Inflation Comes in Hot for September, Investors Don’t Care

Inflation was 8.2% year over year, beating expectations of 8.1%. And of course that’s only the official number.

The unofficial number is over 16%

Stocks plummeted at the open today, but surprise, surprise, have been rallying hard throughout the morning:

The compulsion to buy the dip still persists, with the S&P 500 up over 1.5% off its low point of about 3,499.

People still aren’t getting it.

Mortgage rates are now higher than they were at any time during the 2000s housing bubble:

You can see that the bursting of the 2000s housing bubble was caused by a move in mortgage rates from about 5.4% to 6.8%.

In 2022, mortgage rates have skyrocketed–2.77% at the end of 2021 to nearly 7% today. This is way more than in the 2000s, both in absolute terms and in terms of percentage change.

As a result, home prices in 2022 are falling faster than they’ve ever fallen before:

We’re on pace for the worst housing crash ever, even worse than 2008.

And yet we’re being told it’ll be a mild drop in the housing market. A slight correction. Nothing serious.

Well, it’s not looking that way right now.

But naturally, there is zero fear on Wall Street despite the fastest and most aggressive rate hiking cycle in decades:

That’s what panic looks like. The Fed is panicking. Undeniably.

They’ve never hiked this fast and this aggressively in nearly 40 years.

Yet Wall Street is still in buy the dip mode.

The Nasdaq is down 37% and nobody’s really panicking. People still think this is just a temporary pause in the party.

Everything is heading off a cliff–the economy, the housing market, the stock market, crypto.

The average investor is probably down way more than 37% right now. People who piled in during 2020 and 2021, into meme stonks and all the bubble stocks, they’re probably down 50-70% already. And it’s just going to get worse.

There will be no Fed pivot any time soon.

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