Bitcoin BTC/USDLeans bullish towards today’s critical US CPI data from August as it attempts to print a higher low on the weekly timeframe. Headline inflation is expected to be 8.1% year-on-year, down from 8.5% last month. I think if the CPI is below 8.2%, that would be positive for the markets, because it shows that inflation indicates that inflation has slowed considerably from July to August, especially since inflation fell from 9.1% to 8.5%.
Cathie Wood, CEO of investment management firm Ark Invest, is confident that August inflation will come down convincingly from July due to the following statistics: post-COVID price spikes, wood -60% , copper -35%, oil -35%, iron ore -60%, DRAM -46%, corn -17%, Baltic freight rate -79%, gold -17% and silver -39%.
Cathie said: “Used car prices fell 4% in August (about 50% at an annual rate!), They’ve fallen 10% since the January peak, and if electric vehicles are that disruptive than we think, they could be halved, hitting lows last seen at the GFC in late 2008.”
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I agree with Cathie in the sense that the drop in gas, oil and commodities should translate today into a substantial drop in headline inflation.
However, core inflation, which is the change in the cost of goods and services but does not include those of food and energy, is expected to post a 5.9% year-on-year increase to 6 .1%. If this happens, coinciding with a decline in headline inflation, then the direction of the market will be very difficult to predict because underlying inflation is a key metric that the Federal Reserve pays attention to.
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