CPI LIVE: Inflation Decides Fed Rate Hikes?! — Stocks, Bitcoin & XRP React (OIL SURGE)

[00:00:00] Speaker ?: Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords [00:01:30] Speaker 1: Transcription by CastingWords [00:02:00] Speaker ?: Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Thank you. Thank you. Thank you. [00:04:14] Sensei: Hello and welcome to Martin Lucas Investor. My name is Sensei and you're watching a special show today for inflation. Today we're going to get the CPI inflation rate, the most important inflation rate of the year because this is the one that actually decides. Will there be rate hikes or will we be pausing? This is the point where the Fed will have to decide whether they raise rates or they don't in this upcoming FOMC this month. Let's keep an eye on it. If it comes in too hot that can crash the whole market especially with the rebound of oil over the last few days and also obviously the restart of what looks like the war is back on. Meaning it might not be a transitory inflation shock and if it isn't and inflation is here to stay and it's here to stay sticky, rates need to go up, markets can't take that and stay at all-time highs. So CPI, we have CPI information guys or not? Oh God, you can see on the screen right here, right down, it's all mirrored. Down here you can see that there is a countdown for the CPI inflation report. So yes, we will have it on the show. Yes, we will cover it on the show but more importantly, let's get ready for the outcomes. So we will come on to that shortly but as always, we will start off with our market watch and see what's going on in the markets because the markets have been moving over the last few days and maybe not in the direction you might want especially when we look at oil. Oil currently above, well it was just above $80 now. It's just below $80 sat at $79.69. That is WTI crude. If we actually look at Brent crude, which is sort of more the European crude is at $86 already. So at $86, that is where Brent crude is and then the main gauge I guess is WTI, which is just sat at $80. Above $80, I'm concerned. Above $90, I would say it's very likely the market will crash but we are in starting to enter that range where rate hikes will become a real possibility. So we'll come on to that in a second as well. But the biggest gainer in the top watch list, which consists of the main commodities, the main indices and the main cryptocurrencies, about $10 over there. 2% up on oil, over 2%, the highest gainer in the watch list. Next is Ethereum, which is holding above $1,250 and holds that. It will continue to do well. But it's up 1%. Crypto is volatile. I mean, it means nothing. Same with Bitcoin. It's up 0.74%. I mean, it's good to see them being up while oil is up. It shows a little bit of strength, shows that potentially crypto is in a better value position than maybe the rest of the market. Oil up, sorry, gold up 0.66% after having potentially its worst day in, I think, weeks. Oil, sorry, gold was down 2.88% yesterday. Now trying to have a little rebound around $4,000. If you have just tuned in, guys, please do hit the like button. We'll come on to our top stories in just a second. The banks have just reported as well. And we've already got the information for that. Subscribe if you haven't done so already. If you want the daily news stories without any ads, without any sponsorship, without any one-sided reporting, just the facts. Every day, everything you need to know, you can sign up to the newsletter for free. The first link in the description, or if you want all the other perks that come with the newsletter premium, you can also decide to join the premium plan. There is three spots available for the 25% off today. And that's the link in the description gives you either that or the free plan. Silver is sort of following exactly what gold is doing. Down quite significantly yesterday, 3.71%, but up slightly today at 0.65%. XRP, pretty flat on the day. We are tracking this multi-year bear market, a downward sloping trend line. That date's all the way back to, I think, the all-time highs for XRP. Yeah, back in July of 2025. Feels a lot longer than that, though. July 2025 is when XRP peaked only a year ago, which feels a lot longer than that. Is that right? Yeah, I guess it is right. Wow, it feels a lot longer than that. Let me know in the chat. Does it feel longer than that for you as well? July 2025. And now we're July 2026. Just literally a year ago, XRP peaked. Interesting. Anyway, so about a year trend line towards the downside and the most important psychological and possibly horizontal support level of $1. They are both coming together and you have to make a decision. You can see they're coming together. They're coming together. They're either going to go up or down. We did a full analysis and a video is out on the channel on that as well. And we'll continue to cover it on our XRP weekly in the newsletter. But yeah, when is the last possible day is 23rd of July. So a year on from the all-time highs, then we will get a decision on XRP's chart. So XRP, I wouldn't worry about it. Just for now, I'll wait for this breakout. Let me know if you're here in the chat. Say hi. Say hello. I want to see who is in the chat this morning. Say hi in the chat so I can see your names come through. I know it's early. I don't know if we go to live chat and see if I'm seeing everyone's messages. Oh, yeah. Yolanda's here. Tony Young is here. Tony Young, lovely to have you here. Lovely to have Yolanda here. Nossman is here. Slim UK is here. Maurice is here. William Myers. Lovely to have William Myers and Chris F and Starlight Matrix. Yeah. Oh, Dan Acumen is here as well. Yeah. Say hi in the chat. I do always see the chat rolling and I do always look to the side to see what the chat is saying. So please do say hi and let me know you're here. So the S&P 500. Crypto's up. Oil is up. S&P 500 is flat. Bonds are pretty much flat down slightly and the FTSE is down slightly as well. NASDAQ being up a little bit this morning. So we are, the market is bracing for CPI. CPI comes out in 47 minutes. That is all the market is waiting for. That is. And also another major event today is Fed Wash. He is testifying. So let's see what he says about interest rate cuts or hikes. And if he is going to cause a problem with Donald Trump, the rumors are that there are behind the scenes conversations between these two that aren't going to plan. Donald Trump brought him into cut rates and it looks like Kevin Walsh might be raising rates. I don't think Donald Trump is going to be happy about that. And there's reports that he's not already happy about that. So that's the market watch. Let's move on to the top stories of the day. If you have just tuned in, have we got 100 likes? Yeah, I don't think so. Maybe we can hit. We've got nearly 200 people watching. So that means we should have. [00:11:45] Speaker ?: Yeah. [00:11:45] Sensei: Why is that channel coming? Oh, yeah. That means we should have. If 200 people are watching, we should have 100 likes. But I will settle on 80. Let me just check. I hope you guys haven't let me down. Before I look at it, just hit the like button. I'll give you a second while I go through the chat. I don't even want to look until I give you a chance. Yeah, everyone's here. Oh, here we go. Everyone's saying hi now. Everyone's waking up. Yolanda's here. Dan Ackerman. Brandon is here. C. Marty. Good afternoon from a sunny Sussex sensei. Oh, C. Marty. I don't live too far away from Sussex. Rev.Biker. I'm here too. Album says good morning, sensei. M. Taylor says good morning. Jamie Rose says morning. Oh, trying to evolve says YouTube sensei. I don't know what that means. Hi, says Bob. Oh, it's Bob says hey, sensei. Thomas Momoa says hi. Gareth says hey, sensei. Good to see some early vids again from South Africa. Yes, it's good to be doing some more shows. Timothy says IMB down 22% in the pre-market. Sorry, IBM. IBM. A quick look at IBM. IBM, IBM. [00:12:51] Speaker 1: Did we... [00:12:52] Sensei: Let me check. How did I miss IBM being down? Yeah, 22% international business markets or corporations. This is a big company if I remember correctly. Yeah, $272 billion market cap. Down 22%. Interesting. Oh, it's because of the earnings. So it just happened. That's why I didn't pick it up a couple hours ago when I was writing the newsletter. Yeah, we've had a few earnings this morning. The banks have crushed it. It looks like IBM has not performed well. I mean, by the dip. I mean, probably. I don't know enough about the company, but 22% on a company this large. I mean, how bad can the news really be? Normally, we always know the market overreacts. So whatever the news is, obviously, it's bad news. But what we know is human sentiment. Humans overreact. So that does potentially show a reason to buy in. International business machines warned of weakness in the latest quarter as a number of large deals failed to close on timelines anticipated and supply chains shifted. The company said they expect second quarter earnings per share to be down 2% on a year earlier at about 2.27 with its pre-tax income margin projected of 14% is expected to contract with less than 90 basis points. Yeah, it's not a lawsuit. It's just a bad earnings. Interesting. By the time I probably want to buy in, it's probably back up. So I'll keep it on the radar. Let me just put it on to this watch list here. Thank you for bringing it to my attention. I do always enjoy when a massive company drops 22%. That does normally present opportunity. Thank you, Timothy, for that. Good morning, says. John D. Gray says good afternoon. Pinskin says good afternoon. It says morning from Canada. C. Marty says when is Trump ever happy? Yeah, I don't think he's. Yeah, he's not happy right now. Kimberly says hello. Tony Young says. Happy Bastille Day from France. Oh, lovely. All the way from Cleveland, Ohio says Flowman. Brian is here. Chief is here. Salim is here. Liz Dell is here. I'm butchering everyone's name. So I apologize. Kurt Savage says hi, folks. MW says hello from Norway. C. Marty says. Did I see some news about the Clarity Act being pushed forward? We do have a story on the Clarity Act. I'll show you about that. There's only a limited window now. It has to be this month. Bernard says. What if crypto bottomed exactly when the Clarity Act can pass this summer? Yeah, that could be the final capitulation. And the Black Swan event IBM tank software again. Yeah, we'll see. IBM down 22%. What a day that is for. Yeah, I mean, $200 is where I've got my support. But there's even support at $210. I think it was slowly trading. It might have a bounce and then probably trend back down to $200. But yeah, I wouldn't be against buying it right now. Again, not financial advice. I'm just speaking out loud. Okay. So we've gone through your comments. Do continue to say hi if you've just tuned in. Please do hit the like. Oh, I was going to, I gave everyone the opportunity to hit the like button before I, before I check the light. So let me just switch this account back here. I am going to refresh the stream. And then let's see how many likes I have. [00:16:38] Speaker 1: Oh, we have. Three, two, one. 60 likes. [00:16:46] Sensei: I was waiting for you guys to hit at least 80. We can hit 80 likes. Guys, please do hit the like button and share this out to whoever you think might be interested in this event. That would be great. Okay, so we've done the market watch. Let's move on to the top stories. Again, you can always, you can even get the top stories for free as you get the stories for at a glance in the newsletter. Top stories are Hormuz Toll Ignites Oil. A new, a new rule from Donald Trump. Here it is. Trump sets a 20% fee. Oh God. A 20% fee on all straight cargo and blockades, and blockades, Iranian ports, lifting Brent past $86, a one month high. So essentially setting the precedent that if you want safe passage, you need to pay the price. Kind of telling Iran that if you provide safe passage to these vessels, maybe you should charge a poll. It's essentially the precedent that it's setting. Obviously not good for world prices. And again, that is the reason oil has jumped. That is the reason we hit our target on oil. I don't know if you guys saw on Discord. I posted that there was a, that my trade went through. I think it was a 520% profit in less than two weeks on oil. I'm out that position now. Yeah. So CPI then, so that's our top story. The 20% B on Hormuz set by Donald Trump. CPI then the Fed chair. Two big events today. The first one we're covering on this show in about 40 minutes. We're going to get prepared for it in the next 10 minutes. But then a big story, 90 minutes after we get the inflation report. What is it? Well, about two hours before after the inflation report. But we'll start the stream an hour and a half after. Which is Kevin Walsh's first testimony. And a July hike near, actually, it is 90 minutes after. So I might start the stream an hour after we end this stream. Or 45 minutes after we end this stream, if I remember. Yeah. Essentially, I'll give you, the stream is already set up. So I'm going to give you the link as well. I'll tell you more about it in a second. But the event that we're covering in about two hours time from now is, is it two hours from now? Yeah, I think about two hours from now is the Fed chair. Kevin Walsh, his first testimony. He's going to be asked questions. He's going to give us insights. He's going to talk about rate hike, rate cuts. He's going to, potentially, we're going to see the feud between Kevin Walsh and Donald Trump's start. And we're going to see what comments he makes about that. So a big, big day for the markets, starting off with CPI, inflation data, and then going over to a testimony from Kevin Walsh, the new Fed chair, after his first meeting. And coming up to his second meeting shortly as well after CPI. So depending on what CPI is, it could make that even more interesting. Bank smash estimates. This is breaking news. I had to amend this story just before I went live because we actually got the earnings come out and they smashed estimates. JP Morgan posted a record profit of $6 billion from trading. And Bank of America and Wealth Arco were also beating. We covered you and we brought a story to you last week about SK Hynix, a new IPO. And we said, remember, IPOs do tend to go down in the short term or once they come out. This was the second biggest ever IPO in the US or the biggest foreign listing in the US. And it's sliding. So the memory giant gives back more than more of its record listing towards $152 from $168 debut. Remember, it was supposed to debut around $150. It came in a bit higher. Now it's selling off those initial gains. Bitcoin waits on Washington. Bitcoin holds near $63,000 as a clarity market structure bill could reach Senate floor within days. The Clarity Act could be on the Senate floor within days. And it has to be within days or it's going to be never. Gold loses its safe haven bid. Billions shed about 3% towards $4,000, its worst day in a month as rate hike fears outweighs the war premium. That happened yesterday when oil shot up, oil came down. Rate hikes are bad for gold as that's the way the market sees it. Chip earnings could still focus. ASML reports tomorrow. TSMC will be soon after that. A live read on AI hardware demand after SK Heinex round trip is the peak for AI in. Is the peak for the manufacturers of chips in potentially. The answer is that is not a crazy idea to bring to light now. We have had a peak. It looks like we might get one final bounce. And then going into potentially a bear market. Especially if oil continues to head up. Prepare for that scenario. Deep dive. We've got two big stories for you today. Two playbooks for our premium newsletter members. One is a full CPI day guide. And one is a Kevin Walsh hearing guide. Both are in this edition below. Remember if there are any major events. We send out playbooks cheat sheets for these events. And there are two. And we've sent them out today. And again the chart of the day is oil. Updating you on oil's price. And I know a lot of you enjoy the charts of the day. So I am trying to do them every single day. In fact that oil trade from a couple of weeks ago was a part of the chart of the day. For the first time this year the biggest inflation print and the start of bank earnings arrives the same morning. With oil shock laid on top. That is three separate reads on the same question landing within hours. CPI shows what prices did. The bank shows what credit and the consumers are actually doing. And oil shows what is coming next. We're getting all three today. The tension is whether they agree. A firm CPI with a cautious bank guidance whispers stagflation. A soft print with a solid loan books lets the rally breathe. Watch whether the data and the boardroom tells you the same story today. So we will see the fear and greed index is there. The number that matters is the 20% toll. Some winners and losers there. And then I'm going to tell you about one of the stories. So we know about the toll. There's some more information there. So please do go read up on it. But what I'm going to tell you about is just the banks. Because this was a story I wrote just literally minutes before I had about half an hour before I went live. Because the earnings came out. So to give you an update on those bank earnings. Major banks reported this morning. And I've got some news for you. So the banks post blowout profits. But diamond are at warrants. Jamie Dimon is giving us a warning. JP Morgan opened earnings seasons with the highest quarterly profits in history. Powered by a record 6 billion stock trading call. That jumped 86% on the year. And even beat the most bullish analyst estimate. Lifting total trading revenue to an all-time high of 12.1 billion. A long-held visa stake added 4.6 billion. Investment banking fees rose 30% to 3.28 billion as deal-making thawed. And the bank raised its full year net interest income outlook to about 105 billion. Even so, with all that bullish news, CEO Jamie Dimon struck a wary tone. Oh, sorry. A wary tone. Warning that the geopolitical tensions, sticky inflation, and elevated asset prices are shifting below the surface like tectonic plates. That is a quote from his earnings call this morning. The strength ran across the group. We've got Bank of America traders set their own records with equity trading revenue up 70% to 3.6 billion. And earnings of $1.21 a share, topping the $1.12 expected. While the investment bank and a 68% jump in advisory freeze rode the same deal-making revival that SpaceX record June IPO helped ignite. Remember that IPO, SpaceX works with all these banks and that obviously helped them. Wells Fargo beat two, lifting its net income 17% to 6.4 billion. Or $2 a share against the $1.71 estimate on stronger wealth management and investment banking fees. Volatile markets and a reawakening in deals rather than a plain old lending to the heavy lifting. The reaction told the story. Despite records, JP Morgan's share slipped about 1.4% in early trading. We might have some more information. JP Morgan, let's see if it's still down. JP Morgan is, yeah, imagine all that good news. All the records left, right and center beating every analyst prediction. And it's down 2.5% in the pre-market for JP Morgan. Why? Well, a volatility-fueled trading boom is not the same as durable growth. And because the same morning rate hike bets are lifting bond yields and setting a jumpy tone into CPI print. The reason they're not booming is firstly, a lot of those profits came from trading. And again, you can't, those aren't solid numbers that you can forecast going forward. Secondly, we've got CPI coming out and they want to see what CPI is. And thirdly, we've got the war spiking coming up again and bonds are going up, which is not good for the banks. So the banks did confirm that the consumer is holding and the credit is calm. That's what we wanted to know. The consumer is holding and the credit is calm. So no panic on that front, which steadies the question of how strong the economy really is. And it looks like it's fairly strong according to the bank's earnings. But Jamie Dimon's tectonic plate warning echoes the oil and inflation backdrop. And blockbuster profits were not enough to lift the wider market while yields climb. When the banks print records and the stock still falls, the good news was already in the price. And the worry is what comes next. Jamie Dimon just named it. I'm watching credit costs and yield move, not the size of the beats. So big beats, but we need to look deeper into that. Why is Jamie Dimon worried? Well, we know we've got CPI today. We've got rate hikes expected and we've got the oil going back up due to the war restarting with Donald Trump's 20% pulse. So that is the backdrop we're up against. And that is what's making me think it looks like we've peaked on the AI trade as well, just temporarily until we get a correction in the market. So if you have just tuned in half an hour to go until the CPI inflation report, the most important CPI inflation report of the year, there is no more important inflation report than this, especially with the upcoming FOMC in just a week, in a couple of weeks, next week, and I think a week or two, I think it is next week, next week. Let me confirm that in a second. Let me check. [00:28:29] Speaker 1: FOMC, FOMC, FOMC. What have I, oh God, I pressed all the wrong buttons. [00:28:45] Sensei: I had to do this, FOMC. [00:28:49] Speaker 1: I take things a week by week, so I haven't looked ahead. FOMC. Just checking over here. Okay, so let me have a look. [00:29:13] Sensei: So this week, we've got obviously CPI today, PPI tomorrow, retail sales on Thursday, Michigan on Friday, Wednesday next week. Yeah, Wednesday, oh no, Wednesday the 29th. So Wednesday the 29th. So that's not next week, it's the week after, is the FOMC press conference. And again, the blackout starts from Saturday, so we won't hear from the Fed after this week. And this is probably the most important inflation report before then. And that's in 29 minutes, so we'll cover that in a second. So banks, big beats, but concerns underlying. CPI inflation, 29 minutes. Oh, I should have, let me close these down. We did the top stories, we did the banks. Now we come on to CPI. I won't go through the whole playbook because it's for the premium members, but we can certainly talk about parts of it. If you haven't just tuned in, please do hit the like button, say hi in the chat. I see more people tuning into the show. Where is the, yeah, here is the comments. So who do we have? We've got Bernard here. C. Marty is here. Timothy's, Trump is now a pirate. Tom says, enjoying a nice dip or two today. Songs for Space says, good mythical morning, a fine day to get red light therapy. Is that just the red light masks or red light therapy? When you go into a room with just red light, I've heard some stuff out there. Green candle chasers here. I guess today is the day we start to see the market turned green. Ooh, maybe. NASDAQ is holding up. Yeah, everything's pretty much flat. Just sideways nonsense on the index for a couple of months. Yeah, holding up stronger than many thought though. Okay, so we've talked about the market. We've talked about oil. We've talked about the top stories. There's a lot more top stories in the news that you can read about. We talked about the banks. We have just reported earnings. Now we come on to the main event of today, which is CPI. Please do hit the like button if you have just tuned in and let's come on to it. Today's report is the strangest setup of the year. Headline inflation is probably about to fall. From May's three-year high of 4.2%, we got the May's 4.2% high. We're going to see it drop to somewhere near 3.8% because June's price data was collected during the ceasefire. Remember, we're not getting inflation from today. We're getting inflation from June. We don't get inflation until the month after. So it's going to be dropping because this is during the ceasefire. Petrol dropped roughly 10%. So we're expecting headline to fall from about 4.2% to around 3.8% in today's reading. Sounds good. Sounds good. Looks good. But that's just headline. And things are different now. The ceasefire is now over. The US and Iran traded fresh strikes over the weekend. And Washington has reimposed the Iran port blockade and slapped a 20% toll on cargo through the Strait of Hormuz. We've got Brent oil back at around $80. So the number of the screen describes last month's petrol pumps while the market trades this month's war headlines. Rate markets have already moved. The odds of a hike at the July 29th meeting in two weeks' time have jumped to nearly a 50-50. A 50% chance of rate hike, a 50% chance of holding where we are. And that comes from about only a 33% chance over the weekend. So a big jump there based off the escalations. Also, 90 minutes after the print comes out, the new Fed chair, Kevin Walsh, sits in front of Congress for the first time. And I've got a separate playbook for that. So we'll come on to that in our next event. But let's focus on what's at hand, which is inflation and CPI. You can see on this chart here, we had CPI really moving towards the upside 3.3%, 3.8% to 4.2% due to the war, due to oil and previously due to tariffs. That fell down, headline fell down, headlines in yellow just above me. No, it hasn't fallen down yet, but I expect that to fall down to 3.8%. I think 4.2% was the peak. Unless we start piling on tariffs, more tariffs or oil heading back above $90, then that becomes concerning. But for me, I still am on the foot of the belief that inflation has peaked. I expect a 3.8% headline number. But more importantly is this lower line here, which is the gray line, which is core. Core takes out the very volatile and potentially transitory inflation runners like petrol or food prices. Because that is very volatile month to month. That's been creeping up. And that's more important to look at today. Let's see what is actually the underlying inflation, because if that stays sticky, then they're going to raise rates no matter what the headline is. So that's just a chart of inflation. And then today's golden rule is the headline will be flatter, the core will decide. So headline will be down. That's my thoughts. I'm very confident that the headline, I guess, major analysts are saying the same thing. Headline will be down. So we're going to be below 4.2%. So in that sense, we've peaked. Let's focus on core, because if core is going up, then forget about headline. Core is more important. Just a few questions that I've seen popping around. Yeah, just a few questions that I saw people asking and also around social media. And I'll just answer them very quickly for you. So how can inflation fall when the war just restarted? Timing. CPI measures prices collected through June. And June was a calm month. The interim peace deal held, Hormuz reopened, and petrol went down about 10%. The weekend strikes and the new Hormuz toll started in July, just a few days ago. So they land in the next report, due in mid-August. Today is a photograph of the ceasefire. So that's why we're dropping is because, remember, this, casting mine back to a month ago, everything was happy. Everything was great. Peace deal. Straight was open. Oil was coming down. That's sort of what we're looking at. However, if core is up while all that was going on, then that's when the concern, and that's why these numbers are so important. And also, my prediction is $80 and above on oil, that's when they might raise rates. $90 and above, again, on oil, that's when we can have sort of a real issue in the market, a real sort of a 10%, 20%, 30% correction. So we'll see how far oil goes and how long this will last, because the longer it lasts, the bigger the issues. If it was done and over, then we could live with it, and if it's coming back, then we have problems. The question then is, does the 20% Hormuz toll show up in today's numbers? Again, no. That's just happened a couple days ago. It affects higher shipping and insurance costs, feeding into fuel and freight bills through July and August. That is exactly why the market may care less about today's soft headline. Then what about oil has done since the survey window closed? So, no, it won't show up. The market is not looking at that right now. Guys, if you have just tuned in, we are getting ready for the CPI report in 20 minutes. Please do hit the like button, share this out, subscribe if you haven't done so already. The link to the newsletter is in the live chat. The first three people get 25% off. And again, if you don't want to sign up for the paid plan, there is a free plan as well. Headline or call? Which one matters today? Call. Everyone already knows that headline fell. So, a decline confirms the script rather than telling us anything new. The live question is whether the energy shock is leaking into everything else, rent, services, airfares, etc. Core at 0.3% or above, while oil climbs again, keeps the height case very much alive. Core at 0.2% or below is the closest thing to an all clear this report can give. So, we are looking at core, we are looking at the monthly, 0.2% or below, we are safe, we are okay, 0.3% and above, we are concerned the market will price and rate hikes and we could get a rate hike this month. So, if you're in the camp of rate cuts, I'm sorry, it looks like there's a 45% chance of a rate hike. In my opinion, it won't happen unless this CPI report is worse than anticipated. So, that's that question. What actually is CPI and what does core versus headline mean? CPI stands for the Core Price Index and it tracks what a fixed basket of goods and services cost to US households. It's published monthly by the Bureau of Labor Statistics and the headline level is everything, the whole basket. And then if you're looking at the core number, that will take out food and energy. Not because they don't matter, but because they swing violently and the Fed wants to see underlying trend that it can actually influence. So, that's the answer to that. What does crypto move? Why does crypto move on the US inflation numbers? The chain runs this way. So, inflation data moves rate expectations, rate expectations move bond yields, yields move the dollar and the dollar sets global liquidity. So, everything is interlinked, but it does come from inflation numbers. Crypto sits at the far end of that chain and it fills it the hardest. Bitcoin has traded with the NASDAQ all year, so the same yield moves drives both markets. And is there really a World Cup effect in this report? And this is another question. And there could be. And again, not a joke. Can the World Cup affect CPI? Yes, it can. The US is co-hosting and several forecasts expect hotel rates and airfares in host cities to nudge core surfaces up in June and July. If core prints hot, some of that might be because of the football. And the Fed knows how to look through that, but that could, again, make the numbers look worse than it is, make the market come down. But we're going to look at core. We're going to look at headline. We're going to be covering it in 19 minutes time. So what's happening at 1.30 UK time? That's in 18 minutes. Or we're talking about New York time, 8.30 or Tokyo time, 9.30 p.m. We're getting headline CPI. So we're probably going to see it first over here, which is month over month, month over month CPI. The consensus is that's going to come in at negative 0.1. Then we're going to get CPI year over year. The consensus is about 3.8% for that. If it's higher, it's worse. The lower is better for the market. Then we're going to get CPI excluding food and energy. That's the core CPI. Month over month, we're expecting 0.2%. And year over year, we're expecting that to be at 2.8%. Remember, the target is about 2% on PCE, which is pretty similar to CPI. And that's, again, 2.8%. It's not awful. If we get into 3%, that's the big concern. Core is a bit more important. And as you can see on that chart, the next very important high impact thing is at 3 p.m. UK time. And that is Kevin Walsh testifying. That will affect the markets a lot, especially once we know what CPI is. [00:41:01] Speaker 1: So, yeah, back to our playbook. Where were we? [00:41:13] Sensei: So, yeah, that's what's coming out. And what did I write there? One report, one question. Did the ceasefire month cool anything beyond petrol? Yeah, that's the important question. Is it just petrol that came down last month or anything else? A minus sign on headline will make for celebratory headlines within seconds. Do ignore them. We're focusing on core today, unless headline has gone out of control. But the main focus is on core. A few deaths sit at 0.2% on core. So, the bar for genuine upside surprise is 0.4%, not 0.3%. So, if core is up 0.4% and above, that's when we're going to see a crash in the market. So, just to break that down for what we're looking for between headline and core. These are the numbers. So, anything above 4% year over year headline would mean energy gave back less than assumed or the pressure is broader than oil. That will be straight away risk off. The peak inflation story takes a direct hit. My thoughts will take a direct hit. And hike odds will move towards the norm for more likely than not for this month. 4% or above on headline would be a real concern. Let me show you again what we're expecting. 3.8%. That's that number right above my head. 3.8% is what we're expecting. [00:42:36] Speaker 1: 4% and above will be a surprise. I apologise for that. [00:42:50] Sensei: I don't feel unwell anymore, but I've still got, can't breathe properly for some reason. So, do bear with me. Where were we? Yeah, so that's headline. And on the flip side of that, if it's 3.7% or below, that's cool. That will show disinflation running faster than the energy math alone. So, that will be a big relief. So, headline. 4% and above bad. 3.7% below good for risk on assets, which I assume most people are invested. Yeah, and again, my view for months is that inflation peaked in May. And the maths right now is backing it up. The annual rate falls today unless energy misbehaved inside the survey window. The real test of the call is not today's print. It's whether oil stays below $80 for long enough for July and August to keep the trend going. So, we can't celebrate today. We need to see a few more months later to say, actually, I was right. So, I'm not going to celebrate today. Even if I'm right, I'll celebrate in a couple months if I continue to be right. So, that's headline. It's important to look at, but this is even more important, core. If you have just tuned in, please do hit the like button. We're 15 minutes away from CPI, the biggest CPI event of the year so far. And it could be the most important event of the year when we look back on it as well. So, please do hit the like button. Share it out. Subscribe if you haven't done so already as well. Cmarty says, is there still a risk with core CPI but bonds continue to raise up? Can CPI be down and bonds go up? Yes, that can happen, but we would expect that not to happen. If nothing else outside is going to go too wrong, we are focused on inflation. It's the only other way you can get there is the jobs market, which we'll keep an eye on. But focus on CPI because CPI is what will move the bond market due to rate hikes the most in this situation. So, yeah. Please breathe, sensei. It's kind of important. I am breathing. I just can't. I don't know. You know when you're unwell and a few weeks later you've still got a stuffy nose. Yeah. I don't think my nose is working properly. So, I can only breathe through my mouth, which is why. But anyway, let's not focus on that. Let's focus on CPI coming out in 30 minutes. So, yeah. We looked at core. No, no. We looked at headline. Core is more important. 0.4% or above. On core, that will suggest that the shock is spreading beyond energy and that will be coming into rents and services, which is more holistic inflation and much more concerning. The Fed will care much more about core going up than headline going up because core is actually in their control. And core will be the most concerning because that will show really sticky inflation and probably not coming back down to their 2% level for years if we see core really start to move up. So, we're looking at the monthly core level. 0.4% or above is concerning. That will make yields and dollar jump. Stocks, crypto, gold will be sold off. 0.3% is sticky but it's contained. It's what we sort of expect. 0.2% or below on core month over month shows that there is still underlying inflation but it could ignite a little bit of a rally. So, core is where the transitory or not argument gets settled. So, we talk about is oil prices going up? Is tariffs, is it all transitory? Is it going to come and go and it's not going to have a big effect? Well, if you want to settle that argument, you look at core. Core is where transitory or not argument gets settled. An oil spike that stays in petrol prices is a level change that fades on its own. An oil spike that shows up in services six weeks later is an inflation process and central bank hikes at a process, not level. So, we're not looking at singular levels. When it becomes part of core, when it moves from headline into core, that's when the central bank and Fed Chair Kevin Walsh could realistically, very easily, raise rates and really annoy Donald Trump in doing so. We are 11 minutes away from the CPI coming out. We'll be covering it on Bloomberg. I'll be doing analysis behind the scenes as well. [00:47:29] Speaker 1: Maybe get ready for that as well. I think we can get the link up. So, if I go over here, let's get ready for that print to come out. Yeah, that'll come out over there. We'll be looking at all our sources. [00:47:55] Sensei: So, we'll come out there. We'll look at Bloomberg as well and their coverage. Mike McKee will probably be live covering it as well. Behind the scenes, I'll be looking at the numbers and then five minutes into that, I'll give you my thoughts. So, as soon as those numbers come out, don't go anywhere because we'll have analysis from Bloomberg. We'll have analysis from me as well. And then we'll have analysis from Martin. He'll be live in about 10 minutes' time. We'll cover it here and there. So, once I'm done with my show in about 20 minutes' time, then you can always go over to Martin to get his analysis as well. We'll also see the numbers probably come out here first before Bloomberg, so I'll give you my initial reaction first as well. So, soft headline plus a cool call would be the peak inflation scenario confirmed on both counts. Stocks, crypto, and gold will bid. Yields and dollars will ease. The relief rally set up. And at least that, at least until Kevin Walsh speaks later today. So, if you're watching now, there is even probably a bigger event later today with Kevin Walsh testifying and speaking to the house. So, the best case scenario is a soft headline and a cool call. The worst case scenario is a hot headline and a hot call. If we get a soft headline and a hot call, that's the trap. Falling pressure, falling petrol, masking, spreading pressure. That will be concerning. And then hot headline plus cool call will be oil did it. The shock stayed in the tank choppy, but it's a bit better. If we get a hot headline and cool call, it's better than getting a soft headline and hot call. But anyway, if you just want to keep it simple, low inflation good, high inflation bad, focus more on core inflation. Sensor, can you play the accordion for us? Definitely not. Not today. Maybe in our Kevin Walsh show in a couple hours time. And what I mean by that, if you haven't seen it yet, let me see if I can pull up a link. We are covering Kevin Walsh testimony. This could annoy Donald Trump a lot with what he says under oath. So, let me bring up the link for this. If I put it here. You'll see this event will be starting late. Oh, why is it not loading? Here we go. This event, oh, wow. It's starting in 68 minutes. It might start 10 minutes later than that. But yeah, in about an hour's time, Kevin Walsh will be live at the Senate hearing. Is there a Trump betrayal? July rate hike coming. We'll know more about CPI. Kevin Walsh might comment on it. And he will be going head to head with Donald Trump, really with his words. Because the rumors are Donald Trump is not very happy with Kevin Walsh and the direction he's going. Because it looks very likely we're going to get rate hikes. And Donald Trump put him in to cut rates. So, we'll come on to that story in about an hour's time. So, stay with me. I'll give you that link later in the show. But if you want to bookmark it, I'll give it to you in the chat. And you can just click on it and press notify me. Oh, I've done it as Martin. But there you go. There's the link for the show later today. So, seven minutes to go. Are you guys ready? Are you guys exciting? The market's going to move. Another question a lot of people have asked me is, how much of inflation is due to oil? Well, here is the answer. More than people realize. Energy is only about 7.5% of the CPI basket, but it drove over 60% of the May's monthly increase. On an annual number, energy contributes to only roughly 1.7 points of the 4.2 rate. Strip it out and US inflation is running near 2.5%. That is the case for calling an oil shock rather than a broader inflation problem. The caveat sits in core, which has crept up from 2.5% in February to 2.9% now. That creep is the shock slowly leaking into airfares, freight, services, and it's a number that decides whether it's just oil. It's just oil stays true. So, everyone's just going, oh, it's fine. It's just oil. It's transitory. We don't need to raise rates. Actually, if it comes into core, then it's a problem. So, if you're looking at the headline, about 1.7 percentage points was because of energy. 0.4 percentage points was because of food. And everything else above 2.1%. If you exclude energy, 0.4, you can see the difference there. And so, oil does have a big effect on especially headline, but also core inflation. So, that answers the question there. Six minutes to go until the CPI report. We've done most of the coverage now. We are getting ready for the numbers. You can see oil peaked in April. It is heading back up. We took a trade at $67. Yesterday, I sold that profit at $80. That was a 500%, 520% profit. And the way I like to do oil is on polymarket because I don't really want to have time getting out. I just want it to hit a certain level. And the odds there are better than me taking a leverage position. Anyway, I did that. I spoke about that oil position. That was up 520% in two weeks. I'm out of that position because if it stays above $80, hike odds will climb. If it goes above $90, which is the danger level. You can see it just above my head. $90 is the danger level. Oil will turn sticky. And then there will be rate hike after rate hike, potentially going into a recession as well. We could deal with a one-time war. We could deal with a one-time oil price shock and then a ceasefire. I don't think we can deal with it two times in a row. So if this war gets worse, if oil continues to go up, if Trump continues to charge a toll and make everything 20% more expensive, if Israel continues to bomb the Middle East, then we've got a situation that affects every single normal, everyday man around the world. The man, woman, child around the world. And obviously affects a lot of people within the Middle East as well. So that's where we're at. Crude oil. Has it peaked or is it going to go higher than nitroids? If it goes higher than nitroids, I change my tune from going a little bit bullish to saying actually inflation's peak to going, hmm, doesn't matter if inflation's peaked or not. Above $90 is a real concern. So, yeah, let's continue. The war will, yeah, do we need, I don't want to go through the whole cheat sheets because I want to leave some for the premium members. And this will actually be more useful to look into later. So we don't need to cover it and it'll still be relevant for any of the premium members on the newsletter. Remember, if you're a premium member of the newsletter, you get the cheat sheets before the events occur and you can always go back to them as well. Some people ask me, when yields rise, what happens to stock? What happens to defensive stocks? What happens to crypto? What happens to gold? Well, I've created a matrix table for you there. So you know if, when defensive stocks go up, when defensive stocks go down, when stocks go up, when they go down, when crypto goes up, when it goes down. And it's all linked to each other. So there's a nice table there for you to refer to. But yeah, here we go. [00:54:52] Speaker 1: Four minutes to go. [00:54:57] Sensei: Let me go back to this table here. If you have just tuned in, it takes one second. Please do hit the like button. Let's see if we can get up to 400 likes. I know so many people are here right now and you haven't hit the like button. Please do hit the like button. If you haven't done so already, please do subscribe. And let me tell you about the newsletter because we've got a minute to go before the CPI, before we need to get ready for CPI. The newsletter comes out every trading morning, two hours before the opening bell. You get the top stories you need to know about. 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As we go over to CPI, there is the link. Your newsletter is the only annual subscription available. No, there is a monthly subscription, but the annual subscription definitely works out a lot better for you guys. It's more cost-effective. But I understand if people want to go monthly as well, the annual plan is what gives you the 25% discount. You can sign up for the monthly as well instead if you like. Okay, so one minute to go. CPI, the most important inflation report of the year. Potentially, looking back a year from now, this might have been the most important one. Let's see what happens. I've got over here, we're looking at the data will come out here first. I'll give you my initial reaction. The lower, the better. The higher, the worse. Core is more important than headline. Then we'll go over to Bloomberg. Then we'll stay on Bloomberg for five or so minutes, three or four or five minutes. While I do the analysis behind the scenes, look at the actual numbers. I'll give you my thoughts in about 10 minutes' time once again. But here we go. 30 seconds to go. The CPI playbook. Let's change this from being the playbook to live. The actual CPI event. You can see the wheels are swirling now, and we are seconds away. Network for Tracker app. So where do I get this? Thomas Moreau, if you go to sensor.news, you'll see one of the headings is worth the lens. I think it's called. Click on it, and then it'll give you all the information how to use it. There's a video explaining it as well as the website and the link. Seven seconds to go. Here we go. Numbers are out. Negative 0.4. Wow. Headline's down a lot. Core is down a lot. Wow, this is good. Markets are going to pump. This is the inflation as peak story. Let's go over to Bloomberg. [00:59:09] Speaker 3: Here's Mike McKee. [00:59:11] Speaker 4: Good morning, John. Kevin Walsh makes no news in his prepared testimony. There is no guidance on interest rates, although he does reiterate that inflation is still the focus for the Fed. And as far as inflation is concerned, there's some particularly good news for Chairman Walsh this morning as CPI comes in down four-tenths on the month. This is the first negative print since 2026 years. Core CPI is flat for the month, and that puts the year-over-year at 3.5%, down from 4.2% for the headline, and for the core, 2.6% down from 2.9%. Now, one month does not make a trend, and obviously, the Fed and the White House will take credit for some of this, but they're going to have to wait and see how things break out going forward. Most of this is, as far as we can determine, from energy, of course. Now, Walsh, it's a kind of a dramatic opening he makes in his statement this morning, but, again, no guidance. He says the U.S. is at a hinge point in history, and their task is to ensure that the economy excels into the future. In the text of the testimony, Walsh says the key to that is bringing inflation down. Quote, while monthly price fluctuations are inevitable, especially in an unsettled world, underlying inflation over long-time horizons is determined largely by monetary policy. The members of our committee have no tolerance for persistently elevated inflation, and we share a resolute commitment to restoring price stability. Now, what's missing from that statement is any mention of how they plan to do that. Whether they plan to raise or lower interest rates or hold them, nothing on that in the text. The economy, he does say, is solid. Consumer spending is moderate. Manufacturing moving up steadily, and the labor market broadly stable in his sort of economic outlook. The only laggard is housing, which is a victim of interest rates, but, again, no mention of where rates are going. He does mention AI, which came up as a concern in the minutes of their last meeting. We don't know the extent to which the economy will benefit from the AI build-out, Walsh says. Even so, new opportunities for the economy introduce new challenges for policymakers. We at the Fed are monitoring the implications for inflation and the labor market. And the rest of his six pages, which are, by the way, about two pages longer than Jay Powell has had in recent years, he outlines the five task forces that he has appointed, and he offers praise for the late Alan Greenspan. Again, though, no policy possibilities. That will have to wait until members get a chance to question him. [01:01:55] Speaker 3: Mike McKee, thank you, buddy. Let's get to the bond market board. Two's, 10s and 30s. That's a downside surprise on CPI, and this is the sound of the door closing on a July rate hike. Two's down by 10 basis points, 4.18, removing the urgency to hike anytime soon in the minds of many, I'm sure, in this market. That can change. Tens right now down by about eight basis points, the 4.55. Turn to the equity market, unlocking this move. [01:02:20] Sensei: So let me tell you what's just happened. Straight away, I told you those numbers are much lower than expected. So those numbers came out, and I'll tell you what those numbers were once again. Core, sorry, headline month over month came in at negative 0.4% compared to the consensus of negative 0.1%. Headline came in at 3.5% year over year compared to 3.8%. Core came in at 0% compared to 0.2% month over month, excluding food and energy. And core CPI year over year came in at 2.6% compared to 2.8%. So core is down, headline is down, both pretty significantly, and that is great news for the market. It's great news because now I'm more confident to say inflation has peaked, and also we won't get rate hikes, as I've said, this month based off that. I'm very confident to now start saying no rate hikes this month and continue to say no rate hikes this month and inflation has peaked. So let me tell you instantly what happened. So June CPI is now in and it's soft, cooler than expected, top to bottom. Headline prices fell 0.4% on the month, the biggest monthly drop in over five years. The biggest monthly drop in over five years and the annual rate cooled to 3.5% from 4.2%. And the numbers the Fed actually watches, core came in flat, zero on the month against the three-tenths the street expected. So everything much better than expected. The key numbers are headline CPI, negative 0.4% month over month versus 0.1% expected. Biggest monthly fall since April of 2020. Biggest monthly fall of April of 2020. Crypto's up, stocks are up. I don't even need to look at the charts. I already know that. Headline, annual 3.5% down from 4.2% in May. Again, remember, it's going to be volatile in the markets. They'll pump and then they'll dump and then they'll probably pump until we get Kevin Walsh speaking. You heard the statement has already come out from Kevin Walsh. He'll be testifying and answering all the questions in about an hour's time. We'll be live for that. Core energy is down negative 5.7% on the month. So it's down 5.7% on the month. The single biggest drive of the drop. Gasoline is down about 10%. Food is up 0.2% on the month. Up 3% in the year. Shelter is up 0.1%. The smallest monthly rise since January of 2021. The smallest monthly rise since January of 2021. That means rent is essentially down. What else moved? Also down in the month, motor vehicle insurance. Insurance is down 2% on the month. Communication, again, I'm going through, if you want to see what I'm looking at. We're going through, where is it, where is it, where is it? Here. We're going through the numbers from the actual CPI report. Motor vehicle insurance is down 2%. Communication is down 1.5%. Apparel is down 0.6%. Used cars are down 0.2%. And medical care is down 0.1%. But what's still hot year over year is airline fares are up 26% year over year. Gasoline up 26% year over year. Total energy up 15% year over year. And eggs, Trump's favorite thing, jumped 4.3% on the month. Let's see what he says about eggs. So the bottom line is this is soft everywhere. Energy did the heavy lifting on the headline. But the important part is core. Flat on the month. Down to 2.6% on the year. And shelter cooling to the slowest since 2021. That pulls a lot of the heat out of the July rate hike argument. And it lands at 90 minutes before Kevin Walsh faces Congress. We'll keep an eye on the 10-year yield, the dollar, and the pressure that has just eased. That was building all year. And again, we'll be back for Kevin Walsh. So final chance for you guys to hit the like button. Final chance for you guys to take advantage of the 25% off offer in the live chat. You can sign up for the premium plan, which gives you the chart trading course. It gives you the net worth track. It gives you the £5,000 portfolio challenge. It gives you the trading view indicators. All of that comes with a premium plan, plus the daily newsletter and the Sunday XRP weekly. You can also sign up for free. You can also join me later today. Let me give you the link for the show I'm doing later today. Where is it gone? It's here. So this is Kevin Walsh. It's a live hearing at the House. It's not Senate. It's tomorrow. Today is House. So I'll change that title in a second. But it looks like Trump is being betrayed and Trump is not too happy about it. But Kevin Walsh will be testifying live, his first one, ahead of his FOMC and after his first FOMC. So I'll give you the link to that. If you want to join me for that, that'll be in about an hour's time. You can just click on it now. That's the link in the live chat. If you click on that now and just go to the stream. And then once you have the stream, just press the notify me button and I'll be there with you in just under an hour. For now, we're going over to I did the CPI live. I gave you my take. Now we're going to go over to Martin, who is live with this news. Let's see what his thoughts are. Have I missed any comments? Oil getting up. I guess we're going green. Yes, we are going to go green. Comical last month's CPI rise in last month's biggest CPI rise in six years. Now the biggest drop in five years. It's ridiculous. Yeah, all over the place. 3.5 needs to be hiked by artificial low rates. Boom and scam. Yeah, I mean, if you look at it holistically, of course it's high. But what we need to look at is core because that's what the Fed look at. Anyway, no rate hikes as expected. Inflation peaked as I've expected. We'll see. I know Martin doesn't think inflation's peaked. I do think so. We can differ on opinion. But let's go get Martin's opinion now. So thank you everyone for tuning in. Martin's show is pinned here. Or if you stay where you are. Let me give you Martin's show. If everyone can go over there and really annoy him. Everyone just go say, sensei sent me. And say, sensei was right. Let's see what he says. Say, sensei was right. Inflation peaked. Guys, go over to Martin. Say, sensei sent me. Go and annoy him. See what he says. He'll be live with his thoughts as well. But until next time, as always, I'll see you guys in an hour for Kevin Walsh. So stay with me. Martin will send you back to me. But take care of yourselves. Oh, I forgot to end the poll. Let me end the poll. End poll. What did the poll say? 4.4% or higher. 41% of you thought it would be hot. It was 3.7% lower. So it was cool. There you go. Until next time. Stay where you are. We'll take you over to Martin's stream. We'll click the link that's pinned. I'll see you back in an hour. [01:09:00] Speaker 1: Take care of yourselves and each other. Bye-bye. [01:09:04] Speaker ?: Bye-bye.