1. Pop the Bubbly! The Numbers Say We’re Fine!
Or Do They?
Oh, gather ’round, children, and hear the glorious news from on high. The S&P 500 and the Nasdaq, those twin gods of our completely rational and stable financial system, have notched a fourth consecutive day of gains. Hosanna! The market is green, the birds are singing, and the algorithm has decided we are all getting rich. Why the sudden euphoria, you ask? Because a key inflation metric, the Commerce Department’s darling Personal Consumption Expenditures (PCE) price index, landed at a mere 2.8% for September. A number so beautiful, so perfectly crafted, it brought a tear to a hedge fund manager’s eye. It was even lower than expected!
Lower than expected. Just let that sink in. The wizards of Wall Street, who get paid millions to guess numbers, guessed a slightly higher number, and because the real number was less terrible, we’ve decided to throw a multi-trillion-dollar party. This is the financial equivalent of being told you only have a mild case of gangrene when you were expecting a severe one. It’s still gangrene, people. The cost of living is still up nearly 3% year-over-year on top of the absolutely breathtaking increases from the year before, but who cares about the cumulative effect? Not the ticker tape. The number was smaller today. Yay.
2. The Holy Gospel of ‘Core’ Inflation
(Now With Fewer Peasants’ Problems)
To truly appreciate the genius of this economic narrative, you have to understand the sacred text of “core inflation.” See, the 2.8% number is the *core* number. What does that mean? It means the economists, in their infinite wisdom, have decided to simply ignore the things that are most volatile and, coincidentally, most essential to your pathetic little existence. Things like food and energy. You know, eating. Driving to your job (if you still have one). Heating your home. Silly, trivial things.
By stripping out these messy, inconvenient realities, they arrive at a much cleaner, more palatable number that they can present to the Federal Reserve as evidence that their plan is working. It’s a masterclass in propaganda. They’re telling you the patient’s fever is down by taking the thermometer out of his mouth and sticking it in a glass of iced tea. Meanwhile, your grocery bill has doubled, your gas tank costs a kidney to fill, and your electricity bill looks like a phone number. But don’t worry, the *core* price of whatever basket of goods they measure this week is behaving itself. All is well. Now get back to work.
3. The Federal Reserve: Our Benevolent, All-Knowing Overlords
(Or a Room Full of Monkeys with a Ouija Board)
This whole spectacle is, of course, a prelude to the main event: the next Federal Reserve meeting. The market isn’t celebrating a strong economy. Don’t be ridiculous. A strong economy would mean the Fed has to keep interest rates high to fight off actual prosperity-driven inflation. No, no, no. They are celebrating a WEAKENING economy. They’re cheering for this magical, mythical creature called the “soft landing,” a scenario where the Fed masterfully raises rates just enough to crush inflation without, you know, crushing all of your jobs and 401(k)s in the process.
The market is betting the farm that this 2.8% number, this glorious, food-and-energy-free data point, is the green light Jerome Powell needs to stop hiking rates. To maybe, just maybe (if we’re all very good little boys and girls), start cutting them again soon. They are salivating at the thought of the cheap money spigot being turned back on. It’s the only thing they know. The entire market is just a giant addict, jonesing for its next fix of low-interest-rate liquidity, and this PCE report is the dealer telling them, “Hey man, I might have something for you next week.” It has absolutely nothing to do with the health of the underlying society. What a joke.
4. A Tale of Two Realities: Wall Street vs. Your Wallet
Guess Which One is Real.
And here we get to the punchline of this grand, cosmic joke. Hidden in the reams of data, buried beneath the headlines of stock market glory, was another little tidbit: consumer spending stalled in September. Stalled. As in, it hit a brick wall. The American consumer, the great engine of the global economy, the person whose debt-fueled shopping sprees have been keeping this whole charade afloat, is finally running out of gas. Shocker.
After a year of draining their savings, maxing out their credit cards to a record $1 trillion-plus, and taking out sketchy “Buy Now, Pay Later” loans for a bag of Doritos, the people are tired. They can’t spend money they don’t have anymore. So while the stock market is having its fourth day of gains based on a theoretical inflation number, the actual, real-world economy of people buying things is grinding to a halt. This isn’t a soft landing. This is the moment the cartoon coyote runs off the cliff, hangs in the air for a second looking at the camera, and then plummets. The market is still celebrating in mid-air. The fall is coming.
5. The Government Shutdown Data Delay: A Feature, Not a Bug
Let’s not forget the cherry on top of this satire sundae: this all-important September data was delayed. Why? Because our magnificent government had a little spat and shut itself down for a bit. You cannot make this stuff up. The most powerful economic empire in history had to put its key economic reports on ice because the adults in Washington couldn’t agree on a budget.
But does this little hiccup inspire caution? Does it make anyone wonder if the people in charge actually have any idea what they’re doing? Of course not! It just adds to the drama. The delayed data makes its grand entrance like a late-arriving celebrity, and everyone swoons. One has to wonder (if one were a cynic, which I most certainly am) if the delay wasn’t just a bit convenient. A little extra time to polish the numbers? To make sure the narrative was just right before the big Fed meeting? Nah, that would be crazy. Our institutions are beyond reproach.
6. So, What’s the End Game Here?
(Spoiler Alert: You’re Not Going to Like It)
The path forward is so painfully obvious it hurts. The market will continue to rally on any whisper of bad economic news, because bad news for you is good news for the cheap money party. They’ll cheer for rising unemployment claims. They’ll throw a parade for negative GDP growth. They are praying for a recession (a mild one, of course, that only hurts the little people) so the Fed will be forced to open the floodgates again.
And the Fed, trapped in the corner they built for themselves, will eventually comply. They will declare victory over an inflation they never really beat and cut rates. The market will scream higher, minting a new class of paper billionaires. Asset prices will detach even further from reality. The rich get richer. Meanwhile, the cost of actual, tangible goods will stay stubbornly high, and your wages will stagnate. The stalled consumer spending won’t be a temporary blip; it will be the new reality for millions. But the S&P 500 will be at an all-time high, so who are you to complain?
7. Enjoy the Circus
So sit back and enjoy the show. Watch the tickers go green. Listen to the analysts on TV explain with straight faces why record credit card debt and stalled spending is actually bullish. It’s a masterwork of illusion, a grand performance designed to distract you from the fact that the foundations of the economy are rotting away. They are celebrating the fever breaking while the patient is slipping into a coma. But what a party it is. Just don’t be the one left holding the bag when the music stops. Because it always, always stops.
