The Consumer Price Index (CPI) is expected to both increase and decrease on Wednesday. That’s right! Core CPI is expected to go up, while headline CPI is expected to go down. Worse, inflation expectations are increasing with most people expecting inflation to be well above 4% next year – flying in the face of the Federal Reserve who believes inflation will go down. Is the Federal Reserve wrong? If the inflation data comes in higher than expected, not only can we expect the stock market to crash, we can also expect the Federal Reserve to raise interest rates higher than expected, and to keep them elevated for longer than expected. But financial conditions are also tightening, which might help the Federal Reserve fight inflation. Meanwhile the Producer Price Index (PPI) is coming out on Thursday, and earnings season kicks off on Friday with JP Morgan Chase (JPM) reporting earnings.