Big Stock Catalyst: Watch BEFORE Thursday Morning

quick reminder check out the 40 off

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and the two events i have coming up

including one free rally

this weekend on saturday in san

francisco and

one in los angeles the week thereafter

hey everyone me kevin here tomorrow cpi

data comes out i know many of you do not

like cpi data because you don't trust it

and that's fine it is still a market

moving catalyst though

so let's take a look at what the

expectations are first things first

and this is a very very quick recap you

have to understand this before i give

you projections

and what to expect for tomorrow very

important that

the way cpi is calculated is such that

when we compare year over year

we're looking into a hole in this case

this is the whole of the pandemic

everything closes down prices fall so

businesses can still sell something

prices of goods and services everything

plummeted

the exception of certain things like

meat and cereal because of

well supply issues but anyway what we're

going to do just to see how this might

work annually is we might see okay well

right now we're growing maybe at about

1.1 points

1.6 points over here let's just go with

1.4

uh in cpi data and so the way you could

calculate this is you could grab a

little calculator

and you could take our current cpi

reading of

266.8 from april 2021 here you can see

that

at about 1.4 to get what maybe

may of 2021 might look like and then

divide by this hole right here

see 255. if you didn't divide from the

whole the percentage you're about to get

would obviously be a lot smaller

so because we're dividing by this hole

over here which is actually

lower than it was last month the

inflation reading is going to be even

higher

so i wouldn't be surprised to see a

headline number like 4.8 percent

as a year-over-year inflation which is

going to be a very scary number because

it's almost five percent

and i think there will be a lot of

clickbait a lot of news headlines over

this inflation number whatever it is

but it's actually not the number that

matters now keep in mind that's not to

discredit the fact that there is

inflation presently

but what's more important is not that

there is inflation presently

and that year over year we've had four

or five percent inflation that's not

what matters right now

what actually matters is the

month-over-month data and this is what

you're going to want to pay attention to

so last month we got the report from

april

we got april's inflation readings which

compared to march

we had a 0.8 percent increase in prices

from march to april and a lot of that

was driven by

cars used cars shot up 4.6 percent

month over month that's intense the

annual reading was like 9.6

as a bump for car prices so car prices

are going to have a

potential renewed impact on this month

over month figure but hopefully because

prices have gone up

hopefully they're starting to stabilize

and if they're starting to stabilize on

the month over month

our month-over-month data should not be

as bad as it was last month

having month-over-month readings at 0.8

is really really scary because if you

annualize that you're actually seeing

inflation at over

9 per year 9.6 percent so you really

want to

try to put some of these details aside

and focus

on what specifically matters and that is

that if we do get a

flattening in car prices and we know

we're comparing to the whole of last

year

we're not going to look at the

annualized data instead we're just going

to go month over month

the current expectation for a month over

month reading is point four percent

about half as high as it was last month

here's the catalyst portion

what happens if this meets expectations

beats or comes in lower well if it meets

expectations i don't expect the market

to move much

the market will say okay good we have

half as much as the

month-over-month inflation reading last

month this is pretty good

market continues to operate the way it

does a

fall in month-over-month data so for

example let's say month-over-month

inflation comes in

and it's 0.3 0.2

or in in a crazy way

watch it goes negative potentially maybe

because some aspects had just risen too

much and now they're coming down a

little bit to get in price

like used cars or whatever we'll see

that if that's the case

you know 0.3 is pretty close to 0.4 so

probably not going to see much there but

if we get a reading at

0.1.2 or even negative that's going to

be very very bullish

because it sends a signal that we might

be willing to delay tapering

that more money getting injected into

the economy is not creating

month-over-month inflation

maybe we'll see a delay in the interest

rate increase by the federal reserve

and this potentially also sends the

signal that we have

much more capacity to print if we wanted

to if we needed to print more if we

needed to stimulate more we could

but in other words this month-over-month

figure coming in low

would be very very bullish for the

broader market

and because we don't want to see

inflation we don't want to feel like

we're getting hyperinflation

and that we're going to have a market

crash because the fed is going to jack

up rates substantially

to try to combat this and so what

companies is this generally good for

well

a fall in the amount of inflation or at

least a good fall below in expectations

would in my opinion be good for tech

consumer discretionary

and health care probably not so good for

banking financials and industrials

so usually companies with good

financials now or working with loans

not so good you want to see those higher

interest rates you don't mind inflation

as much because you're producing now

companies with more earnings in the

future like online consumer

discretionary like etsy

or tech like tesla apple microsoft or

health care with projects that

won't actually be available or you know

new potential drugs that won't be

available for

a long period of time inflation hurts so

a lower reading would be very very good

for these sectors and that's what we're

hoping for however if we get a reading

above

probably not much impact again if we're

like 0.5 maybe 0.6

but if we go over like 0.8 or 0.9

and it's not just used cars but all of a

sudden it's everything inflating

on a month-over-month basis i wouldn't

be shocked to see a nice

quick one one and a half percent

pullback in the s p

quickly uh and tech may be selling off

two to three percent pretty quickly if

inflation comes in higher and then

depending on the magnitude at which how

high it comes in

we'll know how long a potential sell-off

lasts and how deep it'll go

so these are definitely things that i

would be cautious of if especially if

you're trading

this has the potential of being a large

catalyst event for many different stocks

and many different companies so i would

pay attention to this be prepared

remember what you're looking for i will

be live at 5 30 in the morning covering

it so you're welcome to

be here with me we'll look at it but you

what would be very prudent for you to do

now

is not only use the coupon code down

below to get 40 off on the amazing

programs linked below

including my stock buy and sell alerts

in my stocks and psychology money group

but also write on a post-it note right

now expectation

0.4 month over month very very very

important number there

and maybe even start charting your

strategy like oh i've got options in

this do i sell or buy more do i buy the

dip or not

think about those things all right folks

there you have it thank you very much

for watching we'll see in the next one