Let's talk about Trump’s inflation numbers being doubted by the big names....

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Belle of the Ranch 4 min 1 speaker 5 chapters transcribed 1 month ago

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What is the new Trump inflation figure and why is it causing a stir?

Belle of the Ranch 0:01

Well, howdy there, internet people, it's Belle again. So today we're going to talk about Trump's inflation numbers being doubted by the big names. The new inflation report was interesting to say the least. The report came out and showed CPI at two point seven percent. The market expectation was that it was going to come in around three point one percent and Immediately Trump supporters started doing victory laps. Retail investors generally accepted it at face value because they wanted to. A lot of liberals sent questions asking if Trump was cooking the books. And the big names in finance started pressing X to doubt.

Why didn’t the market react negatively to the lower‑than‑expected CPI?

Belle of the Ranch 0:49

There is definitely a lot of skepticism coming from big financial houses. And we'll get to that. But we need to touch on some other things first. A two point seven percent reading would be amazing. But it's different from the expectation by a drastic amount. Remember, the market runs on estimates and when those estimates are off by a large amount, the market should have a negative reaction, because the estimate being off by that much means that they've missed something major about the economy. But that didn't happen. There wasn't a negative reaction. Why? Because retail investors are running on emotions, pushing price to earnings to dangerously high levels. And because frankly, a lot of the big houses don't believe the report.

What do JP Morgan’s Michael Hansen and KPMG’s Diane Swank say about the report’s accuracy?

Belle of the Ranch 1:45

Is that because Trump cooked the books? Not exactly. Michael Hansen, who is a senior economist at JP Morgan, explained that the numbers coming in lower than expected, quote Suggests that the BLS may have held fixed a number of prices it was not able to collect in October. Which likely means a material downward bias in the current numbers that will be reversed in coming months, as full price collection resumes. Clear as mud, right? We can't just say things in English when it comes to economics. Here's the translation. Because of the government shutdown, BLS had to estimate October numbers instead of using hard numbers coming from the normal survey data collection process. They estimated wrong, but it'll show up later.

How did the government shutdown affect the BLS data collection and lead to non‑survey estimates?

Belle of the Ranch 2:42

Meanwhile, Diane Swank, who is the chief economist at KPMG, which is one of the biggest audit, tax, and advisory firms, cast doubt on the accuracy of Trump's numbers as well, saying quote. Things that should be going up are going down, and things that should be going down are going up. So it's confusing, and it doesn't quite square with prices that we've observed. If that doesn't do it for you. John Hill, who is the guy over US inflation strategy over at Barclays, flat out said the report doesn't pass the smell test. Using those exact words, then going on to say quote Given the lack of explanation about how the BLS made these decisions, it's hard to take at face value. Now, to be clear, there's actually a note from BLS saying they used non survey data in this report.

Belle of the Ranch 3:47

It's not hidden. But really, who reads the notes?

Should investors trust this inflation report for financial decisions?

Belle of the Ranch 3:52

If you've ever done a deep dive into one of these reports, just for funsies, take a look at all of those empty data squares. So the big names are telling you not to believe this report. BLS is saying they used non survey data, made it up. And it didn't match expectations. I wouldn't make financial decisions based on this report. But there's also no evidence that this was an intentionally tanked report. It could really just be bad estimates. Anyway, it's just a thought. Y'all have a good day.

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