wow... CPI Inflation Report [Summary]

Point match match low slight High okay

so 0.1 on the month over month 0.4 on

the core month over month CPI year over

year four percent core year over year

slight take up 5.3 that could just be an

average measure there that's pretty good

though we're basically at expectations

there were definitely some expectations

that that core number would come in a

little lower we didn't get it a little

lower uh we did get match a match a

little low on that year over year and a

tenth of a percentage Point High On That

year over year number real average

weekly earnings year over year negative

point seven percent and the real average

hourly earnings year over year point two

percent uh now what we're going to do is

we're going to get into the actual

report uh as soon as uh it's available

we're also going to be looking for

revisions so what does this mean what we

have so far well what we have is that

year over year I'm not so worried about

that we have a match I'd like to get

into the actual math and we'll get into

that of uh seeing what uh what kind of

increase we had here here we go though

CPI increases 0.1 percent seasonally

adjusted and Rose four percent uh year

over year over the last 12 months both

of those well the first number matches

the second number somewhat soft uh then

what you have is again that year over

year coming in at a time a tiny uh Miss

on the uh headline number year over year

and then the core number on a 0.1

percent beat so let's get into the

actual report and see what uh what

details we can glean from a plural Labor

Statistics uh again also waiting to see

if we have any revisions that'll cross

the wire so we'll cover those uh and

then we'll uh we'll see what we've got

in terms of hourly earnings I have the

document here uh shelter shelter was the

largest contributor once again we're

gonna share this screen here and let's

get into it okay here we go let's see

what we have so Consumer Price Index

Rose 0.1 percent we already know that

shelter was the largest contributor of

all items followed by an increase in

used cars and trucks once again food

increased 0.2 percent in May after being

unchanged for the prior two months

energy index down 3.6 percent for energy

good this is despite the OPEC Cuts we're

still seeing oil falling which is great

the index for household furnishings and

operations and the index for airline

fares were among those that decreased

airline fares finally decreasing here

but those increases unfortunately

they're still in shelter used cars

trucks Motor Vehicle Insurance apparel

and personal care that is a little

broad-based it's not so great uh all

items okay let's keep going here 38-page

report so let's look at the

uh let's see if we can actually get

straight to the Chart here sampling

error that's fine that's fine it's fine

okay here we go let's let's go to the

back of the report first because this is

where we're going to get our services

and we're going to see what Wall Street

is saying as well which will be pretty

important uh okay so here we go these

are going to be our services and we're

looking at that far right number tax

return and prep 0.7 Financial Services

up 0.5 those darn financial advisors

miscellaneous personal service is point

seven percent some of those numbers are

a little bit on the hot side telephone

services look at this this is nice

telephone services down about half

percent that's good you've got education

down point two percent admissions to

sporting events down point seven percent

that's good you have uh Pet Services

down point six percent that one actually

Rose substantially last month so I'm

glad to see some disinflation occurring

here uh that's actually a straight up

deflation on the month over month

recreational Services basically here at

point one percent video audio 0.1 that's

fine negative here on one of them

Recreation was negative uh airfare was

down negative three percent just like

that negative two point six percent we

had previously public transportation was

up point nine percent that's a little

high there you've got transportation

services coming in at point eight

percent not so great Hospital Services

also point eight not great Medical Care

Services point one to the downside

uh you've got here's the rent look at

and then I want to see what Wall Street

is saying in just a moment rent of

shelter staying stable at that point

five percent level and you actually have

shelter itself rising to 0.6 instead of

0.4 that's not great we really want to

see shelter roll over because as we were

talking about just a little bit ago we

were talking about rent starting to fall

uh and on a year-over-year measure and

48 out of uh 100 of the largest U.S

cities but we're still not really seeing

that rental disinflation show up in uh

in this CPI survey which is unfortunate

so then we have other Goods at uh 0.6

percent uh that's that's too strong here

0.6 is definitely too strong alcoholic

beverages point four percent

still a little up there I'm gonna

actually Mark those as green since those

are greens

point five percent on alcohol

smartphones up 0.7 that's interesting

could be good for Qualcomm Big

manufacturer of uh smartphone related

chips education we saw that decline uh

photography supplies a point three

percent

newspapers reading materials and

otherwise up 1.4 percent those numbers a

little on the on the hotter side let's

use pink there uh apparel what was

apparel saw a rise in point three

percent Footwear coming in at flat

uh used cars and trucks were negative

point one percent oh okay that's good uh

wait hold on a sec no no no no no sorry

new new cars and trucks 0.4 and 0.1

however used cars at 4.4 pretty hot just

like last time so another somewhat mixed

bag of a report here I do think it

reiterates a pause but I don't think

this is good enough to say that the July

hike is is out uh okay let's look at

this so two year yields are down six

basis points stock futures seeing some

modest gains dollar at a session low uh

the Q is QQQ is uh a little volatile but

sitting at up about 58 basis points

you've got uh shelter of course being

the largest increase I call personally

my initial expectation here is a it's

it's headed in the right direction but

you definitely still have some numbers

here that are somewhat sticky which

isn't fantastic because in order to

really get that pause in July we need to

see these numbers come down a little bit

more no revisions just yet across the

wire but again that that CPI

year-over-year core number coming in at

one tenth hot even though it's one tenth

hot it is still down from last year

remember where we were sorry last month

last month remember we were at 5.5 we're

down to 5.5.3 now we were at a year over

year of 4.9 for a headline we're down to

four percent now that month over month

number let me see if I can get an exact

read uh on the uh the number here let's

see the actual release no it's not going

to show me here the exact detail we'll

figure out the exact detail oh here it

is I actually have it now uh and so if I

go to the prior release let's see here

so this is the core number actually came

in at

307.824 and if I divide that by 306 489

I know this is a lot of numbers oh my

gosh JP Morgan was right it came in at

4.35 or or I should say that correctly

with the decimal point so my expectation

was 0.34

uh Bloomberg Economist was .30 Wall

Street consensus was 0.40 JP Morgan was

.43 and it came in at

0.435 so JB Morgan was the closest to

being right there so credit to JP Morgan

very good at JP Morgan uh this is It's I

would call this mostly an ad

expectations report but uh you know

leaning a little warmer than cooler uh I

I wouldn't call it compatible with with

you know definitely saying we're in for

a pause we're definitely going to be

looking at that July 12th of CPI report

that's the next one so mark your

calendar for the next Catalyst and we're

going to keep going through some of this

report mark your calendar for the next

Catalyst next Catalyst tomorrow producer

price inflation 5 30 a.m California time

I'll be covering it live 11 A.M the

Federal Reserve statement on a pause

followed by 11 30. Jerome Powell's press

conference I'll be covering both of

those live I hope you'll be here with

mean then we'll have retail sales the

next day at 5 30 in the morning and then

we'll have a coupon expiration we'll be

raising the price again on the programs

and that's again because we're

consistently raising the prices because

we're consistently adding value a lot of

the folks who are joining are leaving

wonderful comments in our course member

live streams Thanking us for the

fundamental analysis we bring every

single day and uh the ideas that we

bring to the programs of building growth

so we hope to hope to see there so let's

keep going a little bit here with what

Wall Street is saying and I want to get

through the report a little bit more as

well but it looks like uh the two-year

treasury yields uh uh initially uh

flipped higher and then sank a little

bit following the data we're getting

some mixed messages and some confusion

on on the CPI what this means this is

really it's unlikely to mean there's any

kind of change for the FED in terms of

of not pausing I think there's a lot of

this Market that was concerned that this

report would potentially lead to the FED

not to pause and that was a risk right

the Federal Reserve were heading there

was a real risk here that the Federal

Reserve would get a nasty CPI report

today and as a result of a nasty CPI

report that the Federal Reserve would

ultimately end up saying okay sorry we

thought we were going to pause now we're

sending Nick T a message and we're

telling Nick T hey you know what we have

to hike again that is good in my opinion

not likely it is not likely that the

Federal Reserve is not going to pause uh

after this report so so to be very clear

about that uh it is likely tomorrow we

will be getting a pause from the Federal

Reserve and markets should cheer that

it's just going to come down to what

kind of pause are we going to get is it

a hawkish pause is it you know a dovish

pause what are they going to tell us

about about the importance of wages

we'll look at all of that

but uh for now let's take another look

over here at some of these charts so

here's the headline a chart of the

headline changes in inflation obviously

this is fantastic that we're sitting at

point one this is great this is really

in line with disinflation uh however

that core number uh you know still still

a little strong still strong on core

these are just some more of the

summarized headlines here oh what is

this here uh this is the unadjusted

12-month figure here uh and then here

this is your seasonally adjusted number

so you can see shelter here really

Rising quite a bit here which is not

great because we started seeing this

this disinflation trend here look at

that from from point A to 0.6 to 0.4 and

it's popped back up so I don't like to

see that overall it's not the cleanest

report right look at this Transportation

pop back up as well back to point eight

percent here not great you had somewhat

of a disinflation trend at least for a

month although we as we know one month

does not make a trend

for apparel we were at 0.3.3.3 that's

pretty stable here for used cars uh it

was still a little Rich over here also

not great it'd be nice to see these come

down you are seeing that disinflation

over here in new cars Commodities also a

little bit Rich over here and point six

percent uh and then of course we've got

our energy disinflation which is great

we've actually we actually do have some

food disinflation I mean food barely

moving here which is great because food

has been such a contributor to inflation

uh which isn't great let's see if

there's any particular details here as

we await a little bit more data from the

uh from the uh Wall Street folks

Consumer Price Index uh okay here we go

CPI U 3.6 uh we've got CPI uh or sorry

cpiw 3.6 over the last 12 cpiu 4.3

percent

you have a brief explanation of CPI this

is fine calculating sample changes and

then we get right into the uh right into

the charts which we've gone through as

well

uh so uh yeah no so so the banner thank

you for suggesting the banner has a typo

so I don't know why but I thought it was

a brilliant idea to go with met Kevin uh

as some of these links both of them

actually work so you can use

metcavin.com join or meet kevin.com both

of them work just fine uh but uh yeah I

bought the domain met Kevin because I

thought you know back in the day

everybody wanted short URLs that didn't

last very long but anyway yes thank you

for pointing that out but it still does

work uh okay so let's go ahead and see

what we have here what is this uh

breakdown of core inflation sitting at

point four four percent driven by

increased contributions of

transportation and shelter uh again the

report is unlikely to change the fed's

mind about a pause in this cycle uh

however ever this could potentially

iterate a call for a hike in July

although I would probably still put it

at a coin toss and it's going to be

dependent on that next month's CPI

report which is kind of like okay great

so today's CPI report reiterates the

pause but we're kind of like moved on

for that hike already like we want to

know for the hike like are we going to

get the hike again in July the good news

is next month CPI and I want you to take

this away very important next month CPI

is so important as well because it's

actually going to be your year-over-year

comparison to the peak of inflation June

to June and from a

psychological point of view oh hello

camera there from sorry that's the

metcaven.com webcam getting a little

excited there zooming in a little bit

everything's getting a little large over

here maybe it's got pricing power good

old PB but anyway the uh the beautiful

thing about next month is really going

to be this this year over year

comparison uh of of the peak uh and that

should be very good all right so let's

look at Super core on a chart so I'm

going to pull up the chart of super core

inflation

and it'll just take me a moment to share

that but super core is declining which

is very good uh so to those who are

arguing that super core is sticky uh

there really isn't an argument for that

uh it is not plummeting I think there is

an argument for that there's absolutely

an argument to be made that it's not

plummeting and that's actually not even

an argument it's just correct but take a

look at what we have when we look at

Super core inflation here and super core

inflation it's very clearly easing and

this is fantastic what we don't want is

this to remain sticky so if we draw an

arrow for example first of all what I

want you to remember is that our peak of

inflation

inflation's Peak was roughly here

interestingly super core did not

actually Peak until about here so about

three months months later however we

already see super core on this beautiful

Trend down which is very very good I

mean this is a rapid decline here uh in

your super core inflation and you want

to see this this is the leftover bear

argument that uh you know core inflation

is is is you know really going to

um uh you know stay sticky there's just

no evidence of that