Is inflation beginning to plummet? Well, The Washington Post thinks so in this video. I'd like to show you a report from The Washington Post that suggests inflation is beginning to plummet now. I'd like your commentary on this, but let's go ahead and go through this and then I'll add mine as well. So here we go.

From chicken wings to used cars, inflation begins to ease its grip. Let's take a look at this: The price of gasoline is dropping. Like A Rock Chicken wings are suddenly becoming a bargain. This, by the way, was a huge huge issue.

When a Wing Stop reported that the price of chicken wings was up like 30 to 70 percent depending on which quarter you were comparing to, everybody was like oh my gosh, who cares about inflation At seven percent, We've got chicken wings going up 30 percent to even more for certain varieties of chicken. Anyway, so so I think that's probably why they're mentioning chicken wings suddenly being a bargain because it hadn't been for a very long period of time and retailers drowning in excess inventory looking to make a deal You you don't say Remember my Black Friday video when I went around some retail shops and saw those TVs and computer stacked up? Yikes! After more than a year of high inflation, many consumers are finally starting to catch a break. Even apartment rents and car prices. two items that hammered millions of household budgets this year are no longer spiraling out of control Really important and the FED is recognizing as well.

this fall of new leases being signed and what they're actually paying attention to When this is so important they're actually paying attention to. Will that fall in new leases continue or is it going to stabilize and potentially Circle back up? That's very, very important and something the Fed's really paying attention to? Global Supply Chains are finally operating normally as more consumers suspend up more in on in-person services like restaurant meals and less on goods. and Furnitures uh Furniture Goods how's that going to affect Restoration Hardware Reporting this week, we'll see that middle to Upper end consumer I mean who really buys a Restoration Hardware I I Don't know I've never brought myself to buy there I Just can't spend a lot of money on furniture. We only have 500 couch and then after five years we just get another 500 couch.

It beats having like a seven thousand dollar couch that maybe lasts 10 years. It's not worth it. Anyway, our opinion, of course, might be unpopular. Anyway, the cost of sending a standard 40 foot container from China to the United States uh is West Coast That would be like your Long Beach Los Angeles is now under two thousand dollars down more than 90 percent from the peak.

This is true. We are seeing shipping costs plummet. It was one of the reasons I briefly shorted Zim I made a little bit of money on that short. The moderation in inflation is just beginning to appear in government statistics.

Well, that that's bullish in October the Fed's preferred pricing gauge. The Pce posted its smallest monthly increase in September of last year. Great. The worst of inflation is behind us says an economist here for TS Lombard The question is, where does inflation settle and this is true.

That is probably the biggest question now is is inflation going to chill at five percent? And if it chills at five percent, Does that mean the Federal Reserve has to keep hiking? Uh, that is. Maybe we end up going to a six percent terminal Fed funds rate. or are they just going to keep us at five percent for longer? That's the big concern right now is how long is the Fed going to keep rates high? And I think a lot of folks are saying well, the answer to that is how long is it going to take for inflation to actually come down? See, this is the projection right now. We'll pull this up on screen right here.

This is the Federal Reserve's projection. The black line was a month ago and you could see us hitting about five percent almost five percent and then rotating down slowly into 2025, which is the bottom right corner that I'm kind of locking. There is February 2025. Well, the blue line here you can see has started falling sooner, falling as soon as about the end of 2023, and falling sooner.

So a lot of folks at least the market pricing in this idea that ah, rates are going to go higher, but they're not going to stay high that long. Well, if inflation ends up stabilizing around five percent, maybe the rates will stay high longer. Some folks of course are saying hey, no, the Fed's not going to keep rates high that long Because we'll It'll end up pushing us into a depression. They'll have to have Mega Rate Cuts coming very soon.

I'm actually a fan of that belief, but it's going to be it. It's all going to be predicated on how much inflation actually comes down. Where it stabilizes, the deflation stabilizes at three percent. Honestly, I Wouldn't put it past the FED to just say hey, look, for the last 10 years we've been at one to one and a half percent inflation.

If we sit at two and a half to three percent inflation for the next 10 years, we think that'll average out to about two percent and we think that could be okay. So I do see the FED loosening their target a little bit with this argument that oh well, we still have a policy of flexible average inflation targeting known as Fate F-a-i-t Flexible Average Inflation Targeting pronounced to Fate Anyway, let's get back over here and let's see what. uh, the rest of the Washington postings here. That chair Jerome Powell on Wednesday noted signs of progress, but said it's too early to claim victory.

Yep, it'll take substantially more evidence to actually be convinced that inflation is coming down. sure still. The Washington Post says there are clear signs of improvement in merchandise pricing. This is interesting as consumers resume their pre-pandemic spending patterns, excluding volatile food and energy.

Glitz Prices rose in October by 5.1 percent. That's sort of your core read: I believe they're using the Pce. Read here down from 12.3 percent on an annual rate in February. Yeah, well, that's when you multiply by 12 the month of a month.

But anyway, as good prices begins begin to cool, pressure is building on Services Rising Demand and limited Supply Think short staff Restaurants has Services inflation running at an annualize or annual rate of 6.7 percent more than twice the figure a year ago. The expectation is that Goods prices will continue to disinflate, but service is more gradually and may be more sticky. Most of what's Happening Now with prices reflects developments in specific markets or consumers return to pre-pandemic routines. The plungent ocean shipping costs by itself has stripped roughly 3.7 percentage points from the inflation rate, making credit more expensive.

The FED has put a major dent in the Housing Industry right? Well, this is where now we get to talk about rents and home values and what's interesting here is they say the full effect or they say here but the full effect on the economy of how higher rates will take many months to materialize. This is despite home sales in October being 37 percent lower than a year ago. That's another big issue we face is when are we actually going to see the bottom of Housing and will that drag down inflation in other areas? Think about some of the services related to housing and how those Services could actually infect or affect inflation. You've got construction, title, and escrow loans Open Door Apparently just sent out an email.

This is a rumor I Saw it but somebody sent an email around saying oh, open doors Now closing their lending business. That doesn't surprise me I Mean lending has almost no pricing power in this environment right now I Want to say 95 of people would not benefit from refinancing right now? That's because they have rates that are lower than where current rates are. So lending is a really difficult industry to be in. But when you look at all the services related to real estate, think Electrical Plumbing Handi folk, painters, drywallers, anyone related to the building or Renovations which are important right before you go to sell a property.

All of those Services would expect to see disinflation as demand falls off a cliff in construction. Remember, generally what people do is they spend money to fix up their homes. Ironically, right before they sell them. They don't even get to see those benefits or right after they they buy them.

But people are buying homes less and people are selling homes Less In fact, Redfin just put out a post about how the most properties are being delisted that they've seen in a very long period of time. I Want to see if I could pull the exact data piece here? I Believe I have that handy. It is the Redfin blog post that just came out and uh, there it is. Okay, Sellers: Okay Record: D Listing: Two percent of homes were de-listed without being sold each week during the three months ending November 20th That compares to 1.6 percent a year earlier, suggesting the Boom is over and there's a complete reversal in the housing boom time.

Now this is a record amount of D listings. They don't necessarily suggest in how long it is, but Redfin has a full blog post on that, so they might have some more details on that. Uh, either way, it's it's clearly painful and so we could see that just housing alone could push Services inflation down as well. not just through fewer people buying, but also fewer people selling, Pushing that real estate agent, title escrow, lending, and all of those Services down.

This is why we talk about the velocity of money, right? One person spends one dollar. Well, that leads to five or six dollars into somebody else's pocket. That's because they always think about the hot dog vendor. The hot dog vendor sells you the hot dog.

You give the hot dog vendor that buck 50 for the Costco or Walmart hot dog What do they do with that? Well, they buy more hot dogs. That gives the hot dog supplier jobs. It also gives the hot dogs seller jobs. It gives the marketing company for Costco and Walmart jobs, right? It flows through the economy generally four to five times.

Spending does savings only flow through the economy about one to two times, so they don't really flow through the economy as much. This is why the government's always encouraging people to spend your money, not save your money. That's why they give tax benefits to businesses for saving by the way or sorry for spending by the way. Uh, this is why people are like, oh, how come all the businesses get all the big tax breaks so you keep spending money Well anyway, to be sure, in the 26 trillion dollar economy, prices on some products are always falling even as many otherwise rise in June When inflation reached its highest point in more than 40 years, prices nonetheless dropped uh that month for bacon, window coverings and men's sweaters according to the POS So it's important not to exaggerate the recent Improvement Okay, interesting with Europe and the United Kingdom and recession and China hobbled by its restrictive covet zero policy Global demand for oil has sagged.

A barrel of Brent crude now goes for about 85 bucks, one-third less than in the early March of following Russia's invasion of Ukraine. As a result, the national average gas price has fallen to 3.47 down 8 percent from a month ago. now. gas spending is really heavily correlated to people's ability to actually spend on Goods Some folks say there's like a 1.5 x multiplier on gas, so for example, if you could save 100 bucks a month on gas, you'll spend 150 more on junk.

Uh, Anyway, continuing on here, many retailers find themselves with unused usually High inventories. Yeah, no kidding, we saw that Tolga I don't know who the heck that is Uh. Ikea's corporate parent told Reuters Okay, there you go. Told Reuters this week that he was quite optimistic about being able to lower prices in the Uh months ahead and the company did not reply to a customer comment.

fine. Walmart said last month it will look for pricing opportunities for areas where they can cut prices. Sam's Club recently cut the price of its in-house hot dog to a buck 38 from a buck 50 undercutting. Costco I Mean that's like a marketing gimmick.

Let's be real. Living with high prices through the year has been has had a cumulative impact. Whatever. Fine, fine.

Okay, I've pre-read some of this and it's just kind of boring. A lot of pricing pressures, However, this is interesting. The situation reversed this fall when production rebounded just in time for typical seasonal decline in demand. The amount of chicken and Cold Storage jumped nearly 20 since May according to the USDA that's created some Bargains at least for restaurants, wholesale prices for boneless chicken breasts have dropped dramatic quickly over the past six months at Wingstop hey, that was one of the ones we've talked about fast food chain based in Dallas Executives said the cost of bone and chicken fell by nearly 43 for the quarter ending September 24th.

That's crazy. We have a favorable commodity Outlook not only for bone and wings, but also for chicken breasts. And that's the other thing is is you know when you look at like the Bcom index you see Commodities have really flattened out uh on on their prices. This is, they're not plummeting anymore.

They really, they fell. But they're not plummeting anymore. But certainly nothing like the kind of damage that we saw in March. So uh, in order to see be calm, you could just do a quick little boo a Google For bcom, it's the Bloomberg commodities index and uh, what you'll find is you could either use Bloomberg or market watch or whatever you want and you can look at the Bcom chart.

uh which? I'll pull up right here. This gives you bcom here. This is the year to date index. You can see we're sitting at about a buck 14 down from about a buck 36 Buck 34.

But if you go, go to the three year on this. You can see we're still well above where we were at any point in 2020 uh, or prior to 2022.. So we're still up there. Still some room for Commodities to really come down.

We just haven't seen that just yet. Of course, there's a lot of Hopium around that, but remember folks, hopium is not an investing strategy. However, what might be is investing in your education by checking out the programs linked down below and building your wealth and using Code PB Continuing on to this: Wingstop hasn't lowered any retail prices, but said the new offering of the chicken Chicken wing sandwich for 529 in a combo meal. Uh, uh.

okay. so basically they've introduced some new products here, right? that may come in at a new price without making other prices seem like they're coming down. and after soaring in 2021, wholesale used car prices are down 15 percent from January New car prices are also slowly starting to act. remember Tesla just came out with some new price Cuts Really? Uh, trying to for certain models trying to pre-price in that thirty six hundred dollars so tax credit or providing a thirty six hundred dollar rebate on certain Vehicles bought in December I Think they're really trying to suggest hey, look, we know there's a tax credit coming next year.

Don't wait to buy, Buy. Now we'd rather sell you a Tesla Now that of course gives rise to some people saying oh, it's demand falling Africa for Tesla Who knows. Uh I Guess we'll find out in the earnings. Uh, you know if if Tesla does not sell all of the vehicles it produces, it's bad.

It's gonna be very bad for Tesla Anyway, although Elon suggests that's not a problem. but then again, Elon suggested some things before and those don't always come true. Sometimes they're a little more hope than actual reality. Anyway, more ample supplies mean fewer customers are paying above MSRP for cars.

The average new car in October sold for 46.991 which is about 230 above MSRP In May the average price a buyer paid was 721 above list. Usually this is always below list. so the fact that we're still above MSRP really shows that. Yeah, things are improving, but prices are still up.

Dang it, we got some work to do. In other words, All right. Apartment rents, meanwhile moving steadily higher all year long, are finally cooling. The national average rent for a two-bedroom apartment is up eight point one percent from a year ago, down from April's 14.6 percent rate.

So you're seeing that inflection point down, especially in air areas like Boise Phoenix and Austin Rental prices are cooling. Real-time rental data takes months to show up in government statistics Yep This is really talking about the owner's equivalent rents. Let's take a look at some of the comments here and they're Wow. 2.6 000 comments.

Okay, let's just see if we can sort by the uh, most liked replies. Let's see what we got here. Of course, inflation is down, the election is over. You gotta love the immediate immediate tinfoil Hat now.

I Know you can't blame some of this because some of the data just seems rigged like when we. Analyze That Jobs data. It's like really all the private indicators are suggesting jobs are are Contracting Yet all of a sudden your establishment survey is coming in with growth I Get it? I Get it all right, let's go ahead and collapse that one since. uh, we'll call that one tinfoil hat here.

What do we got here? Uh, either way, consumers are unimpressed. Speak for yourself. Those of us love driving around looking for chicken wings or feeling pretty smug. Okay, all right, that's uh.

that's one way to suggest that you're enjoying lower gas prices and cheaper. um, cheaper chicken. Trumpets are here to vent their Fury that inflation is easing I Mean you have to say like you can't give Trump a total pass for the inflation just because most of the inflation fell on Biden's shoulders because a lot of the pandemic policies that were bipartisan under the Trump Administration right? Think Pelosi McConnell stimulus policies and Fed policies led to the inflation that we have today. It would be really funny.

Although it's probably not likely to happen. It would be really funny if inflation goes to zero right as Trump takes office in 2024 Again, I Think that's unlikely to happen. but imagine it did inflation zero and Trump is in office. It'd be kind of weird because it basically means Trump just missed out the painful inflation cycle that he kind of also had some responsibility in causing.

And I'm not saying Biden's hands are clean right? shutting down the the uh, you know, uh, north, Um, not the North Stream Pipeline. although they could have had their hands in that explosion shutting down the Keystone big mistake should have been pumping more oil over here during the oil crisis. Uh, this person says thanks Biden Well, he's not the only reason for that. In fact, Biden probably has more to do with uh Base gas prices being up than down.

uh. besides Russia's illegal war on China's insane no covet policies I Firmly believe we are overwhelming. the overwhelming driver of inflation was corporate greed. If you've never worked at a corporation, then don't comment.

uh. I don't know about that. I really disagree with that. I Think corporations are driven by shareholder demands, right? Shareholder demands are, hey, can you make sure we're increasing profits? Uh, while, uh, while providing value for our customers, right? That is the mission statement of a corporation.

How do we provide more value for shareholders? Remember, shareholders are people like you. me, people who are retired and employees of companies. So it is a job, the job of a corporation to maximize profit margin. and if people are willing to pay more for whatever reason, that is, if they're willing to pay more because they have more money or because there are shortages, then it is the capitalistic response for corporations to charge more money.

If you don't like that, then you might prefer a system like communism where when price ceilings are set in place. That is, corporations can't raise prices above a certain level because they're required to by the government's sell product at a certain price. Then guess what? You end up having you have gas shortages like we had in the 1970s here in America where prices weren't allowed to go above a certain level. Or you have shortages for bread or everyday goods and services because there's more demand than there is available.

Supply So that to me, this isn't necessarily a factor of corporate greed. Corporations can profit from shorter shortages because they can maintain margins, but it has more to do with supply and demand. Dynamics And and the way the economy functions Like people don't say the and think about the reverse right. In my opinion, people don't say the reverse.

Oh, corporations are cutting prices on all these computers they have because they order too many and they're way too many computers. Corporations are all of a sudden charity cases. They're cutting prices. How nice of them.

No. I'm not going to give corporations credit just like I'm not going to say corporations are trying to be greedy I'm not going to give corporations credit for lowering prices and suggesting that they're Charities Because they're not. they're just responding to supply and demand. So I don't know that.

That common generally always bugs me. Uh, then I Don't Know Jack Do you have anything to add? No. All right. Uh, let's see here.

What about? Uh, let's do another. Maybe one or two of these stories like this after the election make me skeptical of journalistic integrity. Uh, okay. Well, all right.

I mean they're They're like what they're reporting is not wrong. Some things are still expensive, but the trend of many things is down. freight costs chicken. Commodities rents.

They're not wrong about that, right? And they've been talking about these sort of changes all the time. So I think it's just potentially convenient that people leave these cards. You mean greed. Inflation is letting up.

Check the profits for these companies. Corporate greed is what's destroying America Pretty cynical view I Don't necessarily agree with that. Funny how the inflation pandemic Panic ended after the elections. Uh yeah, a lot of cynicism here in the Washington Post Good lord, Well you know what.

That is. what it is. Anyway, let me know what you think about this style of video. It's really yes, just kind of brainstorming together on a piece that I find interesting and responding to some of the comments I'd like to hear.

If you want me to kind of continue this, you actually made it to the end of the video comment something like um hey, PP more reactions That'd be awesome just to let me know kind of what you like I think it'd be really useful for me. Thanks so much for watching and folks we'll see in the next one. Goodbye.