00:00 Speaker A
to flag that we would see this distortion here. So now that we've got it, like what can we read from the numbers ex distortion?
00:06 Speaker B
Okay, the most important reading actually isn't in the CPI. It's the real average hourly earnings, which are down 3/10ths of a percent year over year. What that means is negative wages have set in amongst the American public.
00:21 Speaker B
Now, why is this important? Well, you know, most of the wage gains are clustered up market, right? Those are the people who are buying and investing in securities.
00:28 Speaker B
So the equities market will continue to be decoupled from the real economy. But when you talk talking about the middle class, working class, working poor, they're actually going to be feeling the brunt of this. What this means is is that their living living standards are in decline at this point.
00:41 Speaker B
Now, is this a threshold where we're going to see this continue or is it just a mild uh one to three month downward turn in wage gains. Right now my sense is is that I expect we're going to peak at or near or even above 4.5% in CPI.
00:55 Speaker B
So assuming nominal wage gains around three and a half, that means most of the public will be down 1% on wages, probably within the next, you know, 90 to 120 days. To me, this is what the public and the political authorities is going to be focusing on, not necessarily government quirks that cause the cord to to go up, right?
1:09 Speaker A
Sure. Yeah.
1:10 Speaker B
But look, energy, transportation, right? Those things matter. And what I want to do is I want to really dig deep later on and see if those increase in transportation costs are bleeding into the grocery basket.