Inflation is Plummeting | Deflation is Coming.

is inflation beginning to plummet well

the Washington Post thinks so in this

video I'd like to show you a report from

The Washington Post that suggests

inflation is beginning to plummet now

I'd like your commentary on this but

let's go ahead and go through this and

then I'll add mine as well so here we go

from chicken wings to used cars

inflation begins to ease its grip let's

take a look at this the price of

gasoline is dropping Like a Rock chicken

wings are suddenly becoming a bargain

this by the way was a huge huge issue

when a Wing Stop reported that the price

of chicken wings was up like 30 to 70

percent depending on which quarter you

were comparing to everybody was like oh

my gosh who cares about inflation at

seven percent we've got chicken wings

going up 30 percent to even more for

certain varieties of chicken anyway so

so I think that's probably why they're

mentioning chicken wings suddenly being

a bargain because it hadn't been for a

very long period of time and retailers

drowning in excess inventory looking to

make a deal you you don't say remember

my Black Friday video when I went around

some retail shops and saw those TVs and

computer stacked up yikes after more

than a year of high inflation many

consumers are finally starting to catch

a break even apartment rents and car

prices two items that hammered millions

of household budgets this year are no

longer spiraling out of control really

important and the FED is recognizing as

well this fall of new leases being

signed and what they're actually paying

attention to when this is so important

they're actually paying attention to

will that fall in new leases continue or

is it going to stabilize and potentially

Circle back up that's very very

important and something the fed's really

paying attention to Global Supply chains

are finally operating normally as more

consumers suspend up more in on

in-person services like restaurant meals

and less on goods and Furnitures uh

Furniture Goods how's that going to

affect Restoration Hardware reporting

this week we'll see that middle to Upper

end consumer I mean who really buys a

Restoration Hardware I I don't know I've

never brought myself to buy there I just

can't spend a lot of money on furniture

we only have 500 couch and then after

five years we just get another 500 couch

it beats having like a seven thousand

dollar couch that maybe lasts 10 years

it's not worth it anyway our opinion of

course might be unpopular anyway the

cost of sending a standard 40 foot

container from China to the United

States uh is West Coast that would be

like your Long Beach Los Angeles is now

under two thousand dollars down more

than 90 percent from the peak this is

true we are seeing shipping costs

plummet it was one of the reasons I

briefly shorted Zim I made a little bit

of money on that short the moderation in

inflation is just beginning to appear in

government statistics well that that's

bullish in October the fed's preferred

pricing gauge the pce posted its

smallest monthly increase in September

of last year great the worst of

inflation is behind us says an economist

here for TS Lombard the question is

where does inflation settle and this is

true that is probably the biggest

question now is is inflation going to

chill at five percent and if it chills

at five percent does that mean the

Federal Reserve has to keep hiking uh

that is maybe we end up going to a six

percent terminal fed funds rate or are

they just going to keep us at five

percent for longer that's the big

concern right now is how long is the Fed

going to keep rates high and I think a

lot of folks are saying well the answer

to that is how long is it going to take

for inflation to actually come down see

this is the projection right now we'll

pull this up on screen right here this

is the federal reserve's projection the

black line was a month ago and you could

see us hitting about five percent almost

five percent and then rotating down

slowly into 2025 which is the bottom

right corner that I'm kind of locking

there is February 2025. well the blue

line here you can see has started

falling sooner falling as soon as about

the end of 2023 and falling sooner so a

lot of folks at least the market pricing

in this idea that ah rates are going to

go higher but they're not going to stay

high that long well if inflation ends up

stabilizing around five percent maybe

the

rates will stay high longer some folks

of course are saying hey no the fed's

not going to keep rates high that long

because we'll it'll end up pushing us

into a depression they'll have to have

mega rate Cuts coming very soon I'm

actually a fan of that belief but it's

going to be it it's all going to be

predicated on how much inflation

actually comes down where it stabilizes

the deflation stabilizes at three

percent honestly I wouldn't put it past

the FED to just say hey look for the

last 10 years we've been at one to one

and a half percent inflation if we sit

at two and a half to three percent

inflation for the next 10 years we think

that'll average out to about two percent

and we think that could be okay so I do

see the FED loosening their target a

little bit with this argument that oh

well we still have a policy of flexible

average inflation targeting known as

fate f-a-i-t flexible average inflation

targeting pronounced to fate anyway

let's get back over here and let's see

what uh the rest of the Washington

postings here that chair Jerome Powell

on Wednesday noted signs of progress but

said it's too early to claim victory yep

it'll take substantially more evidence

to actually be convinced that inflation

is coming down sure still The Washington

Post says there are clear signs of

improvement in merchandise pricing this

is interesting as consumers resume their

pre-pandemic spending patterns excluding

volatile food and energy Glitz Prices

rose in October by 5.1 percent that's

sort of your core read I believe they're

using the pce read here down from 12.3

percent on an annual rate in February

yeah well that's when you multiply by 12

the month of a month but anyway as good

prices begins begin to cool pressure is

building on Services Rising demand and

limited Supply think short staff

restaurants has Services inflation

running at an annualize or annual rate

of 6.7 percent more than twice the

figure a year ago the expectation is

that Goods prices will continue to

disinflate but service is more gradually

and may be more sticky most of what's

Happening Now with prices reflects

developments in specific markets or

consumers return to pre-pandemic

routines the plungent ocean shipping

costs by itself has stripped roughly 3.7

percentage points from the inflation

rate making credit more expensive the

FED has put a major dent in the Housing

Industry right well this is where now we

get to talk about rents and home values

and what's interesting here is they say

the full effect or they say here but the

full effect on the economy of how higher

rates will take many months to

materialize this is despite home sales

in October being 37 percent lower than a

year ago that's another big issue we

face is when are we actually going to

see the bottom of Housing and will that

drag down inflation in other areas think

about some of the services related to

housing and how those Services could

actually infect or affect inflation

you've got construction title and escrow

loans Open Door apparently just sent out

an email this is a rumor I saw it but

somebody sent an email around saying oh

open doors now closing their lending

business that doesn't surprise me I mean

lending has almost no pricing power in

this environment right now I want to say

95 of people would not benefit from

refinancing right now that's because

they have rates that are lower than

where current rates are so lending is a

really difficult industry to be in but

when you look at all the services

related to real estate think Electrical

Plumbing Handi folk painters drywallers

anyone related to the building or

Renovations which are important right

before you go to sell a property all of

those Services would expect to see

disinflation as demand falls off a cliff

in construction remember generally what

people do is they spend money to fix up

their homes ironically right before they

sell them they don't even get to see

those benefits or right after they they

buy them but people are buying homes

less and people are selling homes Less

in fact Redfin just put out a post about

how the most properties are being

delisted that they've seen in a very

long period of time I want to see if I

could pull the exact data piece here I

believe I have that handy it is the

Redfin blog post that just came out and

uh there it is okay sellers okay record

D listing two percent of homes were

de-listed without being sold each week

during the three months ending November

20th that compares to 1.6 percent a year

earlier suggesting the Boom is over and

there's a complete reversal in the

housing boom time now this is a record

amount of D listings they don't

necessarily suggest in how long it is

but Redfin has a full blog post on that

so they might have some more details on

that uh either way it's it's clearly

painful and so we could see that just

housing alone could push Services

inflation down as well not just through

fewer people buying but also fewer

people selling pushing that real estate

agent title escrow lending and all of

those Services down this is why we talk

about the velocity of money right one

person spends one dollar well that leads

to five or six dollars into somebody

else's pocket that's because they always

think about the hot dog vendor the hot

dog vendor sells you the hot dog you

give the hot dog vendor that buck 50 for

the Costco or Walmart hot dog what do

they do with that well they buy more hot

dogs that gives the hot dog supplier

jobs it also gives the hot dogs seller

jobs it gives the marketing company for

Costco and Walmart jobs right it flows

through the economy generally four to

five times spending does savings only

flow through the economy about one to

two times so they don't really flow

through the economy as much this is why

the government's always encouraging

people to spend your money not save your

money that's why they give tax benefits

to businesses for saving by the way or

sorry for spending by the way uh this is

why people are like oh how come all the

businesses get all the big tax breaks so

you keep spending money

well anyway to be sure in the 26

trillion dollar economy prices on some

products are always falling even as many

otherwise rise in June when inflation

reached its highest point in more than

40 years prices nonetheless dropped uh

that month for bacon window coverings

and men's sweaters according to the POS

so it's important not to exaggerate the

recent Improvement okay interesting with

Europe and the United Kingdom and

recession and China hobbled by its

restrictive covet zero policy Global

demand for oil has sagged a barrel of

Brent crude now goes for about 85 bucks

one-third less than in the early March

of following Russia's invasion of

Ukraine as a result the national average

gas price has fallen to 3.47 down 8

percent from a month ago now gas

spending is really heavily correlated to

people's ability to actually spend on

Goods some folks say there's like a 1.5

x multiplier on gas so for example if

you could save 100 bucks a month on gas

you'll spend 150 more on junk uh anyway

continuing on here many retailers find

themselves with unused usually High

inventories yeah no kidding we saw that

Tolga I don't know who the heck that is

uh Ikea's corporate parent told Reuters

okay there you go told Reuters this week

that he was quite optimistic about being

able to lower prices in the uh months

ahead and the company did not reply to a

customer comment fine Walmart said last

month it will look for pricing

opportunities for areas where they can

cut prices Sam's Club recently cut the

price of its in-house hot dog to a buck

38 from a buck 50 undercutting Costco I

mean that's like a marketing gimmick

let's be real living with high prices

through the year has been has had a

cumulative impact whatever fine fine

okay I've pre-read some of this and it's

just kind of boring a lot of pricing

pressures however this is interesting

the situation reversed this fall when

production rebounded just in time for

typical seasonal decline in demand the

amount of chicken and Cold Storage

jumped nearly 20 since May according to

the USDA that's created some Bargains at

least for restaurants wholesale prices

for boneless chicken breasts have

dropped dramatic quickly over the past

six months at Wingstop hey that was one

of the ones we've talked about fast food

chain based in Dallas Executives said

the cost of bone and chicken fell by

nearly 43 for the quarter ending

September 24th that's crazy we have a

favorable commodity Outlook not only for

bone and wings but also for chicken

breasts and that's the other thing is is

you know when you look at like the bcom

index you see Commodities have really

flattened out uh on on their prices this

is they're not plummeting anymore they

really they fell but they're not

plummeting anymore but certainly nothing

like the kind of damage that we saw in

March so uh in order to see be calm you

could just do a quick little boo a

Google for bcom it's the Bloomberg

commodities index and uh what you'll

find is you could either use Bloomberg

or market watch or whatever you want and

you can look at the bcom chart uh which

I'll pull up right here this gives you

bcom here this is the year to date index

you can see we're sitting at about a

buck 14 down from about a buck 36 Buck

34 but if you go go to the three year on

this you can see we're still well above

where we were at any point in 2020 uh or

prior to 2022. so we're still up there

still some room for Commodities to

really come down we just haven't seen

that just yet of course there's a lot of

hopium around that but remember folks

hopium is not an investing strategy

however what might be is investing in

your education by checking out the

programs linked down below and building

your wealth and using Code PB continuing

on to this Wingstop hasn't lowered any

retail prices but said the new offering

of the chicken chicken wing sandwich for

529 in a combo meal uh uh okay so

basically they've introduced some new

products here right that may come in at

a new price without making other prices

seem like they're coming down and after

soaring in 2021 wholesale used car

prices are down 15 percent from January

new car prices are also slowly starting

to act remember Tesla just came out with

some new price Cuts really uh trying to

for certain models trying to pre-price

in that thirty six hundred dollars so

tax credit or providing a thirty six

hundred dollar rebate on certain

Vehicles bought in December I think

they're really trying to suggest hey

look we know there's a tax credit coming

next year don't wait to buy buy now we'd

rather sell you a Tesla now that of

course gives rise to some people saying

oh it's demand falling Africa for Tesla

who knows uh I guess we'll find out in

the earnings uh you know if if Tesla

does not sell all of the vehicles it

produces it's bad it's gonna be very bad

for Tesla anyway although Elon suggests

that's not a problem but then again Elon

suggested some things before and those

don't always come true sometimes they're

a little more hope than actual reality

anyway more ample supplies mean fewer

customers are paying above MSRP for cars

the average new car in October sold for

46.991 which is about 230 above MSRP in

May the average price a buyer paid was

721 above list usually this is always

below list so the fact that we're still

above MSRP really shows that yeah things

are improving but prices are still up

dang it we got some work to do in other

words all right apartment rents

meanwhile moving steadily higher all

year long are finally cooling the

national average rent for a two-bedroom

apartment is up eight point one percent

from a year ago down from April's 14.6

percent rate so you're seeing that

inflection point down especially in air

areas like Boise Phoenix and Austin

rental prices are cooling real-time

rental data takes months to show up in

government statistics Yep this is really

talking about the owner's equivalent

rents let's take a look at some of the

comments here and they're wow 2.6 000

comments okay let's just see if we can

sort by the uh most liked replies let's

see what we got here of course inflation

is down the election is over

you gotta love the immediate immediate

tinfoil hat now I know you can't blame

some of this because some of the data

just seems rigged like when we Analyze

That jobs data it's like really all the

private indicators are suggesting jobs

are are Contracting yet all of a sudden

your establishment survey is coming in

with growth I get it I get it all right

let's go ahead and collapse that one

since uh we'll call that one tinfoil hat

here what do we got here

uh either way consumers are unimpressed

speak for yourself those of us love

driving around looking for chicken wings

or feeling pretty smug okay all right

that's uh that's one way to suggest that

you're enjoying lower gas prices and

cheaper um cheaper chicken trumpets are

here to vent their Fury that inflation

is easing I mean you have to say like

you can't give Trump a total pass for

the inflation just because most of the

inflation fell on Biden's shoulders

because a lot of the pandemic policies

that were bipartisan under the Trump

Administration right think Pelosi

McConnell stimulus policies and fed

policies led to the inflation that we

have today it would be really funny

although it's probably not likely to

happen it would be really funny if

inflation goes to zero right as Trump

takes office in 2024 again I think

that's unlikely to happen but imagine it

did inflation zero and Trump is in

office it'd be kind of weird because it

basically means Trump just missed out

the painful inflation cycle that he kind

of also had some responsibility in

causing and I'm not saying Biden's hands

are clean right shutting down the the uh

you know uh north um not the north

stream pipeline although they could have

had their hands in that explosion

shutting down the Keystone big mistake

should have been pumping more oil over

here during the oil crisis uh this

person says thanks Biden well he's not

the only reason for that in fact Biden

probably has more to do with uh Base gas

prices being up than down

uh besides Russia's illegal war on

China's insane no covet policies I

firmly believe we are overwhelming the

overwhelming driver of inflation was

corporate greed if you've never worked

at a corporation then don't comment

uh I don't know about that I really

disagree with that I think corporations

are driven by shareholder demands right

shareholder demands are hey can you make

sure we're increasing profits uh while

uh while providing value for our

customers right that is the mission

statement of a corporation how do we

provide more value for shareholders

remember shareholders are people like

you me people who are retired and

employees of companies so it is a job

the job of a corporation to maximize

profit margin and if people are willing

to pay more for whatever reason that is

if they're willing to pay more because

they have more money or because there

are shortages

then it is the capitalistic response for

corporations to charge more money if you

don't like that then you might prefer a

system like communism where when price

ceilings are set in place that is

corporations can't raise prices above a

certain level because they're required

to by the government's sell product at a

certain price then guess what you end up

having you have gas shortages like we

had in the 1970s here in America where

prices weren't allowed to go above a

certain level or you have shortages for

bread or everyday goods and services

because there's more demand than there

is available Supply so that to me this

isn't necessarily a factor of corporate

greed corporations can profit from

shorter shortages because they can

maintain margins but it has more to do

with supply and demand Dynamics and and

the way the economy functions like

people don't say the and think about the

reverse right in my opinion people don't

say the reverse oh

corporations are cutting prices on all

these computers they have because they

order too many and they're way too many

computers corporations are all of a

sudden charity cases they're cutting

prices how nice of them no I'm not going

to give corporations credit just like

I'm not going to say corporations are

trying to be greedy I'm not going to

give corporations credit for lowering

prices and suggesting that they're

Charities because they're not they're

just responding to supply and demand so

I don't know that that common generally

always bugs me uh then I Don't Know Jack

do you have anything to add

no all right uh let's see here what

about uh let's do another maybe one or

two of these stories like this after the

election make me skeptical of

journalistic integrity

uh okay well all right I mean they're

they're like what they're reporting is

not wrong some things are still

expensive but the trend of many things

is down freight costs chicken

Commodities rents they're not wrong

about that right and they've been

talking about these sort of changes all

the time so I think it's just

potentially convenient that people leave

these cards you mean greed inflation is

letting up check the profits for these

companies corporate greed is what's

destroying America pretty cynical view I

don't necessarily agree with that funny

how the inflation pandemic Panic ended

after the elections uh yeah a lot of

cynicism here in the Washington Post

good lord well you know what that is

what it is anyway let me know what you

think about this style of video it's

really yes just kind of brainstorming

together on a piece that I find

interesting and responding to some of

the comments I'd like to hear if you

want me to kind of continue this you

actually made it to the end of the video

comment something like um

hey PP more reactions that'd be awesome

just to let me know kind of what you

like I think it'd be really useful for

me thanks so much for watching and folks

we'll see in the next one goodbye