The Consumer Price Index (CPI) increased by 0.5% for the month of September but was lower than expected. Despite a tight labor market, strong economic conditions and increasing commodity prices, inflation has remained lower than expected throughout 2017. Further, CPI has been lower than its expectations in six of the last seven months.
Other economic indicators continue to show strength and support further gains in the economy. Later this week I will be watching Janet Yellen’s speech for any clues on the Federal Reserve’s (Fed) thoughts about longer term inflation expectations. This environment of economic strength and low inflation continues to support equity prices reaching new highs. As a result, I expect third quarter earnings to exceed market expectations.
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