Inflation HITS A 3-Year HIGH! But Here's Why The Economic Data Does NOT Really Matter

0:00Hello, everyone. Inflation came in a little lower than expectations. We're going to talk about Bitcoin versus AI and where you should invest your money. And then the New York Knicks, the greatest basketball game ever played. That's why I lost my voice because I was there. I'm going to tell you what I think. We're live today from the desk of Anthony Pompliano.

0:25All right, ladies and gentlemen, inflation got reported yesterday and people are freaking out. U.S. inflation, according to Heather Long, jumped to 4.2 % year over year in the month of May. That's the highest in three years, and it's up from 2.4 % just back in February of this year. Now, a big reason for this is the war in Iran. Higher gas and energy prices are driving 60 % of the gain in inflation. Shelter and food, especially restaurants, those also contributed, but much smaller. The monthly increase was 0.5%, which is a big number. Now, Charlie Blutlow shows 63 consecutive months with US inflation is above the Fed's 2 % target.

1:0163 months is a crazy number. Both Republicans and Democrats are doing this. The Fed has lost all credibility when it comes to fighting inflation, according to Charlie. And then Robin Brooks, he says that there's really no sign whatsoever that US inflation is overheating. Again, remember only 60 % of all the gain is coming from energy. That has implications for the dollar. And just imagine what will happen to inflation when the war ends and oil prices fall. I think markets are wrong to price hikes for the Fed. Very wrong. Now, what I found interesting is that Anna Wong over at Bloomberg, she also thinks that pricing in the rate hikes is the wrong thing to do.

1:35And so naturally, you've got a lot of smart people who are looking at the data and seeing the nuance, and they're saying inflation core CPI came in lower than expectations. It's only 0.1, but still 0.1 is lower than what people were expecting. So inflation may not be as big of a problem. But here's the thing. Does the average American care what the number is on inflation? Probably not. See, the thing is that people want to understand what's happening in their life. They don't care what the economists are saying. I explained yesterday to Patrick McDavid exactly why the people are more right than the metrics.

2:08Take a listen. I spent a lot of time thinking about data and then talking to people. The number one takeaway I've had is that the people are right, the data is wrong. And what I mean by that is, if you go back, at the end of last year, inflation was coming down. And I think most people, myself included, were like, this is a central banker or a politician's dream. Low inflation, high growth economy. Wow. They're going to pull this off. Before the Iran thing happened, I think that pretty much everyone I knew in finance was kind of like, I can't believe they're pulling this off. If you went and you talked to people, though, they don't care what your numbers are.

2:46They're saying my gas bill was high. My grocery bill is high. Rent is too high. I can't afford a home. This is crazy. Everything is too expensive. And what I used to think is, oh, these people just don't know what the data says. Like the data is telling us that inflation is low. And then I started thinking about it. I said, it doesn't matter what the data says. It's what the people think. Because guess what? Midterms in November, they don't care what the number says. If they think things are too expensive, they're going to vote based on what they think, not on what the data says. And so the reason why that becomes really important is why was it that inflation readings were low, but everyone felt like everything was expensive?

3:20Because both sides were right. And that's the part that no one really wants to talk about. Yes, all of the readings were showing that inflation was coming down going into the end of the year, but it didn't matter. We had 30 % loss of purchasing power for the five years before and everything was sky high prices. You remember going to the grocery store and you would check out and it was 50 bucks and now all of a sudden it's 90. All you're thinking is like inflation, but really what you're talking about is like the nominal cost of goods has gone up. And so who cares what the year over year changes?

3:48All I know is that my bill is significantly higher than it used to be. So the reason I bring that to now is now actually what you have is you have a point in time that people can point to and they say, everything is expensive. Trump went to war with Iran. And I think that is going to be a very big problem for Republicans going into the midterms is because when they look at that gas pump, they are going to equate it directly to the war in Iran. When they go to the grocery store, They're going to say, this is the war in Iran, right? And they're just going to keep tying it there. I think that the administration, their view is, okay, we're going to end it.

4:18The strait's going to open. You're going to see energy prices come down, gas prices come down. I think that there's probably a good chance that that is actually what's going to happen. I do not think that people are going to care, though, because all they're going to have in their head was gas was$5. Grocery prices were too high. I still don't own a home. I still have this problem. I'm still falling further behind. And so you get in this weird game of who goes into the ballot, who votes? Are they voting looking at what the CPI says, or are they voting on what they're feeling? And I bet you if you took a poll of the audience, if you walked down the street and you asked people, what do you think the healthiest economy is?

4:53I mean, look at all the poll data. It's all bad. And so I just think that we're in this very weird world where the Fed is going to make decisions based on the data. I think Tom is right that they should not raise interest rates. but if you go talk to people, people are pissed. They do not like politicians on either side of the aisle because they feel like they're getting their wealth stolen from them. They feel like things are too expensive. And Scott Besant was asked, when he first became a Treasury Secretary, the all-in podcast guys went and they interviewed him. Their question was, do you believe the economic data?

5:26And he said, no. And he very quickly polished the answer. But in his explanation, what he said was, when you're faced with facts, versus what people are telling you. You have to side with the people. Now, he was talking about the Biden high inflation and the fact that Biden was saying, oh, it's coming down, but people were saying it's too expensive, et cetera. I agree with Scott Besson. It's just that structurally, the US economy is facing a problem and both sides of the aisle are gonna have to deal with this going forward. It's gonna be a major, major issue. So there you have it. We can talk all day long till we're blue in the face.

6:02What is the number? Is it 0.1 above, 0.1 below? How are expectations and where are the economists coming in at? None of that matters. Ultimately, people want prices to come down. Inflation coming down just means that prices aren't growing as fast as they were before. But what we need is we need prices to be affordable. It's an affordability crisis. It's not an inflation crisis. And that difference is really important for politicians, investors, and the average American. Bitcoin, artificial intelligence. These two different asset classes, people are trying to figure out. I got$1. Should I put it in Bitcoin?

6:40Should I put it in AI? AI looks super sexy. It's got a lot of momentum. It seems like everyone I know is getting rich in AI right now, but Bitcoin's out of favor. And should I buy the thing that's not popular now? Because it's going to become popular later. This is the great debate of what investors are trying to figure out. Bitcoin, AI, How do I go and grow my money? And now it's all being magnitudes bigger because the IPOs are coming and people are trying to figure out, should I put my money in SpaceX? Should I wait for Anthropic or OpenAI? Or, oh, there's this Bitcoin thing that's liquid that I could buy today.

7:09What do I do? I talked to Patrick David and his whole crew yesterday, tried to explain how I'm thinking about Bitcoin versus AI. Take a listen. I've always believed that when I buy things, I try really hard never to sell them. And so there's nothing you're gonna do to convince me to sell my Bitcoin. But I did. Maybe I'm a good example. We built Sylvia, right? We started to use the new technology. I've always been industry agnostic, interested in technology, right? Bitcoin was one technology. We've got AI, et cetera. But I do think that there's - Are you more pro? Are you more optimistic with Bitcoin today or AI?

7:45I think that they actually reinforce each other. And if you think about what does AI do? AI is from an offensive perspective, it's going to help companies go make money. It's going to be abundance, right? It's going to create a lot of stuff. Bitcoin is all about scarcity. So in a world of abundance, scarcity becomes more valuable. I think that Bitcoin will still continue. Let me ask the question a different way. So I know you're running for office with Bitcoin, the way you gave the answer. What is more likely to 10x faster? Bitcoin? If I take a million dollars and I put it in Bitcoin or if I put it in AI, what's more likely to 10x?

8:16It depends what in AI, but AI for sure. AI. Well, think about Bitcoin has gone, I mean, it's a trillion and a half dollar asset, right? It lost$235 billion, the recent one that they had. It's down to$62K right now. If you had asked me, so in 2018, the bear market, that's when I first started really going on television talking about it. And I used to think, like, these people think I'm an idiot, but I can't believe how easy this is going to be because the thing just fell 80%. If you start talking about an asset after it's down 80%, the odds, as long as it goes back to an all-time high, you look like a genius, right?

8:47And so that's a very different story than now when you're talking about when it's$60 ,000. And so I think that Bitcoin, just given the size, the volatility is compressing. The asymmetric returns that used to be there are very different. Now, go look at gold. I don't think that there's a lot of folks buying gold because they think it's going to 10x in two years. Instead, they're buying gold because they're like, the government's never going to stop printing money. It's going to continue to appreciate. That's really, in my mind, Bitcoin is kind of gold but a better return over the next decade or so.

9:13The AI stuff, though, is creation from scratch. So my investing framework is when you create something from scratch, that is where asymmetry lies. Bitcoin got created from scratch. It became very valuable. Asymmetry. AI today, we're starting at zero. We're not going to go create it. There's going to be a lot of asymmetry. But at some point, AI will hit enough mass adoption where it becomes still very attractive. It's just not going to be 10x in two years. And I think that Bitcoin's already there and gold at some point will get there too. Bitcoin and AI, rather than it be either or, black or white, maybe it's both.

9:45What do you think? Let me know in the comments. I'd love to hear how you're thinking about investing in Bitcoin and artificial intelligence. Now, before I let you go, we got to talk about the New York Knicks. I was at the game last night, game four, the second game at Madison Square Garden. I got a couple of thoughts. The first is that I don't know who's to blame. Is it the mayor? Is it the police? Is it James Dolan? Whoever. But the fact that the New York Knicks fans are not allowed out on 7th Avenue right outside of Madison Square Garden, the vibes are off. Let the fans celebrate. They've been waiting five decades for this moment.

10:19And so having fans right outside the stadium is part of the basketball experience. It's part of the New York experience. Now there are all these big barricades up. And so what happens? The fans are not dumb. They still want to celebrate. So instead of celebrating on 7th Ave, they just went over and they went to Herald Square, an avenue away, and they celebrated there. You got the same fans. You get the same craziness. You get the same excitement and euphoria. Let them do it outside the stadium rather than just pushing them a block away. The second thing, the New York Knicks, this team is going to win because it is destiny.

10:51That's my big takeaway from this whole thing. Last night's game, the first half of the entire game, the vibes, they sucked. People were super down inside the stadium. It literally felt like there was no energy, no energy from the team, no energy from the fans. They were down 29 points at one point. That is crazy. That is the biggest deficit, I think, in NBA Finals history. But guess what? If you come back and you win, that also makes it the biggest recovery in NBA Finals history as well. And so ultimately this team to me, the thing that is most exciting about it is that they epitomize everything about New York.

11:26There's guys from New York. They're playing for their hometown team. And in the last game winning play, I turned to my wife who's in the stands with me and I said to her, I said, do you understand every young boy who plays basketball? This is his dream. You're playing for your hometown New York Knicks. There's five seconds left in an NBA Finals game at Madison Square Garden. The place is rocking. And you got the ball down one point. And then we saw what the New York Knicks did. They came back. They won. The Spurs, I'm not going to attack the Spurs. You know, they're not very good. But just leave that alone for a second.

12:01Wemby, he's running the biggest PSYOP that I've ever seen. Everyone thinks this guy is some super nice French guy. Turns out he's just the dirtiest player in the NBA. But put that aside for a second. at the end of the day the New York Knicks are bringing hope back to this city and I'm excited for everyone who's been a Knicks fan for a very long time I don't care if you like sports or don't like sports everyone likes an underdog story the New York Knicks are the epitome of underdogs but I think that the New York Knicks are going to be the NBA champions so let's see what happens over the next couple of games but New York forever I'll see all of you next time thanks so much for watching please remember to subscribe on YouTube my goal is to get to 1 million subscribers with your help we'll get there I'll see all of you live from the desk of Anthony Popliano tomorrow.