Folks, is it Christmas Because it looks like Santa came early. pretty much everything was up massively this morning. Green green as far as the eyes can see. When I was growing up, my dad said that Santa skips over LA because it doesn't snow when there's too much regulation to get down the chimney.

But The Claws Man certainly made it to the stock market today. Hundreds of billions of dollars coming into the market from everywhere, and I was planning this video. You had the NASDAQ up Six percent, a index that has looked more like a Stephen King novel versus an actual stock market index. But not today, folks.

not today. The S P 500 up almost five percent I mean even Crypto, which is experiencing a major structural collapse saw inflows today at a rapid clip. You pull up some specific stocks you had your carvana up 27 today, a company whose flawed business model is getting destroyed. Meta up eight percent AMC 16 Nvidia 10 Affirm 22 Unity up 26 Beyond meat up almost 20 percent you name a stock that got hammered on higher interest rates, a reduction in spank, relative trading and crunching multiples overall, and it was probably up quite a bit today.

And this folks is what happens when you have an entire asset Universe Algorithmically programmed to respond to just one or two variables: inflation and the fed. and when it responds all of a sudden, you get massive inflows. And when you get massive inflows, you get short squeezes. And when you get short squeezed, you get people going in and riding the momentum, buying the dip.

And then all of a sudden boom. You get these insanely green days. but folks, inflation and the FED We did get some good news on both fronts today. Today will be the first video in many, many months where I can report some actual good news.

Although the good news does have a little asterisk next to it, but some actually real genuine good news. I'm going to get right into what was reported today, what you need to know, and what it means for the trajectory of the market moving forward. and first a quick plug from today's sponsor, Zip Trader You and this very handsome gentleman right here. We have just officially launched our Black Friday 60 off coupon code.

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Okay, so going into two days CPI released the lowest estimates were for CPI month over month at 0.5 percent, but most of the others were leaning towards 0.6 and 0.7 The average was about 0.6 And what did we end up getting? We got 0.4 So the Algos that sold at valuations factored in 0.5 or above were triggered massively this morning. And then for core, the estimates were 0.4 and 0.5 We got what 0.3. So inflation lag those expectations as well, so that's a win on both overall inflation and Core. Something that we haven't seen pretty much at all during this entire higher inflationary cycle.

And annualized inflation has dropped down below eight and is officially in the Sevens at 7.7 percent. Now is the Fed going to Pivot on 7.7 percent? You're over. Your inflation. Is the battle anywhere near one if you're at 7.7 percent? No, No, no.

But it does make markets expect that the monetary policy medicine is going to be less severe. You have to understand that markets look at this as a trajectory. If markets see inflation underperforming expectations. Right now, they go and they assume that moving forward inflation is going to continue underperforming expectations.

and thus they have to adjust their perspective and adjust their positions. This is the way the Stock Market Works In 2022, computer programs go in and responding to variables that track the Fed and track inflation and track probabilities. And that's exactly what triggered the Bear Market rallies in the summer. and that's what triggered today's run Now how long it's going to last.

That may be another question, but as of right now, Algos are very, very happy you go over to the FED Futures You now have an 80 chance of a 50 basis point hike versus the split chance which we had yesterday of a 50 versus a 75 and the terminal rate. The top rate we reach, which is much more important, really, is now increasingly expected to be capped out at 475 to 500 instead of the 500 to 525 range that we were seeing increasingly factored in and sometimes even up to 600. If you're starting to see a little bit of a ripple of people saying hey, you're going to have to get into the six percent plus region Which means simply that because of today's slight cooldown in inflation, Well, all of a sudden you have markets going and expecting lower inflation for many months to come and less rate hikes as well. And the Wall Street Journal reports quote.

Even before Thursday's report, several Fed Presidents had hinted that they were ready to slow down the pace of rate Rises at the Fed's next meeting scheduled for December 13th to the 14th. even if inflation readings don't improve markedly before then. And guess what? hey, inflation ratings are improving I Don't want to say markedly, but they are improving so they were willing to do it without the Improvement And now they have a little bit of improvement. Some markets are like, hey, more Fed members are going to flip into slowing the pace of raid hikes and not only do we have today's report, but we also have the next CPR report coming out on December which is the very day, the very morning of their meeting and at the end of the day folks, hey, people love to make this complicated.

But at the end of the day What Markets Care About is really this man here and his institution. We could talk about the TA inflation, the recession, the political environment, my neighbor Susan's barking dog that won't shut up. But at the end of the day, the Fed's policy is the main fire that drives stock prices in today's environment. in normal environments where the FED is in a consistent range.

Well, then you can start looking at company earnings and you could start looking at the economy and you could start looking at Innovation, so on and so forth. But when the FED is in a cycle of timing at a pace that we haven't seen in four decades, the FED is the only thing in the room that you should care about. And you should only care about recession numbers and inflation numbers and all other things in regards to what it's going to make the FED do. Because that is really what the market cares about right now now, over the long, long run.

Obviously, if you buy good companies at good prices, hey, you'll probably do fine. But if you want to understand how the market is moving right now, it's all because of this man hither and his decisions. So in my view, the game plan here is that once the FED has convincingly pushed the economy off the cliff, well, they will use the extra elevation in rates to step back in and save it. and you're going to see huge asset repumps way before the economy even shows signs of recovery.

Something very similar to what you saw in 2020, although this time it might be a little bit less effective and it might be a little bit more long-winded. You're going to have an economy that takes a long time to re-stimulate out of and a stock market that tries to preempt that stimulating out of by about 12 months. And I Think that most people see this coming and everyone wants to try to time when that is going to be and you'll see many, many more days like today when it does eventually happen. However, it is my view that we haven't seen anything yet.

Four Decade High Inflation does not go down without some substantial pain, and what we have seen in the broader economy is really nothing resembling some substantial pain. We've still got quite a ways to go down before we get anywhere near the Fed's target rate, and as we've seen time and time again, getting inflation down is kind of like putting toothpaste back in the container. It's just not so simple and not so easy. Sometimes you just gotta throw out the whole thing and buy a new one.

And in fact, the main line item that is pushing prices up higher right now is shelter. According to the BLS, the index for shelter contributed over half of the monthly. All items increase, with indexes for gasoline and food also increasing, but shelter costs those take a long time to come down right? People get locked into rentals. it takes time to adjust.

A lot of owners are still raising rents to keep up with the higher real estate prices that they saw the last couple of years, and they weren't able to raise because of different covet policies, and a lot of them are still trying to adjust upward. and they haven't taken the hint that things are starting to contract. so that's certainly a tough line item and something that's going to take a long time to get through. But at the same time, I mean the more that consumers are spending on rent and food and energy, the more they can't spend elsewhere.

and the more that helps motivate other pricing pressures down. David Rosenberg From Rosenberg research said this on Twitter Quote: Biggest downside: Miss On the core: CPI Since April of 2020, excluding shelter, food and energy, you had a decline of about 0.1 percent the first dip since May 2020. that is a one in 40 event and never happened in the 70s. Services excluding rent came in at negative 0.1 percent, month over month and core Goods excluding food and energy fell point four percent after a flat September So he is saying something here that we've been saying all along: when consumers are hit with skyrocketing costs and they are borrowing their way to the neck and they're running out of money, Well, what do they do? They start cutting back, they start cutting back on non-essentials and you start seeing that affect the demand and prices of non-essentials start going down and down and down.

And this is not something that you usually see. Unless you have a massive massive recession coming, you don't see consumers go and say hey, we're not going to spend anything except on the Essentials Now this is something that he said didn't happen in the inflationary cycle in the 70s. Clearly trying to make the distinction between the entrenched inflation of the 70s and the current day inflation. Big difference between the two is really the speed at which consumer confidence is dropping and how fast companies are reporting massive bludgeons.

To the bottom line, if you look back at the 70s, it was a lot more stretched out and you had opportunities for inflation to still stay Very very entrenched Because consumers weren't changing their behavior, they just kept spending at the same time. We're back then especially. you had commodity prices continuing to stay very, very elevated. So what is my closing thought process on today's report? I Say good news.

It's the beginning of some broader trend of good news in regards to inflation, but we've got a ways to go. and then on the other side of that, you got a massive recession to worry about. The good news though is that by the time you have the recession start being very, very apparent, while the FED is likely going to be on the verge of pivoting and pivoting in a massive way, at which case, Chachinga. that's what all the money is going to be made.

Anyways, folks that gaps off today's video, make sure to take advantage of that black 60 coupon code with our link down below 60 off our program and the one time fee for access to these step-by-step license, private chat, daily morning briefings, and full price Target list as well as all other trading resources. If you want to get up to 15 free stocks with MooMoo I will also put a link to them down below. Have a good rest of your day folks and we will see you in the next video.