This video is sponsored by 10ds, but more on that in a bit. Hey, good morning! This is Tom And let's talk about the inflation numbers. for February, there are a lot more Nuance than mainstream media tells you now. Look, the Faber inflation numbers are out.

The Consumer Price Index is up six percent compared to last year and point four percent compared to last month. Basically all this means is that stuff are six percent more expensive this year compared to last year. So the question is beyond the numbers, Is this good or bad? Well, in general, these are good news you see. on June 2022, we had nine percent year-over-year inflation and just in January we had 6.4 inflation.

Now we're at six percent, which is a big Improvement. In fact, this is the eighth straight month of slowing inflation and the lowest inflation we had since September 2021. But it's too early to sit out of the campfire and celebrate by singing Kumbaya Because there's a lot of nuance here. There's a lot of bad things in this inflation report, as will now.

Core inflation, which is basically the Consumer Price Index without food and energy prices, was actually up 0.5 for the month, up to five and a half percent year over year. This means that the core inflation is accelerating at the highest rate over the past five months. This means also that without Energy prices dropping, the Consumer Price Index reading might have been a lot less attractive. But the other hand, you know if Grandma had balls, she would be grandpa.

So you know there's that. Now look, despite the smudge on core inflation, you know in general terms inflation figures are in line with expectations and the biggest winner here is going to be John Powell because he can finally relax after the challenging few days he had with the banking collapse over the weekend. Now don't get me wrong here, we are still at six percent inflation, which is three times more than normal. and if you actually look at real inflation, it's probably much much higher than 6 then.

But at the very least, we seem to be declining on the CPI the Consumer Price Index terms for now. now, where did this inflation slow down came from? Well, the good news are that energy prices decline in February, But the bad news is that food prices are still Rising sharply and are now nine and a half percent more expensive than last year. Housing costs also rising at eight percent year over year, that's still very high. So with that being said, what will the FED do with the interest rate hikes? Well, we know the FED looks at the Consumer Price Index to determine its policy, right? That's kind of standard stuff, but this February support, along with tomorrow's Producer Price Index which will show us the inflation on raw materials and goods should have been the key here, but this time there's more to it than just looking at the CPI and the PPI data, the Consumer Price Index and the Producers Price index.

Because look so far this year the Fed was very aggressive with interested hikes we haven't seen since the 80s and during Fed chair Pals slash Beach he actually said that 50 basis points increase was on the table. But all that was before the collapse of the three banks of the weekend. Now there's an old saying that a hawkish Fed is going to keep raising interest rates until something breaks. So the question here would be did something break? Did the collapse of the Silvergate Bank Silicon Valley Bank and Signature Bank is breakage enough for the FED to chill the down well.

According to the CME Fed watch tool, there's a 73 chance of a 25 basis point hike at the FED meeting next week, and the 27th probability of no hike at all Just A Week Ago Markets were seeing a 70 chance for a 50 basis hike and 30 chance for a 25 basis hikes. But as I said, the collapse of the Silicon Valley Bank and Signature Bank over the weekend basically have paved the way for what seems to be the 25 basis point hike territory. It also might be zero, but it seems more likely that 25 would be it now. I Suspect that the FED will be a bit more dovish this month, both with the 25 basis points increase and the things that Powell will actually say.

and once banking stocks recover and once the overall Market fear subsides, we might see a return to a little bit more of a hawkish stance from the FED unless of course inflation data comes in super low all of a sudden and basically we have no longer an inflation problem. Now that is of course more likely than Grandpa having balls and becoming Grandma but again, it is what it is now before. I Let you go I Want to tell you about today's sponsor attendees now 10 days and I've been working for a while together. It is a free platform that will give you access to some of the best research on the internet, some of the best information in real time which is key in this crazy volatile market, and most importantly, their options tools are some of the best in the game, and somehow they're free.

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Thank me later. See you next video.