Sometimes more can be learned by how markets respond to an economic report than the actual data in the report. Most investors have become quite sanguine about inflation after the April and May CPI reports were tame. The Headline CPI increased by 0.22% in April and just 0.08% in May. Broadly speaking tariffs are going to lift inflation, but the drop in May led investors to think the lift from tariff inflation won’t be as bad as feared. The shift in attitude is why investors could be vulnerable to bad inflation news. I think tariff inflation will be worse than expected but will take some...
