The CPI Magic Is Here!

CPI was out this morning and it was negative 0.1%. Year over year, it's still up there at 6.5%. And you'll see that we are now below the trend line here or the midpoint. So where are we in this kind of hump? Because every month will chew through this hump and will replace a higher number with a lower number.

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Hosts: Ansel Lindner and Christian Keroles

Fed Watch is a macro podcast like no other, with a clear contrarian thesis of a deflationary financial system’s breakdown leading to bitcoin adoption. We question narratives and schools of thought, trying to form our own understanding. Each episode we use current events to question mainstream and bitcoin narratives across the globe, with an emphasis on central banks and currencies.

In this episode, I was joined by special co-host Nolan (@countBTC) to go through December CPI data and its effect on markets including bitcoin.

The big development this month in CPI was the negative print. Yes, you heard that right, the general change to price level in December was -0.1%. This was a great opportunity to drive home the massive shift we’ve seen in CPI in the last 6 months, that without a doubt tells us CPI rises have peaked and were transitory all along.

Nolan and I broke down some of the components of the CPI like shelter and energy. Overall, the only component that is really holding up the CPI at this point is shelter. If we take shelter out, aka Ex-Shelter, December CPI was -0.8%, and 5 out of the last 6 months were also negative.

Next, we take a look at the market reaction. Those charts included bitcoin, S&P 500, and US Treasury yields.

The last topic we cover is whether or not these CPI numbers will affect the Federal Reserves upcoming policy decisions. The market is rapidly shifting toward expecting only one more 25 bps hike. We will have to wait and see.

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