Everyone kevin here, okay, so here's exactly what happened with cpi and why we had a miss. The expectation was that we were going to have year-over-year inflation come down from eight and a half percent to eight point. One percent. We got eight point three percent, so it's in the right direction, suggesting that inflation might be peaking, but the real hope was that inflation would come down to at least 8.1, if not even more so that way, we could clearly define a peak, even though we're kind Of like making that turn and we're rotating down the concern now is that well crap what, if we're going to sort of plateau at higher levels? Now at first read i was a little nervous and i only started feeling a little bit better when i actually looked at the details of the numbers and those are what we're going to go through in just a moment with some charts month over month headline inflation Was expected to move up point two percent and we ended up getting 0.3 and core inflation was expected to move up 0.4.

That's because, as food and energy comes down, the other core sectors were expected to uh to sort of um come down to the effect where, when we take out food and energy we'd have the larger increase on on the headline numbers for month over month. But when we look at core we thought we would uh by not removing these sort of negative hits to gasoline and food. We would end up seeing uh not as great of an improvement in month-over-month core, so we were expecting 0.4, but we got 0.6. So we missed on headline year over year by 0.1, the headline month over month by 0.1 and core by 0.2.

That's the bad one though, because that's the one, the federal reserve told us hey, we want core to go down and it went down from last month. Last month we had a 1.2 gain right. That was insane that was potentially a peak, but still 0.6 percent pretty hot, because 0.6 percent means core. Inflation is still moving at 7.2 percent.

That's sort of the speed that we're going at that's called the annualized rate, and so when i looked at the actual cpi report we can see this is sort of the reflection of what it looks like when we see cpi starting to rotate down. We were hoping again to have more of a rotation down and we really got kicked in the butt right here with this core uh number, which is this section right here. That really kicked us in the butt and there's a particular reason that i believe core came in so high and it actually remember this is the weird thing: okay, core is supposed to strip out it's supposed to be minus energy and food. Now, energy and food includes gas right, but here's the problem, part of core is actually airline and public transportation.

Both of these price. Their fares, based on how expensive gas and energy is - and we know that brent, crude and wti crude, are still above a hundred dollars. A barrel each and that leads to some expensive gas prices, obviously off the peak, but take a look at some of the gains we've had here on airline prices. In january we had 5.2 percent increases in airline prices in february 10.7 and in march 18.6.

You'd think that may have peaked, but because we're also at the same time as we have relatively high gas prices, seeing a surge in demand. What did we end up? Getting? We got 21.9 percent of an increase in airline ticket prices. Public transportation went up one point, a 14.4 percent which is right above it look at these two numbers right here. If we just take the weight of airline prices, which is taking this weight right here, the relative importance rate of about a half percent multiplying that by the increase we get, we can explain about 0.12 percent of the miss solely from airlines.

If we then include public transportation by going 0.00836, which is the weight multiplying it by fourteen point, four, we get another one point, two percent, so you're, literally getting or or point one two in this case, you're you're, getting a combined uh point. Two four increase to core solely because of airlines and public transportation. Now, when we take a look at visualizing, some of the changes here look at this. This right here tells you how much rent contributes to inflation that we're seeing and it's been consistently coming in at about 0.5 percent month over month.

But it's becoming more of that stabilizing force in cpi. That's actually keeping inflation hot in the fact that, while while rent is still going up, 0.5 percent, other things are coming down. So this is carrying more weight. So that's something to keep an eye on uh and then here are your leading decliners.

So these are things that went down in price from the last month, and so we can see admission to sporting goods down here, uh gasoline down about 6.44 motor fuel down 5.81 energy commodities, laundry equipment, information technology - these are things that came down. Look at this one televisions came down apparel, like women's suits, men's apparel, jewelry, personal computers and peripherals. These are things that came down somewhere to the anywhere between eight percent and two percent month over month, two percent decline in computers by the way month over month. That's actually a pretty good move because that's somewhere around, if we do two times 12 to annualize, that that's like a 24 year-over-year decline where you get a two percent decline month over month on computers.

So you kind of see some of that weakness. Potentially in the chips, you know that makes me sort of think of like corsair. It makes me think you know when we see washing machines laundry equipment, i think of whirlpool, i think of nvidia uh. You know not so much looking at potentially apparel, although you have a big apparel section within target and then apparel stores themselves, whether that's nordstrom or whatever else going to the upside.

You really see that disaster here in airline fares, public transportation, eggs, margarine window coverings sewing machines, milk, transportation services. So again the more we look at things like here: transportation services, airline fare public transportation. This is interesting. I want to actually see what the weight here is for pub transportation services.

I think that's the category right here, though yeah it is. It is look at that this uh category moved 3.3 as a full category here, but i prefer to just look at these right here, because these are sort of they give us a little bit more detail. They really tell us that this inflation read again missed, probably by about 2.4 percent. Well, i should say like it makes more sense to look at it like this 0.24.

There we go percent solely because of these two things here now personally, i actually don't think that's as scary. However, the market's going to hate this right, the nasdaq's selling off we've, got the uh 10-2 spread down. The 10-2 spread is now i'll. Show you a screenshot here, 10 2, which is our yield curve.

Remember zero means an inverted yield curve. Take a look at this right here, uh we, we were actually steepening nicely we're at 30 basis points right now, which is still higher than where we have been uh since uh since essentially march, which was a disaster april 1st when we had our inversion of the Yield curve this was really the beginning of the stock market. Sell-Off we've had the last five or six weeks here now but uh. You know we've come down not down as much as we were, which is good, but 10-year yields back to over three percent and if we look at the break, evens uh.

Take me a second to get it here and get the break evens up five year break. Even which is sort of the bond market's expectation of inflation. Here we go, we get the following chart and we can see that we've really been seeing this nice decline here inflation. This is really really good in the markets.

Expectations for inflation really really good to see this, but really bad. Obviously that uh, you know now now we're getting that push back to the upside. It's just breaking that trend of falling a falling break, even expectation which it happens. You know we get these little breaks to the upside; hopefully it ends up being transitory but that missing course sucks and unfortunately, the federal reserve can't just look at this and say: oh well, it was just airlines no big deal well, it actually is a big deal Because you know, you've got a situation where the federal reserve has to see okay.

Well, this crazy airline spending clearly means that airlines have pricing power and if airlines have pricing power, it means the consumer's still spending like crazy and it just solidifies the fact that we need continued 50 basis, point hikes which really sucks. Now, if you jump on over to the actual qqq here, you can see uh this. This essential disaster happening here, the nasdaq now down 1.85 percent. You actually see a less of a a degree of pain in tesla than you, ordinarily would tesla usually has a beta of 2 to the nasdaq, which would mean we would expect tesla right now to be down about 3.6.

It's down about two point: three percent, so you're, actually seeing less of of pain here, uh and uh. I'm not exactly sure why! But that's what the market's doing sitting at about 782 right now, nasdaq, a one point: five, nine percent uh my suspicion is, you know, reads like this are probably going to almost with with certainty, push us into uh recession and q2 here and we're going to look Back at this time, which we won't actually know - probably my guess until let's see the second quarter ends april may june, probably late july, early august, we'll have the next gdp data and that gdp data is going to tell us. You know potentially the word recession uh and which we could be the entire year. Now.

It's also worth noting that tomorrow we have ppi numbers that are coming out. Ppi uh final demand is expected to come in month over month, at 0.5 percent down from 1.4 uh. The core is expected to be 0.6, and - and i mean if we get a miss here as well to the upside - it's just it's not going to end the pain for the stock market anytime soon. So i do think this puts you know essentially cold water on on hopes for a short-term rally here kind of disappointing and all thanks really there to uh airlines, which really good measure, though of consumers right.

You know so uh. Here's! Here's your report. You could thank uh. You thank consumers for traveling, speaking of which i have a flight today yeah flying to florida.

I got to go to tampa. Then i got ta fly to miami uh. Then, after that i got a fly to florence, italy, so there won't be a market closing livestream today, because you know i'm flying around sorry. I guess that means i'm contributing to inflation which contributing to inflation.

You know, i guess i guess. Maybe i'm also hurting with that by by reminding you that we're going to have the largest price increase ever on the programs on building your long-term wealth linked down below. This probably feels quite insensitive to be talking about this in the cpi report. So i'm just going to kind of like slowly back away from that one uh yeah.