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we've gotta talk about Pce. The personal consumption expenditures numbers come out in about 20 seconds. Prepare for the expectations. Pce month over month is expected to be 0.5 by some estimates 0.6 year over year 5.0 Core month over month point four year over year core 4.3 and the numbers will be coming out within the next 10 seconds.

This is gonna move the stock market today. Let's see what happened. It's been like 10 seconds and still not out waiting. Uh, usually they're pretty on time Earth is out.

Personal income comes in at an actual 0.6 versus the survey of 1.0 Personal spending, however, comes in at 1.8 versus 1.4 So more personal spending, but less personal income. Here we go. Pce numbers in month over month slightly hot at that point. Six, although some estimates did hit that year over year comes in hot 5.4 versus 5.0 This is just like the January CPI report all over again.

Core: Oh, that's not good. Core comes in at 0.6 That's 7.2 percent annualized. That's terrible. The prior read was 0.3 and the last serve and the survey was 0.4 That's a nice beat.

Uh, in in a negative way. Uh, Core: year over year comes in hot at 4.7 Okay, now we got the revisions year over year core of the last reporting period. So December was revised up from 4.4 to 4.6 Core Deflator: month over month, revised up from 0.3 to 0.4 for last month. Uh, Year over year, revised up from five percent to 5.3 percent Pce month over month for the last report, revised up from point one to point two percent.

So what do you have? Well, you literally have people showing now these new reports showing less income, more spending, and higher inflation uh, than than anticipated by survey, and certainly higher than what we had last month. So much in line with the CPI report. It's not good. it's it's all hotter.

It's all hotter than expected. Uh, and uh, no surprise. But at least at this point the market is taking a little poopsie dupsies now. I I Kind of.

I Have to I Just put my own little spin on this for a moment while we pull up the Pce report and we go through some of the details here personally. I'd just like to say that I feel like this is redundant I feel like this is just a redundancy till what we saw and the CPI report. But for some reason we have multiple of these reports like PPI reports and Pce reports I Get it! So it's no surprise to some degree that this one's coming in hot because we had the heads up that it was going to come in hot by the last again. the Beats on PPI the Beats on retail sales, the Beats on uh CPI Okay, now that aside, let's see what Wall Street is saying about it.

Obviously, it's an algorithmic easy sell trade. It'll be really interesting once the humans actually start reacting to this data. If we end up buying this dip, that will be very interesting because I want you to know right now it's Algos Firing off it's It's a very simple formula if expectations or the results come in higher than expectations. So if they come in lower than expectations, buy very very simple algorithm.

you could program probably yourself as well. So not too terribly much of a surprise. again that this data is hot. but hey, whatever.

61 sir. Economist of okay, here we go. Only six of the 61 economists surveyed by Bloomberg forecast a personal spending gain of 1.8 or higher. Another hot January report? no question.

Yep, agree with that. Pce core accelerated to 4.7 in January above all estimates and the month on month gain match the high forecast inflation again coming in hotter than expected. Okay, we've talked about some of the headline numbers here. Let's go to the actual release as well and see what they've got here.

So here's the actual report. Uh, so what do we have here? We've got. uh, personal income for January There we go: 0.6 personal disposable income 2.0 percent on current dollars expenditures 1.8 So again, this is where you can see we're spending more than we're making right now. and this kind of reiterates what we're seeing with the credit card data, right? The credit card data suggesting people are spending more than they're making.

This is where there's a lot of uh I'd like to say clickbait because I Like to say it's really. it's kind of just like basic, but like there are a lot of folks going. Oh, but Kevin the personal savings rate has plummeted. Yeah, no.

Like we're probably going through some degree of a recession. So people go into their their savings that they have and they spend money to get through the recession. Businesses do that and people do that. No duh.

People's incomes go down in a recessionary environment when stocks go down and when you know people are getting laid off. duh. So showing the chart of the personal savings rate going down is just. it's redundant.

It's like childish. It's it's It's simple. What we need to pay attention to is how much excess savings people have and most people still have four to five times as much money as they had before the pandemic. So so we we have a long Runway of still being able to spend through this.

I'm not saying that's a good thing, it's actually one of the reasons we're seeing some of these inflationary numbers coming hot. Obviously, combined with the fact that you've got crazy seasonal adjustments that happened in January Uh, so so February is going to be even more important because January is like seasonal adjustment month. But whatever. Obviously, this is a hot report.

Obviously, that's not good. Obviously, this is not the trend that we want. uh, and and obviously that's why the stock market is taking a little poopsie doopsy. Immediately after the report, however, I Went to see how the day evolves because I'll tell you.

one of the most important things that you're going to get as an investor in those stocks today is if the stock market ends up green today. That's a sign in my opinion that institutions realize we're not going to get Paul Volckard and any dip is starting to turn into a buy the Dip opportunity. now. I'm not saying this dip is a by the dip opportunity I'm just wanting you to observe the market today.

and if for some crazy reason, we somehow rebound from negative one and a half percent on the QQQ to positive at the end of the day, it's a sign that institutions are realizing Oh damn, we've been offsides for too long. It's time to start allocating more cash to these levels. Grab these before they're gone in. February when maybe those seasonal adjustments are gone I'm not thinking it's all in time because obviously if we get a hot Fab you know you're going to be like oh, why did I buy right not Feb would be like worst case scenario because then you're reiterating the January Trend and the argument that January is just a seasonal adjustment disaster.

or maybe January is hot because January was a lot warmer than December and people are buying spring spring clothes in January that goes away instantly. look I don't know I mean if you follow me Instagram on Instagram It's basically at this point, like following my only fans. Okay, I don't have an only fans. but on Monday I was skiing without my shirt on because it was hot, it was I mean it's like February in Lake Tahoe and I'm like I'm sweating my butt off over here and even after I get you know, splashed with snow.

uh, I'm still hot. It's weird. It's like, um, it's just. uh, it is.

It's a weirdly warm winter I Know, obviously that's just an anecdote, but that is also what we're seeing in the data, right? So that motivates you to buy different clothing right and then leads to more retail spending and people have more anyway. Okay, so so take that as you'd like, but obviously prey Market here and maybe at the beginning Market Open Whatever. We get some red if we continue to close, right? Okay, then this is a legitimate concern if we can if we actually rebound like we did yesterday off of this because yesterday was insane I Mean yesterday was just like straight down and then just like straight back up to close higher basically than where we started today. Insane.

But anyway, what do we have here we go: increase in personal dollar income in January was led by compensation reflecting private wages and salaries. Obviously these are just the lagging uh, uh, Embers of inflation. No surprise. uh.

government social benefits decreased in January reflecting a decrease in other benefits fine one-time refundable tax credits Social Security Cola adjustment. Oh, that's another thing to remember too is you have, uh, you have, uh, the cola adjustment that took effect in January So people's incomes actually Rose thanks to getting more Social Security money starting in January Remember when they announced the cola adjustments and like, when do they do it like September August or something like that, they're like oh yeah, you know, 8.7 Bomb. People were like, oh, great. Inflation is wonderful.

My social security is going up almost 10 percent, you know? Uh, obviously inflation's not great, but but anyway, uh, that that could be what we're seeing some of in January as well Cola Cost of Living adjustment and not Coke Okay, anyway. uh, so what do we have here? 3 12.5 billion dollar increase Pce reflected spending on 162 billion and spending for goods 150 for spending for services within Goods The increase was widespread, led by motor vehicles and parts as well as other non-durables durables or like cars, washing machines, dishwashers, and stuff with Services the largest contributor first for the increase was spending for Food Services. That's interesting because Food Services is actually part of Core. but food is not part of Core see what I'm saying So it's like even if food increases and then you're like oh well, I Want to look at Core which takes out food and energy, You still have food services that are affected by food prices.

and so if Food Service prices go up because they raise menu prices, that's an increase in in basically Food Services and it's related to food going up even though it's supposed to be part of Core which is excluding food and energy. it's the same thing as saying like you know, oh uh, you know, my delivery fee for my new gym is a hundred dollars more expensive because gas is high, but my gym shows up as more expensive on my CPI report. even though the Core CPI says here's your gym without the uh energy costs right so so you could see how in like food and energy which is very volatile still continues to flow through even in Core. But anyway, personal outlays increase personal savings? Uh, decrease? uh from prices from a program blah blah blah Okay, real.

Okay, let's uh. let's see here. let's look at some of the other data or related materials that we have here. Full releases and tables.

Yes, this is what I want? Let me get this up. Uh. In the meantime, let me quickly see what Wall Street is saying. Uh, Pce reflected an increase in both goods and services.

Is spending Food led the way? Yeah, see, they're picking up wall Street's picking up on this as well. Hey, they just picked up on that 30 seconds ago. Maybe they're watching us right now. Hey, fine with me.

Hey, if you're watching me. Hi. Anyway, so there was really no disagreement across the raft of indicators in January strong for the economy, jobs, consumption, inflation. Will this be sustained? That's the big question right now.

A lot of strategists right now talking about will. Is this a re-accelerating of inflation? Is this the second wave that everybody's been fearing? That's maybe why the stock market is falling and then sort of selling off a little bit right now. Yeah, that is a very fair question. That's why January Or uh.

Well, the report that comes out next month for February would be so important. Okay, is there anything else interesting in some of this data? I Do think that food services item was very, very interesting? Uh, and quite important? No, not really. I Mean we'll get some tables here. Oh yeah, yeah.

Okay, okay, okay, this actually will be really interesting. So let's go to: I Want percentages? Please give me percent changes, Because now we can see categorically what's happening Here we go: Percent change from proceeding month? Uh, this is so bad. I'm like choking and dying. Uh, Anyway, so uh, uh.

here we go: Wages and Salaries: Oh good Lord. Uh. 0.9 seasonally adjusted monthly rates? That's absolutely horrible. 0.9 Good.

Lord You realize how high a 0.9 Reed is? Oh my goodness gracious, it was 0.4 in November And December 0.9 I Mean this is going to make people scared of a wage price spiral that's 10.8 percent annualized. But again, some of that has to do with like Cola going up. But damn, 0.9 That's not. that's bad.

Uh, personal interest income. Wow. with rates this High it basically you're sitting at point one percent of an increase. That's nothing.

personal. Dividend income. Boy, that's a volatile category right there. Uh, Rental income of persons with capital consumption adjustment I Don't even know what that is.

Uh, we can figure that out. So this is. yeah. this is percent change from prior month.

so these numbers are just nutty. What is this? Uh, personal contributions from government social insurance? Yeah, there you go. Look at that one point. Five percent I mean that's a massive boost? That's the cola adjustment taking effect.

Uh, okay. can we get a little? Can we get percentages on like specific? Goods Maybe food really popped off over here. Percent change. This is from a year ago one month.

but a year ago? this is from one. Okay, yeah, I mean that's fine. Eleven point One percent. That's sort of what we've been expecting for food.

Ah, this table. Not too terribly insightful, but um, let me see a little bit more of what Wall Street is saying. And then let's try to fed swaps. Okay, yeah, here we go.

Fed swaps are now fully pricing in rate increases in March May June Yeah, we've kind of been expecting that already though. Three more 50 basis point hikes, right? That brings us to five and a quarter percent. So from 4.5 percent to four point seven, five percent uh, in in the next meeting, to five in the next, and then five and a quarter in the next, you know that kind of is what we've been expecting. So the question now is, is the terminal rate moving up? It probably will on this, the terminal rate was before this report at a high of 3.7 or 3.3 What am I saying 5.37 was the terminal rate before this? And okay, it's moving up a little bit.

There's now this expectation that potentially there's a rising risk for a 50 BP move in the next meeting I Disagree with that I think if anything they would just add a 25 BP or the market will start practicing in a 25 BP for uh July if it needed to. but I don't really honestly like. Bottom line that all is: I don't think this really changes anything because again, it's just like it's literally like replaying the nightmare of uh of of a personal consumption. or uh PPI retail sales and CPI for January it's literally like we're playing the same movie over and over again for January Like we get it, the January numbers are hot.

We get it. Like how many more times are we gonna play the same movie over and over again? It's like watching the Titanic on repeat and being sad that people are dying. It's literally what these reports are. It's over and over and over again.

For January it's the same crap. we get it. January was hot I Know it was hot for winter as well. next month's data is going to be very important.

We want to break this trend because the last thing we want is all of these reports next month to be confirming this trend. That's what matters at this point. I Don't think this changes anything in terms of the FED going for 25 BP next meeting I Don't think there's any way they go for 50. uh I I'll I'll you know I don't know I'll I'll make a we'll have to make some kind of bet on that because I feel so confident on that.

but uh, sure, you know, like if this stuff is a trend, it's bad. If it's not a trend, it's a buy the dip opportunity. which I still believe that we want to pay attention to what the market does today because even if it's super red at open, if it recovers towards the end of the day, the more the institutions and they could be wrong too. Institutions are wrong all the time.

Institutions could be yelling at you going, especially if that boost happens towards the end of the day. Remember that most ETFs do their transacting at the end of the day. so if you get well, that could also be representative of some retail info since rep ETFs or an institution. but they get both retail and institutional Investments right? But often if you see big inflows at the end of the day or big kind of moves up or down at the end of the day, it's usually institutions pulling the trigger.

So they come up with sort of their strategy. uh for for the opening belt and then the closing bell. So you usually get the most volume at those times because of the institutional strategies going in. Kind of interesting.

kind of fascinating. Play the by the dip video. Well, let's see what happens throughout the day. See, But remember, you know, like Alex Courier says disinflation is transitory.

Poor Jpal, this is just a reiteration of the same crap from January right? Like this is, This is not a trend. Uh, QT Yeah, look Steve's talking about QT You know. Yes, the Federal Reserve is quantitatively tightening right now. It's similar to what we saw in 2018 and 19.

uh in terms of the runoff. Uh, the contraction of the money supply. The contraction of the money supply from an Austrian economics point of view could actually be providing us all of the evidence we need to suggest that inflation will end up being transitory. Uh, but uh yeah.

I mean that's that's part what. Nobody really knows how quantitative tightening is really going to affect the broader Market Nobody really knows. and I think that's why the FED is going as slow as they are on that. They don't want to break anything.

so we'll see a little really interesting. Uh, but yeah, it'll be fascinating to watch the institutional reaction today, watch how the market closes today, and obviously 10-year treasury yields Still holding on to that 3.94 We saw a pump when, uh, in real estate when treasury yields fell to 3.3 percent because people were under the impression that this is it. This is the bottom. I'm like, not so fast.

We'll see Bottom's not in yet for real estate in my opinion. so you know. I I don't ever want to come across as like I'm only a bull like I'm definitely bearish on certain parts of this economy. But anyway.

uh, we'll see what the next data sets show for. But in terms of PC and am I really like oh my gosh, this changes everything. No, this is just like again. it's Titanic all over again like I Saw this movie I Saw this movie on Jobs report I Saw this on the PPI report I Saw this on the CPI report.

Why am I shocked that PC came in hot. It's like the last indicator of the month. It's boring. It's like thank you.