Okay folks, so I got another impromptu vacation video for you today. We need to talk about the latest Cpi report that came out today and what it means for you and your moolah. and then I want to discuss my opinion on what the heck to do about all this. Okay, so the Cpr report was nasty with a capital N.

We broke the slight deceleration in growth rates that we've had since October of 2021's hot 0.9 percent up. It went from 0.9 percent to 0.7 to 0.6 and now we're back up at 0.8 Unadjusted, This is a 7.9 year-over-year increase in prices. It's a disaster, But what is freaky is that the bulk of energy price increases didn't happen until March, Which means the biggest inflationary pressures haven't yet been factored into these numbers yet. They're still very, very hot, which is something that we were worried about earlier this week.

On Tuesday's video, if you look at energy as a sector, it's up 3.5 percent. You look at Energy Commodities 7.6 percent Gasolina, la La Gasolina up 6.6 Fuel Oil 7.7 All very, very hot, but it's not nearly as hot as what we've seen the last couple weeks. I know that oil has been incredibly volatile and it's been cooling off the last two days from its huge increase. but look at the bigger picture here.

in February, oil prices accelerated upwardly all month, but we were still much lower than where you started in March. For most of the month, you're at below 100 a barrel, right? And for like half the month, you're below 90 a barrel. In March, you're likely going to be retaining support somewhere around and above 100 a barrel minimum. And really, I don't see anything that is happening right now that points to this overall energy and oil crisis abating.

What evidence can you point to without Russia completely backing down and sanctions reversing that suggests that we won't continue to see an overall upward push on energy prices. What is going to make energy prices all of a sudden start bottoming lower and lower. Is Russian escalation in Ukraine suddenly done? Does Europe suddenly no longer need oil? Is the massive global supply that Russia provides suddenly not needed on the global scale anymore? Sure, the Us, which imports relatively little from Russia, has decided they aren't going to buy from them anymore and instead remake frenemies with Venezuela and Maduro, who the U.s doesn't even formally recognize as the real leader of the country. But remember, at the end of the day, energy prices are benchmarked globally, and as long as the massive supplier which is Russia is increasingly being cut off from the global market, well, that supply needs to be made up for elsewhere.

Or it's going to cause prices to skyrocket everywhere and in the U.s Whether you blame the government, oil companies, or a combination for the lack of increase in production, well, the fact of the matter is that they just aren't increasing production fast enough and even if they were, it would only soften the blow. I know that the blinded administration has been blaming the recent inflation on sanctions, and there's certainly a bit of truth to that, even in the February report. But remember, this is where Russia attacked Ukraine. Some of the pricing pressures in oil have been due to anticipating this attack, but we were already on a very, very strong acceleration in prices for many quarters.

And you look outside of oil. We were already on a strong acceleration in pricing pressures everywhere. The massive inflation that we're seeing right now is not just because of Russian sanctions. In fact, we haven't seen the bulk of the results of that yet.

The massive inflation we are seeing right now is because of a massive, massive compounding of a very multi-faceted issue. There are so many inflationary pressures that are all coming to heed right now and we're burning because of it. I'm never pessimistic over the long run, but in the short run it's a very, very pessimistic and dreary market condition. and I'd be lying if I said it wasn't And we will talk about everything that you need to know about this report, some areas that are actually a little bit more optimistic, and some areas that I'm very much worried about for the future reports.

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Food has been Hot. You have a full percent increase from January to February with food at home prices going up 1.4 percent. Whether we are talking cereals and bakery products, meats, poultry, fish, dairy, fruits and vegetables, non-alcoholic beverages or as I say boring beverages and other food at home, it's all super super hot. Fruits and vegetables were some of the highest up 2.3 in a month when we were kids.

Our parents would say make sure to eat your fruits and vegetables, but now if you eat your fruits and vegetables you could go bankrupt. It could be healthy for you, but it's certainly not healthy for your bank account. I did some digging to figure out why they're so damn hot. And it's because not only do they need to be transported very, very fast, which is very, very expensive, but produce is one of those areas that takes the most amount of human labor, whereas a lot of other areas you can just use machines.

There's also the case to be made that the cost of fertilizer is increasing rapidly, and of course, Russia is going to be providing less fertilizer to the global market and many people don't even want to buy from Russia. But if you're trying to gauge what the most problematic areas are going to be in the next report because of the whole Russia Ukraine situation, it's obviously going to be led by oil, but there's a whole tit-for-tat sort of situation going on right now. with sanctions that is going to only serve to worsen the global supply chain and the global access to a lot of different commodities that Russia is a supplier for. It's hard to argue that Russia doesn't at least deserve sanctions, but there is a cost to sanctions.

and as market traders, we need to know about that and going back to what Russia exports to the global economy. Obviously, you've got the big ones being various energy commodities, but you also have wheat, semi-finished iron, gold, platinum, aluminum, sawn wood, copper, diamonds, various types of fertilizers which we were just talking about, fish, and so forth. And while the blocking of these things may not have as big of an impact as the blocking of energy exports, which are continuing to get more and more blocked via many different methodologies, well certainly none of these things are going to help. There is always a global benchmark for prices, and while some things are less internationally influenced, it still has the potential for a huge inflationary impact everywhere.

But keep in mind the obvious that rising energy costs are the biggest threat here. Rising energy costs means that costs have to be passed on to the consumer or the companies have to eat in to their bottom line. And with inflation outpacing the rate at which consumers are receiving wage increases, well, eventually, this is a collision course to help. Even before this crisis, a lot of analysts had banked on this idea that consumers, even though they have less and less money to spend on discretionary goods, all of a sudden, we're going to come up with money out of thin air to pay for these increased pricing pressures.

If you're living on a fixed income and your cost of energy and food is skyrocketing Huge. month over month. Well, how do you pay for other things? And if you're a company trying to market goods and services to these people, you're not going to have much luck. You're going to try to spend money to get them, but they're not going to have any money to buy your things they're like.

Okay, well, I'm going to have to cut back and you're probably gonna cut back on your employees as well, which causes a downward spiral. And in totality, I would argue that we have the very real prospect and scary prospect of a reduction in economic growth. At the same time, where we have increasingly hard to manage pricing pressures, Demand might drop dramatically as prices go up and people have less and less money to spend. But if there's a massive shortage of basic commodities, how are you going to bring inflation down? At a certain point, you start realizing how stubborn of a situation this is going to be.

Meanwhile, the Federal Reserve is, of course set to start draining capital and raising interest rates. Just as early as next week. I saw some comments from folks saying charlie the Fed would never raise interest rates into this market environment with this crisis over our heads. But the problem is that you have to figure out what type of crisis this is to accurately predict what the Fed's response is going to be to this and what type of crisis is this.

This is an inflationary crisis on top of an inflationary crisis. If the Fed doesn't even want to raise rates a little bit now, we may be facing upcoming quarters. With Cpr reports that are 15, 20, 25, 30 annualized, we are a hop, skip, and a jump from a much much more accelerated disaster. If the Fed doesn't do anything right now, it's risking running out of options.

It's much better to raise rates into an economy that is relatively healthy, than to wait six months when the situation is much much worse, and to raise rates into an economy that might already be falling into a recession and again, 100. This is fear and uncertainty talking, but this is really what we're facing. We're facing the prospect for a higher and higher likelihood unless the situation calms down dramatically. And I don't know why it would calm down dramatically.

that if the Fed doesn't do anything, we're going to be in a much much worse inflationary situation. And even if they do do something, we're still probably going to be faced with very, very stubborn inflation. I do think there's a very strong possibility that in areas of the economy that are more discretionary, that you do start seeing some stabilization of pricing pressures like we saw in used cars and trucks this month. If you're spending all your money on food and rent and essentials, you're probably going to wait to get that new car.

You're probably going to wait to get that new Tv. And so certainly there's a lot of pain to be felt in this entire economy if this continues. So the next question is inevitably: how do you emotionally and really logically and practically handle this market condition and all these uncertainties? We've talked about short-term trades and short-term catalysts that we've covered in ziptraderu and on the channel. But for people who are buying high conviction, long-term plays either on the dip or have been buying it on previous steps.

how do you handle the emotional uncertainty? Market downtrends can be short. They can be long, but they're always very, very painful emotionally. And they always. They always test you obviously inor you have been around for every single market downturn in the market's history.

But we do have the benefit of historical analysis and all the data being right at our fingertips and I can hammer again on the opportunities that are present in every bad fear-based market. Opportunities to buy things at deep deep discounts, But that would just be me saying what I always say and what everybody says. The biggest opportunity right now is your opportunity to learn how to handle yourself emotionally, your opportunity to build emotional stamina and stability, an opportunity for you to detach yourself from the immediate gratification that the market can often give you during an upcycle, but that the market robs from you during a down cycle. This market has not only been a downturning market, but it's also been a big and dirty tease.

It gives you massive massive green days on its downturn, and it makes you feel emotionally good about yourself like, oh, things are about to turn around, but of course, like we saw after yesterday's massive massive rally, which was like one of the best days since June of 2020.. most of these days are just convictionless rallies that end up getting eaten up. So that's why this is such a good opportunity to focus on yourself and your emotions. When you can look at the market with a blank face whether it's a green or a red day and say i don't care, you're preparing yourself to be a killer Over the long run, people that participate in the worst market conditions are the ones that do the best in the best market conditions and the ones that don't fall for the Bs.

And really, since we as market participants can't control where the market goes on any given day or in any given month, it's really a good opportunity to learn acceptance. Hey, I accept that I have no control over what's happening over the next two quarters, but I have a lot of control over what I do. I have a lot of control over what I don't panic on and what I take advantage of. And I have a lot of control over the bigger picture that I'm seeing.

And most importantly, you want to say, I have control over my emotions and my emotions aren't going to dictate my decisions in this market. Think about two scenarios: Somebody who goes and buys a terrible company with a terrible future that's going to fail dramatically in the upcoming five years, but buys that company during a good stock market. A market that allows it to go up for the next three months after he buys it? Well, guess what? That person who probably didn't do any due diligence on the company just made a nice return and feels like he's a genius. He got that instant gratification from that kicker, and he's probably never gonna sell it either because he's like, well, i gotta let my winner run.

He goes around thinking he's the Albert Einstein of the stock market. Oh, look at me so smart. But the problem is obvious: The short-term trading of the market if you're a long-term conviction trader does not dictate whether you are good or bad. It just dictates what the market is buying right now, the supply and the demand.

There's many, many times where the crowd will buy stuff that's complete junk. If you build your market prowess on whether the market is giving you instant gratification or not, you're going to blow yourself up. But what about somebody who buys a good company during a bad market condition and feels like a after it goes down, but then waits and waits until it actually starts realizing. It's long-term upside? Well, that person is going to learn emotional discipline, going to learn humility, and it's going to learn patience.

And when the market inevitably goes back into a euphoria cycle, it's going to do very, very well. This is a market condition that's better than any other to build your emotional intelligence and walk away like a complete beast after this is over. And I say this not from a point of oh, I'm a beast intellectually. I'm a Mr.

Charlie man that's really good with the emotions. No, I'm saying this as somebody who struggles with this myself and aspires every single day to be better. Sometimes I am better, sometimes I revert back. You know, two steps forward.

Three steps back. sometimes. but over the long run, the goal is to get better and better. and to be able to question yourself and why you're making every single move.

And to be able to make sure that you're acting more and more on logic instead of emotion. Because really, what? the stock market is if you're looking at it on a day-to-day basis, it's the emotions of the masses. The masses are very, very bad at making decisions, and if you fall trap to them, you're going to end up destroyed over the long run and you're not going to have a good time. The people that enjoy their time in the stock market feel the challenge in the stock market and come out on top in the stock market over the long run.

Or the ones that use logic, look at the bigger picture and don't act on what, well, their emotions. Especially those short-term emotions. Anyways, folks, a little bit of a rant and an impromptu video, but I hope this video was helpful. Have a good one and I'll see you in the next one when I get back to L.a which will most likely be Sunday or Monday.

We went down to Florida for a week just to kind of get away and get some humidity in the system, but we'll be back.