Redeye Macro Note: New All-Time Low in Consumer Sentiment, Strait of Hormuz Update, Breaking Down the CPI Report, and More

In this Redeye Macro Note - we break down the CPI report (including Core & PCE readings), provide an update on the Strait of Hormuz traffic, highlight the all-time low in consumer sentiment, and more.

Don Johnson (@DonMiami3), Chief Economist

Good Friday evening MacroEdge Readers and Community,

It’s still evening on PST as I write the latest Redeye Macro Note, and we’re going to cover a brief update on the CPI report from this morning, as well as look at the latest UMich Consumer Sentiment data, which dipped to another all-time low under the current Administration. We continue to reside in very bizarre economic times - where we’re watching the devolution of the 80% back into a pre-1950s economy as things like the chance of a retirement evaporate, while the asset class continues to benefit from nominal asset appreciation. Today’s inflation report is further evidence of what we have been calling out for months in that the *deflationistas* are grasping for straws and seeking out a ghost of deflation that simply does not exist in the current macro backdrop. Each and every single Administration does all it can to keep nominal inflation up and to the right - and this one has certainly been no different. While Y/Y inflation has decelerated, with the Strait of Hormuz still closed (which we’ll talk about below), we’re going to start seeing broader impacts next week in East Asia and the following in Europe with things like fuel supply, fertilizer supply, and more.

Another *new record*... just not one to be proud of:

UMich sentiment printed its lowest level on record this morning, and this reflects the difficult economic environment for the non-asset class. While initially, some thought this was flawed survey methodology that was reflecting response bias, the economic backdrop is not supportive for voters (especially independents) to come out in support of whatever is left of the ‘MAGA’ mandate come November. There will be pockets here or there, but the political dynamic is shifting, yet again, to a more fractured nature - and I think that will be the case until at least the next Presidential election.

The Macro Club and MacroEdge Portfolio Strategy

Next week, in the Midweek Macro Note, we will open applications for The Macro Club from mid-April until the end of June. Beyond that period, we will assess where we’re at and go from there.

Complete an interest form below, and a member of our team will get in touch within the next 2-3 days:

At the end of April, a core offering from our Macro Research team will be available as ‘MacroEdge Portfolio Strategy’. This offering is incorporated into all Economic Advisory engagements, but also will become available as a standalone offering that now has its own Substack. Stay tuned for more on Portfolio Strategy from MacroEdge, and how to access it, in tomorrow’s Saturday Macro Note.

Breaking down the CPI Report and UMich Data

CPI Headline Surge: The Headline CPI for March rose by 0.9% month-over-month, pushing the annual rate to 3.3%. This spike was driven almost entirely by energy and transportation costs, reflecting the immediate impact of WTI Crude maintaining levels above $90/bbl due to the Strait of Hormuz blockade.

Core CPI Stickiness: Core CPI (excluding food and energy) increased by 0.2% month-over-month, lower than the 0.3% expected.

PCE Price Index: The Personal Consumption Expenditures (PCE) report—the Fed’s preferred metric—showed a .4% m/m reading.

Philly Fed Prices Paid v CPI:

Gas prices saw their largest monthly jump on record - and consumers have seen prices up about 50% at the pump, a true shock:

Strait of Hormuz Update & Geopolitical Note

• Near-Zero Tanker Traffic: Since the ceasefire took effect, only 3 non-Iranian oil and chemical tankers have successfully crossed the Strait as of late April 9. This is a large drop from the pre-war average of over 120 daily crossings.

(continued below in the Redeye Macro Note: Strait of Hormuz Update (continued), Energy Portfolio Basket Update, Saturday Macro Note Preview):