Holy moly how the tables have turned. The Federal Reserve has responded to this morning's CPI data. We've got a Nikki leaks update. We've got so much to break down in terms of Market expectations. We've also got a temper Euphoria because we're still. uh, you know we still got a December report coming up. Okay, we'll talk about that, but folks, wow, CPI comes in cold. Let's talk about the reactions to that. Uh, in case you haven't yet seen my. my reaction, especially when my prediction was nailed right on. Predicted month over month of 0.4 versus expectations of 0.6 That's what we got year over year predicted 7.7 Market was expecting 7.9 we got 7.7 That was awesome. Core month over month coming in at Uh 0.3 below expectations and Corey over here 6.3 below expectations. So great news. Now what do we know? Well, here are some things that we know. First, we know that shelter inflation made up over half of the entire CPI move. That's insane. Half of the entire CPI increase was because of shelter inflation, which we know that rents have already peaked and they're going down, but CPI inflation is still trying to catch up to it because of the way they measure it with owner's equivalent rent. It's so stupid. But the point is, it is making up half of the inflation we're seeing now. and markets are saying well. you've got a few different ideas, but markets are overall saying that we expect that to actually really meaningfully start rotating down and really drag inflation down very quickly. Sometime in 2023, some Market experts say quarter one JP Morgan says quarter three, But either way, the consensus is a rental inflation is expected to Peak Now if you actually remove rental inflation from core CPI This is not saying we're not having empathy for people who have to pay higher rents, it's just saying if you want to isolate where the inflation is, if you remove and I tweeted this: if you remove shelter or inflation from Core, you're at negative one percent. The first negative read since May of 2020. That's insane. Okay, that's like the bottom of the the stock market. Uh, well, bottom was like March April but near bottoms. uh, during the covet pandemic. make sure you follow me on Twitter as well at realme Kevin This is really good. So not only are you now seeing shelter inflation neg or core inflation negative when you take out shelter inflation, but you're seeing the FED already respond to the CP I Missed this morning in a great way. So fat Harker had talking or you know, some chatting to do this morning and he immediately picked up on the CPI report and now suggests that it could be appropriate for the Federal Reserve to pause at a Fed funds rate of four and a half percent. This is a huge shift just last week. After Jay Powell's talk, we were thinking potentially marketing needed to price in a Fed pause at five and a quarter, five and a half and that sort of expectation started leading markets to say well, what if it goes to six percent and that's why we just saw this utter decay in the stock market and it was very, very painful. Now markets are pricing in a Fed pause at 4.865 which is actually slightly above where Fed Hawker is and anytime that terminal rate comes down, stocks tend to Rally. Anytime that terminal rate goes up, stocks tend to fall. So if Hawkers at four and a half and he's right and the terminal rate right now is deemed by the market to be 4.865 we see that come down. You can see continued pushing up of the stock market and it continued pushing down of the US dollar. Remember the U.S dollar does really well when bonds in America are yielding more money because more international buyers want to come to America for the Guaranteed Rate that treasuries offer for you if you hold to maturity there. the only thing you could call a risk-free investment. and in order to buy treasury bonds, you have to buy the dollar. So the Dollar's gotten really, really, really strong. But as soon as inflation Peaks we expect it to collapse and the collapse of the dollar has already started. If you wanted to invest uh, in the dollar, before we get into that, I want to thank today's sponsor. MooMoo Mumu is an advanced a One-Stop trading app that makes it easy for Traders to do any and everything they need. MooMoo offers an earnings calendar which is a clear and customizable calendar that lays out individual release dates of financial reports for you. 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If you think the dollar is going to continue doing well, you could always get you up. uh, where you could see that recently the dollar has actually been falling a little bit. So a couple interesting ETFs that you could pay attention to. so uh, if we look at some things to, well first of all, you know what what does this mean for the Fed and then if we look at some things that we can do well, what does this mean for the FED It really means that if this CPI report is replicated on December 13th which is when we get the next CPI read which would be great right then and when I say replicate I mean it's also either soft or it doesn't Spike again it could Spike and if it spikes, it just ruins all the optimism that we're on a sustained downtrend. But at 5 30 a.m December 13th. so in a month and three days, we'll be getting the CPI read for December And that's actually before the Federal Reserve meeting. which is really good because what matters more right now? Killing jobs Or killing inflation. And the answer is killing inflation. Like that, the FED does not want to have to slow down the job market if people can make more money by switching jobs and inflation is low by all means have at it. But you can't have a strong job market and high inflation because you potentially lead to a wage price spiral and then you really have to rug pull the economy like Paul Volcker did and push us into a dirty, deep depression. So could this report be the start of the FED pivot? Now that's different from Fed: U-turn Fed U-turn is when they're like we're raising rates and now we're dropping rates. That's a Fed U-turn right and markets are anticipating and trying to price in that U-turn A Fed pivot is like a 45 degree change right where they're like. All right. We were going for 75 basis points in the next meeting and markets were actually pricing in about a 50 chance of a 75 basis point hike. 50 chance of a 50, uh, 50 basis point hike. At the next meeting, they pivot and go. Okay, we're going 50. That's a pivot, right? A reduction in how much they're raising rates from either a higher level like 75 basis points to 50 or from 50 to say zero. That's a pivot different from a U-turn Those things are very, very important to know. His markets usually really rally Off full u-turns although we are getting some pricing in of anticipation of that eventual U-turn Uh, Okay, so now what are the expectations for a 50 basis point hike? Now they were 50. What are they now? Now they're 82 percent And that's partially because Nikki Leaks came out and tweeted basically that this sets us up for 50 basis points in the next meeting. Remember Nikki Leaks is the guy at the Wall Street Journal who always seems to get text messages from the Fed and then he breaks the story. so he's the guy who's like, yeah, Okay, we're probably going 50 and so markets are quickly adjusting to that. which is great. Now it is interesting to note, uh, that, uh, you do have gold up slightly and you have some calls for or obviously treasury yields are falling on this. That's not a surprise, but you've got some folks saying that if you believe we're in a position of peak inflation, uh, that's now behind us, we're just off peak inflation. We're not going to get a new Peak and we're going to continue to trending down. What are things that you should do? Well, Here's some Investments to consider: One you could invest in bonds, You could buy bonds and as long as inflation continues to Trend down, you would likely expect that bonds would go up in value now. I Want to be clear and the yields would go down, but you would hold your yield to maturity based on what you bought if you hold it to maturity, but you could also trade them. Uh so I Want to be clear though while yes I am a financial advisor and yes I have courses of building your wealth. whether it's stocks zero to millionaire real estate investing, Learn everything I Know about real estate I Think you know I know a lot about real estate property management. If you want to grow your business income and be part of me with with boot camps and and actually really learn uh, join the elite Hustlers course that's linked down below right? You can get 60 off now. Uh, while I am a financial advisor and while I do have uh products uh, related to education I want to be clear that what I'm suggesting here is not Financial Advice I Can't give you personalized Financial Advice I Have no idea what your situation is. So bonds you would expect to do well, that is owning them, you would expect to do well. You'd expect the value of those to go up. If inflation has peaked, you would expect tax, tech, stocks, and cyclicals like Arc or Tesla or whatever to actually do very well. If inflation has peaked, you would also want to probably cover shorts. You want to still be careful in my opinion and temper expectations for margin, right? I Don't think you want to go all in Yolo margin right now? Uh, if we are at a bottom, which is a dangerous word to say, then going in margin makes sense right now, right? But if we get a dirty December 13th report or indicators are that we're going to potentially get a dirty December CBI Report: You can get screwed. You can get Margin Call Terrible situation? Be in. so covering shorts good idea. Uh, with the exception of shorting the dollar, shorting the dollar could actually be a very good strategy if inflation has peaked. Uh, now be careful though, because if you're going all in Tech all in bonds and all in shorting the dollar, what do you have? Well, you have a recipe for disaster if inflation ends up going up again because all of those will underperform if inflation goes up right? So you really have no hedging in what I've just described to you. Uh, now Feder Hawker Also came out and mentioned that monetary policy lags by up to a year now. Jerome Powell Doesn't really believe that. He seems to think that, uh, you know that the lags could be closer to six months or maybe even three months. But uh, it's it's very interesting that uh, you've got this uh this Hawker coming out suggesting a one-year lag because that could really mean yeah. we do need to pause now because we're gonna we're gonna have to start are turning the money printer on maybe in October of next year or November of next year because we've over tightened. It'll be really interesting. could set up for a really nice bull decade. Is that being too bullish? I Don't know, but get your 60 off I'm so I'm still like shocked and nailed those inflation predictions. So freaking cool. Check that out via the links down below. folks. thank you so much for watching. We'll see in the next one. Goodbye.