The CPI print itself wasn’t the real warning. The combination of data was.
NFP came in at 162K, unemployment held at 4.1%, and previous months were revised higher. Then August CPI rose 0.4% MoM, while core CPI accelerated 0.3%.
Put it all together and the Fed is facing a difficult setup: the labor market isn’t weak enough to demand easier policy, while inflation isn’t cooling quickly enough to make a hold comfortable.
My call: the Fed hikes.
But the more interesting question is what that means for markets.
I’m bearish on rate-sensitive stocks and bullish on gold.
A Fed hike alone isn’t the entire story. The bigger risk is what happens to yields if investors begin pricing in the possibility that this isn’t a one-off move.
Higher financing costs can pressure equity valuations, while persistent inflation and policy uncertainty create a stronger environment for gold.
That’s why I’m not chasing stocks after a relief bounce. I’d rather hold the asset whose thesis doesn’t depend on the Fed turning dovish.
Strong jobs plus sticky inflation has shifted the question from:
“Will the Fed hike?”
to:
“How long can it afford not to?”
#CPIWatch
$龙虾
$LAB
$LSK
NFP came in at 162K, unemployment held at 4.1%, and previous months were revised higher. Then August CPI rose 0.4% MoM, while core CPI accelerated 0.3%.
Put it all together and the Fed is facing a difficult setup: the labor market isn’t weak enough to demand easier policy, while inflation isn’t cooling quickly enough to make a hold comfortable.
My call: the Fed hikes.
But the more interesting question is what that means for markets.
I’m bearish on rate-sensitive stocks and bullish on gold.
A Fed hike alone isn’t the entire story. The bigger risk is what happens to yields if investors begin pricing in the possibility that this isn’t a one-off move.
Higher financing costs can pressure equity valuations, while persistent inflation and policy uncertainty create a stronger environment for gold.
That’s why I’m not chasing stocks after a relief bounce. I’d rather hold the asset whose thesis doesn’t depend on the Fed turning dovish.
Strong jobs plus sticky inflation has shifted the question from:
“Will the Fed hike?”
to:
“How long can it afford not to?”
#CPIWatch
$龙虾
$LAB
$LSK
