Financial Insights

FROM THE VAULT 10/14/22: Inflation - CPI

CPI came in hotter than expected, at 8.2% year-over-year, versus the 8.1% expected. Similarly, Core CPI, which some consider a more important metric, came in at 6.6% vs. an expected 6.5%. Core CPI removes food and energy factors from CPI as those are the most volatile components.

"The underlying inflation picture continues to deteriorate, and it is hard to blame supply chains or reopening pressures. More than half the components of the CPI are rising at faster than a 5% annualized rate in the latest month.” - Brean Economics

Positive +++
Some items that are showing relief are goods. Many retailers have announced overstocked inventory. To clear this glut and clear the shelves, they’re incentivizing shoppers with discounts. This parlayed with the recent weakness of container rates, and the loosening of the transport market should continue to drag on prices. Used car sales show a decline from last year from the Manheim Used car index, and next month is on pace to reach close to double-digit declines.

Negative - - - 

The stickiest parts which showed relief look transitory.

Using data going back to 1951, commercial stocks of distillate fuel (diesel and heating oil) in the United States are at perilously low levels ahead of winter. At just 106m barrels, they are the lowest since weekly records started in 1982. From a crude oil standpoint,  US commercial oil inventories are now larger than the government's Strategic Reserves for the first time in decades.

Glass Half…

Per Redfin, rents rose 9% year over year in September, but they are growing half as fast as they were six months ago.

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