Watch BEFORE Friday Morning [Critical Fed Report]

well the pce comes out at 5 30 a.m

Pacific Time on March 31st which also

happens to be the deadline for investing

in the house act but this is a very key

measure for the Federal Reserve and I

want to give you the projection so that

way you're prepared and you've got your

expectations potentially aligned with

what the heck economists think unless of

course you want to take the contrarian

point of view by going with the over the

under so first the pce is the fed's

preferred inflation gauge known as

personal consumption expenditures it's

an index measured very similarly to CPI

One Core difference though is that

housing is actually a lower weight in

the pce in pce housing only comes in at

around 25 percent whereas in CPI you're

closer to 34 now that's actually quite

potentially important because in the

last CPI reports the last two we started

using new way States slightly higher

weights for housing and Housing Services

have still been hot they've been coming

in hot hot so the point where some are

saying one of the only reasons we're

still getting hot inflationary data is

yes some part because of the stickiness

of some of the services though that may

actually be going away thanks to tighter

credit standards really a topic for a

different video but quick little spoiler

alert there's a lot of talks that has

Banks Titan lending guess who doesn't

open up restaurants anymore or certain

businesses anymore I guess I kind of

spoiled that one restaurant owners or

hotel owners or service industry owners

potentially Stop opening up new

facilities which uh then it makes you

wonder does that actually potentially

increase inflation because you have less

restaurants or does it actually mean

there's less pressure on wage earners in

retail and Hospitality at the same time

the economy is a little Teeter ish maybe

putting less pricing power into the

hands of individuals meaning potentially

less inflationary impetus for the

service sector either way any kind of

credit tightening is not what we're

expecting to see in this next report and

that's because this next report is going

to talk about February's data and I'll

give you the projections in just a

moment but it's just important to note

that they have less of a housing weight

than CPI and it comes out tomorrow the

stock market is very likely to move

based off the numbers that we see in

this particular report so

tomorrow the personal consumption

numbers are expected from a prior

release of 0.6 which was the hot January

number we are expecting to get a 0.2

which is actually very good if we could

get a point two percent on the release I

think that's phenomenal the reason we

want to see a number like this is

because the number would actually on an

annualized basis be somewhat in line

with two percent inflation a point two

percent read is about 2.4 percent and

the FED could easily in my opinion argue

that point two is well within the bounds

of averaging two percent inflation so

that could be a a good number to hit if

it comes in less than 0.2 I would expect

even more enthusiasm for the stock

market right now technically the NASDAQ

yesterday entered into a bull market now

this was pretty surprising to me but I

it's true the NASDAQ is up about 20.4

percent from bottoming out in October

and technically now the NASDAQ is back

into bull market territory this is quite

remarkable this is actually leading

Bloomberg to put together multiple

different stories on how it's basically

by the dippers going back into action

and buying and I think that activity

could actually be accelerated by a weak

pce uh producer prior sorry not producer

price that's PPI I'm thinking of by a

weak personal consumption expenditures

read I mean take a look at this story

here from Bloomberg this one right here

wild stock market reversals put dip

buyers on his store or a pace for

historic Year all right let's take a

look

and then of course we have some more

projections to get into uh for the

survey tomorrow but anyway look at this

in the 2023 stock market when one group

of companies fall out of favor another

usually is ready to take its place this

is called the cyclical transition sort

of of socks generally you go into a

recession people go defensives they go

to utilities and health care and Staples

uh and then when the recession bottoms

out people go to growth because they

think growth will lead you out and kind

of get these sort of moves around when

there's war people flee into the the

military-industrial complex right these

are very very typical kind of moves

anyway

the latest winner is the firms with the

riskiest credit uh that's actually kind

of scary uh poised for their best week

since January versus their sturdier

balance sheet counterparts the

outperformance is happening as credit

markets stresses ease helping push the S

P 500 up for four out of the last five

days the sudden popularity of firms with

dicey credit is part of a large pattern

in equities this year where Harry

Traders reliably find new vehicles to

express bullish views now personally I

just want to be clear in case I haven't

already been I'm a big fan of looking

for companies with high free cash flow

which is operating cash flow minus

Capital expenditures and high net income

I like both of those okay and if they

could be in growth and I could get all

three of those and some pricing power

that's awesome but Bloomberg's talking

about 2023 is shaping up to be the

second best year for the dip buying

strategy how Wild is that a gloomberg

Bloomberg that's a good one a Goldman

Sachs group uh basket of companies with

weak balance sheets Advanced for a

fourth straight session extending its

week up 3.3 compared to a weekly return

of about one percent for the Goldman

basket of companies with sturdier

finances weak areas of the market maybe

seeing short covering or momentum

trading that is looking for quick gains

now personally I think that's a little

risky it's a little speculative so it's

okay if you're trading these sorts of

things but I'm a little bit more of a

fan of an in and out if you're going to

be playing with uh potentially more

highly leveraged companies but it's kind

of wild to think we're back into a

technical bull market territory crazy

all right

so headline 0.2 versus 0.6 from last

time then we get personal spending

personal suspense suspending oh it's too

early personal spending in January came

in at a gain of 1.8 percent we are now

projecting point three percent okay

reasonable remember what the stock

market is going to try to balance right

now we have a little bit of I like to

call it the teeter-totter so if I kind

of draw a little triangle here and this

is our Market that we're trying to

balance really what we're trying to

balance right now on one side is sort of

our regular uh inflation risk but then

on the other side we're also trying to

balance uh Financial uh stability and

recession right so on the right side you

kind of have your banking crisis and on

the left side you have your inflation

risk uh and so we're kind of doing this

right now because either of these being

bad would mean the parties officially

over

although I think the party has been kind

of dead for for like the last year but

uh beyond that all right so real

personal spending inflation adjusted

expected to come in at point one percent

versus 1.1 then we get the pce deflators

numbers uh numbers now we're actually

getting into pce so we get retail spends

or personal income and expenditures then

we get the actual uh inflating inflation

version of the number

uh pce deflator month over month

expected to be point three percent uh

it's a little higher than that sort of

average two percent right three point

six percent then we get the BET and

that's different from sort of personal

incomes uh even though we want those to

also be somewhat closer to two percent

because the idea is if personal incomes

are close to two percent that inflation

might be close to two percent personal

incomes really give you a measure of the

wage price spiral and that's again

expected to be point two percent the

actual pce deflator month over month is

expected to be point three percent a

little bit hotter there probably because

of that housing and sticky Services side

uh and then the year over year is

expected to be Point uh or sorry 4.7

4.7 is the same read we got last time

uh that is the uh oh sorry I went ahead

here let me read this correctly here pce

deflator month over month point three

percent PC deflator year over year 5.1

pce core year over year 4.7 and PC core

deflator month over month 0.4 all of

those measures are down from the January

read the most important here probably

being that month over month uh 0.3

versus the 0.6 from last time with the

exception of a year-over-year core

matching 4.7 that out report will come

out tomorrow at 5 30 a.m Pacific Time 8

30 Eastern we'll also be getting the

University of Michigan consumer

sentiment uh now we'll have some talking

about sentiment to do today and there's

some concerns that sentiment could

actually fall once we're actually in an

official recession but uh what's

important from sentiment in my opinion

is that we're going to keep those

inflation expectations stable U of M one

year expected to be stable at 3.8 and 5

to 10 New York expected to be stable at

2.8 for inflation so that's fantastic

now uh that uh that month over month uh

deflator number that's basically your

CPI month over month read very similar

to that again expected to come in at uh

0.3 and that'll come out tomorrow we've

got for tomorrow I want to give you kind

of the the skew on this it looks like

we've got 44 estimates

the high estimate is 0.5 the low

estimate is 0.3 and the average estimate

is 0.35 so it seems like there's a real

skew uh almost everybody on this chart

is sitting under 0.45 nobody's under

0.25 so what does that tell us well it

tells us if the number uh if pce month

over month comes in at point two

tomorrow that would be pretty dang

bullish because really nobody is

estimating that we're going to be at

Point uh anything under 0.25 so if we

get a 0.2 a pce deflator month over

month

good sign it's a rocket ship on the way

to Mars

uh then uh if we get any kind of number

above probably point five like point

five or up that would be really bad news

my expectation is that's going to be the

most important number specifically

because those month over month numbers

are really useful because they kind of

ignore all of the last year stuff and

they just tell us what's happening right

now so I personally like this that's not

to say that the year over year number

doesn't need to come down as well but

those are going to be some important

data points coming out tomorrow uh and

especially since at the same time as

these data points are expected to come

out we're obviously in this environment

where we're kind of starting to build

the Nike Swoosh now I'm really excited

about that do keep in mind that when we

talk about the swoosh I generally like

to show QQQ but if you're going to

invest in the NASDAQ I'm actually a

bigger fan of you using qqqm so just add

an m to that ticker symbol the reason

you want to do that is the fees are

substantially lower and it's basically

the same index it's actually provided by

the same company uh and they they just

basically they do all their marketing

for QQQ and not for qqqm so the price

sensitive people can go over to qqqm

while they could still milk lots of

profit off of the QQQ investors anyway

something to keep an eye on uh just like

the programs I'm building your wealth uh

link down below and the amazing

opportunity for you to get life

insurance in as little as a five minutes

linked down below right next to the get

12 free stocks with this very platform

right here so if you like what you see

on this platform 12 free stocks linked

down below I'm supposed to put up one of

these buttons I think if I push is it

this button one of these there we go no

that doesn't work one of these buttons

tells you it's a paid promotion I can't

figure it out oh that one still says

paid promo motion uh was it

it wasn't six was it seven it wasn't

seven there it is button number eight

all right anyway so where were we I

gotta figure that stuff out so what we

got over here uh I really think this is

the start of it uh I I really hope we

don't drop down again right I mean if we

draw like volatility totally to be

expected I expect this but if we break

the lows over here the Nike Swoosh is

dead uh which would be a problem because

I've kind of been betting on the Nike

Swoosh uh but uh at least I'm making it

bad so I believe that even though this

was representative of a year I believe

that the handle over here is going to be

10 years long

so you know strong bet but uh I I think

in in hindsight this is gonna look like

a joke uh look at like remember when the

NASDAQ was running for like two years

straight over here

uh look at this like two year run over

here this is kind of an example of a

Nike Swoosh over here except it just

uses the shorter covid pandemic to show

you the left side of it look at that

down straight up basically yeah was

there a little bit of I mean this is why

I buy the dipboard so well because you

could buy the dip and just immediately

get rewarded afterwards so that's why we

had such a by the dip area over here

and this this was long I mean that was

from March of 2020 to December of 2021 I

mean that's almost two years that's wild

uh of course now we're in in a

substantially larger downtrend and

hopefully that's the beginning of the

swoosh recovery over here uh so far it

actually has been tested I think a lot

better than some of these other drops I

mean consider this uh this was bear that

was not even really a recovery over here

at the beginning of January last year we

look over here at this brief recovery in

March it brought us to new lows right

afterwards brief recovery here in August

brought us to new lows and then really

it's been since about October November

right around when I launched my ETF

that's interesting we launched the ETF

like the 30th like somewhere over here

like the 30th of uh of November learn

more by going to meet kevin.com but

anyway uh I really hope this is this is

the bottom uh and so we'll see and

what's different here is the last time

we had sort of this sort of red bear

cycle here briefly we didn't actually

break new lows when in the past when we

get our next bear psych or our next red

bear cycle after our green upcycle we

tend to break to a new low we didn't do

that so in my opinion that's reiterating

this sort of channel of of the Nike

Swoosh which I think rides this line

over here so I think it'll probably be

until it could be until July based on

this right here before we actually break

up to the next Fibonacci retracement

line no guarantees who knows maybe we'll

break it sooner but if we break it

sooner we'll probably fall back to it in

honor of that Nike Swoosh uh like I say

I think I think we're going to be in a

little bit of a volatile uh recovery up

so um we'll see

so uh that uh that's a little bit of my

thesis on Nike Swoosh and uh the uh

important Catalyst to pay attention to

tomorrow of course I'll be streaming it

live tomorrow so make sure you come to

your meet Kevin report tomorrow at 5 30

Pacific and I'll cover the news the

second it drops my goal is always to

beat CNBC if I could beat CNBC uh I win

and so uh with that said make sure to

check out the programs on building your

wealth link down below yesterday we

talked about short shorts we also did

fundamental analysis but we also talked

modeled short shorts so if you want to

see that uh for whatever reason check

out the programs of building your wealth

link down below so you never know what

you're gonna get you just don't know

what you're gonna get but usually it's

fundamental analysis we talk about the

size of pp uh and yeah check that out

link down below and make sure you

remember that house act deadline

thank you

[Music]