One of Wall Street’s most misbegotten memes is the Goldilocks Economy notion. They invariably trot her out near the end of a business cycle in order to keep the mullets buying stocks and the Fed heads as anesthetized as possible.
The theory, of course, is that with the economy in a perfect and endless growth equilibrium, punters should be eager to buy equities and the central bank should be in no rush to remove the punch bowl.
So not surprisingly, when the alleged “blow-out” jobs number for February was followed by a purportedly “cooling” CPI print, bubblevision became rife with goldilocks spottings. As JPMorgan’s stock peddler in chief, who also doubles as an “economist”, noted:
“These figures should satisfy Fed policymakers that inflation is not too cold, as last spring’s numbers hinted at, or too hot, as might have been inferred from the January print,” said Michael Feroli, an economist at JPMorgan in New York.
That statement is risible nonsense. To the contrary, the great David Rosenberg, an honest economist who finally fled the Wall Street sell-side for Toronto, where he runs an honest-to-goodness subscription service, noted that core inflation is accelerating rapidly.
To wit, on a year-over-year basis the CPI less food and energy printed at “only” 1.8%, but that embodies a huge base effect owing to the aberrational plunge in telecom services last March. By contrast, on a three month rolling basis, the core CPI has risen from 1.9% in November, to 2.3% in December, 2.9% in January and 3.1% in February!
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In fact, the 3.1% three-month annualized rate in February was the highest it’s been since before the…