INTRADAY ALERT: March CPI creates max pain moment. Why is CPI "hot" but U Mich shows falling inflation expectations? "hot" CPI due to same issues --> auto insurance and auto-related

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The video in this report is only accessible to members
The video in this report is only accessible to members
The video in this report is only accessible to members

March CPI released came in "hot" with Core CPI of +0.36% vs Street of +0.30% and this is triggering a sizable sell-off in equities. This is fueling the skepticism of the "inflation is stubborn" cohorts, but as we discuss below, this is a "maximum pain" moment for stocks -- that is, today's reaction is the worst moment of the reaction. Meaning, this is arguably a buy the dip moment.

Core CPI came in above consensus at +0.36% vs Street of +0.30%. This is a disappointment because this is not really an improvement from Jan and Feb Core CPI (Feb was +0.36% too). After all, we expected seasonality and other distortions to be removed from March. March is the first clean CPI reading of 2024. What caused March Core CPI to be "hotter"? It was all automobile insurance related:- Auto insurance MoM soared to +2.58% March- Feb MoM was +0.85%- YoY surged to 22.20% vs 20.58% The surge in auto insurance is still causing upward pressure in Core CPI MoM and YoY. How much?- CTG (contribution to growth)- Auto insurance-related March CTG MoM +0.14%- Auto insurance-related Feb CTG MoM +0.08%- Auto insurance related was +0.06% higher- explains entire upside reading vs consensus Is the fact that auto insurance accelerating a reason to see inflation generally surging?...

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