INTRADAY ALERT: August CPI "hot" but details better. Tape bombs ahead, so investors now likely wary until FOMC rate decision 9/20

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August CPI came in "hot" as Core CPI came in at +0.30% versus Street +0.20% and above our +0.16% to +0.18% estimate. The details, however, are better than the surface level readings.

The details for August CPI are actually better. The +0.10% MoM is entirely due to 2 categories:- Motor Vehicle insurance surged +2.4% (29% annualized) adding +0.08% to Core- Airline fares exploded +4.89% (59% annualized) adding +0.03% to Core- combined, these 2 added +0.11% to Core, or the entire upside surprise Vehicle insurance is simply catching up to the surge in auto prices over past few years (replacement cost, etc) and one wonders, do further hikes slow this? Not really Airline fare exploding higher is not congruent with the significant guidance cuts by American Airlines ($AAL) and Spirit Airlines ($SAVE). To me, this rise in airlines is somewhat one-time. These 2 items also drove the "super core" (aka Core Services ex-shelter) to +0.53% MoM. - Motor Vehicle insurance +0.28%- Public transportation +0.12%- Total +0.40% of the +0.53% Does the Fed want to hike further to contain these 2 items? The Fed fund futures pushed hikes into November- Sept odds now 2.3% -4.50%- Nov odds no...

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