INTRADAY ALERT: Nov Core PCE +0.06% vs +0.20% Street shows inflation glide path lower. Sustains case for YE equity rally.

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The Nov Core PCE Deflator was released today and came in at +0.06% MoM, inline with tireless Ken's +0.07% and well below Street consensus of +0.20%.

The key takeaway is that inflation is falling like a rock. One can look at Core PCE MoM since the start of 2023 and the sustained downtrend in this reading is clear. Inflation is on a glidepath lower and the notion of "higher for longer" is not congruent with this trend. Housing accounted for +0.09% of the MoM increase, so ex-housing, Core inflation is negative. Yes. There is so much goods deflation that overall core inflation is falling below 0%. This makes me wonder if the Fed would actually be cutting more aggressively relative to their own timeline of expected cuts in 2024. Lastly, the overall story of inflation is consistent with our thesis and this is supportive of stocks. After all, if the Fed starts to worry about deflation (not the case at the moment), then Fed wants to reverse it stance. How would Fed reverse its stance if it was worried about too little inflation:- Move up forward guidance for cuts = dovish- End QT (quantitative tightening) = expansionary of money supply- Incent rising asset prices = stocks go up See the point, the Fed would go towards a money printing stance, whi...
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