wow... CPI Inflation Report [Summary]

[00:00:00] Speaker 1: match, match, low, slight high. Okay. So 0.1 on the month over month, 0.4 on the core month over month, CPI year over year, 4%. Core year over year, slight take up 5.3. That could just be an average measure there. That's pretty good though. We're basically at expectations. There were definitely some expectations that that core number would come in a little lower. We didn't get it a little lower. We did get match, match, a little low on that year over year and a 10th of a percentage point high on that year over year number. Real average weekly earnings year over year, negative 0.7%. And the real average hourly earnings year over year, 0.2%. Now what we're going to do is we're going to get into the actual report as soon as it's available. We're also going to be looking for revisions. So what does this mean what we have so far? Well, what we have is that year over year, I'm not so worried about that we have a match. I'd like to get into the actual math and we'll get into that of seeing what kind of increase we had here. Here we go. The CPI increases 0.1% seasonally adjusted and rose 4% year over year over the last 12 months. Both of those, well, the first number matches, the second number is somewhat soft. Then what you have is again, that year over year coming in at a tiny miss on the headline number year over year, and then the core number on a 0.1% beat. So let's get into the actual report and see what details we can glean from the Bureau of Labor Statistics. Again, also waiting to see if we have any revisions that'll cross the wire. So we'll cover those and then we'll see what we've got in terms of hourly earnings. I have the document here. Shelter was the largest contributor. Once again, we're going to share this screen here and let's get into it. Okay, here we go. Let's see what we have. So consumer price index rose 0.1%. We already know that. Shelter was the largest contributor of all items followed by an increase in used cars and trucks. Once again, food increased 0.2% in May after being unchanged for the prior two months. Energy index down 3.6% for energy. Good. This is despite the OPEC cuts. We're still seeing oil falling, which is great. The index for household furnishings and operations and the index for airline fares were among those that decreased. Airline fares finally decreasing here. But those increases, unfortunately, they're still in shelter, used cars, trucks, motor vehicle insurance, apparel, and personal care. That is a little broad based. It's not so great. All items. Okay, let's keep going here. 38 page reports. So let's look at the, let's see if we can actually get straight to the chart here. Sampling error. That's fine. That's fine. That's fine. Okay, here we go. Let's, let's go to the back of the report first, because this is where we're going to get our services. And we're going to see what Wall Street is saying as well, which will be pretty important. Okay, so here we go. These are going to be our services. And we're looking at that far right number. Tax return and prep 0.7%. Financial services up 0.5%. Those darn financial advisors. Miscellaneous personal services 0.7%. Some of those numbers are a little bit on the hot side. Telephone services. Look at this. This is nice. Telephone services down about half percent. That's good. You've got education down 0.2%. Admissions to sporting events down 0.7%. That's good. You have pet services down 0.6%. That one actually rose substantially last month. So I'm glad to see some disinflation occurring here. That's actually straight up deflation on the month over month. Recreational services, basically here at 0.1%. Video audio 0.1. That's fine. Negative here on one of them. Recreation was negative. Airfare was down negative 3%. Just like that negative 2.6% we had previously. Public transportation was up 0.9%. That's a little high there. You've got transportation services coming in at 0.8%. Not so great. Hospital services also 0.8%. Not great. Medical care services 0.1% to the downside. You've got, here's the rent. Look at, and then I want to see what Wall Street is saying in just a moment. Rent of shelter staying stable at that 0.5% level. And you actually have shelter itself rising to 0.6% instead of 0.4%. That's not great. We really want to see shelter roll over because as we were talking about just a little bit ago, we were talking about rents starting to fall on a year-over-year measure and 48 out of 100 of the largest U.S. cities. But we're still not really seeing that rental disinflation show up in this CPI survey, which is unfortunate. So then we have other goods at 0.6%. That's too strong here. 0.6% is definitely too strong. Alcoholic beverages, 0.4%. Still a little up there. I'm going to actually mark those as green since those are greens. 0.5% on alcohol. Smartphones up 0.7%. That's interesting. Could be good for Qualcomm, big manufacturer of smartphone-related chips. Education, we saw that decline. Photography supplies up 0.3%. Newspapers, reading materials, and otherwise up 1.4%. Those numbers are a little on the hotter side. Let's use pink there. Apparel. Apparel saw a rise in 0.3%. Footwear coming in at flat. Used cars and trucks were negative 0.1%. Oh, okay. That's good. Wait, hold on a sec. No, no, no, no, no. Sorry. New cars and trucks, 0.4% and 0.1%. However, used cars at 4.4%, pretty hot just like last time. So another somewhat mixed bag of a report here. I do think it reiterates a pause, but I don't think this is good enough to say that the July hike is out. Okay. Let's look at this. So two-year yields are down six basis points. Stock future seeing some modest gains. Dollar at a session low. The QQQ is a little volatile, but sitting at up about 58 basis points. You've got shelter, of course, being the largest increase. I call personally, my initial expectation here is it's headed in the right direction, but you definitely still have some numbers here that are somewhat sticky, which isn't fantastic because in order to really get that pause in July, we need to see these numbers come down a little bit more. No revisions just yet across the wire. But again, that CPI year-over-year core number coming in at one-tenth hot, even though it's one-tenth hot, it is still down from last year. Remember where we were, or sorry, last month. Last month, remember, we were at 5.5. We're down to 5.3 now. We were at a year-over-year of 4.9 for headline. We're down to 4% now. That month-over-month number, let me see if I can get an exact read on the number here. Let's see the actual release. No, it's not going to show me here the exact detail. We'll figure out the exact detail. Oh, here it is. I actually have it now. And so if I go to the prior release, let's see here. So this is the core number actually came in at 307.824. And if I divide that by 306.489, I know this is a lot of numbers. Oh my gosh, JP Morgan was right. It came in at 4.35, or I should say that correctly with the decimal point. So my expectation was 0.34. Bloomberg Economist was 0.30. Wall Street Consensus was 0.40. JP Morgan was 0.43. And it came in at 0.43. 0.45. So JP Morgan was the closest to being right there. So credit to JP Morgan. Very good, JP Morgan. I would call this mostly an ad expectations report, but leaning a little warmer than cooler. I wouldn't call it compatible with definitely saying we're in for a pause. We're definitely going to be looking at that July 12th CPI report. That's the next one. So mark your calendar for the next catalyst. And we're going to keep going through some of this report. Mark your calendar for the next catalyst. Next catalyst tomorrow, producer price inflation, 5.30 a.m. California time. I'll be covering it live. 11 a.m. The Federal Reserve statement on a pause, followed by 11.30, Jerome Powell's press conference. I'll be covering both of those live. I hope you'll be here with me. Then we'll have retail sales the next day at 5.30 in the morning, and then we'll have a coupon expiration. We'll be raising the price again on the programs. And that's again, because we're consistently raising the prices because we're consistently adding value. A lot of the folks who are joining are leaving wonderful comments in our course member live streams, thanking us for the fundamental analysis we bring every single day and the ideas that we bring to the programs of building growth. So we hope to hope to see there. So let's keep going a little bit here with what wall street is saying. And I want to get through the report a little bit more as well. But it looks like the two-year treasury yields initially flipped higher and then sank a little bit following the data. We're getting some mixed messages and some confusion on the CPI. What this means, this is really, it's unlikely to mean there's any kind of change for the Fed in terms of not pausing. I think there's a lot of this market that was concerned that this report would potentially lead to the Fed not to pause. And that was a risk, right? The Federal Reserve, there was a real risk here that the Federal Reserve would get a nasty CPI report today. And as a result of a nasty CPI report that the Federal Reserve would ultimately end up saying, okay, sorry, we thought we were going to pause. Now we're sending Nick T a message and we're telling Nick T, hey, you know what, we have to hike again. That is, in my opinion, not likely. It is not likely that the Federal Reserve is not going to pause after this report. So to be very clear about that, it is likely tomorrow we will be getting a pause from the Federal Reserve and markets should cheer that. It's just going to come down to what kind of pause are we going to get? Is it a hawkish pause? Is it, you know, a dovish pause? What are they going to tell us about the importance of wages? We'll look at all of that. But for now, let's take another look over here at some of these charts. So here's the headline, a chart of the headline changes in inflation. Obviously, this is fantastic that we're sitting at 0.1. This is great. This is really in line with disinflation. However, that core number, you know, still a little strong. Still strong on core. These are just some more of the summarized headlines here. Oh, what is this here? This is the unadjusted 12-month figure here. And then here, this is your seasonally adjusted number. So you can see shelter here really rising quite a bit here, which is not great because we started seeing this disinflation trend here. Look at that from 0.8 to 0.6 to 0.4. And it's popped back up. So I don't like to see that. Overall, it's not the cleanest report, right? Look at this transportation pop back up as well, back to 0.8% here. Not great. You had somewhat of a disinflation trend, at least for a month. Although we, as we know, one month does not make a trend. For apparel, we were at 0.3, 0.3, 0.3. That's pretty stable here. For used cars, it was still a little rich over here. Also not great. It'd be nice to see these come down. You are seeing that disinflation over here in new cars. Commodities, also a little bit rich over here at 0.6%. And then, of course, we've got our energy disinflation, which is great. We actually do have some food disinflation. I mean, food barely moving here, which is great because food has been such a contributor to inflation, which isn't great. Let's see if there's any particular details here as we await a little bit more data from the Wall Street folks. Consumer price index. Okay, here we go. CPI-U, 3.6%. We've got CPI-U, or sorry, CPI-W, 3.6% over the last 12. CPI-U, 4.3%. You have brief explanation of CPI. This is fine. Calculating, sample changes. And then we get right into the charts, which we've gone through as well. So, yeah, no. So, the banner, thank you for suggesting the banner has a typo. So, I don't know why, but I thought it was a brilliant idea to go with Met Kevin as some of these links. Both of them actually work. So, you can use metkevin.com slash join or meetkevin.com slash join. Both of them work just fine. But, yeah, I bought the domain Met Kevin because I thought, you know, back in the day, everybody wanted short URLs. That didn't last very long. But anyway, yes, thank you for pointing that out, but it still does work. Okay, so let's go ahead and see what we have here. What is this? Breakdown of core inflation sitting at 0.44%, driven by increased contributions of transportation and shelter. Again, the report is unlikely to change the Fed's mind about a pause in this cycle. However, this could potentially iterate a call for a hike in July. Although, I would probably still put it at coin toss. And it's going to be dependent on that next month's CPI report, which is kind of like, okay, great. So, today's CPI report reiterates the pause. But we're kind of like moved on for that hike already. Like, we want to know for the hike. Like, are we going to get the hike again in July? The good news is, next month's CPI, and I want you to take this away, very important. Next month's CPI is so important as well because it's actually going to be your year-over-year comparison to the peak of inflation, June to June. And from a psychological point of view, hello, camera there. Sorry, that's the metkevin.com slash webcam getting a little excited. I'm so excited there. I'm zooming in a little bit. Everything's getting a little large over here. Maybe it's got pricing power. Good old PB. But anyway, the beautiful thing about next month is really going to be this year-over-year comparison of the peak. And that should be very good. All right. So, let's look at super core on a chart. So, I'm going to pull up the chart of super core inflation. And it'll just take me a moment to share that. But super core is declining, which is very good. So, to those who are arguing that super core is sticky, there really isn't an argument for that. It is not plummeting. I think there is an argument for that. There's absolutely an argument to be made that it's not plummeting. And that's actually not even an argument. It's just correct. But take a look at what we have when we look at super core inflation here. And super core inflation, it's very clearly easing. And this is fantastic. What we don't want is this to remain sticky. So, if we draw an arrow, for example, first of all, what I want you to remember is that our peak of inflation, inflation's peak was roughly here. Interestingly, super core did not actually peak until about here. So, about three months later. However, we already see super core on this beautiful trend down, which is very, very good. I mean, this is a rapid decline here in your super core inflation. And you want to see this. This is the leftover bear argument that core inflation is really going to stay sticky. There's just no evidence of that.