Inflation Shocker *JUST* Out -- BIG Fed Surprise [PCE Report]

now though we gotta talk pce we've got

the pce numbers coming out right now and

the pce numbers that we are looking for

inflation numbers that is the fed's

preferred inflation gauge personal

income comes in slightly higher at point

three the expectation was 0.2 personal

spending comes in slightly lower at

point two versus point three waiting

right now for the inflation gauge which

is the deflator month over month year

over year we still don't have that

number that number should be out in just

a moment remember you can now use buy

now pay later on the programs on

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for as little as thirty dollars uh

monthly I believe it's somewhere in the

thirty dollars month there it is the

deflator numbers and we have deflator

month over month matches 0.3.3 okay we

got a match deflator year over year

comes in a little lower let's go 5.0

versus 5.1 expected 5.4 prior excellent

excellent oh we got a revision down on

the prior as well and we got a revision

down on the prior month over month

deflator from 0.6 to 0.5 this is

fantastic good news good news we've got

pce core deflator month over month yes

we gotta Miss point three it comes in

low 0.3 versus the 0.4 core expected

this is great especially on the heels of

Europe the European Union just saw core

prices Accelerate from 5.6 to 5.7

percent above the expectation of 5.6 in

Europe so this is really good uh I mean

obviously it's not a plummeting but it's

below expectations thank goodness thank

goodness the last thing we need is more

runaway inflation pce deflator year over

year comes in at 4.6 the expectation and

prior were both sitting at 4.7 this is

excellent so what do we have we have a

little bit more income for people

fantastic 0.3 versus 0.2 that is good

people however are saving a little bit

more personal spending comes in at point

two versus point three real personal

spending negative 0.1 you have that

deflator month over month matching

expectations for uh your headline your

headline year over year coming in one

tenth below at five percent we're almost

in that four percent range let's go uh

and you got a prior revision down again

of that headline number to five three

from five four which is great and then

that month over month number very very

important core pce deflator the fed's

favorite numbers here folks comes in

under expectations 0.3 versus the 0.4

expected 4.6 uh for the year over year

instead of the 4.4 expected and we got a

revision down on that month over month

uh core deflator number this is

fantastic let's listen to CNBC for a

moment while I pull up the actual report

up the Dow was up about 90. it's up 130

not huge yeah boy saying that Bitcoin

moved from under 28 000 back above uh 28

000 and then as you can see the 10-year

was 355. it's now 352 or so uh in the

two-year uh also has the yield has has

backed off a little bit but uh Steve

said let's get reaction to this data

from time I'm excited to beat a fellow

for the Hoover institution he's a good

fellow and I love when we say a fellow

we got distinguished fellows Good

Fellows that's a whole different thing

uh Tyler great movie though and former

acting chair of the Council of economic

advisors all right these introductions

always take forever uh let's just go

ahead and get to the report it's pulling

up give me just one moment here uh again

this is the fed's preferred inflation

measure this is fantastic news we're

going to look at the actual uh document

now uh it's

darn iPad stand by five seconds it goes

fast

okay it's right here all right so here's

the personal income uh increase 79 point

or 72.9 Bill 0.3 percent personal

spending Rose Point two percent this

gives us a chart of uh basically the

numbers that we just looked at so if you

want to take a screenshot uh Now's the

Time oh wait uh can I put a banner up no

I can't do it right now that's it anyway

all right so uh the increase in cursive

current personal income in February was

led by an increase in compensation

mainly from wages and salaries but no no

sign of really a wage price spiral here

right it's okay that wages are still

going up I want people to remember that

when you hear the words wages are going

up that's not a bad thing

we want wages to go up we just don't

want them to spiral out of control and

by no measures or wages spiraling out of

control by no measures zero there's not

a single piece of evidence that suggests

the wage price spiral is coming and I

say that very passionately because I

want to make sure you could be in a

position where where if we're playing

Halo together all you hear is this game

the lead that's it that's all I want to

hear gain the lead okay like we we want

good news but look if all of a sudden

this is what's the lead you know we need

to know about it we need to get together

we need to get you know off our Bud we

need to do something about it the good

news is we're in the lead right now okay

we don't have a wage price file no no

indicators of a wage price spiral none

uh and and if you don't believe uh if

you don't believe it send me some data

because I I don't see it just because

Walmart raised wages because they lag

doesn't mean Walmart's creating a wage

price spiral what it means is Walmart's

gonna suck over the next year in my

opinion uh personal outlays increased

okay prices uh let's see if we can get

some price detail here

um let's go into the charts

all right related materials so let's get

the full release with the tables I want

all of the tables please that way I

could look at uh the pieces inside of

the report uh and see by the way heart

goes out to that journalist in Russia

who uh was just arrested from The Wall

Street Journal did you know that his

last piece that he wrote was basically a

hit piece on the Russian economy talking

about how not only has the Rupal Fallen

like 20 but they're basically running

out of cash in Russia and their economy

is about to collapse like it doesn't

surprise me that he posted that from

Moscow and he was basically immediately

arrested don't you all remember when

they started the war in Ukraine they're

like um if anybody talks crap about us

we're gonna arrest you like

they gave a fair heads up I feel and

it's it's still terrible like I don't

there's no way I think this guy from The

Wall Street Journal should have been

arrested but um but yeah that was ballsy

man that like that's some straight up

balls right there wow uh and now this is

what they're doing to him in jail

kept brainwashing all right so what do

we got seasonally adjusted rates give me

give me percentages these numbers are

ridiculous here we go this is what I

want all right so February point three

percent increase in wages supplements to

wages uh that's over here on the right

side you can see this that's all point

three percent that's good Proprietors

income uh okay whatever what do we have

over here oh that's gonna piss off some

people rental income of persons with

capital consumption adjustment uh one

point four percent that's a pretty dang

big move here under the rental income

segment now uh what What's fascinating

about this is

we expect widely expect that the uh real

estate price slow down so still to be

seen in both pce which Real Estate makes

up about 25 percent of pce and uh and

about 34 percent of CPI we I widely

still expect that to come plummeting

down it was just yesterday that uh maybe

it was the day before yesterday but Neil

kashcari comes out and says the rent

deflation is coming rents are going down

so so it's coming which is good uh all

right so personal income on uh receipts

on assets 0.2 fine personal current

transfer c8.5 whatever

personal consumption expenditures

there's really no good data here like

give me give me like the full chart the

full breakdowns this gives us some more

headlines okay let me try to get some

other supplemental charts this these

charts are done a little bit differently

from CPI

so they don't as easily give us all of

the uh the various different uh

components

oh here we go what is this

seasonally adjusted in a quarterly rates

no okay let me listen to CBC for a sec

we'll figure this out I would not break

out champagne bottles

um as you know economists are want to do

quite often Joe but but I would say you

know maybe we can think that things are

headed in the right direction again

which is what you would think would

happen after these very strong interest

rate increases by the fed and the

question becomes what does this say

about how far the FED has to go when you

have a good number maybe you can think

something less is needed pile on top of

that with Tyler and both Megan we're

talking about which is what's going to

happen to the credit Channel and maybe

inflation uh is is looking a little more

optimistic this morning than it was at 8

29. all right more oh you're thinking I

got it I got what I was looking for

right here this is what I was looking

for services okay this is really

important so Services uh seasonally

adjusted monthly rate for February

Services point two percent thank God

look at that look at the last months

folks thank freaking God look at the

last months okay look at this look at

this January

1.2 percent for pce services December

0.6 November 0.4 October 0.5 and

remember if you multiply these by 12 you

could see how hellish this is that's six

percent inflation that's 4.8 percent

that's seven point two percent that's

that's like a lot I can't even do the

math on that that's 12 plus 2 times 1.2

2.8 that's like 14.4 or something like

that that's crazy those are some crazy

inflation rates right on on Services

right here that's exactly where we do

not want to see services

are they seasonally adjusted monthly

rates but look at what we have right

here boys and girls

2.4 percent

that right there calls for celebration

and a mention that you should get 12

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actually probably the best line out of

this entire report right here this is

fantastic that's very very good

so I like to see that uh so really nice

move there on uh service says

okay personal income disposition

uh uh let's see then you got

expenditures yeah these are Goods

expenditures so Goods expenditures

actually came in at zero

so we've had Goods deflation before see

this over here there in November

December is your goods deflation here's

Goods deflation in in July and August as

well

but look what happened in in December

and January and uh or sorry in January

you had 3.6 that's insane that was why

everybody freaked out about the January

numbers right

and then what do you have here

zero so you literally have

no inflation in Goods right now and not

only that uh but you have uh

uh you know Services inflation

plummeting I mean this is absolutely

fantastic I like this report this is a

very good report uh let's let's take a

look at how uh El stacos are doing so

let's go over here

let's see here okay so we got the QQQ

is up about a quarter of a percent I'm

actually surprised it's not up more than

that

because these are some pretty good

numbers I mean you did get a pop-off so

let's go ahead and show you the strut

bottom uh push that button uh and then

see because it's green what do we do

gain the lead

uh Tesla is uh up at points uh about up

about three quarters of a percent

GameStop lost the lead they're a little

negative here

uh anything moving largely let's see any

big remote uh big moves here

uh dwac is still up about nine percent

uh that's you know with the Trump

indictment yesterday we expect a lot of

users to kind of track Trump on Truth

social but but yeah this is actually a

very good reaction I mean well it's it's

a modest reaction it's a good report

it's listening here that it might be

just shown in the price or the interest

rate of debt

yep

I would say if you look at the senior

loan officer surveys they suggest that

actually lending standards have

tightened already by the end of January

pretty massively up to where we've been

at peaks in previous recessions so there

is a question about how much more they

really are can or will Titan

um and if you look at why the bone the

banks in the U.S got into trouble it's

not really because yeah I mean she's

basically saying and I've heard this

argument quite a bit over the last few

weeks basically saying look the banking

tightening has already happened like

there's not going to be much more and so

I think the way to put this is is very

simply this is a fantastic pce report it

should make you very excited about

transitory inflation potentially

actually becoming true now we don't want

to get blindly drunk over this right and

expect that that's it the problem's over

the FED is going to have to keep telling

us that rates are going to stay high to

psychologically convince markets that

crap the fed's Gonna Keep the foot on

our neck and they're going to drown

honest in the mud of a recession but

that's exactly the kind of pressure that

they need to keep on us to keep getting

reports like this because that January

report which I think I said 17 000 times

the January reports were a horrible

month of seasonal adjustment bad news

but this report this fed report helps to

show that that was just a nonsensical

January seasonal adjustment Report with

a big pull forward into January now

actually something we talked about with

course members yesterday we went deep

into some thoughts on Google yesterday

but we actually noticed a little bit of

an advertising hiccup uh details in the

course member livestream from yesterday

but we noticed an advertising hiccup in

March thanks to the banking crisis and

that could end up leading to some misses

on revenues for some ad companies uh

thanks to some changes in spending we

were seeing in uh in about mid-march so

interesting but that also has

implications for some of the uh the

retail companies which we think

potentially did extremely well because

of uh the inclusion of January I I

challenge you to do this this is another

thing we were talking about we did a

fundamental analysis on Lululemon I

challenge you to do this look at when

Lululemon's calendar for the fourth

quarter ends in other words why did they

do so well on their last report look at

what the last month is of the last

quarter uh that they reported and uh and

you should go

I see what they did here

not not to cast too much shade but it is

it is very interesting very convenient

so um

with that scent that gives us an update

on the inflationary numbers this is the

fed's preferred inflation gauge and

they're good this is fantastic no Goods

inflation soft Services inflation and

numbers that came in below expectations

these are great these should motivate

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much

thank you

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