophic resurgence of inflation yet. That’s not a pony, but maybe we can ride it for now. Read the [whole thing](. Ukraine Hasn’t Won Anything Yet It says a lot about what a slog the Ukraine war had become recently that the recapture of about 2,000 square miles is being celebrated like VE Day in the West. Russia still has the upper hand in manpower, weaponry and enthusiasm for committing war crimes. Where Ukraine has an edge is in morale, and its breakthrough over the weekend boosted that even more. Bloomberg’s editorial board writes the [West needs to help it press that advantage](. Ukraine has proven it can use donated weapons effectively. Now is the time to give it more and to stick with sanctions, no matter how painful they become. Niall Ferguson, who visited Kyiv recently, guesses there’s a [20% chance Russia will be routed]( in Ukraine. The next three months will be decisive. But without a higher level of military assistance than it’s gotten so far, Ukraine’s chances are nil. And with its economy in shambles and risking hyperinflation, it will need economic assistance during and after the war, no matter the outcome. So far Europe hasn’t exactly been kicking in as much as it could, especially considering it’s on the front line. Bonus Russia Reading: Apartheid South Africa could be [a model for what sanctions will do to Russia](. — Clara Ferreira Marques Telltale Chart As Matt Yglesias [proposed]( this weekend, President Joe Biden’s administration is thinking of [buying oil]( from US producers to refill the Strategic Petroleum Reserve. It could use a top-up, given how much it’s been drained lately, according to the [Elements]( newsletter: Javier Blas points out [oil production in the crucial Permian basin has dried up](, an ominous sign for supply. Maybe some Biden cash could get wells flowing again. Further Reading Want to guess [who will win the midterms](? Flip a coin. — Jonathan Bernstein Extreme [right-wing parties are still gaining political clout]( in Europe. — Pankaj Mishra Funding public colleges is [a better solution to the student debt problem](. — Eduardo Porter Biden’s EV policy is [too focused on boxing out China](. — Anjani Trivedi Drone package delivery is a cool idea whose [time will probably never come](. — Thomas Black How to avoid [a war over the moon](. — Adam Minter AI is making it [easier to cheat at chess](. — Tyler Cowen ICYMI Inflation is [hurting some US cities]( more than others. Ferrari is selling a [$390,000 SUV](. Nobody wants the [omicron booster](. Kickers People are [still buying floppy disks](. People still love [Choose Your Own Adventure books](. People are in an [arms race with cockatoos](. RIP, [Jean-Luc Godard](. Notes:  Please send floppy disks and feedback to Mark Gongloff at mgongloff1@bloomberg.net. [Sign up here]( and follow us on [Instagram](, [TikTok](, [Twitter]( and [Facebook](. Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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 Opinion Today newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022