CPI just printed 3.8% and oil crossed $100 and the market barely moved. that should scare you more than a selloff would

The April CPI report came in yesterday at 3.8% year over year. Highest since May 2023. Energy up 17.9%. Gasoline up 28.4% annually. Beef up 14.8%. Airline fares up 20.7%. Core came in at 2.8%, the highest monthly reading since January 2025. Real wages fell, both monthly and annually.

And the S&P closed down 0.16%.

Oil settled at $102.18 a barrel yesterday. That's the first triple digit close since 2022. Hormuz is still disrupted. Trump said the ceasefire with Iran is "on life support." And the market just kind of shrugged. Nasdaq fell 0.7%, mostly because semis gave back some of their insane run. Qualcomm dropped 13%, Intel 8%.

The thing that bothers me isn't the red day. It's how small the red day was. 3.8% CPI, oil above 100, rate hike odds now at 1 in 3 by december per CME, zero chance of cuts through 2027, and the index is still within 0.2% of its all time high. Either the market is right that this is all transitory war noise or we're watching the biggest game of chicken with inflation since 2022.

The Cleveland Fed president called this "the fourth shock in five years" after the pandemic, Russia, and tariffs. Morningstar's chief economist said rate hike odds while still under 50% are rising. Mark Zandi at Moody's said households are going to struggle "for the foreseeable future." Real wages falling while the stock market sits at all time highs is the kind of disconnect that eventually resolves and usually not in stocks' favor.

I'm not panic selling. But I trimmed my equity allocation by about 15% last week into short duration treasuries and I'm glad I did. NVDA reports May 20 and FOMC is June 16. If earnings hold up and Iran de-escalates, fine, I rotate back and miss a few percent. But if this inflation keeps running with oil above 100 and the Fed starts seriously talking about hikes, I don't want to be fully invested at 7400 on the S&P with 53% breadth.