**Watch before Morning.**

this morning around 2am i made a video

describing that i will no longer be

doing public live streams and this

remains to be true however tomorrow

morning at 5 30 a.m when cpi data comes

out i will be hosting a small private

group live stream if you're interested

in that link below but for now let's

talk about

what to expect for cpi tomorrow first

we're going to talk about good news then

we're going to talk about bad news and

i'm going to provide both perspectives

of the bad news and then we're going to

talk about some other aspects that i

think are really relevant when it comes

to inflation and what expectations to

have for tomorrow i'm also going to

discuss potentially what the results of

the cpi means for investing in the stock

market in my opinion so i will keep my

opinion towards the end

first let's briefly touch on good news

earnings are absolutely killing it

people are spending money like there is

no tomorrow we have already known from

the beginning of this earnings season

that people's individual bank balances

are higher than they have ever been

before they're not expected to grow in

2022 because of probably the lack of

stimulus

the only thing left is really the child

tax credit coming during tax return

season and it's a questionable how much

of that people will actually get in the

form of money in their hands depending

on their tax situation because people's

incomes were higher last year which

means more taxes to potentially offset

that

so we know that people have more money

and people are clearly spending that

money disney for example introduced the

option for you to pay money to skip the

line well apparently fifty percent of

people are getting that add-on with

their tickets to skip lines and if fifty

percent of people are skipping the lines

it makes you wonder do you just have two

equally long lines

anyway parks and experiences at disney

just for example brought in an

additional

17.4 percent not more than another

quarter more than expected for the

fourth quarter twilio killed it on

demand raising forecasts even zenga

despite a slowing gaming industry

absolutely crushed earnings sure we had

some bad earnings this season that led

to some pain look at netflix or facebook

or even activision maybe there have been

big misses even at peloton but the

market has been looking for any

semblance of good news and we've been

getting a lot of good news look at amd

microsoft disney these companies are

killing it even enface is killing it and

a firm is expecting to report earnings

which honestly if the spending that

we've seen at other companies have

anything to say about what could happen

at a firm or even the spending that

we've seen happen coming out of visa

quite frankly if you want a hint hint

and you want to make a bet on the market

tomorrow i would read the visa and

mastercard earnings reports or at least

get a summary on google or something and

then decide what do you think that means

for a firm it's probably going to be

their first first quarter after having

integrated the affirm pay by now pay

later button on amazon and we know what

amazon did okay

they also crushed it so if he's on

amazon or any good uh or end phase or

any of the other companies that have

recently been reporting or any guide the

economy is doing extremely well and this

is why with unemployment so extremely

low and the economy booming and earnings

booming

everybody's really really excited about

this market and it doesn't make sense

that prices should be as low as they

even are right now we should have just

continued the highs that we've seen uh

you know maybe in like mid-december you

know maybe not necessarily the november

highs but like the mid-december stuff

mid-december you know we should have

just continued the santa claus rally

right around the 25th 26th right anyway

a lot of good news look at this you can

even go to japan and see some co a

supplier of silicon wafers booked out

through 2026

folks we're in 2022

that is four years of them saying yo

our capacity is booked out for the next

four years now they're not taking

contracts they're just expecting to be

so booked and because they're expecting

to be so booked up their shares

skyrocketed 11

but what does this say about supply

chains and potentially the improvement

we're hoping for in supply chains to

hopefully bring inflation down

well we have individuals who are a

little bit more dovish like a federal

reserve board member bostick suggesting

that inflation signs may already be

starting to hit their peak

most analysts are projecting that

inflation will hit its peak in february

and quite frankly last year analysts

were right about inflation more than

they were wrong 7 out of 10 cpi reports

were within the range of analyst

expectations and only five of the cpi

reports came way outside of the range of

what analysts expected one of the worst

misses came in may and june with the

biggest the worst one being may 12th and

folks a lot of you aren't even going to

have to look at your stock chart to see

what happened may 12th of 2021 you

already know may 12th was one of them

bottoms okay you thought we just saw

some cheap prices on end phase we saw on

may 12th as well it was

wild and it was all following a really

really high cpi report that was way

outside of what the market was expecting

but hey it looks like analysts are

generally more right than they're wrong

and you've got a lot of good news that

all sectors i mean even the logistics

sector is making profit hand over fist

just look at what xpo logistics did

after earnings not only did they

absolutely crush their earnings the ceo

said they had their highest revenue

growth quarter ever but they also raised

their guidance

this is really all good news for our

economy i mean if the suppliers and the

logistic companies are all

saying things are booming and things are

getting better then hopefully that means

inflation will be transitory will come

in for a soft landing on inflation and

everything will just be okay how could

you stop this amazing economy and we

just had a gdp print of over six percent

now some folks say uh but a lot of that

that annualized gdp print was because of

higher inventories and that just means

we're setting up for deflation which is

actually potentially good for helping

inflation come down others argue no that

inventory is actually not on shelves

it's actually stuck in transit because

it's taken way longer to get stuff and

face for example tells us that the

batteries that they sell the home

batteries similar to what tesla sells

right the home battery packs not only

are they going to raise prices seven

percent in march but their lead times

are like 14 to 16 weeks right now and

face freaking killing it okay ah one of

the good things too about end phase

which another piece of good news before

we get to the bad is they say asic

supply is pretty readily available why

probably because crypto prices have

fallen leading to less demand for asic

chips

so when you see crypto prices go down

write that one down and face happy

less competition for those asics

okay fine that's all really good for the

economy but what is the bad news here

well the bad news is the more pricing

power companies have

like enface saying they're going to

raise prices seven percent on their

batteries amazon raising the cost of

amazon prime starbucks having two price

hikes in the first half of this year

panda express two price hikes first half

of the year pricing power kimberly clark

end phase amd you name it anybody who

has reported earnings is saying

we're raising prices we are passing

along higher costs to the consumer

usually when inflation happens the

company shares some of the burden of

higher supply costs or labor costs but

they're they're not they're they're

either if they are they're trying to

fully recoup that from their customer or

they're already fully recouping these

higher costs from their customers

because americans are spending money

like there is no tomorrow it's like

there's

this massive oblivion that's going to

come and everybody's like well this

money ain't going to do any good in the

oblivion so i may as well just go spend

it on and that's awesome for growth and

the economy but it's really bad for

inflation and that brings up the

boogeyman the inflation boogeyman and

the inflation boogeyman is jerome powell

see we're not like japan japan usually

has historically low inflation japan

just had a bad print though they just

had the japanese producer price index

rise eight point six percent year over

year the estimate was eight point two

percent that's a miss

also the japan producer prices index

rose point six percent on a month over

month basis which is 7.2 percent

annually the estimate was for a 0.4 bump

or a 4.8 percent annual raise that's a

miss on both the numbers worse than

expected right now japan is different

though because in japan a lot of the

companies in japan they remember the

days of not really having inflation and

they don't like passing higher costs

onto their consumers because they're

worried about losing their customers in

japan they're like oh my gosh we're just

so grateful like customers are coming to

us again because their economy has grown

so freaking slowly it's still in the

slugs of the 90s basically

this is different though for america and

the person that we're fighting right now

the most folks is the person who haunts

me every night in my dreams i know this

sounds corny but it's jerome powell and

it's true i'm stressed out day in day

out about what jerome powell is thinking

about i know that sounds crazy but i

consider this my job and i really care

about my job and so i get stressed about

my job some people like just don't be

stressed about j-pal that's like saying

don't be stressed for that test that you

know you're gonna be stressed for it's

like saying don't be stressed the first

time you jump out of a plane right

because you care about surviving

right so this is leading to some folks

saying well kevin

you don't have to worry because there

are a few things we can do

we can just let it rip let inflation rip

you know what as long as wages go up

more than the rate of inflation then

maybe purchasing power will actually

increase so we'll be good which if we

look at the month-over-month data of the

last jobs report month-over-month data

actually shows that labor

wages rose more than the rate of

inflation in the sa in the i'm sorry in

the eight percent annualized range

compared to the seven percent inflation

range which means people are actually

now starting to finally make potentially

more money on a month-over-month basis

that was not true on the kathy woodian

argument which is where she took the

year-over-year data and said oh no

year-over-year wages only went up 5.6

which is less than inflation yeah but

month over month we've got an inflection

point and month-over-month is what you

want to pay attention to because

month-over-month shows you the

inflection point let me just graphically

draw this because we were working on the

whiteboard earlier today and i think the

easiest way to kind of show you what the

difference between month over month and

year over year is is year over year

charts on inflation and such might look

like this

but what's so cool about the month over

month data and annualizing that is let's

say we wanted to zoom into this orange

box right here and i labeled this

november

december and january let's just say and

then we zoomed into that box and this

right here is that zoomed in version of

that box and so you've got the same

things over here you've got november

december january well on the

year-over-year picture it might look

nice and smooth but what you're looking

for potentially on the month-over-month

data is what if from november to

december you had this monthly inflation

of let's say 0.1 percent of an increase

okay that's not bad but then all of a

sudden you had a 0.6 percent increase

well now you go from say here to here in

january that is an inflection in the

curve that you actually don't see on the

year-over-year data so i always believe

you want to look at that

month-over-month data to look for

inflection points and yeah i already

know you all like playing drinking games

when i say inflection points so if

you're playing that game again today

inflection point

but anyway

so so some folks say hey look you know

maybe just let inflation rip

well

that might be something we all think

could be a possibility especially since

those with assets usually win

usually in higher inflation times people

who have like debts uh associated with

let's say hard assets like real estate

their debt becomes less expensive it's

easier for them to pay that debt off

that could do well well as long as the

fed's on your side that could do well

see the problem is the federal reserve

sees inflation as something that hurts

existing consumer debtors people who

don't have their debts tied to assets so

credit card debts student loans car

loans these things usually become more

expensive as we experience inflation car

loans recently a little bit of a weird

one because car prices have been going

up so just think credit card debt if

there's a lot of inflation and you have

less money left over every month it

becomes harder for you to pay off that

credit card debt so inflation hurts

folks who are generally in consumer debt

which are generally poor individuals who

need more help to participate in society

the federal reserve wants poorer

individuals and maximum and broad-based

support for the economy so that way poor

individuals and everybody else can

participate not just rich folks even

though we all know when they bailed out

the stock market in 2020 all they really

did was bail out rich people we know

that it's kind of like intentions versus

reality your expectations versus reality

right anyway so keep that in mind

so we know that the federal reserve has

a dual mandate number one is uh maximum

employment well

by almost all accounts we've reached

maximum employment not only have we

reached maximum employment but the

federal reserve believes we could

actually do with a little bit less

demand for labor because more demand for

labor is actually making prices go up

more for wages which ends up leading

inflation to go up so if we took a

little bit away from the wage bucket and

took a little bit away here and use that

to help bring inflation down then maybe

we won't hurt poor individuals and and

that would actually mean that we can

bring inflation down and maybe one way

to do that is by raising rates and so

this is where the next argument comes up

and says okay kevin we know the fed's

going to raise rates it's probably not

going to do anything in the short term

because there's plenty of cash flowing

around who cares if rates go up one

percent but you know what even if they

did it's priced in it's all priced in

you don't have to worry about it and

this is where i have to say two things

number one is a sentiment analysis and

i'll tell you when it comes to polls on

twitter you can't really trust them as

far as you can throw them why well

because on january 27th i ran a poll

asking uh the following is elon musk

right with the market now pricing in

five rate hikes this year will we be

heading into a recession here is that

twitter poll uh and you can see here

that 57 of individuals out of 10 500

votes voted yes so more than half

thought oh my gosh elon's going to be

right we're going into a recession but

wait a minute i just ran the same poll

again i literally copy and pasted the

poll today

with also almost ten thousand

five hundred votes this one had about

150 less votes so statistically

insignificant

it's flip-flopped now about 56 percent

of people say no elon musk is not right

no recession and you know what the

difference between those two twitter

polls is

today

the indices were all up over one percent

and we had sick earnings coming out at

disney and everything was mooning during

the day you had end phase and the and

the solar companies and the after hours

uh you had uh and you've got crypto

going up in the after hours you had the

earnings that killed it january 27th

folks the market was bloody red people

were fearful so

there's a little bit of sentiment

analysis for you it depends what the

sticks did that day

now

is it priced in are these rates hike

priced in

maybe maybe not maybe the market is

assuming we're coming in for a soft

landing maybe it doesn't matter in the

long term and quite frankly the odds are

it probably doesn't matter but why the

fear well there is some fear in the

markets because individuals believe that

if jerome powell is going to change his

tune to become more aggressive

potentially by using not only tomorrow's

cpi print but the cpi print that comes

out on march 10th before the march 15th

the 16th federal reserve board meeting

we could end up having a really hawkish

fed also one week from today we get the

fomc minutes from january which in

december were a disaster so we got some

catalysts coming up write those down

okay first tomorrow cpi this is consumer

price inflation numbers one week from

today on the 16th we're gonna get the

minutes for january in december they

crashed the market that was a disaster

when those notes came out in january for

the december meeting and then march 10th

is your next and then of course march of

15th to 16th you want to pay attention

to those dates now is are these rate

hikes priced in maybe if things continue

to go along with expectations current

expectations are that inflation is going

to come in at 7.2 percent year over year

and month over month we're going to see

a decline from the prior month to just

0.4

previous month with 0.5 so actually a

slight inflection down kind of like what

i showed you on that chart those

inflection points where you take a shot

yeah we're actually expecting it to come

down a little bit which would be really

good and so this sets up three potential

scenarios if we come in close to

expectations the market's probably going

to do absolutely nothing tomorrow if we

come in above expectations which i

believe would be something like a

7.6 or 7.7 percent headline number the

market's probably not going to do well

especially since no analyst is expecting

inflation to come in over 7.7 so that

would be a wide misc that the shock

number is over 7.6 that is your shock

number shock number on the high side for

month to month is over 0.6

on the low side the shock number with no

analyst expecting a number under 0.2

percent that's the low side shock

and no analyst is expecting inflation to

come in under seven percent on the low

side so if we got something like 6.7 and

0.1 percent

that might be a signal to potentially go

buying if you've been sitting on the

sidelines if you get a really low shock

like that you get something along

expectations markets probably not going

to do anything probably doesn't mean

change your strategy if it comes in

super high maybe that means evaluating

oh do we think we're going to see this

again or are we going to hit peak in

february and then is it downhill from

there

ultimately it's all speculation but i

will be sharing my personal opinion in

terms of exactly what i'm doing in

reaction to this because i'm kind of

giving you you already know what my

opinion is where i stand uh but i will

be sharing my reaction to the numbers in

a private course member live stream

tomorrow so if you're interested in

joining that check out the link down

below make sure you watch uh check out

all the notices that have been posted

for this uh so you're properly prepared

5 30 a.m tomorrow california time will

be privately streamed uh and i'm going

to leave you with one extra thing

warren buffett sat out in the early 70s

50 years ago when he was in his 30s he

said quote you're dealing with a lot of

silly people in the marketplace it's

like a great big casino and everyone

else is boozing if you can stick with

the pepsi you should be okay

folks stick with the pepsi we'll see ya