Month-on-month PCE index, up. No arguing with that one. +0.2% from March to April, +0.6% from April to May. Fact.
Looking at the annualized trend, ie. April ‘22 vs April '21, May '22 vs May '21 - PCE index, flat ie +6.3% last month, +6.3% this month. Fact.
So, on a quick read - say when you were trimming your toenails or adjusting the stops on your SPY puts - you would say, well, we need to keep going with this rate hike stuff. Maybe jack it up a little to teach those dang overspending consumers a thing or two. STOP BUYING TOO MANY IPHONES PEOPLE and then rates can come back down some.
But what’s that you say?
You’re still on a two-generations-old iPhone?
Sorry, what now?
You’re worried you won’t be able to afford yams by Thanksgiving?
Huh. Then why are you all spending so much money?
< … incoming abuse … >
Gas prices. Food prices.
Right. I see now. Because PCE excluding energy and food? Flat month vs. month for the last few months. 0.3% every month. And down on an annualized basis. Feb, peak at +5.3% vs Feb '21. May, +4.7% vs. May '21. OK. So, gas prices and food prices.
Now, Jay’s buddies up the road are actually doing things to bring gas and food prices down. The futures market knows this. The bond market knows this. But apparently nobody has yet told stock jocks.
Crude futures are 20% off their recent high.