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Inflation Surges to 6.4%: Fed's Financial Measures Prove Ineffective
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Inflation Surges to 6.4%: Fed's Financial Measures Prove Ineffective

Investors Beware: Headline-Induced Misconceptions Mask Accelerated Inflation

Feb 15, 2023
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Asymmetric Finance
Asymmetric Finance
Inflation Surges to 6.4%: Fed's Financial Measures Prove Ineffective
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Source: Pexels

Yesterday's CPI data revealed that inflation has surged to 6.4%, marking 22 consecutive months with inflation at 5% or higher. Despite the Fed's implementing tighter financial conditions, this persistently high inflation environment has shown little responsiveness.

This morning's data shows a year-over-year decrease in the inflation rate from 6.5% in January to 6.4%. However, it is important to note that inflation actually increased by 0.5% from January to February, indicating that the perceived drop in the annual rate is simply a base effect concealing the actual change. Don't be fooled by headlines- inflation has accelerated over the last few weeks.

This could mean that the Fed's measures are proving insufficient and may need to revert to their aggressive policy of high-interest rates and liquidity cuts. If this were to happen, the best action would be to stay out of the market and hold cash until the storm passes.

To make matters worse, equities are overbought, as confirmed by the RSI in some indices. The market suggests this excessive growth in all assets during January must subside and relax. While this may be true in the short term, it could cause many people to lose a lot of money in the long term.

• Feb • 2D23 
Nasdaq 一 00 Index INDX 
0 en 1258D 3 Hi h 1270g 45 L 
1247 12 一 
124g538 
Volume 12B Ch • 232 O • L83 
Sobrecompra RSI 
to kC ha 43h0 m 
5L53 
12495.38 
1 1582 
1 1 
10500 
1D75D 
1 1000 
1 125D 
1 175D 
1225D 
1275D 
13000 
1325D 
135DD 
1375D 
14 凵 00 
1425D 
145DD 
1475D 
15000 
1525D 
155DD 
1575D 
16000 
1525D 
155DD

We have been in the markets for a long time, and the exits from a bear market always follow a V-shape pattern, as seen in January, confirming the trend. People always talk about a false rebound, but they are generally wrong.

Amidst all this uncertainty, there is one asset that very few people are taking into account, and that could be one of the big winners in the next bullish cycle.

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