INTRADAY ALERT: 'Soft' Oct CPI with only 7 of 31 Core components seeing inflation. Wow. Face ripper intact. YE rally thesis intact.

INTRADAY ALERT: 'Soft' Oct CPI with only 7 of 31 Core components seeing inflation.  Wow.  Face ripper intact.  YE rally thesis intact.
INTRADAY ALERT: 'Soft' Oct CPI with only 7 of 31 Core components seeing inflation.  Wow.  Face ripper intact.  YE rally thesis intact.

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
    – Wow
  • 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

10-year yields tanking

INTRADAY ALERT: 'Soft' Oct CPI with only 7 of 31 Core components seeing inflation.  Wow.  Face ripper intact.  YE rally thesis intact.
Source: Fundstrat and Bloomberg
INTRADAY ALERT: 'Soft' Oct CPI with only 7 of 31 Core components seeing inflation.  Wow.  Face ripper intact.  YE rally thesis intact.
Source: BLS

INTRADAY ALERT: 'Soft' Oct CPI with only 7 of 31 Core components seeing inflation.  Wow.  Face ripper intact.  YE rally thesis intact.

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36 Granny Shot Ideas: We performed our quarterly rebalance on 10/18. Full stock list here -> Click here

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INTRADAY ALERT: 'Soft' Oct CPI with only 7 of 31 Core components seeing inflation.  Wow.  Face ripper intact.  YE rally thesis intact.

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