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Subscriber CF pinged me about my thoughts about what might be the fallout (or lack thereof) if inflation numbers (actually, the numbers on inflation’s “effects”) come in higher than the street expects this week. PPI is tomorrow and CPI is on Thursday.

It’s a tough question, because I don’t think you and I are the only ones who know that the economy is decelerating and inflation signals have been instigated by U.S. tariff/trade policy, not normal cyclical forces.

But as I look at my holdings open strong yet again (this is too many big up days clustered together, aka a melt-up) I wonder what tepid excuses the market could use to start taking profits in gold, gold stocks and other areas that have seen outstanding performance of late.

In other words, I think about whether a headline like CPI StrongerThan Expected could ignite a new fear of Fed hawkishness, and hammer certain assets/markets that have been ramping largely due to the coming Fed dove pivot. That would obviously include Treasury bonds.

The bottom line for me is that profits are in hand and while I have been awaiting the main event, FOMC next week as a potential flashpoint (+/-, sell the news?), I believe that the elements are in place for any event seen as something that could dissuade the Fed from flipping dovish just yet, could create an excuse for profit taking amid a bounce in the USD. These could include:

• The above noted possibility that PPI and/or CPI come in higher than expected.
• The Fed only cuts .25% next week instead of the .5% that is getting more airplay in the hype-o-sphere (I think it is doubtful they cut that hard).
• Or as we’ve been discussing, a “sell the news” event.

I am going to look for areas in my holdings to take more profits, hedge and/or outright book profits. It’s getting overdone with potentially inflammatory news ahead, in my opinion. *

* And that is not even including the cancellation of tariffs drama playing out in the courts.