Dotdat's real-time Headline CPI rose by 0.24 percent in November compared with 0.10 percent for the official print, practically a rounding error.

While some investors have celebrated what they see as a sea change in inflation trends based on November’s CPI, it's important not to get too carried away.

As Chairman Powell emphasized in today’s press conference, inflation is still a force to be reckoned with, despite the slowdown in Core Goods prices.

November's softer inflation numbers were partly due to falling energy prices. Dotdat's real-time Gasoline CPI fell by 2.5 percent in November after rising by 4.4 percent in October.

Our analysis also suggests that some of the major drivers of the deceleration in Services inflation—like Hotels—have historically been among the CPI’s most "noisy" series.

In other words, they tend to jump around a lot and shouldn't be relied upon to make sweeping conclusions about overall inflation trends.

So, while it may be tempting to get excited about lower inflation numbers, it's important to take them with a grain of salt.

Sea Change

In his latest memo, Howard Marks, Chairman of Oaktree Capital, argues that we are in the midst of a "sea change"—a major shift in attitudes and goals—in the investment world following higher inflation and other by-products of the coronavirus pandemic.

The current environment is vastly different from the post-financial crisis climate, and the strategies that worked well during that time may not be the ones that outperform in the years ahead.

The base interest rate over the next several years is more likely to average 2-4% than 0-2%, and highly stimulative rates—like those that followed the Great Financial Crisis (GFC) for over a decade—are likely not in the cards for at least the next several years.

Well worth a read.