It’s official: CPI data for June 2021 is out… and somehow things got worse.
U.S. Consumer Price Index (CPI) prices increased in June by the most I’ve seen in 13 years — with the figure rivaling those during the 2008 financial crisis. Consumer prices increased 0.9% month over month in June, and the CPI rose 5.4% year over year.
And then you have the clowns in the Federal Reserve shrugging their shoulders and telling Americans it’s not a big deal.
Yeah, I’m calling B.S. on that one…
Here’s the reality of the situation: The Fed doesn’t know what the hell it’s doing. This global pandemic is uncharted territory, and it doesn’t know which direction it should take.
The Fed has no way of predicting what’s coming next and it’s losing touch with this new world order.
But of course no one at the Fed will admit that, and no one’s asking the questions we need answers to…
- Do you really know what you’re doing here?
- This has never happened before, so what will you do if X, Y and Z occurs?
- Do you know how miserable it is to be an average consumer with a 40% hike in used cars and a 50% hike in rent?
However, the Fed’s inability to take action — after viewing the CPI data for June 2021 — to combat obvious inflation is paying off in other areas of the market.
Oil is ripping back up, and I think the reflation trade is gearing back up with a vengeance for a strong run this summer.
How CPI Data for June 2021 Is Triggering a Surge in Crude Oil
I looked at the continuous contract on crude oil on its monthly chart, and it’s sitting right at the edge of a resistance level.
If crude oil goes up so much as a hair, then there’s nothing stopping it from shooting up to $100. This move will be the story of the summer.
And remember, oil stocks right now are still 30% cheaper than they were the last time it was around $75 a barrel.
In fact, oil stocks are so historically cheap that when crude oil makes its parabolic move up, this will be the tipping point for the inflation crisis.
Unlike the price of lumber or housing, people can’t hide from the price of gas when they need to fill up their cars every week.
Eventually, the sticker price of gasoline will cause a public outrage. This will then cause the Fed to feel political pressure, and it will have to make a change.
The problem with this scenario, however, is that the Fed will be forced to make a change to the economy during a time that won’t be advantageous for the rest of the stock market.
And if things continue the way I expect them to, investors will experience a lot of calamity and panic with their trades — all thanks to the Fed…
Check out my short video below to learn more about what the CPI data for June 2021 means for the future of the market and your investments.
Also be sure to share your thoughts in the comments section below.
And as always, send any trading questions to jeff@joyofthetrade.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.
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