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"Learn from yesterday, live for today, look to tomorrow, rest this afternoon." ― Charles M. Schulz

Good evening,

Stocks gave back their gains from the post-election surge this week, and then some. Much of that followed worries about inflation and its effect on Federal Reserve policy. Investors got the chance to review fresh inflation this week, with CPI showing inflation no closer to the Fed's 2% target. However, Core CPI arrived roughly in line with expectations, and to Fundstrat Head of Research Tom Lee, the October CPI report was actually "better than it appears at first glance." 

A 30% annualized surge in used car prices was one of the largest contributors to the rise in Core CPI MoM. Head of Data Science Ken Xuan hypothesized that used car prices were affected by previous hurricanes, and Lee concurred, viewing it as a "distortion [that] will disappear next month." As he reminded us, "The used-car CPI component tends to lag Manheim wholesale used car prices by two months. If this trend holds, then based on recent Manheim data. this component is set to tank."