So today is September 13th and the latest Cpi report came out this morning and I am here with you today to personally and publicly thank the Federal Reserve and the Federal Government for doing what it takes to keep inflation under control and ensuring that inflation is indeed transitory. And just to be sure, I want you to know that these are my off the cuff to the heart words and not words that I was told to say. the fact of the matter is and from the heart I believe that the Fed's rate hikes are working, that the government's spending habits are also helping to get inflation under control. I personally wake up every single morning and I thank God.

I thank God that we passed that Inflation Reduction Act which is doing exactly what it has set out to do in its name. The President made a statement today highlighting all the progress that this report shows that we have made in bringing inflation successfully down and I for one and the rest of the market really cannot agree more. The stock market rallied today and pretty much everything was green on all this undeniable progress that we have made. The fact of the matter is folks that the inflation battle the inflation battle has been won.

Pause, Repeat the line. The inflation battle has been won. Now in the past I have made huge mistakes. I have referred to the Cpi incorrectly as the Quote Consumer Poverty Index or as the Castration of Purchasers Index, but in reality what Cpi stands for is Consumer Prosperity Index and it measures the level at which we should thank government and central banks for our prosperity.

The higher the Cpi, the better job they are doing. If somebody tells you otherwise, it is probably because they support Putin. I firmly believe and I want to encourage you to also believe that we need to print more money. We have not printed enough money and there is no problem that can't be solved with endless printing of Greenbacks.

If you do not agree with that statement, it's probably because you are greedy and again, want to help Putin. So I just want to conclude this statement by saying that I charlie firmly believe that the government and the Federal Reserve have this under control. I also believe that inflation is transitory anyways like the government has been saying, and I certainly do not believe that you should be taking advantage of anything where you can get up to 13 free stocks with our link down below. Trolling aside, this inflation report was a complete disaster.

The market participants who have been buying the dip all summer thinking that inflation was indeed going to start plummeting have just been slapped across the face. Now, while we all know that inflation is a complex problem with a lot of different motivating factors, the truth is that understanding whether or not inflation is going up or down is actually not that complex. It's either increasing or it's decreasing. And this report that we got today shows very clearly that it Is getting worse in this video.

I am going to go violently through the highlights of this report and what it means for next week's Fed meeting that is happening on Wednesday. What kind of basis point hike are we going to get in the wake of this disaster? Okay, so if you look at all items, a large portion of the market come back was predicated on this idea that inflation was zeroing out month over month and slated to drop. You saw many prominent figures. not so much actually at the Federal Reserve, but definitely in government talking about, hey, inflation is zeroed out month over month, Inflation isn't increasing even though it's still up like eight plus percent year over year.

They said, hey, you know what, You don't have to worry about inflation anymore because damn, it's zeroed out. But this morning you had a reversal back upward where we've seen price increases on average in all items month over month, But this misses the forest for the trees. Of course, a 0.1 percent increase month over month could just look like a rounding error if it's in an overall trend downward, right? Sure, it's above expectations. Markets thought this would be at zero or slightly negative, but 0.1 percent up isn't terrible considering where we were just in the beginning of this past summer.

But where it gets freaky is when you start looking at where the pricing pressures are actually coming from. Now if you remember the beginning of this year, we were told that what you should pay attention to is core inflation. This line item hither minus food and energy. Because food and energy is too volatile to be factored into inflation data, they said food and energy isn't something that you should care about for your day-to-day life.

they said. so. Guess what happened? Well, core inflation is now up 0.6 month over month. It's accelerating upward again.

And if you go back to my coverage of the Cpi report from last month, I said very clearly. now that energy is dumping and core is pointed upward, they're going to start telling you not to focus on core anymore, but instead to focus on oh well, at least energy's cooling off, right? And folks, that is exactly what's happening. All of a sudden, nobody's supposed to care about core. It's all about Oh, energy's down.

And hey, energy being down is a very, very strong positive. and it is a win if it stays down. Don't get me wrong, but you have to look at the report in totality. You can't just avoid the bad line items and focus on the good ones.

This report, energy aside, was across the board. bad. And when you consider that energy is down this much and you still have such insane pricing pressures, such stubborn pricing pressures, it's freaky. Shelter costs accelerated from up 0.5 month over month to now up 0.7 This is the biggest single line item for most Americans in the economy, and it's getting what it's getting more expensive.

Why are shelter costs getting more expensive though? Charlie? Well, when you raise interest rates substantially, what are you doing? You're raising the cost to buy a home. It can cost upwards of two three, four times as much to borrow money to actually get that house. So what happens while buying a home becomes more expensive? So more people go and they choose to rent and wait on buying a home. When more people go and they choose to rent, what happens? Well, the demand for renting properties overall goes up dramatically.

The supply of apartments to rent stays the same at the same time, where the pool of renters increases. People that may have bought a house if rates are lower are now going and they're bidding for the rental market. Which means what, while the market price for rent starts skyrocketing, not to mention higher rates projected for it also increase the debt servicing costs for landlords who may not have a locked-in rate. So all of a sudden, if they want to stay in business and stay profitable, they have to raise rents on tenants.

And again, shelter costs people are saying, oh, it doesn't matter. at least people are saving on gasoline, but shelter costs are the biggest line item for most Americans. You can acknowledge that we've had a win in gasoline, and also acknowledge that we're having a lot of massive losses in other categories. Your dollar is getting you less quality of life month over month.

Just because one area is getting cheaper, doesn't mean that all the other areas aren't just taking all those gains from you. Um, Transportation Services went from dropping 0.5 to increasing 0.5 and it's up 11.3 year-over-year This line item includes things like motor vehicle maintenance and motor vehicle insurance. The medical care inflationary rate doubled month over month, which includes hospital and general care expenses, health insurance costs, dental, eyeglass, and so forth. Even apparel found its way upward.

And there's a massive excess inventory problem with apparel, so I don't know how that went up. And food, while it did decelerate a little bit, it's still up 0.8 month over month. One of the hottest line items still people will say, Oh, but Charlie, you know it has cooled down from 1.1 up month over month. But be careful with those words, it's not cooling down.

it's the pace at which it's increasing. The pace at which it's increasing is cooling down. We are still retaining all of the insane pricing pressures from the last year. Plus, we are still up 11.4 year-over-year in food.

another basic commodity that people need. But honestly, I think if you look at this inflation report and you don't think too much below the surface, It's not extremely frightening. but it becomes pretty frightening if you think about the elephant in the room. here.

Nearly every major line item except for energy, was hot this month, despite the fact that energy was a major pulling down factor, working both behind the scenes and to bring the overall average down in front of the seats. But what happens if these inflationary pressures persist and all of a sudden energy costs start going back up to the moon like many analysts are projecting, heading into the end of Fall and winter? If this is what the report looks like when energy is dropping? What happens when energy all of a sudden starts plateauing? What happens if energy starts going back up again? Even if we don't get a new push to all-time highs in energy? What does it look like? If all of a sudden, these do start going up Three percent. Four percent, Five percent. Six percent.

Month over month Again, That could easily happen. Now, why did the market take on this report? As much as I just shot on these August numbers? they are still a substantial improvement over the pace of inflation we saw early this past summer, right? Thanks again to Energy. But the problem is that markets rallied substantially from those levels. We've climbed a lot of the way since that bottom back in mid-june Orchid saw the drop in energy and saw the slowdown in inflation as evidence that inflation is going to start taking and that the Fed will be able to reverse course very quickly.

Just a couple weeks ago, the Fed futures rates were showing that most market participants felt that rate hikes would stop at the end of this year and into 2023, you'd start seeing the Fed go and cut rates, which provided a lot of room to rally. But today, the cold hard evidence in this Cpr report is that that is just not a true thesis. Inflation may indeed be done peaking and making newer and higher highs, but that doesn't mean it's all of a sudden going to go away, and inflation is just going to drop off the face of the earth. A lot of people forget that we could very easily not be seeing eight or nine percent increases year over year, but still see six or seven percent increases year over year.

and that's still to be a massive disaster that the Fed has to bludgeon to get down to its target rate at two. So we have to go over and look at the Fed futures probabilities for the Fed meeting coming on September 21st, which is just around the corner next Wednesday markets. Prior to the Cpi, we're expecting a 91 chance of a 75 basis point hike to 300 to 325 basis points and a zero percent chance of a hundred basis point hike to 325 350. But look at what just changed this morning this morning.

markets have just begun factored in a chance that we actually get a 100 basis point hike A 22 chance actually, and this might even go up further. So now it's not only considered guaranteed that we are going to get at least a 75 basis point hike, but it's also a possibility that we get an even bigger hike. So that's why markets tanked. Every extra quarter point hike that the Fed goes up discounts the future value of stocks, and further increases the probability of a hard landing, which is a double whammy to stock valuations.

So anyways, folks, it is. Unfortunately, my view and has been my view that inflation, the inflation battle is not over. It is not all of a sudden going to go and just magically fall back down to the Fed's target rate at two percent. History suggests that when you have this kind of inflation, what tends to bring it down is a long stretch of time where you have consistently tightening monetary policy.

you get pushed into a fairly deep recession, and you allow an opportunity for supply to really catch up with demand and ideally cross above it. so prices start going back down. And it is my opinion that these kinds of reports showcase that the Fed is going to be risking a lot. A lot if they don't go super aggressive at attacking this inflation.

And to be fair, the Fed has been very clear in the last few meetings that they need several down trending inflationary reports to confirm that Inflation is actually going in their favor before they actually start going and pivoting. And this report sadly suggests that no, we are nowhere near the several consecutive downtrending quarters that we need in order for that to happen. And it seems pretty clear to me that the Fed, which is behind the curve right now on its rate hike trajectory, doesn't want to become even more behind the curve and doesn't want to risk a situation where all of a sudden it's late fall, early winter, and energy prices are skyrocketing. and then all of a sudden, all of these line items that are already very, very hot without the energy prices all of a sudden become hyperinflationary.

At that point, it's going to be very, very painful to get things down, and I think the Fed knows that, and they're starting to wake up to the possibility that, hey, we're going to have to be a little bit more Valkyrie here. So anyways, folks, this is my take on what happened today. Let us know what you think down below: is inflation going to continue to be stubborn? Or is it going to go down? Or are we actually headed for new peaks? I think there's a strong possibility that we're not headed for new peaks, but I do think that it's gonna stay very, very stubborn. at six, seven, or even maybe eight percent for quite some time now, I think of Energy pops Again, We could definitely hit a new peak though There's a lot of factors out there, right? So let us know what you think down below is going to happen.

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