INTRADAY ALERT: July CPI good enough. Odds of a Nov hike fall 4% to 18% and eventually we expect to go to zero.

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This morning July CPI was reported and the key number was core CPI MoM. This figure came in at +0.16% vs consensus of +0.22%. So it was a good figure, or at least good enough.

Core CPI has fallen to a pace consistent with ~2% inflation. +0.16% x 12 = 1.97% and this is <2% and this is the second consecutive month of low core CPI. Under the hood, shelter is still elevated with a MoM % increase of +0.47% and this pace is above the +0.45% last month. I don't think this will bother the Fed, as this is more emblematic of the widening gap between the reality of home prices and CPI calculation. Does anyone believe housing prices are up ~8% YoY? Some cities, sure. But for the ENTIRE STOCK of housing? Nope. If this was the case, housing is literally the best investment in the world right now. Another figure that matters is Core CPI ex-housing and ex-cars and that figure was +0.22% MoM. There is still an interplay between goods and services. Goods are deflating outright. Services are rising. But the bigger picture is inflation is cooling. Core goods are down -0.33% MoM. This is exactly what we want to see. Core Services ex-shelter is +0.22% MoM and this is consistent with 2% inflation. Housing is still biggest issue. Odds of a November Fed hik...

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