The Good, the Bad, and the Inflationary

CPI Report Triggers Market Shootout

Did y’all hear the news?! Yesterday, the much anticipated CPI report came out, and the news was not what financial folks wanted to hear. The CPI rose 0.4%, for a total of 3.5% over the course of the last 12 months, and the stock market was not happy about it.

For those of you new to this conversation, the tl;dr is - the Consumer Price Index (or, CPI) is a measure of inflation (how much prices of goods are rising) and one of the key metrics the Federal Reserve watches closely to determine what actions to take on interest rates. The goal is a 2% year-over-year increase, and we’re about 1.5% higher than that. This figure was compounded by the fact that last quarter the CPI was 0.4% lower, which means after trending solidly downward over the past several months, inflation switched course and started moving higher again.

Prior to this news, the Fed hinted at possibly lowering interest rates this year, which caused the stock market to surge. But it seems the Fed was getting a little ahead of itself. Mr Powell hinted at a few shiny promises he couldn’t keep, and yesterday the market made its disappointment heard. We are living through this strange paradox where a strong economy is actually a bad thing for the markets.

But do not fret my dear money mavens and mavericks! We are not victims to the whims of bureaucrats or macroeconomic forces out of our control. In fact, turbulence in the markets often breeds opportunity, and mastering your money means learning how to wrangle these opportunities when you see them!

The questions to ask ourselves now are…