The Stagflation Warning Got LOUDER as CONSUMERS Hit A Dangerous BREAKING POINT...

[00:00:00] Speaker 1: Welcome back to Wall Street Truth Bombs. This segment focuses on the Federal Reserve's Impossible Balancing Act and why the latest economic data is flashing serious stagflation warning signs. We're going to break it all down. The newest inflation numbers, GDP revisions, why consumers are burning through savings, what Kroger's pricing strategy tells us about the real economy, why the Fed may be trapped between rising inflation and slowing growth. The headlines say one thing. The underlying data says something very, very different. Let's break it all down. We got a ton of great data this morning and that data is worth looking through a little bit because we learned quite a bit and that's going to impact the Fed and their very much impossible position. Guys, the Federal Reserve has only one job. Well, they really have two, but their main job right now is to manage inflation and their other job is to maximize employment, right? It's really their dual mandate. They really got to do the two. You can't have one without the other, but it's a very tight balance. And right now they're struggling with both. They not only try to balance both, but both of them are really struggling. Three major data points dropped this week and every single one of them painted a picture of an economy, guys, that is slowing down while prices are going up. Guys, I hate to say it and you're going to call me a fearmonger, some of you, but that is textbook definition of stagflation. I'm not trying to scare you. I'm just telling you what the textbooks say. And these numbers are implying that, right? I called that today in one of our other videos, stagflation adjacent, right? I wouldn't say it's burning down the house yet, but the trends are certainly alarming enough and that means we need to pay attention. And the Fed at its last meeting was so divided, guys, that four members dissented on the policy decision. The last time you had four of these voter members dissenting was October of 1992. Again, looking way back to the early '90s. Boy, you know, sometimes we wish we were back there, but maybe not with these kinds of numbers, guys. Let's look at the numbers I was just talking about. This morning, we got the April PCE inflation number, right? We have CPI. We talk a lot about that, but PCE, okay, Personal Consumption Expenditures, and that is the number that the Fed watches really, really closely. It is actually, in some ways, a more accurate number. But, you know, both numbers, the key is we just want to look at the trends here. So whether it's PCE or CPI, both are really good for us to look at right now, as long as we understand what we're looking at. If we look at the headline number on PCE inflation, we got a print of 3.8% year-over-year. Guys, that's the highest reading since May of 2023. It's up from 3.5% in March. The Fed's 2% target, guys. Where's that? It's not even in the same zip code right now, okay? So we're not even close to that 2% level, okay? We don't even have one foot on the ground at this point. Core PCE, which is also what the Fed likes to watch, it's a big policy number, that strips out food and energy. That's at 3.3% year-over-year. That was a monthly gain of two-tenths of a percent. Now, it came in softer, softer than the three-tenths of a percent estimate. Guys, but the annual trend is still moving in the wrong direction. Let me take a second to talk about this because I have spoken about this before, I think, on this very live stream. Stripping out food and energy is helpful for government agencies or policymakers. They do it because those numbers are very volatile. When you're making policy, you want to see a trend and make sure the trend is going in the right or the wrong direction. The sad part is, right now, food and energy is the top of mind for, I would bet you, the majority of you guys out there who are watching this right now certainly is at the top of my mind, right? I have to fill up a car. Not too often, but when I do, boy, I feel it. Many of you need your cars for work. You need your trucks for work to get to work. That is unbelievably more expensive now to fill up. Like I said, I've seen numbers that are eye-watering for people. By the way, I also see it at the grocery store and I know you do too. We need to get to work so we can make money to buy food. We need food to feed our families, okay? But it doesn't stop there. We're going to talk about that a little more in a second. It's moving in the wrong direction, guys. We also got Q1 GDP this morning. That's the second estimate. A little side note, that was released this morning. Okay, so this is Q1, right? We're now in Q2, but this is kind of how it works. We're looking at how well the economy did in January of March of this year. That's still overlapped, that's still overlapped the Iran situation. The way this number is released by the BEA, the Bureau of Economic Analysis, is they release an initial release and then they revise it several times through the quarter. I know it's crazy, guys, but this is stuff we have to work with and these are the official releases. But the one that we had prior to today said that the economy was growing at 2% in the first quarter of this year. That was the initial release. But this morning, we got the second revision and guess what? It was revised down to 1.6% annualized growth. Guys, that is 0.4 percentage points, sorry, below that 2% advance estimate that we have there. Okay? That is an extremely big revision. Okay? And it's not pretty. There is no way that you can even come up with any wild story of how that is a good number. 2% is a good number. 1.6%, not a bad number, but it is not a good number at all. And it's going in the wrong direction. And it was driven by downward revisions, guys, to investment and consumer spending, both consumers and investment. Investment is companies, generally speaking, and consumer spending. That's you and I. That's 70% of that number. There's something that also came out with that data series that was really telling to me, and I want to sort of put this in here and let you know this. Guys, the personal savings rate. If you watch my other videos, you know I talk about the personal savings rate a lot, right? We want to know, are people saving money? If they're not saving money, where are they spending it? Okay, well, we could guess where they would be spending that money that they're taking out of their savings account. But the way we do that is we look at the personal savings rate. This morning, as part of the series, we got the latest one for April. And guess what that rate is? 2.6%. You did not see that on any of the mainstream media. You did not see that because it's horrific. You know why it was horrific? Because we thought 4% savings rate was horrific at the start of this year. Now it has gone down to 2.6%. I know you probably can't see over my shoulder, but you see that blue chart behind me. That is a chart of that savings rate. Now, I'm just going to describe it for you if you can't see it. It's going in the wrong direction, guys. It's going down and it's going down sharply, right? It's near historic lows, guys. And the reason for that is a couple reasons, right? One of the reasons that it's going down, well, let me just give you some perspective first. I told you 4%. This was post-pandemic 4%. During the pandemic, it actually spiked up a lot because people got funds from the government and because people were spending less because they had nowhere to spend their money. But prior to COVID, just to give you an idea of where we were more like 7%, 6%, 7%, 8%, 10%. So people were saving, let's say, 8%, 6% to 8% of their income. Now they're only saving 2.6% in April. Okay? So we know that personal income was flat. Okay? So income wasn't growing. Disposable income, that means what you have left after buying the important stuff. It fell as well. Okay? And consumers still spent, so let's say, let's say we know that because we got it. It's 19.9 billion, but consumers still spent 111 billion more. Okay? There's your number, right? They're still spending, but they have less disposable income, right? And so guys, they're spending it from savings. They're not spending from strength. They're taking it from their savings accounts. And that is what's happening right now. And I don't want to get into it now, but a lot of my videos, I talk about the rising cost of credit card debt, which is also at nosebleed levels in the trillions right now. And so people are having to spend money by taking money out of their savings accounts and by using credit cards right now. And I know everybody that's watching right now knows what I'm talking about. If I know it, you certainly know it. Guys, it's evident. Let's talk about the consumer confidence numbers for a second. Okay? We got a consumer confidence number earlier this week from the conference board. That's another. There are two organizations that released that. There's the conference board and there's University of Michigan. Talk about them in a second, but let's start with the conference board because that was this week. Consumer confidence came in at 93.1 in May. That was down. It wasn't down a ton. It's down from 93.8 in April. The present situation index, okay, that is what people are feeling today versus what they expect in six months. That fell 3.2 points. Guys, two thirds of consumers say in this survey, they said that they're cutting back on spending due to rising prices, right? That's anecdotal data. That is not in the number, but people are saying that they're cutting back. Like I said, I know you're watching me. I know you know this to be the fact. This is serious business. Now, I'll give you another data point while I'm here. The looking forward index is holding up pretty nicely. People expect things to get better in the next six months or so. Okay, maybe they are. Hopefully, we're going to see some breaks here, but I will also tell you that that number is also at abysmal levels. If you look at that number, according to the conference board, numbers below 80 are considered precursors to a recession. Now, that number has been below 80 for many months now. Even though it's looking better than it was, it's still in a very, very dangerous place. Now, these are consumer. These are sentiment numbers. There are no guarantees. These change a lot. There are no guarantees that these numbers will turn into something real, okay? But I did mention the University of Michigan number. I don't want to beat that up too much. A lot of people say that these numbers are biased because we have a Republican president now and so Republicans are notoriously very happy about the economy and very confident when you have a Republican president. Of course, Dems are not happy. We know this for a fact because it was the reverse when Biden was in the White House. Democrats thought everything was great and Republicans were crying because it was terrible. But the reality is, and we can watch this on Michigan, we see Republicans and Democrats losing, declining sentiment at the moment. So everyone's feeling it. It doesn't matter who you voted for. When you go to a grocery store and you have less money to spend on groceries because you have to fill your car up and that's costing you more money and grocery prices are going up, okay? I don't care who you voted for. You're feeling it. And our latest batch of numbers are showing us that people are taking it from their savings account. And nobody likes to do that. Nobody likes to do that, okay? I promised I was going to talk a little bit about the Fed, but before I talk about the Fed, I want to give you a side note and I want to point you guys to a video that we released earlier today. I want you to go look for that on our homepage because it's about Kroger. Probably a lot of you have shopped at Kroger. It's the largest grocery store in America and a larger grocery chain in America. And they announced last week that they're going to cut prices on many, many items. And when the CEO said that, it was celebrated for a couple of reasons. One, one of the main reasons is because the way he pitched it was, well, we're doing it to be competitive with Walmart, right? And we happen to know, by the way, little insider info, and you'll get it on my video if you want to get it, Kroger prices are higher, have been found higher than Walmart prices. So, if you're looking for better deals, you better compare to Walmart, right? Because they're charged more for beef, they charge more for milk, considerably more, okay? And Kroger says, we got to lower those prices because we want to be competitive. It was also celebrated in the mainstream media because, you know, look, we're all struggling and who does not want to see a grocery chain announce that they're going to lower prices. But I want to remind you that, again, guys, you know, this is capitalism here, okay? Companies don't lower prices because they want to help you and I out. They lower prices for a couple of reasons. One, yes, for competition. But, guys, the reality is, and if you read below the line, you read the shadow data, you will see that that very same CEO who announced it, a guy who was at Walmart for so many years, he told us that shopping baskets are smaller, okay? That people are coming to the store more frequently, but they're buying less. They have less goods in their baskets and they count the number of goods, not the total, what they're paying, right? Because those numbers are going higher, right? So, if you just look at how much the average cost of a basket is, it's going up. And so, if you didn't watch Truth Bombs, you'd think, well, oh, people are just buying more at the grocery store. But the reality is, guys, is they're paying more and they're getting less. And like I said, I know you know this. I know you know. If you don't know this, I want you to let me know in the comments. I know you know this. I know it. And so, it's a very interesting thing. So, what that is, guys, is what I talked about earlier. It's called demand destruction. People are buying less because the prices are too high because they don't have the money, okay? And that, going back to the question that I got earlier, okay, from Z from Uruguay, that is when you see when that's where the rubber meets the road, right? You have the bad sentiment numbers. You have people buying less. And you have grocery stores who are not in the business of helping you and me out. They're lowering prices because they have to because they're losing customers. And by the way, they have to lay people off and cut expenses to do all that because their margins, their net margins, their profit margins, are very, very slim in grocery stores. Maybe 2%, maybe 2% or 3%, okay? But if you look at their gross margins, right? That's what it costs for them to get the product. Those gross margins are pretty high, 23%. You would think they have a lot of room to help us out. They really don't because you have transportation costs going up, right? We know this. You have all the refrigeration costs. You have all those costs, the overheads that they have to do to put those packages on the shelf. We know those are going up too because plastic is made from oil, okay? So all this stuff is a wave of pain that's not going to go away tomorrow. It will go away eventually, but it's not going to go away tomorrow. And so this is where the rubber meets the road. And when you start to see that, when you start to see demand destruction, you start to see pullbacks in consumption. That is when, Z, you're going to start to see some problems, okay? The other day, I haven't checked Kroger since then, but Kroger went down on the news because people got the message, margin compression, and that's why they sold. But when you start to see this happening more and more and more, it starts to go to all sorts of sectors in the economy. Not all of them, as we're going to learn in the third piece, but sectors that should be feeling the pain, they start to feel the pain and those stocks are going to go down. Are they having yet? You know, right now, shockingly, shockingly, consumer discretionaries are doing pretty well. But you're going to start to see that. So we're going to have to watch earnings as we get through the year, as the stuff proliferates through the system. Okay. I promised that that was a side note, but take a look at that video. It's fascinating. It's fascinating because everyone knows Kroger and we watch those numbers like crazy, right? Because they're really good. They give us a really good handle on what consumers are feeling. And we're two-thirds of the economy, guys. It's us. It's up to us. Let's talk about the FOMC. An interesting week. We have our new Fed head. I believe he was sworn in last Friday at the White House, also a very rare event. Some people will call that political. Whether it is or it's not, I don't do politics here, just policy. He's a very bright guy. Let's talk about his policy a little bit. Bright guy, Kevin Warsh. He has some good ideas on how he thinks that he can fight inflation or that he doesn't have to worry about certain levels of inflation because of maybe AI, maybe AI efficiencies. I have videos out on that too. I hate to keep pointing into these videos, but I talk a lot about that. And so he has some good ideas. Hopefully, his ideas are good. Clearly, the Fed can always use a spiffing up. They can hopefully come up with some new tools to do a better job at what they're doing. But he walks into a very, very difficult situation, Mr. Warsh. He walks into an FOMC. Those are the people that vote with a four-person dissent, okay? And we haven't seen dissenters, meaning people who don't agree, since October of 1992. A long time ago, right? And so we generally see people, they generally agree, generally. They don't always agree. You do see dissenters. But to see that many dissenters, that's something that you have to note. Right now, guys, it looks very much like they are stuck in a holding pattern at this point. I can tell you that the next meeting is in two weeks, June 16th and 17th. At that meeting, we get the SEP, okay? That is, they do this quarterly. That's their economic projections where you get to see all these brilliant economists tell us where they think the economy is going to be in the next couple of years. They cover unemployment rate. They cover the GDP. They cover they cover inflation. And they even tell you where they think rates are going to be. Well, that's something we all want to know, isn't it? Because those are the guys and gals who vote on it. And we'd certainly like to know what their thoughts are on it. Because of that, we get this dot plot, right? Everyone knows the dot plot. We will probably be covering that in depth. We're going to get the dot plot to see where the Fed thinks rates are going to be at this next meeting. But I'm going to look at this live right here now. And I'm going to tell you that all I see, you can't really see these little orange bars down here. That just means that the market thinks that there are no cuts coming for quite some time. In fact, all I see is hikes going in the future out to a couple of years from now. And they increase in probability through the end of the year. So I could tell you by December, there's probably last I looked closely at it with my glasses on, it was a 65% odds of a hike by year end. And that's in the end of the year. Guys, I've told you this before, 65% on Wall Street is considered a darn good probability. So when you say 65%, we will say a rate hike by the end of the year. I think if you look at all the bulge bracket banks out there, you don't have to Google too far to find that a lot of them are piling on to that very message that they expect rates to only be higher at this point. But the Fed, this new Fed under Kevin Warsh is in a very, very tough bind, right guys, because we talked about it. The inflation numbers, they're going in the wrong direction. And it's not just energy. We're seeing it spread to other areas. Energy, we expect that to be up. But you start to see it going into services, which means people who use that energy to provide services, right? The trucking companies, trucking, transportation as a service, they have to fill their trucks with fuel and that fuel has gone up in price. So you're going to start to see service prices going up. And of course, you have the old sticky prices that are in services that have not gotten any better. And we're namely, we're talking about housing costs, which have not gone in the right direction either. They're sticky. They're not coming down. So the Fed is under pressure, whether through these, let's call that and I don't want to call them temporary through what's happening in the Middle East right now, and crude oil and proliferating through the system. And I pointed out earlier, it's not going away tomorrow, you're talking about late in the year, best case scenario, before we start to see those numbers show up in the consumer numbers, which is what the Fed watches. We're talking late in the year, if that, okay. But there are other areas, as I said, it's going to take a while before we see any of this stuff work its way through the system. And the Fed, whether they like it or not, whether through politics or not, the Fed has to pay attention to that because inflation is inflation. And they have to deal with that. They have to make policy based on that. And they are going to have a hard time easing back on rates when you see inflation going in this wrong direction. I'm not going to get too much into it today. But next week, we're going to talk a lot about the labor market. That's the Fed's other problem. And that number always looks good on the surface. Right. But we've touched upon that a lot here. Wall Street truth bombs. Check out those videos. We're going to be talking about it a lot next week that the inflation numbers look great on the surface. But if you look beneath the surface, you're going to find that things are not so great. Right. We are seeing lots of change happening under the surface, under the blanket of the surface, which looks okay. It's not okay. And those are going to come home to roost as well. The Fed is going to find itself in a really tough bind if they're looking to help us out and give us some relief on the employment situation. There's certainly guys, as I told you before, not going to give us relief at the grocery store. Okay. That is the problem. That's the challenge is that the Fed, if they raise rates or they keep them higher, it just makes it more difficult for us to buy things at the grocery store. And if God forbid, you're having to use your credit card now to buy groceries, and I know many people are, that is not a good thing. That just means your credit card rates, they're the highest in history, the APRs, and they're just going to stay high. So they're pressuring us to buy less. Well, that's certainly working, but it just means more pain for us. And it's not going to fix the problem, which is starting all this, right? Because rate hikes are not going to drill more oil. Rate hikes are only going to put more pain and pressure on you and I in the checkout line at Kroger's. Okay. So unfortunately, that's the tool they have. Let's talk about a little bit of shadow data here. Right, guys, I got to give you some shadow data. The Cleveland Fed, okay, that's one of the Fed regional banks. They have an inflation now cast, right? Basically, because all these numbers that we look at are backward looking numbers, which are kind of useless, in my opinion, but at least you know the trends and you know where they were a couple months ago, or last month. But the Cleveland Fed, they do this great statistical gymnastics, and I will absolutely do some videos on how they do the gymnastics. If you're interested in that sort of stuff, we will post those things. Those videos we will post probably in our sub stack, but if you want to get deeper into this stuff. But they do these great statistical gymnastics to tell you where they think they're going to be with a high degree of confidence using current numbers, right? And of course, factored into that number is the price of oil, right? Why would that be in there, guys? Because it's in everything, whether we like it or not, is a very important number. And we know that we can prove it statistically, that there is a pretty tight link to where inflation is going, okay? And so, right now, this nowcast from Cleveland projects the May PCE inflation, that's 40 days, okay? I'm sorry, excuse me, the May PCE at 4.18% year over year, okay? So, the annualized Q2 inflation rate is currently tracking, if we annualize it, that's 6.85%. Guys, 6.85%, okay? That's nearly double, okay, the official April print that I just told you about, okay? So, we're talking like, hey, if you have any faith in those numbers, if you like those numbers, that's just saying this could be way worse than we think it's going to be. If you're just looking at the numbers, okay? Again, not fear-mongering, I'm just telling you about the numbers. But all I can tell you is I know that you're watching this and you're thinking 6.8, 6.2, 4.8, I don't care. I know prices are going up and I would like to see interest rates come down. That's like everybody here. I hope everyone who's watching this would agree with me on that. So, that is your shadow data point. You can look that up. I think Dylan put the chart up before. But you can find that, okay, guys? That is a thanks, Dylan. That is the Cleveland Fed inflation nowcast. You can go check that out online. It's pretty cool. And there are a bunch of nowcasts that are out there. But no, understand that these do move up and down a lot because they're operating in real time. And if you see crude oil start to come down meaningfully, if we have something meaningful that develops from this morning's agreement or possible agreement, I don't see anything up there yet, then maybe these things will come down. We hope they will. Let's talk about the truth bomb, answer some questions, and move on a little bit. Here's our truth bomb. Slowing growth, rising prices, a divided Fed, and a consumer that is already pulling back. If you're waiting for the official definition of stagflation, guys, the data isn't going to wait for you. I'm sorry. I'm just reporting the numbers here, guys. Okay. Any questions on that? Let me just see if I can take a couple of questions here. Okay. I want to answer this quickly. This is a good one here. Edward Fox2610. Thank you. I'm glad you like our stuff. We try hard. The new Fed chair is a balance sheet hawk. Why does it seem the markets are pricing in QE? That's an interesting question. The market's not pricing in QE over here, Edward. We can only expect the opposite. We know Mr. Warsh is anti-QE. In fact, it's why he says he quit the Fed when he was on it earlier on. He's actually talking about aggressively reducing the balance sheet. That's quantitative tightening. Maybe you meant quantitative tightening. Markets are more pushing toward that than quantitative easing. Where you see hints of that is by looking at the 10-year yield because the Fed holds onto mortgages and treasuries that are a little bit longer in maturity, not necessarily short maturities like the Fed funds rate. If they start to sell this stuff or let this stuff run off, it'll push upward pressure on yields, by the way, that affect your mortgage rates, that affect your credit card rates, that affect an auto loan, all of those things. That brings me to Tony LBG5EG. I hope I read that right. I tried to use the contact that works for that one. Please, Mark, I need your opinion about housing market. I'm looking to buy a house. Should I wait for the prices to go down or drop? Okay. We get this question a lot. Well, I just told you that mortgage rates are going to be higher. It looks like they're not coming down anytime soon. In fact, they're bubbling higher and they track directly with the 10-year treasury yield. Those have been higher. And if, in fact, we are going to see runoff of the balance sheet and more people anticipating inflation and a continually rising deficit, unfortunately, unfortunately, that's going to put more pressure on mortgages. And unfortunately, what that means, Tony, is that people who are sitting in homes today are not going to sell those homes because they don't want to buy new homes and take out new mortgages at higher rates. So that's why we have this problem where people are reticent to sell their homes. They are now, though, starting to put houses more on the market. So you are actually seeing a little bit of relief. But there are a whole series of numbers on that, Tony, that we watch here that you should listen for that will tell us about house prices and house price indexes. And we get those once a month, and those are the ones to watch. But right now, unfortunately, there's still a challenge with the housing market and the supply problem. And a lot of it is tied, unfortunately, to interest rates, which are high. Even developers would develop more if interest rates would come down. So, Tony, I don't know if this is the right time to buy or not, but this is a very tough market. Watch interest rates. That'll give you the answers, at least the hints of what you need. Let's see. Okay, this is a good one. Narendra 82 asked about government decreasing gas tax to keep prices down. Does it artificially increase the rate of use of oil? Yeah. Okay. I'm not even worried about that. This has been something that's been kicked around for the last several weeks. The president actually hinted at that. Some states have actually already taken the steps in doing so. The problem is, it doesn't give us a lot of relief. And so, you know, you're talking about maybe five to, at most, 15 cents a gallon. That's a lot. I'm not saying that's a lot. That's not a lot. We'll take it. We'll take it. But here goes the problem, going back to Tony's problem, Dorendra, is that if the government is not taking in their gas taxes, that simply means that they are spending more money than they don't have, aka deficit, aka having to borrow more money, aka pushing 10-year yields higher, okay, which is making Tony's situation that much more difficult. So, you know, the president would like to help us out, I'm sure, but he knows that if he does that, it's just going to confound his deficit problem. So whether he does it or not, we shall certainly see. Hopefully, we'll get it the natural way. Hopefully, there can be a resolution and a lasting one at that. And the sooner, the better, because guys, you know now that it's going to take time before you and I feel it, right? There's this concept that we talked about in economics. It's called rockets and feathers, right? Prices, they go up like rockets, but they come down like feathers. This is definitely one of those things, and I talk about that a lot on my TV appearances. Let's see. We'll wash lower rates in June. That's Carpe Diem 07a. He is absolutely not going to lower rates in June. And even though he feels like the president would like him to lower rates, and he said as much in his congressional testimony, I find it very hard for him to lower rates. And by the way, he's only one vote. There are many others. As I told you earlier, we have dissenters that exist over there as well. He has a lot of power, but he's going to have to sway a lot of people other than maybe one person that we know that will vote along with him for a rate cut. So we'll see. Maybe we'll get some better economic numbers between now and next week. Maybe we'll see a resolution. Maybe that'll ease things up a little bit. But the numbers that we got today, the inflation numbers that we got today certainly suggest that the numbers are going in the wrong direction. And the fact is, is it's now starting to show up in other places, not just energy, which is the direct effect of what's going on over there. So not likely, but if you look at the markets, I think it's like almost like a, like a 0% chance with, without, with rounding of rate cuts coming up. Okay. Okay. I'm going to get to this next question. Elijah Rivera, 2858. When we get to the next section. Okay. Great questions, guys. I love it. I have a little bit of time left to get through this. Okay. Segment three is stocks are at all time highs. Okay. What are earnings telling us guys? Here's the thing about markets that everyone is so confused about. The markets are not the economy. Okay. While we're watching in the Middle East, watching PC, watching GDP get revised down, hammered stock market at fresh all time highs. S&P is above 7,500. At least it was this morning. It was higher earlier today. It certainly is higher. Yes. It closed above at the close. The Dow hit a record again, equal weight S&P, which doesn't let the big tech names carry the index also made a new high. And that's a telling thing. That's basically saying it's not just AI. It's equal weighted. Okay. So markets are flying right now and people are looking and scratching their heads. Guys, this is crazy. It's a market that's not being carried by something specific because of that big breadth with the D. Okay. I want to show you what that something is right now. Okay. I talked about the S&P 500, all these indexes closing at their high. It goes beyond the big indexes, even the Russell 2000. Okay. I didn't see where it closed today, but when I checked it earlier today, when I wrote all my notes out, it was up 18.5% year to date. It was up 2.7% for the week alone. I think it closed up. Yeah, it closed up today. It sure did. It was up 57 basis points today. So the Russell is doing well. These are small cap stocks. Companies like this are not supposed to do well when an economy is under stress. They're certainly not supposed to do well when we're expecting interest rates to go up and yet they're going up. It's absolutely scary, right? Let's talk about the VIX. Okay. VIX, which is the volatility index. Okay. That is supposed to tell us how stressed the market is. When that number goes up, we know the market's under stress. Okay. Right now, VIX was at 15.8 earlier today. I'm going to look at it live right now. Where did the VIX close today? 15.74. Okay. That VIX is pretty low. In my estimation, anything below 18 is considered low volatility. Anything above 20, generally speaking, high volatility. So there's not a lot of fear. Not a lot of people worried about this market right now. Okay. And that's completely different than what you and I are talking about, right? We're talking about being worried at Kroger's, filling our tanks up. We're talking about housing costs. When should we buy houses? But the market's going up. Now, let's talk about that for a quick, quick second. I'm going to veer because there's this thing called the wealth effect. Okay. When people own stocks, stocks are going up. People have more money or they feel better. That's if you own a stock. Okay. If you have a house and the house price is going up, you feel better because it's going up. And that sort of stains a lot of what people would believe. It's called the wealth effect that sustains consumption a little bit. Okay. And here's the reality though. When I was at Kroger the other day and I saw a lady looking at her iPhone using a calculator on her iPhone, trying to figure out if she could afford everything in her basket. I don't think she was thinking about the stock market when she was doing that. I'm pretty sure she wasn't. I'm pretty sure she didn't know that Micron, the memory manufacturer, just became a $1 trillion company. She may own it if she's lucky, but the truth of the matter is she most likely doesn't own it. And she's not liquidating that to pay for pasta for her children to eat.