Thursday: Hot CPI, $4 Gas, and Warsh's Hike Dilemma

Rush Lindell3.7%. Say it out loud in your kitchen. Go ahead, I'll wait. Hmm. Feels like a bill, doesn't it?

ReaganRush, you're doing the voice already. We haven't even said hello.

Rush LindellFine. Brought to you by Lear Capital, America's precious metals leader since 1997. I'm Rush Lindell, that's Reagan, and this is the Rush Lindell Show, the Scorecard Edition.

ReaganAnd the scorecard says September consumer prices rose 3.7% from a year ago. CNBC reported that on October 14th.

Rush LindellAnd the forecasters said?

ReaganThe Dow Jones consensus forecast was 3.6%.

Rush LindellA tenth of a point. Oh, man, you'd think a tenth is nothing. Tell that to the guy at the pump.

ReaganFair. A tenth miss is small, but it landed the wrong way, and that's why everybody's shouting.

Rush LindellWait for it, because there are two questions hanging over this whole hour. One, does the Fed hike again?

ReaganAnd two, how much of this is Trump's war, and how much is Warsh's Fed?

Rush LindellI've got a strong opinion. Shocking, I know.

ReaganYou've got a strong opinion about the weather, Rush?

Rush LindellAnd I'm right about the weather. Okay, cue the bumper. Let's read the number itself. Okay, the guts of it. Prices went up six tenths of a percent in one month. One month, Reagan. That's not a trend line, that's a mugging.

ReaganSure, but that's the headline number, and the headline is where I wanna slow down. Core, which strips out food and energy, was 2.6% over the year.

Rush Lindell2.6. That sounds almost polite.

ReaganIt does, but core rose three-tenths on the month, and it came in hotter than expected, so I'm not letting the Fed off the hook. Core is the number a central bank actually watches.

Rush LindellHold on. Who told you the Fed gets to pick which prices count?

ReaganNobody told me that. I'm saying the Fed's tools work on demand, and a pump price spike from a war isn't something a rate hike fixes.

Rush LindellCute line. Say it slower.

ReaganRates don't pump oil.

Rush LindellThen here's the number. Gasoline rose 9.1% in a single month.

Reagan9% in 30 days.

Rush LindellAnd you know what else? Real wages have shrunk six months running. Six. Six straight months of your paycheck buying less.

ReaganWait. I'd keep it simpler than that. Six straight months of shrinking real wages means raises are losing to prices every month. No single month has to be dramatic for that to hurt.

Rush LindellThat's my whole point. Nobody at the kitchen table is reading a core index. They're reading a gas pump.

ReaganMm, and I'll concede that. Core is what the economists argue about, but a family fills the tank every week and feels it.

Rush LindellThank you. Write that down.

ReaganWritten. And here's what it means for a household. A six-month squeeze isn't one bad grocery run. It's a budget that gets a little tighter every single month, and people start cutting things without ever deciding to.

Rush LindellThat's the slow leak, Reagan. You don't notice the tire going flat until you're sitting on the shoulder with the hazards on, and then somebody tells you to look at the core index.

ReaganWhich is why I'd rather watch whether the next report repeats the pattern than treat one print as the whole story. One month is a mugging. Several in a row is a habit.

Rush LindellNow you're talking my language.

ReaganBut the split matters, Rush. If the heat is mostly gasoline, the cure isn't the same as if the heat is everywhere.

Rush LindellAnd core ran hot too. You've just said it.

ReaganI did, which is why I'm not calling this all one thing. Part of it is energy, part of it isn't, and anybody who tells you it's 100% either side is selling something.

Rush LindellSelling something. On this show? Never.

ReaganThen ask where the gasoline spike comes from.

Rush LindellOh, I know exactly where it comes from. It's got a flag, a strait, and a war that somebody in Washington keeps calling a short-term disruption. Follow the barrel back, Reagan.

ReaganFine. From the pump to the people who started it.

Rush LindellReagan, forget the spreadsheet for a minute. Where does that gas actually come from? A strait, a narrow ribbon of water that the whole Gulf has to squeeze through.

ReaganHormuz.

Rush LindellHormuz. And there was a ceasefire in June. Everybody exhaled.

ReaganAnd it collapsed. Al Jazeera's piece on the stalemate says the fight was over control of the strait itself.

Rush LindellOh man, of course it was. Fighting over the one spot on the map that sets your price at the pump.

ReaganWhere things stand now is a standoff. The US keeps a naval blockade on Iran's southern ports.

Rush LindellBlockade on one side.

ReaganEscorts on the other. American ships are guiding traffic through Hormuz.

Rush LindellSo we're picking a fight and running a taxi service in the same waterway. Try putting that on a bumper sticker.

ReaganFair. It's awkward. But there's a diplomatic track too. Indirect talks are running through Pakistan and Qatar.

Rush LindellIndirect, meaning nobody will sit in the same room.

ReaganMeaning it's going slowly. And Al Jazeera reports Trump rejected Iran's latest offer to reopen the strait.

Rush LindellHold on. Reopen the strait? That's the thing driving prices, and he said no?

ReaganI'm giving you the report. I'm not defending the call, and the report doesn't say why it was rejected.

Rush LindellNo reason given. Wonderful.

ReaganHere's the detail that matters most to your pump argument, Rush. The escorts were working.

Rush LindellWere?

ReaganGulf oil flows had recovered to more than eighty-one percent of pre-war levels in September.

Rush LindellEighty-one? So the plan was actually working.

ReaganUnder escort, yes. Then it reversed because Iran stepped up its attacks on ships.

Rush LindellAnd there's your gas spike.

ReaganThe timing fits, I'll give you that. Flows climbing back, then sliding the other way.

Rush LindellWait for it. So the pump didn't just get hit by a war, it got hit by a war that looked like it was ending.

ReaganWhich is a brutal thing to explain at a gas station.

Rush LindellIs that the whole story of the pump, though?

ReaganNo, and I'd keep it honest. The report gives us the flows and the reversal. It doesn't hand us a straight line from the Strait to your gas receipt. So that link is our reasoning, not theirs.

Rush LindellOur reasoning is called common sense, Reagan. Less oil moving through the one passage everybody uses, and the price at the other end doesn't go down.

ReaganAs a general matter? Sure, and gasoline did rise nine point one percent on the month in the September data. So the direction fits, I just can't prove the link from here.

Rush LindellFits. I'll take fits.

ReaganTake it, but label it as opinion.

Rush LindellAnd Congress had its chance to say something about all of it. Reagan, what did the Senate Republicans do?

ReaganLet's go look at the vote.

Rush LindellSeptember 24th, the Senate votes on a House-passed resolution telling Trump to pull troops out of Iran, and it dies.

ReaganNarrowly, though. The Hill reported four Republicans crossed over and voted with nearly the entire Democratic caucus.

Rush LindellFour, out of a whole conference.

ReaganFour is not nothing, Rush. The House passed this thing back in July, so the Senate sat on it for two months and still couldn't get it over the line.

Rush LindellAnd look at the calendar. CNBC noted the vote came weeks before the midterms, with Republicans trying to hold their majorities. You vote to keep the war going, then you go home and fill your tank.

ReaganThe Hill also said GOP senators are growing dissatisfied with how Trump is handling the war. Dissatisfied, but most of them still voted no.

Rush LindellSay that again?

ReaganUnhappy and still loyal on the roll call.

Rush LindellThat's a whole political party in one sentence.

ReaganTrue, but I'll give them this: a war powers vote is a blunt instrument. Some of those no votes may be about who gets to pull the plug, not about liking the war.

Rush LindellMaybe, but who are the four? Name them.

ReaganThe reporting we have doesn't name them, so I'm not gonna guess. What we know is the number and that it wasn't enough.

Rush LindellFour defections and still a loss. That's a protest with a press release attached.

ReaganThat's your read, and it's a little harsh. Voting against your own party on a war this close to an election is not free.

Rush LindellFine. Then who did break ranks in a way that's about money?

ReaganWhich brings us to Tillis.

Rush LindellTillis, the one who walked.

ReaganSenator Tillis broke with the GOP, and the brief we're working from says it was over gas, diesel, and fertilizer costs. That's all the brief gives us, so I'll stick to that.

Rush LindellHold on. Gas we've covered. Why diesel? Why fertilizer?

ReaganBecause that's what moves the food. Newsweek, citing Energy Information Administration data, says on-highway diesel hit a record six dollars and fifty-three cents a gallon in the week of September 21st.

Rush LindellRecord.

ReaganAnd when the fighting began, it was about three eighty to three ninety.

Rush LindellSo the truck that carries your cereal is paying a lot more per gallon than when the fighting began, going by those two numbers. You ready for the next part? Fertilizer.

ReaganNewsweek says fertilizer prices also jumped after the Hormuz blockade. Plant it, harvest it, ship it. Every step costs more.

Rush LindellNobody puts that on a campaign mailer.

ReaganThose are the costs the brief names, and that's as far as I'll take the Tillis part. We don't have what he said himself.

Rush LindellCosts, the most dangerous thing in Washington.

ReaganAnd a diesel number like that is the kind of cost that can get passed down the supply chain, though the sources here don't tell us how much.

Rush LindellSo not just the pump, the whole grocery run.

ReaganPossibly. That's reasoning, not reporting, and the Fed meets October 27th and 28th with all of those prices in the background.

Rush LindellBumper time. That's the war side. Now the Fed side, Reagan, and brother, the Fed has a bigger mess. Reagan, look at the calendar. The Fed decides on October 28th. The election is November 3rd. Six days.

ReaganSix days, and that's before anyone says the word politics out loud.

Rush LindellNo, they'll say it. Warsh already called September's hike "removing a dose of accommodation." Doctor talk. Now he's gotta decide whether the patient gets a second dose right before they walk into the voting booth.

ReaganFair, but history is on his side, sort of. The 24/7 Wall Street piece says the Fed has hiked within seven days of an election only once since 1990: November 2022.

Rush LindellOnce in 36 years.

ReaganOnce.

Rush LindellSo a hike now is practically a comet sighting.

ReaganAnd it notes UBS calls an election eve hike politically untenable. That's UBS, a bank, not a campaign office.

Rush LindellA bank telling you what's politically untenable. Hold on, though. What do the traders think?

ReaganThey moved. CME FedWatch had an October hike near forty-one point five percent on the 14th. Before the CPI print, it was twenty-two.

Rush LindellAlmost doubled in a day. Oh, man.

ReaganBut I'd be careful with that number. FinanceFeeds says odds vary by source and by time of day. FXStreet, using the same CME data, had about fifty percent in the morning.

Rush LindellAnd by evening?

ReaganAbout thirty-one point six.

Rush LindellWait, so the market flinched, then unflinched, all in one afternoon?

ReaganWhich tells you nobody's sure. That's market pricing, not the Fed saying anything.

Rush LindellFine. So where's the money going?

ReaganDecember. That same FinanceFeeds piece has December near eighty-nine point seven percent.

Rush LindellNinety. Not a maybe. A shrug with a calendar attached.

ReaganAnd there's a voice inside the building that fits it. The report says New York Fed President Williams said on September twenty-ninth there's no need for urgency, and that one further upward adjustment might be appropriate late this year.

Rush LindellLate this year. That's code for after the votes are counted.

ReaganMaybe, but it's secondhand, Rush. A report of what he said, so I wouldn't hang a whole thesis on it.

Rush LindellI hang theses on less every morning. But fine, I'll hold it loosely.

ReaganThank you. Here's my worry, though. Wait a hike until December, and you've told everyone you flinched in October.

Rush LindellAnd hike in October, and every candidate in a gas price district gets to run against the Fed for six days straight.

ReaganAnd September's hike complicates both choices. If Warsh called it removing a dose of accommodation, then skipping October invites the question of whether one dose was enough.

Rush LindellOr hiking again invites the question of why the first one didn't do the job.

ReaganRight. A hold can be read either way, which is why the language around the decision may matter as much as the decision itself.

Rush LindellSpoken like someone who reads the fine print for fun.

ReaganNeither is free.

Rush LindellNeither is free. That's the bind. Bumper, please. Sponsor break. The Lear Capital read, then the parody, and then Reagan and I settle who owns this blame.

ReaganYou say settle. I say you're about to lose.

Rush LindellCue the music and watch. Reagan, I've got something for you. The kitchen table hearing is now in session.

ReaganOh, no. Rush, did you write a bit?

Rush LindellI wrote a bit. Gavel sound, please. Order. The committee calls its first witness, the gas pump.

ReaganThe pump would like it noted that it just displays what it's handed. It has no further comment, and it's flashing numbers at the chairman.

Rush LindellHostile witness. Next up, the diesel tank. Big fella. Sweating.

ReaganThe diesel tank invokes the Fifth. Also, it's very full of something that costs a lot.

Rush LindellAnd now, the star of the show, the Fed Chair, who arrives in a very quiet car.

ReaganWait, who's he talking to?

Rush LindellNobody. He speaks only in meeting minutes, and he's not saying a word until the calendar says so.

ReaganSo the pump shrugs, the tank pleads the Fifth, and the Chair is on mute. Are we sure this is parody?

Rush LindellGavel. The witnesses are excused. The only person still talking is the guy at the kitchen table with the calculator.

ReaganAnd he's got questions.

Rush LindellHe does. Speaking of people who want to protect what's in their wallet, my friends at Lear Capital are doing something I've never seen before. They're selling a one ounce silver American Eagle below spot price.

ReaganBelow spot?

Rush LindellThat's right. Below what silver is actually trading for right now, and Lear's covering the shipping and taxes. Here's what you need to know. Priced below spot. Lear is selling this at a loss to get silver in your hands.

ReaganOkay, what's the catch?

Rush LindellLimit one per person. New customers only. Free shipping. Fully insured by Lear. And this is a twenty-four-hour offer only.

ReaganWhy does below spot matter?

Rush LindellBecause spot price doesn't include the cost to mint the coin, ship it, or any dealer overhead. Buying at spot is already a deal. Buying below spot almost never happens.

ReaganAnd it's not some obscure piece.

Rush LindellNot at all. The silver American Eagle is one of the most recognizable and sought-after coins in the world. Backed by the US government for weight and purity, one ounce of point nine nine nine fine silver, IRA-eligible, a tangible asset you can hold in your hand.

ReaganI like that last part. Holding something is a different feeling than watching a screen.

Rush LindellGo to www.rushcoinoffer.com right now. This is a twenty-four-hour offer. The URL goes dark after that, and when it's gone, it's gone. That's www.rushcoinoffer.com.

ReaganOkay, Rush. The hearing's adjourned, the coin's on the table, and the kitchen table is still waiting on a verdict.

Rush LindellThen roll the bumper. Closing arguments. Whose fault is all of it? Okay, my opinion, and I'll wear it proudly. It's the war. Overwhelmingly the war. Not a coin flip, not fifty-fifty. The war.

ReaganYou've got a number for that, I assume.

Rush LindellOne. Gasoline jumps nine point one percent in a single month. Where did the fire start, Reagan?

ReaganLook, I'll concede the pump, Rush. Gas is the fire, but core at two point six percent is where the Fed's hike has to prove itself. And the Yahoo Finance piece on the Fed's election eve decision has that figure.

Rush LindellThat's calm water next to a fire.

ReaganMaybe. Here's my opinion, and it's mine. The September hike was supposed to keep warm from becoming a habit. If the Warsh Fed hikes in September and core still runs warm, somebody has to ask what the hike bought.

Rush LindellWhat it bought is a Fed Chair who's now on the ballot without being on the ballot.

ReaganWhich is my point. October twenty-seven, twenty-eight is a choice. Hike, hold, whatever. Those are decisions, not weather.

Rush LindellOkay, but when the GOP votes to stay in this war, they own the pump. The CPI is the receipt.

ReaganHold on. Defend them for a second, because the strongest version of their case exists. Their argument is that leaving mid-fight hands Iran the strait, and prices would be worse.

Rush LindellProve it.

ReaganI can't. Neither can anybody. That's the weakness in both our positions, honestly.

Rush LindellReagan admits uncertainty. Mark the calendar.

ReaganI'll say it again, with an edge. Blaming the war for everything lets the Fed off the hook for the part of inflation it does control.

Rush LindellAnd blaming the Fed lets the White House off for the part it started. Pick your villain, folks. I picked mine.

ReaganMine's both, in different proportions, and the proportions matter most where the diesel hits, out on the farms.

Rush LindellSo here's a test for both of us. What would change your mind? For me, if the pump eased while the war dragged on, I'd have to rethink the whole pump argument.

ReaganFair test, and mine runs the other way. If the Fed held steady and prices still ran hot, I'd concede the war carries more of it. An opinion should come with a way to be wrong.

Rush LindellDeal. We'll put it on the studio wall.

ReaganGood. Then at least one of us gets to be wrong on the record.

Rush LindellWhich brings us to the midterm scorecard, because those farm state seats don't care whose fault it is. Reagan, the number I want to leave you with is five.

ReaganFive what?

Rush LindellFive big farm states. Newsweek reported that diesel, tariffs, and war fallout put GOP Senate seats at risk in all five, about three weeks before Election Day.

ReaganTariffs are in that list. That's worth noticing.

Rush LindellOh, I noticed. Everybody gets a piece of the blame.

ReaganHmm. And it matters because farmers buy diesel in bulk. They don't shrug at a pump price the way a commuter can.

Rush LindellRight. Somebody in Iowa doesn't pick a different gas station.

ReaganI'd keep one caution on it. Newsweek says seats are at risk. That's a warning, not a forecast of who loses.

Rush LindellYou always take the fun out of the tea leaves.

ReaganSomebody has to. Nobody has voted yet.

Rush LindellSo if it's not a forecast, what should a voter actually watch?

ReaganWhether the pump and diesel costs ease before the vote. If they don't, those five states are where the squeeze would show up first.

Rush LindellFine. Then the Fed is the wild card hanging over all of it.

ReaganAnd as we said in the Fed segment, neither a hike nor a wait is free.

Rush LindellMoving on. Final scorecard time. Reagan, grade it.

ReaganHold on. I'm doing math. The war gets the bigger share of the blame for the pump. The Fed gets a real share for not being ahead of it. I give the GOP a C-minus on the war and the Fed a C.

Rush LindellA C-minus. Generous.

ReaganI told you, I give credit where it's earned.

Rush LindellOkay, my turn. The war gets an F at the kitchen table. Gas, diesel, fertilizer. Nobody grading on a curve in a grocery aisle. The Fed gets a D because it's a bank, and banks should know better.

ReaganA D because it's a bank? That's a rubric I'd like to see.

Rush LindellBanks get no curve. Ask anyone with a mortgage.

ReaganYou and your grading.

Rush LindellGrades are on the wall. Bumper, please.

ReaganAnd then comes the question for the listeners.

Rush LindellReagan, you get the verdict question. Make it count.

ReaganFine. Trump's war or Warsh's Fed. Pick one or pick a split and tell us why.

Rush LindellAnd tell us the date. October 27 to 28, when the committee meets again, mark it.

ReaganHmm. I'll be watching for whether they say anything at all.

Rush LindellOh, they'll say something. Whether it's English is another matter.

ReaganRush.

Rush LindellRemember the scorecard we opened with? I said the pump was the receipt. Go check your own receipt this week, then email us your grades.

ReaganAnd if you like arguing with us, subscribe, leave a five-star review, and tell a friend. New episodes every weekday.

Rush LindellTell the friend who still thinks gas is weather.

ReaganBumper out.