☕ The ONE thing you need to understand about today’s inflation report

Howdy! 👋 

We’ve seen this movie so many times that we know the lines by heart. 

Today’s inflation report came in “hotter” than expected so traders are busy selling everything but the kitchen sink. 

Smart investors, on the other hand, recognize the opportunity. 

Investing is about focus, not noise. 

• Set goals 
• Plan 
• Execute 
• Repeat.  

Here’s my playbook. 

1 – The ONE thing you need to understand about today’s inflation report 

Spoiler Alert. 

It has nothing to do with inflation. 

The entire game is about what highly leveraged, short-term traders think Warsh will do based on the report.  

It is as predictable as the sun coming up. 

• The report came in red hot and futures immediately cratered because highly leveraged short-term traders think he’ll have more reason to hike rates.  
• If the report had shown cooling, the same bunch would have immediately borrowed all the money they could carry and be buying outta the gate because they think he’ll have more reason to lower rates. 

What’s happening is a lot like an old-school talent contest, except nobody actually watches the talent. Instead, the judges rate contestants by watching the audience’s reaction to whatever and whoever is on stage. 

And if you really are worried about inflation? 

I understand – I am too. 

Medicine, insurance, housing and groceries are all rising quickly and have been for a long time. Millions of people are hurting when it didn’t have to be this way. 

The Fed has screwed this up yet again. 

Warsh hiked into a negative growth shock – meaning that he raised rates in September just as the economy was already losing steam and productivity was rising. That’s because the Fed’s policy wonks are misreading rising bond yields as confirmation that tightening is the way to go. 

What Warsh and his team should be doing is making proactive decisions that reinforce the distinction between growth that strains existing capacity and growth that enhances it. 

Greater productivity, particularly from AI and AI-related productive capacity, is a deflationary input, something that hundreds of very smart people working in the Fed can’t seem to grasp.  

And btw, Mr. Chairman, if you happen to read this, I’d be happy to explain it to your team so they can help everyone who’s struggling. 

This is not the bond market of 100 years ago, so please stop treating it that way. 

Keith’s Investing Tip: Buy great stocks in world-class companies that are growing faster than the rate of inflation. Problem solved. 

If you’d like to know what’s on my list or simply want a compass to help point you and your money in the right direction, you may find One Bar Ahead® helpful. People tell me repeatedly that it’s changed their life and altered the course of their financial future – humbling as heck! 🙇

2 – Overcoming the “ick factor”, buybacks and what’s next 

I sat down yesterday with my good friend and colleague Scott “The Cow Guy” Shellady to share my thoughts on buybacks, why so many investors can’t shake the “ick factor” and the worst decision I think an investor could make today. (Watch) 

3 – Delta’s makeover is working, save one thing 

Delta is spending like a sailor on shore leave to keep its premium customers happy, and so far what they’re doing is working exactly as I suggested it would last November (See #3) 

Delta just posted record September-quarter revenue of $20.2 billion. 

Now CNBC is reporting that the new A350-1000 shows up early next year with 53 next-gen Delta One suites, a third more than any plane Delta flies today. Beds three inches longer. Pillow top cushions. 24-inch screens. A cubby for your shoes and a hook for your glasses, because apparently that’s where we are now... or I am. 😆 

More Porsches on the tarmac to chauffeur the big spenders from terminal to jet. A new dining menu. Blanton’s bourbon. New crockery. Fancy dishes.  

Then there’s the Wi-Fi. 🤦‍ 

Delta passed on Starlink and went with Amazon’s Leo, with installs starting in 2028. United will have Starlink on its entire fleet by the end of 2027, before Delta even flips the switch on a single plane. 

CEO Ed Bastian reportedly told staff, “We do not want to be with Elon Musk. Trust me.” Now he’s on CNBC calling it a business model disagreement and offering this gem: “I’m a big fan of Starlink. I drive a Tesla.” 

Right. 

That’s like telling the waiter you love steak right after ordering the tofu. 

Musk, never one to waste a good grudge, joked that a Delta flight is the perfect place to test AI because there’s no internet.  

Ouch – and I agree… 80%+ of the time I can’t get online reliably, I’m on a Delta flight. 

United promptly rolled out a status match aimed at Delta flyers, and American invited anybody “reconsidering” their loyalty to come on over. 

Ed, buddy, you can park a Porsche at the bottom of the jet bridge and pour Blanton’s into every glass. A road warrior paying five figures for a seat who can’t get on a Zoom call at 38,000 feet is booking United next time.  

Nobody drinks enough bourbon to forget a dropped connection – and don’t even get me started on the fact that I can’t get a martini in-flight. 

I think this is going to bite ’em in the asteroids, or at least the tailhook. 

Premium flyers are Delta’s profit engine… and they’re already choosing airlines based on whether they can work in the air. Connectivity is the one amenity that matters because they use it for all ten hours.  

Every quarter Delta lags is a quarter its best customers spend building status somewhere else, and the thing about that is that frequent flyers rarely come back once they’ve rebuilt it.  

Delta (DAL) is still one of the best-run airlines around, but I can’t see adding shares given that a 62% jump in fuel costs that apparently wasn’t properly hedged just handed the company its first earnings miss in two years, and the Wi-Fi gap is self-inflicted.  

Meanwhile, watch premium revenue and loyalty numbers over the next few quarters. They’ll tell you first. 

Keith’s Investing Tip: Customers vote with their wallets, and they almost never announce it until after they’ve switched. 

4 – Want to know if the AI boom is real, ask the printers 

Nearly every advanced chip on the planet, including the ones powering AI, gets made with ultra-precise printing presses that use light to etch circuits onto silicon from one Dutch company called ASML. 

Well. ASML reported earnings this morning. (Read) 

Monster numbers and a big tip o’the hat to everyone who owns it! 💯  

The company says its planned capacity for 2027 and 2028 won’t fully meet customer demand. It’s looking for ways to grow beyond the 30% increase it had already announced. 

Some customers are also apparently already expressing interest in placing orders for 2029 and even 2030. 

Read that again. 

Nobody books equipment four years out on a whim or for a fad. 

Reminds me of the Gold Rush of 1849.   

I’d hate to be a naysayer right now. 

Should you buy it? 

Lots of people do and they’ve done just fine. I prefer to do “better” if I can, which is why I own a few other top tier names – but that’s neither here nor there. 

What you want to focus on is that AI is very real, so you want to invest accordingly. 

There will be no excuses whatsoever if you look back years from now and missed it but sadly, that’s what millions of investors are doing already for a dozen different reasons… they’re scared, they’re filled with doubt, they think investing is something that everybody else does and that it’ll never work for them. 

There is ALWAYS a path to profits. 

What most people lack is the discipline needed to take the first step and to keep walking. 

Even a single share will help get you started. 

Keith’s Investing Tip: Every company will adapt, adopt or die. Be sure you’re on board or you and your money will get left behind. 

5 – Apple wants to move in, but Siri still needs to pass the background check 

Apple just unveiled HomeView, a $299 smart home hub with a 7-inch screen that hangs on your wall or sits on your kitchen counter. It ships November 13. (Read) 

And the star of the show? 

Siri. 

Ummm… 

This is the same Siri that has spent 15 years hearing “call Mom” and dialing the pizza place. The same Siri Apple promised a big AI makeover back in 2024, then pushed down the road when it wasn’t ready. Now Apple wants that assistant running your front door, your thermostat and your security cameras. 

What could possibly go wrong… other than everything?! 🙄 

Here’s the thing, though.  

I love Apple stock, and if this thing works, it’s a doozy. 

Apple co-designed a whole lineup of LG gear under the “Apple Home Collection” banner: doorbell, deadbolt, thermostat, cameras.  

Setup reportedly takes one tap from your iPhone. HomeView recognizes faces, so everybody in the house sees their own stuff. And it reportedly plays nice with Matter and Thread, so the gadgets you already own stay out of the junk drawer. Alexa and Google’s stuff, perhaps not so much. 

Apple controls every pixel which I also like a lot for the simple reason that control freaks make terrific landlords, especially when they take privacy seriously – something neither Alexa nor Google seem to have any interest in doing imho.  

Bloomberg’s Mark Gurman figures Apple has spent a decade losing the smart home. Amazon and Google got there first with Echo and Nest, then mostly fell asleep at the switch. Google’s newest smart display is still a 2021 model, for example. 

Apple does this a lot.  

In fact, it’s a key part of the company’s strategy: show up late, let everybody else do the dirty work of figuring out what customers hate… then walk in with something people actually want to buy. 

I know I’ll be taking a hard look. 

As much as Alexa drives me nuts and Google’s home devices were something we installed with high hopes but binned within two weeks, my family and I are ready for something that works… Siri or not. 

From an investing perspective… every HomeView sold is another anchor tying a household to the iPhone, Apple’s services and Apple’s next upgrade cycle. Switching phones is annoying enough already. Now imagine your front door, your thermostat and your kid’s bedroom camera all answer to Apple.  

Can you spell billions of dollars in licensing revenue? 

Yeah, me too. 

The real test will be if Siri actually works in a kitchen with three kids, a barking dog and the dishwasher running. If the answer is yes, Apple just bought itself a new platform for the next decade. If not, it’s a very pretty $299 picture frame. 

I’ll bet that Apple gets it right eventually, but I wish that Tesla would get in the game because that I would buy that setup so fast it’d make a supercharger blink. 

Keith’s Investing Tip: Own the company that owns the customer, and the gadgets take care of themselves. 

Bottom Line 

Volatility is simply the price of admission for real wealth and serious investors. 

The sooner you learn to embrace it, the sooner your portfolio can thank you. 

You got this — I promise. 

As always, let’s MAKE it a great day! 

Keith 😀