print-icon
print-icon
premium-contentPremium

Hartnett: Why The Red Hot CPI Print Is A "Blessing In Disguise For Stocks"

Tyler Durden's Photo
by Tyler Durden
Sunday, Feb 16, 2025 - 06:11 PM

This article is so good
it's for premium members only.

Does that sound like you?

Already a member? Sign in.

PREMIUM


ONLY $30/MONTH

BILLED ANNUALLY OR $35 MONTHLY

All BASIC features, plus:

  • Premium Articles: Dive into subscriber-only content, market analysis, and insights that keep you ahead of the game.
  • Access to our Private X Account, The Market Ear analysis, and Newsquawk
  • Ad-Free Experience: Enjoy an uninterrupted browsing experience.

PROFESSIONAL


ONLY $125/MONTH

BILLED ANNUALLY OR $150 MONTHLY

All PREMIUM features, plus:

  • Research Catalog: Access to our constantly updated research database, via a private Dropbox account (including hedge fund letters, research reports and analyses from all the top Wall Street banks)

There was an interesting point toward the end of last week's Flow Show note by Michael Hartnett (here if you missed it), which was the following: for all the jawboning, the US is unlikely to go full-bore China trade war, which "would be a big political misstep for Trump" as it would "allow 2nd wave of inflation, and meanwhile China is less reliant on exports to the US, which are down to just 2.8% of China GDP today vs. 7.2% in '07" and furthermore "neither side is likely to pursue “MAD” tech war because while US and allies control >90% of global semiconductor manufacturing, China extracts 60% and processes 85% of world's rare earth minerals"

So fast forward to today when in his latest weekly Flow Show (also available to pro subs) in which Hartnett doubles and says that the "hot 3% US CPI in January was a "blessing-in-disguise" for bonds & stocks" as the rising inflation means "Trump must go “small” not “big” on tariffs & immigration in coming months to avoid fanning 2nd wave of inflation." Which means that according to Hartnett, Trump is playing 4D chess, which may be a stretch but who knows.

So assuming Trump is thinking 5 steps ahead, Hartnett - who last week explained why he is long BIG (Bonds, International, Gold) - doubled down saying that 5% was "a multi-year top for 30-year Treasury yield" as the impact of inflation, tariffs, immigration (big or small) will be more negative than positive for US consumers & labor market H1'25 (a point he first made last June). That said, he notes that catalysts for a dramatic H1 move lower in bond yields below 4% are scarce, due to…

Want more of the news you won't get anywhere else?

Sign up now and get a curated daily recap of the most popular and important stories delivered right to your inbox.