'Hot' August CPI To Trigger More Aggressive Fed Tightening

Damir Tokic 14.71K Followers Follow Summary The August CPI report is expected to show a rise in headline CPI to 3.6% due to energy costs, but this is not expected to affect the core CPI. The super-core PCE inflation at 3.9% signals persistent wage-driven and structural inflation pressures, which is supported by the strong August labor market report. Thus, the Fed might be forced to aggressively hike to above 5% to invert the yield curve, as key inflation measures are at the 3.5-4% level. The S&P 500 trades at bubble valuations, and higher rates could burst the bubble. Win McNamee/Getty Images News The Pivotal August CPI Report The August CPI report is expected to be pivotal with respect to the Fed's September policy decision. The Fed appears to be equally divided between the hawks and the doves, and one of the swing votes appears This article was written by Damir Tokic 14.71K Followers Follow Commodity Trading Adviser (CTA), member of National Futures Association. Professor of Finance, research on Global-macro issues. Editor-in-Chief, Journal of Corporate Accounting and Finance. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.