The Stock Market Has 24 Hours, You Must Be Ready..

While stock investors, the 24-hour countdown has now officially begun as the United States will begin releasing inflation data starting tomorrow with PPI data, which is producer inflation, and then of course followed by CPI data on Friday, which is consumer inflation. And given the state of the market and the economy right now, many analysts would say that this is the most important inflation release of the year. And honestly, I I think I have to agree. And so because this is going to be such an important moment for, you know, not only just the United States and the economy and the stock market, but the world in general, in today's video, since the clock is ticking, we're going to break down everything. I'm going to go over why this data matters, what it is that you need to be on the lookout for, what the stock market could do in response to this data over the next 48 hours, and exactly what it is that I'm doing in my own portfolios as a result of everything that's going on right now. 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As I mentioned before, let's go ahead and let's begin. So, first and foremost, as I mentioned, over the next two days, we are going to get two inflation reads. one on the producer side, which is PPI, and then one on the consumer side, which is CPI. We're getting PPI on Thursday. We're getting CPI on Friday. Now, CPI is the one, consumer inflation is the one that grabs all the headlines. It's the one that everyone talks about. It's the one that people think is the most important because it's what affects them, right? Consumer inflation is what we as normal humans face when we're going to the grocery store, the gas station, etc. But personally speaking, I actually think that PPI is the more important metric sometimes because it's more of a forward-looking metric and the stock market is a forward-looking market. Now, the reason why I say that is because again PPI is producer inflation. And this is the rise in what it costs producers to make their goods. So, the example that I gave on the live stream earlier was imagine if I'm a producer who makes scissors. Why do I have a sharp pair of scissors right next to me? I don't know. But let's pretend like I make scissors. Well, PPI data tells the world if it cost me as the producer more money to create this, whether it's the materials for whatever whatever this is, right? Or the blades or whatever, right? The services to create them, all of these things. If it cost me as the producer more money to make these because the cost of materials or services are increasing, that means that you will see PPI data climbing or producer inflation climbing. And the reason why I think it's so important and why it can be a bit of a forwardlooking inflation read is because often times if for me the cost to produce these scissors goes up, I'm going to then turn around and charge my customers more money because a lot of these businesses they have in many ways a fiduciary duty to increase and you know increase their margins and make their capital as efficient as possible. And so if it cost them an extra dollar for every pair of scissors that they make because you know this I don't know if this is silicone or what it is but if it this costs more money they're not going to want to eat you know they're not going to want that to cut into their margins they're going to usually pass that cost on to their customers. And so what often times ends up happening is that if you see PPI data climbing producer inflation climbing eventually that will be reflected in consumer data consumer inflation also climbing as they charge their consumers more money. Does that make sense? And so that's why when I look at PPI data, not only am I thinking, okay, this tells me how producers have been impacted over the last month, but it gives me an image of what the next few months for consumers could look like. So with that in mind, when it comes to the actual data that we're going to be looking at tomorrow, Wall Street is expecting headline and core PPI data to come in at plus 0.3% month-over-month, which would take Headline up to 3.3% and core year-over-year to 3.5%. Now, this is a bit of a slowdown from the last month. But one thing that you do need to remember is that oil prices are climbing like crazy right now. So, I wouldn't take that too far into consideration. And we'll talk about that a little bit more in a second here. But when it comes to the actual numbers that Wall Street's looking for, 3.3% for headline, 3.5% for core, which represents a plus 0.3% increase month-over-month for the both of them. Okay. Now, the next day we are going to get CPI data. And as I mentioned before, CPI data is just the inflation that we face as consumers. So this is the one that you know gets the most attention that people talk about the most because it's what we feel. So let's imagine that you know the person who makes the scissors it cost them more to make the scissors and then they increase their prices by $1 per scissors to cover of course the cost that went up on them, right? Well that then gets reflected in consumer data, consumer inflation and that's the one that again a lot of people care about because now they're going to the store and paying a dollar more for their scissors. It's what makes the news, so it's what everyone talks about. And that metric is coming out again on Friday. Now, the problem with CPI data is something that I always talk about is that unlike PPI data, which can be looked at in some way as a forward-looking measure, CPI data, it just is in general a backwards looking measure. So, the data we're getting tomorrow is from August. But the problem with that is that if you go look at oil prices, oil prices back in August were remot, you know, relatively lower than where they are right now. I mean, the highest that we got to in August was $87 a barrel for crude oil. We're sitting at $95 a barrel for crude oil right now. Um, you know, if we look at Brent crude, UK oil, it got up to $94, but it's now back at around $100. So, it's just a little bit delayed, but people do find it very important. People do look at it. It is something that shifts market sentiment and impacts the way that people feel in the market. So, it's obviously very worth paying attention to. Now, when it comes to the actual numbers that the market's going to be looking at, Headline is expected to come in at 3.4% which reflects a.3% month- over-month growth. And for core, we're looking at a plus.2% um growth month over month. Remember, the Federal Reserve is looking for 2% at most. They don't want anything higher than 2%. So, if we do get a 3.4% reading, again, this is still dramatically higher than um what the Fed is looking for. I mean, what is that like a 75% increase over what the Fed is looking for from 2% to 3.4%. So, it's it's going to be obviously very interesting to watch and see how it plays out. Although, I'm I'm honestly just more interested in what we get from PPI data. This is to me the bigger thing to pay attention to. But all in all, they're both very important. Now, remember the reason as to why they are so important in general is because right now the market is expecting with about a 63% 62.4% 4% chance that the Federal Reserve is going to hike interest rates next Wednesday. The next FOMC meeting is exactly 7 days. And by the time you're watching this, about 7 days from right now, meaning that the market thinks that the Fed's going in and taking these interest rates from where they are right now, 350 to 375 is a target rate to 375 to 400. And considering the fact that this is the last inflation read that we are going to get leading into that FOMC meeting, there is a world in which these next 48 hours decide what the Fed does. And we've actually heard from people in the FOMC like Christopher J. Waller last week who said, listen, it seems as if an interest rate hike definitely could be on the way, but if inflation data does show signs of cooling off and slowing down, he even said himself that he would be in support of not hiking rates. So these next 48 hours when we get CPI and PPI data, it's going to be very important. So with that in mind, how will the market respond? Let's say, you know, based on certain circumstances, if it comes in higher than expected, lower than expected for PPI and CPI, how do we expect the market to respond? Well, of course, as you all know, I can't predict the future. And if you've been watching the market over the last week, it's been responding to basically everything in a very weird way. you get a piece of good news and then it like goes up then goes down then goes kind of back up and then goes back down or some bad news will come up and it just goes up. It's the market's been responding quite oddly recently and I think it's because there's a ton of anxiety right now be behind everything that's going on. You have the geopolitical conflict over in the Middle East. You also have the US debt going nuts. You have bond yields climbing. You have a potential interest rate hike coming. There's so much anxiety in the market right now and it's very uncertain. So, it's obviously hard to tell exactly how it's going to respond, but I do firmly believe that if we see inflation come in higher than expected on any of them, PPI or CPI, that we're going to see red in the market. It would it would almost to me seem like a foregone conclusion, like at least an 85 90% chance that if we see CPI coming in higher than expected, PPI coming in higher than expected, that the market would take that very negatively because you have to consider the fact that that's from August. That's from before we saw oil prices climbing before UK oil hit $100 a barrel. So, what the market's going to do is it's going to say, "Wow, inflation came in higher than expected last month. You can only imagine what it's going to look like this month whenever we see, you know, it factor in or inflation data factor in the fact that oil prices have climbed so much." And then I think you're going to see the um the odds that the Fed hikes rates fly up into the 70s and people are going to start factoring that in. And I do believe that that does lead the S&P 500, for example, to the downside. it would be very difficult for the market to pump after that sort of news. The only thing the only thing that could save the market in that scenario is if the narrative begins that inflation is higher. So the Fed is going to hike interest rates to bring inflation back down. So they're actually doing something now to help this inflation problem. As a result, people expect over the long term bond yields to start coming back down. And people go, "Oh, well this is great. the Fed's going to hike interest rates, but that's going to bring down bond yields, which is good for the market, so this is actually a good thing. And they just kind of forget about the fact that the Fed just hiked interest rates and that constrains the economy and it constrains the market and they just focus on this new narrative. That's not super likely that that happens. But I could see it in this little delusional market that we're in. I could see people seeing it that way, which could cause some sort of hotter thanex expected read tomorrow and Friday to um to not cause some sort of pullback. It doesn't seem likely though. I think the more likely scenario is that if you see inflation come in hot on Thursday or Friday that we're going to see the spies start to pull back, that we're going to start to see of course um you know just individual stocks start to pull back as a whole. Now let's say hypothetically um inflation data comes in better than expected. Some people would say okay well does that mean that if um inflation comes in better than expected on Thursday and Friday that we'll see the market pump? Generally it does, right? So generally you do see the market responding positively to better thanex expected inflation data. The problem with it this time though is oil prices right now. The problem with it is that a lot of people may say okay well cool. I mean inflation data came in better than expected last month but that wasn't factoring in the fact that again oil prices are now back at $100 a barrel for Brent crude. So that's lagging data. That's you know old news. Let's see what it looks like in September. So, I'm not quite sure that the market will respond to anything that happens over the next few days in a very positive way. It's almost as if the market won't dump bad if it comes in higher than expected or it will. It doesn't it doesn't seem like there's a scenario, a clear scenario here at least in which we see the market really rallying unless the narrative starts spinning up again that this helps bond yields. That's the only way that I could see this going in a bit of a positive direction. So realistically, the best thing that we can hope for throughout this week and then going into FMC meeting next week is the market to just not dump. I don't think we should be hoping for it to pump. I think we should be just hoping for it to not dump. And of course, I if it dumps, I'm fine. I'm just going to buy some more. But you get the point. If we're looking at general price action, I think the best case scenario here is that it just doesn't dump. Not that it actually starts climbing like crazy because I don't think inflation beating is going to be enough because oil prices are so elevated. Now, I guess if oil prices just start crashing, right? If we just see oil prices just crashing over overnight, you know, that could do it, but I don't Is that going to happen? You know what I mean? So, it's just one of those scenarios, right? It's one of those situations where it would take a lot to happen in order for the market to respond to whatever we get over the next two days extremely positively. So, it just seems more likely that we either get it coming in hotter than expected, inflation comes in really, really hot, worse than expected, and the market does start to pull back hard off of it, or it doesn't. It comes in at expectations or slightly better, and maybe it just kind of stays rangebound going into the FOMC meeting. Uh, something along those lines seems more realistic than us just going, you know, just shooting out of this thing based on whatever they could possibly say tomorrow. [gasps] Unless it's like something, again, it would take something dramatic. It would take inflation, you know, if the market's expecting 3.5%, it comes in at 3%. Then it's like, oh my god, that's a huge beat. But what are the odds of that? You know what I mean? So, that's kind of the perspective that I have on the whole thing. It's not really exciting going into inflation data tomorrow and the next day knowing that there's not a there's not a super high likelihood of this going extremely well. Um, but it just is what it is. It's the market that we're in and you just got to be ready for it and adjusted for it and prepared for it. Okay. And so with that in mind, when it comes to my own portfolio, what I'm doing in my portfolio right now, I'm going to be doing a little bit of dollar cost averaging and a little bit of waiting. Um earlier this morning, I actually did start doing a bit of buying. I bought some more um Google and I bought some Amazon on the live stream that we did earlier. I bought $1,000 of Google around 327 or 328 somewhere around there. And I bought Amazon around $252 or $253, about like 350 bucks. So, I deployed about $1,350 into my hyperscalers positions, and I will be doing some dollar cost averaging on my S&P 500 position. If I'm capable of buying some SPY, um, you know, or buying the S&P 500 towards the bottom side of the structure. I've told you guys multiple times, if I'm going to be doing any buying on the SPY, it would be down in this bright green zone towards the bottom side of it because that is historically, of course, the best time to buy in these sorts of structures. So, we're not there quite yet, which is the reason why I haven't bought anything yet, but we are getting closer and closer. So, I'll start deploying a bit of capital if I can get, you know, SPY around 755, 756 somewhere somewhere down here. And let's say hypothetically we see um CPI and PPI come in way worse than expected and it starts to pull back. No problem. I'm just going to go in and I'm going to start building up my positions in the golden zone. Right? I'm looking for SPY to come down to 747 to 732. And that's when I'll start to really increase the amount of cash that I'm deploying. Right? If I'm deploying hypothetically $5 in here, I'd probably start deploying like10 to$15 in here. So dramatically increasing the size of my purchases if we do end up breaking down cuz I think it would bounce off of this and work itself back into the structure at some point. So that's kind of my game plan. I'm just going to do a lot of waiting. Let's just see what PPI does. Let's see what CPI does. Go from there. See what they say. See how the market responds to it and then start acting on there. Set in some buy orders in some of these buy zones and be willing to purchase in the moments where things feel scary. And the best case scenario is that I'm wrong. Well, yeah, I guess I would technically be wrong, but if it if we see the market just go boom and it just shoots straight up towards the top side and we get a better thanex expected report and bond yields start coming back down and something happens in the Middle East and oil prices start coming back down and the spy just starts flying up towards 788, fantastic. I'll happily be wrong and I'll be very glad that that happens and I'll get to just sit back and watch my portfolio climb. No problem. Again, I just don't think that's the more likely scenario here. I don't think that's the more likely scenario. So, I'm preparing to do a bit of buying, buying in the bright green zone, buying in the yellow zone if we get down here. And of course, I'll keep you guys updated as it does play out. I am going to be trying to do a live stream whenever we do get all of this data coming out, PPI and CPI, and kind of seeing how the market responds to it. So, do make sure that you subscribe to the channel and turn on those notifications if you don't want to miss the live stream. And don't forget that I am going to be hosting the technical analysis boot camp on Saturday at 11:00 a.m. Central Standard Time. That's noon Eastern, completely free. Head to the link down below, save your seat, enter in your name, enter in your email, and check for the confirmation link. But with that in mind, look, that's what I got for you all today. Get your get ready. The next two days are probably going to be pretty interesting. Maybe get a little bit of a plan in place so that you're prepared for the volatility. And I can't wait to see you all in the next one. Peace out everybody.