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The False “Disinflation Narrative” That Set Investors Up For Painful Losses Last Week… And How To Prepare For The Next Shock

February 13, 2023  |  Steven Place
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Another week, another example of why you shouldn’t take news headlines too seriously.

Everybody knows the market was off to a great start in 2023. 

The Dow gained nearly 3% in January. 

The S&P 500 rose 6%.

And the tech-heavy Nasdaq soared almost 11%, its best month since July 2022.

This was because the Consumer Price Index (CPI) came in lower than expected for December 2022: leading the market to believe disinflation has come to stay.

That is to say, inflation is cooling, and the Fed will cut rate hikes soon.

This was a false narrative, and the media blew it out of proportion.

As such, many investors threw caution to the wind and went bargain-hunting.

But if you’ve been trading bear markets as long as I have…

Fake bear market rallies do not easily fool you.

Hence, why I issued this warning two weeks ago.

Few listened. 

But we now know there was a statistical error in the CPI result for December.

CPI headline

CPI headline

In other words, the rally was built on a lie.

As such, most bargain-hunting investors will sustain another round of painful losses as the market experiences a steep correction this week.

We’ve got another CPI number coming out this Thursday, and as expected…

The market is preparing for a scenario where the CPI is hotter than expected.

Here’s the kicker:

CPI results can be misleading, but the Fed always does what it says it will do.

Consider this comment from Fed chair Jerome Powell during a question and answer session at The Economic Club of Washington. “We think we are going to need to do further rate increases. The labor market is extraordinarily strong.”

In other words, it will keep hiking until it reaches its 5% terminal target.

Which is the highest it can raise interest rates during this regime.

Therefore, the question for the Federal Reserve in March won’t be whether to hike interest rates again in May but whether to continue hiking in June and beyond.

This harsh sentiment has sent more stocks over the cliff.

I expect more will follow in the weeks ahead as the media continues to mislead unsuspecting investors who’ve embraced the “disinflation narrative.” 

I’m not here to tell you what to do.

But if you’ve read this far, I hope you’re smart enough to know what to focus on.


The hikes will continue longer than the market expects.

The cost of borrowing cash will become unbearable for most companies…

And we could see a wave of bankruptcies bigger than we saw in 2022.

Still, the market always offers sensible opportunities if you look in the right places.

Hopefully, this gives you something to work with this week.

If you need more insight on protecting and growing your money in this market…

I’m holding a free webinar at 7 pm ET this Thursday.

I’ll share my game plan for this quarter and four recent winners in my portfolio. 

This way, you can see how I maximize returns while minimizing risk.

Click here to save your seat.


P.S.: Most financial advisers tell you “time in the market” beats “timing the market,” but this is the #1 reason you sustained painful losses in 2022. If you’re not careful, it could cause you more pain this year. I’ll shed more light on this during my webinar on Thursday. I’ll also share four stocks to grow your money. Save your seat here.

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