00:00well Donald Trump should be very very
00:01happy because rate cuts are now fully
00:05priced in instead of for this summer or
00:08as early as September in November but
00:12those rate cuts that rate cut meeting
00:14comes just a day after the election so
00:17that means there is a chance we will get
00:20zero rate Cuts until the election is
00:24over a big win for Donald Trump
00:27especially since even as Nick T men in
00:30his Wall Street Journal piece this
00:31morning on CPI Americans have had it
00:34with inflation and unfortunately the CPI
00:37report today which was supposed to give
00:39us Direction was January February just a
00:42bump on the road or was it a trend of
00:44inflation resurging well the numbers
00:47came in hot as outlined over on ec.com
00:50to make it easy for you remember every
00:52time you go to pooper check on ec.com
00:54what do you got CPI month over Monon
00:57you've got a point4 every item comes in
00:59point one hot you can see that on screen
01:01here core month over month year-over
01:03year year-over-year core everything
01:07expectations uh Market's looking at just
01:101.9 rate Cuts this year maybe 2.26 by
01:14January the super core trend is not
01:17great the super core trend is the
01:20biggest problem that we have right now
01:22the last time we had a rise in supercore
01:24was really when the Federal Reserve
01:26started freaking out you'll see right
01:28here in about September mber July July
01:31August September we bottomed out in
01:33super core in 2021 unfortunately we
01:37skyrocketed until the FED lifted off on
01:39interest rate uh uh increases lift off
01:43uh in March of 2022 and we are now
01:46trending towards the longest uptrend in
01:48the super core now super core is exactly
01:52what we pay attention to every single
01:54time we get a CPI report the first thing
01:56we do is we jump in over here and we go
01:59what's going on on with Services Pet
02:01Services up 1.9 we warned that we wanted
02:04to pay attention to insurances pets
02:08Financial Services healthc care all of
02:11them hot motor vehicle repair 31 this is
02:14month over month so when you annualize a
02:1631 you're talking 36% inflation you just
02:20multiply it by 12 don't use exponents
02:22when you annualize 3.1% on motor vehicle
02:25repair Insurance 2.6 Mo uh motor vehicle
02:28maintenance and repair 7 uh you've got
02:31health insurance up one2 hospital and
02:33related up one2 medical care services up
02:366 household operations up8 Pet Services
02:40up 1 n postage delivery 04 other
02:43personal services8 not great all of
02:46these hot that's super core Rising uh
02:48since we did touch on medical I want to
02:50give you a quick little heads up by the
02:51way uh summer baby summer uh I'm already
02:55starting to talk to a discharge nurse so
02:57we could be within 2 weeks knock going
02:59would knock on wood or three surgeries
03:01are done and she is recovering so yes uh
03:04but anyway baby summer hopefully be home
03:06soon so all seven babies will be home uh
03:09but anyway going to the Super core chart
03:11this chart over here on the right is
03:13rough uh this is a rough rough rough
03:16chart the chart is going in the wrong
03:17direction and so now you have to look at
03:19the implications the implications are a
03:22clearly policy isn't restrictive enough
03:25clearly the Federal Reserve thinking
03:27that 55% rates is restrictive in not
03:30it's not restrictive how could it be
03:33deemed restrictive if supercor is
03:36skyrocketing the way we see super core
03:38here uh it's crazy uh then this also
03:42raises the estimates of the neutral rate
03:45which reduces where we might end up
03:47going with interest rate Cuts in the
03:49long term the idea that we're going to
03:51go back to 0% rates is is basically
03:54killed by reports like this where
03:56inflation is continuing to resurge in
03:59the face of H of a very high policy
04:02rates and the econom is still chugging
04:04along we don't have jobs weakness if
04:06anything we have jobs strength yes some
04:09of that is affected by immigration
04:11obviously but the jobs Market is broadly
04:13expanding there is a renewed risk of a
04:16wage price spiral especially since we
04:19think the ECI reports are going to come
04:21in hot in part due to California still
04:24raising minimum wages during a time
04:26we're trying to get inflation to
04:28stabilize now I'm not here to say people
04:30shouldn't earn more money I do think
04:32people should earn more money but I am
04:34also concerned that if from an economic
04:36data point of view we start getting
04:37signs of a wage price spiral the Federal
04:39Reserve will be forced to drive us into
04:42a recession again this is actually what
04:44we're getting right now is good for
04:46Trump in the short term because not
04:48getting Cuts until November means the
04:50Federal Reserve is kind of going to look
04:52like they're behaving politically the
04:54moment Trump potentially or the new
04:56president gets elected that's when
04:58you're going to get rate Cuts whoever
04:59obviously ends up winning of course
05:01delaying that until then is going to
05:03look very political uh but you know the
05:06data is also driving them in that
05:07direction the problem though is if you
05:09stay at those higher levels for too long
05:12you do increase the chance of a
05:14recession a recession could end up on
05:17the next president's plate so whoever it
05:20is whether it's Biden uh or or Trump or
05:23whatever it is very possible that with
05:26rates having to stay this high and super
05:28core moving up like this and a potential
05:30lead into a wage price spiral the
05:33Federal Reserve is going to have no
05:35choice but to drive a recession uh to
05:38actually finish the job on inflation and
05:41the Federal Reserve will do that if
05:45necessary obviously this is not good for
05:47your interest rate sensitive stocks
05:49yesterday we anticipated that the most
05:51volatile mover would be Sun Run followed
05:55of course by the other interest rate
05:56sensitives we thought there was maybe
05:58some hope for artif icial intelligence
06:00but at least this morning there's really
06:02hope for basically nothing the only
06:04thing there's hope for is the volatility
06:07index Alibaba and United Airlines uh
06:10other than that you've got sun run down
06:127% open doors down about 7% wfirs down
06:15five end phase down five you've got uh
06:18uh uh the tqq down 3.9 that's because
06:22obviously your index is down about 1.3%
06:25right now arkade down 3% Cheesecake
06:30uh you've got Tesla over here is
06:31actually only down about 1.8 uh is
06:34NVIDIA is down about 2% Nvidia now in
06:37correction territory along with um AMD
06:42and uh you really want to watch on
06:44Nvidia that 850 line we are below that
06:47850 line right now and that's a big deal
06:50for NVIDIA uh getting below 850 it is a
06:53support level breaking could bring us
06:56back to 731 uh for some violence uh arm
07:00for example down 2.5% on the day uh
07:04though that's also been sort of a
07:05volatile up and Downer uh we'll see what
07:07happens though but with markets but
07:09right now you've got the bond market
07:144.48% 10year yield you also have
07:17inflation break evens moving up the
07:195-year inflation Break Even is sitting
07:242.55% and the trend of the inflation
07:26Break Even chart is not good keep in
07:29mind that Jerome Powell consistently
07:30says that inflation expectations remain
07:32well anchored this is in the face of
07:35inflation expectations just one measure
07:37of inflation expectations moving up
07:40rapidly you can see on screen here we've
07:42been straight up since December Jerome
07:45Powell is not changed his tune at all
07:47and the question now is what is he going
07:49to do and what is the market going to
07:51react with when JP really uh ends up uh
07:56uh you know uh going oh no oopsy doopsy
08:00whoopsies we screwed up when we get that
08:04commentary from Powell how markets will
08:06reply will be very uh uh obvious uh uh
08:10will be very interesting uh obviously
08:12we're expecting to get Fede this week we
08:14will get minutes today at 11:00 a.m.
08:17though I'm not sure how useful the
08:18minutes will be given that we just got a
08:21third month of um hot dat out so if you
08:24get minutes that say Hey you know two
08:26months could just be a little bit of a
08:28bump on the road unless we get some kind
08:30of hedging bets like hey if we get three
08:33in a row that would be bad then these
08:35minutes might not be very useful today
08:37we're really going to be looking for is
08:39that fed speak coming Bowman today we'll
08:41have other speakers going forward the
08:43rest of the week like Walker will be
08:44speaking towards the end of the week so
08:46we'll cover the FED speak clearly
08:48rafhael Bostic was uh not informed of
08:51having any kind of sort of preak on
08:54what's going on uh given that Rafael
08:56bosk suggested hey it'd be great if we
08:58hit consensus and uh you know what maybe
09:01you know he he sort of acted bullish
09:03rather and doish suggesting hey
09:05consensus are a little below would be
09:07wonderful news and just accepting
09:10consensus at even where it is somewhat
09:12implied hey maybe he knew what the data
09:14was going to be turns out no maybe only
09:17japal gets the data ahead when he wants
09:19it but uh doesn't look like Bostic had
09:22any kind of clue and so the market and
09:24it's run into the close yesterday wasn't
09:26really led by anything other than
09:28speculation so uh again coming in hotter
09:31than expected here uh also hits our
09:33Trend numbers we'll pull up the trend
09:36numbers here which uh thank you Nick t
09:38for throwing those up but Nick T gave us
09:40the trends and this is the problem the
09:43trend is not our friend when it comes to
09:45inflation here you go on screen now
09:48you've got Nick T everybody loves our
09:51fed Whisperer he gives us the 36-month
09:53and 12-month basis uh and those here say
09:57uh what's going up are the course on
09:59building your wealth from meet Kevin
10:01including all the buy sell alerts uh
10:03trade alerts that we send in the stocks
10:05and psychology of money group we'll have
10:06a price increase within about the next
10:0810 days on those if you want to bundle
10:10up make sure to email us at staff
10:12meetkevin.com you can bundle up with the
10:14event or other courses if you want if
10:16you're an existing member or a new
10:18member or a curious member you have
10:19questions but anyway uh so staff atme
10:21kev.com but anyway look at that core
10:23Consumer Price Index right here you see
10:25that 3 six and 12- month Trend solidly
10:28moving up here this is an issue because
10:30again at five and a half percent rates
10:32it means the Federal Reserve is not
10:35managing to control this inflation
10:38problem so a little oopsy doopsy again
10:41we're not pricing in our full rate cut
10:44until November and we are moving down on
10:47rate cut expectations to uh just one
10:51okay we've just moved down even more
10:54that's uh that's incredible we are now
10:581.69 I'm going to throw this uh screen
11:01on um uh this chart on screen rather but
11:04I want you to first see yesterday's data
11:08so I got uh yesterday's data I'll show
11:10that on screen first yesterday's data is
11:13right here this is what it looks like in
11:15terms of the market pricing and cuts the
11:18way to read this is these These Bars are
11:20basically number of rate Cuts priced in
11:23and if you hold your mouse right here
11:25for December you'll be able to see we're
11:27pricing in -2 six rate Cuts as of
11:32-2.6 so basically 2.6 cuts for yesterday
11:36okay today uh we have now moved that
11:40number down again because we were at 1.9
11:44if I now hover over December I get 1.
11:49692 that's it 1. 692 on rate cuts that
11:54means we're getting to only pricing in
11:56about 1 and a half rate cuts at this
12:00point that might end up moving down on
12:02hawkish talk here to only pricing in one
12:05rate cut for the year uh so big
12:08implications here obviously for the
12:10market broadly for treasuries we'll see
12:12how the market responds as the day
12:14trading moves I really think it's going
12:16to take probably the whole trading day
12:18to kind of figure this out and then
12:20obviously we'll get PPI tomorrow as the
12:22next Catalyst and then we'll get fed spe
12:24coming up PPI for tomorrow month over
12:26Monon is expected to be3 core month
12:29month is expected to be .2 core less
12:31trade is expected to be 0.2 so we'll see
12:34usually those producer price numbers do
12:36come in lower and then at the end of the
12:38week we'll get sentiment University of
12:41Michigan inflation expectations those
12:43are usually uh something that is closely
12:45watched or are closely watched by jpow
12:48so we'll look at those next week we'll
12:50get retail sales building permits uh and
12:52some other um smaller data sets as well
12:55but obviously 3 months now much more
12:58than a bump in the road this is turning
12:59into a trend it's not great let's see
13:02how markets respond though can we get a
13:04market rally here in spite of maybe not
13:07having R Cuts let's find out as we get
13:11ready uh for the trading why not
13:14advertise these things that you told us
13:15here I feel like nobody else knows about
13:17this we'll we'll try a little
13:18advertising and see how it goes
13:19congratulations man you have done so
13:21much people love you people look up to
13:23you Kevin pafra there financial analyst
13:25and YouTuber meet Kevin always great to
13:27get your take even though I'm a licensed
13:30financial adviser licensed real estate
13:31broker and becoming a stock broker this
13:32video is not personalized advice for you
13:34it is not tax legal or otherwise
13:36personalized advice tailor to you this
13:38video provides generalized perspective
13:39information and commentary any
13:40thirdparty content I show shall not be
13:42deemed endorsed by me this video is not
13:45and shall never be deemed reasonably
13:46sufficient information for the purposes
13:47of evaluating a security or investment
13:49decision any links or promoted products
13:51are either paid affiliations or products
13:53or Services we may benefit from I also
13:55personally operate an actively managed
13:56ETF I may personally hold or otherwise
13:58hold long or short positions in various
14:01Securities potentially including those
14:02mentioned in this video however I have
14:04no relationship to any issuer other than
14:06house Haack nor am I presently acting as
14:08a market maker make sure if you're
14:09considering investing in hous Haack to
14:10always read the PPM at house.com
![Welp, Here's what the Fed *Just* Said [Fed FOMC Minutes]](/_next/image?url=https%3A%2F%2Fi.ytimg.com%2Fvi%2Fl8u23oq1E9E%2Fhqdefault.jpg&w=3840&q=75)
