Okay folks, so the Cpi or as I call it the Consumer Poverty Index came out today. I need to give you the highlights: the truth if you look behind the curve and the curtains that the government puts on this report, and more importantly, the implications in terms of what this means for the rate hike that is coming in about two weeks at the end of this month and quick plug before we get into it. If you want to get up to 10 free stocks with mumu valued all the way up to 2 500, make sure to check them out with our link down below. Excellent trading app.

I think you're going to like them a lot. Certainly worth a shot for 10 free stocks. Okay, so to start to be completely frank with you, today's inflationary numbers are actually really, really good news, at least for people who are rooting for the collapse of western civilization. For everybody else, this was a dumpster Fire Markets were anticipating eight point seven percent to eight point eight percent, we ended up getting nine point one percent.

The hottest motivating line items were as everyone anticipated in energy segments. We were talking on Sunday's insanity. Incoming video about how dropping prices in commodities showed that prices would likely be cooling down into July. So this June print that we just got this morning may actually end up showing a short-term peak at the very minimum.

But the problem that I think a lot of people are missing when they see this report actually coming in hotter than expected a slight variation from 8.7 8.8 to 9.1 is that that seemingly slight variation means so much. Because we already had the numbers for the most worrisome line items, we already knew where energy costs were trading last month. We already knew where energy costs were trading last month. We already knew all of that.

That's updated minute by minute. So all that extra inflation are in areas that are going to be a lot more stubborn than energy to bring down. in areas that are going to still be very, very hot next month. Not just hot.

This month, you look at all items, less food and energy. Your core inflation. you're seeing that spiral upward as well. It's continuing to go upward, increasing from 0.6 the proceeding month to 0.7 this month.

Technically, it decreased year over year, but it's still accelerating month over month. These are pressures that are a lot more sticky. and when energy prices actually start going down, you're not going to see core inflation go down until you see a massive, massive bludgeon to demand or a massive massive increase in supply. The supply is definitely not going to be happening anytime soon.

At this stage, you're starting to see this dynamic where, hey, demand is going down, but the prices are still going up. If you can't even get core inflationary acceleration to budge meaningfully downward at all, that means that you are nowhere near where you need to be in order to get inflation under control. But on the bright side, hey, at least commodity prices are going down and energy costs have gone down month over month. Which means the July print should show that June was a peaking month in terms of accelerating pricing pressures.

but net and in effect, it's incredibly difficult to reason that pricing pressures are going to decelerate enough to the extent that you wouldn't get into a stagflationary environment. People forget that pricing pressures can stop accelerating at the same rate and even decelerate a bit, but plateau at a heightened level that it still causes a problem and still causes you to be in a stagflationary environment. People think, oh well, if we peaked here, that means inflation's no longer a problem. No, if you peak and you go down a little bit and you decelerate just a little bit, you're still at insane levels of inflation, folks.

Even if this marks the last peak of accelerating pricing pressures, the fact of the matter is that this could take years and years on the current policy trajectory to get down to levels that the Fed wants this to be at. And for historical context, the scary thing is, we already know the numbers on the Cpi chart are heavily heavily curved to hide real inflation, and they are doing a bad job at even that. So if you use the Cpi metrics that the government used back in 1980, the more honest ones Cpi as of this latest report, would register in at about 17 to 18 percent. Which means that it would be a lot higher than the rates at the time when Volcker vulgar the economy and there was widespread outrage.

Obviously, nine percent year-over-year gets a huge emotional reaction from most people. and it should. It's very, very painful, but not nearly as much as an 18 rate of inflation would, right. If people knew they were losing 18 percent year over year, they would demand real action from policy makers.

Policy policymakers wouldn't get away with just saying, oh well, it's not really our fault. It's small businesses that have gas stations. They're charging too much. They're the cause for some of the highest inflationary numbers we've seen in the last 100 years.

More than half of us gas stations are owned by a single family or a single individual who owns just one station. It's their combined greed and milking of the consumer that is causing record inflation all across the economy. When in doubt, blame business. If big business is not allowing you to blame them anymore, then blame small business.

They can't defend themselves, but at the same time, I mean policy makers are shooting themselves in the foot. If you have curved a data set decade after decade after decade to basically half report inflation, If people think inflation is half as bad as it really is, then they are going to be a lot more upset and resistant to you taking strong, aggressive action to get it down. Go ahead and look at the active Cpi that we use today in Red, and how it has changed over time compared to the Cpi that we used in 1980.. look at how the government changed the metrics to calculate the red Cpi of the active Cpi to diverge more and more with the 1980s line.

It's almost as if it was specifically designed to dramatically under report inflation, right? and it was specifically fine-tuned more and more over time and over the decades to under-reported even more. And the implication is that if you're being truthful, the inflation situation now is actually worse than the inflation situation during Volcker's time at the Fed. It's actually way worse. You know, the highest inflation during Volcker's administration was 13.5 percent, and he responded to that by setting short-term interest rates to nearly 20, which then sent unemployment soaring to 11 in the following year.

If you use the same metric today and you kept it consistent with what is going on today versus what happened in Volcker's time, well, inflation today is at 17 to 18 on the Cpi and the Fed's current plan trajectory isn't to switch rates up to 20, but is to raise rates to 4 in 2023 and then start lowering it again in 2024. That is at least the current trajectory that the Fed Survey has put out. Volcker came to the conclusion at lower inflationary pressures that the only thing that would solve these out-of-control inflation numbers were a huge shock to the system. today.

inflation numbers are worse and the Fed has decided to do much, much, much much less. I look at this report and commentated on it. It's sort of like commentating on an open flame burning a house down. Oh, flames next month in the kitchen are going to be less flamey than the ones in the bedroom, but who cares, the whole house is still burning down.

We can talk about how you have the Fed here with a little spray bottle trying to spray out this burning house and saying oh, the fire just doesn't want to be put out at a certain point. When you are watching a house fire, you have to decide whether or not you are going to take aggressive action or you are just going to let the house burn down. What does aggressive and decisive action look like though? Charlie? Well, aggressive cuts to government spending on both the federal level and the state level. You need to warn people to start saving money and stop throwing it at everything Because we are heading for a recession.

This isn't the strongest economy that the United States has ever seen. You need aggressive action to push for more production of oil either domestically or abroad with our trading partners. You need aggressive action to support movement on the supply chain. And you need a Fed that is going to commit itself to attacking inflation, not just undermine itself every single time you get a new data set out.

Unfortunately though, right now, Yes, indeed. we are just watching the house burn and saying, oh, pretty flames wonder when the house is going to collapse Now A few hours after today's Cpr release, Fed futures rates moved to predicting a 76 chance of a 100 basis point hike. Yesterday the chance of a 100 basis point hike on the same metric was 7.6 percent. It 10x overnight, it 10xed in about 24 hours.

There are some folks that think the market is convinced that inflation won't be a problem in a few months because commodity prices are already cooling down, but if markets were really convinced of this, they wouldn't have done such a big 180 when this report came out today. No, there was something in this report that made markets say oh man, this is getting a lot worse and it's going to be a lot more stubborn and the Fed is going to have to be a lot more aggressive than we thought they'd have to be. There was something in this report that suggested that the Fed is going to be forced to hike a lot faster. I don't think they necessarily think that commodities are going to rebound, but they think that commodities are going to sell off, but inflation is still going to stay hot enough in the upcoming months that the Fed is going to look at this data set or at least the data sets they refer to that are coming out in the next two weeks and they're going to decide hey, hey, we got to hike a lot faster than we were expecting right now.

What's freaky is that markets are pricing in yes, selling off in commodities, factoring in a recession, but they are also pricing in the need for even more aggressive rate hikes as inflation stays stubborn. Orchids may be convinced that inflation acceleration will peak soon, but they are convinced that inflation is going to fall meaningfully. I suspect in the next two weeks as we get closer to the actual Fed meeting that you're going to see this start factoring in 125 basis point hikes, you're going to start seeing it. say, oh, 10, 20, 30 chance of 125 basis points and then all of a sudden boom.

And then once again, the Fed is going to undermine their goal of bringing down inflation by once again penciling in at the minimum the rate hike that the market is priced in. This is yet another Deja Vu in the cycle that we've seen again and again from the Fed the last few quarters. really. So I don't know folks.

I mean, hey, I hate coming out with these negative videos day after day, but it is what it is anyways. folks, if you found this video informative, make sure to hit that ravishing like button and subscribe to. Keep up to date with us! If you want to get up to 10 free stocks with Moomoo and want to try out an excellent trading app, make sure to check them out with our link down below. Have a good one folks and I'll see you in the next video.