---
title: 'CPI Live Reaction & Market Impact Analysis'
source: 'https://youtube.com/watch?v=zjeuLeZP9XE'
video_id: 'zjeuLeZP9XE'
date: 2026-09-11
duration_sec: 988
channel: 'Meet Kevin'
---

# CPI Live Reaction & Market Impact Analysis

> Source: [CPI Live Reaction & Market Impact Analysis](https://youtube.com/watch?v=zjeuLeZP9XE)

## Summary

This video is a live market reaction to the release of the latest U.S. CPI inflation data. The creator analyzes the numbers in real-time, breaking down the components of the report to identify what surprised markets and why. The main conclusion is that higher energy prices are bleeding through into core services, which has significantly increased the market-implied probability of a Federal Reserve rate hike at the upcoming meeting.

### Key Points

- **Pre-Release Market Expectations** [00:28] — Before the data release, markets had a 69.4% probability of a rate hike. The creator noted that estimates were extremely tight, with a core CPI expectation of 0.2%.
- **Core CPI Surprises to the Upside** [02:13] — Core CPI came in at 0.3%, above the tight 0.2% estimate. Headline CPI was 0.4%, with headline year-over-year at 3.4% and core year-over-year at 2.4%.
- **The Importance of the Core Number** [02:47] — The creator argued the core CPI number matters most to the Federal Reserve because it reveals whether high oil prices are starting to bleed through into other components of the economy.
- **Identifying Inflation Drivers in Core Services** [04:15] — Key price increases were identified in education and communication services (+1.8%), motor vehicle repairs (+1.1%), and trash collection (+0.5%). These were considered the direct effect of higher energy costs.
- **Post-Release Market Repricing** [09:28] — Following the data release, market futures suggested a 90% chance of a rate hike next week, a significant jump from the pre-release 69.4% probability.
- **Rate Hike Expectations for the Year** [10:35] — The futures market pricing showed a 100% probability of a rate hike in October, and it was pricing in 1.7 hikes by December, suggesting two rate hikes this year is now the base case.
- **Analysis of the Core CPI Number** [11:23] — The unrounded core CPI increase was 0.29%, not 0.25% which would have rounded down. The 3-month annualized rate jumped to 2%, up from 1.6% previously.
- **Nasdaq 100's Reaction** [12:16] — The Nasdaq 100 showed little immediate reaction. The creator's take was that this is a 'catalyst clearing event,' suggesting the market is looking past this data and towards the potential for a Trump deal with Iran to lower oil prices.
- **Food Price Deflation** [14:49] — A notable counter-trend was a significant drop in lettuce prices, which fell 6.2% this month after a 16.4% drop last month.

## Transcript

with you with you all right here we go i got everything cooking and in two minutes we have
the cpi data release so if you're watching a replay go out to two minutes that's where you got to go 5 uh 30 is what time cpi data comes out of this 528 and take a look at what we got here
We've got a 69.4% chance of a great hike, and that's the current probability. Now, I personally am excited about this, mostly because the estimates are really tight.
I think the scoring has gotten better. I'm not, like, playing low, low options or whatever on this, so it really doesn't matter. I do think some of the pain that we've been seeing has been a buy-the-dip opportunity. I think if we get a bad CPI report today, it could be a buy-the-dip opportunity.
I think Trump is secretly getting a little closer to a deal than he's letting on. I think, you know, he goes to max aggression when he gets closer to a deal. Maybe I'm totally wrong about that, but this idea of we're not even negotiating, I don't know, I just don't trust him.
So I think that's part of his way to pressure people to get a deal. Why would he say, oh, yeah, we'll get a deal, you know, this is not going to be over until after the election? They're sending signals during negotiations, is what I think, that, you know, well, we're prepared to go on forever.
And then he just magically, you know, comes to a deal before the election. I'm not buying it, I'll put it that way. But let's look at these estimates for CPI. Estimates for CPI are .2 on core.
That's going to be the most important number. Why does that matter the most for the Federal Reserve? It matters the most for the Federal Reserve because they want to see if oil prices are trickling down to other components of CPI.
This is the most important number. The expectation is 0.2, and it is very tight with estimates. You've got 73 estimates, 67 qualified economists, and here we go. Ready for the data? Let's go.
Here we go. We got 0.3. Wow. Of course. Look at that. So it comes in over here above this very tight estimate. Not ideal. you did get CPI headline, interestingly, that matches. Headline CPI, 0.4. Headline year-over-year,
3.4. Core year-over-year, 2.4. Real average weekly earnings, 0.3. But despite, once again, the fact that we have crazy, crazy tight estimates here. I mean, how many estimates do we actually
have? This would be like nine, eight or nine estimates came in at 0.3. The vast majority of people were at 0.2, the average estimate was 0.21, and you just, I guess you just can't,
you can't trust that they've gotten better at collecting data, apparently, because the result is actually 0.3, which was the high estimate, yeah, geez, yeah, average and median,
both of them rounding to 0.2, so the only folks who got 0.3, there were individual economists, Oh, they're sort of scattered through here. Like Regions Bank. You get sort of like these various different NatWest markets.
Kevin! Oh, Kevin got it right. Okay, we'll leave it there. All right, let's go through the actual report to see what we have. So, let's go. We don't want the labor report. We want the CPI report. Let's go grab the actual details of the report now.
But we know so far, core did increase more than expected. So, a little unideal. As you know how I like doing this, I like getting to the bottom line. I want to go straight to the bottom to start seeing where some of those core numbers are.
All right, so miscellaneous personal services went down 0.3 just like last month. Okay convenient That carries a weight of about 1 in CPI I got other personal services flat that the total that includes haircuts Haircuts I guess went up a little bit Okay
Education and communication services carrying a weight of nearly 5% actually went up by 1.8%. Now, we did have back-to-school August, but it looks like back-to-school August was
a little bit more expensive, specifically with elementary and high school tuition coming up over here. This could be one of your drivers. Daycare, preschool got more expensive. Maybe labor got more expensive. But this should be seasonally adjusted, right? And this is
seasonally adjusted. And it still came in almost 2% higher for education and comm services. So that's going to be one of the weights. And that is a core component. Is it more expensive now for teachers to drive to school and therefore they need more pay? I don't know. But that
is a 5% weight right here that is a little meatier. Recreation services stay flat, 3.1% weight coming in flat on the month over month. I've got transportation services. There's
that traveling again. This is going to be 0.5% for traveling to work or commuting or whatever. And the biggest move here is actually motor vehicle repair. Repairing cars at 1.1%
as well as truck rentals. Last month, we were supposedly negative 3%, and then this month, we're up 2.2%. Somebody in the chat, Scott, says,
when you kick out the cheap child care labor from deportations, dot, dot, dot. All right, then you've got hospital and related services. I've actually got pretty flat here,
because that's a 2.6% weight at 0.1 month over month. Medical services are negative. Negative 0.2. That's good. That's good. We've seen a lot of inflation in the medical care side.
And last month, we were at 0.6. So we're going in the right direction there, at least for this month. Water and trash collection services. Look at that. Collection services. Also going to be related to diesel, right?
Comes in at a 0.5% increase. That's a 1.1% rate. Owner's equivalent rents, 0.2. That's good. Although we know this number lags a lot. overall rent of shelter coming in up 0.3, specifically because of lodging away from home,
where you had two pretty large negative months in a row, and then you come down to 2.4. Remember, the last three columns we're looking at here are going to be the last three months, and then the numbers before that, it gets a little more complicated,
because then we're getting to the non-seasonally adjusted numbers. Those are sometimes useful to look at. For example, if I want to go look at schooling, which should be one of the most obvious seasonal adjusted numbers, I can go over here and look at August. August was hot, whether it was seasonally adjusted or not.
The seasonal adjustment only removed 0.3. So, you know, we were net, net hot on child care and education there. Other goods like tobacco, cigarettes, personal care products were also up a little bit.
So a little bit of other goods inflation coming through. I've got alcohol at 0.1. I've got education, education commodities. So these are like books and back-to-school supplies and such.
Only at 0.1, so that's relatively nominal. I've got medical care commodities per negative, negative 0.2. That's good. And if we look at women's apparel, 0.2, fine. Apparel in general, men's and boys' apparel.
Men's apparel went up a little bit. Specifically, suits, sports coats, and outerwear up 2.1%. Appliances, ooh, major appliances up 1.4%.
This is a durable good, getting more expensive for those washing machines. We got laundry equipment. There you go, 2.8%. So a little bit higher here. Furniture down. Now, we saw that with restoration hardware. You know, if they didn't have inventory buildup as much as they do have,
they really be suffering I feel like on even lower margins than what we seeing now and revenue decline It tough to sell furniture right now Here energy Energy up 2 on the month with fuel oil up 10 on the month Obviously
that's part of our non-core component. We expected higher energy reads. So, not a horrible surprise as far as the energy read side. The worst surprise is really that we are getting a core
beating expectations. That's not good because, you know, why is trash collection up, you know, a substantial amount? And it sounds like that's not that big of a deal. But, I mean, if you look
at here, it's the same as miscellaneous personal care services. So, we're at 1.1% weight and you're seeing a 0.5% increase there. But really, motor vehicle repairs, car and truck rentals, that's
low. So it's really trash collection services, motor vehicle repairs, and then a big one over here, especially with back to school, education and comm services. That was really popped off
this month. And those are your trickle down effect, right? They're technically services, but they are your trickle down effect of high oil prices. So this is where energy prices can
feed into core. So we now have a, oh man, oh man. All right, this was 69%. The current reads, I'm going to hit refresh on this. I believe it is now at 90%. And we have, drum roll, whatever,
it says, I'm looking at some other, everybody is using this website right now. It's fine. It says stock futures are now suggesting a 90% chance of a rate hike at next week. I'll go back to that one. 0.3% monthly rise in core CPI is the biggest since April. Not the scope
that the Federal Reserve would want to look for. The surprise of the market now would be for the Fed to remain on hold. If it doesn't hike, Walsh would need to give some credible reasons for not hiking. Yeah, no kidding. He's got to put the pants on now. World interest
probability now suggests a 90% chance of a move next week, and I'm going to go look at a different resource here. I want to look at next month as well. We now have a 100% chance of a rate hike
in October, and we have a, the December meeting is pricing in 1.7 hikes by December now, so we are more likely now to get two rate hikes by the end of the year than we are to get just one.
Let's take a peek at some of the other notes here. So prices rose for communications, airline fares, education, used car trucks, lodging away from home, we saw that. Those are all core components. That's exactly what I said in the first two minutes of this segment,
was that if the Federal Reserve sees any kind of bleeding of these higher energy prices down under, then you have a potential problem for the Federal Reserve. And it's something, you know, even though we were all expecting it was going to come in at expectations,
Got a little ruggins here. So let's take a look at Nick T. We love it when the Nicky T has stuff to say. He says core CPI was firmer than expected, rising 0.29. So this was not.
I mean, the expectation was on an unrounded basis was 0.21, right? And this was not a 2.5 that got rounded up to 0.3. This was a 2.9 that got rounded up.
Three-month annualized rate was 2% previous of 1.6. So we also went up on the annualized rate. The six-month rate also moved up, and the 12-month barely moved.
So obviously, this information can be very volatile. It changes on a frequent basis. But when we were going into this with a 69% chance of a hike, missing to the upside, not ideal right here.
So to me how does this look Okay Well let go see how interesting the NASDAQ 100 actually just does not care Why? Why do I think the NASDAQ 100 doesn't care?
Because it's a catalyst clearing event. Even if we go down today after market open, I personally think we're like at the worst situation for Trump with oil.
and I wouldn't be surprised if Trump tries to swoop in and announce some form of a deal with Iran before the election and it would be such a trade for all of Donald Trump's, you know, team of insider traders.
Because every report we've gotten from the White House, I just want you to think about the setup for a moment, okay? I'm not trying to be jaded, but think about the setup. Every report we've gotten from the White House, and Leak or whatever,
has been, you know, we might keep this going on for the rest of Trump's term. You know, this war's not going to be over until after the election. We're going to have to just suffer with higher gas prices.
It's basically like trying to steel man the negotiation. And I think when Donald Trump gets that aggressive in leaks coming out of the White House
suggesting this is going to go on forever. We're going to bomb them to prior civilization or, you know, whatever, to the Stone Age. That's very, very frequently the bottom of the pain
or to the bottom of the market, right? So in this case, the height of oil prices and the height of yields. And then it comes out in tacos and then everybody's like, what the F? You just said this was going to go on forever
and now you're saying there's a deal? Call me crazy. But that's my take. My take is this is a buying opportunity. And so we'll see how some of the other data comes in. But looking at this table, we are definitely seeing those higher oil prices feed through to the other components.
I will say that as we look at these other components, this is an issue that the Federal Reserve would generally be compelled to respond to. I still think Kevin Warsh has kind of been installed to not raise rates.
But, you know, he's only won vote here, and the bleed through, once you start getting this bleed through, that's where things start looking a little oopsie-doopsies. The good news is, it looks like lettuce is down.
So if you want to save money on food, lettuce is down negative 16.4 last month and negative 6.2 this month. It's almost like, you know, if you want prices to come down, you just need to infect stuff with a parasite.
right. Anyway, okay, that's my head on CPI, that's my initial reaction to the strategy that missing high now kind of potentially makes this a capitalist clearing event, markets
now go, alright, we'll get a hike, whatever, they suck it up, and now you start pricing in post-CPI, post-Fed, and Trump getting a deal before the election.
My guess could be a bad hot take, but I'll suck it up, and now I'm going to go put some money where my mouth is in the course member live stream. Now, keep in mind, there's no coupon code.
There really should be a CPI, but we're going to go do the course member live stream, so We'll probably do the bell with course members today, and then I'll do the public live stream after that. So I'll be back in maybe an hour or 45 minutes or so.
I will come back to a public live. So we'll see you all soon. Goodbye. Good luck out there. And I wish you the best. Oh, wait. And I've got to push this button. Oh, man. Good luck, Kevin. Good luck. Good luck, buddy. Oh, that's okay.
I am with you. With you. Oh, man. Good luck, Kevin. Good luck. Good luck, buddy. Oh, that's okay. I am with you. Here we go. Come on.
Push it. Fly in the air. Fly in the air. Here we go. Come on. Push it.