The US CPI is going to be worse than we all think.


Last week, the Producer Price Index jumped to 6% YoY, putting it back at its highest level since 2023.
Why does this matter? When prices for producers rise, it usually takes time before they get passed on to consumers.
Higher input prices mean companies have to charge more in selling price to compensate.
There's typically a 1-2 month lag from PPI before it gets passed on to consumers.
So if CPI follows, I believe we could see it push above 4%.
Remember, the 2022 bear market bottomed on hopes of easing inflation and rate cuts. The Fed delivered its first cut in September 2024.
Now, if inflation stays higher for longer, hopes for rate cuts dim. That could make investors skeptical and drive outflows from global assets.
The macro backdrop is getting serious.
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