The Inflation Surprise Has People Scratching Their Heads

To investors,

Many economists and market commentators predicted sky-high levels of inflation after the flurry of tariff announcements coming out of Washington DC earlier this year. Fortunately, those predictions have not proven true in the last few months.

Truflation, the leading real-time alternative inflation metric, shows inflation started the year hovering around 3%, fell to approximately 1.2% in April, and now sits near the Fed’s target of 2%.

This means despite all the chaos, inflation has fallen about 33% since the start of the year. Not exactly a small number. This lower inflation level should be a welcomed development for citizens and investors alike. In fact, most people in the economy were bracing for higher inflation because that is all the media would talk about for weeks.

But surprises are not always bad. The Citi Inflation Surprise Index shows the United States has the largest gap between 3-months ago and today. And that gap is working in favor of the everyday American and their families.

The economy is rocking and inflation is nowhere to be found, so many people are ready to celebrate. I would be very careful here though. We are not out of the woods yet.

While the tariffs are not a cause for concern, the big threat looming on the horizon is the massive government spending that is we are witnessing. This has always come from both sides of the aisle. They really don’t have a choice. But EJ Antoni highlights the US government has increased the national debt by approximately $500 billion since they lifted the debt ceiling back at the beginning of July.

The money printer is cranking and the dollar is debasing.

The situation we are in is just plain weird. You have tariff revenue exploding higher, inflation lower than expected, and people like Bill Maher, who thought the tariffs were going to sink the US economy, admitting they were completely wrong about what was going to happen.

This is a great reminder to all of us to never have 100% confidence in your assessment of a situation. You have to think probabilistically. And the odds have always been in the favor of the US economy strengthening if the government was putting pro-America policies in place.

Now all eyes will shift to the Federal Reserve and the FOMC as they begin their 2-day meeting today. The consensus is Jerome Powell will not change the interest rate, but that doesn’t mean we won’t get a surprise cut. And a surprise cut would send stocks, bitcoin, and gold significantly higher.

So whether we get the rate cut or not, every data point is telling us asset prices are going up and to the right. Politicians can’t stop printing money. The Fed eventually has to capitulate. And investors are going to win big as long as they stay long and chill.

Hope you all have a great day. I’ll talk to everyone tomorrow.

- Anthony Pompliano

Founder & CEO, Professional Capital Management

Jordi Visser on Bitcoin Going Higher and US Grid Capacity Issues

Jordi Visser is a macro investor with over 30 years of Wall Street experience. He also writes a Substack called “VisserLabs” and puts out investing YouTube videos.

In this conversation we discuss what is going on with bitcoin, Fed independence, interest rate expectations, Azoria lawsuit against the Fed, PMI, and everything that has happened in the last week.

Enjoy!

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