| Inflation data, Wall Street earnings season gets underway, and Democrats argue over stimulus package again. This morning's consumer price inflation print is expected to stay at 5.3% with the core number, which strips out food and energy costs, holding at 4%. The longer inflation remains high, the harder it is to argue that it is transitory, and there are signs of differences emerging among policy makers on the outlook. Federal Reserve Bank of Atlanta President Raphael Bostic said it is becoming increasingly clear the current surge in prices will not be brief. While Treasury Secretary Janet Yellen still says it is transitory, even she is starting to acknowledge it will take longer for the pace of price rises to return to normal. Investors will closely read the minutes of the Sept. 22 FOMC meeting, which are released this afternoon to try to get an insight into the thinking on the issue at the Federal Reserve. 
JPMorgan Chase & Co.'s quarterly results published before the bell will get Wall Street earnings season underway. Analysts are looking for a return of loan growth as the U.S. economy recovered from the worst of the pandemic. Morgan Stanley and Bank of America Corp. report tomorrow and Goldman Sachs Group Inc. announces results on Friday. While the problems with supply chains and price pressures are expected to dominate wider corporate earnings season, investors hope that those too are transitory.
  | Fresh from passing the short-term debt-ceiling increase and sending it to President Joe Biden for his signature, House Democrats are back to arguing the details of his economic package. The original $3.5 trillion plan has been shelved with Biden suggesting a compromise $2 trillion benchmark, meaning choices will have to be made on priorities. Progressives in the House say they won't give up on their spending plans, but may agree to put them in place for a shorter amount of time. Moderates warn that this tactic would risk the programs eventually being cut by Republicans. Negotiations are complicated by the unofficial deadline at the end of the month when House Speaker Nancy Pelosi wants the $550 billion infrastructure bill passed, something progressives have refused to allow until the larger package has been agreed. It is a fairly quiet session in global equities so far as investor await data and earnings. Overnight the MSCI Asia Pacific Index added 0.1% as trading in Hong Kong was cancelled for the day due to a typhoon. Japan's Topix index closed 0.5% lower. In Europe, the Stoxx 600 Index rose 0.5% by 5:50 a.m. Eastern Time with tech stocks the strongest performer after SAP SE raised its guidance. S&P 500 futures pointed to a move higher at the open, the 10-year Treasury yield was at 1.563%, oil held above $80 a barrel and gold gained. Inflation data is at 8:30 a.m. The U.S. sells $24 billion of 30-year bonds at 1:00 p.m. The minutes from the September Fed meeting are released at 2:00 p.m. G-20 finance ministers and central bank heads meet in Washington. Federal Reserve Vice Chairman for Supervision Randal Quarles's term as Wall Street's main watchdog expires today. OPEC publishes its monthly outlook. As well as JPMorgan we also get results from BlackRock Inc. and Delta Airlines Inc. today. Here's what caught our eye over the last 24 hours. Hello and happy CPI Day. It feels like this day is now on par with Nonfarm Payrolls, in terms of market and political salience, something that certainly wasn't the case prior to the pandemic. Economists expect core inflation to grow 4% year-over-year, which would be the same as last month. One thing we can say is the various pressures that have pushed CPI readings to these elevated levels over the last several months haven't abated and are arguably getting worse. Fuel shortages, fertilizer shortages, chip shortages, container shortages, bottlenecks at the Port of Los Angeles, workers quitting etc. None of it is obviously easing. Here's a few quick thoughts about it all in vague order: 1. The word "transitory" is starting to annoy people. The President of the Atlanta Fed Raphael Bostic is even treating it as a swear word. The main problem seems to be that people took it to mean "this will end very quickly" as opposed to "this is related to pandemic-driven changes to supply and demand that will fade as commerce normalizes, and as such tighter monetary policy isn't the solution." 1 a. Part of the problem is we're still not at 100% what post-pandemic "normal" looks like. So the state of flux seems like it will just continue for awhile. 2. The big thing to watch in the data right now is whether we can still draw a fairly clear line between rising prices and the pandemic. When CPI is driven in large part by used cars, there's a certain comfort to that. (That's even if used car prices are still surging!) What would become worrisome is if price increases really start becoming broad based, with more categories dislocating. So far, the people whose job it is to really dig into the data haven't seen this happen much. 3. It's clear that globally central bankers have turned jittery and more hawkish, even if they do believe the inflation is transitory. There's obviously some kind of tension. They acknowledge that the inflation is mostly about supply disruptions and that tighter monetary policy can't really address that (rate hikes can't make more containers appear), but they're central bankers, so they might feel the impulse to hike rates regardless.
4. If I were to steelman the case for tighter monetary policy right now, it would basically go something like this: "Yes, the inflation is being driven by supply disruption factors. However, low and stable inflation over the medium is an important part of the general economic welfare. If central banks don't take this inflation seriously, the public's inflation expectations may become unmoored, eventually causing inflation itself to become persistently unmoored, which would turn a one-time shock into a long-term inflationary problem." 4 a. The hawks also seem to be bolstered by the recent Nonfarm Payrolls report. Even with the slow pace of headline job creation, they can point to the rapidly plunging unemployment rate, and strong pace of wage growth, as evidence that the economy is running out of slack -- giving policy makers a green light to at least get less accommodative. 5. Of course, the concept of inflation expectations being a powerful driver of inflation itself, while crucial to the story that central bankers tell, is dubious. Even a Fed staffer, in a paper published last month, took issue with the concept. And as Julia Coronado, a founder of Macro Policy Perspectives noted on a recent Odd Lots, we weren't even really measuring inflation expectations prior to the Volcker era. So to say that Volcker and his successors won the battle against inflation by winning the battle of inflation expectations seems to assume some facts without evidence. Even still with all the attacks on the concept, the importance of expectations remains a pretty central mainstream dogma. 6. In some ways it feels the entire economic storyline surrounding the pandemic has now come full circle. Thinking back to early 2020, before it was obvious that we would see a global public health emergency, there were concerns about supply disruptions out of Asia hitting big tech companies. And yet for the most part, the supply of goods -- even in the extremely intense early months -- held up well. Meanwhile, the news out last night is that Apple is likely to slash iPhone 13 production due to chip shortages. Going back to the beginning, inflationary pressures may be "transitory" but the evidence that they're coming to an end remains scant. Follow Bloomberg's Joe Weisenthal on Twitter @TheStalwart Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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