Zero Percent, Joe? Come On, Man!

No, Mr. President. Inflation isn’t “zero.” But Mr. Market was euphoric anyway. Were you forwarded this email? [Sign-up to Rude Awakening here.]( [The Rude Awakening] August 11, 2022 [WEBSITE]( | [UNSUBSCRIBE]( Zero Percent, Joe? Come On, Man! - July’s CPI print came in at 8.5%, beating the consensus of 8.7% year on year. - To be fair, the month-to-month CPI change was 0.0%. - Wall Street celebrated like it was 1999. The Nazzie was up nearly 3%. Recommended Link [Biden Just TORPEDOED the U.S. Dollar]( [Click here for more...]( This is the scenario we’ve been fearing… Instead of President Trump… We’ve got “Sleepy Joe” Biden behind the wheel. And now, a [sinister move that Biden just made]( could TORPEDO the U.S. dollar once and for all. In fact, thanks to this one move… Your dollars could be made worthless, or even CONFISCATED. Do NOT get caught off guard. [Learn How To Protect Your Wealth]( Sean Ring Editor, Rude Awakening Good morning on this fine Thursday from NYC. A bit of housekeeping first. I’m nearly done with this graduate program and head home on the Friday night red-eye to Milan. So tomorrow’s Rude will be a re-run. From then, I’ll be writing fresh new columns - like today. Next, two nights ago, I ate at Keen’s Steakhouse on West 36th Street with good friend, fellow Villanova grad, and Rude reader Ryan. Besides the unique decor mirroring the turn-of-the-century era of New York City, my filet mignon was simply the best steak I’ve eaten in ages. I like my steak “blue” - ultra rare - with bearnaise sauce. It was (barely) cooked to perfection. Ryan was always an “au poivre” man - pepper sauce on the side. I’m not sure my steak hit the sides on the way down. So if you must be in Manhattan, do yourself a favor and head to Keen’s. Many thanks to Ryan for the amazing treat. I didn’t pick up the bill for dinner. But the fact that the table cracked when the waiter dropped the bill on it made me suspect inflation had also taken hold at old Keen’s. In this Rude, we’re going to put yesterday’s CPI reading into perspective while looking at the market’s reaction to the news. Not Zero, But Better Ok, does this look like inflation is zero? Credit: [@unusual_whales]( Despite the overwhelming evidence that the inflation story isn’t over, President Biden, like any politician, took the low road: I just want to say a number: zero. Today, we received news that our economy had 0% inflation in the month of July — 0%. Here’s what that means: while the price of some things go up — went up last month, the price of other things went down by the same amount. The result? Zero inflation last month. But people are still hurting. But 0% inflation last month. To be fair to the old man, the month-on-month CPI change was zero percent. But consumer prices had risen 8.5% from July last year. The consensus was looking for an 8.7% increase. Since actual inflation was less than the consensus guess, investors celebrated like it was 1999. Really. But more on that later. Is the Inflation Spectre Vanquished? In a word: no. But things have improved slightly. Slightly. I loved this Mark Moss tweet, summing it up: Credit: [@1MarkMoss]( The problem now is that inflation expectations are embedded in the supply chain. And expectations don’t turn on and off like a light switch. Worse, fuel oil, better known as diesel, is still up 75% over last year. Sure, you may feel happy that gasoline is cheaper at the pump. The problem is that taking your car to pick up supplies is the last link in a chain where all other links are connected with diesel. But some still think the situation is salvageable without creating too much mess. I had a good laugh when I read this in the [Journal]( Elevated inflation is the byproduct of rapid growth as the U.S. rebounded from the Covid-19 pandemic, fueled in part by lower interest rates and government stimulus. The Federal Reserve faces the challenge of tightening monetary policy to cool the hot labor market and slow demand enough to curb inflation, but not so much as to set off a recession. Here’s how I would’ve written it: Runaway inflation is the obvious outcome of three stupid policies: the government-mandated private sector shutdown, the Fed putting its foot on the yield curve, and asinine stimmy checks. The Fed faces the challenge of reversing the effects of these stupid policies, some of which it helped create. Yes, that’s better. Recommended Link [URGENT: Your New Crypto Book Is Awaiting Shipment]( If you’ve kicked yourself for not investing in cryptocurrency… Watching Bitcoin go from $61… To $1,000… To over $60,000... Then pay close attention. Famous crypto millionaire James Altucher just released a brand-new book on crypto… [And he’s releasing a limited number of books to folks who click here now.]( We have a copy reserved in your name, and we just need to hear back from you. [Click Here To Learn How To Claim Your Copy]( How Euphoric Was Mr. Market? Pretty damn euphoric would be my answer. Credit: [Stockcharts.com]( This market wants to rally; I think it’s a big trap. Credit: [Stockcharts.com]( Yes, you can see that today the market broke above the 4,200 mark. Let’s see if the market follows up. If the market continues going up, we can easily see 4,550 soon. But for me, I think this is a low-volume rally that may turn around in September once the real money managers come back into work. Still, that didn’t stop Wall Street from immediately calling a Nasdaq bull market. [The Journal]( exclaimed, “The Nasdaq Composite is officially in a new bull market.” It amazes me how we’re arguing over the term “recession,” but “bull market” seems automatic. The Nasdaq was up a definitive 3.9% today, so tech investors must be over the moon. Clearly, we’re seeing some upside here. Will it last? My guess is no. I think the underlying macro numbers, such as the regional Fed indexes, inflation, and GDP, are pretty bad. This is a sentiment-driven rally in the quiet part of the year. Wrap Up Inflation isn’t out of our system yet. It may just be taking a break. Nevertheless, that hasn’t stopped politicians like Joe Biden from taking credit for economic statistics looking better than they have in a while. I don’t like the overall market trend, though; I think this is a bull trap. While the SPX may head up to 4,500, I still see 3,213 in the future in this cycle. Tomorrow’s PPI release will dictate the action. That number will come out shortly after you’re done reading this. If producers are still eating too much inflation on behalf of customers, then the market will tamp down its enthusiasm. If not, up we’ll go. In the meantime, let me leave you with a bit of good old British humor, courtesy of the Financial Times: Have a wonderful day! All the best, Sean Ring Editor, Rude Awakening [ARCHIVE]( | [ABOUT]( | [CONTACT US]( Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Paradigm Press delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [unsubscribe](. Please read our [Privacy Statement.]( If you are you having trouble receiving your Rude Awakening subscription, you can ensure its arrival in your mailbox by [whitelisting us.]( © 2022 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. 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