wtf

hey everyone me kevin here wow the

inflation report came in way worse than

expected it came in with a month over

month inflation reading at 0.9

as opposed to the 0.6

expected that is a month

month-over-month change so to figure out

what that's like on an annualized basis

you multiply it by 12. so in that case

we were expecting about

7.2 percent of an annualized inflation

rate instead we got .9 times 12 or a

10.8 percent annualized inflation rate

but folks the devil is in the details

why

what led the inflation report to beat so

badly we came in with a headline

year-over-year reading at 6.2 percent

instead of 5.8 percent expected we're

expecting according to the latest

analyst wall street reports we're

expecting inflation to come in slightly

higher than last month uh to come in at

5.8 percent compared to that 5.7 of last

month but 6.2 this is a blowout it is

the highest

highest that we have seen for uh for

inflation sin on a cpi report since 1990

which is absolutely incredible and so i

uh you know obviously the stock market

rotated to the downside uh it's it's

been trying to recover some stocks have

actually recovered very well for example

tesla was down at one point three to

three and a half percent down at 987

and it's now sitting at 10.66 it's

actually up 4.2 percent so there's some

major by the dipping happening in the

market which is is good in a sign of

resilience uh crypto obviously moved up

very nicely you could see uh crypto

bounced which was also very weird it had

like a three minute delay uh before

people actually started buying crypto

and then then you saw bitcoin run up uh

go from about 66 400 to 69 000 new

all-time high

slight uh consolidation here and now

we're in that consolidation pattern

around 83 000 i'm sorry

83 000. around 68 300 but why like what

was so bad about the report well i

finally figured it out i finally figured

it out uh i had trouble figuring it out

earlier but now i'm looking in in the

right place and i have the correct

details sorry this is a calculator it's

not this okay this uh is is what we want

to look at this right here is the cpi

report

and it's got a special page here

so

what we want to look at here to help

make sense of this is the number on the

left side right here this tells you the

weight

of a specific category the number right

here tells you the month over month

change and then if i scribbled a number

here all i did was just multiply it by

12 to give you an annualized rate

of inflation so let me give you an

example

services in services we had a point six

percent gain that's a 7.2 annualized

inflation reading for services that's a

lot 7.2 percent that's a lot for

services right then you go to durables

durables folks appliances bikes workout

equipment desks furniture

1.4

on the month over month okay 1.4 times

12 is like an inflation rate

of

16.8

non-durables like clothing or

consumables like shampoo up 1.3

in a month

okay 1.3

times 12 is

15.6 percent

and then again over here you see the

rating or the weighting i should say in

the cpi report so for example

non-durables have a 27 weight in the cpi

report uh so things that we're buying

regularly as consumers imagine that in

the consumer price index have a

one-third weight kind of important but

anyway uh then look at this

if we go to housing we're at point seven

percent that's an eight point four

percent annualized bump uh for housing

which is probably a little understated

because of the way they measure owner's

equivalent rents a little funky i think

rents are probably a little bit higher

than that 8.4 percent annualized but uh

still the report is actually coming in

with a number pretty big here uh

we've got some smaller

increases here or in some cases declines

in education and recreation

but we go to some of the other

categories here transportation up 2.4

in a month again that's the crazy thing

is in a month 2.4 times 12

works out to

28.8

28.8

it's pretty high uh and transportation

has a 16 weight so it's got a pretty big

weight

you've got private transportation up

15.6

that has a uh that's that's sort of a

subcategory of transportation uh so not

so

important to necessarily

consider both of these it's not like you

want to add these up right this is part

of that one so

don't worry about that one so much

utilities public transportation up

8.8 here for utilities and public

transportation 1.2 1.2

times 12 that's 14.4

uh percent

at an annualized rate this is high these

are very very high reads uh and again

look at the big categories here food and

beverages food and beverages 0.08

times 12 is

an inflation rate of about

9.6 percent on food right here

uh and and again some of these other

sections like the the housing a 41 wait

for housing up 8.4

and so i finally figured it out when

when i went through this and i went

through these categories and the

category weights

we can do a quick little just to make it

maybe a little bit easier let's go ahead

and just use a little peach color here

and go through

some of the the heavy weights here in

the index so you kind of have an idea of

how they come together here so housing

41

really big weight right education and

recreation together these only have

about 11 weight and those were the ones

that came in low

food and beverages came in at

14.98 percent transfer uh well that that

is what the weight is uh transportation

at 16.7

other services 11.4 so it gives you a

little bit of an idea how this breaks

down and so what i realized in terms of

why

this is so crazy why this is so

so bad this this inflation read

i realized it's because

not one thing went up

everything went up

literally every freaking category

with the exception of education and

recreation these sections in the light

blue over here and maybe services

less medical care services which is is

also redundant to education recreation

educational recreation with the

exception of these things and the the

teal color here everything in this

pinkish color here

went up way more than expected

and that's the problem

is literally prices for everything went

up this is not a cpi report where we

could just go in and say hey folks don't

worry it was just because of cars oh

folks don't worry it was just because of

chips

i can't do that

literally everything got more expensive

uh and if you want you could get a

little bit more granule you could go

into uh

you know exactly uh what items within

this

and within the sort of sectors that we

just saw here uh went up even more

and so we'll we'll do a quick little

example here we'll do a quick look we'll

jump in and we'll see specifically

what's getting more expensive if we jump

in to uh the detailed expenses there we

go what we're looking for on this

particular chart is the uh change

uh in uh for the percent change we could

use the far right number because it

gives us the seasonally adjusted number

and like here just as an example

breakfast cereal up 3.3

meats up 2.5

but we also saw it's categorically up as

well as as a sector or category 3.3 for

canned vegetables yeah you keep

scrolling here and you'll regularly find

that with the exception of jewelry

which which actually went down

most sectors went up sporting goods 1.6

remember 1.6

in a month is a lot miscellaneous

personal goods 2.7

car and truck rental 3.1

these are huge moves physician services

were low medical care services actually

didn't increase that much

airline fares actually went down 0.7

but again

overall when you look at the categories

overall

everything went up and that's why the

cpi report was so bad

and so this is going to have major

implications in my opinion for the

buildback better plan for joe biden i

think this is almost a potential nail in

the coffin for joe biden trying to get

his social spending his tax and spending

plan through because people like joe

manchin are going to look at this report

and go sorry inflation is not transitory

anybody who thought it was transitory is

wrong

i was one of those people and now i

think eventually it's going to go down

at some point during this decade i'm not

going to speculate when it's going to go

down at some point it's going to go down

inflation's going to go down i do

believe that i don't believe we're going

to see hyperinflation but

this is the kind of stuff that actually

makes jerome powell

seem

less potentially competent even though i

think he knows he can't predict exactly

when inflation is going to go down and

it came in way higher than expected here

it's very very likely that joe biden

is is going to look at this report and

maybe even use this as ammunition to

replace jerome powell and if he does end

up replacing jerome powell i think the

market's going to freak market's going

to have a hissy fit

and freak out a little bit over over

uncertainty around what another federal

reserve person would do are they just

going to raise rates right away or

they're going to be patient just like

fed uh chair jerome powell what's going

to happen

that uncertainty could lead to more of a

pullback in the market but overall if

you're wondering why

this report was so bad it wasn't just

the headline numbers it was literally

everything

inside

joe biden says

looks like he just came out joe biden on

inflation quote reversing this trend is

a top priority for me

yeah because right now the trend is

worsening

this is worse

not better

it's shocking it's disappointing

but in many cases actually probably not

unexpected

a lot of folks were probably expecting

this

and they're right

and they've been right

so there you have it this is crazy thank

you so much for watching i'm actually

surprised that the indices and certain

stocks are uh are recovering uh in the

manner that they are

but uh yeah this this was definitely a

shocker and it's no surprise the indices

are almost all red though they are

starting to kind of flip to go green

again mostly because there's so much

money because of all the inflation

people keep buying the tip

anyway thanks for watching we'll see in

the next one bye

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