Inflation Report & The Fed Response [CPI].

okay CPI 30 seconds from on Deck here

are the expectations write them down or

remember them CPI month over month point

four CPI core month over month point

four CPI year over year six and Corey

over year five five Joe Biden gave us a

heads up that this CPI report would be

good he was confident this report would

be good did Joe Biden get a leak does he

know something we didn't here we go

and CPI is

0.4 it's a match on the headline month

over month 0.5 a little hot on core not

great CPI year over year matches 6.0 and

core year-over-year matches at 5.5 so

across the board it's basically a match

with the exception of core core comes in

slightly hot not ideal real average

hourly earnings year over year negative

1.3 percent real average weekly earnings

year over year negative 1.9 if you

speculated on this one with options I'm

not sure this is going to be enough to

really push us in one direction or

another that core number coming in one

tenth hot though if anything is slightly

bearish that tilts slightly bearish that

moves us from a prior release of 0.5 on

the month over month down to 0.4 along

with expectations but we go from 0.4 on

the prior release on core with an

expectation of 0.4 unfortunately up to

0.5 on an annualized basis that is in

line with a 6 percent

annualized inflation rate now

unfortunately uh the uh well that is

that's not ideal that's not where we

want to be uh however the uh the other

numbers all matching expectations the

fact that we're coming in at six percent

year over year five point five percent

core fine uh I I would say this is this

is clearly evidence to me that uh we're

likely to see a a the Federal Reserve

stay 25 or potentially even zero uh

we'll talk about expectations from

different companies in just a moment and

a different analysts in just a moment

but to me this is probably enough data

to really say look we don't need to be

thinking about a 50 BP hike we're like

inflation is slowly trending down it's

not plummeting right it's clearly not

plummeting inflation when we have core

increasing point five uh in uh in

January here and then oh sorry this is

uh this is the last report let's go

ahead and get the uh the new one that

means the BLS hasn't updated their

website yet but anyway we get point five

on the uh uh the headline core waiting

for okay here we go there we go there's

the new report uh okay this is the one

release yeah this is released March 14th

okay interesting let's go ahead and grab

this in here

uh that's the same document okay all

right whatever CPI oh go ahead and throw

this in here but again slightly hot here

I would say this probably reiterates a

25 BP hike but if the FED is really

concerned about the banking system it is

entirely likely that the FED could pause

I think it's 25 BP more and done after

this report uh I don't think this is uh

this is a report where we could say okay

yeah you know the FED should pause or

cut this is probably another 25 BP we've

bailed out the banks everything's good

let's keep going one more 25 and we're

on the right trajectory that's the idea

here uh so let's see here index so this

does again show yeah this is the March

14th report right here total for all

items less food and energy Rose point

five percent in February after Rising

0.4 uh in in uh in January that's good

remember this is the February report

released in March let's look at some of

the details that we have over here so

food increased point four percent in Fab

at home Rose Point three percent five of

the six major food groups increased over

the month not ideal although then again

it's okay if things increase as long as

the increase is a slow rate index for

non-alcoholic beverages uh increase one

percent for February uh on the Mormons

back at it again uh Meats poultry fish

eggs fell point one percent over the

month okay cool so a little bit of a mix

over here and food fine you've got

energy energy index fell point six

percent and Feb fantastic natural gas

decreased eight percent over the month

it shows you how volatile this stuff is

fuel oil Rose nine point two percent

over the last 12 months uh okay whatever

let's get out of the volatile and let's

go to the most important one so the most

important ones in my opinion are the

core Services segments so I'm going to

go ahead and pull up the detail chart

and at the bottom of the CPI release you

can actually get the detailed

expenditure categories chart and we want

to look here because really what we'll

look looking for and we know what Jerome

Powell is doing he's probably already

done this because he gets these reports

early it's not fair man I want to get

the reports early too how am I supposed

to YOLO my options man anyway over here

what do we have

this is what we want to pay attention to

so just so you know how this chart works

the far right column is the seasonally

adjusted uh month over month percent

this is generally what we use if you

want the unadjusted you could use the

second uh percent column over here but

really we're going to be looking at the

far right one for the seasonal adjusted

we're going to go straight to Services

over here see look this is just not

ideal why why is water and trash

collection uh and the services for that

why is that up 0.8 percent that's too

hot that shows you Services just too hot

domestic operations minus 1.3 percent

that's good Moving storage Freight minus

3.2 percent fantastic we want to see

negates good good medical good negative

point seven good Professional Services

negative point three good Physician

Services negative 0.5 this is good

dental service is point one that's okay

0.3 a little bit hot not bad hospital

and related thank God comes down to

point one from 0.7 that's good more of

these Services coming down good where

are we sticky look where we're sticky oh

thank God this is actually a good this

is good folks uh rental inflation is

sticky come on man everybody and their

mom is expecting rental inflation to

come down so so this is this is good

it's just this is probably one of the

biggest lagging indicators you have

right is rental inflation point seven

percent on rent of shelter primary

residents coming in with a 0.8 that's

hot uh 2.3 for lodging away from home

that's not ideal that's like your Airbnb

and your hotel index here uh lodging

away from home really expensive here up

2.6 percent that's hot owners equivalent

rent still hot remember rent of shelter

is like over 32 percent of CPI and over

25 percent of CPI so when you see that

this is sticky over here but you know

that this is going to be coming down

thanks to Leading indicators it's a good

thing right look at the weights over

here rent of shelter 34 that's right

they actually increased the weight for

rent of shelter from 32 to 34 set so

they actually made it even more painful

and the biggest component of that is

owner's equivalent rent at 25 so this

rent section staying up is the hottest

part here actually look at this other

lodging away from home that's the part

that really ran up is barely one percent

so hotels folks barely one percent of

CPI who cares if hotels get more

expensive just bring owners rents down

that's it that's all it's going to take

for inflation to start plummeting

because look at all this yellow here

this yellow is actually good These are

nice negatives and services over here

health insurance let's go minus uh Point

uh four uh 4.1 percent a little more

expensive to take care of elderly and

invalids dude who still uses that phrase

the CPI is that's racist okay no that's

not racist but anyway uh so

transportation services 1.1 percent to

the upside that's hot that's not ideal

that's a little hot uh so transportation

services what's driving that well what's

driving that is motor vehicle

maintenance and repair and that's only a

point two percent motor vehicle Body

Work guys stop working on the body

point nine percent over here motor

vehicle maintenance and servicing point

five percent Motor Vehicle Insurance

dude insurance has been skyrocketing

it's a pisser man everything's going up

with insurance look at home insurance

too anyway point nine percent over here

parking and fees okay that's not that

big of a deal public transportation come

on man the government should be able to

rig this one three point four two

percent for public transportation good

Lord how are we back to airfares going

up now airfare is only a 0.57 weight so

again it's it's a drop of the bucket

compared to rents but geez Lord 6.4 on

airfares and you just destroyed the down

of the last two months it's actually

interesting Morgan Stanley had a a had a

heat uh map of airfares and they're like

we think more planes are flying now

maybe that's just my plane I like people

like Kevin you're not gonna fly enough

to justify a plane I flew 70 hours in

the last 30 days if you annualize that

out that's like flying 840 hours in a

month that's insane anyway uh

inter-city Transportation down okay so

in other words it's uh probably the

outside of of city transportation well

it's really airfares that are driving

this Transportation up in public

transportation Recreation services

that's still hot why is Recreation

coming in so hot that's not ideal

Recreation coming in at one point two

percent I mean that's like 12 inflation

so that's not great cable uh cable and

satellite streaming video disc who still

buys that pet services interestingly we

saw leading indicators even a course

member uh remember we got a course

member coupon code linked down below St

Patty's Day price will be going up after

it but anyway a course member emailed me

and said hey I got a pet shop we're

still raising prices the first few

months of the year so what did I do I

went and looked at Petco and the other

pet companies earnings calls and they're

like yeah we still have some leftover

price increases coming for the first

quarter and first half of 2023 but after

the first half of 2023 we're done we're

not going to raise prices anymore now

that to me is actually really

interesting because it's a leading

indicator leading indicators matter what

we're looking at right here is a little

bit lagging what are the leading

indicators saying the leading indicators

are saying yes there's still a little

bit of pipeline inflation yes Walmart I

still had to raise wages yes McDonald's

still had to raise wages a little bit

but what is the leading information well

the leading information is don't worry

inflation is trending down yeah yes

maybe a little bit left in the pipeline

but that's normal okay so I'll also tell

you what the suits are saying in just a

moment education com Services that's

nothing point two percent honestly a lot

of these services are coming in pretty

soft Postage and delivery 0.2 tuition

and schools point one this is actually

fantastic folks this is actually a

pretty good report other personal

services that's pretty hot 1.1 that's

not great that's going to be like your

haircuts that's probably the last place

you would expect to see softness

miscellaneous personal services like

Legal Services up one percent that's not

great laundry apparel Financial Services

man those Finance people raising their

prices all the time dang it uh by the

way have I mentioned that we're raising

the prices for the programs and building

your wealth link down below use that

same Patty's Day coupon get in before we

raise the prices you get a price

guarantee once you're in so you get the

best price for life but anyway I have to

say personally first uh you know glance

at this this is actually a very good

report and what okay all getting cheaper

oh damn who wants to go out it's on me

uh alcohol going down 0.3 percent other

Goods a little hotness there on Goods

0.7 on other Goods but that's like to

back tobacco Sporting Goods point two

that's fine there's the pets product we

knew that would be a little hot uh and

that's sort of the pipeline we just

talked about education calm coming in

negative point one uh look at the

vehicle segment over here used cars and

trucks still coming in with a negative

2.8 even though leading indicators are

suggesting this should be actually

Rising uh I think the seasonal

adjustment is really well even

unseasonably adjusted it's negative over

here so I don't know if there's a lag

here because we do kind of expect used

cars and trucks to start popping again

but so far they're quite negative over

here now I'm going to jump into what uh

the suits are saying I want to get there

look how the hell is apparel a point

point eight percent what is this are you

telling me Lulu has PP again after I

thought they had no PP what is this

garbage

household cleaning supplies 0.5 tools

and hardware and Outdoor Equipment stop

spending money

2.7 percent

uh all items less okay that's fine what

do we got over here uh window floor

coverings minus one point three percent

hey that's good for house hack living

room furniture that's good for the

Airbnb hack

negative point eight percent Furniture

betting only two percent that's fine

okay good so this Appliance is popping

up a little bit okay not ideal but but

all right I'd say overall this is

actually not a scary report let me see

what the suits are saying to me this is

actually suggesting that we have uh some

uh uh disinflation fine it's lumpy right

it's lumpy it's like ah some of the

things that were following last month

arising now yes it's lumpy but the

biggest thing that's keeping this up the

only thing keeping this up is the Viagra

of housing that's it otherwise otherwise

this thing would be so soft it would be

the softest uh CPI report you've seen in

years anyway what are the suits saying

underlying U.S consumer Prices rose in

February by the fifth by the most in

five months that's the point five

percent an acceleration that leaves the

fan into tough place as it seeks to

thwart rapid inflation without the

turmoil of the banking sector yes

Bloomberg intelligence Chief says data

is just long enough to think it clears

the FED for 25 BP that's what I said the

first like minute of this video I think

this nails down 25 BP I agree I think

we've got one more 25 BP in us and

that's probably it

uh core Services X inflation while

stubbornly high ticking down we're down

now to an annualized increase of a 6.14

uh down from 6.2 percent this is

actually good uh so I I like this so you

could see how slow it's moving down look

on screen now please you can look how

slow it's moving down core Services X

inflation but you know what the good

news is folks you know what this line

right here says

no Paul volcker no Paul volcker no Paul

volcker that's actually important

because remember

Kevin meet Kevin for the longest time

has had the opinion that yes we are

going to go through hell but we are not

going to go through a pole volcker there

is no evidence of a wage price spiral

there is no evidence of a spiraling out

of control of core inflation even

excluding shelter yes is it sticky is it

coming very slowly yes we don't want it

to come very slow come down very slowly

we want it to come quickly but it's

taking longer but that's okay higher for

longer is not the end of the world it

doesn't mean Paul volcker it means Nike

Swoosh recovery baby another report to

reiterate Kevin's bias of the Nike

Swoosh recovery it's true but look I'll

tell you if if things are going

anti-mythesis but so far this is this is

right along thesis here

uh Bank of America says we're in a

stress event right now blah blah blah I

want to by the way tell you what other

banks are saying in terms of uh what

they whether they think we're going to

get a cut uh flat or or hikes I'm going

to give that to you in about give me one

minute I want to look at a couple more

things super core month over month

moving from 0.36 and Jan to 0.5 in Feb

not ideal that's that six percent rate

uh that's six percent annualized rate

again we'd like to see that coming stuff

but again no Paul volcker yes higher for

longer but no problem

uh okay we those were all just the data

report okay so I've already gone through

this one last thing core Goods inflation

cooled cursed course service inflation

is marching higher uh on an annual basis

uh yeah but that's annual okay we just

looked at core Services

um month over month which is more

important yes annual is still

technically lapping numbers and still

trending up not a biggie okay now what

are the suits or what were the suits

saying before this report now I want you

to keep in mind what I'm about to read

you is not another coupon code pitch it

is not suggesting that you should go to

metcaven.com life to get life insurance

in as little as five minutes or go to

metcaven.com Weeble to get yourself free

stonks it is simply to say that Bank of

America expects a 25 BP hike uh in March

uh City still expects a 50 BP hike in

March due to a hot fed uh or hot jobs

report uh and this probably reiterates

that the CPI report we just got

reiterates it why because guess what CPI

called it or or Citibank called it the

Citibank said we actually expect core

CPI to come in hot at point five percent

month over month guess what it came in

at point five percent so Citibank

actually thinks the 0.5 that we got yes

or that we just got on CPI reiterates a

50 BP hike I don't think so I think 25.

I think we got one more and done one and

done wham bam thank you all right

Barclays expects a pause or a 25 BP hike

because of the banking stress in my

opinion after the CPI report it

reiterates 25. Goldman expects a pause

due to uh the plummeting basically of of

yields they think the market agrees with

them so Goldman is expecting a pause JP

Morgan expects a 25 BP hike credit

agricultural expects a 25 BP hike

Deutsche Bank expects a 25 BB height now

here's the interesting

Xbox a 25 basis point

cut

and half uh oh sorry and halting balance

balance sheet reduction boy that's a

mouthful they actually think no more

research actually expects a 25 basis

point cut and they think the FED is

going to pause quantitative tightening

because of the buy the FN fed pivot

program

it's not actually what it stands for the

btfb program anyway uh some people are

calling it dead but anyway uh no more

research thanks to btfp program is

insufficient to maintain stability in

the financial system as a result the FED

is actually likely to cut by 50 basis

points and stop QT crazy they're the

only ones saying that

Jeffries expects 25 BP regardless of

whether CPI comes in slightly hot or

slightly low

okay TD Bank thinks 25 thanks to the

Silicon Valley Bank uh uh a program a TD

Bank went into this thinking that core

Services remained strong and that

disinflation from core Goods is fading

yes that's what we saw conclusion most

of all of the analysts on Wall Street

are reducing their expectations for a a

Fed hike to 25 BP some of them are going

wild

yeah analysts gone wild oh that sounds

like a fun party anyway uh

they they only no more research thinks

we're going to have the potential of

seeing a 25 BP cut now what is the

market saying as of minutes ago well the

market is suggesting that we're probably

sitting at about a 91.5 chance of a 25

BP hike and only about an 8 chance of a

pazola

what is the terminal rate expectation

showing let's take a look at this

uh

so let's see here terminal rate

expectation

up now up to

[Laughter]

oh my God what a roller coaster this is

stupid this this is just stupid

4.95

okay why am I frustrated in saying this

is stupid because look at the chart

look at this nonsense that's what this

is folks it's nonsense we literally sat

at like 4.9 to 4.95 right we literally

sat right here

for what four or five months this is

like September October November December

it started rising in uh and and well

really started rising in February so

maybe I'm a month off but anyway let's

say whatever October November December

January basically for four months we

were stuck at 4.9 then we had these hot

January reports and we went to hell

and then we had a banking crisis and we

came back from hell and look at where we

are now this is like the most

flip-floppery Market I've seen in my

life look at this we're literally where

we were sitting forever

[Laughter]

what a joke what a joke we're right back

to where we were sitting forever all the

drama of February and the last eight

weeks is basically like JK

good Lord

okay what about Goldman Sachs Financial

conditions Goldman financial and then we

I want to look at inflation break evens

let's take a look at how people are

reacting over here so inflation break

evens what are they sure Goldman Sachs

Financial conditions index sitting at

100. it's actually good they're tighter

than where they were at the end of

January they're not as tight as what we

saw in September or October but they're

good enough to where I think Jerome

Powell says hey look uh Financial

conditions are tight we're good we could

do a 25 BP and chill you know it's like

Netflix and chill except you know in fed

world it's 25 BP and chill let me show

you that chart

so look over here if you zoom in okay so

here's Jan look how low we got in terms

of financial conditions when we got the

hot jobs report guess what Jerome Powell

said when we got this Spike oh hot jobs

report no it's it's not a problem you

know Financial conditions already

reacted to that

that was the reaction he was talking to

look at what we ended up getting Bubba

I mean it is entirely possible that with

the financial conditions this tight the

FED could pause I think it's unlikely

dude you know how many people yelled at

me on Friday when I said I think this

banking crisis makes it more likely for

us to have a pause than 50 BP that

doesn't mean I think a pause is more

likely than 25. I think 25 is most

likely but I said immediately 25 most

likely maybe pause but no more 50 after

the banking crisis people got so mad at

me now all the analysts are saying it

anyway okay now we have to look at the

five-year break even

five year break even by the way thanks

for being here I like hanging out with

y'all uh it's it's really cool uh yeah I

know it doesn't seem that way because

I'm all alone technically uh but uh but

really it's it's like we're at like a

Super Bowl together maybe not a super

bowl like a concert 17 000 strong

concert and you got literally some dude

wearing a Christmas sweater y'all showed

up to a concert with some dude who can't

sing a Pokemon in RuneScape coffee mug

talking about inflation

man who's more weird you or me all of us

okay what do we have over here uh but we

could be weird together so what do we

have over here we have uh what is this

this is the uh five year Break Even okay

all right that's okay that's okay look

at that pretty stable over here I mean I

that's probably the app wouldn't have it

any other way that's probably average of

what we've seen since September I mean

let's draw some lines here I mean who

doesn't like drawing lines on sticks uh

okay so

um let's see here so we we did not hit a

higher high here that's good we did hit

a higher high compared to October but

are we continuing the downtrend

I mean somewhat you could kind of say

we're continuing that downtrend I mean

if I draw the line here it's better it's

not as strong as the downtrend that we

had which was probably more like this uh

what if I draw

you know it it really shows we're

definitely above me a median here see

this was this was more of a solid

downtrend right here and we're certainly

above that you know we should be a

little we should be about 10 bips lower

right now just based on this trend right

here uh so you know we got this is

really consistent with higher for longer

but it's certainly not a Paul volcker

Paul volcker would look like this I

guarantee you if we had inflation that

looked like this uh or break even

expectations that looked like this I

guarantee you we'd be at 10 interest and

we'd be getting Paul volcker we're not

we this is not this is not a Paul

volcker this is a hire for longer buy

the F and dip that's what it's telling

you it's by the day because it's just

slowly going to Trend up uh in a Nike

Swoosh style recovery I know people get

mad at me also for saying that but then

what then again you know I've gotten to

the point where people just get mad at

me forever I just I don't care anymore

uh but anyway yeah so I have to be very

clear about this because people hear

Nike Swoosh and I think they just see

this uh I think the better way to look

at this is probably something like this

and then like this but this being very

very volatile but I personally think

that we're going to look back and say

wow that year to two years period of

time between mid-2022 and maybe you know

the end of 2023 that was a in time

to invest you were able to invest a

pretty reasonable valuations good thing

I signed up for meet Kevin's stocks and

psychology of money and zero to

millionaire real estate course or the

elite Hustlers to learn more how to make

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need to know about lscs or tax benefits

or whatever because yes