Shocking Producer Inflation Data | Warning

all right PPI comes out in about 20

seconds we are looking for good old data

that is going to hopefully reiterate the

declining CPI we saw yesterday final

month over month we're looking for zero

we are looking for X food and energy of

0.2 X food energy trade of 0.3 year over

year three percent PPI inflation 3.4

year over year X food okay energy and uh

energy trade uh that is ppix food energy

trade looking for 3.8 here we go oh yes

okay big old Midas negative point five

percent month over month on PPI final

that's really good uh ppix food energy

trade point one percent let's go baby

inflation's going away it's finally

turning transitory look at that PPI

final demand year over year was expected

to be 3.0 comes in at 2.7 also below

expectations ppix food and energy was

expected to be 0.2 we got negative point

one let's go this is great uh year over

year we did get ppix food and energy a

matching 3.4 3.4 uh ppix food energy

trade expected 3.8 we got 3.6 so we got

big misses across the board here initial

jobless claims were expected to be 235

000 we got a

239 000. uh we were looking at

continuing claims of uh 1.833 we got

1.810 it does show a little bit of

strength they're still in the labor

market which is good though because you

don't exactly want on a destroyed labor

market and a destroyed economy but you

want inflation God but that's literally

what's happening here this is fantastic

this in my opinion reiterates look the

FED can

hike in May and go away this is great we

do not want inflation to stick around

obviously uh and now keep in mind and

we're gonna look at the PPI BLS in just

a moment what up keep in mind I see this

comment like every single day but every

single day I talk about inflation I see

people but Kevin I went to the grocery

store and stuff is still expensive yes

yes we know prices went up but that is

not what the Federal Reserve is fighting

the FED is not fighting that things are

expensive the FED is not fighting that

things got expensive the FED is fighting

that things are continuing to get more

and more expensive and right now

fortunately that is finally

transitioning away let's take a look at

the producer Price Index this is

absolutely fantastic look at this this

month over month figure keep in mind

this was expected to come in at zero the

expectation was Zero uh point zero what

we actually got was negative 0.5 this is

really good uh BLS finals demand prices

or were

unchanged in February increased uh Point

uh let's see what is this here final

demand prices were unchanged February

increased uh 0.4 in January uh that is

the

uh let's see here final okay here

producer price index for final demand

declined 0.5 in March seasonally

adjusted by the BLS okay then they go

back into February was point four J uh

unchanged in Feb and 0.4 in Jan so what

you're really seeing is sort of that

declining in PPI that's what they're

really trying to show you here 0.5 uh

here you had 0.4 in Fab I guess would be

the other way around but I think you get

the idea and point uh or sorry geez

Kevin wake up uh point zero here in uh

Fab 0.4 in Jan that's what they're

trying to show you and here we are in

March there we go okay uh two-thirds of

the decline in the index for final

demand can be attributed to a one

percent decrease in prices for final

demand Goods there's that manufacturing

side right there's that disinflation

happening in manufacturing in my opinion

that's your Consumer Staples that's sort

of your regular consumer products that

people just aren't spending money on

anymore because either they've hoarded

enough of it or they're like crap you

know if we are going to go into a

recession because now even the fed's

talking about it maybe we ought to save

a little bit of money prices for final

demand less food energy and trade edge

up a 0.1 in March after Rising point two

percent in Feb right that's fine we went

through those numbers already that was

expected to be 0.3 so the expectation

for that number was uh this number right

here was 0.3 so we pretty much missed on

every side here let's see if we can get

a little bit more detail here uh product

detail a 7.3 drop in margins for

machinery and vehicle wholesaling was a

major factor in the March decrease in

prices for final demand services oh

really for services final demand

services for machinery and vehicle

wholesaling that's really interesting

because we've been seeing uh negative

negativity on

um uh what's it called um we've seen

this negativity on uh products but to

see it on Services as well it's good the

index for transportation Freight

portfolio management fuel lubricants

retailing loan services automobiles

Parts also moved down all of those I

just mentioned here uh well most of

these truck transportation Freight

portfolio management those are all

services loan services uh that's great

prices for guest room rental

Rose 4.6 okay guest room rental what is

is that like a like almost like an

Airbnb uh index for food retailing and

transportation for passengers Advanced

okay it's fine so what do we got let's

see here Foods energy Transportation

warehousing fine

processed goods and intermediate Goods

declined a one percent in March after

moving down point four percent in

February a major factor in the March

decrease was a five percent drop in

prices for processed energy Goods that's

okay I mean we we have seen and this is

why we purposefully look at some of

these numbers excluding energy remember

final demand not excluding energy came

in at negative point five percent uh and

then when we exclude food and energy we

got negative point one exclude food

energy trade we got point one uh and

then uh same thing for the year over

year numbers but but these numbers

really came down nicely now do keep in

mind we did get revisions for the prior

release so February did get revised up a

little bit vital demand went from

instead of negative point one to zero

food and energy went from zero to point

two so you had some upward revisions

here year over year went from four six

to four nine uh four point four on X

food energy year over year went to uh

four eight X food energy trade went from

four four to four five so the revisions

are not that great

the revisions definitely hurt this

report a little bit on the prior but uh

this is very good for this month at

least all right let's keep looking here

huh

product detail one third of the March

decrease in prices for processed goods

for intermediate demand can be traced to

6.5 decline in diesel fuel that's okay

again that's why we exclude energy from

some of the numbers and even if we

exclude energy we get some big movements

here

uh let's see here the index for

unprocessed goods for intermediate

demand moved down five percent in March

the largest declines since falling's 9.7

in October the broad-based uh decline

was based on unprocessed energy Goods

which dropped 11.5 percent the index for

unprocessed foods and feeds also moved

lower fine all right uh crude oil fell a

lot fantastic we know China's reopening

didn't pump oil like people thought it

would that's great we also know that uh

Opex price or I can always say price

Opex production

uh cut was really supposed to drive oil

up substantially which it did I mean

Brent said 87 bucks and last month we

were significantly lower in the month of

much of the month of March we were

sitting around 75 bucks 75 to 78 dollars

for Brent so we're going to be getting

some re-inflation next month because of

these energy uh prices going back up

this month unless they fall start

falling again pretty rapidly but that

might not be such a terrible thing

because again we're looking at inflation

numbers that exclude a lot of the energy

numbers uh and and all of those missed

pretty pretty decently which is good

okay let's see if we can get some more

tables here so we can see some actual

products but this is fantastic news this

is a great Point while I pull up the

chart here to mention uh that if you

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out all right so let's look at the

actual

uh charts here now that we got this up I

want to see where numbers are going down

and let's quickly also see here

seasonally adjust to change one month

percent change so we want to look at the

far right column in this one so far

right column what do we got here

durable consumer goods point two percent

those are like appliances fine final

demand services oh thank goodness look

at that that's what I want to see this

is what you want to see look at this

final demand services this by the way

has a 66 weight I'm pretty sure hold on

let me make sure that's the weight

relevance yes okay good

look at this folks 66 weight of uh of uh

ppi is final demand services

and finally for the first time in at

least the last three months over here I

I think we could even go back to four

let me double check oh look at that one

two three four five five we can go back

five for the first time in the last five

months we've actually had a negative

read on Final demand services

thank God uh final demand Trade Services

negative

finished goods negative point seven and

these are Big negatives too look how

negative this is this is this is finally

starting to make it look like inflation

is starting to be transitory uh I know

people are like a terrible word but it's

it's finally coming true because look

what happens is first PPI Falls then you

have to remember there's a big lag

and then it shows up in CPI because when

the production prices come down then you

don't have to raise prices as much uh

not even that you could raise prices as

much because people are demanding less

but anyway there's a lie between the two

but this is fantastic so final demand

services in aggregate down point three

percent that's awesome that's literally

3.6

deflation on an annualized basis that's

wild uh final demand Trade Services

minus 0.9 I mean think about what what

0.9 means 0.9 on an annualized basis is

negative 10.8 percent deflation price is

actually coming down

trade of private Capital Equipment like

this is like Machinery right here you

want Machinery right now

coming up for sale baby minus 2.4 on a

month

uh government purchase Goods down two

percent look at this this is this is

insane uh mine is four point eight

percent trade of government purchase

Capital Equipment trade of exports minus

1.5 final demand transportation and

warehousing services minus one point

three percent but still passengers

passenger Transportation so if people

right people are still spending money

but not on stuff so this is where we are

seeing some of the stuff some of the

items and that's but it's interesting

that in the services

four Goods that's where you're seeing a

lot of these these negatives it seems to

be all right let's see what else we got

here

uh let's see Transportation

Transportation lots of Transportation

you got some mixed reads over here but a

lot of this Transportation stuff is

actually negative negative negative

negative negative negative oh that

sounds like Mario uh you know here

anything with passengers positive

okay fine

what do we have here final demand

Services less trade transportation and

warehousing

okay

finished consumer services

finish consumer services only 0.2

percent

well that's good final demand Services

less trade Transportation warehouses 0.1

percent that's fantastic that's really

good

okay well I like to see that final

demand construction point two percent

fair game totally fine there's nothing

scary in this report at all this report

is freaking awesome this report is great

it's a me

final demand uh less exports negative

point five percent final man less

government negative point five percent

uh okay this is I mean it's so negative

it's crazy

uh final demand Goods less energy this

is the highest thing I've seen here 0.4

uh uh but that's interesting 24.8 final

demand Goods Goods less energy so I mean

energy really tanked a lot of this it

seems but I mean energy is not going to

tank your services

this final demand Services over here

but it would make sense that it would it

would take some of your goods prices

um but then again even in aggregate what

we say without energy without energy

we're looking at the ppix food energy

trade point one percent X food and

energy negative point one percent yeah

that's fine

okay what else do we have here let's see

here finish Goods finished Services see

look at that finished services

finished Services negative point two

percent yes yes very good uh finished

goods excluding Foods negative 1.8

finished goods excluding energy so if

you only exclude energy

it's interesting point six but then so

if you only exclude energy

does that it looks to me like Foods then

really pushes this up so maybe foods are

what in Goods push this up because when

you do Goods minus food you get Negative

1.8 percent if you do Goods only minus

energy and not food you get point six

percent which is pretty high so that

suggests food really popped up a little

bit

should be able to see that a little bit

more clearly here somewhere

we'll keep looking for it all right

total finished uh Less Foods minus 0.5

less energy flat fine and aggregate of

all 1.2 okay good total exports goods

for export all of this is negative and

just look at this you don't even have to

read it anymore it's just all plummeting

all of it

personal consumption negative point four

percent what else here uh

yeah as soon as you take out food look

at that personal consumption of goods

Less Foods negative 2.9 so Foods must

have had a big pop there to weigh this

up so much

processed Goods

uh manufacturing for Foods manufacturing

components for construction

construction's still getting a little

boost here 0.5 percent

car unprocessed Goods these are feeds

for animals

fine a lot of these numbers will be up

for uh the Energy Products next month

because of the volatility of oil

but that's okay because once we look at

less energy you're still looking at good

ah no but that's interesting oh these

are stage four Goods because here food

is negative

it's a little bit more of a complicated

report see here we go inputs to stage

four there we go Foods yeah Foods were

up a little okay that's fine but foods

are one of those volatile ones and

that's why we generally say x food and

energy because on a month-to-month basis

these things are flying around and again

what's more important here is seeing

some of these services start coming down

Trade Services down point one percent

Services across the board 0.5 percent uh

except for passengers that's one part

that's moving up

okay anything else

let's see if there's anything that

really stands out over here

no

stage two looking for something that

stands out Services passengers energy we

know energy fell a lot stage one food

fell 4.4 okay

um

[Music]

inputs to stage one service produces

Foods yet there are definitely some

parts of foods components that were hot

in this one but beyond that this is all

negative here it's pretty remarkable

wow okay that's really great so that

gives us our PPI numbers now what I'd be

curious to see uh is how the Fed rate

monitor is moving as a result of this

uh let's see here

all right fat rate monitor

[Music]

um

all right let's see what we have rate

monitor right now is looking at a 69

chance of a 25 BP hike in May

and then we're looking at a 67 chance of

a freeze in May or sorry in in uh June

so in other words hike in Maine go away

some people are starting to price in it

with a 28.6 chance that we get a 25

basis point cut or that we actually have

Frozen in May and then stay frozen

uh for June

indices now turning slightly positive

Dow up 13 basis points s p 22 NASDAQ 36

10-year treasury sitting at 3.35

9 so down just a smidge here and uh oil

is down about half of a percent here uh

so what does this really mean for the

fed well let's see if we have any

commentary from Wall Street on this I

mean in my opinion this is obviously

this is fantastic this is exactly what

the FED wants the FED does not want to

have to create a recession but they will

if they have to get rid of inflation

that's always something you want to

remember they will force a recession if

they have to get rid of in fightship but

are we

um

you know is it necessary to create a

recession if uh if inflation goes away

no of course not

you know then they could then they turn

the money printer back on

PPI provides dovish surprise the claims

data was broadly in line with

expectations for initial filings more

notable however was the unexpected

decline in PPI which undershot

Expectations by a considerable margin

across every aggregate falling half a

percent on a headline basis there were

some upside revisions to Prior data

correct I went through those but in

aggregate producer price inflation looks

a bit lower than expected that would

provide

uh another argument in favor of an end

to the FED cycle coming shortly though

given some of the trends in Energy

prices it may well be the case that PPI

starts ticking higher again soon well

yes we talked about that

Brent's up ten percent oh sorry not ten

percent it's up a little bit more than

10 so it brings up like 10 bucks right

so I mean you're up like 13 on oil month

over month right now but

that's why we look at these numbers

excluding oil so next month is going to

be a little bit more granular where

we'll have to go through a little bit

more and go okay so that's related to

oil

but uh that should be pretty obvious

uh yields drop on PPI data in headwind

four dollar yields dropped on data

meanwhile uh jobless claims were pretty

much in line PBI below expectations

right

uh uh let's see here what is this right

pervasive deterioration and consumer and

continuing claims data across the United

States is consistent with a recession

beginning very soon

I didn't see

the jobs claims data actually

deteriorating let me see here

initial initial claims came in 4 000

higher than expected But continuing

claims fell

from the survey

and from the prior report the survey was

1.833

the prior release was 1.823 the actual

was 1.810 so what do they mean a

continued deterioration here a pervasive

deterioration continuing claims data

across the U.S is consistent with a

recession beginning very soon

historically a recession should mean

stocks making new loans but this cycle

is proving odd and this should not be

taken as read a very reliable and a very

rare technical signal points to a

long-term constructive outlook for U.S

equities

very reliable and one very rare

okay

this is why can they not write English

here

hold on percentage of continuing claims

has never hit this level and not gone on

to spike much higher oh I see what

they're saying okay here let me let me

show you a screenshot of this so you can

see what they're talking about okay

uh that's not necessarily from this

uh percent of the United States uh okay

all right fine so let me pull up I press

this button yeah so here's the chart

that they're showing percentage of uh

U.S states so this is a percentage of

U.S states so this is very different

from the headline number but it's a

percentage of U.S states with an annual

change in claims Rising 30 percent so as

soon as you get more than what is that

18 of states

seeing continuing claims rise over 30

percent on a four-week moving average as

soon as that goes above about 18 you've

always seen it rise substantially higher

is is sort of the argument they're

making we're basically there right now

which is quite interesting

on uh continuing claims but I want to

understand what they're talking about

here with this

uh and one very rare technical signal

points to long-term constructive outlook

for equities

uh why let me click it let me see what

this is

rare Buy Signal hints that worst is over

for stocks

let's talk about that in another segment

so let me give a quick summary here on

PPI and then we'll talk about that so a

quick summary here PPI look PPI was

great PPI was great and your PP related

stocks should be very happy today any

kind of pricing power stocks should be

very happy today because your input

costs just went down I think this once

again reiterates the FED 25 BP in May

and then pause and they're gonna pause

for a long time until inflation is

convincingly dead but that's okay

because the longer the pot they pause

the longer we're not in recession and

the longer they're paused the longer

inflation isn't a problem think about

that the pause on both sides is good

pause rate increases inflation no

problem

pause and not cut no worse action

so you want to pause and kind of hang

out there as long as possible that's

your most optimistic scenario

so very excited about that uh and

um let's uh let's get into the next

segment so uh thanks for watching the

PPI segment all right

now let's now talk about rare by signal

Kevin loved your video on life yesterday

oh thank you for that same pump me up

this morning I pumped Steve I'm honored

um no well thank you for that no it was

sincere as you know I I wanted to just

share some we're always talking about

these numbers

you know like in uh Wolf of Wall Street

it's all the granular

uh and I think it's good to talk about

reality too sometimes