TAKES THE BAIT BUT THE ABC PEOPLE ARE LIKE THE TURKEY SHOOT! >> RICK, WE'RE GOING TO CONTINUE THE CONVERSATION RIGHT NOW ABOUT CPI. I WANT TO GET EVERYBODY'S TAKE ON WHAT WE'RE JUST HEARING AS RELATES TO THIS INFLATION DATA AND ECONOMIST AT PIMCO EMILY ROLAND CO-STRATEGIST AT JOHN HANCOCK INVOLVEMENT MARGARET AND OUR OWN STEVE LIESMAN HERE START WITH YOU AND GET YOUR REACTION TO THE NUMBER AND MAYBE GET INSIDE THE MIND OF FED LOOKING AT THIS NUMBER THIS MORNING. >> I'LL DO THAT. FOOD WAS A GOOSE EGG ENERGY DOWN 0.8. GET MORE OF THAT GIVEN WHAT'S HAPPENED TO THE PRICE OF OIL OVER THE PAST MONTH. INTERESTING. USED CARS DOWN 1%. THOUGHT THEY MIGHT LEVEL OFF HERE NEW CARS UP AT ZERO. AND RENT, CAN'T GET HELP FROM. QUITE A MYSTERY. UP 0.5 AGAIN THIS IS THE PROXY THEY USE FOR HOUSING COSTS. DOESN'T SEEM TO COME DOWN. I KEEP READING ADDICT DOTAL PRICES LIKE IN FLORIDA CONTINUES TO EXPECTED TO SHOW UP MEDICARE SERVICES DOWN, ANOTHER THING, 0.1%. AN EXPECTATION THIS IS GOING TO 0 BE COMING BACK HAD BEEN DOWN. AIRLINE FARES UP 3.1%. TAKE A SECOND TO TALK ABOUT THIS THERE'S A RESIDUAL SEASONALITY PROBLEM OR BECAUSE OF THE PANDEMIC SAW AIRLINE FARES RISE EACH SUMMER. AN EXPECT THEY'LL CONTINUE TO RISE THE PANDEMIC MESSED UP A LOT OF DATA EASY SPECIALLY SEASONALITY, SEASONAL SAY JUDGMENTS LIVING WITH THIS A WHILE NOT SURE HOW MUCH AIRLINE FARES GO UP. TEND TO GO DOWN WITH ENERGY. QUICKLY THEN, AS RICK POINTED OUT, A RISE IN YIELD THAT SHOWS IN UP THE EXPECTATION FOR THE FED. WHAT'S HAPPENING RIGHT NOW, I THINK THIS IS RIGHT, THERE WAS ONE CHANCE, A SMALL CHANCE, THIS DATA MIGHT FAVOR A 50 BASIS POINT INCREASE IT DOES NOT. SUBSTANTIALLY LOWER, SUBSTANTIALLY BELOW EXPECTATIONS A CHANCE IT MIGHT FAVOR 50 IT DOES NOT. WHAT HAPPENED IS YOU HAD AN INCREASE IN THE PROBABILITY OF A 25, FROM 71 TO 85% I EXPECT WITH THE PPI TOMORROW IF IT COMES IN AROUND EXPECTATIONS IT WILL LOCK IN AT 25 FOR NEXT WEEK. >> THANK YOU, STEVE. TIFFANY, WHAT WOS AS YOUR REACTN AND TAKE ON ALL OF THIS? >> I AGREE THINK THINK THIS IS PROBABLY A 25 BASIS POINT RATE CUT IN SEPTEMBER. TAKES AWAY SOME URGENCY THAT THE MARKETS WERE DISCUSSING AROUND A 50 I THINK ULTIMATELY, THOUGH, THE FED PROBABLY MADE UP ITS MIND. I DON'T THINK THE LABOR MARKET REPORT WE GOT A FEW WEEKS AGO WAS WEAK ENOUGH FOR THEM TO GO IT WASN'T GREAT. BUT IT WASN'T WEAK ENOUGH FOR THEM TO GO 50. I THINK MORE LIKELY WHAT HAPPENS IN SEPTEMBER IS THEY ANNOUNCE 25 BUT THEY MAKE IT VERY CLEAR THAT THEY'RE GOING TO DO A SEQUENCE OF RATE CUTS, BECAUSE RELATIVE TO THEIR OWN MONETARY POLICY RULES THEY LOOK A LITTLE BEHIND THE CURVE. THEY CAN, THERE'S A RANGE OF POSSIBLE OUTCOMES HERE WHERE IT'S APPROPRIATE FOR THEM TO BE CUTTING. I THINK THAT'S REALLY THE MESSAGE THEY'RE GOING TO SEND. >> AND YOUR REACTION WHAT YOU THINK THE FED MAY DO >> YEAH. THIS WAS A GOOD REPORT IN FACT, THE FOURTH CONSECUTIVE GOOD REPORT WE GOT AFTER THREE BAD ONES TO START THE YEAR YOU KNOW, THE SHELTER COMPONENT HERE, A LITTLE WORRISOME RESPONSIBLE FOR 70% OF THE GAINS IN CPI OVER THE LAST SEVERAL MONTHS THE HOUSING MARKET VERY STUBBORN OVERALL THE FED WILL BE A LOT MORE FOCUSED ON THE LABOR MARKET I AGREE WITH TIFFANY LAST MONTH'S JOB REPORT WASN'T GREAT. REVISIONS TERRIBLE JOB OPENINGS AT LOWEST LEVEL SINCE 2021 HEARING RESPONDENTS IN SURVEYS TELLING US JOBS ARE HARD TO FIND THEM HEARD FROM POWELL AND JACKSON HOLE THE FED DOES NOT WELCOME ANYMORE COOLING IN THE LABOR MARKET WE THINK THE FOCUS HERE SHIFTS AWAY FROM INFLATION TOWARDS THE LABOR MARKET IT'S GOING TO BE 25 BASIS POINTS IN SEPTEMBER BOND MARKETS LOADING UP THE REST OF THE YEAR. 50 BASIS POINTS EXPECTED IN NOVEMBER 50 IN DECEMBER