Inflation Data Is FLAT So Why Is The Fed STILL Stalling On Cuts?

0:28Hello, everyone. We've got a lot to discuss today.

0:33Ladies and gentlemen, we got more data this morning that proves that tariffs are not inflationary. The producer price index. This is simply a collection of indexes that measures the average change of prices that domestic producers receive for the goods and services that they produce. Now, the PPI metrics this morning came in lower on every single measurement compared to what economists expected. This is important because PPI is seen as a leading indicator of CPI, the government's inflation metric. And if PPI is falling, the market starts to price in lower inflation in the future. And the data is screaming at us from the top of their lungs.

1:07Inflation is going lower than economists previously believed. PPI month over month, 0%. PPI core month over month, 0%. Zero. Zilch. Nothing. Literally flat. Call it a narrative violation if you want. PPI and PPI core came in under expectations for year over year numbers as well. The reason? Tariffs are deflationary. They're not inflationary. And this isn't even debatable anymore. The tariffs have been in place for six months. We have a blanket 10 % tariff on all U.S. imports right now, yet inflation has not exploded higher as everyone predicted. The shelves, they were never empty. The recession, that's been canceled.

1:42And the doomsday predictors, they look insane in hindsight. But here's the more interesting conversation than just dunking on all the people who are wrong. What does a lower than expected PPI metric tell us about the future? According to our handy economic analyst, ChatGPT, here's the things to consider if PPI comes in cold. First up, lower producer costs, businesses are facing less inflationary pressure. That means that their raw materials, their components, and their production costs are all lower than people thought. This could lead to lower prices for consumers down the line. That'd be a good thing.

2:12There's also a disinflationary signal. It suggests that inflation might be slowing in the economy. And that's generally seen as a positive signal for the Fed if they are trying to actually cool inflation and cut rates. The third is the impact on interest rates. Markets may interpret this as a less need for interest rate hikes. And also the Fed should maybe be cutting rates to boost stock prices and lower bond yields. And corporate margins. Consumer prices stay the same without input costs dropping. Profit margins for companies can improve. And last but not least, the economic growth. It may also reflect slowing demand in the economy, especially if falling prices are due to weak purchasing activity rather than increased supply.

2:52But to me, the most interesting part of this entire situation is the Federal Reserve cutting interest rates. Lower PPI gives another data point to the Fed to get a cheaper cost of capital into the market. Will they listen? Probably not. But just because they won't listen doesn't make them right. The U.S. economy is in much better shape than people want you to believe, especially in the media. Inflation is less of a problem than most people thought as well. And we are about to do our best impression of a growth economy to get ourselves out of this dire financial position that we are in. Doesn't mean that we're going to be perfect, but we're going to try our best.

3:23The unfortunate part is that the growth is going to be stimulated by money printing and currency debasement, which means that stocks, Bitcoin, and gold are going much, much, much higher through the second half of the year. So buckle up, put your seatbelt on. The upwards volatility is just beginning. Home Depot co-founder Ken Langone is an absolute goat. He's one of the best investors in the world. He one time did an interview and he said his average holding period for stocks in his portfolio is over 40 years. The guy just buys things, goes long, and doesn't look at them for decades. And he was on CNBC recently, and he went off on one of the best tangents I've seen in a long time.

3:58He says that he is bullish on the U.S. economy, and he explains exactly why. Take a listen to what Ken Langone had to say. If I told you how bullish I was, you wouldn't believe it. I have never been more excited about the future of America than I am right now. Why? For a lot of reasons. Number one, like it or not, this guy's getting things done. This guy meaning President Donald Trump? Trump. He's a little pissed off at me because I had the audacity to say that on television about a few months ago that I was worried about if he won, that he'd engage in retribution. I'm happy to say I'm comfortable he's not doing that.

4:46He's acting presidential. I'm impressed with the people he's got around him. I had a nice chat with Kevin Walsh last week, and part of my positivity comes from my discussion with him. You might have heard him on television. I think the American people are waking up. I think the world is a mess, but I think it's coming more to our direction than it was. I think that strike in Iran had significant symbolic meaning for the world, that America's here and when our interests are at risk, we're going to do something about it. Now, Ken Langone's a no-nonsense guy. And so hearing that he's bullish means that you should probably pay attention.

5:33And one of the parts that I found was most interesting about the interview is he actually said that he was negative on the economic policies coming from the Trump administration. But now that he's starting to see some of the data, he's becoming bullish. He got new data and he changed his mind. Sign of intelligence. So congratulations to Ken Langone for being one of the intellectually honest people, once again, going on national television and saying, I previously thought A, now I think B because I got new information. I wish more people would do that regardless of what they're changing their mind on.

6:00So Ken Langone's bullish, I'm bullish. Now the whole thing's going to be through the second half of the year. Are we right or are we not? This chart is going to blow your mind about the difference in the U.S. economy over just 35 years. Scott Galloway recently shared this, and in 1990, it shows that pretty much the entire United States was based on manufacturing and retail. Think of it as a physical economy. Everything was things that you could touch, that you could feel, that you could go to the store and you could buy. But now all of a sudden, we've completely changed the economy in just 35 years.

6:32Three and a half decades later, our entire economy is based on healthcare and professional services. We have the luxury of the world. We simply got to say to ourselves, why don't we go from a physical economy to a digital economy? And our population got older. And now all of a sudden, the baby boomers, they're dominating everything that goes on in every single state. And so when you see this type of transition, no wonder all of a sudden we have differences in how the government interacts with citizens. You see things like Medicare, Medicaid, Social Security, et cetera, becoming huge burdens on the national debt.

7:05Why is that? Well, it's because of the population and demographics. And so this chart right here is a great explanation for what has happened in America. We went from something that was producing physical goods to now we live in a digital world where older people are dominating with their needs and we simply have to continue to fulfill the promises that we made to them. And so whether you like it or you don't, this is just data. It shows that the U.S. economy has gone through a transformation in 35 years and it helps you better understand why all of a sudden it seems like we went from making things to consuming things.

7:37Where we went from young people who were simply going into factories and manufacturing plants and creating, to all of a sudden now, a lot of people are showing up to the government and saying, you owe me. It's because literally demographics and the change in the US economy forced us into this position. That's it for today's show. Hope you guys are enjoying it. I'm having a blast putting it together. Please make sure that you're following us on X. And also, please, please, please subscribe to the YouTube channel. We're trying our best to grow that thing over there as well. And I will see you guys live tomorrow from the desk of Anthony Pompliano.