September CPI registered upside surprise:
Figure 1: CPI (blue, left log scale), Bloomberg y/y consensus (blue +), core CPI (red, right log scale), Bloomberg y/y consensus (red +). Source: BLS, Bloomberg.
The above graph uses y/y consensus; on a m/m (due to rounding), core CPI did not exceed consensus in September, while headline did.
Since the Fed targets PCE inflation, it’s useful to consider the implications for PCE. Nowcasts of inflation (orange line for headline, green line for core) picked up as a consequence of the upside surprise.
Source: Cleveland Fed, accessed 10/14/2026.
Thank God Barkley Rosser Jr. was right about Russia not invading Ukraine back in Feb 2022. Can you imagine what inflation would be like right now if that had actually happened?? Wheeeew!!!
Speaking of inflation, it seems the oil matket is geographically segregated these days due to tanker rates:
https://oilprice.com/Energy/Crude-Oil/Record-Tanker-Rates-Leave-Heavy-Crude-Stranded-in-the-Americas.html
When it costs $40/bbl to ship oil(!) – that’s the cost from the Americas to Asia – you may not buy that oil. Canadian, Colombian, and Ecuadorian crude is $10/bbl lower in recent weeks because of tanker rates.
This is mostly heavy crude, a high share of which cracks into diesel. High tanker rates are adding to the diesel shortage in Asia and Europe.
This should mean extra heavy oil to refine into diesel in the Americas. So we’re going to buy Russian diesel, paying record-high tanker costs, in the middle of a heavy oil glut? Stupid idea.
So what happened? Why is the grifter-in-chief talking about importing Russia crude, at the cost of undercutting Ukraine’s defensive efforts? Because Putin played him, that’s why. Putin told the grifter that a “deal” could benefit “everybody”, by giving the grifter a diesel-price talking point and a Ukraine-war talking point. Russia gets relief from destruction of its oil facilities and makes a monkey of the grifter. Ukraine gets screwed. Everybody wins.
It’s worse than that, since we are already a net diesel exporter. We will buy diesel from Russia, ship it across the Atlantic to US. Then those tankers will be loaded with US diesel and join the other tankers full of US produced diesel, that gets shipped back over the Atlantic to Europe. Brilliant move of burning large amount of diesel to ship diesel back and forth across the Atlantic. It’s not like we would want to lower use of diesel, because that may reduce the record profits of oil companies.
There is no logic to this action except that the Orange Idiot who Putin calls his “main US asset” is doing what he has been ordered to do. Top level kompromat has these magic effects.
However, it looks like the White House overplayed their hand and doesn’t have the cards. Ukraine just resumed the oil refinery bombings so they must be ready to completely break free from US. Just like with Iran, Kecksbreath has no idea where we stand because he fired most of our competent generals and testosterone poisoned the rest (although it probably would not make any difference since he and Trump only listen to advisers that agree with their wet violence fantasies).
You forgot to mention Putin’s promise to sell to Trump’s nominee all Lukoil assets outside of Russia. Who in his right mind would refuse to buy bit of diesel, with other people’s money, in exchange for that opportunity?
The press is making much of Houthi missile attacks on a Saudi airport. The attack itself is highlighted, but is also used in many stories as an opportunity to discuss the strains on Saudi Arabia’s economy due to Houthi attacks. There’s even an internet buzz about threats to bin Salman’s rule. Here’s an example:
https://www.nytimes.com/2026/10/12/business/dealbook/saudi-arabia-strikes-energy-airport.html
Just one more consequence of the war-criminal-in-chief’s decision to fight a war of choice in Iran.
Investment banks are having a hard time selling data-center debt:
https://startupfortune.com/banks-are-now-trying-to-offload-the-ai-data-center-debt-they-just-underwrote/
Difficulty selling the old debt means reluctance to underwrite new debt. And sure as night follows day, banks are cobbling together exotic structures to shed the risk associated with debt they can’t unload. Risk doesn’t evaporate, it just hides out of sigjht.
Kinda looks like a turning point in the financing of data centers. That could lead to a slowdown in building them.
Questions present themselves. Would a slowdown in data-center investment free up funds for other capital investments, or are investors likely to turn risk-averse and hold cash? How much systemic risk has piled up? Crappy off-balance-sheet structures like SIVs are on the rise, and that’s often symptomatic of rising systemic risk. With ROI likely negative for the industry as a whole for quite some time, there aren’t any obvious cashflow remedies, should the bubble burst. At least housing and auto factories and railroads generate cashflow after a bust. The Fed made a ton on troubled housing assets after the housing crash. Is there a future cashflow bonanza for some part of the economy from bankrupt data centers?
remember, I have been in the camp of worry over the data center bubble. today, I think more money is flowing into them than can be made from them. that said, for another 5 plus years a new data center is a positive asset. compute demands won’t be less tomorrow than they are today. predicted future compute may be cut back, but I don’t see us moving into the future with less compute needs than today. so I think a bankrupt data center is not a lost cause. it will be sold for quarters on the dollar, and at that point it will be profitable. data centers will be cash flow positive, assuming the debt burden is not too great. it will not be the equivalent of a condo built in a swamp that nobody wants to buy or use. I am in the camp of an electric and digital future, and there is much room to grow in that space. it just may not grow as fast as recent investment would indicate.
In fact, net cash-flow positive is easier after bankruptcy – lower cost base. That doesn’t change the calculation for investors in new data centers. New centers end up competing with lower-cost post-bankruptcy centers.
Yesterday a NVIDIA backed data center operator in Australia had to withdraw their IPO when investors failed to subscribe. Today, CoreWeave, operator of 51 data centers, had their bonds rise to 15% interest in a mass sell off. Investors seem to be recognizing the fact that these AI investments, like Pet.com, may never pay off.
Is this the beginning of the end? There’s a ton of off-the-books debt out there. Will these libertarian oligarchs be begging for a taxpayer bailout?
“Gosh, do we want our city water supply, or ‘the cool internet cloud’ robbing our tax revenues on business tax rebates so the town council can party on our dime off of bribes from high tech???” answer: “Gosh Biffy, good question. Hmmmmm….. Biffy get back to me on this one when you figure out the illiteracy of the typical MAGA voter. ALSO, see how many D1 Uni Econ profs can tell people we are the new Jesus”
Remember in 2025 when Trump officials would constantly announce on Fox News that the economy soon be entering a “golden age” under trump’s stewardship?
Can we take a look at the data? When Biden turned over the economy, inflation had significantly cooled from its post-pandemic peaks, long-term borrowing costs were stable in the low 4% range, and unemployment was hovering right at full employment levels. Since then, aggressive wide-ranging tariffs, restricted labor supply, and endless war have re-accelerated inflation and pushed long-term interest rates to heights not seen in decades and employment is stagnating. When Biden left office (Jan 2025) the U.S. economy was averaging 168,000 to 329,000 jobs per month, annual CPI was 3.0% and dropping, and long-term interest rates (10-Year Treasury Yield) was 4.0%. During Trump the economy is averaging 27,000 to 35,000 jobs per month, annual CPI is 3.7% and raising, and 10 year Treasury yield is 5.3%.
Can the corporate media report some historical context rather than just repeating whatever nonsense Bessant says to get through the daily news cycle?
In conclusion, I expect medical services/social assistance inflation to start increasing next year after the GOP/Trump Medicaid cuts to start in January of 2027. In particular, look out below rural GOP areas – The American Hospital Association analyses estimate that nearly half of rural facilities operate at a loss, with over 400 rural hospitals vulnerable to closure or facing severe financial strain as federal Medicaid reforms (such as work requirements and caps under Public Law 119-21) take effect.
Producer Price Index came in at 1.2% for September. That’s a 17% annualized rate. Food up 1.2% for the month. It looks like those high diesel prices are starting to really bite in their secondary effects. Next month’s CPI report is going to be ugly. What will the Fed do at their meeting in two weeks?
Same headline, different day. Final demand PPI up 1.3% m/m, 6.3% y/y. Services showing upward pressure from diesel costs.
Curious to see how much these price increases affect ex-oil profits.
Profit margins soar. Inflation continues apace. Coincidence or cause and effect?
https://fred.stlouisfed.org/series/A466RD3Q052SBEA
“Profits and price inflation are indeed linked.”
https://www.epi.org/blog/profits-and-price-inflation-are-indeed-linked/
Absolutely. What I’m curious about is retailers’ – and their suppliers’ – reaction to consumer resistance to price increases. Lots of retailers are reporting consumer resistance.
This is monopoly pricing 101. In a competitive market, “normal” profits are all you can get. In a non-competitive market, sellers have a choice between profit and market share. The less competitive, the greater the latitude of choice. Profits are really high these days. There’s room to meet consumers half way. If sellers don’t eat some of the cost increase from the war, it will be evidence that pricing power is extreme.
Much of the profit bonanza in recent quarters is concentrated in tech and oil, so we can get a distorted impression of general pricing power. That said, the increase in profits’ share of national product has been around much longer that AI or the Iran war.
ISW has a nice run down of the Starlink speed restriction imposed without warning on Ukraine:
https://understandingwar.org/research/russia-ukraine/russian-offensive-campaign-assessment-october-14-2026/
It turn out that the speed restrictions were likely imposed by our defense department. Ukraine’s attacks in Russia will not be affected, because they never used Musks satellites for anything they do in Russia. The one thing that was specifically affected was Ukraines ability to defend against jet powered drone attacks in their own country. Those defenses require anti-drone drones that fly much faster than 100 mph. By implementing a speed restriction without warning, Trump and Heghseth assisted Russia’s murder of civilians in Kiev. They essentially committed a blackmail of “do as we say or Ukraine will suffer more civilian casualties at the hand of our friends in Moscow”. International war crimes tribunal anybody?
Looks like the next member of the felon-in-chief administration to get the boot will be Chief of Staff Susie Wiles:
https://www.newsweek.com/susie-wiles-list-of-potential-replacements-if-trump-ousts-chief-of-staff-12573759
https://www.independent.co.uk/news/world/americas/us-politics/trump-susie-wiles-fire-white-house-aide-b3067422.html
Another woman, naturally. Everybody is just another apprentice to the felon, but he fires women, and attacks women, with far greater frquency than men.
Unlike most of the felon’s inner circle, Wiles is sophisticated and capable. Her corruption is the corruption of experience, not the giddy, high-on-power kind of thing we see from so many others. There’s no saving the felon’s public approval rating, but the daily function of the White House, the filtering-out of access for people with the dumbest ideas, can get worse.
My personal suspicion, based on nothing, is that Wiles sabotaged Katie Zacharia by sending her out without any preparation. Another unqualified Barbie, when the felon is about to enter the weakest period of his presidency, seems like something Wiles might want to scuttle. One way or another, Zacharia’s implosion was Susie’s fault. The on-again-off-again, cult-of-death, televised slaughter of a paraplegic Muslim, while not dumber than a lot of other decisions by these guys, comes at a time when the felon is looking a little desperate. Again, Susie may have been in the splash zone.
The Newsweek list of potential replacements gives a taste of what the felon is looking for and it ain’t pretty.
Steven Miller – effective at turning the worst kind of thinking into policy. If you like I.C.E., you’d love Steven Miller as Chief of Staff. Getting one’s own way is not a quality that makes for a good gate-keeper.
Randy Levine, head of the Yankees and a big-time bundler of political contributions. Bundling is illegal if you do it wrong, so we’re looking at a slick fella. Levine was mentioned as a potential Chief of Staff during the first felon administration. More politics and power than policy, but obviously good at running organizations.
Steve Witkoff, one of the felon’s two everything-envoys. A failure in his job, by any conventional definition, but that doesn’t mean he hasn’t gotten the felon what he wants. We can’t see inside those “deals”. Not the same skill set as a good Chief of Staff, but he clearly makes the felon comfortable.
Bill Pulte, FHFA director, and perpetual nominee for director of everything within the felon administration. He’s a bully, good at seeking vengeance on behalf of the felon; lots of observers expect the final two years of the felon’s term to focus on money and vengeance. It could be that Susie isn’t revenge-focused enough to suit the felon.
Kevin McCarthy, former House Speaker. He got tossed out of the Speaker job by his own party, but that’s the fate of Republican Speakers who were better than McCarthy, and may happen to the current speaker once he’s demoted to minority leader. McCarthy has run the House, so he could run the White House. Knows policy and politics. It’s hard to imagine he’d want the job, except that it would be his last chance to exercise any real power.
By the way, Wiles will almost certainly be snapped up by some campaign organization whenever she leaves the White House. Moving her into a campaign organization would be an easy way to justify her exit from the administration. Heck, she might like the idea, since the next two years are going to be a nasty mess for the felon administration.
The felon-in-chief is stepping up his effort to steal elections:
https://www.nbcnews.com/politics/2026-election/justice-department-threatens-legal-action-california-noncitizens-rcna603536
No real surprise here; you hit the gas in the way to the finish line. Courts have just definitely ruled against voter-roll purges within 90 days of an election, so this new effort has to get around that ruling. The latest demand is that California sequester some ballots. See? No purging. It would delay vote counts until the elegibility of sequestered votesnis established. Delay means more time for lawsuits and propaganda to cast doubt on the legitimacy of elections.
The Supreme Court is ultimately to blame for this. Bush v. Gore was an invitation to anti-democratic mischief. Trump’s insurrection effort was built on this crap.
So far, just California. Gotta think Texas, Ohio, Kansas, Iowa and Maine are on the list.