Has the Recession Come to an End? Possible Turning Point.

Has the Recession Come to an End? Possible Turning Point.

CPI inflation has decreased to a more reasonable level of about 3%.

INFLATION TALKS

Although I am usually a stickler for data, examining the different types of inflation, such as CPI vs. Core, might indicate that the Federal Reserve is trying to put body spray over a pair of dirty gym clothes.

The Federal Reserve may often highlight the wrong data to instill confidence in the financial markets.

CORE INFLATION VS. CPI (Consumer Price Index)

First, for those who don’t know, Inflation refers to the sustained increase in the general price level of goods and services within an economy over a period of time.

It is characterized by the decrease in a currency's purchasing power, as each currency unit can buy fewer goods and services.

Core and Consumer Price Index (CPI) are tools that the government uses to measure inflation.

—

—

Last week the market and the market’s participants celebrated that the June year-over-year percentage of change was now 3%. To give context, this time last year, our data measured inflation to be at a high of 9%.

All data is above in the chart.

DIFFERENCES:

When you look at the chart, you see a data point for ‘Less Food and Energy’ and ‘All Items.’

1. CPI data measures the entire U.S.A economy and how consumers spend their money.

2. Core inflation data excludes food and energy.

   • Looking at core inflation instead of the Consumer Price Index (CPI) can provide a clearer picture of underlying inflationary trends in an economy.

   • Core inflation excludes specific volatile components of the CPI, such as food and energy prices, because they can experience significant short-term fluctuations due to weather events or geopolitical tensions. (covid, tensions with Russia, hurricanes, etc.)

   • For example, if you want to buy a home, the core inflation rate is more accurate to gauge the economy's outlook.

3. Meaning the CPI data doesn’t tell the whole story.

These fluctuations and misinterpreted data have often led to volatility in the stock market.

QUOTES FROM THE FEDERAL RESERVE & BANK OF AMERICA

What damage has been done to our banking system to get us this close to 2%?

• Top-tier banks have failed.

• Interest rates have skyrocketed.

• The cost of living is only sustainable for some Americans.

Should I go on?

The Weekly Trading Plan will be released tomorrow by 6:30 am Eastern time.

WHY IS THIS IMPORTANT?

One of our goals at Simplify Wall Street is to help create independent thinkers. When you receive data, you must fact-check and read between the lines.

Studying the data is essential, but it’s more crucial to follow the money and activities of politicians, CEOs, Hedge funds, and banks.

The government will try to make things seem black and white, but when you have greed, debt, and very influential decision-makers, there’s always more than what’s shown on the surface.

If you are interested in trading the stock market and could use daily trade ideas, and unlimited Q&A, upgrade to our Premium Membership.

Signup today and get 70% off the first two months when you subscribe to the monthly plan.

For more readings like this or to join our newsletter, visit www.simplifywallstreet.com