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CPI jumped today. Topline CPI looked worse (here). Core also looks bad in an uptrend (here).

I've been saying inflation is still in the system. The Fed's 100 basis points of cuts was, I believe, a mistake and too early.  

I said yesterday based on Powell, WSJ and Michigan there was more upside than downside in the CPI number. 

The Fed worries about the Michigan Inflation Expectations number, namely the 5-year which has also been moving up. I see no way the Fed cuts with that 5-year moving up. 

I've been saying I thought 2025 should have rate hikes, not cuts, as you know. 

Today was a confirmation of that potential. 

It's a double-edged sword right now with higher inflation prints...

One side of the sword: If the Fed stays in cut mode TLT likely gets killed based on inflation risk. Rates too low stirs inflation and kills bonds. Bonds dropping, a yield spike would likely hurt the market because of core-DCF-valuation-calculations. The market valuation system conceptually runs on DCF which runs inverse to yields. 

The other side of the sword: If the Fed gets out of cut mode and into hike mode it likely slows the economy and so likely slows EPS and growth expectations which also can hit the DCF valuation process. 

Rock and a hard place. 

That said the market action is great. Have to respect that action.

The market has not broken down from key levels. 

So my fundamental thinking sees some building risk. 

But we don't have a technical break confirmation. 

So before someone decides to start aggressively shorting one probably needs technical confirmation, which we'll be watching for.

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