Latest / Markets with Megan: A Quick Financial Markets Update / Rising Prices, Falling Paychecks | S3 E149 | 06-10-26

Transcript

Rising Prices, Falling Paychecks | S3 E149 | 06-10-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: We got the first big inflation report for the week.
• 0:03
  Megan Horneman: It is Wednesday, June the 10th, and this is Markets with Megan.
• 0:06
  Megan Horneman: If you like this podcast, you can subscribe to it.
• 0:09
  Megan Horneman: There's an alarm bell you can hit.
• 0:10
  Megan Horneman: Also share it with your friends, family, colleagues, anybody who wants to dig into some of that economic data we get, especially when it comes to the headlines that you read and what really is the underlying story here.
• 0:22
  Megan Horneman: And let's start this with what we got today.
• 0:24
  Megan Horneman: It was the May reading on the consumer price index.
• 0:27
  Megan Horneman: So this tends to be very market-moving event.
• 0:30
  Megan Horneman: We are seeing equity significantly weaker today.
• 0:33
  Megan Horneman: It's not all the uh inflation reports.
• 0:36
  Megan Horneman: Some of it has to do with increasing geopolitical tensions with Iran, as well as some profit taking ahead of the big SpaceX IPO that we'll receive later this week.
• 0:46
  Megan Horneman: But let's dig into these details.
• 0:48
  Megan Horneman: What we got and what you'll see from the headlines is that inflation's not that bad.
• 0:52
  Megan Horneman: It actually came in as expected.
• 0:54
  Megan Horneman: Well, it's it you can't say it's not that bad when it comes in as expected, but the as expected number is very high.
• 1:02
  Megan Horneman: So when you look at the headline level, this takes into consideration all of the energy prices that we've seen.
• 1:08
  Megan Horneman: Um, energy's up 24% on a year-ver-year basis, gasoline's up 40%, and fuel oil is up 59%.
• 1:15
  Megan Horneman: So that pushed the headline level to uh 4.2%.
• 1:19
  Megan Horneman: That's the highest we've seen since April of 2023.
• 1:23
  Megan Horneman: And the core level, um, that rose is rising 2.9% higher than it was last month when it was 2.8, and that's the highest since September of last year.
• 1:33
  Megan Horneman: So both of these are going in the opposite direction of the Fed's preferred inflation target, which is around 2%.
• 1:41
  Megan Horneman: When you look at the service sector, this is where we spend the majority of our money and where consumers are getting squeezed, and these can be sticky.
• 1:49
  Megan Horneman: When you look at service prices on a year-over-year basis, they're rising 3.5%.
• 1:54
  Megan Horneman: And when you take out that volatile energy component, that's rising 3.4%, which is also the highest since September of 25.
• 2:02
  Megan Horneman: The core reading, when you just look at the three-month moving average of that year-over-year level, it's ticking higher on a year-over-year basis.
• 2:09
  Megan Horneman: It's now 2.7%.
• 2:11
  Megan Horneman: So again, going in the wrong direction.
• 2:14
  Megan Horneman: Some of the details in this, um, there was some surprise that the food increase was was muted.
• 2:19
  Megan Horneman: It was only up two tenths.
• 2:21
  Megan Horneman: But if you look at some of those things within that food component, so fruit and vegetables are up 6.1% on a year-very-year basis.
• 2:28
  Megan Horneman: Um, food just generally at home is up 2.7%, a little bit better than last month, but still 2.7%.
• 2:36
  Megan Horneman: This is stripping the the buying power.
• 2:39
  Megan Horneman: And what we saw was real uh weekly and hourly earnings in negative territory again for the month.
• 2:45
  Megan Horneman: Um, some of the other details, airline fares, this has everything to do with gasoline, they're up 26.7% on a year-over-year basis.
• 2:53
  Megan Horneman: And then apparel is something we've talked about as well because we do import a lot of uh those goods, that's up 4.8%.
• 3:01
  Megan Horneman: So this might not have been as bad as maybe the worst case scenario had expected, but when you are seeing inflation rising, 4% at the headline level, 2.9% at the core level, it is outpacing the gay, the the gains in wages.
• 3:16
  Megan Horneman: This is this should be concerning for the Fed.
• 3:18
  Megan Horneman: And the new Fed chairman comes in next week.
• 3:20
  Megan Horneman: So we'll get some more kind of appetite on how long he wants to leave this running hot.
• 3:25
  Megan Horneman: Um, does he think that this is just a supply shock that will be over once this war is over?
• 3:30
  Megan Horneman: And unfortunately, it looks like that's intensifying again.
• 3:34
  Megan Horneman: That's all that we have today.
• 3:35
  Megan Horneman: We'll be back with the producer price index, which comes out tomorrow, and then we also have consumer sentiment towards the end of the week.
• 3:42
  Megan Horneman: If you want a history of our podcast, you go to marketswithmegan.fm.
• 3:45
  Megan Horneman: Thank you.