Hey guys, it's Sasha. Inflation in the United States was flat in October and is back down to 3.2% Year Onye, the stock market is blowing up because absolutely nobody could have seen it coming. The S&P 500 is up over 2% today. As I'm recording this video, 10year treasury notes are down1 18% Suddenly, 99.8% of analysts agree there will be no rate hike.

At the last Fed meeting of the year just a few weeks ago, everyone was certain we are going to have one more and only 0.2% of analysts think that the rates will now not come down next year. Suddenly, everyone is expecting an average of around four rate decreases next year. And look just yesterday, 10% of the Wall Street numpties thought that interest rates would be at 5.25% at the end of next year. Now, just one day later, that number has dropped to 2% and suddenly a load more of these Tweedle Dums expect interest rates to drop below 4% So here is the inflation data.

Inflation overall sits at 3.2% You can see that the October print is at 0% so there was no month-to-month movement at all. Food is down to 3.3% which is fantastic news. it was at 3.7% last month and even more importantly, food at home is down to 2.1% Finally, bang on the Fed's 2% Target Energy Commodities printed a strong negative month which has helped the overall inflation number come down even more. but we still haven't seen the full benefit of gas price data coming through in inflation.

Gas prices in the US have come down significantly this year, but the inflation commodity number for piped gas is only down 16% A large part of that is because the energy companies are greedy. Core inflation is at 4% down from 4.1% last month. And the best news in this print is the shelter number. It's come down from 7.1% last month to 6.7% and the recent monthly data is heading in the right direction, which is all that matters.

Here is a more detailed chart of the same month-to-month data from the St Louis Fed. You can see that the shelter month-to-month movements are now sitting within the natural fluctuation range from before this inflation Spike started. Shelter is really important because it is such a big part of inflation data. It is the biggest single component in makes up 35% of the overall index and 44% of core inflation.

And it's a lagging indicator because it takes a long time for changes in interest rates and house prices to filter through into what people are actually paying month-to month. Because until your rent review or until you move house, you don't actually pay more just because the interest rates have gone up or because the rental prices in your area have increased. If you exclude shelter to eliminate the lag effect, the rest of inflation is now at 1.3% and core inflation is at 1.9% So what is actually happening to shelter right now? That's what we need to understand, because whatever is happening right now will be filtering through into the shelter data down down the line in the future after the lag and that will be affecting the data that we're going to be seeing next year. While here is the Zuma report showing rental price growth and the this chart sat at 12 to 15% for a long, long time and you can see that in September and October, the year-on-year growth in rent prices is below 2% and the median sale price of houses in the US is down to Q4 2021 levels.

Although did take up in the last quarter, this data is probably being skewed upwards at the moment because lower income households will find much much more more difficulty in moving because of the high interest rates. The impact on their budgets is very different to people who have a lot of money. In this scenario, it is far more likely that the average sold home swings towards the more expensive end of the spectrum because the people buying those houses have more money and can take the higher interest rates. Having said that, for anyone who does move, the mortgage payments are going to be through the roof regardless of if you do have money or if you don't have money.

according to bank rate, the average interest rate on mortgage at the moment is still sitting at 7 to 8% So in terms of inflation, anyone who moves will definitely start paying a boatload more money and we will be seeing that in the shelter data. However, if the FED is forced into cutting rates aggressively next year, those mortgage rates will also start coming down pretty fast. And the fact is a lot less people are buying homes right now because of the high interest rates. That is what's causing that skew in the house prices.

And we can see that in the data, you can see the number of transactions fell below 4 million in September. The scale here is in thousands. The is way lower than the peak in 2021 and much lower than the Run rate before coid. This means that not that many people are currently switching from cheaper to more expensive mortgages and this again will be helping the shelter number reduce in the coming months because relatively speaking, not that many people are seeing their monthly payments increase.

So know that Without Shelter inflation is already below 2% However, it is that you want to measure it. Shelter is a lagging indicator, but the numbers that will feed into that shelter figure in the future are looking really good and Shelter will be coming back down in the coming months. We already see the data. There is, of course, absolutely zero reason to increase interest rates at the moment.

That was absolutely obvious a few weeks ago. That was also absolutely obvious a few months ago. In fact, it was also the case and blatantly obvious. Back in, February March I was making videos on my channel explaining how the data is looking and why it is heading, where it's heading.

And here we are. The FED increase rates anyway though, because they don't seem to actually understand how much time is needed for the rate hikes to fully filter through. I Don't think they fully understand what the it is that their job entails and how they're meant to do it. So, unemployment rates in the US have started creeping up since the summer for no good reason whatsoever other than the FED pretending that they know what they're doing.

We are sitting here watching the economy get hit. not very hard, but get hit all the same just because the FED is trying to pretend that they are in some kind of control. Oh, here we go. We've got a puppy here.

How do we know that the FED have no idea what they are doing? Well, just 4 days ago, Jerome Powell said that the FED is not confident it is done enough to bring inflation down. Speaking at the clown convention called the International Monetary Fund, Jerome Powell said, we know that ongoing progress towards our 2% goal is not assured. Inflation has given us a few headaches if it becomes appropriate to tighten policy. Further, we will not hesitate to do so.

At the September meeting of the Fomc, more than half of the members voted for rates to be above 5% at the end of 2024. in 2021, This same committee, those same people said that inflation is not a problem. It will go away by itself, keeping interest rates at zero while inflation went all the way up to 88.5% This looks completely absurd now, and it looked equally absurd back then. but the FED only increased interest rates from zero for the first time here.

That's how long it took them to figure out what was going on because the FED has no ability to actually look at the data and do any analysis and we're seeing the exact same thing happen in Reverse. Right now, inflation is already below that 2% Target We can see it in the data, it doesn't It takes a calculator I can do that math on this. The only thing keeping it high at the moment high is shelter and shelter is coming down. In fact, a big part of why shelter is staying higher for longer is because the interest rates are high.

You can see the cash 22 here, right? Fed is saying that they have to keep interest rates High because inflation is high, Inflation is only High because this one variable shelter is high because the interest rates are high. UBS has come out and said that they expect interest rates to fall all the way to 2.75% next year. But their argument for why is a little bit different. You see: UBS thinks that the US economy is going to implode, is going to plunge into a recession, and these Cuts will be necessary to save the economy now.

I'm not sure I share the sentiment because there is no data other than trust me bro. I'm a Wall Street Economist that supports us. The but the fact remains real: Inflation is gone, food inflation is gone, energy inflation is gone. and I know that there will be people in the comments saying that the data is rigged.

It's all fake, blahy blah blah because people are incapable of understanding that their own anecdotal experience is not representative in a country with 50 states and 330 million people. and also people struggle to understand how inflation actually works. Just because inflation has gone away does not undo the price increases that have already happened. Inflation being at zero doesn't mean that the pressure on your weekly shop has disappeared.

It doesn't make things easier. Things are just as difficult as they were before. In fact, they're still getting worse just at a slower rate. Reducing inflation down, as has happened right now, just means that the increases have slowed down.

And yes, I am not into conspiracy theories with hundreds of thousands of people across all these different organizations faking data in unison so that it looks a little bit better. Seriously though, if they were faking the data, do you think that maybe they'll be able to fake it a little bit better than the craft data that we've had over the last 2 years. But anyway, what does this mean for investors? Well, the data says that the inflation fight is over I Know that Grandpa power is a bit slow on the uptake and it might take him another few months to understand this. but eventually the FED will have no choice.

if shelter begins coming down towards 4 or 5% next year, there will be no argument you could possibly theoretically make for not reducing rates and the FED will have to go and reduce rates with their tails between their legs while saying that nobody could have seen it coming. And how did all this come to be? How is it that inflation has gone away? I Mean we couldn't possibly have imagined it was sticky. Truth is, over the past four years, the Federal Reserve has shown that it is completely unfit for purpose. The people sitting on the Federal Open Market Committee have absolutely zero idea what the it is that they are doing.

If they did, they would have acted in 2021 when it was extremely obvious that inflation is running away way and somebody needs to go and do it. And you know there are people who meet several times a year whose job it is to manage interest rates. Instead, they just stuck fingers in the ears and pretended that nothing was happening and told everyone is transitory and they would have also stopped rate increases at the beginning of this year if they actually looked at the data if they actually did any analysis and no, I am not a big fan of the Illuminati and all the other that I see all over my comment section: I Don't attribute sophisticated and extremely complex conspiracy theories to actions that can be much better explained in terms of stupidity and incompetence. The FED is not playing 4D chess for the World Economic Forum or whatever it is that people like to think the FED just happened to up in 2021 and then the FED up again earlier this year and now they up all over again.

They're talking right now about doing more interest rate hikes I Don't know why because they're driving forward. while staring in the rearview mirror. You saw how the market reacted to marginally better inflation data today and the whole Market is up over 2% What do you think is going to happen if the FED starts actively reducing rates multiple times in a row? What happens to the valuations of growth stocks that got completely destroyed and wiped out when the exact opposite started happening in 2022 and interest rates started going up? What happens to the economy as pressure, unemployment drops off and the market rebounds and confidence returns after this 2-year downturn? But of course, don't go out there and buy stocks because you you might be catching a falling knife. Much better to wait until the economy is fully recovered.

The stocks have all gone up 300 or 400% because then you can walk in like a boss investing in the market that is back at its peak and going up. Remember, only losers buy stocks while they're selling at a big discount. Instead, wait for Grandpa Powell to wake up from his nap before risking your money.