A "face ripper" rally is underway as today's October CPI report vastly undershot consensus.
- Core CPI came in at +0.23% MoM vs consensus +0.30%
- As we noted in multiple notes this week, Consensus was leaning "hotter" as many forecasts at +0.34% to +0.38%
- The softside reading came in the right places
- Shelter slowed to +0.30%, among the slowest readings all year (42% weight)
- cars still tanking used and new (>12% weight)
- But the bigger story seems to be inflation could be "hitting a wall"
- only 7 of 31 Core CPI components saw a rise in Oct
- This should drive a change in both Fed's view of the "stickiness" of inflation and also the market narrative
Bottom line: We said the risk/reward favorable into CPI because so much skepticism. YE rally intact
This strengthens our base for a rally into YE. While there are some peculiar technical dynamics as noted by Mark Newton, the key in our view is:
- investors bearishly positioned
- yields falling
- we like $QQQ $IWM -- FAANG and small-caps
36 Granny Shot Ideas: We performed our quarterly rebalance on 10/18. Full stock list here -> Click here_____________________...