Hey, I recommend you watch this video in full before we get to tomorrow. So Morgan Stanley just put out a really neat indicator about what we could expect for inflation tomorrow. We already know that the inflation estimates have been revised down. We already know that JPMorgan thinks there's an 85 chance we're going to have a green S P 500 tomorrow, Which, if you're a contrarian, that's actually really bad news.

If you like hearing that, that's good news. If you're invested and you're a bull, that's good news, right? So Morgan Stanley came out with this fascinating, uh argument. They argue that there's actually this CPI fixings chart and the CPI fixings chart has been correct in 10 out of the last 10 CPI prints in terms of the direction of how CPI is going to come in. in other words, is CPI going to come in up? Is it going to come in down? And it's nailed it 10 of the last 10 times.

And so the CPI fixings read right now I'll tell you what it looks like and what it's predicting. But wait, let me first actually give you a quick reminder no not of the coupon code. link down below and price is changing soon. You already know that about amazing programs on building your wealth and fundamental analysis.

Live streams in both real estate stocks, you name it. But the current projections we know are Bloomberg consensus estimates which I did see some comments asking like hey, what creates these consensus estimates Basically, it's a survey of like somewhere around 50 to 70 economists every month and they basically take the average of that and they kind of chart like a bell curve and they say all right. It looks like most people think it'll come in here, right? That's basically what they do and then you sort of have ranges. You have tails like some people think.

it'll come in really high, something low, whatever. So we know that the Bloomberg consensus estimate for the month over month estimate has actually been moved down from zero percent month over month to actually negative point one percent month over month. which yesterday I Talked about how that makes me nervous because I'd prefer to beat big. To the downside, we also know that we we saw a 6.5 percent year over year be the downward revision from 6.7 percent for that year-over-year number, right? But look at this from Morgan Stanley Morgan Stanley talks about this: CPI fixing market and it's predicted the surprise correctly in 10 of the last 10 prints.

It's currently pricing in a 0.13 month over month headline print. So if you think the trend of this survey being right is going to continue, we're probably going to beat tomorrow. Look at this: CPI fixings versus Bloomberg median forecast over the last 12 months and so you can see here it was wrong. the the fixings the yellow came in different from the actual versus the uh.

the Bloomberg consensus which is the blue here. Uh and so when they say actual versus Bloomberg consensus, it's a little complicated. It's basically just saying that the Bloomberg consensus was way off. uh and the actual CPI read came in way higher than expected.

And so basically what to understand? This chart? You're trying to see. Where did the CPI fixings give you the right directionality compared to actual CPI and Bloomberg consensus? Right? And it was wrong here. It was right here. It was right here.

Right here. right? We're going in the right direction. Right? Correct, Correct, Correct, Correct. Correct.

Correct. Correct. Correct. Kind of wild.

That and this is. this is like a market-based survey, right? This is people putting their money where their mouth is rather than just like economists speculating. This is why. Kind of like when you see betting odds for election polls, they tend to be more accurate Now, no guarantees.

The CPI fixings is suggesting a downside Miss for this next one. and that makes not just Goldman Sachs and JP Morgan and Morgan Stanley optimistic about tomorrow. Which personally makes me nervous because if everybody's optimistic, it's probably going to be bad news, right? Uh, but it's like oh man, Yikes. Okay, what do we actually think is going to happen? TBD But let's take a look at some of this other information.

What I think is fascinating as well in this Morgan Stanley report is: listen to what they say here. And yesterday we had a pretty damning piece from Morgan Stanley talking about how they see a 3 000 bottom for the S P 500 still coming. and that's because they think the S P 500 and indices are going to get crushed. Not because things aren't going to get better with inflation.

They think things are going to get better with inflation. and the FED In fact, look at what they say over here and sorry if I'm talking fast like I I gotta go to a flight like soon I have a flight that takes off in 62 minutes. Uh yeah, I'm going to Utah So I'm actually I'm actually already tight addressed in like tights like I have Under Armor under this I don't know if you can really see that there. it looks kind of cool.

but so anyway. so I'm a little anxious I'm also highly caffeinated. But anyway. um, most investors don't expect rate Cuts in 2023 according to a survey of Market participants Market Participants expect Cuts in the first quarter of 2024.

However, the market actually expects those cuts in Q4 2023. Remember from prior videos I Talked about how the markets right now are projecting about 1.73 percent Cuts in 2023 and then before the The Cutting cycle ends, we'll be down a full five percentage points. That's what the bond market is pricing in right now. The five percent over the next few years the 1.73 this year that Divergence which we attributed to a negative risk premium is commonplace.

Market prices aren't investor expectations, but they're just Incorporated within them. So in other words, the market might be a little more negative and bearish now than it ought to be for individual stocks, but potentially more optimistic on the indices, right? This is building off of what Morgan Stanley wrote yesterday. But either way, take this for how you want it. Take a look at some of the risks they point out and some of the weaknesses they point out.

This year, the risks skew increasingly toward an Fomc that changes their minds. The lags with which the Fed's tools, both the rates and interest rates and the balance sheet operate suggest the FED will need to ease Financial conditions to help avoid a hard Landing. In other words, even though the FED wants Financial conditions tight, they don't need to be that tight to bring inflation down because inflation might already be plummeting. In which case, you can loosen Financial conditions to kind of hit the brakes on on like a soft Landing Or or maybe in the analogy of a car if tight Financial conditions are the brakes.

Maybe they tap on the gas a little bit again, or they soften off the brakes a little bit right? Anyway, analogies: The labor market Improvement continues to show a slowing look. For example, when we chart this total change in non-farm payroll plummeting. and even though we think these numbers are rigged, they're plummeting. The reason we think they're rigged is not because we're putting on a conspiracy hat.

it's because the payrolls establishment survey from Bureau of Labor Statistics potentially double counts people, right? And so these numbers could already be inflated. But even the inflated numbers are trending down. Like the last thing you want to say is rigged is like when let's say this number is trending up and you're like, oh, it's just raked. No, no, like it's already going in our favor and we think it's rigged like that's that's doubly good, right? Average weekly earnings and average weekly hours worked, both trending nicely down.

This is good for investors, right? We do want to see people make more money in from an individual point of view, right? Latest ISM Services Data is giving a stark indication that we are Contracting substantially manufacturing and services based on the New Order index solidly down. What do you have over here? Economic surprise in the last eight years starting to go negative over here? Still room to go down though. to the economic surprise side. Uh, but we are suggesting a big contraction in both the demand for goods and services and that and services line.

Really, really important. ISM Services Prices have held up recently in in the face of cooling demand. However, Data is really suggesting that cooling inflation and a soft Landing could be possible If the Federal Reserve flip-flops and so something everyone's expecting, we'll see well. I guess I Shouldn't say not everyone is expecting.

In fact Morgan Stanley I said said it best. It's more like everyone around here I Feel like is expecting the FED to cut Maybe not maybe maybe I shouldn't say that at all because then again, I get comments all the time. people saying Kevin the FED cutting rates is a pipe dream. All right.

Well let me rephrase this and simply say most investors don't expect Cuts in 2023 as Morgan Stanley here says, however, the risks are skewed to the fact that the FED will. But remember, they are going to keep the mask of Hell on for longer because they don't want to take that hellish mask off yet and reveal their true clown faces just yet that they are going to end up flip-flopping this. this data so far day after day after day is pointing towards optimism. But I really want to caution against being too optimistic because if you're too optimistic, we could be terribly disappointed tomorrow.

So stay out of debt. Good luck Godspeed! I will be live streaming the CPI release at 5 30 a.m I Hope you'll be there with me. Goodbye.