watch *BEFORE* the CPI Inflation report

hey everyone me Kevin here it is the

evening of CPI this is the biggest

report because it is going to set the

standard of is the Federal Reserve going

to be willing to pause and we've got to

talk about my personal predictions as

well as why this month is actually

really interesting compared to next

month for CPI let's start there let's

throw out the good juicy information

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Investment Portfolio so when it comes to

inflation the estimates right now on the

streets are a one thing and I'm gonna

have my own predictions as well and

implications but what matters is

next month is going to be the year over

year Peak measure now this is incredible

because think about this

Peak means we actually ended up

accelerating last year in 2022 from May

and we were kind of accelerating like

this if I were to kind of draw sort of a

hand line over here right and then all

of a sudden we had a tick up in May and

then we came back down or take up for

the June uh read and then we came back

down which means when we get our June

report in July will actually be year

over year comparing to the highest

numbers in the history of this inflation

cycle which in my opinion if the

inflation numbers because remember

inflation is actually like a nominal

addition of a basket of goods like the

inflation numbers currently work out to

about 307 for core and 303 for year over

year and then they divide those two

numbers to get the percentage that we're

all familiar with well let's say those

numbers stay flat from May to June that

is from last month to next month the

inflationary numbers year over year next

month would look like this listen to

this 2.9 year-over-year for uh nominal

and then for core 4.6 in other words

you'd have a pretty big drop next month

when we're looking at that June report

because those year-over-year numbers

would be comparing to the peak and I

think people are going to start thinking

about that

after tomorrow's report and that's why

I'm mentioning tomorrow's report because

if tomorrow's report comes in either

soft or even at expectations now

everyone's going to focus their

attention to the next CPI report because

the next CPI report is right before the

FED is supposed to hike in July well if

you're going to have these

year-over-year comparisons you might

actually end up wanting to lean bullish

because you're comparing to some of the

with the biggest numbers of the cycle

the biggest increase of the cycle was

that may to June period of uh of last

year and that we end up will will

realize that it was really the June

report I shouldn't say May to June but

that's what it looks like on the tar

chart when the May report goes to the

June report anyway point is the next CPI

report should actually on a headline

basis be pretty dang juicy and in a good

way in a positive way now uh and

nobody's really talking about that and I

just wanted to look a little bit ahead

and go what are those charts looking

like and what are those over your base

effect is going to look like and it's

actually good

I know I know people are always the good

kids just here you go being and

I'm like that chart is what it is if it

were bad I'd be making that and people

go Kevin you need to Bear yourself it's

like oh good lord can't win uh just like

by the way I was I was suggesting this

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really really good so uh now what about

the numbers for this CPI report this is

the CPI report that obviously everybody

cares about right now and does Kevin

have a prediction well of course Kevin

has a prediction so Kevin prediction and

I will compare my prediction to the

market prediction the market prediction

for month over month is 0.1 Kevin's

prediction here is actually point zero

so I'm looking for flat on Headline

that's energy adjusted so we'll see what

happens there but the one that matters

more is core so the numbers that I

crunched get me to uh

0.34 now the estimate for Wall Street

consensus is 0.4 my number is 0.34 JP

Morgan is the hottest that I found on

the street they're at about point four

three at least from analyst reports

there are some other miscellaneous

economists that are kind of all over the

place I can actually go through those

numbers and give you the range in just a

moment I'll pull that up but what's

remarkable is if we end up getting the

point zero uh you actually I get the

same number as the Wall Street estimate

which is a little odd but I suppose the

way the rounding Works we're at the same

year over year uh estimate oh sorry I'm

at the same year-over-year core estimate

5.2 same year-over-year estimate even

though I'm about six basis points off

from the consensus here uh it's so a 5.2

is the same year over year core estimate

and the year over year estimate for the

street is 4.1 Kevin is uh at a 4.2

that's the weird part about the numbers

even though my number is slightly lower

there uh maybe I got something wrong in

the math but the most important part

here if all those numbers kind of went

over your head is it totally okay look

for these numbers okay headline core 5.2

core month over month

0.4 or 0.3 ish somewhere in that range

that's magical 0.3 to 0.4 so if you're

going to write anything down 0.3 to 0.4

month over month and 5.2 year over year

that is very very important because if

we miss on core and say we got a 0.5 or

Worse the market will tank because the

market will immediately start pricing in

another 25 BP hike as soon as Wednesday

they will price that in immediately and

then at that point you're going to be

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one video okay so what are the actual

ranges we have here for CPI so this I

think is very cool so uh the for the

month over month the uh average estimate

uh for the month over month core number

the average is actually 0.38 and I

personally am at 0.34 so I'm a little

bit lower than the average this is

roughly what the curve looks like if you

look on screen now you get kind of the

example of the curve uh that puts the

median estimate at 0.4 average 0.38

again I'm at point three four and jpms

at 0.43 so they're a little high highest

estimate is 0.5 but that is not being

priced in right there at all okay then

you have the a month over month headline

number this one is concentrated with an

average of 0.15 but the median is 0.1

low of point zero that's where I am and

a high of 0.3 that chart looks a little

bit more concentrated at something like

this so those are going to be some of

the numbers to prepare for them I've

staked myself in the ground I've staked

my stake so to speak again I'm at zero

month over month uh and then for that

core number I'm looking for 0.34 we'll

have to do math on that though because

we're not going to get that directly in

the report in the report we'll end up

getting either 0.3 or 0.4 then we'll do

some math and we'll see okay well how

close was the actual uh decimal here

obviously the lower the better everybody

is paying attention to that core number

specifically because of that wage

inflation problem now we've talked about

wage inflation wage inflation

specifically I want to drill this one

home because quite frankly I don't think

people are believing this wage inflation

is disappearing and it's so important so

what we'll do is I'll put a chart up on

screen it's probably easier I'll put a

chart up on screen here and show you the

wage inflation chart one more time the

wage of chart when you look at it

specifically look at that peak in

January of 2022 and then look at where

what has happened since then look at

that oh it's plummeted and how Peak

inflation was about six months after Jan

of 2022 which is really good to recall

because it means there's about a six

month lag and when those wages show up

in services

and what are we getting where are we at

now we're about you know we're starting

to want to recognize some of those drops

and wages and so I really believe we're

going to be able to show that core

inflation is not plummeting but slowly

trending down just like that chart and

that's good because as long as we're on

that course we're good now uh speaking

of course of course is obviously linked

down below but remember one more thing

remember how I talked about how the

Federal Reserve uh is is flipping on

their opinion on wages this is a flip

somebody left a comment they're like

well they mentioned that in the last

meeting yes they did mention that in the

last meeting but what's actually really

important is that is a flip that they

are now reiterating on Wall Street that

was a subtle flip last meeting something

they're reiterating now and is a massive

policy change in the history of the

Federal Reserve to ignore labor

inflation as a driver of actual price

inflation it's remarkable so it is a big

flip and it is a good thing it's

actually bullish thing we'll see how it

goes with jpow on Wednesday but I've got

my fingers crossed you know where my

numbers are and I'll see you tomorrow

morning thanks so much bye