Inflation Surges Higher — The Fed is Now Trapped

[00:02] this morning and inflation came in raging hot and US consumer sentiments is now plunging. So I want to give you the highlights. inflation is now running at a rate of

[00:14] and they're saying that core inflation is at 2.6% If you're looking at the inflation rate it's 3.3% that might not seem like a you want to take the government's word for it.

[00:29] However, what's concerning is the acceleration of the rate of inflation because in February we're at 2.4% and then in March it just spikes up to and then in March it just spikes up to 3.3% that is a that is a spike. And yet

[00:43] Reserve is to get the rate of inflation down to 2.0% and we're far from it. So back in February 2.4% yeah, sure we're close to 2.0% but now this is a major setback. Now I want you to take a look at this to see how problematic the

[00:59] situation is. So look at the CPI month-over-month change. situation like you can see the numbers for yourself. It's accelerating at a rate of 0.9% a month. That is terrible. And I just want to point this out to you

[01:13] with energy prices surging and with all this inflation going on what's happening is that inflation is going up faster than wages. For the month of March real earnings went down by 0.6%

[01:27] and as I've been saying our purchasing power continues to erode. And I just want to say this, I do not expect energy prices to quickly return back to how it was back in February. So this is a one-year chart and this is the price of

[01:41] oil and we're still at $96 a barrel this is for WTI oil. So we were below $60 a barrel for quite some time in the recent past. And I know that we have a ceasefire with a few days remaining and of course it's

[01:56] know if it's going to last the full 2 weeks. And then after the 2 weeks, like You know, not to mention that due to the toll in the Strait of Hormuz, oil is

[02:08] going to become more expensive, and that's get that cost the additional cost consumers, you know, making energy prices more expensive. And also, the energy infrastructure in the Gulf has been damaged, and those

[02:22] damages, they cannot be repaired very quickly, which means that there's going And we can't forget about the natural gas, the fertilizers, the chemicals, the metals that come out of there that trans that transit through there.

[02:35] And then we take a look at the average price of gasoline in the US, and they're still elevated. As of today, the national average is at $4.15 a gallon. national average is at $4.15 a gallon. A year ago, gasoline was at $3.22.

[02:49] This this is a national average. The average in California right now is $5.91 cities within California, it's more expensive. And I want you to take a look at diesel fuel. So, it's currently at $5.68

[03:03] a gallon. That's the average in the US. It's actually very close to its record It's actually very close to its record high of $5.82. prices, then it's going to cost more money to farm, to mine resources, to

[03:17] money to farm, to mine resources, to ship, to make products, to also deliver. accelerate the rate of inflation. So, I'm telling you like it's bad right now, but it can get a whole lot worse if there's no true de-escalation.

[03:31] surprise that consumer sentiments has now hit a record low. And to emphasize, it's not just low or lower. I'm talking about a record low. So, this reading was conducted in April. So, this is the most recent one.

[03:46] The expectation is that consumer sentiment will improve after energy prices decline from a resolution in the Middle East, but again, when is that going to happen? And also, I want to show you this. I want you to

[03:59] relief from the Federal Reserve anytime anytime soon. interest rate cut by the Federal After the CPI inflation report was released, here the new updated odds, and

[04:12] tool. There is now a 98.4% chance that the Federal Reserve will not change interest rates at their next meeting on April There's a 1.6% chance that they're going

[04:26] that they're going to cut interest rates. In my opinion, for this April meeting, they're not they're not going to raise interest rates. Consumer sentiment's already at a

[04:39] record low. The GDP revision came in lower. this going on, we cannot raise interest rates. And how can they cut interest rates. And how can they cut interest rates in the face of spiking inflation?

[04:52] So, they're not going to change rates. It's because they're trapped. meeting's going to be on June 17th, and this is actually going to be chaired by President Trump's new Fed chair. And even with Warsh in charge of the

[05:06] Federal Reserve, the market expectation is that there's a 98.3% chance that they're not going to change interest rates by that June meeting. A 1.7% chance that they'll raise interest rates, and a 0% chance of an interest

[05:21] rate cut. All I'm saying is, I mean, I already see this coming. Just be prepared for President Trump to be very upset. hands tied. Like, what can he do? Like, he still may cut.

[05:36] Like, that's not impossible. Like, we never know, but these are the odds as of Okay, I just want to show you one more meeting. This is the July 29th meeting. And it's not much of a difference. Overwhelming odds that they will not

[05:51] change the interest rates. A 96.2% chance that the rates are the same by A 1.6% chance that they'll raise interest rates by that meeting, and a 2.1% chance that they'll cut rates by that meeting.

[06:05] Now, I just want you to keep in mind that this meeting in particular is 3 and 1/2 months out. You know, a lot can change by then. I want you to know that the changes it could be for better or worse. Like,

[06:17] we'll see how the whole situation develops. But regardless of what they do with the interest rates, I want you to know two things. So, the first thing is that the M2 money supply it continues to expand.

[06:29] Reserve's website. We are at a record high for the money supply. And it's just well, to me it's just common sense that if there's more money out there, then obviously prices are going to continue to inflate.

[06:44] This is the M2 money supply over the past 12 months. It has consistently been going up. And if you notice over the past 2 months, here's the second thing that I want to show you. And this is coming from the

[06:58] Federal Reserve's website as well. So, I went into more details on this in my previous video, but the new figures came out about 2 days ago. And yes, the Federal Reserve is currently printing approximately 40

[07:11] billion dollars a month, which is, you know, of course inflationary. know, of course inflationary. So, ultimately sure, the Fed may not cut interest rates is inflationary. However, they're still printing money

[07:24] and expanding their balance sheet and the M2 money supply is growing. Now, if you've been following along for a while, what did I say back in 2024 and 2025? money printers back on in early 2026, and I was wrong. They started in

[07:41] So, they started a little bit earlier than I expected. And I also said that we'll see an acceleration of inflation in 2026 with the brunt of it occurring in the back half of 2026 and 2027.

[07:57] later they're going to have they're going to have to accelerate the money Because, again, we cannot afford a recession. We cannot have liquidity problems. Like, it doesn't work in our debt bubble environments. And another

[08:12] asking me whether this is the manufactured crisis that I predicted in my great melt-up series. And to that, I'd say that it's just too early to tell if that's the case or not. But, regardless, I expect an

[08:27] acceleration of money printing. And that's going to lead to more And that's going to lead to more devaluing of the dollar, more inflation, and of course, more wealth inequality. Look, I just want you to know that from

[08:39] about this, like the Federal Reserve, the government, what they're doing, this why? It's because the Federal Reserve is cornered. And what are they cornered by? It's the debt situation.

[08:54] Like, I hate to be a Debbie Downer, but you know what? It's the truth. Like, I apologize for being blunt, but I'm not going to apologize for being honest. for today. I know that's not you know, the great the happiest news or

[09:07] I do wish you have a nice weekend. Please take care.