Inflation is the BULL Catalyst.

PCE inflation numbers just came out and

good news they're at expectations. Now

that is the basic news. We generally

already know that the PCE report is

going to come in at expectations because

it's made up of components that are

within CPI and PPI which are reports

that we get weeks earlier. Now, this is

the Fed's preferred inflation gauge, and

markets honestly just needed a little

bit of a reprieve today to get away from

more drama around tariffs or other news

coming out of Trump leading to

uncertainty. For example, yesterday we

got the Trump tariffs, we got the

upholstery uh tariffs, we got the

kitchen cabinets tariffs, we got the

bathroom vanities tariffs, we got the

pharmaceutical tariffs. And so people

today were looking for like, all right,

we got a lot here. We got the Russians

going crazy. Can you just give us

something a little positive today? And

this inflation read coming in at

expectation is exactly what people

needed. The reason people needed just a

little bit of boost or hope here is

because after the Federal Reserve

promised us, well, they didn't really

promise us, but gave us the impression

that they were setting up for three rate

cuts this year, what happened? We got

Powell who ended up turning neutral on

us which was weird because the statement

was so dobbish. It was literally like an

intraday flip-flop. It was wild. It's

like here's the PCE. Wow. Dang, that's

dovish. And even the statement with now

the labor market is no longer solid. Oh,

we're going to remove that, too. That is

really dovish. Oh man, we're getting

rate cuts. You know, yields fall below

4%. Which we had scenarios, we're like,

if Powell is doubbish, we're going to

get yields under 4%. If he's neutral,

we're going to get yields at 4.15%.

That was my expectation. Uh this is

exactly what I broke down to course

members in the alpha report. We have a

coupon expiring on that, by the way, at

meet.com today. But that's what we broke

down. We're like, look, that's our

that's how we're going to play this.

That's our expectation. Uh and so then

we ended up getting a neutral Powell.

And then in the days after, we got all

these other members from the Fed that

are like, "Yeah, we don't even know if

we have to cut rates anymore." Not only

that, but uh you know, you get Powell

who has his own very interview which has

the craziest softball interview

questions ever. And he basically doesn't

talk about cutting rates at all, which

is insane. And so it's no surprise now

the 10ear is sitting around 4.16. But

the good news is this PCE inflation

report is good news because it's at

expectations. Now we already knew it was

going to come in at expectations. That

is what we talked about to everybody who

course members in the course member last

year. We're like we already have the

components. It's going to come in

expectations. But this is exactly what

the market wants as a catalyst to go

okay

maybe we could get back to 600. Okay.

Cuz inflation's had expectations. Now

understand the numbers for a moment

here. I'm going to break down the

numbers and we got to talk about the

odds of rate cuts because we're still

looking at two rate cuts. the timing of

those rate cuts has just shifted a

smidgen. Now, in order to hit that

smidgen, I want to cover something that

some of you emailed me about. I've never

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This is what y'all have been asking me

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So, go check that out. Really cool

sponsor today. Uh but anyway, so let's

now understand the components uh of this

PCE report. So, the PCE inflation report

uh and you know what our expectations

are going forward. Well, let's find out.

So, here's the current release. So, uh

we're going to view the current release.

These are the numbers for August. So,

keep that in mind as well. These aren't

the you know this isn't September right

this is going back to August we are at

the end of September so PCE kind of

comes late in data it it's very common

it always does but the good news is here

personal spending came in a little bit

higher than expected at 4% the

expectation was.3 uh sorry personal

income was4 expectation was.3 and

personal spending came in at 6 uh the

expectation was.5 so we beat on this and

we revised a little higher on real

personal spending as well. We also had a

downward revision in core PCE in last

month's reads from.3 to 0.2. That's a

really big deal because that little bit

of a change annualizes out to a big

change. I mean, think about it. 2

annualizes out to 2.4% inflation. 3

annualizes out to 3.6% core inflation.

So, basically, we had more spending

here. Look at this spending dip over

here in personal income outlays and

savings. So savings is the black line.

You could then see spending is the

orange line and income is the blue line.

Look at this. You actually had incomes

decline. Part of this is because of the

way they calculate inflation. In May,

incomes build up in April and now that

extra cash is being spent. This is why

people say there are distortions in sort

of the post tariff uh data that we're

getting because you had these

distortions here that potentially led to

a pull forward of spending right here

and then led to an artificial sort of

saving during panic. Uh and then you

ended up getting additional spending as

corporations are like, "Hey, uh yeah, we

actually uh aren't in a place where we

um uh you know, haven't uh we haven't

increased prices yet for tariffs, so you

still have an opportunity to buy. I I

don't know why all of a sudden I sound

like a character from you know, a movie,

but anyway, uh it's it's too early and

the coffee hasn't hit yet." But changes

in consumer spending uh as of August,

take a look at where some of this money

is being spent. Keep in mind these are

changes. Transportation services up,

food and services up. That's kind of

healthy if you think about it, right?

Like this isn't like people are now

cutting out their vacations or they're

cutting out going on, you know, to to uh

to restaurants or whatever. Uh you've

got, you know, gasoline's up here,

healthc care's up here, housing,

utilities, clothing and footwear. The

lowest over here, motor vehicles and

parts and furnishings and household

equipment probably because a lot of this

is what was pulled forward because we

knew these parts were going to get hit a

lot with tariffs and we thought we were

done with them, but we're still getting

hit with tariffs, right? So now course

members went into this PCE report

knowing that we were probably going to

get a number ad expectations and that

we'd get up after that which is

exciting. And look, Restoration Hardware

is right here. It's lost that 207 line

because of why? Well, that good old

tariff announcement yesterday on

upholstered furniture, which it just

almost feels like targeted at

restoration hardware at this point. I

mean I don't have any exposure to

restoration hardware but it's one that I

watch a lot to see uh tariff impacts.

Now let's keep going into PCE here. Uh

PCE for August increased.3% excluding

food and energy. Okay, we saw this. We

want to look at some of the other

components here. Uh technical lo notes

within composition wages and salaries as

well as supplements of wages uh

increased based on the current uh uh

labor statistics. Private wages and

salaries increased uh and uh reflecting

a 28.8 8 billion increase in service

producing industries and a.1% decrease

in goods producing with a government

salaries and wages increase of 4.3

billion. So you're actually seeing

services really kicking butt in terms of

the the wages that are going out. Goods

flat again probably under the weight of

sort of this tariff warfare that we've

got going on. But you know broadly flat

is better than like hugely negative

right? So this is not a bad report. This

is very good. not only add expectations,

but we've got the right numbers inside

of the actual components of these

documents. Now, if we go to the full

release and we get full tables, we might

get a little bit of extra information

here. Let's take a look at this real PC.

Again, we're right here at.3

fine, no problem. We've got Let's take a

look at some of the tables over here.

These are going to be personal incomes.

We did just break down personal incomes.

So, we're going to go a little bit

deeper on PCE here. And I want to see

here we go. Personal consumption

expenditures month overmonth. Durables.

Look at this pop in durables right here.

August highest month for durable

spending all year long in terms of

changes and non-durable goods. Highest

month of spending. Holy smokes. Look at

that. You were negative uh in April and

May for some of these some of these

categories very low at the beginning of

the year. People have gone crazy on good

spending again. despite the tariffs.

Holy smokes. That's actually I mean

that's pretty impressive. Uh now these

are a percent change uh from um uh you

know from month one year ago. Perfect.

Then we've got uh changes in personal

income. That's fine. We've already gone

through some of those. Let's see

comparisons over here. Previously

published. Uh let's see here. Disposable

personal income. Disposable personal

income. We've got the 23 chart, 22

chart.

I want let's see changes in personal

income 24 25 here we go seasonally

adjusted annual rates disposable

personal income look at this so uh 90

what do we got here $90 billion change

uh we were negative in May and we're

just up in June up in July so a little

bit you know these are changes to prior

reports that's it I mean this is this is

really broadly a good set of data. Now,

let's see what some folks are saying

here. Uh, some of the suits are saying,

"There were no surprises in August PCE

data, though both income and spending

were a smidge higher than expected,

which is fantastic for the economy

following an upward revision to

consumption in Q2. That's not exactly an

argument for needing deep rate cuts. At

least the public at large is not

behaving as if they're on the precipice

of losing jobs." This is true. like no,

like if if people were like feeling they

were about to lose jobs, they probably

wouldn't be going on vacations or

spending all that money on restaurants,

right? Uh the bond market's reaction has

been negligible. That's okay cuz we

already priced in, you know, quite a bit

there in terms of yields moving up. Oh,

now now it looks like they're saying

yields ticked up as PCE meets

expectations, right? The bond market

reaction has been negligible though the

uh initial impulse from equity seems to

be one of relief of course because it's

somewhat of like it's something of good

news in the face of the last few days

where we've just had a little bit

unfortunately of of red days. Now, in

our course member liveream, uh we've

been talking about how, you know, this

is going to be not only a tough week,

and so it's a tough week to play. Uh but

you might want to wait until into

October because there's so many

catalysts that could end up leading us

to have some bleeding and some red uh

this week and next week because next

week we've got jobs. This week you get

the anticipation of shutdown and jobs

and Russia. These are all things and

components that we talk about when we

set up our meet Kevin Alpha report.

Right after I post this video, I'm going

to be going into our alpha report for

today and we're going to set up our

strategy. Remember what we did

yesterday? Yesterday, we were actually

live with course members during this

double dip drop on the cues. Uh, and we

were able to draw a line. And look at

this. We even hit it again. So, you had

three opportunities on that line

yesterday to knock the bottom. We called

the bottom here and we even bought the

dip and send a trade alert out to

everybody who's in the Mev membership.

We've got a coupon expiring on that

later today. And then uh also remember

to go to that investing pro sponsor

today. It's a great sponsor. So

remember, use the Pro Plus plan and go

to meet Kevin.com/pro

to get that extra 15% off. You get that

extra 15% off with my link. So anyway,

look, broadly this is bullish for today.

I'm really excited. It it you know

covers the headlines of the madness of

of you know Trump yesterday having even

more tariff announcements and

uncertainties and sort of a paper tech

deal that is fugazy and doesn't really

mean anything.

People are going to call me TDS for that

and I'm just calling it like it is about

this.

>> We'll we'll try a little advertising and

see how it goes.

>> Congratulations man. You have done so

much. People love you. People look up to

you.

>> Kevin Praath there. Financial analyst

and YouTuber. Meet Kevin. Always great

to get your take.