**Watch BEFORE Morning**

oh you are going to want to watch this

one before tomorrow and no it has

nothing to do with how trade desk lost

money and their revenue growth stalled

from 35 year-over-year growth to just

eight percent annualized growth yet at

the same time despite that kind of bad

issue news the stock is up 16 in after

hours

makes sense but not what we're talking

about i'm also not talking about how

coinbase just reported revenue and

reported that secondary sources of

revenue all but evaporated their revenue

fell over 60 percent they burned 3.8

billion dollars in cash and only have

about 5.8 billion dollars left all at

the same time while paying 750 million

dollars in stock-based comp for a

company that's

going into the toilet oh okay okay no

those are not the things that we're

talking about those are just snippets of

things that we covered this morning

actually uh i shouldn't say this morning

it was like 30 minutes ago right after

earnings in the fundamental analysis

market closing live stream for course

members a link down below to get my

daily uh live streams no today we're

actually warning about cpi that's the

consumer price index um it is basically

the measure of inflation let's get right

into it

take a look at this this my friends is

the bell curve for the cpi year over

year and i'll tell you

out of the entire year

6

out of eight times well six out of the

eight last cpi's which goes a little bit

into december i've seen misses on these

bell curves that is i see the bell cur

like i see the the actual uh

like result of cpi come in like over

here or over here it's almost never here

in the middle it was a few times but

it's

like economists have been pretty bad at

getting cpi right and so they've been

missing like absolute crazy and the

expectation is

that

tomorrow's inflation numbers headline

will actually come down from the 9.1

percent we had previously and go to 8.7

there are 44 economist projections in on

this the average estimate is that

inflation will be 8.73

right here in the middle of the bell

curve

here's the fact of the matter

the nasdaq is testing the zero for the

old-school zero percent fibonacci today

it's like the 38.2

uh and that's because we obviously the

nasdaq continued to fall throughout the

year all the way down to

268 on qqq which is the etf that tracks

the nasdaq

uh but anyway on

on the fibonaccis we are actually

popping up against that 318 resistance

again

and cpi these numbers right here are

dictating or we're going to dictate i

should say whether or not we are

actually going to be able to

hold get above this line and hold or if

this red line is going to end up pulling

us back to a retracement back to under

300 qqq potentially if we get a really

bad miss tomorrow we could be right back

into bear market territory around this

268 level for the nasdaq

very very possible and so everything

comes down to 5 30 a.m pacific time

tomorrow this cpi report why why does it

come down to this well because the

federal reserve has told us they want to

see meaningful movement in both headline

cpi and core i'm going to explain those

differences and show you the differences

and the charts for core and month over

month inflation in just a moment but the

fed has told us look we need both to go

down we need headline to go down we need

core to go down we know that we've had

many reasons that inflation has been

transitory for longer right we went from

covid oh it's transitory to oh crap

delta just pushed up inflation and led

to more supply chain issues ah crap

omicron pushed it back up pushed

inflation back up extended the

transitoryness and then we get war like

talk about some crazy events that

destroy supply chains and lead to more

inflation in the short term and so it

makes sense that the federal reserve is

like look

at this point we have to

fight inflation down

either

by being patient which was the old

school method but now we can't be

patient anymore because we've been

patient too long so that really only

leaves the other option and that is try

to crimp the job market down and crimp

demand down the federal reserve tells us

that their actions lag and that's also

very important to remember is that if

the federal reserve's actions lag

we know that the federal reserve has to

beat us up pretty good and at some point

they're going to go all right like can

we see the actual numbers yet because

otherwise we're going to look like fools

and this is tough because really the

fed's credibility is in question that

even though their actions lag if

tomorrow morning cpi comes in with a hot

miss and we end up getting something

like a nine plus percent read on cpi

something actually nine nine percent is

like over here we're somewhere over here

on the bell curve

the fed's gonna have zero credibility

left that their actions actually lag and

uh and they're going to be forced into

potentially even an intra meeting hike

if there's a really bad cpi missed

tomorrow which is pretty bad news that

would be pretty freaking terrible if

they had to do that to maintain uh any

semblance of credibility left now we do

have two cpi reports tomorrow being the

next one august 10th and then we have

another one the second week of september

so we get two cpi reports and another

jobs report before the fed meets again

but if this number comes in terrible it

gets spelled disaster tomorrow so i

expect a lot of people to be on standby

with their finger on the pulse of the

market tomorrow to dump everything or to

potentially go

all in what if we actually came down to

the low side we had a cpi read of maybe

even like 8.4

or we just met expectations of course

meeting expectations would be nice

because we need some credibility back

for the economist but uh we really want

to cheat to the left side here

now

what

about that month over month and core

let's briefly discuss that and then i

want to tell you about my opinions and

sort of what's on my mind but first a

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you by the motley fool today welcome

back so let's go back into this bell

curve here this now is the month over

month expectation you can see the bell

curve wants us to see inflation come in

at an estimate of 0.2 percent now if you

multiply that by 12 to annualize it that

means inflation would be moving at about

a 2.4 percent rate you don't exponent

this it's just multiplied to get the

speed at which inflation is moving in

the month 2.4 percent is the annualized

expectation uh the high is 0.4 percent

the low the low folks and i really like

seeing this is actually zero percent

because if you want to go to the moon

you actually want to see this potential

of having a negative month-over-month

cpi this right here would give the fed

so much credibility and markets would

absolutely go nuts starting to pre-price

in that the federal reserve is going to

soften their stance and finally pause

and now they can say see this is why we

can be patient we can pause because

inflation is turning down this is best

case scenario we get some kind of

negative on that month over month that

would be great now core is expected to

be a little bit higher coming in at 0.5

percent and that's because a lot i would

say a bulk well

maybe not necessarily a bulk but a lot

of the reduction in inflation that we're

expecting to see tomorrow is because oil

prices have come down gas prices and

energy prices have come down we've seen

commodity prices come down so we've

already hit peak inflation for

commodities and energy and those are

coming down

now it's just a matter of are they

coming down enough to offset all of the

other inflation that we're seeing well

here when we uh look at the headline a

month over month with energy in it we

could see that energy brings us down

potentially to zero to 0.2 month over

month we take out that energy anchor

dragging down inflation we are somewhere

around point five percent for the

expectations now if used cars airfares

travel hotels owners equivalent rents if

all of these moon they have the real

potential of actually pushing inflation

up and us getting a miss on core which

would be pretty bad just like a miss on

headline would be bad and that's because

we have factors that still

lag high inflation so you get high

inflation what does high inflation do

fed raises rates which leads houses to

get more expensive to buy which actually

drives rents up in the short term and

rent is one of the biggest pieces of our

inflation cpi report it makes up about

32.8 percent of the cpi waiting and if

we get a miss on owner's equivalent

rents and rents pop up to like a

month-over-month rate of 0.7.8 it could

drag this entire thing up and we could

get a terrible miss over here one of the

concerns that i have regarding these

charts is some of these estimates these

economist estimates are so low

that i feel like it's going to be easy

for us to beat to the high side

which does make me somewhat nervous for

how the market is going to react

tomorrow of course i'll be live

streaming uh at 5 30 a.m publicly and

then we'll go into the course member

live stream after that we'll do some

fundamental analysis and work on

reacting to the market but what's my

expectation how do i think uh or you

know what how do i feel well

look i'm bullish on america i'm bullish

on train america i've always been

bullish on train america with the

exception of like 45 days following

january 21st and i'm so glad i

transitioned because i don't know

there's some kind of saying out there

maybe somebody can tell me in the

comments what it is but stupid people

don't change their minds or fools don't

change their minds

wise people look at the data and change

their minds when circumstances change

right that's very very important

but i'm bullish on america and that's

why i'm back in this market and so even

though i have some cash left on the

sidelines it's not a lot it's less than

four percent of everything that i've got

and so for me i really do believe that

inflation will end up proving to be

transitory in the long term commodity

prices are showing it energy prices are

showing it break even bond yields are

showing it which generally precede

inflation plummeting it just hasn't

happened yet though and even though for

seven or eight months i've been saying

hey i really think you want to pay

attention to august and september to see

the cpi numbers come down i could be

wrong and here we are we're in august

and next month is september these are

the reports we've kind of been waiting

for for quite a long time so hopefully

our patience pays off and the

opportunity to have bought even below

that 318 qqq level or at various

different discounts we've had over the

last few months even some that are still

available today

maybe that was just a benefit for us to

increase our ownership of companies we

really believe in for the long term

that's what i'm doing we also know that

it's going to take a little bit of time

for the job market to actually react to

monetary policy and jobs tend to fall a

few quarters after a recession begins

and when jobs start falling and

inflation starts falling all of it which

happens with the lag

then we might end up actually having a

solidified bottom

and a pathway back to the moon but folks

still have a big risk and that's that

consumer spending really does turn

negative we know we have two quarters in

a row of negative gdp some of that does

have to do with spending but in general

we see consumer spending is still

positive it's just growing at a slower

rate than it used to grow

me

i'm bullish on the country i believe

that most consumers think the economy is

in a terrible spa in a terrible place

but their personal lives are better off

and more wealthy than they have been

since before the pandemic that's my

belief there are certainly some folks on

the very lower end of the threshold

probably your bottom quintile and these

are individuals who are struggling

because food costs have skyrocketed and

rents have skyrocketed my heart goes out

to those folks

as an overall basket though of consumers

i really still see

growth however a big risk a big big big

risk is if we get things that happen to

our companies like what's happening to

nike where you get that negative

year-over-year growth

well when we might actually start seeing

serious earnings revisions down and

that's actually what it's going to take

for markets to move to lower legs we're

going to have to see inflation not come

down

and at the same time we're going to have

to see revenue misses to the negative

across the board of many companies

across across the board

all various different companies uh but

that's not what we saw in q2 earnings

right but that risk could still happen

in q3 q4 and so if we have high

inflation

and negative consumer spending at lots

of different companies in q3 q4 then

we'll be in a stagflationary environment

and we will have a worse stock market

in the second half of the year than in

the first half of the year that's not my

base case scenario i think there's about

a

20 chance of the second half of the year

being worse than the first half of the

year

could be wrong but that's my opinion i'm

bullish and i'm really hopeful that

tomorrow we finally see that cpi u-turn

begin and if we don't

all it means is more patience will be

required

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money and folks we'll see you the next

one bye