This Week's Inflation Reports May Have Been Cloudy, But the "Forecast" Ahead Is Clear... VIEW IN BROWSER Fall is settling in. The air is crisper, the days are shorter and the leaves are turning shades of gold and red. It’s the season of transition where warm afternoons can give way to chilly evenings, and where the forecast can change quickly from sunny skies to sudden rain. That same sense of unpredictability is shaping the economic landscape right now. And just like checking the morning forecast, this week brought us the latest reading on the economy’s conditions. The Consumer Price Index (CPI) and the Producer Price Index (PPI) serve as our inflation weather reports, showing whether the skies are beginning to clear or whether storm clouds may still be building. In recent months, we’ve seen signs of cooling. Energy prices have eased, and some food costs are finally drifting lower. But dig a little deeper, and you’ll find plenty of lingering warmth. Shelter, healthcare and key service categories remain stubbornly elevated, creating sticky conditions that refuse to clear out on their own. A decisive break lower could give the Federal Reserve room to cut key interest rates, potentially sending the market higher. But persistent price pressure might force the Fed to keep policy tight, prolonging the higher-for-longer environment that weighs on growth and adds to market volatility. In other words, the stakes couldn’t be higher. Every shift in the “forecast” matters. So, in today’s Market 360, we’ll dig into the CPI and PPI numbers, what they signal about the Fed’s next move – and why this uncertain backdrop makes a proven system more important than ever. | Recommended Link | | | | Wall Street legend confesses, “I feel a sense of duty to share what I know with as many people as I can… that’s why I made this free for all to view.” Click here to see it. |  | | Producer Price Index Yesterday’s PPI report showed a drop in wholesale inflation, falling 0.1% in August. Additionally, July was revised down to a 0.7% increase (it was 0.9% earlier). I want to remind you that the July increase was all due to wholesale diesel costs. In the past 12 months, the PPI is now running at a 2.6% annual pace. That was substantially below economists’ expectations of a 3.3% increase. Also, the PPI has been negative in three of the past six months. Excluding food, energy and trade, “core” PPI declined 0.1%, or 2.8% year-over-year. Economists were looking for a 0.3% rise. Looking further into the report, wholesale service costs declined 0.2%, so that was a very nice surprise. Goods prices, excluding food and energy, rose 0.3%. The only glitch in the report was something called “trade services,” and that spiked 1.7%. But that’s a new indicator, and it’s very controversial, so I recommend we just ignore that for now. I should add that wholesale energy costs declined 0.4%. And we may see more of that in upcoming months as seasonal demand drops in the fall – except for natural gas. When it gets cold, that’ll pick up. But in the fall, we have nice weather, so natural gas demand will be falling until it gets cold. Consumer Price Index This morning’s CPI report showed an uptick in consumer inflation. In August, consumer prices rose 2.9% over the past year, up from 2.7% in July, but on par with economist expectations. Month over month, prices rose 0.4% compared to July’s 0.2% increase. Economists were looking for a 0.3% increase. Core CPI, which excludes food and energy, rose 0.3% in August, marking the strongest monthly rise in six months. Year over year, prices were up 3.1%. The main culprit behind this rise was both food and shelter costs. More specifically, shelter, or owner’s equivalent rent, rose 0.4% in August and was the largest factor in this month’s increase. Meanwhile, the food index increased 0.5% on the month as “food at home” rose 0.6% and “food away from home” increased 0.3%. Digging a little deeper, the energy index rose 0.7%, driven by gasoline, which was up 1.9% over the month. Bottom line, this report was all about owner’s equivalent rent. And since it didn’t crack, neither did the CPI. But what does all this mean for next week’s Fed meeting? The Focus Turns to the Fed After the PPI news, Treasury yields fell sharply. There were even rumblings of a 50-basis-point rate cut. The CPI data was a mixed bag, but it shouldn’t change the narrative at this point. Here’s why... The reality is that there are widening cracks in the labor market. Last Friday, the latest unemployment report showed only 22,000 jobs were added in August, and the unemployment rate rose to 4.3%. That’s down from the 73,000 jobs that were created in July. Economists were looking for 75,000 jobs in August. And just this week, unemployment claims surged by 27,000 to 263,000. That’s the highest level since October 2021. Economists were expecting claims to decline by 2,000. So, clearly, there’s a problem in the labor market. Remember, the Fed has a dual mandate of stable inflation and maximum employment – and that’s what will force the Fed to cut next week. In fact, in the wake of last week’s dismal jobs reports, the CME FedWatch jumped to a 100% chance of a key interest rate cut at the September Federal Open Market Committee (FOMC) meeting. I suspect the Fed will stick with a 0.25% rate cut instead of a “jumbo” 0.5% cut, since it doesn’t want to “panic” or show that it’s grossly behind where key interest rates should be. That’s why the big news next week is going to be the dot plot and how many rate cuts we may have coming down the pipeline. The Bottom Line Now, here’s what I want you to remember going into next week... No matter what the Fed does – whether it cuts rates by a half-point, a quarter-point or holds steady – uncertainty will remain. Inflation has cooled in some areas but remains sticky in others. Growth is uneven. And volatility is unlikely to fade anytime soon. That’s why I always stress the importance of having a proven system. Markets can swing on a single headline, but a disciplined, repeatable process helps you tune out the noise and act with confidence. My InvestorPlace colleague Eric Fry has built exactly that. Over his 30-year career, Eric has uncovered 41 different 10-baggers – including gains of 7,992% on Bitcoin and 2,045% on BHP Group. Now, he’s turned his lifetime of experience into a powerful new tool called Apogee. Apogee scans thousands of stocks to identify when a company enters what Eric calls the “10X Pattern.” In back tests, it would have flagged Apple, Inc. (AAPL) before its 4,285% run… Amazon.com, Inc. (AMZN) before its 1,115% surge… and NVIDIA Corporation (NVDA) before its 1,871% climb. The difference is, Apogee doesn’t chase hype. It targets high-quality companies that have already been “down a lot” and are just beginning to move “up a little.” That’s the sweet spot Eric has used for decades to find safer, more sustainable 1,000% winners. And right now, Apogee has lit up five new buy signals. Eric reveals all five names during his 10X Breakthrough event. If you haven’t watched it yet, I encourage you to do so right now. Because in an environment where the “forecast” changes week by week, having a rules-based strategy could make all the difference. You can catch Eric’s 10X Breakthrough replay right here. Sincerely, | .png)
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