Hey guys, it's Sasha US Inflation data just came in and the overall rate of inflation is at 3.7% the same as it was last month and core inflation is at 4.1% down from 4.3% CNBC says that consumer Prices rose more than expected Financial Times says US Inflation is higher than expected Reuters says that Us Consumer Prices rose more than expected CNN says that Us Consumer Prices rose more than expected. Come on. How did every single major news organization publish the same exact headline in the same exact wording within seconds of the data coming out? This is a fast. They were given the headline by the US government or the Federal whoever gives it to them ahead of time and they all printed it without even bothering to reward it.

And the truth is, inflation in the United States is over because there are only two things holding inflation above the 2% mark. The first is energy in a small way. We've got the war in Israel Russia and Saudi Arabia cutting oil production at the same time. So oil prices have bounce back a bit in August and September.

And of course, that means that gasoline and fuel oil are up immediately because prices at the pump go up as soon as oil price goes up. For some weird reason, it then takes weeks and months to come back down when the oil price drops. Strange that, right? Anyway, the point here is that the price of oil is not a US problem. It is not some kind of underlying fundamental issue with the way that the US economy works.

It is not an inflationary pressure. it is a temporary glitch because of macroeconomics globally, and it is not something that you can fix with high interest rates or by managing employment down. The other factor that is keeping US inflation up is shelter. Shelter is the measure of how much people pay in rent and mortgage payments on a monthly basis.

Shelter makes up 35% of the entire inflation read. so it's really important and it has a huge impact on the overall number. So if shelter stays High it pulls the whole thing up with it. And the problem with Shelter data is that it lags what actually happens to rent and house prices.

because if rent prices go up, you only start paying more rent yourself when your annual review comes up or whenever you happen to move. So that might take months and years. and if house prices go up, you only start having to pay more if you happen to sell your old house and buy a new one and you move. And the perverse thing here is that the FED has increased interest rates to try and combat inflation.

but as the Fed's interest rate has gone up, so have mortgage rates, 30-year fixed mortgage rates in the United States are almost at 8% Which means that the monthly payments on your average mortgage are going to be Mighty expensive and you can see that the number of homes being sold has dropped significantly. Before coid, it sat at around 5.5 million homes per month. After the pandemic hit, it went crazy up to 6 to 6 and a half million a month, but now it's down to 4 million, a 30% drop from the previous Norm. You can see that this is pretty much the same level as what happened in the financial crash in 2008, so this is pretty significant.

The numbers have dropped, but some people still buy homes because you know people have to move. Life happens. so the FED has increased interest rates to reduce inflation. The high interest rates are now causing mortgage rates to explode and so the cost of paying your mortgage rate is going up as 4 million households every month take on mortgages at these much higher rates and this is causing the shelter number to artificially stay high.

Pushing inflation up. buying a new house is seriously expensive. You know what's not expensive? Weeble Who are the sponsors of today's video Weeble Charg Super low fees for investing in US stocks and you can load your money into the account by pressing transfers and then hitting deposit inside the app. here.

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So except for oil and shelter, every other metric in the inflation report is down. Food is down at 3.7% It was 4.3% last month, so quite a big drop again. and look at the last 7 months worth of data. it's all 0 to 0.2% So food inflation is already below the Fed's 2% Target Right now, this sounded crazy.

Just a year ago at the turn of the Year, food inflation was over 10% That wasn't very long ago. Look at energy, excluding the oil price increase. Electricity is at just 2.6% and gas is at minus 19.9% Now that gas figure is going to keep falling because gas prices have come down by 60% this year, but you can see that the cost to the consumers is only down 20% and that makes perfect sense, right? Absolutely nothing to do with greedy profiteering there. That's just how it works.

Look at any of the other major categories in the inflation report: New vehicles are at 2.5% Used vehicles are at minus 8% Everything in this list is down except shelter and transportation services, but even transportation services dropped that number was 10.3% last month and is now 99.1% Rent prices in the US are collapsing, as was evident for over a year now. The latest Zumper report shows that growth in rent prices is at almost 0% and in 2021 this Sat at 12 to 15% It's collapsed all the way down. The rent prices have not gone up in the last year, and neither have house prices. The median sale price of homes in the US has fallen sharply in 2023.

But despite this fall, because interest rates are higher, the monthly payments on a new mortgage are still going to be a lot higher on the same property compared to two years ago. US Inflation is only sitting above the Fed's 2% rate because of the current oil prices and shelter. In fact, it's pretty much just because of shelter. Oil prices are something that we notice, something that we pay every week when we fill up the car.

But they only make up 3.9% of the overall inflation data. and we can see that house prices are not growing and neither are rent. So long-term shelter is not an issue and it's only an issue right now because the FED has raised rates and because the metric is lagging. here is an interesting fact for you.

if you take out Shelter From the index. If you just remove it, the entire rest of the US inflation index is at 1.8% so everything except shelter is at 1.8% below the Fed's 2% Target The media is of course making out that there is this massive problem because you know Panic sells newspaper copies. The truth is that underneath this layer of fear, the US economy is booming. New data this morning shows that real wages continue dragging negative.

Which is a good thing because it means that there is not a wage price spiral. There isn't a sustaining problem in the UK. We actually do have a massive problem with this. Wages have now overtaken inflation and are growing at 88.2% in the most recent data.

So the UK is completely when it comes to inflation. Unlike the US and in the US average, hourly earnings are growing at 4.2% But because of inflation and the market fear, there has been a shift towards part-time employment and you can tell because you can see that the weekly earnings are a lot more volatile and they track behind the hourly number. Now, the next meeting of the FED is happening on October 31st to November 1st so there is no more inflation Data before that meeting and at the last meeting, the majority of the Tweedle Dums voted for one more rate hike before the end of the year presumably most likely at this next meeting and we can see in the data there is absolutely zero data. There is no information whatsoever that supports another rate hike.

It is completely unwarranted. It is against the Fed's Mandate because the Fed's Mandate is to maintain inflation 2% which they have already got and it is to maximize not minimize maximize. employment and higher interest rates are definitely not going to help there. In fact, at this point, a rate hike would probably only make the inflation situation worse because the only thing that is holding the overall inflation number up is shelter as was obvious all the way through last year.

Because I was saying this every month in Channel and a rate hike would actually exacerbate that problem, it would make it worse, not better. Yesterday, the FED published a minutes of their last meeting and in those minutes they say that rates will need to increase more and they will have to stay high while inflation is high. but inflation is not high anymore, inflation is already below the Fed's target. It's at 1.8% except Shelter and Shelter is lagging.

The real world data where rent prices and house prices are both now falling, so making changes now to something that is lagging data from 2 years ago is not going to help. It's already happening. You can see it in the data. Is the Fed really so incredibly incompetent? Are they really so incredibly dumb that they will actually go in increase rates again Despite every data point out there showing there is zero justification for doing it.

Why the has the FED not? Looked at 2021 and realized that being slow, being incredibly slow processing data is a bad strategy. In 2021, the FED waited until inflation was a huge problem and only then started increasing rates in March 2022. It was obvious in the summer of 2021 that there is a massive problem. A random guy on YouTube seemed to see it.

I Mean it wasn't exactly hard. It's not Rocky Science: Look at this graph. Does this graph look like inflation is all fine and sitting at 2% during 2021? Well, right now now we are seeing the exact same thing happen in Reverse. Inflation is gone.

We can see it in the data. We can see it in all the metrics that come through in lagging indicators. Rates should not have increased in the last seven months, and the FED should now be dropping rates right now But instead of using you know brains because I guess they just don't have any brains, they are sitting there like mentally challenged raccoons, damaging the economy, potentially slowing down the economy over the coming years and risking blowing up the commercial real estate debt for no particular reason. We're getting to a point where at some point very soon they will have no choice because the data is going to become so overwhelming really fast and they will have to start dropping rates which is the opposite of what's seemingly every single War Street analyst thinks is going to happen and I look forward to making videos covering how surprised everybody is, how nobody could have seen it coming.

Now remember to go and check out the free shares from Weeble in the description and I'll see later.