Wow.. wtf inflation [cpi report]

well the CPI report was kind of crazy

this morning now I'll play back my

reaction in just a moment but a few

important things that you need to know

before we go into it first I realized

that I made a mistake when I talked

about used vehicles the Consumer Price

Index measures used vehicle prices from

the consumer's point of view but the

Manheim used vehicle index report

actually uses auction prices so that's

what dealers are paying that would show

up in things like the producer price

index report right and one of the things

we're seeing is that the costs of

companies are rising or have risen but

consumers aren't necessarily paying more

that means company margins are taking it

in the rear you know kind of sucks

taking the L over there at the company

level but the consumers aren't

necessarily paying more maybe thereby

reiterating why we saw a 1.9 month over

month negative read for used cars in the

CPI report that was somewhat

unsurprising though or someone

surprising though we thought we would

see some kind of pull forward and see

some form of increased consumer prices

but we didn't see that yet now it's

possible there's also a lag and that

maybe in the next few months we'll

actually start seeing some consumer

prices start ticking up again core

Services super Core X housing did come

in pretty decently to you know an

annualized level of about 3.2 percent

which isn't terrible but some of the

other pieces of the report definitely

definitely reiterate that uh oh some

parts of service inflation could end up

being sticky and I think you'll see that

as we go through this together here and

one of the issues that come out of

sticky inflation is you're probably

going to see the bond market stay stable

higher for longer and this is really the

Federal Reserve Way of suggesting hey

look Financial conditions are going to

be tighter for longer and it's going to

take more time to get that sticky

inflation out with our course members

this morning and our course member live

stream we really agreed and believed

that it's probably going to be until at

least the second half of the year before

we're really on the coastis clear Road

where we really start getting

substantial disinflation so let's take a

look at my reaction here do realize that

this does hit real estate given that the

10-year treasury right now sitting at

3.76 is uh pretty well up there and uh

let's take a look at some of my reaction

and some of the details of it which I

think are very important remember what I

said about used cars and uh how I had

initially uh misinterpreted that and I

want to be very clear about that up

front I'm not perfect but I do my best

so anyway let's take a listen in here

and remember today is Valentine's Day so

take advantage of the flash sale linked

down below and in terms of Market

positioning it is worth noting that I

think the market went into this report a

very bearishly hedged and positioned so

it wouldn't surprise me to see some

short covering but do keep in mind any

kind of hire for longer talk from the

FED is probably going to lead to some

sort of resistance some form of downward

pressure at least in stocks although I

think that could all part be part of the

longer Nike Swoosh recovery where this

is just kind of like all right it's like

it's it's getting slightly better but we

still have problems we still have work

to do it's going to take longer so we

really just have to be patient as we go

through this process but as I've said

I'm pretty I'm pretty well long

positioned with uh with some cash and

then of course I'll uh I'll do my best

to trade in the meantime with a smaller

part of my portfolio like you know less

than a fraction of a percent of my

portfolio where we get to do some fun

trades and I send alerts for all of

those in the stocks and site course link

down below

all right all right 10 seconds there

folks 10 seconds here we go here comes

the CP light

and the numbers are not out yet okay 0.5

match match high on the year over year

we came in at 6.4 that's bearish a core

year over year came in at 5.6 we got a

match on CPI month over month match on

core month over month so we got 0.5 0.4

year over year came in a little hot 6.4

and year-over-year core coming in at

five a point a six 6.4 is a little bit

hawkish unfortunately JP Morgan told us

that we could expect the S P 500 to go

down uh about uh three quarters to to

1.5 percent apparel dude apparel's been

getting cut like crazy apparel at point

eight percent this is bizarre how did

used vehicles go negative here this is

very weird uh Medical Care Commodities

up 1.1 percent uh all items less uh food

and energy up five point uh six percent

uh for the 12 month bot on the month

over month you're looking at point four

percent that's what we saw uh that is

quite interesting food uh the food index

see four of the major six food groups

increased month over month let's see

here the index for uh Meats poultry fish

eggs increase point seven percent that's

quite a lot eggs Rose eight point five

percent yeah that's definitely a lot uh

okay food I don't know how much we

really care about index for food away

from home Rose 8.2 percent over last

year

uh all items less food and energy let's

see here among the other indices that

Rose in January was the index for motor

vehicle insurance which increased 1.4

percent month over month that's not

great seeing a lot of people potentially

reduce uh their car insurance uh by

basically just canceling it to save

money which is scary housing contributed

the most to the monthly increase shelter

accounted for about half of the gain uh

yep that's thanks to the new weighting

as well the household furnishings and

operations Rose 0.3 percent in January

I'm actually surprised by that I'm more

surprised by that than I am uh that we

have a flash sale of 69 off for the

programs I'm building your wealth link

down below or the experiences build your

wealth with stocks psychology and money

uh the elite Hustlers course which has

custom live streams or get lifetime

access to any of the programs on

Building Wealth but consider this

household is now exposed to 44.4 of the

index that's nearly half uh and uh that

came in at point seven percent that's

pretty hot so no disinflation in housing

yet when we get disinflation here you're

going to see these numbers plummet but

this is really interesting here uh to

see uh uh you've got housing furnishes

right or Furnishings rising and apparel

that surprises me a lot of folks were

expecting Medical Care Services here to

rise you actually had a fall here in

medical care services

and let's get the individual charts as

well it looks like no meaningful

takedown according to what Wall Street

is looking here looking for here no

meaningful takedown they say in core

Services excluding shelter that's not

great it's really showing that you still

have a sticky core Services a set of

inflation we're obviously waiting for

that to decline but we're not seeing it

yet uh let's see here I mean of course

we did move down in general but it's

just not moving down quickly right it's

not like super bullish over here

let's start at the end of the detailed

tables here if we start at the end of

the tables we can really see where these

core services are moving so uh the last

column you're going to see is the month

over month change between December and

January so if we go over here

what do we have we have Financial

Services maybe tax season over here a

little volatile coming in at 2.5 but

that only has a 0.17 weight personal

services that's not good point eight

percent over here still showing a move

up here in apparel Services laundry

funeral expenses we want to see these

start disinflating here these are the

sectors that are going to get driven up

by wages right personal care services up

0.2 percent you have uh delivery

services up 1.5 percent this it's still

too much

um it's not very bullish uh in my

opinion this is despite the fact that

indices actually positive right now

which is a little bit of a surprise but

education maybe just because it's it is

still trending down it's just slowing

it's trending down very slowly right so

it's not a bad report it's just sort of

a neutral report yeah we're trending

down but very very slow you're still

sticky over here on core Services Pet

Services up one percent uh photography

and uh processing here or 2.7 percent

that's sticky High Recreation service is

0.7 I mean 0.7 remember 0.7 read is like

eight point four percent annual

inflation that's a lot annualized

inflation airfares oh let's go good

you're starting to potentially see that

price War come in uh this is something

that United Airlines and spirit have

actually been talking about United

Airlines and spirit have both been

talking about this idea that hey look if

if uh our competition starts cutting

prices we're ready to fight we're ready

to reduce prices as well and it looks

like you're starting to see some of that

show up over here in CPI

okay that's good to know so what else do

we have here you've got uh let's see

Motor Vehicles you've got 1.2 percent on

Motor Vehicle fees Motor Vehicle

Insurance 1.4 public transportation down

1.8 but uh car and truck rental up three

percent that's a lot for a month over

month read over here these are these are

huge numbers right uh so still getting a

push over here transportation service is

point nine percent still very very hot

Medical Care Services thankfully coming

down point seven percent that's a good

thing uh that's despite the fact that

hospital related services are up point

seven percent these are pretty bearish

numbers here on some of these service

numbers water sewer trash collection of

0.9 shelter a point seven percent over

here yikes uh your services less energy

still point five percent so you're still

seeing that hotness over here uh but the

market almost suggesting this is this is

pretty aligned with what they were

expecting NASDAQ pretty much flat right

now not getting a lot of movement here

you've got alcoholic beverages up 0.6

it's a lot tobacco point seven percent

uh smartphones smartphones down 1.1 so

you're seeing that sort of goods

disinflation Sporting Goods oh well

sporty Goods at point five percent uh

photography equipment's down toys down

1.2 percent two percent for hobbies uh

so this is where you would expect to see

some of the disinflation right I'm

surprised that used cars are down here

since the used vehicle index actually

showed up

so that's uh that's definitely a

surprise excuse me there for a moment

apparel how is apparel Rising point

eight percent especially men's suits

outer closing and underwear outer

closing and underwear up up 5.5 it's

going on

uh you've got bond yields pretty stable

though the 10 years down about four

basis points sitting at about 3.68

pretty stable High there for Real Estate

you know I I'd say this is a pretty

mixed report you have uh you you really

what you have

is you have a report that's saying look

inflation is trending down uh which is

great that's fantastic but it's trending

down very slowly housing contributed

half to the increase you're still not

seeing any of a decrease in housing

you're still not seeing the services

disinflation that you really want to

start seeing now yes we have leading

indicators like uh Chipotle easier to

hire less labor turnover Uber more

available drivers uh a 36 percent more

available drivers Lyft fell 30 after

they talked about an extreme increase in

the supply of drivers leading to less

Peak pricing meaning less margins for

Lyft

Starbucks finding it easier to hire

people so interestingly you are starting

to see the early signs of disinflation

and wages but it looks like it's still

going to be a few months before that

actually shows up as well as the housing

data in fact if you consider January of

2022 when we started seeing every

earnings call basically to say the

option or opposite that everybody's got

pricing power that we're going to raise

prices like crazy uh what you ended up

happening or what you ended up having

happened was inflation ended up getting

worse for about six months so it took

really about a full six months for

inflation to really fully show up after

those earnings calls so maybe the

earnings calls are really a leading

indicator six months out of what you

could expect

but what's remarkable really is you

didn't really have a peak of inflation

until about July despite this potential

Peak pricing power talk in earnings

calls in January that's a six to seven

month delay well now we're starting to

get this talk about disinflation and

wages and earnings calls we might not

actually see that come up in inflation

data until about the second half of the

year which is hopefully when inflation

from uh from from housing will show up

as well the problem is the following

what if Goods inflation slows down what

if Goods inflation or disinflation

stalls and CPI or inflation stalls out

around four to five percent well Federal

Reserve is going to be essentially

continuing to embark on their 25 BP

hikes and they'll stay a lot higher for

a lot longer now of course this report

could have been worse wasn't bad at 0.27

now 0.27 on an annualized basis for

current core Services X and uh X housing

is about 3.24 annualized rate of core

services so it's not bad remember we've

got the flash sale going on today

Valentine's Day we'll be sending out uh

Buy sell alerts for some of the trades

that I'm making what I'm thinking about

probably doing is closing out some of

the positions I opened and doubling down

on another one uh I've got a particular

position I really want to increase my

exposure to uh so uh we'll we'll see

what happens there from a trade point of

view but very surprised Rising CPI

report all set but anyway all those

alerts will be going out to those of you

in the stocks and psychology MoneyGram

of course if you're part of the elite

Hustlers course we are starting a

Saturday live streams for those this

weekend if you want to Shadow me or take

advantage of any of the programs I'm

building your wealth largest uh largest

discount that we've ever had on a

percentage basis 69 is linked down below

all right let's uh let's see what else

we got going on in uh markets so we have

uh that's uh that's CPI for you let's go

ahead and take a look at what's going on

in China I'm gonna answer a few

questions here and then we'll go look at

what's going on in China here Bank of

America says they're buying back stocks

you have a lot of companies buying back

stocks right now dealers make so much

money front and back end financing

upsells the dealership business has been

good

uh it'll be interesting to see how that

changes with companies like Volkswagen

thinking about getting rid of their

dealership uh model in the future how

does the mythology change fall into this

yeah I mean uh

we we've seen an increase in the weight

for housing and actually apparel so

maybe maybe uh you could see the uh the

fact that you've got uh an increase in

the waiting change uh for for apparel

leading to that uh at least some of that

uh boost in CPI uh for apparel but I'll

tell you that that apparel read wow it's

just shocking point eight percent on

apparel 9.6 annualized inflation yeah

right yeah right