Okay folks, violence. We've got three big things to discuss today. Number one, the disgusting situation we are facing right now and what you need to know: Number two, an update on squeeze stocks and overall setups like Mr. Redboxy Box and then number three.

We have to talk about the catalyst heading into this week and we've got a big one that we've been looking for for a long time. Okay, so we haven't talked for a week. Why? Charlie? Well, because I went to France. thanks for asking.

And while I was there, I had some time to gather a new perspective on the market while also watching the latest round of Blood Bathory. The Dow dove 800 points on Friday and the S P 500 posted its worst week since January. In France, they have the same wee wee bonjour oui, Which means never trust the Fed, especially with inflation. And that's good advice that dates all the way back to Napoleon back then.

If one of his squires said something was transitory and it wasn't, let's just say that he wouldn't be squaring for long. but let's cut to the chase. More bad data out us. Consumer sentiment slumped to a record low on rapid inflationary data.

The charts look downright apocalyptic, lower than any point the last four decades. Meanwhile, short-term and long-term consumer expectations for inflation are climbing, which means people are likely going to prep for higher living expenses tomorrow by saving money on some of the non-essentials today. And the Cpr report released Friday was disgusting. Just disgusting.

And the market has certainly not been silent To this, it's been no silent little salamander. The Berg of Bloom reported that after peaking above 30 times earnings a year ago, the S P 500 multiple shrunk by roughly 40 percent through its trough in May, almost matching the size of the contraction during the entire 2000 to 2002 crash. Which means the correction to valuations is happening at about three times the speed that it happened back then. But I want to get back to this inflation report for a second.

At this point, we are pretty much all on team. Stubborn inflation. This is gonna take some pain and some time to heal. but even so, this report was rough and it was bad news.

We knew energy costs were skyrocketing through the month of May. You get up-to-date minute-by-minute data on that, but a lot of the areas that Wall Street analysts had expected would start going down. They weren't even cooling off. Bloomberg ran a poll that asked economists what would be clear and convincing evidence of clear progress on inflation.

and the standard here was super super low. More than half, more than half said all they need is small monthly gains in core inflation. not overall inflation. Core inflation, not declines, but rather slow increases.

We could not even inflict downward on that that low of a bar. It's like you send your kid to school and you ask him to do just one thing for you. Just one thing. Don't wet yourself.

You don't have to pay attention. You can throw boogers at your teacher. Just don't don't wet yourself. There's a bathroom down the hall and then you go and pick him up from school.

And guess what? His shorts. They're soaking wet and your seat is drenched. In the story, the Cpi report was Little Jimmy. You've seen an increase in the inflation rate of shelter costs, medical costs, apparel which we we're supposed to see pick downward as we have all this excess inventory.

but nah. Used car and truck suddenly jumped up again, which is mind-boggling as rates should have people being able to afford less car. Maybe they're fomo buying, but sales overall have actually been going down. So when you see these numbers picking up, this is pretty freaky.

It just doesn't smell good. And then this line item here, all items without food and energy accelerating at the same pace as the month prior. Even if you take out food and energy here, prices are appreciated at the same rate as they were last month. Wall Street's expectations were hey, yes, energy is going to go up.

food's going to go up, but at least if you exclude those two things, it's going to start picking down. Couldn't even do that. And of course, energy has just gone parabolic in May and has continued going up into June. Food at home, Food away from home, food in an alleyway.

Wherever you eat your food, it's going up dramatically. What's scary here is that energy costs and food 100 drove. This report had a lot of impacts behind the scenes, even when you removed the two categories, but the expectations here were so low. We weren't asking for deflation, we were just asking for a slowing down of the pace of inflation.

But you just couldn't do that. And the problem is that as we go into the summer, energy costs are expected to go up a lot more. Based on the current trend trajectory and the lack of production or willingness to produce, it's hard to be optimistic that the biggest hottest line item here is just going to all of a sudden start Last month when we reviewed the Cpr report for April. at least you had some sort of trend starting to show a little bit of a cooling down, which allowed markets to say okay, hey, maybe inflation's peaking a little bit And then they started worrying more about recessions instead of inflation.

Now we took about five steps backward and we're thinking okay, shite Not only do we have to worry about this recession that's coming, but we also have to worry about the inflation trend continuing to stay strong. Which brings us back to market enemy number one, the Fed. The Powell of Jerome has won one goal right now to bring down inflation and increasingly at any cost necessary. with rising energy costs, rising food costs, rising shelter costs, overall cost of living everywhere Going up into the moon, Markets are quite frankly coming to the inevitable conclusion that the Fed is going to have to nuke the economy.

Not only that, but they're starting to doubt the ability of the Fed even to bring down some of these costs. especially when it comes down to global benchmark prices like with energy and food. The market is pissed that the Fed is going to have to nuke a bunch of other unrelated parts of the economy in order to have a slight effect on bringing down some of those prices and some of the demand on those segments. And the Cpi report.

While it's not one that the Fed pays close attention to, although I do think they pay some attention to it even though they won't say it. But even though they look at other reports, this does showcase their need to move a lot more aggressively than markets would want markets would have thought. Unfortunately, when you're this late in the game, it starts becoming apparent that you're not going to get a soft landing anymore. You look at a lot of these line items.

How do you fix this folks? How do you fix this? Unfortunately, you just don't have many options. If you're the Fed, you have one option. Completely and utterly destroy demand. Make it so that it's so, so difficult to take out money to spend to buy something for your family or start a new business.

Hire employees that people would rather go and get a colonoscopy with a wide wide camera than actually go and do those things. It sucks, it hurts, it's terrible. But this is what the market is feeling after this report and this is what is going to be watched very very closely in this upcoming Fed meeting that we're going to talk a little bit about At the end of this video and before we move on. I do want to remind you that there's always huge opportunities rain or shine in the stock market, especially if you're a trader.

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Thank you Moomoo for sponsoring this video. Now let's get back to the content. but anyways, back to the content. So I look at one big argument for the slowing down of inflation.

and that is the excess inventory argument: the fact that retail store after retail store bought too much inventory and now they have to offload it at lower prices. But the problem is when you're talking about blanket consumer goods and excess inventory there and prices coming down that doesn't have as big of a deflationary pressure as we would have liked it to. And the reason is quite simply, the painful inflation isn't coming from there anymore. The most painful inflation is coming from things that you absolutely need in your day-to-day life.

Who cares if it's November 2022 and the price of My Little Pony toys have gone down 50 percent. What about energy? What about food? What about shelter costs? Are those down even five percent? No, they're probably up and up a lot. You look at shelter costs. Shelter costs are up 5.5 percent year over year, and accelerating Is rent going to come down magically because supply chains will heal eventually.

Is there an excess inventory of apartments in big cities and excess inventory of houses in big cities? For the most part? No, these things can be brought down and will be brought down. But it's going to have to be brought down by something that's very, very painful. Very very very painful If there are enough people to pay these higher and higher prices. the only way that you make it so that the prices come down is by making it so that there's less people that can afford them.

and the economy sets prices lower. And you could certainly do that in a lot of areas of the economy. Energy. You probably can't do that.

You actually need to have an opening up of the supply chain in terms of Russia in terms of actually producing energy. I know, that's a crazy concept. Why would you want to increase the production of energy? Don't even think about producing more energy in the United States. That's bad for the planet.

Let's do it on another planet. Like in I don't know the Middle East. That's good for Earth because it's on the other side. No folks, you need to fix the supply chain one way or the other in terms of energy.

But in terms of a lot of these other line items. Yeah, the Fed can totally and utterly destroy demand and bring the prices down. but it's going to be a painful process to get there, and unfortunately, it seems like that is what is going to need to happen. We've got a roller coaster ahead of us folks, but if you've ever been to Six Flags, you know that the steepest drops tend to be right before you go right back up.

The faster the drop usually the faster the rise or it could also be one of those rides that it just goes down and then you're just like okay. Moving on to trading opportunities opportunitas. Let's talk about a box of Red Weight. No, not that box of red.

This box of red red box. So if you were following our daily zip trader you morning bravings which we did post last week when we were in France, you noticed that we mentioned Redbox quite a lot. A big reason was because of proof of concept on Tuesday, it pushed extremely hard to hold on to momentum and build. despite the clear fact that it was a rough week for the stock market.

the beginning of the week wasn't exactly a bludgeon, but there was weakness everywhere. And for a squeeze setup with this high of a short interest to consistently fight off short sellers and bears, that is a big proof of concept. And that ended up continuing into Friday, Capping off the day with around a 40 run and a solid break above previous squeeze highs at around 11 bucks to all the way up to 1450 at heights. So why is this even worth talking about Still Charlie, it's obviously not a fundamental play.

Almost 80 of their revenue in the last report came from their Legacy business, which are those Dvd rental boxes. Despite random comments and tweets constantly praising them as the next Netflix, there's not much evidence of that. And even so, Netflix ain't doing too pretty, And Redbox of course, agreed to be acquired by Chicken Soup for the Soul at a price of about 69 cents per share. 69 cents per share is really the perfect acquisition price for a meme stock.

Yes, yes it is, but the fact that it's closing at an undisclosed point in time in the second half of 2022 means that this is really the last month that you don't have the risk of acquisition. July 1st marks the second half of 2022 and the start of Q3. And originally when we presented on Redbox back in April, you had a huge, huge short versus squeeze speculator fight. But the game is much, much more tense right now because short sellers are emboldened at a huge degree because they're like, okay, well, this is trading much higher than it's ever been or at least it has been during the time that we're shorting it and we know that this thing's worth about 69 cents a share at close.

And then of course you have the squeeze speculators that want to buy this up as fast as possible to put the pressure on them to squeeze them out before the end of the month. And the numbers are just insane. As of Friday, Ortex is reporting a current short interest of free float at 226 percent of free float cost to borrow average is now at 832 percent and you go over to the options chin expiring at the end of this coming week call. option concentration is starting to spread out meaningfully into strike prices as high as 18 bucks.

The squeeze math on this is insane and this is running aggressively for a few reasons. The main of which is that not only do you have huge, huge speculator, squeeze speculator capital going and rallying this up, but when you have so much short interest, it's kind of like a Mario Kart nitro boost when you have tons of buyers. it bids up a locked up float and things go to the moon. And so people have been very, very excited to buy this because it's one of the only setups in the market that's really performing right now.

So anyways, is there more room to run in this pony? Well, Redbox in my view, is going to follow a very set pattern that it's been following and that we've seen in a lot of other stocks with lower levels of momentum, but certainly similar characteristics. I'm expecting to see the stereotypical early morning pop where momentum carries on and then you get a big cooldown period where everybody's watching if you don't get that cool down period. It's a completely different game and I think that a lot of that momentum is just going to die off and then you have to restart. And because you only have like a couple weeks left before June ends, it's a lot more of a flip of the coin.

But if you get that cool down period, Monday or Tuesday and things take a breath and then you get a retention of value somewhere around that previous resistance level from the last squeeze attempt. All of a sudden markets are going to be like hey Sally This is a new paradigm. and if you can hold that previous high where a lot of short sellers are deep, deep in the red and on a ticking time clock, all of a sudden, it becomes a lot easier for some short sellers to start covering and more people to want to fomo by and so on and so forth. And because there's not much running right now consistently, I think it would be very, very easy for Redbox to get a lot of that spectator capital.

That said, when it comes to squeeze setups, hey, let's be real. Especially in this case. it's going to end downward and downward a lot. The question is, how long can it stay relevant and how long can new spectator capital ride inwards? If this fails to retain any reasonable level of support this week, do not be surprised if it doesn't come back anywhere near to where it is right now ever again.

This is a ticking time bomb. but in the next two weeks, you're going to see a lot of attention on this stock, both good and bad. Anyways, let's go ahead and finish this video off with a breakdown of different catalysts that you're going to want to know about. Let me find my spreadsheet here.

It is. Okay, so on Tuesday you have Opec issuing their monthly oil market report. We need to see some strong inclination that they're going to increase production, but that ain't going to happen. They're going to say oh, we're doing a little bit a little bit here.

little sprinkles and then people are going to be like, oh, they're so they're such angels And then of course people are going to blame our domestic energy companies for the price of oil and all that good stuff. It's our own companies, they're just greedy for charging more even though they have to pay more. And then of course you have the producer price report arriving. This is the next big inflation report that markets are going to be looking at very very closely and the Fed is going to be paying attention to.

And then of course, on Wednesday you have the retail sales report for May. let's see how that excess retail inventory is selling. Consumer confidence is down, but consumer spending is up quite a lot, so let's see how that's going. And then of course the big event is the Fomc making their rate hike announcement, and then of course guiding expectations.

Likely going to be a 50 basis point hike, but they're going to be managing those expectations, right? These meetings are all about how do we manage expectations for what we're going to do in the future. Are they going to be evolving into a little bit more of a hawkish rhetoric scheme? My take is, it's unlikely they're going to get dovish the economic data right now. In terms of the economy, jobs, growth, and all that kind of stuff, it's bad. I think that we might be in a recession right now, but it's not nearly as bad as the inflation trend.

It's just at the early stages, so people are going to be watching very, very closely to see what is Jerome Powell's goal. With this, how aggressive are they going to be? Do you need to have some sort of shock and ah, policy to actually get the stubborn inflation down? And then, of course, for earnings. We're out of earnings season right now and it's going to be a slow week. You have Oracle on Monday, Adobe and Kroger on Thursday.

Nothing else that people are really going to be paying attention to. and they're not going to be paying close attention to these. but it's something and you're going to hear about it. Anyways, folks that caps off today's video, thank you Moomoo for sponsoring us.

If you want to get some free stocks below, make sure to hit that link in the description. Have a good one folks and I'll see you in the next video. Glad to be back.