Categories: Stock Market
Topics: U.S. Dollar

What the CPI Numbers Say

Just when you thought it was safe...

That seems to be the sentiment regarding the economy and inflation with the latest Consumer Price Index numbers. 

Last week, the latest CPI numbers were released and they showed that prices rose 0.3% from July. This was the first acceleration in six months and was a 4.3% increase from the same time a year ago. 

As far as timing, this comes a week before the Fed’s next meeting. It could be said that this data gives the Federal Reserve the cover needed to raise interest rates. While that’s likely true, popular opinion speculates that it won’t happen at this meeting but will instead happen at the next one at the end of October. 

Chairman Powell said last month that inflation remained too high and that increased raises was a course the Fed was willing to take to continue trying to tame it. 

Higher energy prices are at the heart of the higher numbers. Oil rose due to Russia and Saudi Arabia jointly agreeing to extend supply cuts through the end of the year. That constrained supply could continue to weigh on the numbers depending on what demand looks like from here on out. 

All of this, of course, plays into the shape the economy will take over the next few quarters. 

Many investors enjoyed a profitable summer. Some believed that recession was successfully avoided and that the Fed was on its way to the soft landing it had been chasing. 

But as so often happens in the markets, things turned around and the outlook became less rosy. 

Unemployment went up, housing has been taking a beating, and profits across the S&P for the second quarter were in decline. 

These are all signals that, despite what the pundits have been saying, we aren’t in the clear yet and there is still a lot of rocky road ahead. 

The recent CPI numbers may not be an indication that recession is ahead. They could have been an anomaly made possible mostly by the spike in oil prices. But there are plenty of other signs that it’s not going to be time to start celebrating anytime soon. 

Instead, what the markets are telling us is that those who have been investing defensively, despite summer’s good fortunes, should continue doing so. Those who haven’t been building portfolios designed to weather economic storms should strongly consider doing just that. 

Certain assets are worth owning in this kind of environment, the kinds of assets that thrive and keep portfolios and net worths from evaporating. 

It’s this kind of wealth-building and wealth-maintaining strategy that has helped Nick Hodge beat the market six out of the past seven years. He offers his insights in his publication Foundational Profits. Later today, at 11:00 am PT / 2:00 pm ET you will get to hear directly from him as he hosts his third-quarter Quarterly Call-In.

He will go over the state of the market and how he sees it playing out over the rest of the year. The event is exclusively for members of Foundational Profits. If you join, you and other like-minded investors can ask Nick questions in real time. 

Click here to learn the details and gain the kind of market-beating insight that can help build and protect your portfolio no matter what the market does.

Ryan Stancil
Editor, Daily Profit Cycle