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look at that Tom Lee was correct again CPI came out lower than expected and stocks ripped higher the S&P and the NASDAQ both notching new all-time highs today fun Strat says April CPI shatters the inflation accelerating Camp meaning the number of fed cuts by year end 2024 starts to drift higher towards 2 to 2 A2 the three most recent CPI report surprise consensus with large swings in many categories highlighting not only the challenges of seasonal adjustments but also clouding the true direction of inflation so indeed maybe it is time to buy stocks after all if you buy stocks the day that stocks hit alltime highs the S&P or the NASDAQ you tend to actually have a better return than if you bought on any other just random day now before we get too far ahead of ourselves there is some things that you need to know coming tomorrow morning with Walmart earnings Walmart is going to be a consensus thesis changing report tomorrow morning for good or for bad it will totally change expectations for a recession and certainly how the consumer is doing following retail sales that missed Expectations by a large margin we were expecting positive 0.4% month over month you came in a 0% month over month it's really starting to throw a little bit of Doubt on just how strong the consumer is and the consumer's willingness to spend if the consumer is not spending as much this is going to help put more downside pressure on inflation because remember inflation is just a metric of evaluating the consumer if the consumer starts to revolt and not spend money as much as they did previous ly then you don't see inflation inflation does not thrive in an environment when the consumer is slowing down first things first this is what Goldman Sachs just said about the CPI report today Goldman says based on details in the PPI and CPI reports we continue to estimate that core PC price index Rose 0.25% in April we continue to expect the FED to cut the federal funds rate by 25 basis points in July and proceed with cuts at a quarterly pay thereafter and your treasury yields are down about 10 basis points today down to 4.34% markets have raised the odds of a July 31st cut from the fed by 29.2% yesterday to 33.3% today so you're actually only up like 4% as far as your increased odds of a cut July 31st there's still a 62.9% chance of no cut in July September you're uh getting more uh solidified on your cut 51.1% odds now of a cut coming September 18th I actually think there's going to be a cut July 31st September 18th and likely December 18th so I'm still thinking we're going to get three Cuts this year markets are currently at two there's 37.8% odds of two cuts by December 18 24.3% odds of three cuts and 25.0% chance of only one cut this year so these CPI numbers while they are having a large impact to the bond market as far as the time of recording this video it's not moving around expectations too much for interest rate cuts by the FED knowledge vital today says the CPR print is quite doish the 20 basis points sequential Cooling in the year-over-year rate of change was the largest drop in several months and means the disinflationary process is back on track meanwhile rent is still running quite hot which means non-rent prices are easing even more than it seems on the headline if today's gains hold for the S&P 500 the new all-time high will extend the current bull market to 581 days dating back to its starting point on October 12th 2022 the index is now up nearly 50% during this bull ouch TS Lumbard had this to say today the data is giving confidence in the fed's plan to cut rates later this year I doubt current economic wobbles continue but if they do the FED should have cut in March or December the key lesson to take home fed Cuts will be late ouch Morgan Stanley said today C II deceleration adds to the convincing evidence the FED needs to start cutting soon we still expect more deceleration ahead especially in the second half of 2024 and we maintain our call for a first cut in September of this year we have new updates for the end of the year targets by Major banks on Wall Street or just firms they don't exactly have to be um just Banks the the street High is and they're at 5600 for the Spy wall Street's low is JP Morgan at 4200 which does show quite a difference between um especially EPS estimates but targets as well is at 250 for 2024 EPs and um JP Morgan is at 225 even longtime bear Mike Wilson has a 4500 price Target on the S&P 500 so that's pretty interesting given stocks are now breaking out to a new all-time high today at least for the NASDAQ the S&P is also at a new all-time high at about 5300 so most of those price targets I just mentioned well they're already exceeded these are all reasons why I think tomorrow's earnings from Walmart is going to be so important cuz let's be honest if there is any company out there period that that can give you a glimpse on how the consumer is doing it is Walmart based on how many employees they have based on how many stores they have how much foot traffic they get and the overall reach of the US population that they have also worth mentioning is like apple for an example Apple yes sells their products to people but they mainly sell a lot of iPhones through like upgrades and things like that so it other companies are not a great example of how the economy is doing Apple's not Microsoft's not Google's not Nvidia is not uh Tesla's a a better example but I think that is mainly an interest rate problem um and that's why Tesla's deliveries have been slowing down a little bit but Walmart that is the company for the consumer tumor okay now if Walmart tells you people are slowing down then that's not great now I don't know how much of a dire warning they could give um it's Poss I I mean we we'll have to see it's really a tossup Walmart could say people are doing okay they're doing fine there's so many different outcomes that we could get from Walmart's earnings and I think the markets will pay pay attention because if Walmart is warning about the consumer they did that in August of 2007 and anyone that was around invested during that time knows that Walmart was like the first company that put the markets on notice about the consumer and about the consumer slowing down and I think that is happening right now so I think we're going to hear the consumer slowing down um and you know bucket sizes basket sizes checkout amounts are getting lower and probably Walmart reduces their FYE profit expectations as well kind of what happened back in 2007 and I think the markets might wake up tomorrow and say oh crap the economy is not nearly as strong as we thought and this could actually have an impact in the bond market as well judging off of retail sales numbers that came in today well below expectations the expectation was 0.4% month over month you came in at 0% month over month so not negative but pretty dang close and the next revision um is is probably going to take that number actually negative so you are definitely on a path of the consumer slowing down I mean just just take a look right February you came in at 0.7% March you came in at 0.6% April you came in at 0% next month's probably going to be a negative number so this retail sales number just kind of added to some of my worries about the consumer it definitely didn't make things better with retail sales missing Expectations by that much and I do think whether or not the markets pay attention to Walmart earnings tomorrow whether stocks broadly react to it I think you want to pay very close attention because Walmart is the best leading indicator there again there is no better leading indicator than Walmart if Walmart has troubling things to say that's something take that as a warning that stocks at alltime Highs are not going to last the economy is not going to last the fed's going to be too late to cut rates and we're probably going into recession that's how I will take the a cautious Walmart tomorrow now if Walmart says things are just fine then I think it's a time to get reallocated to interest rate sensitive stocks because that's the area that will be next to benefit when inflation does continue to fall and if the economy holds up that's how important I think Walmart is tomorrow I think Walmart is a thesis changing earnings coming tomorrow for the Bulls and for the Bears and that's why markets May react to Walmart a little bit more than they do normally coming tomorrow morning you will also get building permits preliminary numbers for for April You're Expecting 1.48 million I'll tell you the higher the better here because I mean more building permits presumably more buildings you know less housing inflation that's kind of the way to think about that it this number never causes a huge reaction in the market so I doubt it will this time but it's worth mentioning it's highlighted in red it's a big data point so we'll see what happens you're going to get housing starts housing starts month over month um these numbers are expected to be a positive last month you were Nega 14.7% you're expecting a positive 3.8% number so really that's that's that's not that great if you're only positive 3.8% after being negative almost 15% the month before what will be important as well tomorrow is Philadelphia fed Manufacturing Index expecting that number is going to come in at about four last month was 15.5 so that would be a sharp slowdown as well you will get Philly fed business conditions I think that could be an important one to be watching for as well Philly fed capex index Philly fed employment Philly fed new orders and Philly fed prices paid prices paid is a very big component of these um District surveys if prices paid are going higher than that is usually a negative for markets markets typically react to these prices paid numbers now tomorrow morning and I I should mention all of that data comes out at 8:30 in the morning at 9:15 in the morning tomorrow you will get industrial production month over month expecting that will decrease from 0.4% last month down to 0.2% capacity utilization industrial production year ofe and manufacturing production month over month and year-over year will also be coming out tomorrow morning you will get a speech from Fed Bar he is the regulator for the banks so um just I he usually doesn't move the markets he can but he usually doesn't he's he's he's the guy that everyone blamed for svb right for First Republic for not overseeing um what was going on at that um at those Banks so usually he doesn't talk monetary policy but it's possible fed Harker will be speaking coming at 10:30 in the morning tomorrow that one will be a little bit more important fed me is probably the biggest one of tomorrow because she is the biggest hawk of of basically any fed speakers right now her her and uh kashari are super Hawks as as as far as recently so she speaks at 11:30 in the morning that will be important fed Bostic speaks at 3:50 p.m.
tomorrow and then you will get industrial production and retail sales as well as the unemployment rate coming out for China at 1 p.m. coming tomorrow so Friday could be an interesting day um it depending on all of this data that we will get tomorrow and especially with the data coming out of China so with all of this said let me know how you are investing your portfolio right now are you raising cash do you have a lot of cash on the sidelines waiting to see what happens next are you going all in here are you buying some puts are you buying some calls and just Balls to the walls let's let's go to the upside and what you are doing in your portfolio and most certainly if you made it to the end of this video hit that like button as well as subscribe to the channel because it's fre 99 it cost you absolutely nothing to do so at all most importantly
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