the sept CPI figures will be released at 8:30am ET tomorrow. as you can see from the annotations that i’ve added to these charts (green lines), the CPI has recently been surging higher and has broken out of what appears to be multi-year descending channel as shown in the first chart. in the second chart below, one can also clearly see that the CPI has been in a confirmed uptrend (as defined by a series of higher highs and higher lows) for the last 3 years.
the fed has painted itself into quite the corner: continue to extend the ZIRP and more QE, as promised, and watch inflation begin to spiral out of control. stop QE & all these money printing gimmicks and start raising rates (against their promise not to do so until mid 2015… a promise that is borderline criminal as how could they possibly make such a pledge not having a clue what inflation will do over such an extended period?) and lose all credibility and faith of the financial markets and general public. regardless of where the CPI comes in tomorrow, these trends are pretty clear IMO but a hot CPI print could potentially start this debate (can the fed make whole on their promise to keep rates low for another 3 years?) which would not bode well for equities.