holy smokes - *breaking* unexpected inflation report SHOCKS

wow this was really unexpected but we

just got the University of Michigan

consumer sentiment numbers and wow

compared to survey this is a blowout

this is really good it's a really good

thing it's happening on witching day so

we've already got a lot of volatility in

markets uh but uh and it's also

happening on coupon expiration day link

down below email us at staff at me

kevin.com for bundles but let's get into

the actual numbers here so survey says

uh for uh consumer expectations we were

looking at a survey read of 60 from the

prior 59.2 we got 63.9 uh about eight

percent more than expected what's

incredible though is the University of

Michigan one year out inflation

expectations this is huge we know

expectations are everything we talk

about this all the time we know that

expectations are what destroyed uh

inflation in the 70s will actually led

to Rapid inflation destroyed markets in

the 70s and led to the Paul mulch ring

in uh 81 and 82. what did we get we got

uh one year out inflation expectations

prior read 4.2 before that we actually

had a 4.6 read which was pretty high a

lot of that was probably driven by a lot

of headline Media news about out all

Pepsis raising prices 10 year over year

and remember how most of those price

increases were from last year and uh you

know they're bragging about them this

year even though they took those price

actions last year anyway that probably

led to some skew in the survey but

anyway we went from 4.6 uh down to 4.2

in the prior we were looking for 4.1

today we actually got 3.3 which is

almost in line with the 5 to 10 year

inflation expectation priority to 4-1

survey was looking for three we got

three so basically what you've got is a

more optimistic consumer uh in terms of

sentiment you've got current conditions

a read that is more optimistic

expectations read that much beat the

survey survey of 55.2 we got 61.3 above

the prior of 55.4 as well these are

great numbers if we actually look at the

report itself it says consumer sentiment

lifted eight percent in June reaching

its highest level in four months

reflecting greater Optimus as inflation

eased and policy makers resolve the debt

crisis debt ceiling crisis

uh the Outlook over the economy surged

28 over the short run and 14 over the

longer run these are all sentiment

measures and these are quite volatile

sentiment is now 28 above the historic

low from a year ago and maybe resuming

its upward trajectory since then this is

consistent with a lot of what we're

hearing and seeing with more and more

bears flipping to bullish because

they're realizing all right maybe we are

going to avoid a recession as it stands

though sentiment remains Low by historic

standards as income expectations have

softened a majority of consumers still

expect difficult times in the economy

over the next year but when we actually

look at expectations they're coming out

of the troughs of what we've seen last

year your head inflation expectations as

we said I already read those out but

it's worth noting how they compare to

history the current read of inflation

expectations is the lowest since March

of 2021. uh that's a two and a quarter

year low longer run academic

expectations have been in a range of 2.9

to 3.1 for 22 of the last 23 months

and so we're sitting uh kind of stuck in

that range right there now on one hand

you could argue hey this is great

they're not de-anchoring right but on

the other hand they're also not

plummeting we'd like to slowly over time

see these inflation expectations go down

as those inflation expectations go down

and then we will see the five-year Break

Even Trend down and when we see those

break-even rates Trend down that's when

the Federal Reserve will actually cut

rates which right now is not really

expected until about March of 2024. stay

tuned later for when I break down the

exact sharp that you could use for

watching when Fed rate hikes will

actually come not only to a complete end

but when we'll actually see Cuts that'll

be coming in a different video I wanted

to get this report out on the consumer

sentiment again email us at stephan.com

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