Okay folks, so we've got a big report coming tomorrow morning the latest CPI which will show us one of two things: either a that inflation is coming down and this foreshadows the FED starting to back off or B that inflation is continuing to be stubborn or even heating up and the FED is going to have to be even more aggressive if you look at the market. it's right now trading on a consensus view that rates are going to top out at a bit over five percent and then slowly back down if tomorrow's report is hotter than expected. All of a sudden, you get a rush to immediately factor in a higher terminal rate AKA higher top rate that we reach in this overall hiking cycle. And this is especially true given the very strong Jobs report that we just got which gives the FED a lot more wiggle room and makes the FED feel that the labor market is still overheated.

So in today's video I want to walk you through very violently the data that we have going into tomorrow's report and what it means for the stock market and what it means for the actual numbers we're going to be seeing tomorrow and what the expectations are. But first, a word from today's sponsor commenter. Now as you know, I am a big coffee guy and for me, two things matter most: Number one, taste and number two convenience. Cometeer is a completely new form of coffee, flash frozen at Peak flavor and delivered straight to your doorstep each month.

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Quote Economists project the Consumer Price Index and the core measure that excludes food and energy both cooled on an annual basis, but turates still consistent with persistent and elevated inflation. The overall CPI is seen rising from a month earlier by the most. Since June Again, the overall CPI is seen rising from a month earlier by the most since the beginning of Summer June So they are projecting a cooling down from the overall annual rate at 8.2 percent, but heating up month over month at the fastest rate that we've seen in several months. So you go over to the CPI to see what that means.

June 2022 We had a 1.3 percent month over month increase, then a zero percent, then a 0.1 percent, then a 0.4 percent. Now the expectation is that the October report is going to show the hottest increase since June, which means this will be the third month in a row of increasing pricing pressures. After that July report at zero percent month over month, we were told very loudly, very clearly that the inflation battle has likely been won. Analysts all over the place were flipping their heads left and right, saying, oh gosh, the FED pivot is guaranteed Now Even the President himself came out and proclaimed inflation at zero.

And then you had a slight uptake the next couple of months and the thought process was supposed to be Oh okay. Well, these are just slight temporary outliers in the downtrend. but at least the yearly is coming down, so nothing to worry about. Inflation is being solved.

and now we are heading into yet another report where it is expected to be hotter. Another report the third in a row and it's not just expected to be hotter, but the hottest since June. If inflationary pressures continue spiraling at this pace, well pretty soon, maybe three or four more reports from now, you're going to be at levels where the annual starts picking up and then all of a sudden you're going to be at new 40-year highs. So the question that you have to ask yourself is, how many more months of an uptrend in inflation do you have to have before markets start thinking once again that inflation is not under control and that it needs more Extreme Measures to get it under control At what point? My guess is that if this report comes in a lot higher than expectations, all of a sudden, what happens? Well, a lot of Market participants start waking up and they start projecting that the FED is going to bludgeon us a lot more down the road.

It's also worth calling into question the whole idea that the annual rate not the monthly rate, but the annual rate is going to continue to go down because they are expecting it to go down slightly. But even that I mean the overall annual inflation rate exceeded forecasts and six of the prior seven months. So that's not exactly a great track record. Six out of seven.

Oof. why don't you just stay in bed? Here are your month over month predictions from major: Banks ranging from point five to point seven percent CPI month over month and 0.4 to 0.5 core CPI inflation month over month The standards and Market expectations going into The CPR report leave a lot of wiggle room. The standards are pretty low, which means the actual number that inflation can come out as can be pretty high. So if inflation is even higher than those expectations, that's when you start getting into another round of bottoms falling out in the stock market.

If the labor market is surprising us with strength and resilience, then we shouldn't anticipate a different outcome. With consumer prices, one is going to follow the other, labor is slow to turn, and the same goes for inflation. Well said, when you go into an environment where prices have risen very, very quickly and consumers have spent a lot of money in a very short amount of time when there's basically no Supply and you had labor shortages for the longest time ever, Well, it's a very, very slow process for businesses to then go and recognize the change in tide and of course start lowering prices to meet demand and as well as unfortunately lay people off. You go over and you look at the FED Futures rates for the December 14th meeting.

they are now factoring in a dead heat between the 50 basis point hike and the 75 basis Point hike and a hot CPR report tomorrow will cement the 75 basis point hike if not further than that or higher than that and cause the Algos factoring in the 50 basis point hikes to sell. Meanwhile, we just got the Consumer Credit report a couple days ago. this one was for September and CNN Business reports quote: American Consumers borrowed another 25 billion in September according to newly released Federal Reserve data as higher costs led to further dependence on credit cards and other loans. So we already know that consumers who haven't had their wages keep up with inflation.

Well, they are simply going and just taking out more and more debt and few of them have really adjusted their overall lifestyle decisions until about now. Now you're starting to see some cutting back of discretionary spending. You have this Dynamic that because consumers didn't want to adjust their lifestyle, but they continued to borrow in order to have the same lifestyle. Well all of a sudden you got into a situation where you had all this artificial debt pumped demand that all of a sudden when consumers no longer want to borrow debt, well that just evaporates if you pull up the actual report from the FED.

It's worth noting that the pace at which consumers are taking out new debt year over year was declining from August to September. Which means what? well, consumers are cutting back on excess purchases and focusing on the essentials, removing the artificial Demand on discretionary items, and keep in mind that simply borrowing loss does not fix your debt problem, but it does destroy a lot of segments of demand in the American economy. And if you have a lot of outstanding debt well, it further removes your purchasing power and your demand. If you look at outstanding debt on both revolving and non-revolving categories, both increased month over month.

So consumers, as we see, are starting to borrow less and less and cut back on spending less and less in order to just focus on the essentials. But but all of the money, they already spent all of the debt that they've already piled on? Well, they have to pay to service that, right. And as interest rates rise, especially a lot of the unfixed debt costs are going to be skyrocketing, and a lot of the debt costs that are fixed I mean they still eat away at your purchasing power Right when consumers are no longer willing to go into debt to keep up their Lifestyles and are only borrowing to pay for the essentials, Well, what happens? Well, pretty much everything outside of the essentials sees a reduction in demand and prices start going down over a long period of time. Now, to cap it off with an overall look at the market, you got a pretty bad post midterm sell-off most major indices down 1.5 percent to two percent across the board, pretty wide reaching red with the exception of Meta which rallied since they laid off 11 000 of their employees which means more controlled spending and investors are happy to see that the crypto Market got bludgeoned even more today.

Ftx's native token Ftt is now down 86 percent in the span of a couple days, and it looks like it's going the way of Terra Luna The FTX crisis continues the spiral out of control, and reports are showing the Binance bailout of FTX may end up falling through entirely, which would cause a massive collapse of support levels in pretty much every major crypto asset. That's a substantially worse than what we are already seeing. Oof. So I mean pretty rough climate heading into that CPR report tomorrow.

But what I will say is that markets and investors overall are really hyper focused on Mr Jerome Powell and the Fed and what they're going to do next. And once the inflation battle is convincingly convincingly behind us and we're on to the next step, which is a massive recession battle and stimulating out of it. Well, all of a sudden the whole dynamic in the stock market shifts and the whole dynamic in every Market shifts. And hey, a guy can wish, right? Perhaps tomorrow will be the start of just a little bit of good news.

There's a little bit of Hope right? a little bit. They say hope ties lost in every Revolution I Don't think there's any Revolution here, but maybe a little bit of Hope Anyways, folks, let us know your thoughts down below. Think you can comment here for sponsoring today's video. Make sure to check them out with our link down below.

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Down Below Have a great rest of your day and we will see you in the next video.