OMG *FED Speaker JUST EXPOSED what’s Happening!*

wow what Waller from the Federal Reserve

just said is well somewhat really

unexpected and surprising on inflation

but frankly expected on what they were

trying to accomplish with rates remember

when Powell reduced rates 50 we expected

Powell would want to see some loosening

of financial conditions lowering of

rates but yields on basically the entire

curve both the you know 2year the 10

year or even out to the 2030s they went

up so my expectation was the Fed was

going to talk those down somehow what I

was not expecting was what Waller just

mathed out on inflation Waller just told

us hey markets were so focused on

expectations and whether we beat or

missed on CPI or PPI but what they

didn't do was calculate out what pce

inflation is running at on an annualized

basis so in other words what is the

estim

for August pce which we don't get until

the end of this month what is the

estimate for um August pce based on that

CPI PPI reading uh and what is that

change month over month multiplied by 12

and what's basically the speed we're

driving at in inflation and what he said

was shocking he said the annualized rate

of inflation right now on PC is likely

under

1.8% on the headline and likely under 1%

at Poe and that is with hot housing

inflation now remember when CPI and PPI

came out I said wow okay the areas that

popped were lodging in air travel okay

so we saw a pop there uh and then what

we also saw is that owner's equivalent

rents are obviously still substantially

higher than current market rents which

when we look at current market rents

they're mostly flat some areas you've

actually just got straight up declines

so as long as that holds we know owners

equivalent rents will keep coming down

which given that that's 25 % of pce 34%

of CPI a huge component of inflation is

housing that's one of the remaining hot

sectors which is basically

plummeting and even with that hot data

you're running at 1.8% inflation

annualized you know monthly Pace

annualized times 12 and you don't use

exponents you multiply by 12 uh and uh

and core less than 1% this is really

consistent with what we've been talking

about not just on the channel but we

analyze company earnings every company

that we see is talking about how do we

provide more value to our customers uh

they're not talking about price

increases anymore they're talking about

how do we advertise this new value the

restaurant industry is freaking out

because traffic to restaurants is in the

toilet uh some of the the performance

indices for restaurants are at

recessionary levels levels we haven't

seen since 2008 and uh 2001 or even

covid which is weird uh and you know

what that means for recession some

people say it's an indicator some people

say it's it's a restaurant industry

problem you know people are fed up with

the high inflation it's also possible

people are just running out of money you

know they had a lot of money a big net

worth Boost from covid and and and now

that's sort of waning out uh but anyway

this is really really actually good news

on inflation because it it is consistent

with not seeing a second wave of

inflation of course it's always possible

that more money printing after they

create a recession could create a second

wave I don't think so you know that

about me but I want to acknowledge that

possibility but at least what we're

seeing from companies is exceptionally

low inflation

uh and it reiterates what Waller is

saying here and now what you're seeing

is yields are coming down because he's

suggesting look if inflation keeps

falling like this we can drop rates even

faster than we had been expecting to you

know obviously if there's a Resurgence

we can even pause but the data we're

estimating now is that it's plummeting

which is actually fantastic news it's

good news because it is a way of finally

explaining a little bit of why did

Powell go 50 well maybe Powell's being

being honest and he doesn't see as much

economic weakness and they're just

moving faster on 50 because inflation is

falling faster a lot of people think

though behind the scenes it might also

be trying to cover up some real

underlying fears that they have about

the actual strength of the economy

because frankly if Waller came up today

and said yeah we went 50 because yeah

inflation's falling faster than we

expected but also things are going to

sh9t well then you would just induce a

recession because by by them admitting

that they're fundamental problems uh you

would just exacerbate those problems as

people flee to Safety stock market Falls

and then you get layoffs and and you get

all the drama that comes with that so

anyway bottom line out of all of this

this is actually a fantastic First Fed

speak next fed speak uh we've got a

really busy fed Waller's the only one

today really busy fed day on Monday uh

and the next Thursday we'll actually get

Powell uh as well as multiple other

speakers like kashari who's deemed to be

one of your biggest Hawks but he voted

for a 50 so so uh it's going to be

really interesting I I personally think

over this next week you're going to see

yields plummet but that's my take we'll

see no guarantees anyway thanks for

watching we'll see you in the next one

goodbye goodbye uh I said that twice

goodbye good luck and I love you bye