The consumer price index comes out Wednesday. The Fed will read it. Markets will pretend this changes anything about what Jerome Powell already decided three weeks ago in a conference room you'll never enter.
Analysts expect a modest increase for July. Modest. That's the word we use now when inflation grinds your purchasing power into dust at a slightly slower rate than last month. Your grocery bill still looks like a phone number but hey, the rate of change decelerated. Pop the champagne.
This report should be a big deal for the Fed. Should be. According to whom? The same people who said the Fed would pivot in 2022? The same analysts who've been wrong about every inflection point since COVID started? Those prophets?
Here's what actually happens Wednesday: a number prints. CNBC hosts furrow their brows. Retail traders check their portfolios seventeen times before lunch. The Fed ignores all of it because they already wrote next month's statement. They're not waiting on your July CPI to make policy. They're waiting on their printers to warm up.
The expectation game is my favorite part. Economists predict 0.2% monthly increase. If it comes in at 0.2%, markets rally because it met expectations. If it comes in at 0.19%, markets rally harder because it beat expectations. If it comes in at 0.21%, markets tank because the Fed will obviously raise rates seventeen more times. All three scenarios were going to happen anyway. The number is decorative.
Somewhere right now a day trader is setting an alarm for 8:29 AM Eastern. He's got his strategy ready. He's gonna read that CPI number and make a move before the algos do. He's gonna beat machines that execute trades in nanoseconds. He's gonna retire off this Wednesday inflation print. His wife is gonna leave him by Friday.
Photo by Markus Winkler on Unsplash
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