Yesterday’s stock market rally was noise and does not change the fact that we are stuck in a bear market that won’t end as long as the Federal Reserve keeps tightening. And the Labor Department’s CPI report that preceded the rally provided no reason for the Fed to change course for the next several months. Core CPI - which excludes energy and food prices - rose 6.6% in September from a year earlier, its biggest increase since August 1982 (it rose 6.3% a month earlier so things got worse, not better). Overall CPI (including energy and food, which are among the most important prices to consumers and whose exclusion is another example of the cluelessness of government economists) rose by 8.2% in September with lower gas prices offset by higher food and service costs. This reading was lower than August’s 8.2% and June’s 9.1% but still far above the Fed’s 2% target.
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