Members in comparisons in about two seconds. Hey, Rick Yeah, that's absolutely true. Consumer Price Index for the month of June We're expecting a headline number to be in the neighborhood of Up Three tens, but I'm going to be paying most attention to the Core at Up Four Tenths our last look and I'll tell you why in a moment as we wait for these numbers to populate. And here we go.

If you look at the headline up two tenths of one percent, up two tenths of one percent and that, of course, uh, comps to the Up one tenth in the rear view mirror. It's a one-tenth lighter than expectations now. CPI Core X Food and Energy up two tenths, up Two tenths. And that that means it's not the fourth consecutive month up four tenths.

And it also means it's not the seventh month in a row of four tenths or higher. And that was a record going all the way back. The last time we had something along those lines was from October of 89 April 90 where it was nine in a row. so we still stop that as well.

And Up Two Tenths on the Core is the lowest level, going all the way back to February February of 21 when it was only up 110.. And if we look at year over year, up three percent, four percent in the rear view mirror. Well, four percent in the rear view mirror was the lowest level since March of 21.. So when you see three percent, you have to go all the way back to March of 21 again, because that's where the comp drops from down to 2.6 is what we're comping to and then the rear view mirror.

four percent. And here's another one if you look at X Food and Energy last month was up 5.3 That was the lowest level since Nove of 2021. We breach five percent to 4.8 4.8 and that remains at the lowest level since October of 21 when it was 4.6 We could see that interest rates have fallen about three basis points in tens from 393 to 390. We see that the pre-opening equity markets have rocketed higher Dow futures up basically 200.

And of course we are going to monitor if there's any changes in Fed fund. Futures I Don't think so at 10 o'clock Eastern look for Bank of Canada go a quarter point to five percent dollar Index Prior to this number, of course, was it a two-month low. My guess is it's not rallying at this point and we're all going to pay attention to the UAW You know, wages are big issues we learned last Friday and UAW and Strikes and minimum wages across the country. All of those things may be good for many people, but there's very little doubt that they also fuel some wage inflation.

We need to pay very close attention to that. Joe All yours. So no change in. Uh, so Bookfar was on.

He said they're going in July no matter what. Uh, no change in in that probability. Okay, So basically I'm gonna pause CNBC right now because this is Big. So as you can see on the screen CPI year over year is only three percent.

Three percent. Now we came off of a four percent make. That's a major drop. The main reason we saw this drop is because of the comparable month that we're dealing with.

Don't forget that every single month we have to compare it to the previous years same month. So this June is going head to head to 2022 June which was 9.1 percent. So that was the worst month ever. right? Nine Point one percent.

Now, the cliff is so high that dropping from four to three percent is basically because we're going head-to-head with a nine percent month last year in June. So that's the reason why you see the Steep decline. It doesn't necessarily mean that inflation is dying down as fast as this would indicate. It just means that June 2022 was so bad that this normal June of 2023 is going to give us three percent inflation.

Now there's big big implications to what just happened on the stock market. Massive. I Want you to listen carefully. The last two times John Powell The FED of the Uh, the chair of the Fed was asked about interest rates for the rest of 2023.

the last two times he was asked about us, he was categorically saying without any doubt that there will be 100 interest rate increases before the end of 2023.. Now for the two times that he said it, nobody believed him. The market ignored it. The market basically called this a bluff Now just last week when the employment numbers came out.

Everything all of a sudden change, employment numbers were hotter than expected. Which basically means that the economy is doing way better than expected. It's too hot and all of a sudden there were cracks in the Jerome Powell is bluffing Theory And then you saw a few red days because the market started pricing in the option. In fact, the probable option right that Jerome Powell will indeed increase rates before the end of this year to cool down this Market But now with what just happened today, it's a whole different ball game.

Now, the whole theory that was predicated on John Powell Basically, bluffing is becoming way more probable than before. with three percent inflation. The U.S economy is now one percent away from its Target. We started off with nine percent.

Exactly a year ago, we're currently at three percent and our Target is two percent. We're literally one percent away. Is there a reason for the Central Bank of the United States the Federal Reserve to increase rates In this scenario? Well, realistically, not so much. because according to the Gold Standard of setting interest rates to battle inflation, which is the Taylor rule, the Taylor rule specifically states that the way to calculate how much interest rate you need is very, very simple.

You calculate how much inflation you have, which is three percent you deduct from that. the good inflation, the acceptable inflation which is two percent and you get one percent. You multiply that by two, you get two percent. So according to the Taylor rule, just roughly speaking, we're okay with two to three percent interest rate.

To battle three percent inflation, we are currently at 5.25 Federal fund rate. We're way higher than where we should be given the fact that we're three percent. inflation. is there Central Bank In the world with a right mind and sound mind, that would increase rate in this scenario, probably not, and that basically punches a massive hole in what Powell and his Compadres were trying to do for the past few weeks.

Powell has been trying to intimidate the market into submission by saying we're going to increase rates. He was speaking it into existence, scaring the market, causing people to spend less, causing businesses to fire more people, and basically slowing down the economy by scaring it like a bouncer scares people in front of the club. Nobody fights the bouncer because he's big and menacing. Nobody fights it.

Nobody wants to test the bouncer. So the idea was powers to scare the market. the market is going to drop down and then there were no. No need would be for the interest rate hikes.

I Don't think at any stage the Federal Reserve had any serious intentions of actually raising rates in 2023. Maybe they still will. That would be very stupid if they will, but maybe they still will. But we said this on our Patreon community many times: Patreon.com forward slash top Nash on our Zoom calls our members Below in the comments, if you're a remember comment below, tell them what I'm saying is right.

I've been saying a hundred times in our Zuncles for the past few weeks Powell is 100 full of it's not gonna raise rates in 2023. There's no need for that and the threat worked, especially with how the employment numbers came out, but it worked to an extent. Now it's absolutely redundant. With three percent inflation with five percent interest, the market is going to slowly tumble down into a complete Halt and there would be no need for more interest rate hikes.

This has massive implications on the stock market for the remaining of the year. Now this means that from this point on, whatever that was, whatever chance of Powell raising rates that was still priced and baked into the market will now have to be eaten up by the market. So this would mean maybe not today, maybe not next week. From this point on till the end of this year, because of that three percent number that we just saw right now, the market will have to price that in.

So this is a very bullish sign for the market for the next few months. This means that the market to an extent will have a much more longer bullish cycle than what people initially give it credit for. Obviously, we've seen a lot of hype from AI This is another log in that fire. Adding a three percent inflation into this hype cycle basically means that there's more gasoline in the tank for this rally for this bullish cycle.

How long it continues I Don't know. It actually will not be linear. Obviously, nobody thinks it's going to go up shooting up in a straight line. There would be red days and red times for sure.

But what just happened today? that three percent is a very important sign. It basically is that positive Catalyst that people were waiting for on the macro level to support all this hype from the AI side and the growth side. Now this is the beginning I believe of a very bullish cycle for the market for the next few weeks few months. Obviously you know it's going to be up and down, but in general the direction would be positive.

Um, I Think that power raising rates at this point would be hella stupid. Of course they might do it. they're the fed and they've done stupid stuff before. but I would hope not at this point because now it just seems that the best thing is for them to just keep it at five percent until inflation comes down two percent and then slowly started.

You know, probably dropping it not to zero, but you know, closer to two or three percent, which is where it should be. Um, now, if you enjoy this macro breakdown and you want to join our community uh, Patent.com forward slash Domnash it's on the screen now below my beautiful face. you can join. It's a five dollar membership for the general membership.

Uh, we also have Tom's Academy a brand new thing I Just launched for people to learn how to model, how to evaluate companies have become a better long-term investor, how to descend to good companies over the long term. and of course on Patreon. We'll do a lot more of these macroeconomic breakdowns and we have an amazing Discord When you can chat with our community and talk about these things in real time, would love to see you there. We just crossed 5 000 members which is an incredible Milestone Thank you everybody for joining me today! I'll see you in the next video.