U.S. inflation via the CPI falls to 3% vs expected 3.1%. U.S. Dollar dropped, oil rises over 83pb, and the NASDAQ crashes over 2% on a messy profit take. Markets have priced in an over 84% chance the Fed will cut rates in September 2024. Yet, energy consumption and food remain elevated. CAn they see into the future?

 U.S. Consumer price index for June 2024 has dropped 0.1% taking the index to 3% vs an expected 3.1%.  The CPI is notoriously an unreliable measure and usually, although not intentionally, plays down sticky inflation rather than plays it up, so it can read with a slight paradox, pertaining to the index claiming that energy supply/utilities have dropped, yet overall energy costs for the American consumer have held steady at -0.2%.  So, if you have noticed that your bills for energy use are still high, despite seasonal fluctuations that you'll never know about sans the CPI report, then you are correct in assuming that energy inflation has not deceased at all.  Let alone your food bills. 

The constant drawdown from U.S. oil stocks and the accompanying Strategic Petroleum Reserve/s have most probably lead to a decrease in what you pay for at the pump, as the oil price is stuck above $80 per barrel which is front and centre inflation personified.  But, the expectation that the Federal Reserve under Jerome Powell will cut rates in September 2024 is now at 84.6%, is astounding in its blurry logic, via those crystal balls of data that the oil price, thus inflation will fall dramatically from now till when the market will be awaiting for that rate cut.  Did the record run of stock markets price all this in?  Possibly, but they aren't smart or clairvoyant, just quicker than you with tons of cash, but as greedy. With instant access to information, before you're are even awake for the next day.  Thus, the High Frequency Trading systems will buy and sell on a whim, with expectations that the Fed will keep rates low. 

So, what was interesting when the CPI data was released, is the NASDAQ, please refer to the above chart, dropped over 2% on the news that inflation has fallen 0.1% from the previous month.  With what appeared to be a messy profit take, while the U.S. Dollar dropped (column chart) and the oil price rose (separate pane) to over $83 per barrel.  The argument posed, is that of there is indeed a looming rate cut, stocks may begin to sell off in earnest, maybe even crash via 2% plunges, while the oil price remains elevated.  

Very confusing days, via confused players.