McCullough’s Call Rings True: Inflation Done Declining for 2023
Let Thursday’s CPI print serve as yet another reminder: what politicians or investors want to see happen has no impact on economic gravity. Headline CPI stayed flat sequentially in September, up +0.4% month over month (10 bps higher than expectations).
“It’s a strong number. Not crazy strong, but the market was looking for it to be cooling a little bit from the margin, and obviously it didn’t,” Financials analyst Josh Steiner explains in this clip from The Call @ Hedgeye.
Amid incessant narratives that inflation would continue falling, Keith McCullough made the call in July that inflation was done declining for the year. That forecast proved true for the remainder of the summer, and now into the fall with September’s report.
“That’s really the regime we’ve been in, this re-accelerating inflationary environment since the July print,” Steiner adds. “So, there was no real change in that respect.”
Yet people continue to pounce on every media narrative that economic improvements are imminent. As Ben Hunt described it in the Hedgeye Investing Summit, “Fiat News” has a massive influence, and gullible investors fell victim once again before the market closed Wednesday.
“It never ceases to amaze me how mainstream media tries to spin,” McCullough says. “I heard people yesterday thinking someone leaked CPI and it would be lighter. That was going around the last 20 minutes of trading yesterday. People believe the plutocracy gets the info before us. Because they do. This is a problem for plutocracy, when the numbers themselves and the bond market are trading on numbers themselves.”
“The Fed and US government, particularly Janet Yellen, are losing control of the narrative because they’re losing control of the bond market, and the bond market trades with economic gravity,” adds Hedgeye’s CEO. “The only thing that matters is getting the rate of change of economic gravity right. And we were right. We’re not getting inflation below 3.6% all the way into the end of Q1 2024 at least. And that’s the call.”
Watch the full clip above.
