We got to talk about a coming CPI shock because the initial estimate for January's CPI from economists are out and remember the next inflation report isn't until February 14th between then. Now we've got a few catalysts to go through. so what I'll do is I'll hit what some of these catalysts are going to be in the coming couple weeks here coming 10 days and then I'll talk about what's going on with this CPI shock that we're expecting. So let's hit some Catalyst first and we'll just go in order. So obviously today is Saturday markets are closed, but we want to prepare for Monday Monday We're going to start with Pinterest Pinterest is going to be really interesting from a consumer point of view, because at least for my purposes, I'm going to be looking at Pinterest for a leading indicator on Etsy sales I'm an investor in Etsy because I really believe that Etsy's got some real nice margins over a company like Amazon because Etsy is not doing the Fulfillment I Think fulfillment is a great way to sandbag your cash flow. You're never going to get it faster. You're better off letting UPS FedEx and Amazon Fulfillment handle that kind of stuff. Uh, personally, I don't want to be in that business because I think you're in a race to zero dollars of profit as soon as you get two days of shipping. What happened? Let's go to one day, then it's same day. Then it's gonna be drone deliveries. It's the most expensive thing you can get into in my opinion anyway. Pinterest I Think is going to be a very interesting leading tell for advertisers as well because a lot of people spend money advertising and companies spend money advertising on Pinterest including Etsy sellers advertised on Pinterest. So interesting tells on the consumer. we'll get some leading Uh indicators for Etsy. We'll get some sort of more data on Amazon although we already saw Amazon's earnings, but we'll also learn a little bit for advertisers: what? uh, what are Advertiser appetites like? How does it compare to the advertising declines that we saw at Google the slight beat but still reduction in advertising spend that we saw at Facebook and and what could it mean for a trade desk coming up then on? Monday we'll also be talking Activision Activision Blizzard They just settled with the SEC for 35 million dollars for frat boy uh, culture? uh I'm not sure if the SEC is taking that entire 35 mil. I Imagine part of that is going to the Uh to the people who, uh, submitted these allegations to the women who submitted these allegations. uh, but uh. Obviously looking for insights here on Activision Blizzard to see hey, are they actually going to get acquired by Microsoft or is that deal going to get stuck in the mud? Take two interactive reports Spirit Airlines Reports Now Spirit: I Think is actually leading potentially deflationary indicator we want to pay attention to. because guess what folks, if the discount Airlines If the discount Airlines start discounting even more, guess what I Think you're going to end up seeing pricing war from Big Boys American Airlines United JetBlue Delta These companies are also going to get into a pricing war and we'll actually see a reduction in ticket prices, which is a disinflationary aspect that we would love to see in the next. Inflation reports all throughout this year. I'd love to see airfares actually come down. Keep in mind the airline industry is still trying to get back to equilibrium. We're still not at 2019 levels of equilibrium. You still have 10 fewer Pilots about 15 percent fewer overall staff you've got substantially or you're You're already basically back to 2019 levels of travel. And those will potentially exceed 2019 levels of travel. So more travel, less capability of servicing has led to a lot of deflation. Sorry has led to a lot of inflation. Let me correct myself: there has led to prices rising obviously, and we're hoping that balance starts coming back in the next few months, especially as used car prices are expecting to potentially stabilize and that falling anchor of used car prices goes away. So it'd be nice to see some pickup from Airlines potentially competing a little bit more. We'll see. Simon Property Group Report on Monday Simon Property Group Lar One of the largest mall owners in America They actually own some pretty good quality malls I Personally I like the company I like what they do I'm not a big fan of investing in commercial real estate. not at this point I Think valuations are quite scratched at this point in commercial real estate, but we'll get some consumer insights here. Uh, especially what kind of businesses are going uh BK Basically, especially not not sort of on the big scale. like maybe uh, Bed Bath and Beyond but how many of the smaller stores are picking up and leaving? Uh, you know there was a big belief that we're going to be able to go from a 2000 sort of 19 spending world to a covet everybody spends on world and the reopening. Everybody goes back to the malls, but our people actually consistently going back to the most. How's traffic looking now compared to the Past Tyson Food We'll see if some meat prices are coming down. What kind of inflationary aspects are we seeing for food or really great indicator? Tyson Food should be a great tell for us. I'm a big fan of studying earnings and earnings calls for deflationary signs. So far, almost every single report I'm reading is indicating that the first half of 2023 still tough second half expected to be boom time. Now you know all of the CEOs could be wrong, but let's just say they weren't wrong in the last time around. Where in January of 2022, they're all like, oh, we're gonna have some inflationary problems I'm sure enough we did. Uh Tuesday We'll have Hertz The rental car company I Think it'll be interesting to see if uh, we have any indicators on their interest in buying even more Teslas uh, this is something that they're actually big fans of buying Teslas and pole Stars actually. uh, so we'll see if there's any kind of increase or or more motivation now after price drops to Uh to potentially take advantage of uh, uh, some lower prices and buying some more electric vehicles. we'll see. apparently these rent very well. People want to rent these and also keep in mind the network effects of renting cars when car companies. Rent Out Cars One of the neat things that happens is people go in the cars and they're like, oh, I kind of like this car and they potentially want to buy them. Rental car companies are a fantastic way for companies to advertise their car by actually letting people drive them without actually advertising their cars. It's great. Uh, you've got BP reporting Tuesday You got five serve which is, uh, the traditional sort of more. Legacy Fintech if you will. company that also processes a ton of transactions I think they're They represent over 50 percent of retail store transactions. Think of them as checkout terminals old cash registers, baby. Obviously they're trying to change with the times, but we'll get some insight on consumer spending from them. Dupont is an industrial. We'll see what's going on with Industrials For so far from 3M and down, we've gotten a lot of indicators of layoffs. Uh, industrial layoffs are often the last leg to fall in a recession. so we'll see. Does this mean we're just getting started? or does this mean we're over the pain? Who knows. If you look at the Bond market, the pain hasn't even really started yet because of the inverted yield curve and the depth of the inversion. The pain is usually during the rest deepening phase and we've barely started that. KKR Real estate. You know these real estate companies again. I Think they're terribly overvalued, but I'm curious to see what kind of redemptions uh, and or how the company's planning on handling the massive Redemption requests they're getting. So far, companies like Blackstone and KKR are not fulfilling all of their Redemption requests. That's basically what investors are like. Dude, we want to get our money out, we want to go buy other stuff, and the company's like, yeah, sorry, the Market's trash and we don't want to, but if the company gets forced to, then they might have to liquidate real estate, which could lead to a large bump in real estate inventory. Keeping in mind that after that Jobs report, we got a nice little take up again in that 10-year treasury yield. When you get that tick up in the 10-year treasury, you end up pushing mortgage rates up with it. So something to pay attention to is mortgage rates. Rising More liquidations at rates. A little bit of a risk and phase reports on Tuesday I Do think that End Face is is one of the most phenomenal companies that you should consider as an investment obviously hashtag not personalized Financial advice for you but I think it's a phenomenal company. However, there are massive risks I think all End Phase has to do is say hey, we're starting to see a drop off in residential customers being interested in ordering uh, solar panels because they're worried about the housing market going down. Yeah, that's gonna that could sandbag that stock you really need growth at in Phase Now the stock has thankfully sold off from the the insane valuations of the 330s into the low 20s. I actually picked up a few more shares in the low 200s. Uh, but uh, but but you know there's there's still a big risk here now for me. I Look at this and go hey, look if end face Falls Yeah, if we can get to that 160 level I Kind of want to start backing up the truck potentially so we'll see and face I Think is a phenomenal company Chipotle reports on Tuesday now I am really excited about Chipotle Totally yeah now Chipotle is one of those that they've managed to figure out pricing power with rice and beans and it's phenomenal now. what's also really incredible about Chipotle though is they're one of the leading companies coming out right now saying look, we're hiring 15 000 people for burrito season I didn't even know burrito season was a thing I live in California uh and uh, it's like every day is Burrito season here I think I have burritos like three times a week. Okay, that's just what we do out here. Burritos are freaking awesome. uh anyway and I also by the way, just learned like fun Fact: I never knew this cilantro is actually not an American word. it's a Spanish word for uh, coriander and I'm like hmm, never knew that. The only reason I learned that is because my dad was saying he was gonna cook something and he was going to put coriander on it which is the same word in German coriander and uh, what? what is that? So I translate it and and uh, it translates to coriander and English too and I'm like it's just spelled with a c instead of a k and I'm like I don't know what that is so so I Google it that's another word. cilantro. this is the the Spanish word for it I'm like oh never knew anyway. so uh, apparently they're hiring about 15 000 people for uh for burrito season. If you actually go to their website, you'll see right now Chipotle has like 3 200 job openings on their website. Just like insane how much they're hiring, but the leading indicator is probably the best from Chipotle in that Chipotle is is bluntly saying look, it's becoming easier for us to hire people. In other words, PP from people are are getting smaller wage earners pricing power is going down, their PP is going down and that is leading to more capabilities of businesses who want to expand in a recession to actually hire now. I Actually think that's phenomenal I'm a big fan and massive believer. Then in a recession you double down on your business if you're a business owner right and you prepare to take market share. So that way when you're in that next Bull Run you're a force to be reckoned with that that's that's my my thesis and so I'm a big fan of doubling down I think that's exactly exactly what Chipotle is doing here and I respect that I think that's awesome so we'll see what happens with Chipotle that is. uh Tuesday We've got Consumer Credit also coming out on Tuesday Tuesdays Consumer Credit numbers. We are looking at 25 trillion versus a prior release of 27.96 Uh, that would be good because Consumer Credit has been skyrocketing and it's time for that to come down a little bit. Trade balance is expected to come in at about negative 68.5 Keep in mind that every time consumer credit skyrockets, people start panicking over the the idea that uh, consumers are going into massive loans just to sort of sustain uh, their uh, their, their earnings and uh, or sort of I should say their spending in March of 2022, we hit 46 billion dollars of consumer uh Consumer Credit which was insane. It was one of the largest numbers ever. in June we hit 39.7 It's recently come down to a low of 23, so if we can sort of resettle back to maybe a longer term average, that would be good. Pre-pandemic Consumer Credit had a high of about 27, which is roughly the survey we expect now, and it averaged closer to about 22 on sort of a monthly basis. And during the pandemic, there were Times Obviously Consumer Credit Even when negative people were just paying off their debt, they're like oh my God everything's getting worse and the world's gonna end. Uh yeah, that was a crazy time anyway. Uh Wednesday we have a wholesale trade coming out as well as some other earnings. Of course we'll review those. wholesale trade is expected to be negative Point: two percent in wholesale inventories on the month over month basis expected to be 0.1 we have Uber coming out I don't have too much to say about Uber I Personally I think Uber and Lyft are services that I don't think could ever really make a profit. I think the drivers are the ones who are going to monetize most of the profit and anything that's really left ends up getting spent on Opex At these companies. That's not necessarily to say they're bad companies. I mean after all, they provide food for all of their employees. Basically right, they provide pay for all their employees. So you know, having a company that that makes no money is not necessarily a bad thing because all the people working there make money. I Just don't think it's a good investment because that means the investors aren't making money. Uh, then you've got CVS and Disney Disney coming out on Wednesday Now Disney is going to be interesting because Disney is going through this this phase of cannibalizing all of the hard-working people's efforts at the parks and the cruise lines. Uh, and and really, the the sector that makes money for Disney Disney makes a crapload of money at their Parks. People are spending more money than ever 50 more per person spending per capita spending at Disney Parks Right now it's insane. People are going nutty. Okay, like people love spending money at Disney But the brand value is huge even though they they write their Goodwill as even lower than teletox which is like hilarious to me. Disney is a quality brand. Okay, we know that unless of course we want to start talking politics and then we can have debates about don't say gay and and then everybody is going to start getting fussy and go, what do you mean? What are you some Libra who loves Disney We're not going to get into that. Okay, we're talking about PP here. Okay, we're not going to talk about children politics. We're going to talk about PP Pricing power. And their brand has a Lot of pricing power. Now the the question is and and sure, some of that politically has been reduced a little bit. But uh, the question is really how much money is Disney going to keep throwing into the entertainment World of Disney Plus because that's the big money sync right now. It's kind of like a metaverse situation where on one hand you've got Facebook taking in all this money from advertising. but what are they doing? They're dumping it all into the Metaverse and that's a little bit disappointing for investors because you've got a profitable segment that's feeding a not so profitable business. now. the Hope obviously with Disney plus is that Disney Plus can continue to grow subscriber base, but also grow faster and better than Netflix. Obviously, Disney plus came out a whole lot later than uh Netflix But as of late, they've still been growing better than Netflix and the goal obviously. keep that going. But also, I think the biggest most interesting part for Disney for me is how is the advertising going? because so far Netflix suggests the advertising isn't actually going that great. Uh, that they're having a rougher sign up, period. and that they're potentially even considering going to a freemium model where basically they give free Netflix service. But then you get a bunch of ads because they're just not getting a lot of people signing up for the pay and still have ad service. That's actually not a terrible surprise to me, but Disney's trying something like this as well and I'm very curious to see what kind of indicators we can get from Disney from my favorite trade desk and connect to TV advertising. So far, it's not looking that great for advertising though. I've got my fingers crossed. that trade desk can still grow in this recessionary environment. Might take an L on that one though, so we want to be careful on that. Robin Hood Wednesday Now I'm very curious also to see how they're potentially making money because even though we know companies like Sofi are making more money by attracting depositors, offering a higher yield for savings accounts, attracting depositors, and then lending those deposits out and making money on loans. Robin Hood doesn't do lending other than margin lending and margin lending is falling. But they're also now offering 4.15 percent on cash deposits. which by the way is really good. Like if you've got cash sitting around in my opinion, you stick it into like a wealth. Runner Robin Hood I Don't care what you use, Uh, and milk that yield? That's incredible. Like, why bother dealing with treasuries when you could just milk that? It's great. It gives you that liquidity, too. Instant liquidity. It's phenomenal. So what we've got to consider uh with Uh with Robinhood is they're paying out a lot of uh, their yield. Basically what they could be earning in the market on cash deposits that they have. and so I'm curious to see as that spreads, compression or compressing is there Revenue going down? We'll see. and we have had a couple green months here. Uh, in the stock market or maybe at least a green January we'll see if that was, maybe it will get maybe a good better set of guidance for the first quarter of the year. uh from Robin Hood but no guarantees. Then we'll also get a firm really big consumer spending play here. But I think biggest part for a firm is how are those default rates? I Don't think a firm's really been around long enough to actually be popular during a recession, and now we're in a recessionary environment and a firm's basically playing the first rodeo recession. Now a firm likes to argue that oh well, people need us more in a recession? sure. But are they burning you more in a recession? we'll see Goodyear reports Win reports on Wednesday Mattel reports the uh if you look at sort of uh, the the earnings that we've already gotten from companies like Hasbro games like toys not looking good so big red flag there for Mattel We'll see how much of that is already priced in uh, consumer and inflationary spend obviously for Goodyear will be interesting. uh and then also win, How's travel doing? How's Macau doing? How is the reopening going in? China From the Macau's point of view, uh and to me that's actually going to be a Starbucks tell because I'm I'm pretty excited about what I'm seeing at Starbucks So then on Thursday we get uh Pepsi Pepsi Pepsi Uh, we'll see what kind of inflationary costs we're getting at Pepsi Uh, we've got Toyota Credit Suisse PayPal Lyft Cloud flare. Now that'll be a big one for software service spend. If Bill.com is any tell, Cloudflare is going to get reamed. Software service companies, especially ones that are not profitable, are probably not going to do too well in the next few earnings. Seasons So there's a big red flag for Cloudflare. However, if it can beat on forecasts, oh, it could move bigly. We'll see I I would expect the implied volatility for cloudflare is probably in excess of uh, 15 percent for for uh, a moving earnings kind of. especially following the Bill.com And we can actually find out what that is by looking at what the implied volatility is on earnings day next week. and it is. Oh, I was close. 12.1 is the implied volatility. The average volatility for the stock is uh, generally. uh, for earnings is 5.9 So you've got two and a half times as much volatility expected for these SAS companies. On Friday we get the University of Michigan inflation expectations read and then the week after that we get CPI which we've just got some of our initial surveys in for. Let me first hit U of M sentiment and then we'll also look at the CPI forecast. Uh, after this stream. By the way, we're going to start working on changing the pricing as we promised and removing that coupon for the programs on building your wealth link down below I Just wanted to give you a heads up in case you're wondering like, hey, it's still there. It's like, yep, just woke up. Don't worry, we're gonna change that. So uh, we'll get those changes done and today. Uh, all right. So what do we got here? U of M sentiment and current can conditions and expectations. The survey says 65 for sentiment, 68 for current conditions expectation 63 These are all slightly higher than the last, with the exception of current conditions slightly lower. But what's interesting to me is the survey actually shows the one year inflation expectation moving up slightly from 3.9 to 4. Ideally, we come in low on that. The most important thing right now is that we keep inflation expectations low and anchored. That's the most important thing as we go forward, especially after a Hot Jobs report for January which we could try to explain away, but let's just be real. it's all going to come down to inflation and inflation expectations right now as well. It's worth noting that inflation expectations are on the Via The Five-Year Break Even are still sitting at about 2.3 We can look at this graphically as Well, here on screen. Now, if you're watching, we can see we're sitting at 2.3 That downtrend is really strong. Very, very strong downtrend no matter how you slice it. However, we are still substantially higher than where we were in 2018, especially the FED Went Dovish right around here at this bar, which sits you at about 1.6 for the five-year Break Even. We're sitting at 2.3 right now, so we've still got some work to do. However, this really reiterates the the Nike Swoosh scenario of of a stock market recovery. If we slowly start seeing it coming down here, we shall see next inflation report as well with expectations. This is sort of the expectation set we've been waiting for so far. We do not have all of the expectations. For example, we do not yet have a survey in on year over year inflation expectations, but we do have some month over month numbers and I think this is actually very interesting CPI month over month survey. Last month, the actual result was a negative 0.1 This month for January, it's expected to be 0.5 That's a really high survey. I'm actually really bullish on that even. Look, listen, if this survey comes in really high, guess what? It's really easy for it to miss to the low side because if it comes in at point four, you still win. You see what I mean now. 0.5 though on the month over month. Pretty up there. and this is not the core measure. This is the headline measure and it has to do with Energy prices having risen now 0.5 Again, it's hot. That's a that's a six percent annualized rate of inflation. That's not great. We don't want to see six percent annualized inflation. We want to see less something around two percent. So we'll really have to pay attention to the core survey. Now, the core survey is not out yet, but it really sets us up for a shocker. Now, we do have a core month to month survey though. Uh, sorry. Uh oh yeah, we do have a core month-to-month survey. Uh, we just don't have core year over year. Okay, so the core month-to-month survey taking out food and energy is actually also expected to come in hotter. Last month, we were sitting at Point Three percent, which is 3.6 percent annualized this month. the forecast is point Four, so both of these month over month reads are setting up for a a high report. Again though, if we go in with high expectations, it's easier to miss. To the downside, which is nice. we want that now. Not considering Core for a moment. If we just consider the headline, we could look at what's been going on with oil and what we'll find in the last three months is we had a spike in January which this helps explain some of that headline inflation. look at this starting at the first week of January, we actually ran up on Brent. That's your International crude oil cost per barrel. We ran up to about 84 to 87 and we sat there quite a bit under this trade thesis that uh, oh, here we go. You've got a lot of inflationary pressure because of the Chinese reopening. But what's remarkable about that? because I don't think the Chinese reopening is going to lead to that much inflation is what do we have over here. You've got this decline in oil prices International oil prices again to under 80.. So you're actually now starting to get to the same levels that we had the first week of January and some of the lows that we had the first week of December. So I'm excited to see those inflationary pressures on the headline go down and hopefully stay down. But what about Core? Because that core month over month? Uh, even though we don't have the year-over-year estimates yet, that core month over month is very interesting to me. Point four: Why is Core expected to rise? Is it because those used cars so unexpected to go down As much? Is it because we're not seeing airfares come down as much yet? Is it because household data isn't coming in Weak yet? And so even though that Core coming in at 0.4 would be expected to be weaker, uh, than than where we have been, which has been anywhere between 0.5 to 0.6 in the middle of last year. it's still hot. We'd still like to see this come in at say, 0.1 or 0.2 so we could really reiterate that disinflationary narrative that's needed in Core. Now be careful though, so far we only have like six to ten estimates coming in for some of these early estimates. What's going to happen over the next week is we're going to get many more economists providing their estimates. Now we know they could be crazy off and wrong, but at least it'll give us some kind of guide of what the market wants to be. And as long as we can beat those estimates, the market usually goes up. So we like that we like it when as the market goes up, unless of course you're a short seller. Anyway, this gives us a breakdown of some of the massive catalysts coming in the next two weeks. You'll notice there actually aren't that many other than the inflation report. And really, the next Fomc meeting is not until March 22nd. So we've got another five six weeks here before we have to deal with the FED again. That's also where we're going to get a new summary of Economic Projections. That summary of Economic projections is going to be critical because we want to see a softening from December, but that's softening from December I Think is only going to get written into that summary of Economic projections if the CPI report coming up actually comes in weaker than expected. Fingers crossed.