Our Inflation Nightmare Will Flatline in 6 Months

Investors are running scared.

Chalk it up to the August CPI reading, which prompted a brutal sell-off on Wall Street last Tuesday. Stocks suffered their largest one-day drop in more than two years.

Why? The market took a “glass half empty” view of positive news: The headline inflation rate decreased from 8.5% in July to 8.3% in August.

As you can see, inflation has continued to trend downward since peaking in June:

Readers, this is good news. And it’s part of why our inflation nightmare could end within six months. Let me explain…

  • The CPI core rate is what really sent markets into a frenzy.

The core rate excludes volatile energy and food prices. It rose from 5.9% to 6.3% as rents jumped, along with other goods and services.

The Fed sees the CPI core rate as a major indicator of underlying trends. So, it’s no surprise the media obsess over it too. Maybe you’ve seen some of the alarmist, click-bait headlines. Same as it ever was, fear sells… but I’m not buying it.