Welcome back to another CPI Inflation report. We are just seven minutes away from the report coming out. This is pretty intense. I'm gonna go through my predictions as well and uh, give you a quick reminder of what you want to have written down.

I I Just want to be very clear this: these next two hikes are really important. Or hikes. Uh, so used to the FED These next two CPI reports are really, really important. Uh, they're so important because they set up whether or not the FED pauses or continues hiking.

And that's actually the most critical moment because we've known for the last year that the Fed was hiking, hiking, hiking, and continuing to hike. Uh, and so now we've come to this inflection point where Jerome Powell is convinced that, hey, maybe, maybe we've gone far enough. Maybe we've done enough. Maybe things.

Uh, in terms of financial conditions. whether it's credit conditions or just interest rates in general, the real rates. With maybe things are tight enough and if things are tight enough, then just perhaps we could pause. That's the expectation, right? But it's all going to come down to these next two reports.

These next two reports are extremely critical. Now, one thing that I did notice, which I think is very interesting when it comes to inflation is when I talked about inflation. uh, the other day on uh uh, on the channel where I talked about uh, you being lied to essentially right where the mainstream media is taking the year-over-year figures and they're telling you, hey, look, uh, inflation is so bad. Look at all these companies that raise prices massively in Q1 and they're using these year-over-year numbers to tell you how bad inflation is.

Uh, well. What was fascinating was I Looked at the comments in that video and there are still a plethora of people who widely misunderstand inflation. Oh, there are a lot of comments like yeah, well, I'm still paying 35 more in car insurance and my home insurance is up 25. That's true, and it entirely could be POS possible and by no regard Am I saying that's wrong.

But that doesn't mean that we still have inflation today, because see, you could pay a lot more than what you paid in 2019. we could literally have had 50 inflation on every single category between 2022 or sorry, 2021 and 2022.. But what we care about is what prices are doing between 2022 and 2023. When we're evaluating what the FED is going to do now I Understand, from like a household point of view, it's a piss or that we're paying a lot more money in in, uh, you know, medical insurance, Health insurance.

Well, obviously that's health insurance. Uh, your homeowner's insurance. especially if you're in Florida or your car insurance. You know, restaurants are more expensive.

A McDonald's is more expensive. The groceries are more expensive. Absolutely correct. All of those things are more expensive.

But that has nothing to do with the inflation rate between 2022 and 2023. because a lot of those price increases occur between 2019 and 20. 2020 and 21 and 21 and 22. And so that's a really important distinction.

Uh, because we're basically, you know, we had two years of money printing. Uh, two, one, and uh, or 20, 21 and 22. that's a lot of money printing. So there is a really big fundamental misunderstanding of inflation that actually I think is leading a lot of people to be significantly more bearish than they should be because they're thinking, gosh, golly what You know, why would the Federal Reserve ever cut rates? Why would I invest in stocks? Well, I mean like my car insurance is of up 35 Well, why would I do this? It's never going to go back down.

Correct. It's never going to go back down. It's not going to go back down for a very long period of time until artificial intelligence starts replacing companies like lemonade that built their whole business model around the idea that they have an artificial intelligence chat bot that probably chat GPT just put a big knife into the back of I Hate to say it for lemonade, but um, yeah. prices and the way inflation works is very different from what we think, sort of on a daily basis.

And and if that misbelief is guiding you into a direction of of investing in a way that, uh, that that believes that inflation is here to stay forever, you ought to be careful because the odds are it's not going to be here forever. The actual fight right now is how long is it going to just stay slightly elevated And that's going to help us dictate how long rates are going to stay high. But keep in mind, inflation does not need to go down to two percent for the Federal Reserve to cut rates. inflation just needs to Trend towards two percent.

And Jerome Powell gave us the formula. Real rates have to be two percent. So if inflation expectations fall. uh, we could actually see a one percent rate cut even while we're still above two percent inflation.

It's really incredible. Uh, he gave us the formula just watch his last meeting. It was, uh, remarkable. But anyway, so we are now two minutes away from the CPI data.

The CPI data set. Uh, you know this is this one's gonna be big. Uh, the month over month in the headline stuff I don't really care about I care about Core as everybody should. So month over month, we're looking at point Four.

but we're also looking at point four for Core, so that's an easy thing to remember. I Thought that was 0.3 At one point it looks like, uh, it got moved up in the last 24 hours here. Uh, 2.4 So we're looking at 0.4.4 Uh, and then for the headline number. thanks to a little bit higher of energy prices last month, we're looking at, uh, a flat read of five percent.

Uh, year over year. Five Five percent. That's the same as what was in the prior read. And then the most important in my opinion, is that Core 5.5 That's X Food and Energy I Really want to see that? come in at Five Four.

So my expectation here is a match on the headline Uh, Core. So headline Core Match Five Five CPI Year over Year five. Uh, and I'm really hoping, uh, that that we could see that uh, uh, a CPI Core month over month come in at Uh at slightly under just one tenth under would be fantastic. Uh, but we've got about 40 seconds left so we'll see what we get and uh, then we'll go through the report.

So um, oh, buckle up, it's gonna be exciting I'm excited. Anyway, it so uh again, uh, 25 seconds left. Uh, remember that? Uh, tonight we are Finally we've activated the 120 price increase for the AI course. Uh, on actually making money so not just.

here's a list of stupid tools like we're actually going through. Here's how to actually implement this into a business: As an entrepreneur: How to make more money? Get sh9t done faster. Best price guaranteed for life and lifetime access. Here we go and CPI month over month is.

uh, not out yet. Okay, 0.4.4 4.9 and 5.5 I Freaking nailed it. Let's go. No way is that right.

Uh uh uh no. I Know they flip-flopped a little bit. but anyway, CPI year over year 4.9 Uh, the core was 5.5 Dang it, that's the one I thought was gonna come in one tenth under I was wrong. Never mind.

4.9 year over year? Uh, that's good. Uh, 5.5 is just basically a match on the core and then match on the core 0.4 So uh, really, matching expectations? That's good. Dang it. I saw that one tenth below and I got so excited I'm like no way.

uh, but that's okay. it's okay to be wrong. So um, this is good though. So we got a match with one number coming in slightly under.

it's not a beat which is like it's not a bad number which is good. In other words, we didn't get something higher here. Let's go through the details now. now.

we got to see the big one is going to be Core Services uh x uh. housing? That's a big deal. Uh Wall Street is calling this bang on target with expectations. Which is good because another thing that creates a lot of uncertainty in our markets is the fact that you know these numbers have been all over the freaking Place lately.

All right Consumer Prices Rose Point Four. Uh, seasonally adjusted fine after increasing point One. But that's mostly because of the, um, the energy. This is the number that came in one tenth below 4.9 Uh, I Get excited about that.

Uh, let's see here. then we've got all items less food and energy Rows: 5.5 That's the one I was hoping would come in at 5.4 It came in at a match at 5.5 Uh, okay, let's see here the other sectors: The shelter was among the largest factor. Still, are you serious? Less food? Among other indices that Rose in April was the index for used cars and trucks, which increased four point four percent. used cars still popping off? That's crazy.

Some of the leading data was saying they're finally rolling over, but apparently not at CPI Uh, the indices for recreation Household Furnishings Operations Personal Care Apparel uh, see personal care we don't like to hear that also increased in April. Several indices declined in April led by airline fares which fell 2.6 over the month after rising in Feb and March New vehicles declined 0.2 percent Medical Care Services Unchanged in April Hospital Services Rose six percent annualized. Those are a little volatile. Uh, okay.

index for all items, less food energy Five Five Shelter index increased 8.1 percent over last year, accounting for 60 of the increase of all items. Other indices with notable increases over the year include: Motor Vehicle Insurance Uh, yeah. well, we've been talking about that household Furnishings Operations Recreation and new vehicles. Okay, let's get into the actual report I Want to see the X housing one that's going to come through in just a moment? Let's see annual increase a little cooler than forecast.

That's good. Equity Index indices surge higher in pre-market trading. Two-year yields are at the low. Well, yeah, because again, we we just don't want to get the rug pull right? That's what people are hedging against.

Let's get the actual detailed sheet, which is really important. but people do not want to get rug pulled. The rug pull comes from. Uh, the uh.

the you know, inflation reanimating? That's that's when you're screwed. If inflation reanimates, we're done because then you get Paul Volcker. Because then inflation expectations get ruined. You get Paul Volcker.

Uh, it's hell like even a coupon code that expires is not going to save you if inflation reanimates. Okay, so of getting the um, the actual charts here is taking a tiny little second longer. Biggest contributor was housing. Yeah, we already read that.

Come on. Wall Street Give me something I didn't already know and give me the data. please. All right.

Uh, there we go. Got it. Okay, here's the chart. This is the fun part.

Okay, I'm gonna go straight to the back folks. Straight to the back. Here we go. What do we got? Services Legal Services Come on man.

Oh wait. what column do we want? Hold on. Call them. Call and call them.

You want the far, You want the far right column. We gotta check out the far right. What is the far right thing? All right Here we go. Financial Services What the hell? 4.1 percent is it? Wait? is that that can't be right? Uh, hold on a sec.

March to April My goodness. Oh well. Come on man. that's tax season dude.

Okay, uh. okay. so Financial Services yeah. Tax Prep: Look at that tax prep of 6.4 this year.

Oh God that's month over month. That's horrible. Laundry and cleaning services Point: Five: Miscellaneous personal funeral expenses down a little bit. Okay A little cheaper to get a funeral? Uh, Miscellaneous personal services.

Two Point: That's bad. That miscellaneous personal services. That's not good at 2.4 It: It accounts for less than one percent of the CPI waiting. But still, come on man.

Postage: 0.2 That's okay. that's stable. Good education. Point One: Fantastic That I like that's very, very good Photography Negative: Well, yeah.

Chat EPT is a little bit of a problem. Photo processing just got replaced. man. Okay, maybe not.

I I Don't know. Let me talk about that in a different video. Other: Recreation Services Point Two: Good Stable pet services. Oh again with the pets man, people in their pets.

It's a good thing we actually just introduced a dog to the family. which is really cool. Uh, 0.6 purchase subscription, rental of video? That's that's high. But who rents videoing? What is that? It's like Amazon Prime or some nonsense here.

Okay Recreation Services Point Seven: That's hot. Uh. Public transportation? Oh thank goodness. Look at that.

Minus five percent. Uh, so good. Nice little weight down, all right. Motor Vehicle Insurance Still Rising on a month over month basis, That's not great.

One point Four percent over here. Not good. Uh, we've got transportation services. Negative Point Two: Okay, good health insurance.

Oh, health insurance actually coming down. That's good medical care services. We're at negative point One: That's good that medical care services is a much larger segment here than some of these other services. Where we're seeing it: rise.

Household operations. What is this domestic? Services What the heck is a domestic service? Come on over my house and give me some domestic service. Or maybe that's like Child Care at home or household cleaning or whatever. Water and sewer and trash collection Point Line: Okay, here we go.

Here's the here's housing: I Mean just sixty percent of the increase built in here by housing Still waiting for this segment to fall. Rent of shelter? It is coming down. You can see it's off that. 0.7 0.6 Now 0.5 That's still six percent year over year.

Uh, and it's that. This is a month over month figure, right? So Point: five percent month over month for rent of shelter. That's we. I'm hoping this slows down.

Geez, uh. lodging away from home down three percent month over month? That's good. owner's equivalent Rents still sitting at point. Five percent on the month over month basis.

Good. Lord Uh okay. what else do we have here? Super core price index? Uh is. Uh, Let's see it hasn't updated yet.

Yeah, everybody's waiting for him. Uh, founder of Inflation Insights is calculating it at point one percent a collapse. He says that would be great news. Yeah, everybody's trying to sitting there doing math on like Super Core or Inflation X Housing Right now? that's what everybody's waiting for.

So if you're waiting for what the next big piece of data is, it's when people actually sit and do the math of the inflationx housing. Sharif Of Inflation Insights points to Core: Services excluding rent and owner's equivalent Rent just Rose 0.113 There you go first. Math numbers in that's the category Powell has been focused on because Services X Housing have been lifted by the tight uh labor market. That would be really comforting for policy makers.

Okay, let me let me write out what what this is. Okay, this is really important. So remember this: sixty percent of of inflation that we just saw of uh CPI equals housing. Okay, housing is a type of service, right? We have Goods which are deflating.

We have uh, uh, Housing Services which should roll over. But honestly, we've been saying that for like six months we're still waiting for it, right? And then you have Services X Housing. And these are Extremely sensitive to labor. Like you saw Tax prep.

Tax prep was up like six point four percent in the month. So that's because labor is so freaking expensive, right? So Services X Housing Extremely Sensitive to labor What do we have here? We've got uh, 0.113 uh percent right here for Core: Services Uh, excluding rent and owner's equivalent rent. Uh, according to this guy who's named the Sheriff of Inflation or the Sure I don't know it's it's spelled, it's not spelled like Sheriff, it's spelled more like Sharif Uh, Okay, what else do we have here? Super Core Application Specialist. Let's see shows a breakdown of month over month Super Core figures Services excluding rent to primary residence.

Okay, here we go. Let me get this chart up. Uh, quick note. By the way, uh, if, uh, if you are interested in interning, uh with me, we want to grow the intern base a little bit, send an email over to Jobsatmeetkeven.com Maybe have like one or two openings jobs at Meet Kevin.com Uh, we've got.

uh, we've got a great team right now, but jobs that we can now come send like a 60 second video or something like that and uh, it's basically it's minimum wage I Feed you? Uh, you know I pay for travel entertainment. all that kind of stuff. but it's it's minimum wage for the first like year first year minimum wage. Sorry, you have to prove yourself.

Uh, and then you get paid more if you're good. Okay, uh, what is this chart? Look at this chart. so take a look at this estimated U.S Super Core CPI Month-over month percentage includes Top Line contributions. So what do we have here? We've got zero percent on the bottom.

We've got Uh yeah, there's the water, sewer, trash collection. Medical Care Minus You see that Recreation really popped off here. Education was only like Point One percent so some of those larger numbers that we talked talked about they're here. but it's just everything else is negative which is absolutely great.

Okay Cool. So I like that? Um Max you should hit us up too. I know I know you're you're from Canada Uh so. but anyway, hit us up.

Uh again. So what is this? Anna Wong Bloomberg Economist Uh Chief Economist was April study Corps CPI shows inflation is not receding fast enough to justify current market pricing for Sharp Cuts by the end of the year. That said, Bloomberg Economics believes the Federal Reserve is now placing greater emphasis on credit indicators and with so much uncertainty over future credit conditions and the debt ceiling risk coming to four, officials are likely to be less reactive to any single inflation report. Surprise.

This is good though. Uh, I mean so far, like I would say what you have here is an Ad Expectations report, but in addition to an Ad Expectations report, that's Super Core. If it really is, Point One that is absolutely phenomenal. Uh, because understand this and then I want to talk about the stock market for a moment.

but understand what how this works. Take this number and multiply it by 12. please do not make the mistake of trying to like create an exponent formula out of this. Okay, so so really, you're sitting at uh 1.36 annualized inflation in this report for, uh, super course Services That's really good.

That's absolutely fantastic. Uh, so so I'm I'm really excited about that. Uh, that's this is a very good report. It appears like uh, as a result, the market is cheering that you've got.

Oh yeah, I mean just look at how the well I mean we've been at these levels before, so it's not that great. but uh, you're definitely seeing some excitement here. You've got that tenuousness going into today. some excitement.

It's not like a rip roaring level of excitement, but it reiterates the Nike Swoosh Here's the thing. uh, a lot of people ask me about this. Nike Swoosh They're like, look Kevin this this swoosh that you keep talking about how long is it going to take long? The reason it's going to take long is because it's going to take a long time for people to get used to the idea that inflation could actually end up proving to be the T word transitory Now I Say that and people think I'm nuts. They get mad at me in the comments all the time.

but I like I I Really believe that when we're sitting in 2030, we're going to look back and we're going to have seen inflation that probably looks something like this. So that's your low inflation. Then you've got the insane inflation. Then you've got some inflation like this, stays higher for a little longer, right? and then you're potentially fighting deflation.

So like when we're over here in 2030, we're going to look back and go. Well, Yeah, duh. that was transitory. That's when we we reached escape Velocity on money printing.

Basically where all of a sudden the rate of money printing the first derivative of how much money we were printing skyrocketed. Uh, for the non-math people, that's basically like you were always printing money. but all of a sudden you just went. and that's what led to the inflation.

It's like accelerating really fast on the car being thrown back into your seat. Uh, and so as this goes down I Think proportionately, you actually end up seeing. So here's your Nike Swoosh Basically as this inflation skyrocketing, you have your down. and then you have as people start waking up and realizing, oh, inflation's going away, you have your elongated Nike Swoosh You know, and it doesn't necessarily mean it's going to take to 2030 to get to New Highs but eventually that that'll that'll be better.

Uh, but I Do think because there's so much uncertainty and volatility, it'll probably look something like this and that's roughly. That's roughly what we've had and it's basically what I've been talking about for the last six months. Uh, this this hope that this is something we've seen so far. The data is consistent with this and I'll be the first to flip-flop on this if uh, and you know that you know I'm going to flip-flop on this if the data is wrong I changed my mind based on the data you know and I know Um, you know, like sometimes that's frustrating because like hey, like Kevin do more of the live streams I Love doing the live streams like I want to do the live streams every morning but the data is telling me don't do the live streams So like there's a really cool core of of y'all who love the daily morning live streams but the data says don't do it uh and and so it's it's very conflicting like that and the data says is actually bad for for the viewer like it has nothing to do with money.

If you care about the live streams live streams, you know you could watch most of the live streams anyway without an ad in them. Um, but anyway. uh okay. so um I just do longer course member live streams.

Now in the fundamental analysis, so let's do a little bit of Q: A Uh, keep in mind get that lifetime access to the course member live streams a link down below. you can um, uh, guarantee the best price. If you join before this evening, email us if you need a bundle coupon at Kevin.com and if you are sending a 60 second video and uh, you're okay proving yourself for a year at minimum wage, send that to Jobs at Meet Kevin.com All right. So uh yeah, we'll probably do the course member live right after this.

Nick T tweeted that's a good idea. let's go take a look at this. uh uh. let's see here.

Okay, so does Nike Swoosh better for S P or Russell Uh, Well, technically it should be the Russell but uh, the problem with that is I I Don't like saying the phrase like this time is different. But here's the problem. If artificial intelligence in the revolution we go into favors larger companies, smaller companies could end up getting whacked uh, like I'm not sure if uh, lemonade is in the Russell but uh, let's say it is because it's it. should have a small, uh, market cap, right? So you look at a lemonade stock, it's a 1.14 billion dollar company.

Well, if artificial intelligence were like, basically creates 50 more lemonades and lemonade, spent all of this money investing in an artificial intelligence chat bot that everybody can just plug in and Lemonade is now sinking in debt because of all their expenses on that chat bot. If that's true, then and somebody else can just plug in chat GPT and and create an insurance chatbot then then you're screwed. You know? Uh, so um, it's it's uh, it. I I Don't know that you could bet on all of the small cap companies if there is a real risk that AI actually potentially crushes a lot of small cap companies.

We don't know. Uh, but uh. Zoom dragging along the bottom I Mean quite frankly, you know Zoom Zoom is is like the problem with Zoom is where's the mode I Mean you know Now they're trying to get into the big thing that they were trying to do after. you know Microsoft came out with with what is it spaces or whatever.

uh I don't think it's called spaces whatever Meats meets or whatever. Google's got one, you know Apple's got one. Everybody can send you a link. uh, and and it doesn't have to be Zoom anymore.

So what did Zoom do they got into setting up offices? Well, nobody cares about the office anymore. Now you know they did the Zoom TVs and the Zoom rooms and the Zoom conference rooms. That was supposed to be a big uh, you know, income Source But now you've got Amazon who was building two massive offices outside of Seattle That's like nope. You know it's crazy.

Uh, just a trade not long. Oh thank God. Um, yeah. so I think you could pretty much invest in anything on the FED pivot I Look, people think I'm crazy for that.

Uh people. really, they're like Kevin What? What do you mean? There's been so many cases where the FED pivots and then everything goes down. Just type into YouTube meet Kevin fed pivot and you'll get like all the facts and details on that. But let's just put it this way.

the one concern this Market has is inflation. and if inflation is gone, this Market pumps man. dude. Open Door up another 12.

This is remarkable. So remember we did a course member live and and I talked about this on the channel that uh when this sucker was a buck 50 I'm like this thing's gonna go to two dollars or three dollars. it's so undervalued. uh it's been up like 60 70 percent in just the last uh, a week is absolutely incredible.

Uh, that was just pure Fundy on that one. uh well, a little bit of ta because it was also trading at around the bottom range so both combined is pretty op. uh. anyway oh yeah, Nick T that's right, I was gonna look at neat you know I went to Twitter and then I totally forgot what I was doing okay Nick t mm Nick T says CPI core up 0.41 in April uh yeah, but that's not the um, that's not the uh uh um, hold on a second.

Let's see here. Core 0.41 Oh oh okay. okay yeah yeah, but sixty percent of contributions still from housing, right? So he's right, like this is the core. But the one week the thing we care about right now is Core X housing.

and if it's true based on what, the inflation, sheriff or whatever said that, core inflation X housing is 0.11 We are in a glorious Place Let's look a little bit more. Uh, let's see here. some of the details are promising for future inflation. Uh, let's see here: bull steepening is warranted.

The trend of inflation didn't re-accelerate as some feared thank freaking God I Do not want this re-acceleration of inflation. Good thing we're not counted in CPI You know we can raise prices without affecting CPA All right? Chief Economist uh the Dreyfus and melon. What is this? uh uh. Was today's print disqualifying the Fed's action in June Oh, that's the question.

Here's another a sign of supply chain problems getting resolved: Appliance Prices fell 1.9 in April the most ever major appliances category down 3.4 percent the most ever. Oh wow, uh. gasoline the most up since October of 2022. That's part of the 0.4 gain.

that's the energy. uh section for the headline. although Core is also technically 0.41 uh, airline fares falling grade Super Core inflation. Uh, let's say Super Core Services Inflation.

Let's see here. Uh, okay, we talked about this, talked about this. It's that X Shelter which is fantastic. Core: CPI Year over year X Shelter Oh Core Services here.

Oh, that's a good chart. Let me show you this one. Uh, and then I want to show you the month over month? Hold on a sec. Uh, all right, this is going to be Core Services X Inflation that I'm going to show you and it just shows it to you on the chart.

Keep in mind that Core Services X Housing comes in at point one one percent smallest increase since July Hey, that's when I was I think shirtless on a beach in Germany doing CPI because it's like it's like so much later in the day over there. Anyway, Uh, what do we got over here? Look at this. This is your um, uh. core Services X shelter right here Dropping Drop And drop and dropping.

Fantastic. Uh, uh. so let's see here. Yeah, yeah, that's true.

I mean Steve you're not wrong like that is that that is. The secondary concern is that did the FED over Titan But it all stems from inflation, right? It's kind of like, okay. the guy's got a bullet wound in his leg, let's you know, turn a kitten. Uh, and and the concern is, well, did you over tighten it to where? Now we're going to lose the leg.

That's the derivative concern, right? But the original concern is the bullet wound. How much damage did the bullet wound do? If the damage wasn't that bad, then we can loosen the tourney, right? That's the whole point. And yeah, the market is expecting. uh, that tourney to get loosen and that's because all of the data says the guy's not that injured.

says it. The the original bullet wound wasn't that bad. It was a transitory amount of pain. and this report corroborates that, right? So the guy's still talking dude's still happy.

The guy's still spending. He's trying to get up and Limp around on one leg and go spend some more money on stuff because because he's got more money in his pocket. Yeah, so so yes, yes, there are derivative concerns, but uh, yeah, you know I'm not. Uh, I'm not convinced that, uh, that is.

uh, that is such a terrible, uh, terrible thing. Nobody's buying homes because there are no homes on the market, man. So that's the interesting question is how much does CPI need to follow before the FED Cuts rates? Well, this is the argument we made just the other day where we calculate okay, well, if the FED wants the real rate of inflation or or of, uh, real real monetary rates to be two percent, well, then it depends on expectations for inflation. If one year out inflation expectations go down to three percent, then the Federal Reserve.

Well, let's see here. one year out, inflations are three percent. So if let's say one year out inflation expectations go to two percent. In other words, you know, come September everybody's like, okay, a year out.

Yeah, we could see in a year from now, inflation expectations, inflation will be two percent. If that's the case, then you could cut rates one percent in September See, here's the chart of that. We kind of Drew this out really quick. so we drew out that if the Fed rate or rather here in the middle, let me show it to you with the laser here in the middle.

If the expectation for one year out inflation is two percent and the FED wants a real yield of two percent, then you can have a Fed rate that actually Cuts one percent. So it all comes down to this expectation falling and today's report will actually help that number fall right now. If the FED says Hey the one year out expectation is two percent and we only need a real yield that's positive and we're okay with the real yield that's at one percent rather than at two percent. Now, they can actually cut rates two percent.

So they're actually this is them looking at the leading data saying, hey, if the leading data says inflation is going to be two percent next year, or it's three percent, we're willing to have slightly less tight credit conditions or monetary conditions, then we can actually cut rates. So the formula is there. In the very last Fed meeting, he literally gave us the formula for cutting rates. Of course, they can't say they're going to cut rates.

You know that's that's the the thing that that everybody keeps saying that. but Kevin They said they're not going to cut rates. No, they said they're not having a discussion about cutting rates because they're going to be data dependent. But let's be real.

The transcripts of those meetings don't come out for six years. So of course, they could be talking about cutting rates at the end of the year without us knowing about it. Because as soon as they tell us about it, inflation expectations go up. and it literally does the opposite for this formula.

This formula right here wants expectations to fall. Let's look at the five-year break. Even really quick five-year break. even.

Uh, so five year break? Even. Why would the FED cut because of expectation? Because that's the whole thing that matters. If you study history of the 1970s, the whole problem of what gener what created Paul Volcker were inflation expectations. That's it.

Unanchored Inflation expectations are what the FED is trying to control. There's nothing else because inflation expectations lead inflation to fall. When expectations go down, when expectations of inflation go up, Guess what? inflation goes up? Hey, look here's a five-year chart of inflation break evens judged by the Bond market, right? And look at this. expectations unanchored.

Right here. in January of 2021, Inflation expectations blew up and and ended up skyrocketing after the war on Ukraine. Well, we ended up getting Peak inflation somewhere around here. So you've got like a three or four month lag between expectations and and where you get your Peak inflation.

And look what it's doing. it's slowly trending down. That's exactly what we've been seeing in the CPI reports. Literally, this is what we've seen in the CPI reports this slow Trend down and as long as this continues to go down and these expectations go down Uh, the the FED uh can eventually, um, cut, uh, cut rates.

So it's it's realistic. So at what meeting do we know if Powell is bluffing I Don't know that there is a bluff because remember, he's not said we're not going to cut rates. He said we're not even talking about cutting rates. we're not even thinking about cutting rates right? He's basically he's saying like we just need to wait for the data.

So when do we have good data? Well honestly, by June you know if this next inflation report also shows core Services X housing at 1.3 percent which we just got feds me like hey, things are looking good and then they'll probably do something like if we stay on this trend for the next few months, you know, give it another couple months to September If we stay on this trend for the next couple months, we don't need to raise rates and they'll solidify the pause and then come. September Maybe they start saying hey, we're just gonna do the first 25, just just the first 25. Okay, this this is not a trend we have. We're not talking about cutting more, we're just gonna do the first 25.

Okay, like things are good at just the first 25. what do you think is going to happen at the first 25. When the FED tells you that? Hey man, you know we're good. Like inflation's trending down and expectations are going down.

Inflation's proving to be transitory. Don't worry, it's just the first 25. What do you think the Market's gonna think when they actually see the first 25? I'm not talking about a whole one percent. The fat doesn't need to do one percent.

They could. Literally they got like they got. How many months do we have until September. Four months.

You have Four months. until September Man, you got like four CPI reports until September And if all of those come in low, it's so easy for the Federal Reserve to say. All right. All right guys.

just the first 25. that's it. Don't expect more, Just the first 25. We're not having talks and we're not even thinking about doing more.

It's just the first 25. the market will. Skyrocket September CPI comes out with a new summary of economic projections as well. It'll be September 20th.

Uh, it would not surprise me at all with these kind of reports to get a 25 there. And then guess what? You get a 25 in October. You'll get a 25 in December. You get a 25 in January January is technically the end of the year.

Boom. You had your one percent cut. By the end of the year, you have four months still left to get a hundred basis points of cuts by January of 2024. it's literally there.

So as long as these reports keep coming in this way, this idea that the FED can't cut rates is stupid. Of course they can, but they're going to tell you it at the last minute because again, they don't want to ruin expectations. So uh, it's it's. actually this is a fantastic report and look, let me be real.

If this report came in trash and you know super core inflation X housing was skyrocketing I'd be like uh, well first of all, the market be going red and then we'd be like this isn't good, maybe the bond Market's wrong but so far with this kind of report, the bond Mark is actually correct with this kind of report so we'll see, we will see. But uh, you know I'm I'm a big fan and this is a very good report and now I'm gonna make another cup of coffee and I'm gonna go over to the course member live stream and we're gonna play uh with fundamentals for like an hour about real estate and stocks and if you want to be part of it every single freaking day, you get lifetime access. It's a bargain. Any of the courses join anyone or bundle up.

you know, email us at Kevin.com Bundle up, be part of it. Finally and every day. Fundamental Analysis: What People: A Lot of people trade on on the info like I don't like I trade sometimes but I don't trade every day on all the information. But there's a lot of information we go through and it's great people.

just 2X and back. They're fantastic. A lot of good coverage. So anyway, thank you so much for being here.

We'll see you in the next one. Love you all! Um I don't know. There's probably an outro about Nike Click over here. Did I do it? I did it.

The button still works. Anyway, this is good news. Be happy about it. Yes, there is a path to rate cuts.

Of course the fed's not gonna talk about it other than giving us the formula they gave us the formula: I'm gonna put the link in Discord to the course member live right now then I'm gonna go make another cup of coffee and I'll be there in like five minutes. All right and I'm just waiting for this. Uh oh. Look at this.

Yeah man. Crazy open door I Closed two options after getting your notification. Good job letting him ride if is.