“Inflation” to lead headlines again when CPI data is reported. Real-world price appreciation is well ahead of the Fed’s 2% target.
If last month was any indication the term “inflation” will dominate market-related headlines when May CPI data is released on Thursday June 10th at 8:30am ET (See Google Trends chart below for search term “inflation” as of Thursday May 27th). Recall that when April CPI data was released on May 12th, many were surprised to learn of the 4.2% annual increase (April 2021-April 2020 period). We don’t publish a TEK2day inflation model, but trips to the grocery store, farmers markets and Home Depot were sufficient to directionally indicate that prices have increased over the past few weeks. Price increases are a predictable by-product of a foolish monetary policy that has inflated the money supply (M1) by 4.7x since January 2020 (chart below). Stagflation is the end-game to this experiment in ultra-inflationary monetary policy. As to the question of “transitory inflation” – that is Fed marketing spin. A casual glance at housing prices, equities, building materials, precious metals, commodities, used car prices, art, food, etc. speaks to something more permanent. The catalyst of course is the Fed’s dramatic expansion of the money supply. However, don’t blame Mr. Powell for The Fed’s actions. COVID forced his hand after all. “Good times create weak men, and weak men create hard times”. – G. Michael Hopf