BOMBSHELL Inflation Report - It's Worse Than Anyone Predicted

[00:00:00] Speaker 1: If we're going to talk about the economy, if we're going to talk about the economy, some truly devastating economic news coming out of the government today. Some really, really, really nasty stuff. If you're, say, you know, interested in ever owning a home. [00:00:17] Speaker 2: Well, real average hourly earnings down seven tenths on the month. That's the sixth straight month. How are they saving? And if you don't have the wealth effect from stocks to fund your spending, that's going to be hard. [00:00:30] Speaker 3: Yes, I mean, rich people are making a lot of money. God, I sound like Marx. I really don't want to sound like Marx. It's just I'm looking at the data. I took seven courses on Marxism. [00:00:40] Speaker 1: Guys, I don't want to sound like, listen, okay? I understand that the circumstances of the moment might lead one inexorably to the conclusion that our economy is designed to only fuel the rich. But please don't get mad at me. However, however, the numbers are not looking good. Give me the whole, give me the whole bit. Inflation right now is through the fucking roof. Actually, before we watch the CNBC business segment, take a look at this. Because the, the Kobe, Kobe ceiling, the Kobe C letter talks about it. Look at this. PPI inflation unexpectedly rose to 6.3% above expectations of 5.3%. Again, this is not something that I can necessarily sell to you if you're not like that immersed in the world of finance, but PPI inflation being up one full percentage point higher than expectations. And the expectation already being two and a half times the Fed's target is genuinely really bad. Like actually insanely bad. Core PPI inflation rose to 5% above expectations of 4.4%. That means that in the span of the Iran war, inflation has jumped to, it's, it's reaching that starting to reach the same curve that we were at during the big inflation crisis back in 2022, 2023. Um, genuinely like the, the inflationary effects that we're about to start seeing, it's already getting pretty bad, but like the U S dollar is not doing phenomenally right now. Not even a little bit. The U S CPI inflation is now nearly double the feds 2% target and PPI inflation is more than triple that target. PPI inflation was expected to fall in August, but instead it surged to 6.3%, its second highest level in four years, month over month headline PPI inflation surge plus 1.3% more than doubling the plus 0.6 expected. And the second largest jump since March, 2021. Meanwhile, month over month, core PPI inflation came in 133% above expectations. Remember the only reason we did not get hit with an immediate crisis from the cost of oil and diesel after the Iran war began was because of the demand destruction that China engaged in. But they're not doing that anymore. Just scroll down their page. What page? [00:02:52] Speaker 4: September PPI and jobless claims route. Steve Leisman joins us now with the numbers. Steve, what do you got? Yeah. PPI here, Joe, I've got month over month PPI, final demand up 1.3. The consensus was 0.5, uh, final demand X food and energy. [00:03:08] Speaker 1: Do I pay my loans or no, I need financial advice. The good news is that if you owe any existing debt, the real value of that debt is going to be decreasing precipitously in the coming years because the dollar will be worth less. So there is that. If you are paying off like an existing mortgage or, um, I got, I got, I hope you locked in that, those, that mortgage rate, like back a couple of years ago and not now don't refinance that shit. Um, uh, uh, or a car loan or student loan payments. I've got good news. The value of your debt is about to decrease precipitously. The bad news is it's decreasing along with the value of your checking account. [00:03:48] Speaker 4: A year over year, 5%, uh, X food, energy and trade 0.5 that compares with an estimate of 0.3%. We have retail sales coming in. It looks like a little bit hotter, uh, retail sales 0.8 consensus was 0.4. Uh, let's see X auto 0.9%. Uh, it had been 0.5. So the consumer doing well, wholesale inflation doing worse and real quick on jobless claims, which we may or may not have here. Here we go. Um, it's not been a big story and it doesn't look like it is again for a four week average 198, uh, claims rising to 190. [00:04:31] Speaker 1: The 10 year is now almost 10 basis points above 5%, 5% is already deep in the fucking warning red flag, red light EU, EU. [00:04:45] Speaker 4: He's still my heart on that. Let's just look quickly at the bond market 509, a couple of ticks higher on the 10 year, but Joe, we've had this fascinating tension. The morning was fear of the fed and inflation. And the afternoon was fear of AI default and the fear of AI default. If it was a, a two half game trounced in the second half, especially, okay, dog. [00:05:09] Speaker 1: This is like really bad news economically. Can we get some straight shooting and not some goddamn warning? It's boring to listen to. Are you describing my stream? You're right. You're right. Um, for real though, it's, it's, it's quite bad. Is this, is this the clip from which the when you had. Is this the clip on their channel that has the, the Marx quote that I don't want to sound like Karl Marx. Moments away, BlackRock CEO Fink. Is that in this moments away, BlackRock CEO Fink. Fuck. I don't think that's from this clip, which is too bad. [00:05:37] Speaker 5: Cause it's funny as fuck more about risk transfer, you know, out of the air or anything that consumes capital. [00:05:46] Speaker 1: And. Oh fuck. It went up to 5. In this section of the analysis right here on the treasury yields. It says that the 10 year is at 5.093. But then when they jumped to the live view of it, they say it's 5.102. Did it shoot up a basis point in the, the bells, me Lord, the bells, the, the bells, the bells, the bells, the bells, me Lord, the bells. The Marx clip. If you want to, we're just looking at the Marx clip. We were just looking at, you want to watch it again? I want to watch it again. [00:06:17] Speaker ?: Yeah. [00:06:17] Speaker 2: Well, real average hourly earnings down seven tenths on the month. That's the sixth straight month. How are they saving? And if you don't have the wealth effect from stocks, it's an asset economy, man. [00:06:30] Speaker 1: If you don't own assets, you are getting poorer by the minute. And honestly, I w I don't think the assets are going to be too, doing too well in the near future either. [00:06:39] Speaker 2: To fund your spending. That's going to be hard. Yes. [00:06:42] Speaker 3: I mean, rich people are making a lot of money. People. God, I sound like Marx. I really don't want to sound like Marx. It's just, I'm looking at the data. I took seven courses on Marxism. Where did it get me? Although I did really well in this. [00:06:55] Speaker 1: He's an idiot. Of course, you don't need to be a Marxist to know that this is a, a capital economy for the capitalists. Really though. Hold on. UBS now expects the fed to raise rates twice more after September's hotter than expected inflation report. I, I, I truly think they're underplaying how bad this is. I have never seen. Okay. I'm actually asking. This is not rhetorical for anyone in the audience who has a better memory than me. For anyone in the audience who has a, hasn't the yield been like 5.2 recently? Yes. But it dipped after more market bullshit, but like it's shooting up. It's, it's shot up again after this jobs report. Um, did you guys, oh, fuck. There's so much I want to talk about. Did you guys see that report on how, um, uh, uh, oversight men in the stock market were literally told not to investigate suspicious, um, oil futures trades. Like they were looking into the oil futures trades to see who was benefiting. And it was turning out like what we knew was true was true that before making public announcements about the Iran war, Trump was privately warning people to start making investments beforehand. They were just told to not look into it. By the way, can anybody think of a more drastic month over month PPI inflation overreach relative to expectations in recent memory? Can anyone else think of it being 1.3% higher than expectations? Because that's the worst I can think of in recent memory. I cannot, in my time streaming, I cannot remember another time that there has been this dramatic of an underestimation of PPI inflation surging. Oh yeah, here we go. Billions of dollars worth of contracts predicting oil would fall and the S&P 500 would rise would place about 15 minutes before Trump announced a U-turn on Iran in a post on Truth Social. See, FTC staff began to investigate then were told to lay off. I mean, we already knew this was happening, but it is nice to see it reaffirmed in Bloomberg, I suppose. At any rate. [00:08:41] Speaker 6: Well, 45% odds of an October rate hike now. That obviously is a number that changes all the time. [00:08:49] Speaker 3: 45% in October? After these numbers? Up from a 21% chance. [00:08:54] Speaker 7: They're going to hike in the month before the midterms? I said it was 22. [00:08:57] Speaker 1: It's this bad because the admin is cooking the books and traders are not working with accurate information? Okay. We've talked about this a little bit in the context of the AI bubble popping, but there's another potentially more pernicious element to this kind of insider trading that we don't often talk about on this stream at least, which is investor confidence. By and large, investors are subhuman. They have middling refrigerator temp IQs. They bleat like sheep and they do what they're told to. Investors are very stupid. However, by and large, as easy to manipulate as they are, investors do like working with somewhat accurate information. Investors don't like stuff being hidden from them. Right now, the only reason the stock market has been able to maintain its all time highs in spite of how rickety the global economy is looking is because a lot of investors, mainly the big ones, you know, hedge fund managers, that kind of stuff, like real asset managers, BlackRock. These institutions feel like they are on the inside of the insider trading, but that doesn't always work. The more openly corrupt the administration gets and the more transparently unfair the market gets, the more people, both individual retailer traders and larger institutions, are going to get cautious. They're going to get bearish and they're going to stop investing their money as aggressively. Once that begins to happen, we're one cascade away from another market crash, a bad one. The severity of the crash will be proportional to the degree of corruption in the market because the corruption represents an imperfection in the transmission of information. It means that people feel like they're on the outside. And as soon as, like you say, as soon as the rats start fleeing the ship, they all start fleeing. Stuff like this makes traders feel like they're on the outside. In fact, I think somebody just linked it. Somebody just linked it. The Bank of America plummeted 10% overnight, 10% in response to this core PPI inflation surge. You know, it would not take much to rattle investors to the point that it causes like a runaway cascading withdrawal from the market. And as soon as that happens, it's a fucking bank run, dog. 22. 22. 22%. I do not. I do not see that. I know you don't. Where should you put your money to weather it? Listen, I'm just going to be transparent with you guys. This is not financial advice. If I had taken all the money that I made from streaming, or at least a large amount of it, and I had put it into the stock market, just a standard index fund starting from like 2020 and kept it going, I would be a millionaire by now. The reason I didn't do that was in part because I'm stupid and in part because I've not really trusted the market. I've always felt like we're kind of on the way to a crash. I still think that today, even as the stock market continues to post all time highs, and I really don't want to be the last one in. You know, I do not want to be the last one to board the Titanic. So to be clear, if you had invested with your money some years ago, if I had, I would have far more money now than I do. Much, much, much more money. I would have multiple millions that I definitely do not have right now. So in this respect, I have made a financial error. But even now, knowing that, knowing that I have made that objective mistake over the past couple of years, I still don't feel comfortable putting my money in the market right now. You know, I really don't. So that's all I can say. I can't offer financial advice. All I can say is that in spite of how bad things are, I still don't feel comfortable putting it in the market. Maybe that's a mistake. I just don't want to be the last guy yet. Maybe I'll buy the dip after the market collapse. Maybe I'll put 50K into an index fund and just sit in it. I don't know. Then what do you do with it? It's in fucking high yield savings and, you know, Roth IRAs and stuff. Buy Chinese bonds. Dude, Chinese bonds right now are paying out like one third what we expect USD inflation to be. I would not be investing in Chinese bonds. What are you going to do? The payouts going to be you're like, oh, yeah, I lost only two thirds as much money as I would have if I just put it in like underneath my mattress. I don't like headline. [00:13:16] Speaker 6: But if this is now the biggest jump since May, it is outpacing workers wages. We've talked about how real wages for now. Average hourly earnings for September are down seven tenths of one percent year over year. Again, they're just I agree that it is a blunt tool. We will hear from Kevin Warsh Thursday night. Our time. He's speaking at the IMF over in Bangkok. I probably he doesn't do forward guidance. He probably won't talk about this, but maybe he'll hint at the number of items in the basket that are 4% APY on high yield savings is easy to get right now. [00:13:50] Speaker 1: Yeah, but the reason for that, especially for that is because. Inflation is going to be higher than 4%. So even if you put your money in a high yield savings, you are not making real money every year. You're you might not even keep up with inflation. I mean, Jesus Christ, right now, what did I say? Month over month PPI is at like 6.2% depending on how things go. And we still haven't hit like rock bottom on the on the oil crash, man. We're still like churning through reserves. [00:14:17] Speaker 6: Over a two or a 3% and give us some clues to sort of the directionality of this Fed, whether it's October or December. [00:14:24] Speaker 7: Somebody told me who knows Kevin Warsh, who doesn't work here, that Kevin Warsh is a much bigger hawk than people think. But is he got the cojones to hike or to vote for hike before the midterms in October? We shall see. I say my prediction would be no. [00:14:42] Speaker 1: All right. He's probably right. There's no way we get another rate hike before the midterms. You can say balls, ma'am. Cajones is very fun to say. Anyway, this inflation since the Iran war has translated into, for the first time in a long time, real wage losses. You can see very clearly when the Iran war began. See in real wages, average hourly earning growth after inflation year over year for private sector workers. You can see that the Iran war has just tanked it. You are making less money every month. You know, your wealth is evaporating into the ether. Is oil really that important? It's pretty important. Guys, I'm bad with economics. Can somebody tell me what will happen to the money in my bank account when the market crashes? Your money will likely stay there. If you're asking that question, you probably do not exceed the FDIC insurance limit for US banks. You're probably fine in that respect. Your money will stay there no matter what. However, the real value of that money might decrease. It might decrease. Because of inflation. Yeah, it'll be there, but it will be worth one egg. US short-term bonds are probably the safest bet. There's no way to plan your way out of global economic decline. I think. I mean, my strategy of investing in Japanese denim that I know will sell for twice as much on Vinted after 10 years of wear so far has been paying out. You can do what you want. That's up to you. CPI rose 3.7% September from a year earlier, faster than a month earlier as gas prices surged 34%. When is this from? This is from yesterday. Okay. In a crash, how is there going to be inflation? Buddy. Have you looked at Turkey? You can absolutely have stagflation. In fact, we've been experiencing stagflation markers for years now. The only reason we're not like deep in one at the moment is because of the AI bubble. And once that AI bubble pops, and remember, it's mathematically guaranteed to pop. There is absolutely no way to continue to sustain the sort of month-on-month growth of the bubble. It is a bubble that is only invested into because more people in the future will invest into it, but there is a finite amount of money to invest into it. It's not possible to keep that going forever. Once that bubble pops, it's not going to look good. Wouldn't the strategy be to invest in tangible benefits in your life right now? You mean like before inflation kicks in, try your best to own real physical assets, get stuff taken care of? Listen, I don't want to get into it too much. All I've said is that I think now is a really, really, really good time to be frugal, get your affairs in order, and try to be physically healthy. Because nothing will tank your bank account quite as badly as a sudden unexpected health emergency. Same with cars, by the way. If you could avoid having a car and bike or take the bus or something, obviously this is very circumstantially dependent. But I'm just saying we're in for some bad times. And I stand by that. I stand by that. Stop buying weed. Stop buying weed. Stop buying weed right now. True, but it's been hard to plan around a surprise cancer diagnosis. Yes, that's true. That is true. I'm not going to pretend that you can plan your way around a surprise cancer diagnosis. Man, the performative anti-weed thing is so boring. Dog, you're so defensive. That set you off? Are you kidding me? Fine. I'm fucking sorry for not mentioning alcohol too. Come on. Really? That was all it took for you to clutch the pearls? [00:18:09] Speaker ?: Whew. [00:18:10] Speaker 1: This is why I mentioned the weed too. Because if I say, don't spend your paycheck on alcohol, people are going to be like, hell yeah, man. Word up. Absolutely. But if I say it about weed, at least three people in YouTube chat get mad at me and then stop watching forever. So you got to, you know, rent lowering gunshots out the window. Bang, bang. Yeah. Listen, credit to alcoholics. For the most part, if you point out that it's bad for them, they're like, yeah. Yes, sir. Cap it off. Cap it off. ABC. Put a cap on it. [00:18:39] Speaker 8: We turn now to the midterms tonight, less than three weeks away. And this evening, the new inflation report just out showing prices skyrocketing, driven by gas and diesel and the war in Iran. And tonight, the heated moment in the middle of a debate when a candidate, when he insults other vices, when he insults my vice. [00:18:53] Speaker 1: Oh, dude, nothing is funnier when the Reddit brains in mostly YouTube, but sometimes it happens here, too, are like, yeah, I might fucking, I might unpack a dab rig and vaporize $18 of grade A kush just to get my day started. But you drink coffee, don't you? Like, that's my favorite argument to engage in. I've like, oh, yeah, my black tar heroin. Okay, bucko. I only do it three times a week. You drink three cups of coffee a day. And I'm like, you're right. You got me. I'm not you. You got me. You got. Hey, speaking of, babe, do you think I could have a fourth double espresso today? Is that legal? Am I allowed to do that? Can I ask you? How are you feeling? How's your headache doing? Are you doing okay? Remember when I did those chores this morning? [00:19:43] Speaker 8: It blames diesel prices on something else. You'll see it. Here's Rachel Scott. [00:19:48] Speaker 9: Tonight, the final report on the steep prices. What do you want? [00:19:52] Speaker 1: Could I have a double espresso? [00:19:53] Speaker 9: I love you. Americans are facing before the crucial midterm elections. Spiking gas and diesel now pushing the rate. [00:20:00] Speaker 1: Oh, and could you bring me up some black tar heroin, please? [00:20:02] Speaker 9: Inflation to 3.7%. In Arizona, President Trump now nearly two years into his term blaming his predecessor, Joe Biden. [00:20:11] Speaker 10: Whenever I have a news conference, somebody will stand up, say, Mr. President, affordability. [00:20:21] Speaker 3: I said, yeah, that was caused by Biden. [00:20:25] Speaker 9: But inflation has gone up since President Trump took office. A typical American family is paying about $600 more a month than they were three years ago. [00:20:34] Speaker 1: I knew it was Biden, man. I knew it. I knew it. I had son of a gun. He's behind everything. [00:20:41] Speaker 9: Driving higher costs. The war with Iran, which has sent diesel prices to record highs. I've heard about that. [00:20:47] Speaker 11: It's probably the most stressful time of my life. In Broken Era, Oklahoma. Every machine out here runs on diesel. Scott Belden, a cattle rancher and three-time Trump voter, tells ABC's Elizabeth Schulze the heartland is hurting. [00:20:59] Speaker 10: It don't take no math musician to figure out, you know, it's costing me $1,000 to $1,400 more a week. Every week. The middle of America is hurting. The lifeblood of America is diesel fuel. Everything you eat, consume, wear is delivered with a diesel powered vehicle. [00:21:18] Speaker 1: Okay, wait. Is diesel red? I don't know if I've ever seen diesel getting sprayed into a pump before. Is diesel reddish pink? Their diesel is farm diesel? Okay. That was pink lemonade? Oh, okay. One thing I have in common with the tractor that I didn't realize were both fueled by pink lemonade. I don't even know. What the fuck does the pink and the lemonade even do, man? Sometimes that shit hits different though. Whenever I order pink lemonade from the menu, it does make me feel like a pretty princess. If I was ordering a lemonade, that would be dignified. But ordering a pink lemonade? Can I have the pink lemonade? I don't even know. But it does hit different. [00:22:05] Speaker 9: It means when diesel prices rise, the cost of things like clothes and groceries rise too. Republicans on defense. [00:22:13] Speaker 1: I saw this clip. Well, we'll get to this guy in a little bit, but like we can. [00:22:20] Speaker 9: In Maryland, this remarkable moment during a debate. The audience laughing when Republican Congressman Andy Harris tried to blame high diesel prices on Democrats. [00:22:32] Speaker 12: The facts are that diesel prices have gone up. There's no question about it. Why has it gone up? Because the Democrats' environmental regulations have not. What the fuck? [00:22:44] Speaker ?: Ma'am. [00:22:45] Speaker 9: David, President Trump again promising today that the- [00:22:48] Speaker 1: Get his ass. We'll get more into that. We'll get more into that. No, we will. Okay, somebody like this clip. Apparently Kevin Hassett, even, is having a hard time spinning this inflation data. [00:23:01] Speaker 13: Welcome back to the show. Good to see you. The market doesn't like this. Interest rates are rising. It's the last report heading into the midterms. And it's not real great on inflation, is it? [00:23:11] Speaker 14: Right. You're absolutely right. What happened was that because the Houthis started attacking- The Houthis. The Saudi pipeline and other Iranian proxies from Iraq were attacking refineries and so on, that we had a negative shock to energy again in September. Much of it has abated as we look at what the data look like now. But for sure, there was a top line number that was disappointed. But inside the top line number, there's a lot of good news. So food prices were flat. Drug prices, the biggest drop sweep scene since the Second World War. [00:23:45] Speaker 1: What about the gas prices? Okay, okay. That's great and all. What about the gas prices? [00:23:52] Speaker 14: You know, a lot of Trump policies are helping to keep inflation down. But the energy shock is really the headline story today. But is it a pivot in the inflation rate? [00:24:01] Speaker 13: I mean, it ticked up. Does the tick up keep going? I mean, because you're not going to get away from 7% more- Jesus Christ. [00:24:10] Speaker 1: Look at the fuel oil, dude. Oh, my God. This is the year over year CPI report. Look at that, dude. Holy shit. At least medical care is down 3.3%. If you get diagnosed with like lung cancer or whatever, you know, it'll only cost you like a quarter million a year rather than $259,000. Math. That's another negative. [00:24:38] Speaker 14: Well, I mean, the way you get away from 7% mortgages, the two things happen is income grows a lot so people can afford higher mortgages. Income is not growing right now. And interest rates come down because you're controlling inflation. And over the last three months, there were a lot of positive signs that inflation was under control. If you look at core inflation, it was basically at the Fed's target on average over the last three months. [00:25:02] Speaker 1: No. It's more than double the time. Okay. Whatever, man. It's okay. They'll still be spitting this shit when people are forming Trumpvilles in Grand Central Park, to the extent they're not already. You know, every homeless encampment is basically a Hooverville anyway. Bombshell inflation report.