Postcards: Let's Do Some Simple Math

I'm pretty sure that 2 does not equal 3.3. I need to check my numbers. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: Let's Do Some Simple Math]( I'm pretty sure that 2 does not equal 3.3. I need to check my numbers. [Garrett {NAME}](floridarepublic) Jun 12 floridarepublic   [READ IN APP](   [Good morning, Republic Risk Readers… your issue is right here. RIGHT HERE.]( --------------------------------------------------------------- Dear Fellow Expat: The inflation report came out this morning. The CPI figure came in flat for the month, and annual inflation registered at 3.3%. Now, hold on. I need to do some really long math here. 3.3%… carry the 3… carry the other 3… Drink this Gatorade… scream into this tiny little jar… now let me draw a 2. Nope. 3.3% is not equal to 2%, the Federal Reserve’s target inflation rate. Let me check again. Does 3.3% equal 2%? Economist Paul Krugman thinks so. But I’m still very skeptical. Let’s dig into today’s CPI report. “Inflation is Down, Jack” When it comes to inflation, remember that the average person doesn’t actually understand it. Then remember that 50% of Americans know less than the average guy. The media - people who should know better - are still saying that inflation is coming down. If the annual CPI figure is positive… inflation is rising. The Fed magically picked a 2% figure as a target inflation rate around 1993. They did so because it was just enough money that they could steal from you in the form of this brutal tax that people wouldn’t brandish pitchforks. But 3.3% is a lot higher (and again, the Chapwood Index has inflation north of 10% in most major cities, which is a far more accurate representation.) The Fed also didn’t admit its inflation-targeting goals… until around 2012. Transparency… the government way. I now view government data like I read old Soviet newspapers. The guy who believes these numbers likely runs a shoe store. He’ll get to run the water supply for his loyalty to the Party in a few years. Let’s Look at the Report The McDonald’s menu and the $14 I spent on a single drink last week make me feel like these figures are insane. Excess inflation is coming from two sources: Housing and auto insurance. But I am not going any further into this rant. The big thing right now is that the market - and I’m not the market - has repriced in two interest rate cuts by the end of the year. Are we even going to get one? That’s the biggest question on the horizon. This afternoon, Jerome Powell will speak at 2:30. I’ve already highlighted the 2:35 trade and the directional moves that tend to come as he starts speaking. But today's other big story will be the WASDE Report, our agricultural update from the USDA. This is a huge report heading into the summer. Again… the Fed isn’t going to start cutting if inflation remains north of 3.3%, and inflation in the services side remain sticky. Doing so would be a huge error. But recall that we aren’t the people who make the decisions. Up is down, left if right, and “3.3% inflation is falling.” The market likes the report, and that’s all that matters. I still think this market will take another bath at some point, but I’m pushing that out until August when the Fed has its symposium in August. If you need me, I’ll be packing a suitcase. Stay positive, Garrett {NAME} Secretary of Inflation Report Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()