The markets have reached a brand new degree of stupidity.
Shares are exploding greater primarily based on inflation coming in at 7.1% 12 months over 12 months. That is apparently nice information as a result of Wall Road anticipated the quantity to be someplace between 7.2% and seven.6%.
So, in line with these shopping for shares at the moment, a 0.1% “beat” on an inflation quantity that’s nonetheless north of seven% regardless of the Fed implementing its most aggressive charge hike cycle in 40 years in is a cause to panic bid shares greater.
Trying via the numbers, nearly all the drop got here courtesy of falling vitality costs and used automobiles. I would add that the drop in vitality is no surprise provided that the Biden administration drained the Strategic Petroleum Reserve (SPR) by ~180 million barrels of oil. Virtually every little thing outdoors of vitality and used automotive costs continues to be rising.
Elsewhere within the report, core inflation, which the Fed appears at intently continues to be at 6%. Positive, it’s not spiking any greater, however this it’s not coming down a lot both. Once more, that is good in a approach, however is it a cause to panic purchase shares like inflation is gone? I don’t assume so.
Sadly for individuals who are panic shopping for shares at the moment, the bear market is NOT over. With a recession simply across the nook, shares will quickly collapse to new lows.