Breaking News! Inflation rises 7.5% (much more than expected).
Hey this is tom, and inflation numbers are just out a few minutes ago, seven and a half percent way higher than even the worst of the naysayers anticipated. This is pretty bad. This is way worse than even saying the highest we've had in 40 years. This is literally the result of the whatever it takes policy by john paul and the fed now we're paying the price welcome to our own personal inflation hell now.
What i'm worried about is not so much about inflation, because i feel inflation at this point is inevitable. I'm a little bit worried from what the markets will do or what the fed will not do and i'll explain in a second, so we pumped 5.5 trillion dollars into the system or the past 18 months. That number is unthinkable how easy it is to pump in 5.5 trillion dollars in a year and a half. Now you add the supply chain issues, the logistics issues and the fact that we only have two ports which are literally collapsing under the pressure long beach and la there's, no more ports for chinese stuff coming into the us.
So the ports are collapsing. The trucking industry is basically out of commission because there's not enough truckers everybody's at home, whether it's covered or you know they have better opportunities. We can't convince people to go out and work, so supply chain issues aren't getting any better. We have all this money in the system: inflation ain't going nowhere, so seven and a half is just the beginnings.
Ladies and gentlemen, i told you - and i had this bet with my partner justin. Oh, we do a show together called money talks over at senseinvest, and we made a bet yesterday and we went over under five and a half percent inflation by the end of the year. He took the under and the loser is going to have to shave his head. So justin you better be preparing the razor now on a serious note.
Unfortunately, here's what's going to happen now the markets are going to overreact in the short term. So we're going to see huge like knee jerk reaction from the market today, but then they're going to be looking at the fed to see what the fed will do or will not do, and i can guarantee you the fed ain't gon na do jack, even though Seven and a half percent is already kind of alarming they're, not gon na do jack because they literally can't they haven't fixed the u.s debt problem, yet they need to either restructure the us debt or find some way to generate cash without printing money. Otherwise, we can't afford servicing the debt at higher interest rates, so the fed is literally in the place where they have to explain why it's a good idea not to raise interest rates, even though they have to, and yet they can't so they have to sell us. This story now, according to all estimates this year, we should see anywhere from 1.25 to 2 interest by the end of year.
Now this 7.5 figure, probably gon na, send that a little bit higher, but it won't matter because the fed is going to attempt to keep the can kicked down the road and here's. What's going to happen, and again it's so unfortunate because raising interest rates when you have 7.5 inflation would do so much good for the market, long term. Think about it. This way, when you raise interest rates, what will happen is basically a few things number one. It's going to weed out the weak, failing companies, it's going to get the companies that have good margin, good pricing power, they'll survive the commodities companies will definitely survive because they just roll over their prices on their customers. So basically we find out who's. You know who's swimming naked and who's. Not so it's a healthy kind of darwinian progress where you weed out the wheat companies you make the economy stronger, so raising rates would have been actually a great idea to get rid of inflation and get rid of the weak companies, and you know improve the economy.
Long term, but they can't do it so here's what's going to happen, the fed is going to say well. The 10-year t-bond is already 2 or almost a 2, so we already have quite high interest rates. So it's going to do the job for us. It's going to take care of the problem for us, because i don't think anybody has the balls to restructure the us debt to a 30-year fix and get the interest rates where they have to be at seven and a half percent inflation.
We probably need, like paul, volcker level interest that ain't happening. So here's what's going to happen in the next few months. So since inflation came in at higher than anticipated today you're going to see a completely red market - maybe even tomorrow - maybe even the beginning of next week, but slowly and surely the fed is going to come out and reassure everybody. They ain't going to jack about it.
The price is going to keep going up of the stocks and then, unfortunately, we're going to see more surprises every time new numbers come out from inflation. By the time we hit double digit inflation, which we will have no doubt about it, because i'm entirely not confident in politicians doing their job. By the time we hit double digit inflation, they're going to be forced to do something about it, which is basically means raising interest rates, and that is going to send, i believe, everything crashing down. But for the meantime i guess it's going to be a short kind of thermal in the market and in a few days i i think everybody will basically say.
Well, you know the devil, isn't so bad. I mean it's, it's not so scary, we'll see what happens but and this could have all been easily avoided if we could just raise interest rates at this point so yeah, i don't expect the fed to come out with any significant updates because they literally can. So that's kind of my two cents about it. I hope this was interesting for you.
Let me know below, but yeah seven and a half percent uh. It's getting worse, because i told you, inflation isn't linear. It doesn't go up 0.2.2.2. It's going to be worse! Next time, so, let's see what happens first, they either figure it out for themselves, or you know the market will figure out for them, because if they have to kick the can down the road in a few months they won't have a choice. I'll see you then, by the way.
Here's how twisted everything is right now: Growth stocks were up significantly yesterday as people were buying in the hopes that inflation would come out at LESS THAN 7%…
To kill inflation the rate must be 5% higher than the rate of inflation. So 7.5% requires 12.5%. Unfortunately the cure may be worse than the disease.
Did you hear anything about Black Rock taking over Barclay and some other large companies
The market already priced in high inflation its always forward thinking today the market will go down at open and then probably go green at the end of the day bscause this is already priced in
A lot of peoples piss the pants while watching your videos imo. 😀
Why is no one reporting on 3 month T-Bill growth? It's approaching something like 1000% growth over time. That's a bubble. If inflation is high this should short circuit T-Bills and it's not. Can some one please explain this to me?
Tom's cold water sanity. Green new deal, EV subsidy is dead. Tsla does not need it. Legacy auto will get an ICE phase out delay of 5 years (longer, but Dem's will wait for losing mid terms to blame Repubs, Kubuki), Chip factory builds in US are moving fast (supply). Stagflation, Jimmy Carter style, will hit, Volker rates or not. Gruberment deficit is the rock in the soup as Tom says (US never had it so bad, ever, ever).
Glad you two decided on the head shaving bet. It's the best and friendliest way to settle a bet. Although one of you dressing like Jim Cramer was also a solid idea.
Everyone that warned of MMT was summarily dismissed. The QE trap began in 2009 with $4t.
LGB
A key concept that most people fail to understand is that assets (like stocks) are the very first part of the economy to price in inflation. When stocks go up as in the case of the last year, inflation is happening
Meet Kevin gonna start his live market streaming again just to say I "I told you "
My consultant is Theresa Marie Wenske, I found her on a CNBC interview where she was featured and reached out to her afterwards. She has been of immense help since then.
Fed is going to monitor the velocity of money carefully. QT will begin early, which makes sense as there will be no additional fiscal stimuli and it will balance it out with QT. Inflation could go on for a while but I am not betting too much money on it. Wages are going up still mostly for the bottom and low class. Secure and well paying jobs are more or less paying the same. Consumers will reduce spending which could radically slow down the velocity of money if prices keep going up. All that M1 still sits in the bank.
Always the double what the fed says the inflation rate is. The true inflation rate is most likely at 15% and rising.
National debt is at 30 trillion and rising. It’s all going to come crashing down soon.
Next time you make a gentlemen's bet, have the loser get the same haircut they had in the 8th grade. It's hilarious. The market is in the toilet already today. Open 30 minutes and everything is down 3%.
Thanks Chicken little. When inflation and monetary policies are held artificially low for years, a rebound has to be expected. This supply chain shock will not last forever as the market will adjust. Try focusing on the long-term trend and not the monthly headline number.
Is this the beginning of the end of capitalism as we know it today, you thing nash? Since from what I understand the fed is kind of the owner/manager of the dollar and the they now just lost their controll of it?
Funny thing is …who going force the Feds to pay back lol… you can print as much as you want.. who going force you to pay back?..
It was 0.2% more than expected lol maybe it’s way more than expected..
Tom, your missing a key factor. Stocks now surge with inflation. 😉
Tom/ per MeetKevin’s video last night. This number isn’t as shocking as your saying…
If the moronic truckers would stop blocking borders it would help.
It has always been, "oh no we have inflation so interest rises must happen" however world wide government debt was high before the pandemic. Now that debt is so high that there is no choice than to inflate their way out of trouble. That means low interest rates and high inflation until wages and prices are so high that the taxes generated by them double. Cash is going to lose a lot of value. The only thing to do is own real estate or good companies that can raise prices without losing sales. Hold as little cash as possible. Short term things could get ugly until everyone figures out what is going on then asset prices will sky rocket with inflation. IMO.
I hate it when my gutter feeling is right on these occasions atleast on these moments , 😅🤣 already found the 2019 thru 2021 combined growth bit nuts!
Governor Ron Desantis of Florida offered to open up their ports to relieve some stress on the back logged ports a while ago. This inflation seems intentional at this point.
Why leave ships on the water instead of redirecting them to another open port on the other side of the country?
I have cash on the side to buy the dip . This will get worse soon between March and April most likely. Even Elon said this will be bad in spring or toward end of the year
Market is going to sell off short term but long term stock investing is the best hedge against rising inflation.
prepare to shave your head Tom; I think it'd suit you, goes well with the national outfit
Tom, the gov has tampered with the CPI swapping out expensive items for cheaper “equivalents”. We’re actually at something like 14%…
Love it Tom. 5.5 trillion is crazy. This is printed money that was pushed to the system. What did ppl expect to happen?
Boomers retiring = wage inflation, supply chains leaving the CCP = price inflation. It will pass but not quickly.