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

Investors Beware: Headline-Induced Misconceptions Mask Accelerated Inflation

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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.

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.