inflation is dead. no sh9t.

CPI inflation came in low this morning.

This is not a surprise. Mostly because

remember folks, in order for companies

to actually raise inflation for

consumers, that is the prices that they

charge consumers, we'd actually have to

see companies have pricing power.

Because the worst thing that companies

can do is raise prices and then end up

seeing their net earnings collapse

because that hurts their stocks. It

hurts the executive stock comp. It hurts

the shareholders. And it just hurts a

lot of people. They'd rather pull a

Costco strategy and sell you more goods

at lower prices. That is the nature of

capitalism. And so when you look at the

components, we can see, yeah, there are

little tiny components like inner city

transportation that are up 2.2% 2% or

whatever, but nobody cares because the

big one that a lot of people actually

spend money on like airfares are down

2.7%.

And we've heard of airfares collapsing

from the air carriers themselves. Most

of the personal services came in

relatively low. Overall services coming

in at just.1%

versus the 3% expected on a

month-over-month basis. And headline CPI

coming in at 0.08. 08 uh that's like the

blood alcohol limit versus the 0.2%

expected on a month-over-month basis. So

when we look at this overall, we can

look at some of the components here. But

the message is inflation is lower. Look

at where inflation is lower as well.

Again, rent of shelter, rent of primary

residence, lodging away from home, all

of them uh either at expectations or

lower than where we would expect them to

be at this point. new cars, trucks, and

used cars all in deflation in the last

month. Negative.3, negative.5,

negative.3.3. This is in spite of uh the

threats that automakers were going to

raise uh prices because of uh Donald

Trump's tariffs, which Donald Trump's

tariffs just got an extended reprieve by

the appeals court allowing the Trump

tariffs to continue to be enforced at

least through July 31st when the court

wants to hear more detailed arguments.

And Donald Trump is now bragging about

negotiating 55% tariffs on China versus

China only tariffing us 10%. Now, of

course, can this have longer term

implications in terms of how much

broader demand there is in the economy?

Of course. But that just reiterates a

deflationary cycle. When demand falls,

more companies try to reduce prices.

They take it in the margin. You

generally don't expect in a tariff

regime or an economy that that contracts

to see inflation. You expect deflation

to be an early warning of companies

starting to lose profit margins. In

contrast though to airfares, restaurant

prices are up. Food away from home

category is only up.3%. So not even a

big deal here. Smartphone prices down

1.6% on the month. This is also despite,

you know, Trump's tariffs. It's probably

because Apple's iPhone updates kind of

suck and they're losing pricing power as

well. There's also a lot more

competition for phones these days,

especially in China. Apparel prices are

down 4%. Overall, uh furniture and

bedding uh is down8% on the month.

However, some household furnishings are

up like appliances were up8%. So there

could be some inflationary impacts that

we're seeing at some components here. Uh

appliances for example only representing

a weight of 0.2% though. So it's just

not that big of a deal mostly because

yes appliances are a relatively large

cost for consumers but they're not a

cost that we recurringly spend over and

over and over again. How often are we

really buying a new appliance? Once

every couple years anyway that's all

factored into the CPI weight. So, as a

result of this, obviously, uh, markets

are very enthusiastic, as they should

be. Markets are enthusiastic, uh, or at

least were on the reaction. You're

already giving some of that back.

Markets are enthusiastic because of, uh,

the potential that we're going to get

earlier rate cuts. This is totally

reasonable. I still don't think the

Federal Reserve is going to do anything

until September, but in September, we

could see rate cuts. Absolutely. Oh, by

the way, yesterday morning in the alpha

report, we were really bullish on Dave

and Buster earnings, up 11% right now uh

in the pre-market. I'll be sending my

next alpha report out within the next 20

25 minutes here. So, if you want to be

part of those alpha reports, make sure

you join me Kevin.com. So anyway,

regarding the market, uh obviously this

anticipation that the Federal Reserve is

now going to be unlocked to cut rates

sooner is uh uh is going to be an

expectation that's going to be weighed

down by this potential that, you know,

this China trade deal isn't really that

fantastic in that we still have large

tariffs and those are still going to

cause impacts. They'll look good for

Trump's POV because it'll be like, look,

I got a way bigger number than China.

It's fine. But again, the impacts of

those will come in Q3. As long as we can

get through those impacts, so far data

we're getting on jobs and inflation is

very soft landingesque. And on top of

that, the uh 102 spread uh is sitting at

about 48. So we're still below shock

level right now, which is great, unlike

what we saw post liberation day. Uh and

we are of course seeing the 10-year bond

uh and treasury bond yields fall. 10ear

down about uh 0.4%. 4% at the moment. Uh

although that can uh that can fluctuate

pretty rapidly throughout the day. So

we'll see what happens there. Uh and of

course indices across the board

pre-market nice and green on the CPI

report. So anyway uh good luck today. I

think that uh broadly this is very

bullish. This takes a negative catalyst

away from markets because there were

people thinking that we'd have a miss. I

don't personally really think that we're

in an environment where we're going to

see a lot of heavy inflation. Uh and if

uh inflation is your bare case, then

that makes me very bullish. Uh of

course, do I think that our jobs market

is still quite likely to weaken uh later

this year? Yes. Uh in fact, uh that is

what makes me the most nervous. In fact,

yesterday I made a great video. I

encourage you to watch it. Uh it was the

only bare case remaining and we went

through a couple institutional pieces on

the impact of tariffs eventually on the

labor market because of like what I

mentioned earlier in this video. We

don't expect to see tariffs impact

headline prices, which is the normal

consensus. We expect them to impact

bottomline prices for corporations,

which show up in layoffs. In other

words, layoffs are the way you resolve

this. Now, you know, TBD, if we just get

these sort of voluntary buyouts and

transitions at corporations like Google,

somebody assutely left a comment and

said, Kevin, you're talking about how AI

is taking jobs away from Googlers. You

know, it doesn't innovation usually

breed new jobs? Yes. But the problem is

those new jobs can sometimes come with a

lag. That's the window that we're in.

Yes, artificial intelligence will breed

new jobs we can't even imagine right

now. Innovation always does

and it usually leads to economic growth.

The problem is you tend to go through

this V recre recovery where you have to

basically reskill humans and you could

go through a I don't know 5 10 15 year

period of time where the unemployment

rate is quite high uh in response to a

new innovation in the longer term of

course when people zoom out and study

history in hundreds of years they'll be

like wow AI created so many jobs but

that will take potentially decades uh

and in the zoomedin moment of life where

we are now. Uh we we potentially have

more downside ahead of us uh rather than

we have uh upside on the jobs reports

and and so that's really the big

catalyst here and it's one of the

reasons why I think you know some of the

precious metals are likely in a topping

environment. Anyway, that's my take.

Thanks so much for watching. We'll see

you in the next one. Goodbye. Good luck

and I'll be live.