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What's going on, guys? It is Tuesday, February 13th, and today we are talking hotter than

expected CPI. Before we get into that, however, if you are enjoying the breakdown, please go

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breakdown pod. All right, friends, welcome back to the show. This morning we got a bit of an unpleasant

surprise with the most recent CPI data. Bloomberg writes, U.S. inflation tops forecasts and

blow to Fed rate cut hopes. U.S. consumer prices jumped at the start of the year,

tempering hopes for a continued drop in inflation and likely delaying any Federal Reserve interest rate

cuts. So in terms of the specific numbers, the overall CPI was up 0.3% between December and January,

and 3.1% year over year. The core consumer price index, which excludes food and energy, increased

0.4% from December to January, and 3.9% year-over-year. That 0.4% increase was both more

than expected and the most in eight months. Immediately, markets took this as a sign that

Fed rate cuts, which were already being pushed back in terms of

expectations, were likely to move back even farther. Remember, before Fed Chair Jerome Powell's

appearance on 60 Minutes a couple weeks ago, the market had been pricing in six rate cuts this year

beginning in March. After that appearance, markets were pricing in three rate cuts, with most thinking

they'd begin in May. After these numbers came out, odds of a March cut were marked down three rate cuts, with most thinking they'd begin in May.

After these numbers came out, odds of a March cut were marked down to almost zero, and many are looking even farther out. Kathy Jones, who is the chief fixed income strategist at Charles

Schwab said, the Fed will view this as another reason to wait until May or June, but she

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