The BLS released the November CPI report today and while many are cheering the continued decline in inflation, there is still plenty to worry about.
CONSUMER PRICE INDEX – NOVEMBER 2023
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in November on a seasonally adjusted basis, after being unchanged in October, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.1 percent before seasonal adjustment. The index for shelter continued to rise in November, offsetting a decline in the gasoline index. The energy index fell 2.3 percent over the month as a 6.0-percent decline in the gasoline index more than offset increases in other energy component indexes.
The food index increased 0.2 percent in November, after rising 0.3 percent in October. The index for food at home increased 0.1 percent over the month and the index for food away from home rose 0.4 percent. The index for all items less food and energy rose 0.3 percent in November, after rising 0.2 percent in October. Indexes which increased in November include rent, owners’ equivalent rent, medical care, and motor vehicle insurance. The indexes for apparel, household furnishings and operations, communication, and recreation were among those that decreased over the month. The all items index rose 3.1 percent for the 12 months ending November, a smaller increase than the 3.2-percent increase for the 12 months ending October. The all items less food and energy index rose 4.0 percent over the last 12 months, as it did for the 12 months ending October. The energy index decreased 5.4 percent for the 12 months ending November, while the food index increased 2.9 percent over the last year.
Transportation Services, Shelter and Medical Care Commodities were through the roof but the Fed is not expected to raise rates at tomorrow’s FOMC meeting.
Our investment strategy hasn’t changed. We are till mostly in T-bills and a few dividend stocks because we continue to think the stock market is way over valued. We will buy equities when we think the time is right and that’s not now.
The bond yields for treasuries keep telling us something is wrong as long term yields are lower than short term yields and it just makes more sense to buy T-bills and earn above 5 percent returns than to hold real estate, equities, or other instruments. Eventually things will change but for now stay tuned, stay profitable and stay solvent…