Feb Core CPI downside +0.23% MoM better than "seasonal" fears and outright good Array ( [cookie] => ff40c2-92de9e-70e5bd-2996d6-c30401 [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 2 [max_usage_crypto] => 2 [lock] => 1 [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 210734 [user_id] => [reason] => [method] => ) 1 and can accesss
Feb Core CPI came in at +0.23% MoM, which is better than consensus of +0.29% MoM and the number is clean. That is, the downside read is due to a weakening of inflationary pressures.
- Overall CPI was soft for the right reasons, especially compared to the strong Jan +0.45%.
- Shelter cooled further to +0.29% MoM vs +0.33% in Jan
- Recreation is 2nd largest contributor +0.81% MoM vs +1.37% in Jan
- Used cars 3rd at +0.88% vs +2.19% in Jan - Of those, we find used cars the most peculiar to be rising at these rates when Manheim shows wholesale car prices so weak. This is either a lag and should fall in future months (our expectation) or there is some seasonal quirk, and this should also clear up.
- Auto insurance, the second largest contributor to inflation in 2023 and 2024 has dramatically slowed.
- Feb Auto insurance +0.27% MoM
- Jan Auto insurance +1.99% MoM
- that is a massive deceleration and a good sign
- auto insurers have reached sufficiency on premiums, so dramatic increases of >20% seen in 2023/2024 are likely behind. - Overall, 53% of Core CPI basket YoY inflation rates are back to trend and this is above the 50% average seen over the past 20 years.
- For the Fed, this is strengthening the case and overall picture that inflation is under control. Keep in mind Jan/Feb are the 2 months which are viewed as having seasonal distortion. And while the Fed might be hesitant that one-time inflation may result from tariffs, the actual underlying current trend is positive.
- Equity markets remain hesitant because of the tariff headlines causing uncertainty among CEOs, consumers and markets. This lack of visibility naturally makes it difficult for markets to find equilibrium. Hence, the recent volatility.
- But at the same time, the 4% decline in Nasdaq 100 Monday was a clear over-reaction. And as we pointed out Tuesday, these "high velocity declines" often mark important market turning points (higher). Rarely is it the start of a bear market, or major downturn.
- Remember, we were at a 52-week high just a month ago. And as we noted yesterday, the only decline of that speed that portended a bigger drop was COVID 2020. So if one believes the tariff wars have the same downside risk as a global pandemic, then, 2025 decline is not an opportunity.
- But even 3M and 6M and 12M later, all similar faster declines were investment opportunities.


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