The fourth year of the bull market on <a Act 1"—the R&D phase. "Act 2" is the global rollout.
Fed Chair Kevin Warsh and the FOMC may raise rates multiple times in 2027.
The Fed’s October inflation update is a double whammy for stocks
While no tool can perfectly predict inflation, the Federal Reserve Bank of Cleveland’s Inflation Nowcasting model is highly accurate. This tool offers daily updates on current and future monthly inflation forecasts, adjusted whenever new economic data becomes available.
As of October 20, projections for two primary inflation indicators were trending in an unfavorable direction.
To begin with, we are aware that the Consumer Price Index (CPI) climbed to an annualized 3.7% in September. The Cleveland Fed’s model anticipates a further increase to 3.77% for October. The surge in headline inflation is likely tied to rising fuel prices resulting from the ongoing closure of the Strait of Hormuz.
Perhaps even more concerning is the outlook for Core Personal Consumption Expenditures (PCE). By excluding projects a steady climb to 3.05% for September (with official data due on the 30th) and 3.13% for October.
This anticipated rise in Core PCE indicates that the U.S. economy is facing challenges beyond a simple energy supply shock. Increased costs stemming from businesses rerouting shipments and changing suppliers due to the war in Iran are now impacting the broader economy.
