Latest / Markets with Megan: A Quick Financial Markets Update / CPI Report Spurs Fed's Likely 25 Basis Point Rate Cut | Episode 171 | 09-11-24

Transcript

CPI Report Spurs Fed's Likely 25 Basis Point Rate Cut | Episode 171 | 09-11-24 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: Inflation surely does not want to make the Fed's job any easier for them.
• 0:04
  Megan Horneman: It is Wednesday, eptember the 11th, and we received the August Consumer Price Index that most people have been looking for to get an indication on whether or not the Federal Reserve would cut interest rates by 25 basis points or 50 basis points at their meeting next week.
• 0:20
  Megan Horneman: And what this proved to us is that it's most likely going to be a 25 basis point rate cut.
• 0:25
  Megan Horneman: The reason being is, while it came in relatively in line with expectations, when we look at the core level that level that's excluding out food and energy that actually was a little bit higher than what was expected Not a lot.
• 0:40
  Megan Horneman: It was up three-t tenths of a percent after an expectation of two tenths, and also two tenths the last month.
• 0:47
  Megan Horneman: On a year over year basis, it also came in line as expected.
• 0:51
  Megan Horneman: At the core level, we're growing 3.2%.
• 0:54
  Megan Horneman: There are some people that are focusing on the headline number, which is now growing two and a half percent compared to 2.9% in the last month's reading.
• 1:04
  Megan Horneman: However, that's not what we're focused on and that's not what our pocketbooks are focused on.
• 1:08
  Megan Horneman: We're focused on that, excluding the volatile items.
• 1:13
  Megan Horneman: So when you look into this and you look at some of the items that are still causing problems for consumers again.
• 1:21
  Megan Horneman: Services this continues to be an issue.
• 1:23
  Megan Horneman: Services are still growing about 4.3% on a month-over-month basis.
• 1:28
  Megan Horneman: It jumped up to 0.5% in August.
• 1:49
  Megan Horneman: So on a year-over-year basis, owner's equivalent rent, which is basically a housing proxy, is growing 5.4%.
• 1:58
  Megan Horneman: There have been a lot of reports about how we should have seen this start to decelerate at a much faster pace by now, and we just haven't seen that.
• 2:05
  Megan Horneman: So the Fed will pay close attention to that.
• 2:08
  Megan Horneman: Some of the other areas airline fares jumped up again, but used cars now are lower by 1%.
• 2:15
  Megan Horneman: Recreation, and then obviously some of the fuel and commodities with that energy component.
• 2:22
  Megan Horneman: Now, what does this mean?
• 2:24
  Megan Horneman: We'll get a couple more reports this week.
• 2:26
  Megan Horneman: We'll get the PPI report tomorrow and then we'll get important export prices on Friday.
• 2:31
  Megan Horneman: For us, as we said, it means the Fed can go 25 basis points instead of 50, and they should go 25 basis points instead of 50.
• 2:40
  Megan Horneman: Inflation is getting in the right direction, but it's very stubborn getting there.
• 2:44
  Megan Horneman: So the Fed needs to be very careful and not completely forget about what we're seeing here in some of these inflation data.
• 2:50
  Megan Horneman: That's all we have today.
• 2:52
  Megan Horneman: If you liked this.
• 2:54
  Megan Horneman: Please subscribe to us.
• 2:55
  Megan Horneman: Hit that alarm bell.
• 2:56
  Megan Horneman: If you would like to see any of our historical podcasts, you can go to marketswithmegan.
• 3:01
  Megan Horneman: fm.
• 3:02
  Megan Horneman: Thank you.