Inflation in April? (CPI YoY)
Washington’s renewed focus on tariffs signals a strategic shift toward protecting domestic industries, prompting savvy investors to reposition ahead of rising inflation trends.
Washington’s Strategy Just Changed—Smart Money Already Knows
As we approach the release of April’s Consumer Price Index (CPI) figures, we’re witnessing a big shift in how the U.S. is handling its economy. With President Trump back in charge, the focus is on protecting American jobs and industries, especially by using tariffs—taxes on imports. The old days of low inflation are gone. The markets are adjusting to this new reality, but there’s still some room for smart investors who understand this shift to make a good move.
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The MAGA Tariff Effect—Higher Floors Are Here
Trump’s new tariffs on imports from countries like China and Europe are upending the old global trade rules. This “America First” approach means higher prices right now because companies are passing those extra tariff costs on to consumers. Key indicators to watch include:
The one-year U.S. inflation swap rate, which predict future inflation, is now 3.07%. This shows these tariffs are making inflation rise in the short term, and other countries are hitting back with their own tariffs.
- A survey of economists says inflation will stay above 2% until at least 2027. Chances of a recession, where the economy shrinks, are up to 45%, reflecting both a real economic hit and stubbornly high inflation until a downturn happens.
For April, predictions suggest a 2.34% year-over-year inflation rate, but these numbers were made before the new tariffs. Recent CPI reports have shown actual inflation rates higher than expected, with January hitting 3% because of increases in food and energy prices, sectors heavily affected by tariffs and supply issues.
Market Implications: Where the Numbers Land
Given the current market prices, here’s how they stack up in relation to political and economic factors:
Above 2.2%: YES=81¢, NO=23¢
- Above 2.3%: YES=58¢, NO=45¢
- Above 2.4%: YES=29¢, NO=73¢
- Above 2.5%: YES=11¢, NO=91¢
- Above 2.6%: YES=7¢, NO=95¢
- Above 2.7%: YES=7¢, NO=95¢
Here’s a breakdown:
2.2%: With the forecast at 2.34%, there’s strong confidence that it will be above 2.2%. At 81¢, the price is a bit high and not a great pick unless the market becomes unstable later.
2.3%: At 58¢, this is underpriced. Short-term predictions, surveys, and recent inflation suggest reaching 2.3% is almost certain unless something unexpected happens.
2.4%: At 29¢, this is a cautious bet by the market thinking inflation might drop quickly. But with ongoing effects from tariffs and rising rents, 2.4% is very possible, especially if prices spike in things like gas or food again. This is a good opportunity.
2.5% and up: The market thinks a sudden economic slowdown is needed for these levels. It’s not time to bet big here, but there might be a risk of surprise if tariffs and data impacts are bigger than expected.
Price Level Summary
2.2% or below (19¢ NO): ❌ Too expensive and not likely
2.2–2.3% (58¢ YES): ✅ Priced too low, good opportunity
2.3–2.4% (29¢ YES): ✅ Great value
2.4–2.5% (11¢ YES): ⚠️ More of a gamble, worth considering
2.5% and above (under 7¢ YES): ❌ Not worth the risk
Key Insight the Media Ignores
Mainstream media is missing the point when they predict inflation will quickly drop to low levels because of the Fed’s actions. They overlook how politics now play a bigger role in the economy: Inflation isn’t just a number anymore—it’s a tool for power and protecting American jobs. The MAGA crowd isn’t looking for approval from other countries. The economic plan is all about supporting local industries, even if the CPI (Consumer Price Index) rates look high.
The left-wing view of wage and price spirals ignores two main factors now: (1) Government help for certain industries gives them power to set prices, and (2) new safety nets created by the government keep prices in key areas like housing and tariffs up. While inflation might be suppressed by a recession, it’s not going to go down just because of tighter policies.
Counterarguments and Their Fatal Weaknesses
Some argue that the risk of a recession, suggested by surveys and job data, will bring inflation down soon. While a downturn would lower inflation, this is a slow process that doesn’t affect current year-on-year numbers for April. Recent trends still show surprises in higher inflation are more likely than sudden drops.
Others hope energy or food prices might drop and lower inflation. This is possible, but most of the CPI measures costs in areas like housing and transportation—affected by tariffs—so the market should account for these lasting effects.
The Playbook—Capture the Next Price Repricing
Strategic Recommendation: ✅
Buy YES for “Above 2.3%” at prices up to 62¢, and “Above 2.4%” up to 34¢. Both are underpriced when considering future inflation rates, recent CPI reports, and the direction of U.S. policies.
For those willing to gamble, buying “Above 2.5%” for 12¢ or less is a decent bet if inflation unexpectedly spikes in a big way.
Avoid betting on “NO” for below 2.2% at the current prices: there’s not much upside left, and there’s a risk of inflation staying high.
The new normal is here: Plan your trades accordingly.
This is the advantage in a world where Washington calls the shots, and the market is just starting to keep up.