Hey everyone meet kevin here in this video we're going to talk about cpi expectations, as well as expectations for the federal reserve's action at the beginning of november, which i believe is pretty much going to get nailed this week as we lose our last remaining negative catalyst For the market, that's right this wednesday at 5, 30 a.m. Pacific time which i will be live streaming, we will get the consumer price index inflation readings. This is the last negative catalyst that we have for this year. That is, of course, following the drama around the debt ceiling, the inflation uh, where the infrastructure package, the budget.

All of these things, of course, kick down to the road to december, which means there'll be plenty of time to get these things handled, because the infrastructure packages will be passed before debt ceiling issues and the budget come up again. Those are going to be a nominal, benign catalyst before the holidays. The lawmakers will pass these and it'll be an eye roller. If there's any kind of delay, but the ever grand crisis look, it is still a crisis, but contagion fears have really evaporated and uh fears of the federal reserve tapering have really evaporated as well, because we already have the time frame.

We know that the federal reserve believes they're going to start tapering at the beginning of november and finish their taper by the summer, so uh. What i want to talk about now, though, is i would just briefly want to start by touching on the jobs report uh. Some more detail of what happened around this, and is it really as bad as it seemed then we're gon na talk a little bit about inflation and uh yeah, we'll take it from there. But i got ta take a bite of this because wow all right.

So where were we oh yeah, so here's the thing the jobs data has the potential of throwing a wrench in the pace of the taper, in my opinion, with the federal reserve. So that means that, even though the market was anticipating, the fed would taper the beginning of november, which i still think will happen. The market was anticipating. The fed would continue to taper all the way until about the summer and then raise rates at the second half of 2022., this jobs report and if we continue to get weak jobs.

Reports like this, which i'm going to delve into why these jobs reports are coming. In so poorly, it is very possible that we're going to extend tapering to a normal, 12-month taper cycle, because usually historically, we've tapered over 12 months. And the current trajectory is about uh nine months. And i think the fed's going to update this back to 12 months, which means we could be tapering throughout the entire 2022 year, which means potentially no rate increase in 2022, which is, i think, very good for markets, and also good for real estate.

Real estate is not going to like interest rates going up at all now, i'm the idiot who's still buying, but i also keep finding good deals. So that's just what i do, but anyway uh so jobs, data uh. So the biggest issue with the jobs data is low, labor force participation. This is something that we're seeing yeah we're filming a video right now, but it's a pokemon event yeah, so uh low, labor force participation is the biggest issue and uh.

This is something that, before the recession was a 63.4 now we're at um a level of about 61.6, that's down from 61.7 last month now. Why does that matter? What matters? Because as less people go back because it sounds like oh come on, that's just one or two percent, but think one or two percent uh, you know, one percent of our labor force is like one and a half million people which could be a hundred thousand extra Jobs give or take uh every single month, every single time we get a labor report. So it's a big deal that labor force participation rate and one of the reasons it's down is not the stupid helicopter. But one of the reasons it's down is because we're seeing a lot of uh or a seasonally adjusted loss in how many women and men are applying for educational jobs.

But we know those are mostly women, disproportionately women and that's potentially because of not just covet fears. But probably mostly because of child care issues, that is, a lot of children, aren't able to get the vaccine. So you have a lot of people who are fearful of covet, who don't want? The vaccine aren't sending their kids to school or taking care of their children at schools, uh we're not sending their kids to schools or taking care of them at home, which means now all of a sudden. There are less women who can fulfill those jobs.

Who would ordinarily be taking those jobs, but also those who do want to take the vaccine can't give the vaccine yet to children because we're not approved yet now we do think we're going to get pfizer approval for 5 to 11 year olds, soon, which is good, But uh this ended up being a big hit to this last labor report. Private sector labor jobs, uh, you know the increase in private sector labor was still very good, uh still strongly on pace with uh with expectations. This is why the wednesday last wednesday adp report for private sector jobs came in very strong, but the actual government labor report came in so weak. That's because we included the educational losses and and the lack of um of workers we saw in the sector.

So there is right now a lot of demand for workers, but again we're seeing a lot of people stand on the sidelines, despite the fact that this is against expectations. Despite the fact that the unemployment boost is over right in september, the unemployment boost went away and we thought a lot more people go back to work. So this was a big negative surprise and uh delta is not as big of a fear now as it used to be so we thought more people would go back to work, so there's a little bit of a negative shocker, and this has a lot of people. Believing that the federal reserve is going to not delay the taper but extend the taper that way politically, even though they're supposed to be a political, but we know that's full of crap, we know that politically, the federal reserve is going to then be able to say, Hey we're tapering we're just going to take longer doing it.

That's my expectation, but i think really, the big nail in the coffin here is going to be what happens with the cpi report. So this wednesday we get cpi that comes out and cpi is going to come out we're expecting a cpi to come out at a point. Three percent increase month over month point two percent. Once we take out food and energy point, three percent by the way is an annualized three point: six percent, which is good.

We we really wan na pay attention to that month. Over month, number uh year over year is going to come in still probably scary. The expectation is five point: three percent - that's high uh. This is that click bait inflation we talked about as early as november of last year on my channel, we've regularly talked about how we are going to get this insane.

Clickbait, inflation figures and and the reality is they're not really clickbait. They are very high, but we do expect at some point them to inflect down. We thought they would inflict down at the end of this last the end of this year. They still might this october report is uh going to be inflation for september.

So my talk about september and october, you know my original expectation was. We would see a downward inflection, inflection and inflation september and october report come out. Reports come out october november, so i could still be right, but i'm already softening my position not to flip-flop, but because i'm reading the data - and i have a fluid state - mind i'm willing to adjust if data data's coming in worse and we're seeing data coming worse. Commodity prices, we thought they would come back down: they're inflecting back up like lumber and oil inflecting back up used car prices, inflecting back up uh the labor uh shortage isn't debating as quickly as we thought.

So there are a lot of things that reiterate why we're going to see this temporary inflation longer and larger than expected. So i think uh market wise we're expecting a 0.3 month over month read if that comes in at less that's gon na be wonderful. I mean ideally that's where we see the inflection point is not in the headline number: it's going to be the month-over-month data. Ideally, we see something honestly if we saw something like 0.1.

Oh, my gosh, i think tech stocks would rally the market would rally be great potential negative catalysts for crypto, though, because i do think about 50 of crypto. Investors are deathly fearful of inflation, and that is based on surveys that i've done on my channel and just other research. My channel, i think, could be a little skewed, though so i have to keep that in mind as well uh if we end up getting a a surprise to the upside on inflation, it's not going to be good treasury yields already right now, sitting at 1.62 percent. We're heading to that 1.75.

Basically, the highs that we saw around february february march was not a good time for the tech sector at all. Now i'm still staying strong on believing that the best way to get through this disaster is to buy real estate to hedge yourself with real estate uh that way you're locking in low interest rates and that way, even if prices fluctuate, it's cheaper for you to pay Off that long, 30-year fixed rate debt over time and then take advantage of being able to buy dips on supply chain challenge stocks as well as tech stocks, so supply chain challenge stocks would be things like shift. The used car company end phase any anyone who has to deal with chips a lot of the automakers uh neo uh, you know even xsping, but that also includes a china risk. So you have to consider that, but even honestly uh well, i already mentioned end phase, but tesla to some degree is, is held back substantially, especially with the new product launches by some of these shortages.

So i actually did buy, and i rarely do this, especially since i'm pretty anti-buying calls right now. I actually did buy a call on tesla which remember if you want to know all of my trades, why i do them join the stocks and psychology and money program link down below and get that 41 off coupon code, coupon code diamond hands, so uh yeah! Look! If we end up getting a beat on inflation, it's gon na be bad nobody's. Gon na be happy about that uh month. Over month, number comes in at like a point.

Five point: six point: seven bad day bad day for the markets, not gon na, be very happy about that. Imagine we get a 0.7 or something like that. Uh i mean now you're talking like an eight point: four percent annualized inflation that would be horrible, it'd, be such a horrible, miss uh. The market, i think, would plummet and uh you'd have a really nice buy the dip opportunity there, but then you'd also want to go through the data to see what went up and that's very important as well, which is something we're going to do, because if what Went up was something like women's dresses and used cars, which is something we've seen in the past.

Okay big deal, but if things that are going up or rent and services that's going to be more long, lasting, that's going to be more structural and structural inflation lasts longer, whereas, like again used cars dresses, those things are temporary but rents, services, wages. Those are a problem and we've already seen. Wage-Based inflation come in a little tick higher in this last labor report that came out on friday, so uh long and short of it. If we get a big dip, which is very possible based on the sticker, i'm gon na buy uh and - and i think a lot of folks are gon na - buy that dip.

We know that uh, the repo markets are so full of cash. That's because so many institutions have so much cash, they don't even know what to do with it and if we get a big dip, the banks will step in and start buying. This dip, that's my belief and i actually think that's something that's going to keep the s p, really from falling more than 10. I could be wrong uh in some sense, i kind of hope.

I am because then again we get a nice little shopping spree, but i'm not keeping as much cash on the sidelines uh as i had before this september dip, because i spend most of my cash on this september dip. So anyway, if you like this kind of content, subscribe, i'm gon na get back to this pokemon event. We'll see you next one thanks, bye.