Inflation Report **JUST OUT** [CPI] SHOCKER -- FULL Summary

we're now two minutes away from the CPI

inflation report the projections are CPI

.2 month over month my projection is

point one percent month over month CPI X

energy and food month of month point of

four we are projecting myself I'm

projecting point three percent uh so a

one-tenth of a percent below both both

of those are my projections for the

month over month figures the prior

report was 0.4 and 0.5 so we'd be coming

down with a 0.2 and 0.4 on both of those

year over year we're going to see a nice

big decline moving from a year over year

of six percent to 5.1 percent which is a

fantastic drop down uh however core is

expected to actually take up slightly

from 5.5 to 5.6 so we'll be getting that

data within about the next 100 seconds

here we're very excited this is a big

moment this is a this is absolutely

going to give us guidance on whether or

not the Federal Reserve is expected to

raise interest rates by either 25 basis

points again or pause this is a very big

deal right now the expiration of the

coupon code is also set for today we'll

be raising prices on that uh tonight now

let's go ahead and look at the rate

monitor as we get into the next 60

seconds here so the rate monitor puts us

at about a 74.7 chance of getting a 25

basis point hike next the Federal

Reserve does appear to be split on this

10-year treasuries have come down so

that is a loosening of financial

conditions though mortgage rates do

still remain high at about 6.9 percent

for the 30-year mortgage as credit

spreads are widening so that's actually

a weird phenomenon where you can

actually see uh 10-year treasury yields

come down but Financial conditions

remain tight and keep mortgage rates

High For Real Estate uh however real

estate inventory has been so low we have

not actually seen any kind of uh major

pain just yet in real estate okay we are

now just seconds away from the CPI data

uh within the next 10 20 seconds here

we'll have the CPI data we'll be going

through the report as well this is a big

moment again we're looking for a market

is looking for 0.2 and a 0.4 so drum

roll and uh stay tuned remember check

out that coupon code oh my God it's

point one month over month I was right

however the core was 0.4 uh so core

matches expectation point one on the

month of a month let's freaking go let's

go uh year over year comes in a little

soft as well at five percent as opposed

to 5.1 core matches expectations at 5.6

so expectations matched on core month

over month and year over year uh however

on non-core we got that point one

percent and that five percent year over

year that's absolutely fantastic uh

that's uh that's a sign of not a

devastatingly weakening economy it's not

a sign that we're in this crazy

recession that everything is falling off

a cliff it is a fantastic sign that

inflation is continuing to Trend down

upon expectations we're not getting any

kind of crazy uh reanimate nation of

inflation here even though uh outside of

expectations uh we're not and that's a

big issue right we were worried that

maybe in this report we would see some

kind of massive increase in Services

inflation or something uh keep in mind

housing inflation is still keeping these

numbers really elevated so we're going

to take a look at all of that data here

but this is a fantastic report so far

based on the headline numbers here we're

going to get Wall Street reactions here

as well but let's get into uh both the

report and Wall Street expectations uh

or Wall Street reactions rather so let's

jump into the actual report and here we

go this is the actual report on screen

now let's see what we got here CPI Rises

0.1 percent that was my expectation

there were only four economists out of

all of them surveyed that had that

expectations at that expectation over 40

of them interviewed by Bloomberg were

looking at point two there's that point

four percent Kevin was off on that one

by one percent over the last 12 months

there's that five percent okay let's go

into the actual granular data here so it

looks like uh okay here we go here we go

here we go uh the index for shelter was

by far the largest contributor to the

monthly increase that's good that's

actually a good thing because we do

expect that to come down for rents which

is good uh however we still haven't seen

that come through so there is that risk

that what if that rental deflation never

comes through that would be a big

problem right but we still expect it to

come down even Jerome Powell just a few

weeks ago reiterated uh that this will

be coming uh down we do have uh stock

futures jumping the two-year treasury

yields are tumbling right now this is

fantastic it looks like real average

hourly earnings fall point seven percent

year over year no wage price spiral this

is fantastic uh this is this is really

good and this is not like so bad to

where all of a sudden we're looking at

it going oh my gosh you know we're at

the end of the world in terms of

depression or whatever uh let's see here

shelter what shelter shelter there it is

look at that shelter coming in at point

six percent uh for the March numbers

over here that's telling you remember

shelter it was actually up weighted in

the CPI re-weightings to about a 34

weight transportation services my

goodness coming in at 1.4 that's high

Medical Care is not reinflating that's

very good uh Medical Care Commodities

however a little bit of a Commodities

bump over here not so good point six

percent it's about 7.2 percent

annualized used cars coming in negative

point nine percent that's good new

vehicles coming in at point four percent

let's get a little bit more of a

detailed chart here while I also get

some more reaction here housing cost was

the biggest contributor

Wall Street reacting to this we're going

to get the detail chart here get a

little bit more numbers here while I

pull this up remember CPI is uh this is

going to be a crazy day I'm getting so

many emails for bundle coupons already

this morning because on expiration day

we go through all the emails for

everybody who wants a bundle coupon

email us at kevin.com let's go through

the actual detailed set here if you want

to bundle code as well you can email I

want to go right to the end in services

this is the most important side okay

here we go personal services thank

freaking God look at that point two

percent let's go let's go no

re-annovation reanimation of inflation

and services really important point two

percent that's 2.4 percent year over

year that's great personal care services

uh however you have personal Services

overall still hot but but kind of a line

aligned with Trend here at about six

percent so still a little high there but

not running away kind of like last month

we had that 1.1 that was not great Legal

Services finally reducing to about 0.2

last month we were a little high funeral

popped up a little

Financial Services finally coming down a

little bit here kind of matching that

previous Trend coming down from these

prior higher numbers here we want to see

these Services really stable we don't

want to see runaway inflation here

education services annualized at 3.6

percent postage at uh 1.2 percent

annualized that's great telephone

services going negative great fantastic

photography is going negative okay well

sorry photographers okay here we go

thank goodness okay this is one place

where there could have been lingering

inflation and that is in Pets Pet Supply

Pet Foods you name it uh thankfully for

pet services including vet services 0.5

that's more stable at six percent that's

good we don't want to see runaway there

video and audio Services still a little

hot over here at point nine Rec Services

coming in flat good airfares oh my Lord

uh that's not so great airfares at four

percent uh it's shocking to me how these

Airlines can continue to price it or can

continue you to pass on these high

prices that's pretty remarkable and

unfortunately it's just a point six

percent weighting but that's still

pretty high it is down from last month

but we'd like to see that negative Motor

Vehicle Insurance uh 1.2 percent for the

month that's still way too high Warren

Buffett was just talking about how

insurance is actually helped by

inflation because they can bring in more

float which then they can invest uh so

Warren Buffett actually cheering

inflation for insurance not something we

want to hear obviously car and truck

rentals down 3.8 percent good

transportation services still hot though

health insurance thank goodness look at

those drops across the board drops here

in medical basically Services via uh

Insurance hospital and related Services

also negative good good good good good

Medical Care Services overall negative

negative negative negative good Trend

here of services this inflation we like

seeing this uh this this Falls right

into the argument that inflation can end

up proving to be transitory especially

once we actually get the decline oh it's

happening oh it's starting look at this

we're getting the rollover here uh

somewhat we're finally starting to see

it rent of primary residence finally

coming in at point five percent uh back

to what we've seen previously finally

seeing the rent of shelter number

overall back to 0.6 off of those really

high numbers like that 0.8.7 I think

we're starting to lap some of the year

over year numbers and month over month

we're starting to see a little bit of

weakness however lodging away from homes

so hotels still explosive growth here in

the numbers so still a little expensive

however uh rent of of uh your your home

is going to be a substantially larger

contributor you can see that here owners

equivalent rents coming in at point five

percent let me quickly see what that

point four percent number is that is our

fourth number here yeah that is the

unadjusted Feb to March number so let's

get back over here we're just going to

ignore this right here because that's

the Feb to March number really you're

going to be looking over here that's the

last three month Trend and we finally

see that moving down a little fine

finally that's actually really really

good so happy happy to hear this this is

good then you've got what do we have

here we've got personal care products

wow that's still a little expensive a

little expensive over here on some of

those personal care services uh Services

less energy point four percent that's

okay Goods goods are still deflating

well not I shouldn't say point five

percent is deflating but other Goods

sitting at point five percent led by

cigarettes actually alcoholic beverages

away from home point three percent look

at this alcohol starting to really come

in low in the last two months here

deflating probably because Kevin stopped

drinking alcohol uh sorry I was

contributing to the industry too much

and so now now I've stopped but at least

we're causing deflation which is good uh

so that's a good thing we've got

education communication Commodities good

nice negatives over here we have toys

toys still hot uh oh that's surprising

at point seven percent Sporting Goods

negative point six percent pet and pet

products see look at this still hot over

here at pet products that's good for

companies like Petco they're still able

to pass on they still have pricing power

we don't know how long that'll last

though given the flat household

formations Medical Care Commodities

coming in at point six Recreation

Commodities 0.2 here we go new vehicles

coming in at point four percent

Transportation less motor fuels uh zero

percent new cars 0.6 new trucks 0.3 used

vehicles negative point nine so you're

still getting that compression where

you've got new coming up in price and

used coming down in price

uh this is this is fantastic

um we're going to speculate on the

Federal Reserve in just a moment apparel

coming in at point three percent finally

softening after that initially warm uh

winter that we got in January and

February and uh and you started seeing

some more of those uh Spring sales

pushed forward which are generally

higher or more likely to be full price

sales tools and Hardware coming in at

just point two percent really nicely off

that 2.7 from last month fantastic

household Furnishings coming in at point

four percent still a little high

appliances for some reason at 0.7 odd

those are going to be like your coffee

makers whereas major appliances are

still negative they've been negative for

a while those more durable goods and

then of course if we look at Foods we

have a lot more volatility over here

food however look at that food inflation

zero percent who actually believes that

I don't know food's been so expensive

you go to restaurants it's just insane

right now how's coffee doing coffee

coming in at negative point four percent

good I need some energy had a nice big

drop over here at 3.5 all right let's

get a little bit more of um

uh the uh commentary here from Wall

Street and then let's speculate on the

Federal Reserve shall we okay so Chief

Economist at Wells Fargo tells Bloomberg

TV that while there are pockets of

optimism in today's print inflation is

still far from two percent you know I'm

so tired of people saying this I really

think they are just like Bears who don't

understand that inflation just has to

Trend down to two percent

throughout the rest of the decade and

it's fine of course it's not going to go

oh we're two percent no Sherlock

it's just I don't think people realize

the FED is going to pull fate out of the

genie out of the out of the Magic Hat

the bunny rabbit that comes out is going

to be fate flexible average inflation

targeting the Federal Reserve uses

policies known as opportunistic

disinflation to make sure that inflation

Trends down over time obviously

inflation is too hot at five percent

year over year and that's why we're

seeing rate increases to accelerate that

disinflation but does the Federal

Reserve really want to destroy the

economy uh in order to get inflation

down as long as it is trending down no

of course not so could the case be made

for a pause here yes do I think this is

enough deflation or disinflation should

I say to see a pause probably not I

would probably go for a 25 basis point

hike and that's based on probably the

Atlanta fed now real GDP P estimate that

is real GDP growth right now it's still

expected to be about two percent that

means we have plenty of room for the

Federal Reserve to increase their

tightness on markets I also think there

is a large psychological effect to

making sure that inflation is indeed uh

or proves to be transitory I know

everybody makes fun of the Federal

Reserve obviously for saying that

because they've been wrong for so long

and it's likely that they could be wrong

again but when we take a look at this

right here this is the Atlanta real GDP

fed now estimate uh released two days

ago which is two days before the

expiration of the coupon code given that

today is the 12th prices are going to be

going up tonight if you want to bundle

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ETF and have other affiliate links you

can learn more about it meet kevin.com

some of which are sponsored but let's go

ahead and look at this GDP link here

what do we have latest estimate 2.2

percent what's important for you to know

about this right here is that this is a

tool for the Federal Reserve to say hey

look if GDP is still trending two

percent in our last and in Our Last

Summer of economic projections we were

looking at GDP at coming in at 0.5

percent by the end of the year we still

have leeway to actually raise uh

interest rates and I think there's a

psychological element to the FED getting

to five percent so I think while the

odds of a 50 basis point hike are going

to fall as a result of this I do believe

that we are going to see the Federal

Reserve end up uh uh going for a 25

basis point hike I actually think that

is a good thing if the FED goes 25 it's

a sign that we are further away from

recession than people think which is

fantastic 10-year treasury yields are

falling about seven basis points we're

sitting at about 3.36 right now this is

reiterating that inflation is trending

towards potentially being transitory

again I realize that is offensive to

some people to say that word because the

FED has been wrong so long to your

treasury yields now falling about 14

basis points sitting at 3.91 However the

fact of the matter is if in a year from

now inflation is potentially under

Target we will look back and say Yes it

ended up being transitory it just took

time it took patience and that's

probably the biggest thing we could

learn from uh from this entire cycle is

that every this this whole cycle tends

to take a lot of patience now what I

really want to be clear about uh is what

Wall Street is reacting with so right

now it does look like Futures are up

about

um 65 basis points on the Dow 82 basis

points on the s p and 107 basis points

1.07 on the NASDAQ it looks like uh a

Powell's favorite inflation measure as

of late is the core services in

excluding housing came in at point four

percent that is down from the point five

percent in February but it is still

slightly elevated uh that is uh that is

still a problem so core Services

excluding housing is not running away

that's a good sign it's not runaway

inflation however we are starting to see

a trend down it's just not low enough

yet that's okay we know that it takes

time for it to Trend down the price of

eggs tumbled the most since 1987 down

10.9 percent from Taylor Swift's

actually down more probably down like 50

from what Taylor Swift said she was

going to help get egg prices down

obviously that's a joke uh rates Market

is uh is reacting to this this weaker

report here however we have the let's

see here again core Services X housing

up point four percent not fantastic uh

but again still trending down so that's

called the super core level which does

exclude housing just so we could really

narrow into Services

uh let's see here fed Futures pricing

and still rate Cuts towards the end of

the year from the Federal Reserve is

still sitting at expectations though for

let me look at if we can get an

adjustment on the terminal rate here and

then let's also look at the five-year

break even stand by for that data

five-year Break Even data let's see what

we have

uh and then let's also look at if the

terminal rate has started moving so uh

slight inflection down coming on the

five-year break even for inflation

expectations in terms of the fed's

terminal rate we are looking at uh

Financial conditions by the way also

coming down but you would expect that uh

less Financial tightness given lower

rates here waiting for this terminal

rate to load uh terminal rates still

pricing at 4.99 no big movement here so

still looking at that 25 BP hike but

it's it's becoming clear as day that

probably going to be at an end of the

federal reserve's hiking regime once

they get to an even five percent I do

again think that is a psychological

level that they are going to get to uh

and I am not concerned about a 25 BB

hike do keep in mind later today the

Federal Reserve minutes come out from

the prior meeting uh bond market is

still pricing in 17 basis points of

hikes that is leaning towards 25.

remember what they basically do is they

take the average of how much the bond

market is pricing at zero and how much

the bond market is pricing at 25 that

average or the middle the midpoint would

be 12.5 basis points right the market

right now is pricing at 17 basis points

which again leans us towards a 25 BP I

agree with that I actually think it is

good get to five percent and be done uh

markets are let's see here core figure

coming at 0.1 percent was fantastic uh

that actually matched my estimate

perfectly which is very exciting and so

uh we're looking at actual Market

reactions here I would expect that this

very much aligns again with the Nike

Swoosh theory if you haven't been

watching sort of daily where I've been

talking about the Nike Swoosh that's

okay I still love you uh but let me make

it clear I think the Nike Swoosh is

basically where we have a sharp decline

in prices uh which we've had over 2012

uh and then a Nike Swoosh style recovery

let's show you what that would look like

uh briefly this is pretty simple what a

Nike swoosh potentially looks like is

you have a sharp decline which we had

throughout 2012 you bottom out in around

October maybe at some stocks you bottom

out in July uh in December depending on

the type of stock and then you have this

this very long drawn out dare I say Nike

Swoosh that potentially takes

really just the next 10 years not

necessarily to get to Prior levels but

basically the Nike Swoosh just continues

for the next 10 years we had we really

start a new bull market era however in

the meantime you end up with a lot of

this a lot of volatility that creates a

lot of nervousness and pessimism each

one of these drawdowns will be very

painful and people will question is

inflation transitory is the did the FED

over Titan how terrible is the recession

going to be uh who knows but uh my

thesis is look for pricing power stocks

I talk about those obviously uh and and

I put my money where my mouth is you

could learn more about those at meet

kevin.com you can see the links not only

for the courses with trade alerts or the

uh the ETF or the affiliate links link

down below but this gives a CPI a

fantastic uh read on CPI very very

excited about this so this is great news

uh it it is a little bit of a shocker

that it came in low but

I'm back on over to Warren Buffett