By - _hiddenscout
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In other news, Chinese producer price index inflation surged 13.5% annually in October.
If this is true, the whole world is going to go into an inflation spiral and likely a recession and will take us years to recover from the COVID shutdowns. This is really dangerous. Chinese inflation leads to higher costs on imports.
Yeah I wouldn’t be surprised by some level of recession in the next 2 - 5 years.
It’s to be expected, honestly. Stocks surged way too well after a massive productivity loss due to shutdowns and lifestyle changes.
I just hope it’s not a bad one the next time it happens. Time will tell.
How much of the stock increase is just inflation? Cheap money looking for a home - the real purchasing power of your inflated assets is not nearly as good as it was a few years ago
In my opinion, the purchasing power of inflated assets has held steady, but you've been royally fucked if you didn't have any assets to appreciate in value, aka a fuck ton of people.
At least I have my labor! That will surely maintain val- why is my paycheck a wet roll of toilet paper?
Wait, they gave you toilet paper???
HEY, EVERYBODY, THIS GUY HAS TOILET PAPER!!!!! GET HIM!!!!!
I'll spray his hoarder ass with my bidet!
He who controls the toilet paper controls the power! Get him!
Recession is the economy. Bear Market is stock prices. While they often coincide, they are not the same.
We've seen the opposite last year, where stocks went up while GDP went down.
They went down simultaneously; just before and during the lockdown. The issue is that the data that we use to evaluate GDP takes time to compile and analyze which means that we don’t know what happened today in the economy for two quarters, while the stock market reacts immediately. We were still recording negative GDP numbers on a YoY basis each quarter, but growth was occurring Q32020 to Q22020 and Q4 vs Q3 and so on until today.
It still comes back to supply and demand. Stocks surged, no doubt about it. So did profit taking in 2020 as businesses reported record breaking quarrelers 3 times in a row. New money flooded the asset markets as well.
Don't get ahead of yourself. And definitely don't be fearful of a market contraction as that is normal and healthy for the markets.
It will also see who the investors are, and who the gamblers are.
> It will also see who the investors are, and who the gamblers are.
Hey! We can be both!
90% of my portfolio is sensibly allocated and marching toward retirement. The other 10% is in bullshit speculative moonshots.
Uh... same? That means you are the former, not both. Applying cost/benefit analysis to your investment strategy is sound thought process. You, sir/madam, are an *investor*.
I use Robinhood for gambling. That good for nothing app isn't good for much else but damn is their UI appealing.
Fidelity copied most of robinhood app
Or at least they tried. Hopefully they get it right sooner rather than later. My money is with fidelity, but I track stocks with Robinhood still.
>did profit taking in 2020 as businesses reported record breaking quarrelers 3 times in a row.
Was this across the board? From what I saw it was specific industries that did well, while others really suffered.
Fed raising interest rates to kill inflation may be necessary. May guarantee a deep recession. This happened in the early 1980s. Fed killed inflation. Caused a very deep recession. We came out of it and it was better after it, but people really get hurt when that happens.
And when the Fed raises interests rates, and very likely to painful levels, how are the US government going to scrounge enough pennies to pay the interest for the 30 trillion dollar debt?
I can't believe we're not in one now. Everything seems completely out of wack
Almost like the stock market is just barely-regulated gambling that has no connection to the reality of the economy. Almost like bankers and investors don't actually produce anything useful to society, unlike a construction contractor, teacher, or factory line worker.
The best cure for high prices is higher prices.
Covid shutdowns and insane amount of fed purchasing...fiscal and monetary
How knew that printing 2-3 trillion dollars on top of close to 1 trillion dollars back in 2008 will create inflation.....lol....
Does this affect our prices? Higher prices earlier in the production line carries to the end price?
Depends on the pricing power of the company. Here's the Economist's view of which type of company has more or less ability to pass along higher production costs to consumers:
Not sure if that article is behind a paywall, but either way I'd also suggest reading Warren Buffett's interview transcripts and annual reports where he talks about pricing power and the ability to pass along increased costs when evaluating a good business to invest in.
Finally someone here says it, increased producer costs dont automatically flow through to the onsuner 100%, it depends on demand elasticity. Expect relative prices of things you need to live to increase while relative price for frivilous wants to hold steady or decrease.
Same reason that " OMG MINIMUM WAGE CAN'T INCREASE MAH BURGER COST 1 MILLION" is a very dumb argument.
Everyone seems to forget that market prices are a function of supply and demand, not supply.
Their margins will also take a hit.
Price rises in Chinese goods sent to the American market are reflected in the American cpi.
Not yet, I think that’s the point. These are producer prices. They haven’t been seen by American customers.
Primary drivers (by highest inflation percentage) of the year over year inflation:
1. Gas was up 49.6% YoY, representing 31% of the total inflation of 6.2% YoY.
2. Used cars were up 26.4% YoY, representing 13.9% of total inflation
3. New cars were up 9.8% YoY, representing 6.1% of total inflation
Altogether, these factors drove >50% of the headline 6.2% inflation number.
good thing American infrastructure isn’t wholly dependent on automobile transportation then.
It is a good thing if you sell automobiles or lobby on behalf of the auto industry.
Every major city is now designed around highways and strip malls. Our path dependency around cars is now massive. I think it's a huge problem no one is talking about.
Many people are talking about it. Check out this YT series:
\[Not Just Bikes\]([https://www.youtube.com/watch?v=VVUeqxXwCA0&ab\_channel=NotJustBikes](https://www.youtube.com/watch?v=VVUeqxXwCA0&ab_channel=NotJustBikes))
Which references the \[Strong Towns\]([https://www.strongtowns.org/](https://www.strongtowns.org/)) movement.
The whole idea is that car-dependent suburban towns is a way of developing that has never happened anywhere in the world before, and it leads to financially unsustainable town municipalities. Basically, they are financially underwater because they can't raise enough in tax to cover the maintenance costs, especially for streets to support all the cars.
Cool! I'm a fan of Jacque fresco and he was talking about it in the 70s. Can't believe it's been 50 years
Like most good ideas, no one will ever listen.
Join r/fuckcars I’d you want to talk about it
They got cussy on that subreddit?
It's been a topic for decades.
Just not a very transparent or popular political position.
Basically we can't do much about any of these things in the short term.
Auto prices are going to be high until the chip shortage is worked out (late next year at the earliest) and oil prices aren't likely going down since OPEC probably won't let them.
Probably not. Production wise, with their current plan factored in, they will be pumping at a market surplus by Q1 2022.
It’s natgas and coal driving broad energy prices up, and dragging oil up with it.
It doesn’t make sense for them to do so. They may be slightly on the conservative side, but not by much.
China pushing away Australia coal and bidding up global prices against a Germany that substituted nuclear for coal (bizarrely), an EU that put themselves into a position to be Putin’s natgas bitch and not invest in LNP offload facilities….
The US’s new policy of “We want to use everyone else’s fossil fuels and fuss when they don’t pump more but no use our own” is a comical gesture to come at them with as well.
Look at it from their end. The EU’s energy transition by chaos and US hypocrisy must be mind boggling. It may make sense politically, but it’s a bonkers crazy energy management strategy.
> dragging oil up with it
I wouldn't exactly say that natural gas is "dragging oil" upwards. Oil has had upwards momentum due to underinvestment in oil infrastructure, and capital restraint from producers worldwide, to the point where supply can't keep up with demand. The fact that oil and natural gas don't trade in perfect tandem, or the fact that for the first half of the year NYMEX was flat while WTI was trading upwards; would strongly suggest that natural gas isn't "dragging oil" upwards.
A lot of cars are bought with loans. If you increase interest rates, you immediately decrease demand and allow supply to catch up. So yes - something can be done about it.
And gas was absurdly cheap most of last year
Yeah, it's weird when people point at gas prices last year to this year as a sign of inflation. It's still definitely up from 2019, but gas price is so variable. You'd have people 5-ish years ago thinking the sky was falling when average gas prices were well over $3/gal.
At one point you could get paid to take delivery of oil, you know, if you owned any empty tankers at the time.
True this, it's hard to look at inflation as not happening though, if the average person creates a budget and looks where that money is going the most major expenses have gone up. Food is up, rents/housing are easily double in many areas, education, insurance, healthcare, it's all up. Consumer products run a range but other than TVs and computers it's not like prices have really fallen since the 2000s.
That said when I see numbers like 28% for gas, well, yeah they're comparing to last year. I paid more for gas (in nominal dollars) in 2009 than I do today. It's gone way down considering the current value of money.
Inflation is happening but for different reasons than everyone is pointing too. Also, people are posting photos of price increases of 25%-100% claiming that it’s due to inflation.
We have a supply chain problem. Essentially JIT is out the window and we are seeing the economic impacts of that. We have more inventory sitting around, drastically increased shipment times, we killed off 700k people which includes a ton of laborers and all were consumers. Ports are clogged, I shipped something to Australia and it sat in port for FOUR MONTHS.
Monetary supply is not really driving our inflationary costs. COVID is. Add in a gas crisis being driven by the Netherlands shutting down the Groningen gas field, and a semiconductor shortage. And voila, you have inflation. Except everyone is pointing at political spending when that isn’t really the driving force or anything close to it.
>we killed off 700k people
Also like 2M people retired early, 3M people (mostly women) dropped out of the workforce to provide care, a bunch of young people finally getting good enough jobs that they no longer need to work 2 jobs or side contracts, and a chunk of college students waiting a year to graduate.
Wage-driven inflation is definitely a factor, but I think it should balance itself out in a year or two. (Downside is that it'll probably kill a bunch of small retail businesses that have survived the past 10 years by avoiding the need to raise their pay.)
And what’s the other 50% from?
No one wants to hear it's supply chain issues even though it's very clear there are supply chain issues if you regularly buy things. Everyone would rather get outraged and scream about the country collapsing.
This is bad optics. Fuel/transport is the number one operating cost for supply chains and delivery companies. We cannot simply take it out and say the rest of the pie needs to be observed.
Rather, the two things that have been pointed out will drive correlation with increased prices of goods and services. Take a peak at FedEx or UPS shipping costs YOY.
Increasing energy costs is never a good sign, those costs get passed down to the consumer from the logistics industry.
When was the last time increasing energy costs didn't cause major economic setback? 70s, 2008, ....? Honest question.
Pretty much from 2009-2014. The oil prices were higher back then and didn't cause a major setback.
Eh, well, yes, but 2009-2014 was known for its.. incredibly tepid growth. Despite coming off of a low base due to the Great Recession, real GDP per capita growth was something like 1% per annum on average from 2011-2014, which is historically low for post-recession recovery years. Real GDP per capita growth post-recession is typically much higher.
That isn't to say that oil prices were the cause of it necessarily, but four years of stunted growth is a setback by any measure.
2011, or 2014, depending on how you see it.
When the economy is booming, gas prices go up
They’re increasing from a low baseline during the pandemic https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=M
>Primary drivers of the year over year inflation:
>Gas was up 49.6% YoY, representing 31% of the total inflation of 6.2% YoY.Used cars were up 26.4% YoY, representing 13.9% of total inflationNew cars were up 9.8% YoY, representing 6.1% of total inflation
>Altogether, these factors drove >50% of the headline 6.2% inflation number.
Gas last year was still recovering from the pandemic lows. A return to "normal" prices is naturally going to look like a huge rise after a huge fall. This is a fundamental problem of reporting numbers as percentages.
New cars up due to chip shortage causing a new car drop in supply
Used cars up due to new cars being higher priced and used cars are a substitute.
All of these are easily explained by the pandemic, and the removal of all safe guards in the name of reducing inventory/carrying costs. Rather than because the poors have too much money, which is the angle that WSJ and a lot of other folks are taking/buying.
turns out, when supply is low, costs rise, and 30 years of MBAs telling people to pull out all the safe guards to follow Toyota's JIT system and increase profit led to a bunch of industries with nothing to sell. Yet now, they want to sell us the idea that it's because they've given too much money away rather than their own short-coming in seeing that shit might break at some point? I'm not buying it.
Yeah, I feel like inflation has been kept weirdly low for years (despite the headlines) thanks to stability and improved JIT supply chains being steadily deflationary. Now we've had a surprise event that made the risk of this approach apparent.
Oh good, so instead of lumber and chips it's now oil and transportation. It definitely won't be something else in 6 months. Totally idiosyncratic guys.
Definitely not shelter. Why would you even suggest it would be shelter?
InFlAtIoN iS tRaNsItIoNaRy ¡
Yeah and I mean, who really needs transportation, right?
If you want an airplane ticket though, it does cost 4.6% LESS than 12 months ago and 0.7% LESS than last month. Which doesn't make any sense. 24.0% LESS than 24 months ago.
Thise 3 are prices that will come back down as demand cools though. Isn't that why they keep saying transitory?
Yes, on top of port congestion. There are many reasons this is considered transitory.
The energy crisis in China and Europe certainly isn't helping fuel prices.
Used cars had a dip for a while there, they've picked back up these past 2 months tho
Because new car production has gone to shit again
Source: I work in automotive manufacturing
Given the fact that a lot of people do not understand economics and percentages, they really should make sure to put 'at annualized rate of' in these headlines. Otherwise people will assume prices literally increased 6.2% in October alone.
No, that would be incorrect. "6.2% over last October" or "6.2% year over year" would be proper.
This is extremely common, too. x increased by y%. It could be murders, accidents, suicides, inflation, etc. Without providing the baseline information these headlines are usually misleading.
Used to work with an economist who said this about inflation - “It’s like a speed limit sign on the highway, by the time you see it, it’s already too late”
He said this in 2015, not the most optimistic viewpoint but I thought it was an interesting analogy.
That being said, it’s a one month, might signal an uptick but does not dictate pace. Same goes for the jobs number.
It’s been “upticking” since the spring…
The fed needs to begin raising rates now. Taper isn't enough.
The last time inflation was this high (early 1990s), the fed funds rate was 8%.
Sadly, I don't think the fed will do anything. Americans are going to need to get used to a lower standard of living than before.
If interest rates are lower than inflation just borrowing and spending makes sense. As long as spending wildly and borrowing wildly is profitable inflation will get worse.
If you can borrow money at almost no interest and inflation is 6% buying gold, housing, Rolex watches and antiques makes sense at any price if your time horizon is long enough.
> Americans are going to need to get used to a lower standard of living than before.
And you know this isn't going to happen without massive amounts of violence and blame being directed towards the wrong people.
This is the most interesting part. A big swath of America will have absolutely no tolerance for reducing or surrending while raising taxes. No politician will be able to push it, not will any want it in their watch.
We like to consume more than we produce and that can't go on forever.
It'll drag down a lot of other countries with it. The US consumes 25% of all globally produced resources every year. A lot of countries will hurt with the lost production. And you can't just transfer it to other countries. There has to be demand for it first and foremost. And even if you could, you still wouldn't make as much money as you did before selling your product to Americans. People in Africa aren't going to pay $20 for a t-shirt.
What if you put a supreme logo on it?
> The fed needs to begin raising rates now. Taper isn't enough.
> The last time inflation was this high (early 1990s), the fed funds rate was 8%.
This is it. The difference between interest rate and inflation rate is massive. In the 70s, even though inflation was high, so was interest - therefore the magnitude of the required increase was never that great. They had double digit inflation with double digit interest - we appear to be heading for double digit inflation with zero interest, meaning the hikes are going to need to be monumental and it will only get worse the longer they leave it.
> Sadly, I don't think the fed will do anything. Americans are going to need to get used to a lower standard of living than before.
No... if inflation was 5% and falling, I agree they would leave the cost on the consumer. But if inflation is 5% *and increasing*, they must react otherwise it will very quickly spiral out of control. This isn't optional.
>Americans are going to need to get used to a lower standard of living than before.
How much lower are Americans expected to get? We live in an era of record debt and stagnant wages
Before we had a lot of disposable consumer goods like cheap TV.
Now we'll have less of that on top of the already existing housing and healthcare insecurity.
We'll own nothing and *like* it!
Why do you think raising interest rates will lower inflation in this environment? Low rates are not the cause of inflation here and every major economist agrees on that
Low rates are the reason for housing inflation which is a significant piece of the puzzle here.
Curbing demand is the goal. And with the tools the FED has, increasing rates is the only way they can achieve that
Higher rates means less investments and lower demand, which means less pressure on the supply chains and thus lower prices.
It means a lot more than just that
Sure, but I was just explaining how "supply chain issues" ultimately still is a function of the low interest rate environment we're in.
Not anytime soon with the causes here. Raising rates isn't going make chip factories pop up in Asia anytime quicker to help with the chip shortage. It's also not going to make OPEC anymore likely to raise their oil production levels. We're going to have to wait until the next growing season for farmers to start producing at higher levels.
By next year a lot of this will be resolved, whether the rates in the US are higher or not. Oil prices will be a big question mark I guess. Even if the US gets back to pre-COVID levels, OPEC is still in the driver's seat when it comes to setting prices.
There is mounting evidence that our problem is demand, not supply.
Isn't it pretty clear as day? Despite higher prices, demand is flat or up. Even if that was a supply shock initially, clearly the supply and demand weren't as elastic as economic theory would like to suggest.
Interest rates have been rock bottom for so long that investors have to take high-yield, high-risk positions to keep pace with inflation. Everyone is chasing yields because bankers have spread out the yield too thin. It’s all tuned for a consumer-demand driven economy that just doesn’t exist any longer.
What? Higher rates would undeniably reduce inflation. Let's take an extreme case. Today inflation occurs in part due to supply shocks. But those shocks only occur because demand has outstripped supply. Crank up interest rates to say 50%, and demand will crater. Inflation would disappear.
Interest rates definitely influence inflation.
Where the fed is stuck is that the US government has massive debts. It cannot sustain high interest rates. In similar fashion, home prices have skyrocketed under low rates. They also cannot sustain high interest rates.
The fed must now choose: crater the economy and end inflation, or let inflation run rampant. The fed will undoubtedly choose the latter, because it's the only feasible way out of the government debt problem. If it chooses to address inflation by raising rates, the debt is still there. The debt only goes away with decades of government surplus. And the government has shown an inability to due that. Soo.... expect high inflation to continue, potentially for the next decade.
seems complicat4ed. good thing i'm not in charg
Wouldn’t raising interest rates only worsen supply chain issues?
It might, we need more trucks, containers, port equipment, and especially more chassis.
The Steel and China tariffs have already increased cost on equipment and has had a big impact on the chassis market, increasing the financing cost won’t help.
Maybe the expected drop in demand is enough to mitigate the equipment shortage, maybe not.
>Americans are going to need to get used to a lower standard of living than before.
I think this is going to happen regardless of what the Fed does, though I agree raising the rates is probably the better of their bad options. Horrific runaway inflation strong possibility. At what point do big banks, or even consumers, just start taking out low-interest loans and buying crypto, stocks, real estate or precious metals en masse in the expectation of paying off "cheaper" USD by selling some of their inflated assets? I'm sure this is already happening to some degree, but it could really take off in a self-exacerbating cycle if things get further out of control.
At the same time, given the huge amounts of corporate and government debt, raising the rates would probably result in a massive asset correction and attendant economic turmoil. We were due for a cyclical correction *before COVID even hit.*
Either way nearly all people in this country will suffer, at least to some degree. Material standards of living have peaked in the US, probably at least for a decade or two. The suffering and discontent will likely lead to further political polarization and extremism, which can then possibly exacerbate macroeconomic unease. At the risk of delving too much into US politics, people blame a current administration for economic woes, and the possibility of a certain recent controversial president getting elected on a wave of popular discontent seems increasingly likely. Regardless of electoral specifics, economic, social, and political deterioration can reinforce each other, potentially exponentially.
Maybe this analysis is overly pessimistic. Maybe I am being a "doomer". I hope I am. But even if you think I'm completely wrong, be careful of your own biases. Don't blindly trust statements by political, economic, and media elite who have every interest in downplaying the extent to which we are likely screwed. Please at least have something of a plan for how to look out for yourself, your family, and your community if things deteriorate to a scenario like the Great Depression or even circa-1991 Soviet collapse.
Back then, the debt-to-GDP ratio was roughly half of what is currently is though. I don't see how they will be able to raise rates without bankrupting the treasury.
This isn't the 70s, it's a different animal. This is demand pull inflation after a particularly crazy year of supply collapse rebounding to almost near full demand combined with significantly increased money supply. Is it transitory? We don't know it's too early to tell, stop reacting to media headlines about fast inflation, it will take months to figure out if it levels out.
Add that we are going into the holiday season which normally has heavily increased spend so we likely won't see until January/February if it levels off. Everybody just chill.
Port congestion. Energy crisis in China and Europe. Booming demand. Trucker shortage.
Until we get those things sorted out, we don't know what is real inflation and transitory. We are also seeing wage increases across the board and adding lots of jobs. Interest rates will undoubtedly rise eventually. I think for now as companies invest in things like chip manufacturing in the US, rates will remain low. We need to bring manufacturing back, even if it means automation.
It's all just bait for people who want to be outraged at the narrative they think is happening. By many accounts things are progressing well as far as we know.
'Transitory inflation' is real inflation. It doesn't mean that price increases are temporary it means the high rate of inflation is temporary. Most prices are likely to be sticky and not go back down.
Housing, fuel, and food prices tend not to be sticky though which makes up a large part of inflationary pressure ATM...
There are manufacturers that are beginning to move some production back to the US, namely chips.
I agree overall except the permanent part. I do not think it will be permanent. Especially with investments in ports potentially on the horizon.
It will sort itself out one way or another.
Personally i doubt manufacturing as a whole will be significantly onshored. Critical industries like chips and farming and aerospace will get government subsidies and policy support but manufacturing as a whole being competitive in the globalized market? I doubt it.
I wish I could upvote this more, after a major tail risk event like 2020, it was bound to have second and third order effects that we are feeling. It will take time to sort it out and perhaps new ways of looking at thing.
There is just as likely to be a huge glut in energy in 2022 or 2023 than an increase in energy prices now and we will have the exact opposite conversation about green energy than is happening now, its all just a matter of time horizon.
>There is just as likely to be a huge glut in energy in 2022 or 2023 than an increase in energy prices now and we will have the exact opposite conversation about green energy than is happening now, its all just a matter of time horizon.
Exactly. Now we don't know the second and third order effects but they can be somewhat predicted. And as humans we typically respond to large increases in demand with oversupply of the market. The energy space is going to get very interesting with large amounts of money being deployed for renewable assets and it looks like large amounts of capital being deployed by Oil & Gas in response to the drive up in oil.
All very interesting from an academic perspective and goes without saying very concerning from a personal impact to the population.
So if gas prices, which were historically low during the pandemics beginning due to decreases in demand, make up 30% of the inflation YoY, isnt some of this inflation just...normal? Obviously 6% is large, but fuel costs returning to normal will increase other costs as well, and since fuel costs were so low in the previous year, a larger YoY inflation figure should be expected.
I think the doom and gloom is warranted in some cases here and we should have raised rates long ago, but YoY inflation should have been expected to be larger than normal and I believe that's what the Fed is probably factoring in.
I did the math in another comment. Last October CPI was 1.18%
It works out to an average 3.6% inflation.
See, that sounds a bit more realistic. Still higher than what you want, still an alarm to raise rates, but not some "sky is falling it's the end of the world" spooky number. I'm not a statistician or econ major but I get the feeling using data from a year which was historically wonky instead of using data from a year like 2019, which is probably more indicative of normal economic conditions, is always going to give you weird values.
Should we have a 2 year average of 3.6% inflation when a quarter of the period was deflationary and "historically wonky"?
You are correct. But this subreddit is infested with Doomers who are literally always wrong.
It’s just an offshoot of entertainment news and entertainment politics. Too many people are building their personality off of the economy moving and they need that action.
Last October, CPI inflation was 1.18%
1.0118 * 1.0622 = 1.0747
Over the past 2 years, we have seen a total of 7.47% inflation.
That works out to the equivalent of 2 years at 3.67% inflation.
TL:DR. A year of historic low inflation throws off year over year inflation numbers when we revert to norms.
This is what I keep trying to explain to people freaking out over these inflation numbers. Do you know if anyone puts out smoothed over inflation stats, like a 2yr, 5yr, 10yr inflation number?
I just threw together a [chart](https://imgur.com/gallery/5zAABoC) comparing 2yr and 1yr yoy inflation from Sept 2018 to Oct 2021. 2yr inflation has been higher than average since May.
Thanks for that link!! This was the [chart](https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed/blog/2021/october/ote/blogimage_inflationanalysispt1_pce_100721.png) I had in mind from [here](https://www.stlouisfed.org/on-the-economy/2021/october/what-risks-future-inflation), which I didn't explain properly, I mean cumulative. But seeing both visuals with a pretty clear takeover in early 21 is also interesting to confirm.
Remember PPI yesterday comes in very hot as well. I posted it yesterday already on PPI. No surprise CPI is also hot as well. Both will remain high for awhile. Also, here is my correct call on 6.0% plus minus a few decimal points.