In his national address, President Trump claimed he’s bringing prices down. Here’s what the data shows.

November CPI data show inflation moderating month-to-month with headline CPI rising 0.2% in November and 2.7% year-over-year, after the BLS missed October data due to a shutdown. Several food items have moved sharply—eggs plunged to $2.86 per dozen from March’s $6.23 (a ~54% retail decline), milk fell to $4.00/gal and white bread hit $1.79/lb—while ground beef has risen to about $6.50/lb (an 18% increase since the change in administrations). Energy costs are mixed: average gasoline is $3.23/gal, electricity about $0.19/kWh (up >7% since last December) and natural gas $1.64/therm (up ~8% since the prior administration); tariff exemptions and changes in bird-flu outbreaks are cited as drivers of recent price moves, and some presidential claims on price declines conflate wholesale and retail measures.

Analysis

Market structure: Food winners are grocers and importers (WMT, COST, KR) as falling retail egg/milk/bread prices relieve basket inflation and can boost real consumer spending; losers include commodity egg producers (CALM) and vertically-exposed poultry integrators if retail prices compress faster than feed costs. Beef is bifurcated: live cattle scarcity (lowest inventory in ~75 years) supports cattle futures and ranchers, while packers/processors (TSN) face margin squeeze from higher cattle input prices. Energy is mixed: gasoline softening short-term, but electricity and piped natural gas rising (electricity +7% since last Dec; gas +8%), supporting utilities and winter-driven fossil-fuel demand.

Risk assessment: Tail risks include a renewed HPAI (avian flu) wave (months) that would spike egg prices, abrupt tariff reimposition on key ag imports that reverses recent cost relief, and a severe Midwest drought widening cattle shortages. Time horizons: eggs/produce are immediate-to-short (weeks–2 months) moves; cattle/beef and electricity are medium-to-long (3–12 months) structural. Hidden dependencies: feed/grain prices, tariff policy timing, and winter degree-days drive second-order effects; catalysts are USDA monthly reports, tariff announcements, and DOE/EIA winter outlooks.

Trade implications: Direct plays: short CALM via 3-month puts (size 2–3% portfolio) to capture wholesale price normalization; long CME Live Cattle futures (LC) 2% to profit from constrained supply over 3–6 months and short TSN equity 2–3% to express packer margin compression (pair trade). Natural gas: buy Jan–Feb 2026 NYMEX Henry Hub call spread (defined-risk) sized 1% to capture winter upside; overweight WMT/COST (1–2% each) vs. consumer staples ETF XLP for 3–6 months betting volume recovery from easing grocery inflation.

Contrarian view: Consensus focuses on headline CPI moderation; it underestimates persistent meat inflation and regional drought risk that can keep core food inflation above expectations, so long cattle exposure is underpriced. The administration’s rapid electricity-plant claim is politically bullish for utility capex but operationally unlikely within 12 months; avoid long-duration utility re-rates until firm permitting/contracts appear. As CPI drifts lower, 5-year TIPS (IE: IPE or TIP) at current breakevens look attractive as a hedge—establish a 1% tactical allocation over 3–6 months.

Key Decisions for Investors

• Establish a 2–3% notional short position in Cal-Maine Foods (CALM) via 3-month ATM put options to capture downside from collapsing wholesale egg prices; target 25–40% option premium decay capture or close on a 30% move lower in spot egg prices.
• Initiate a pair trade: long 2% CME Live Cattle futures (LC) for 3–6 months (target +10–20%) and short 2–3% Tyson Foods (TSN) equity to express rising cattle costs vs. packer margin compression; rebalance if cattle futures rise >25% or TSN falls >20%.
• Buy a 1% notional Jan–Feb 2026 NYMEX Henry Hub bull call spread (defined-risk) to capture winter natural gas upside; exit if prompt-month Henry Hub closes below $2.00/MMBtu or after Feb expiry.
• Overweight Walmart (WMT) and Costco (COST) by 1–2% each vs. XLP for 3–6 months to play margin/volume tailwind from easing grocery inflation and tariff rollbacks on produce; trim if same-store sales miss by >150bp.
• Allocate 1% to 5-year TIPS (e.g., iShares TIPS ETF, TIP) as a tactical hedge if CPI continues downward drift over next 3–6 months; add more if 5y breakeven falls >20bp from current levels.