*Critical Fed Warning* Watch BEFORE Wednesday

all right folks this is a big week we've

got April 12th coming up which is a CPI

week that's potentially more important

than jobs data week which is wild to say

but potentially is more important than

jobs data week in addition to that we're

going to talk about how the Federal

Reserve likes to make decisions how they

kind of messed up potentially last time

we'll talk about Nick T's latest

argument on the Federal Reserve we'll

also talk about the economists a take on

what's happening with the stock market

so a lot of things again Catalyst event

fed then we'll talk about uh the stock

market and uh and potential movements

coming up this week so the first and by

far biggest Catalyst of this week is

going to be CPI but not only are we

going to get the consumer prices we're

going to get some earnings reports and a

few of them will actually help us uh

well actually really just one of them

will help us potentially right before

CPI and in my opinion that's Carmax

Carmax reports at 6 50 am am scheduled

to at least on the 11th that's in two

days that's Tuesday morning so we're

going to be getting at Carmax report and

uh the estimate they're looking for

about 22 cents but why CarMax well one

of the reasons I like CarMax is because

obviously they're a used car dealer one

of the things that we're seeing is we're

seeing used car wholesale prices rise

but used car prices aren't necessarily

coming up with how much those wholesale

prices are rising so what that means is

if input costs are up but consumer

prices are staying limited margin is

getting squeezed right so we would

expect if we think inflation is going to

come in softer we would expect that

potentially CarMax

wouldn't be seeing that much of an

average price increase per vehicle and

their margin there is sort of the

difference between what they're paying

what they're able to sell cars for might

show some shrinking pressure now whether

or not the stock moves up or down has

everything to do with the expectations

that analysts have set for CarMax which

is really beyond the scope of this video

but more importantly I think we can look

at Carmax as sort of a little CPI

preview because used and new cars make

up somewhere between five to six percent

of CPI and pce depending on which one

you're looking at obviously this week

we're going to be looking at CPI that's

sort of the most popular one and uh in

my opinion we're going to want to pay

really close attention to CarMax as a

leading indicator in terms of what we're

going to be seeing on on in that car or

on that car side so that could be a

little bit of a trading heads up for us

so I'd definitely be paying attention to

CarMax again that is on the 11th then on

the 12th we'll get CPI followed by more

consumer data on 4 fortunately after the

CPI release for example on April 13th

we'll be getting Delta Airlines we'll

see our Airlines still able to raise

prices that's a big question there's

obviously a lot of demand for travel

Hospitality Leisure but the question is

can Airlines continue to raise prices we

know there's still massive supply

shortages in the Aerospace sector so the

cost of doing business is rising we also

know that lower wage workers are earning

more money so a lot of the input costs

for airlines are going up but if they

can't raise prices anymore because as

United and Southwest have mentioned

they're ready to embark on a price War

if they need to in other words they are

ready to lower prices to compete with

their competitors if they need to and

their goal is to operate more

efficiently well we'll see are they able

to raise prices are they able to operate

much more efficiently and how are those

consumers doing with spending so that'll

be on the 13th we'll get our first look

at Delta Airlines it's actually probably

one of my favorites uh I don't know

probably United holds a candle that them

but we'll see uh okay then American

Airlines is the most indebted so

something to keep in mind as well Alaska

by the way least dead at least indebted

I believe out of all of the airlines

anyway then on Friday on the 14th we'll

be getting JP Morgan City Wells Fargo

and BlackRock all in the AM that is

going to be a busy am that's all between

about 5 55 a.m and about 6 50 a.m

eastern time so the banking sector will

be huge because we're actually going to

get a glimpse at how much our credit

standards actually tightening everybody

keeps talking about how the banking

crisis is going to lead credit standards

to Titan and maybe some credit standards

have already been tightening over the

last six months as we sort of walk into

a recessionary environment but NatWest

was telling us last week that credit

conditions aren't really tightening

anymore than the path they were already

on during the credit crunch now or or

during the last six months I should say

now there are some indicators we looked

at these yesterday where we saw

borrowing sort of fall during the couple

weeks of the credit crisis or the

banking crisis and then a big spike

right afterwards and now people are

wondering okay so is the credit crisis

normalizing like did we have a quick

little pause and then a rebound and is

not West right that there really is no

additional tightening or was that just

people quickly withdrawing their credit

lines down and potentially a uh credit

crisis and a credit crunch is still

ahead of us well that those banking

catalysts will give us a massive amount

of insight on Friday but again that

comes after CPI so the favorite data

that we want to look for CPI obviously

is going to be coming out on the 12th

now the 12th is a very big day because

we have branded a complete coupon code

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then CPI so CPI also comes out on the

12th which is the day of the expiration

of the coupon code and prices will be

going up so CPI expectations just

changed now this is actually interesting

I was not expecting CPI numbers to

change in terms of The Economist

expectations going into the read so on

Wednesday April 12th we have the CPI

expectation of instead of 0.3 percent

which was the expectation the last time

we looked at the data that number has

actually moved and on the month over

month headline it is moved down to 0.2

two percent month over month now I was a

little surprised by that that we we saw

a shift down to 0.2 percent that is

going to be great on a headline basis

we'll be shifting down from 0.4 month

over month to 0.2 0.2 annualized works

out to about 2.4 percent which is

fantastic uh absolutely great uh so I'm

very happy that the that the survey is

sitting at a median estimate of 0.2 uh

there are 58 qualified estimates in uh

from uh from from the Bloomberg analysis

or rather 58 a qualified Economist

putting together 38 estimates I should

say so some of them bundle up uh you've

got uh UBS TD Securities and Wells Fargo

actually just UBS and TD coming in at

point one percent most of these coming

in at point two percent oh if I actually

sort them there are a few more at point

one there we go okay it looks like there

are one two three four five estimating

point one percent and then there are

only four estimating 0.4 most of them

sit around 0.2 or 0.3 percent and the

average estimate is 0.24 if you really

want to get to the nitty-gritty

sometimes in the course member live

streams people ask me they're like oh

okay you can be the exact number so I'm

like yes uh CPI that's month over month

CPI

um core month over month is expected to

be a little bit hotter core that's going

to remove the energy slump and energy

price slump that we've seen and when you

remove that out you're actually looking

at a survey of 0.4 which is 4.8

annualized keep in mind after we saw a a

oil production cut by OPEC Plus members

we have seen oil prices rise but what's

actually quite surprising is how little

oil prices have really risen relative to

what you would expect look at the chart

on screen here which is branded with our

beautiful overlay for the coupon code

there we go take a look at this these

are the this is the international blend

of oil it is Brent crude that's to be

not to be confused with WTI which is the

Western blend and when you look at the

six month chart here obviously you could

see that during the banking crisis we

had a big slump for oil demand but what

you've seen is oil prices rise after the

OPEC plus price production Cuts but

folks look at this we can't even break

resistance that we had before the

banking crisis in mid-fab in late

January in late uh December in early

December we are not breaking out of that

channel so OPEC plus is probably

punching the air right now wondering why

can't we break out well potentially part

of the reason is or Futures markets are

pricing in recessionary fears in the oil

market and obviously if we Trend towards

a recession the expectation is that we

would have a few or should I say less

oil demand that would be the expectation

so continuing with CPI here CPI year

over year has also just been reduced CPI

year over year in the prior read it was

six percent folks buckle up and maybe

get your life Insurance within as little

as five minutes by going to bet

kevin.com life where you can Apple pay

an Android pay for it CPI year over year

has just been revised to

5.1 percent the high estimate is 5.4 the

low is 5.1 the median estimate is 5.1 so

you have a really big skew to the left

side here which means you have a high

bar chart on the left and then very very

few estimates on the right side so

people really convinced that this is

going to come in at 5.1 remember the

prior read here for headline was six

percent we're going to see almost a one

percentage point or an entire one

percent 100 basis point plummet

inflation almost 90 basis points that's

incredible uh and a lot of that again

because of energy prices because when

you look at the core you're actually

expecting to see core tick up slightly

year over year you're going to move from

a prior expectation or a prior read of

5.5 to about

5.6 so what is that going to Signal

what's going to mean we're going to have

to look at the granular data how are

those core Services doing and those core

services are going to be what we're

really going to pay attention to now we

want to talk about what the Federal

Reserve and Nick T are up to as well and

how this could affect the stock market

but before we do that I quickly just

want to look at and read off some of the

core Services we're really going to be

paying attention to and I think they'll

be critical and remember those the

catalysts from CarMax from Delta and

from the banks in terms of what and even

what they say in the earnings call are

really going to help shape an

understanding around this CPI report so

I really think that's going to be uh

important in a basis for what the

Federal Reserve is expected to talk

about in may now remember the May fed

meeting is going to be based off this

CPI report that's really important

because the next May meeting occurs on

May second and third too early to get

another CPI report so whether we get

that 25 BP hike or not it's going to be

dependent on these catalysts likely this

week keep in mind that right now the

Futures Market is pricing in a 65.5

chance of a 25 basis point hike in may

we are also pricing in a 64.7 percent

chance of a pause in June now we're

going to be looking specifically when it

comes to CPI and obviously category

number one are we continuing to see

Goods disinflation very important number

two have we started to see any rent

deflation yet that is rent of shelter

lodging away from home hotels rent of

your primary residence via owner's

equivalent rents Last Read was point

seven percent that's eight point four

percent annualized at the high we want

to see that come down but the other

thing that we'd like to see down are

obviously airfares transportation

services we'd also like to see other

service is like haircuts phone services

Legal Services postage Services

Education Services photography Services

Pet Services we'd like to see all of

these normalize now pet is one of the

largest sectors that still seems to have

lingering pricing power or that is the

lingering ability to raise prices in the

face of higher costs pets and pet

supplies are really still passing on

those prices so that could come up in

CPI as well now we expect that to wane

as household formations for pets are

flat at least according to Petco's

earnings call household formations are

flat at the start of the year for uh for

for more people basically having pets

and that could be an indication that

that pricing power May in for pet stores

but so far if you're looking at

companies like Chewie it does look like

these companies still have pricing power

the question now is how long will that

stay in fast now the question is what

does this mean potentially for the stock

market and the Federal Reserve well Nick

T put together a pretty detailed uh

report on how much Panic there was at

the Federal Reserve during the banking

crisis usually the Federal Reserve

decides how much to raise interest rates

weeks before the actual fed meeting

however in this last crisis the Federal

Reserve decided just two days before the

March 22nd fed fomc meeting whether or

not to raise rates which they did by 25

basis points and the reason they waited

so long is they waited for Swiss

authorities to help solve the Credit

Suisse disaster now if anybody's ever

watched the Bourne series which is my

favorite series ever I just watched the

first half of it with Jack my

seven-year-old yesterday we got to the

car chase in Paris but anyway think

about how exclusive Swiss banks are and

how important Swiss banks are to the

banking system the reason I bring up

born identity is because of course Jason

Bourne has to collect his resources from

a Swiss bank in Zurich and so this this

banking crisis was a huge blow to the

the Swiss banking system but the FED

actually heavily leaned on what was

going to happen with the UBS bailout

basically buyout along with the

government bailout the Swiss National

Bank basically guaranteeing the next

nine billion dollars and actually I

think UBS was willing to take up to nine

billion dollars of losses and the Swiss

National Bank was willing to take the

next 15 billion in losses to orchestrate

that deal because there's not enough

time to underwrite the entire book of

business for credit so he's anyway long

and short of it the Fed was looking at

that deal to decide whether to pause and

they were seriously considering pausing

because of the banking crisis in March

now that was a risk because even Bullard

who generally suggests we need to get to

a higher rate as soon as possible

suggested that if we paused we would

have potentially signaled fear and

usually the formal statement for the

Federal Reserve is actually drafted uh

up to a week before that is the decision

could be made as much as two weeks

before the statement is drafted a week

before but Powell didn't want to rewrite

the statement so waited until literally

the last minute to decide to go with a

25 basis point Hike The Economist had a

great piece yesterday talking about how

the banking turmoil has potentially been

ignored by the stock market and I think

the stock market cares actually more

about what we're going to get in numbers

this week and I want to talk to you

about good news is bad news versus bad

news is bad news because the economist

talks about it as well the economist

cites that investors have dumped stocks

when bankings when banks have failed

before they go into history and say look

go back to Continental Illinois that was

a bank that failed in 1984 the FED had

to rescue it and the Dow dropped six and

a half percent because of Bank in

Illinois failed stocks slid 10 percent

when Lehman Brothers crashed in 2008

it's obviously substantially more after

that and in September of 2029 between

September of 2029 sorry 1929 and July

1932 during the Great Depression banking

failures LED stocks to fall 89 so

banking crisis is a massive deal when it

comes to the stock market especially now

with deposits fleeing to money market

funds but what's actually remarkable is

our stock market's kind of like eh

whatever what did our stock market do

the S P 500 returned four percent during

the banking crisis European stocks were

up three percent during the banking

crisis the NASDAQ was up seven percent

during the banking crisis led by

companies like Microsoft and Apple

retail trading flows have been elevated

since 2021 and even though retail plowed

money into the market about 17 billion

dollars in the first two weeks of

February they actually plowed the lowest

amount of money into the market during

the two weeks of the banking crisis the

lowest amount since late 2020 just nine

billion dollars of retail inflows during

the banking crisis so retail was

actually nervous about the banking

crisis you know the stock market

actually went up during the banking

crisis suggesting that some

institutional investors actually saw the

banking crisis as an opportunity to

finally Buy in now that's interesting

because after all just 20 stocks have

led 90 percent of the S P 500 surge year

to date Mada Apple Nvidia Tesla and the

likes they have led the vast majority of

the surge of the s p

and this is something that I've been

talking about as well is that this is

the kind of Market where you don't want

to be exposed to all of the Staples that

are going to get sandbagged in an

earnings recession you want to be

exposed to PP pricing power stocks

that's what you want and I encourage you

to look up pricing power stocks I teach

price about pricing power stocks just go

to meet kevin.com you can learn about

not only my courses on building your

wealth my affiliate links my uh actively

managed ETF all of the information is at

meet kevin.com so just go there and

learn more but anyway the question now

is is are people being blind to a

potential recession I mean if

historically stocks go down in a banking

crisis why in this banking crisis did

they not go down now that is a question

that I'd like to answer right after I

just shout out crypto life or who just

donated 50 saying that today is their

40th birth birthday sending you some

love that's awesome crypto life or hey

man send us an email kevin.com good for

you man all right so now what and by the

way thank you to all those of you who

emailed me yesterday about the um

gold-backed uh uh digital currency

expect some email replies today okay so

now we've got to ask ourselves is bad

news good news right initially when we

went into the cycle we wanted to see

weak data weak manufacturing data weak

Services data because it would suggest

that inflation is no longer a problem

well this inflation report may tell us

as a catalyst that inflation is no

longer a problem the real problem is

actually recession and how deep is the

recession going to go are we going to go

negative GDP by Q3 Q4 or is this all

going to be a funny joke and everybody's

going to be comparing or waiting for a

recession and the recession is never

going to come we don't know we have no

idea but the CPI report will be a big

Catalyst I believe to letting us know a

is inflation going to prove to be

transitory or not if we end up having

any kind of re-ex here are risk factors

a re-acceleration in demand inflation

and a re-acceleration in uh in services

or housing inflation would be absolutely

devastating Now look for example at

expectations related to CPI going

forward now this is a phenomenal well

actually these are these are not CPI

directly inflation expectations but I

want to show you this this is from the

Federal Reserve the St Louis bank and

the Federal Reserve that's phenomenal I

suppose before I show you this let me

just quickly finish the thought so

generally bad news has been deemed good

news but if inflation proves to be

transitory is it possible that bad news

is actually good news or is it possible

that bad news is actually just straight

up bad news and the answer is yes bad

news could be straight up bad news why

could bad news be bad news because

inflation goes away and then we've

proven to have over tightened well then

we got big problems because if we've

proven to have over tightened now now

we've got oopsy-doopsies because now we

go into a deep recession potentially now

again I have aligned the expiration of

the coupon code with a CPI Wednesdays so

the 12th so make sure you get in

remember you could use buy now pay later

and you get a price guarantee well going

forward for Life the price is guaranteed

will never be lower or you get a price

adjustment which is a phenomenal

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lectures and perspectives on building

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mean everything you learn everything you

can ask any question you want so take a

look at this this is an H District

businesses report uh which basically

they they survey eight different

districts and they do a report about

persistent inflationary pressures here

and listen to this they surveyed uh CFOs

uh in in a CFO survey and then they

looked at BLS statistics for Consumer

prices and producer prices they looked

at forecasts and what actually happened

and what I want you to see is where like

who was basically most wrong so in your

CFO survey in 2022 CFO stock prices

would rise 4.2 percent they actually

Rose 8.4 in the eyes of CFOs and

companies that were interviewed that's

different because it's not a survey of

all prices which you get you know via

the CPI or PPI baskets so that's why

there's difference here but the point is

CFOs were wrong about inflation by a

factor of two it's you know look at this

they were expecting inflation prices to

go up 4.2 percent prices actually went

up an additional 4.6 percent at eight

six that shows you that CFOs were caught

flat-footed in the face of inflation

they were not expecting this much

inflation

from a consumer price point of view via

the Bureau of Labor Statistics we were

expecting 4.4 we actually got 6.4 in

consumer prices PPI we were expecting

five nine we got eight seven now what I

like to look at though is the forecast

for 2023 and you can see this softening

in 2023 you actually see forecasts of

just 4.8 percent uh for the total survey

CFOs are now catching up CFOs actually

think inflation might actually be more

persistent but consumer and producer

prices actually suggest that inflation

will be lower

so CFOs have historically been wrong

they've been very wrong by a factor of

two over here now CFOs are projecting

higher inflation in 2023 but is it

possible that they're wrong again at

this time to the to you know they're

overestimating inflation entirely

possible so I believe to sort of sum

this Catalyst segment up I believe the

big thing that we want to pay attention

to here is a combination of everything

that happens this week I don't think we

can narrow this down to one Catalyst

this week I think this week you want to

write down on a Post-It note or

something you want to write down a CPI

the 12th with coupon code expiring

prices going up then you want to look at

Carmax on the 11th the day before sorry

that's slightly out of order then you

want to make sure you pay attention to

Delta earnings and what happens with the

banks at the end of the week because

think about it all of that together is

going to give you a view of is the CPI

CPI CPI CPI if CarMax is Raising prices

a lot and uh and the airlines are

raising prices and credit is fully

available right now Duke can be keep in

mind and I didn't talk about this one

this one's a little bit less you know

popular but we are also the very next

day on Thursday we're going to get PPI

producer price really quick quickly I'll

go into this one quickly it's less

popular but the very next day 5 30 a.m

We Get PPI month over month expected to

be zero uh the month over month core is

expected to be 0.3 as well as month over

month Core X trade 0.3 but year over

year is expected to plummet we could see

year-over-year headline PBI go from 4.6

percent to three and PPI core go from

4.4 to three and a half and then X trade

as well 4.4 to four so a big plummet

there in PPI expected so you've got a

very busy week and I think after this

week we'll be able to really nail down

all right are we going to get 25 BPS or

not remember the expectation right now

is that we're looking at a 65 chance of

25 BP in uh in the uh on the May 2nd and

third meeting of the Federal Reserve

that's 65.5 percent to be exact at 65.7

percent of a pause in June with of

course rate Cuts being priced in still

towards the end of the year the only way

we're really going to get right Cuts

towards the end of the year in my

opinion is actually if we end up having

a blowout low report on the CPI and PPI

numbers which we may get and then

everything will turn from fighting

inflation to because inflation will then

have proven to be transitory to fighting

over session rates by the way are

expected oh this is a crazy chart my

gosh this is a disaster so rates are

expected to pause in June but if I look

The First Cut is already being priced in

for July

with oh my Lord

what

by January 31st we are now pricing in

almost two and a half percent in rate

cuts

that is an insane curve holy crap

um oh my Lord okay let me show you this

because it's it's actually almost

slightly hard to believe how uh this

just the shape of this curve this is

insane now that is a little risky as

well because if the market is pricing in

this kind of curve it ends up being

wrong uh well that's going to be a

little bit of an oopsy-doopsie eh and

we're gonna have to do a little bit of

price adjusting and remember that's how

the market somewhat works too is the

market uh can rise based on expectations

of rate Cuts maybe that's why we saw

those uh those those uh in the stock

market rise because now we're thinking

okay the fed's certainly going to cut

but holy smokes look at this particular

chart that I'm going to show on screen

right here look at those cuts my

goodness now the way to read this is

basically you look at right here is your

Peak right here is your pause here is

your first cut so this is about five and

a quarter percent five to five and a

quarter percent right here would be the

range uh and then you get your first cut

over here another cut another cut many

Cuts look at this huge cuts coming

towards the end of the year followed by

some smaller Cuts over here I mean the

cut over here looks like a one and a

half percent basis point cut I mean

let's let's draw that really quick

you're going from about negative one and

a quarter here to about negative two and

a half that's a 125 basis point cut that

is being priced in for uh December

followed by uh you know and that's just

that bar difference right there the

cumulative would be somewhere around it

two and a half to almost three percent

cut uh by uh you know people like two

points two and a half two point seven

five two and a half to 2.75 price stem

by uh by the end of January uh that'd be

uh around my birthday time oh my gosh

wow so if we don't get those cuts I

think the market might be a little sad

in fact that's exactly what TD or TS

Lombard mentioned they said If the Fed

does not start cutting we're going to

have a big oopsie goopsy because the

Market's going to go oh damn it in fact

it's over tightening and they're not

even realizing it holy hell please get

your life insurance in as little as five

minutes going to metcaven.com live yes

you have the debt ceiling crisis looming

as well but that my friend is for

another segment thank you very much for

watching this segment it was very

detailed and hopefully very insightful