Hey everyone me kevin here: wow, the inflation report came in way. Worse than expected, it came in with a month over month, inflation reading at 0.9, as opposed to the 0.6 expected that is a month. Month-Over-Month change so to figure out what that's like on an annualized basis. You multiply it by 12., so in that case we were expecting about 7.2 percent of an annualized inflation rate.

Instead, we got .9 times 12 or a 10.8 percent annualized inflation rate, but folks the devil is in the details. Why? What led the inflation report to beat so badly? We came in with a headline year-over-year reading at 6.2 percent, instead of 5.8 percent expected we're expecting. According to the latest analyst wall, street reports we're expecting inflation to come in slightly higher than last month, uh to come in at 5.8 percent compared to that 5.7 of last month, but 6.2. This is a blowout.

It is the highest highest that we have seen for. Uh for inflation sin on a cpi report since 1990, which is absolutely incredible, and so i uh you know obviously the stock market rotated to the downside, uh. It's it's been trying to recover. Some stocks have actually recovered very well.

For example, tesla was down at one point three to three and a half percent down at 987, and it's now sitting at 10.66. It's actually up 4.2 percent. So there's some major by the dipping happening in the market, which is, is good in a sign of resilience. Uh crypto obviously moved up very nicely.

You could see uh crypto bounced, which was also very weird. It had like a three minute delay uh before people actually started buying crypto and then then you saw bitcoin run up. Uh, go from about 66 400 to 69 000 new, all-time high slight uh consolidation here and now we're in that consolidation pattern: around 83. 000.

I'm sorry, 83. 000. around 68 300. But why like? What was so bad about the report? Well, i finally figured it out.

I finally figured it out uh, i had trouble figuring it out earlier, but now i'm looking in in the right place and i have the correct details. Sorry, this is a calculator. It's not this. Okay, this uh is is what we want to look at this right.

Here is the cpi report, and it's got a special page here. So what we want to look at here to help make sense of this is the number on the left side right here. This tells you the weight of a specific category. The number right here tells you the month over month change and then, if i scribbled a number here, all i did was just multiply it by 12 to give you an annualized rate of inflation.

So let me give you an example: services in services. We had a point: six percent gain: that's a 7.2 annualized inflation reading for services. That's a lot! 7.2 percent! That's a lot for services right! Then you go to durables durables folks appliances, bikes, workout equipment, desks, furniture 1.4 on the month over month, okay, 1.4 times 12 is like an inflation rate of 16.8 non-durables like clothing or consumables, like shampoo up 1.3 in a month, okay, 1.3 times 12 is 15.6 percent And then again over here you see the rating or the weighting, i should say in the cpi report. So, for example, non-durables have a 27 weight in the cpi report uh, so things that we're buying regularly as consumers.

Imagine that in the consumer price index have a one-third weight kind of important, but anyway uh then look at this. If we go to housing, we're at point seven percent, that's an eight point: four percent annualized bump uh for housing, which is probably a little understated because of the way they measure owner's, equivalent rents, a little funky. I think rents are probably a little bit higher than that 8.4 percent annualized, but uh still. The report is actually coming in with a number pretty big here.

Uh we've got some smaller increases here or in some cases, declines in education and recreation. But we go to some of the other categories here: transportation up 2.4 in a month. Again, that's the crazy thing is in a month, 2.4 times, 12 works out to 28.8 28.8. It's pretty high, uh and transportation has a 16 weight.

So it's got a pretty big weight. You've got private transportation up 15.6 that has a uh. That's that's sort of a subcategory of transportation uh, so not so important to necessarily consider both of these. It's not like you want to add these up right.

This is part of that one. So don't worry about that one! So much utilities, public transportation, up 8.8 here for utilities and public transportation, 1.2, 1.2 times 12. That's 14.4 uh percent at an annualized rate. This is high.

These are very, very high reads: uh and again: look at the big categories here: food and beverages, food and beverages 0.08 times 12 is an inflation rate of about 9.6 percent on food right here, uh and and again some of these other sections like the the housing. A 41 wait for housing up 8.4, and so i finally figured it out when, when i went through this and i went through these categories and the category weights, we can do a quick little just to make it maybe a little bit easier. Let's go ahead and just use a little peach color here and go through some of the the heavy weights here in the index, so you kind of have an idea of how they come together here, so housing 41 really big weight, right, education and recreation together. These only have about 11 weight and those were the ones that came in low food and beverages came in at 14.98 percent transfer uh, well, that that is what the weight is: uh transportation at 16.7, other services 11.4.

So it gives you a little bit of an idea how this breaks down and so what i realized in terms of why this is so crazy why this is so so bad this this inflation read. I realized it's because not one thing went up. Everything went up literally every freaking category, with the exception of education and recreation. These sections, in the light blue over here and maybe services, less medical care services, which is, is also redundant to education, recreation, educational, recreation.

With the exception of these things and the the teal color here, everything in this pinkish color here went up way more than expected and that's the problem is literally prices for everything went up. This is not a cpi report where we could just go in and say: hey folks, don't worry, it was just because of cars. Oh folks, don't worry, it was just because of chips. I can't do that.

Literally, everything got more expensive uh and if you want you could get a little bit more granule, you could go into uh. You know exactly uh what items within this and within the sort of sectors that we just saw here. Uh went up even more and so we'll we'll do a quick little example here. We'll do a quick look, we'll jump in and we'll see specifically what's getting more expensive.

If we jump in to uh the detailed expenses there, we go. What we're looking for on this particular chart is the uh change uh in uh for the percent change. We could use the far right number because it gives us the seasonally adjusted number and like here, just as an example, breakfast cereal up 3.3 meats up 2.5, but we also saw it's categorically up as well as as a sector or category 3.3 for canned vegetables yeah. You keep scrolling here and you'll regularly find that, with the exception of jewelry, which which actually went down most sectors went up.

Sporting goods 1.6. Remember 1.6 in a month is a lot miscellaneous personal goods, 2.7 car and truck rental 3.1. These are huge moves. Physician services were low, medical care services actually didn't increase that much airline fares actually went down 0.7, but again overall, when you look at the categories overall, everything went up and that's why the cpi report was so bad, and so this is going to have major implications In my opinion, for the buildback better plan for joe biden, i think this is almost a potential nail in the coffin for joe biden trying to get his social spending.

His tax and spending plan through because people like joe manchin are going to look at this report and go sorry. Inflation is not transitory. Anybody who thought it was transitory is wrong. I was one of those people and now i think, eventually it's going to go down at some point during this decade, i'm not going to speculate when it's going to go down at some point, it's going to go down inflation's going to go down.

I do believe that i don't believe we're going to see hyperinflation, but this is the kind of stuff that actually makes jerome powell seem less potentially competent, even though i think he knows he can't predict exactly when inflation is going to go down and it came in Way higher than expected here, it's very very likely that joe biden is, is going to look at this report and maybe even use this as ammunition to replace jerome powell and if he does end up replacing jerome powell. I think the market's going to freak market's going to have a hissy fit and freak out a little bit over over uncertainty around what another federal reserve person would do. Are they just going to raise rates right away or they're going to be patient just like fed uh chair jerome powell? What's going to happen, that uncertainty could lead to more of a pullback in the market, but overall, if you're wondering why this report was so bad, it wasn't just the headline numbers. It was literally everything inside joe biden says, looks like he just came out joe biden on inflation quote.

Reversing this trend is a top priority for me yeah, because, right now the trend is worsening. This is worse, not better. It's shocking it's disappointing, but in many cases, actually probably not unexpected. A lot of folks were probably expecting this and they're right and they've been right, so there you have it.

This is crazy. Thank you so much for watching. I'm actually surprised that the indices and certain stocks are uh are recovering uh in the manner that they are, but uh yeah this this was definitely a shocker and it's no surprise. The indices are almost all red, though they are starting to kind of flip to go.

Green again, mostly because there's so much money because of all the inflation people keep buying the tip anyway, thanks for watching we'll see in the next one bye, you.