The Number-Crunching Beast & Friday’s Treat

by

Now listen closely, because this Friday, a rather peculiar beast awakens. It’s called the Consumer Price Index – CPI, for short – and it snuffles and snorts and spits out numbers that can make grown men weep, or, more often, make them wildly overexcited. It’s a government report, you see, and those are always a bit suspect, aren’t they?

This CPI beast measures how much everything costs – sweets, shoes, silly hats, the usual. But it’s not a straightforward business, oh no. They pluck out certain things – food and petrol, because those prices wobble about like jelly on a plate – and focus on the ‘core’ of it all. It’s a bit like removing the warts from a particularly grumpy toad to get a better look at the beast itself.

Last month, this ‘core’ CPI was creeping along at a rather tame 2.6%. Four years ago, it was practically a bouncing baby CPI. But now, the clever chaps at the Cleveland Fed (a sort of number-counting club) reckon it might have shrunk a bit more. They’re whispering about 2.45%. A tiny, shriveling number. And that, my friends, is where things get interesting.

You see, the stock market – a place full of people who believe in magic beans and get terribly flustered – believes a smaller CPI number means the Federal Reserve – a group of very important people who fiddle with interest rates – will be feeling generous. They might decide to lower those rates, which is like giving the whole market a lovely, sugary treat. Everyone gets a bit giddy, and prices go up. It’s all rather silly, really.

A Little Less Pinching, Perhaps?

Right now, the market expects two little rate cuts this year. But if this CPI number is really small, it’s like offering the Fed a second helping of cake. They might get carried away and cut rates even more. They claim to be ‘data-dependent’, which is a fancy way of saying they’ll do whatever makes them look good at the next meeting.

Now, there’s a bit of a bother brewing, you see. Ordinary folks aren’t spending as much money. The very richest 10% are gobbling up nearly half of everything that’s bought. It’s like one enormous child hogging all the sweets. Not terribly sustainable, is it? Until prices stop leaping about like startled kangaroos, the rest of us will be clutching our pennies and worrying about ‘affordability’ – a dreadful word, isn’t it?

Then there’s old Mr. Trump and his tariffs – taxes on things brought in from other countries. Everyone feared these would send prices soaring, but so far, it hasn’t happened. Perhaps he’s forgotten where he put them. If this CPI report shows prices behaving themselves, it’ll be another sign that his tariffs aren’t as fearsome as everyone thought. Though, don’t count your chickens just yet.

This CPI report has a habit of causing a bit of a wobble in the S&P 500 – a sort of measuring stick for the market. It’s worth keeping an eye on, certainly. But remember, numbers can be twisted and turned to tell all sorts of stories. And the stock market? Well, that’s just a wonderfully unpredictable beast, isn’t it?

Read More

2026-02-11 22:32