Latest / Markets with Megan: A Quick Financial Markets Update / The Numbers Look Fine Until You Read Them | S2 E345 | 05-12-26

Transcript

The Numbers Look Fine Until You Read Them | S2 E345 | 05-12-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: No matter what the headlines tell you, this inflation report today was not a good report.
• 0:06
  Megan Horneman: It is Tuesday, May the 12th, and this is Mark is with Megan.
• 0:10
  Megan Horneman: If you like this podcast, you can subscribe.
• 0:12
  Megan Horneman: There's an alarm bell that you can hit underneath.
• 0:15
  Megan Horneman: You can share it with your friends, family, colleagues, anybody who's interested in that economic data that we receive every day, and what does it mean for the markets, interest rates, and the economy?
• 0:25
  Megan Horneman: Well, today we got the very much anticipated inflation report, the consumer price index for the month of April.
• 0:33
  Megan Horneman: While it might have come in relatively in line with expectations, those expectations were not good.
• 0:39
  Megan Horneman: So let's just break this down.
• 0:41
  Megan Horneman: The headline level, which includes everything in that, that index rose six tenths of a percent in April.
• 0:48
  Megan Horneman: That's after nine-tenths of a percent gain in March.
• 0:52
  Megan Horneman: So when you look at the three-month moving average of this index, it's the highest we've seen since July of 2022.
• 1:00
  Megan Horneman: Again, another very high inflation period when the Fed was aggressively raising interest rates.
• 1:05
  Megan Horneman: The core level, this strips out this things like food, energy.
• 1:10
  Megan Horneman: This um came in up four tenths.
• 1:12
  Megan Horneman: That was after a 0.2% in March.
• 1:16
  Megan Horneman: And at 4 tenths, that's the highest we've seen since January of 2025.
• 1:21
  Megan Horneman: Now, when we go into all of the individual components, obviously there was a lot of energy that had to do with this.
• 1:27
  Megan Horneman: That impacted the headline.
• 1:29
  Megan Horneman: When you look at energy commodity prices, they're up 5.6% for the month alone.
• 1:35
  Megan Horneman: And that's 29% on a year-over-year basis.
• 1:38
  Megan Horneman: That's a big burden for consumers.
• 1:41
  Megan Horneman: The service sector, this is where we spend the majority of our money.
• 1:44
  Megan Horneman: Think about healthcare services, financial services.
• 1:47
  Megan Horneman: That rose six tenths.
• 1:49
  Megan Horneman: That's the highest since January of 2024.
• 1:53
  Megan Horneman: And it's rising 3.4% on an annual basis.
• 1:57
  Megan Horneman: When you exclude energy, so you kind of get a super core here on the service side, that's rising 3.3% on a year-over-year basis.
• 2:06
  Megan Horneman: Housing, which some people had hoped we would see some relief in this in the CPI index, it makes up a significant portion of this index.
• 2:14
  Megan Horneman: We did not.
• 2:16
  Megan Horneman: Housing was up 0.7%.
• 2:18
  Megan Horneman: The owner's equivalent rent, which is a big portion of that housing, that rose 0.5%, and that's the highest since April of 2023.
• 2:28
  Megan Horneman: Food prices also jumped after declining in March.
• 2:31
  Megan Horneman: And then we saw a big uptick in airline fares, and this most likely has to do with the increase in oil prices.
• 2:37
  Megan Horneman: They're up 2.8% in April alone, or 20% on a year-over-year basis.
• 2:43
  Megan Horneman: So looking at the year-over-year numbers, which is what the Fed talks about, we're looking at headline inflation rising 3.8% in April.
• 2:52
  Megan Horneman: The core is up 2.8%.
• 2:54
  Megan Horneman: You're going to hear that people are going to try and kind of maybe make some excuses for some of these sides of what's in this report, say that some of this is temporary.
• 3:04
  Megan Horneman: I don't really care what is said.
• 3:06
  Megan Horneman: This is not a good report.
• 3:08
  Megan Horneman: Um, this is now we're in the second month here with inflation data of what's going on in the Strait of Hormuz and the Middle East conflict.
• 3:16
  Megan Horneman: And this is filtering into this data.
• 3:18
  Megan Horneman: I think there still is optimism that this is transitory.
• 3:21
  Megan Horneman: We don't know yet.
• 3:22
  Megan Horneman: Two months.
• 3:23
  Megan Horneman: Um, we'll see if this if the Strait of Hormuz opens up immediately, that we could see some relief here, but there doesn't look like there's an end in sight right now with that.
• 3:32
  Megan Horneman: So this is concerning for us.
• 3:34
  Megan Horneman: You know, we were concerned about inflation.
• 3:36
  Megan Horneman: For sure, it keeps the Fed on hold when um the new chairman comes in, when they come for their first meeting in June.
• 3:43
  Megan Horneman: In fact, we don't think there's any changes at all to interest rates this year.
• 3:47
  Megan Horneman: We're getting very close to actually changing our call to an interest rate hike at the end of the year, especially if we get a third straight month of these inflation pressures.
• 3:56
  Megan Horneman: That's all we have today.
• 3:57
  Megan Horneman: If you want a history of our podcast, you can go to marketswithmegan.fm.
• 4:00
  Megan Horneman: Thank you.