The Federal Reserve is creating a monster with inflation, and all you have to do is look at the inflation CPI data for April to see the truth of it.
The Consumer Price Index (CPI) measures the average change over time in the prices paid by consumers for goods and services.
And one of the most pressing questions on Wall Street right now is if inflation isn’t a concern — like the Fed wants you to believe — or whether it will distort and pop every asset bubble in the market.
I have a feeling it’s going to be the latter…
This morning, the inflation CPI data for April was released… and WOOF! The numbers exceeded expectations in the worst way possible.
In April, the CPI for All Urban Consumers rose 0.8% (expectation was 0.2%) on a month-to-month basis, and rose another 4.2% (expectation was 2.9%-3.9%) over the last 12 months.
That’s a 2.6% rise annually… That’s also the largest year-over-year increase since August 2018, the fastest spike since September 2008, and the biggest monthly gain in inflation since 1981.
The years 2008 and 1981 should ring a bell for some of you. Let’s just say they weren’t great for investors…
But if that wasn’t crazy enough, I dug a little deeper into those numbers and saw something I wasn’t expecting: used cars.
The prices of these things are key inflation indicators, and boy are they showing there’s some major inflation in the stock market.
In one month, the price of used cars and trucks increased by 10% — surging 21% year-over-year.
This tells me that the amount of new people who can afford new cars is shrinking, and they’re turning to the used-car market — which is slowly getting out of line with prices.
However, it’s safe to say the year-over-year comparisons will look bad for the next few months because of the pandemic’s impact on shutting down the U.S. economy in 2020.
Perhaps that’s why the Fed and many investors want to dismiss the inflation CPI data for April.
But it’s that line of thinking and inability to take action that’ll lead to completely stunting all of our economic recovery…
Check out my short video below to learn more about inflation CPI data for April and what it means for the economy. Be sure to share your thoughts in the comments section below.
And as always, send any trading questions to firstname.lastname@example.org and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.
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