watch *BEFORE* the critical CPI Inflation Report

everyone me Kevin here we've got to go

through the CPI numbers and I wanted to

get them out to you before we take off

so I thought I'd go out here and get you

a video boy this is by the way about the

100th flight I've taken this year so far

and I've seen so much from all of you in

person been meeting course members

agents uh thank you so much to all of

you and none of this would be possible

without you and I know there's a lot of

uncertainty right now with what's going

on especially since we started seeing

stocks fall again so I wanted to talk

about obviously CPI projections we're

going to go through the JPM CPI

projections and then we'll also go

through Goldman projections the CPI

projections are a big deal they're going

to be absolutely one of the reasons why

we are seeing a soft market right now

because look how could you buy right

before your CPI data release people need

that additional confidence that we are

indeed uh on a disinflationary path and

there is a chance that we are going to

get a rocky CPI reports any Rockies CPI

report coming up is going to be a

horrible negative Catalyst especially

with fears that the unemployment

recession is still above or ahead of us

this morning I filmed a video talking

about how that unemployment recession

could be ahead of us and some of you

actually very smart I appreciate y'all

like I appreciate the critical thinking

some of you were asking me because we

looked at the unemployment chart and how

when employment rises above the moving

average the simply a simple moving

average we tend to see a recession soon

after and we've recently had that

however some of you had asked well what

about the other times it's moved above

the moving average and we didn't have a

recession after those instances occurred

right after a previous recession which

somewhat implies some volatility

happening right after a recession I

personally believe that there is a

possibility that is the volatility we're

getting after the coveted recession or

it is a red flag of things to come in

other words we have no freaking idea and

that's why we're so reliant on any data

we can get

assuage our fear so to speak that hey

we're not going into a big dark ugly

recession I will tell you though and

this was a red flag and this is another

red flag is the first time I've heard

somebody say this an agent told me today

in Arizona that's where I am right now

it's hot okay I'm wearing my short

shorts all right

in Arizona I had an agent say Kevin

we're starting to see a little bit of an

uptick in some defaults I go really you

know I'm generally not seeing that other

than uh you know covet normalization

they said it's not

going to show up in the data yet the

defaults that I'm seeing are just now

coming through from people who bought

last year and then I go holy crap

those are people who bought at six seven

percent interest rates thinking they'd

be able to refinance within the next

three to six months rates stayed higher

for longer and now they're like crap

can't afford this payment red flag could

happen so there's always mixed data and

uncertainty I'll tell you there's always

a reason to be fearful there's never

going to be a lack of bad news and I

like to be aware of it because obviously

when there's a Confluence of too much

bad news you can actually have a very

bad economic forecast and that's not

great uh and uh running the different

businesses I do I always like to be as

attuned as possible holy smokes I hope

you can't hear them but there's a jet

pulling up next to me right there it is

so loud there's a chance you might hear

not hear it's too well because of the uh

the mic but anyway let's get into the

CPI analysis so CPI scenario analysis

from JP Morgan JPMorgan research we have

a five percent chance of getting a

greater than point four percent month

over month core that is a tail risk

scenario and JP Morgan is warning that

for us to see that happen we would have

to have a higher expected core along

with hotter Autos that's a big Focus

right now Goldman Sachs actually thinks

we're going to come in low on the CPI

forecast when we come in low on that

forecast it's going to be driven by

lower used and new auto prices so

that'll be a big weight down even though

we're dealing with some positive base

effects that are going to push us up but

JPM only thinking we're going to have a

five percent chance of getting a greater

than point four percent read on that

month over month number they do think

there is a 22 and a half percent chance

of getting something between 0.2 and 0.4

percent uh and they suggest that this

could actually rattle The disinflation

Narrative a little bit you could see the

Spy fall anywhere from one to one and a

half percent if you get something like

uh you know 0.4 or higher on core you're

probably going to get more like a two

plus percent decline in the s p now not

great but they have a 45 chance of

honestly just getting an expectation CPI

read tomorrow I will be live for CPI

tomorrow and I have an announcement for

everyone tomorrow which I'm very excited

about so I look forward to seeing you at

tomorrow's CPI uh that'll be 5 30 a.m or

obviously catch the replay if uh if you

want to sleep in a little bit I don't

blame you although it's going to be very

exciting

25 chance of actually having a below

read of 0.1 to 0.2 consensus being 0.2

any read of point one to point two wow

okay that was unexpected I actually had

to cut uh because apparently the phone

overheated thanks to it being 109

degrees out on the tarmac so picking up

where we were uh 25 chance of getting a

between 0.1 to 0.2 percent cementing the

disinflation story suggests JPM and

could potentially launch uh the view

that the FED would be closer to

declaring mission accomplished

potentially get us getting us closer to

finally cutting or at least having a a

path towards cutting I think a lot of

folks are really excited about that

because once we get on the path to

cutting we can then really argue okay we

can get back to credit expansion we can

call the EPS troughs uh in in stocks

that we've seen and uh then we'll

certainly get a lot more enthusiasm in

the cyclical trades as well whether

that's your your solar your Automotive

uh or other highly interest rate

sensitive sectors there's only about a

two and a half percent chance of getting

a print below point one percent per JPM

personally I'm leaning to something like

a point uh one five so we'll have to

actually look at the actual number and

do the math on it because they'll round

that to 0.2 but I'm leaning myself to a

core of slightly below 0.2 I actually

think we're really going to cement that

disinflation story if we don't though

we've got some real risks of course as

we know one report doesn't make a trend

so one bad report tomorrow uh won't

necessarily confirm that oh inflation's

re-skyrocketing or something like that

which we don't expect but any kind of

read over point two on core I will

certainly jolt the market at a time

where people are already a little you

know gun shy especially after the Fitch

downgrade it was not great even though

nobody really cares about Fitch the

downgrade definitely came at a not the

most ideal time since we just peeked out

and stocks here locally on June 19th

Tesla earnings day almost the entire

stock market peaked out and started

trending down from there so CPI

consensus and I want to get into Goldman

as well consensus we're looking at 0.2

month over month uh that's for headline

month over month core month over month

is 0.2 year over year 3.3 get a little

bit of an addition there because uh from

the prior read of three thanks to Energy

prices uh oil is starting to Trend up

again despite the Chinese disinflation

Story Kathy Wood calling for uh China

exporting disinflation if not even

deflation core CPI a year-over-year

expected to come in at 4.7 which strips

out those volatile food energy

components versus the prior 4.8 okay now

we're going to look at Goldman here so

uh Goldman had an interesting POV

Goldman research actually also argues

for a 0.15 increase again that's going

to look like 0.2 when we first read it

off then we'll do the math and we'll see

they think the year over year will come

in at 466 versus the 4-8 consensus I uh

for eight to four seven depending on

what time of day you look at the

consensus I align with Goldman on this

and I don't always align with Goldman

but Goldman's the other research

institution that I really appreciated

when they uh argued that uh stocks tend

to bottom about six to nine months

before

you actually get a bottom in earnings

which would somewhat align with the

bottom in earnings in Q2 Q3 here stock

market bottom around Q4 of 2022 uh

Goldman Sachs arguing for a three

percent decline in used car prices point

three percent decline in new car prices

reflecting lower used car auction prices

and continued increases in dealer

promotional activity they also think

we'll have some down downward revisions

which I was surprised by in apparel and

lodging prices I was expecting maybe a

little bit more of a push to the upside

on lodging and travel and Hospitality

because of some summer travel seasons

and this season potentially being more

on demand than previous Seasons however

much of the summer travel has actually

been for international destinations

which could potentially reduce that

inflation here in America or that

inflationary impetus you would get in

those categories shelter inflation to

remain roughly on Pace coming in maybe

at about 0.44 as Goldman's estimate they

believe that if we get any read over 0.3

we'll be uh negative one one and a half

percent on the S P anything really 0.2

and a half or less will be positive

because it'll really reiterate lower car

prices lower shelter inflation less wage

inflation remember we we want to see

people make more money over time but we

don't want that to disanchor to where

all of a sudden we're facing a potential

wage price spiral though that has not

been the case at all this cycle uh those

those fears were existed quite well

early 2022 but have not uh

proven to be uh most accurate after that

we have PPI coming out the very next day

so we'll have CPI tomorrow very next day

we'll have PPI coming up I'll give you

quickly the expectations for PPI less

people care about this one but usually

people like to say PPI leads to CPI so

this is your producer price inflation

number survey month over month 0.2 core

0.2 and then you're looking at final

demand year over year 0.7 uh that's year

over year that's less than two percent

right and then core PPI dropping to 2.3

from 2.4 then a very next uh actually

just a little bit later that day we will

be getting our University of Michigan

sentiment read 5 30 a.m tomorrow for PPM

sorry PPI tomorrow 5 30 a.m sorry what

am I saying CPI tomorrow 5 30 a.m the

next morning 5 30 a.m PPI then 7 A.M the

University of Michigan sentiment read

looking for one year to stay stable at

about 3.5 half that is a tick up from

3.4 for the one year inflation read but

that long term which is the important

one saying anchored at about three

percent remember that's part of how Jay

Powell likes to calculate what uh the

fomc rate should be using a restrictive

level of about two two and a half

percent add in the longer term inflation

expectation of three there's your

terminal fed funds rate So eventually we

expect that inflation expectation to

come down along with the level of

restrictiveness that the FED believes

they need so we might see that uh lead

to rate Cuts next year although the

estimates for that vary it could be uh

March it could be July what I found is

more patience is required for everything

I think that's true with real estate I

think that's required for the stock

market uh for everything so this gives

you a breakdown of CPI expectations as

well as PPI protection expectations so

I'll see you tomorrow at 5 30 a.m thanks

so much for watching make sure to

subscribe and we got a big announcement

tomorrow as well right around uh CPI

Time 5 30 so I'll be making that

announcement we'll see you there thanks

bye