Last Week Was the Warning... What Comes Next Is Bigger

The Inflation Illusion [0:00]

• Prices are a result of inflation, not the cause, making CPI data a lagging indicator.
• The CPI methodology deliberately understates the true severity of inflation.

  Prices don't tell you the story when it comes to inflation because prices rise as a result of inflation. They are not inflation.

Debt and Delinquency [0:55]

• Auto loan delinquencies are soaring and mortgage rejections are rising as debt levels become unsustainable.
• The Fed is responding by making credit easier to access, which is the opposite of necessary corrective action.

  Delinquencies are at the highest they've been since the tail end of the Great Recession. They're going to go a lot higher than that.

The July CPI Reality [1:50]

• Headline CPI rose 0.1% as expected, but this was driven by a temporary decline in energy prices.
• Core inflation remains 25% higher than the Fed's 2% target, despite market optimism.

  The year-over-year core is still up 2.5%. That's significantly higher, 25% higher, to be exact, than the Fed's 2% target.

Accounting Tricks [3:25]

• CPI calculations use monthly averages rather than month-end prices, obscuring recent surges in oil costs.
• Future CPI reports will likely worsen as the temporary benefit of falling oil prices fades.

  The July number is still being heavily influenced by the big drop in oil prices that we had in June.

The Record Deficit [7:55]

• July saw a record $432 billion deficit, an 18% increase from the previous year.
• Total fiscal year deficit reached $1.8 trillion with two months remaining.

  That's the red ink that was chalked up just in the month of July. That is an all time record.

Hidden Debt Accumulation [9:15]

• National debt rose by $2.1 trillion in 10 months, exceeding the official $1.8 trillion deficit.
• Off-budget spending, such as disaster relief, is excluded from official deficit reporting, masking the true fiscal burden.

  The national debt rose during those identical 10 months by more than $2.1 trillion.

The Fed's Choice [11:15]

• Large deficits force the Fed to choose inflation to prevent interest rates from soaring.
• High rates would otherwise force politically impossible tax hikes or spending cuts.

  The bigger the deficits get, the more pressure there is on the Fed to choose inflation.

Political Shift [15:45]

• Both the Democratic and Republican parties are moving toward socialism.
• The political spectrum is shifting left, reducing individual freedom and increasing government control.

  Both parties are moving left. The problem is it's hard to figure out who is the cart and who is the horse.

Corruption Concerns [18:40]

• The charging of premium fees for early access to presidential posts on Truth Social is unprecedented and abnormal.
• Such practices, alongside economic weakness, threaten the long-term viability of the Republican platform.

  I don't know any social media service where you pay $100,000 more a month to be a premium member.

Bitcoin vs. Precious Metals [20:30]

• Bitcoin has failed to rally alongside tech stocks and precious metals, indicating a loss of momentum.
• ETF investors are likely to capitulate as Bitcoin prices drop further, seeking "hotter" assets.

  The longer you stay in Bitcoin, the more of the gold and silver rally you're going to miss out on.

The Iran Quagmire [23:05]

• The U.S. involvement in the Middle East has become an expensive, ineffective "forever war."
• The promise of a quick victory was false, and the Strait of Hormuz remains a point of contention.

  I said eventually Trump was going to have to surrender and pretend he won. That's what I said week one.

Failed Negotiations [25:10]

• Claims of a deal to open the Strait of Hormuz and end the nuclear threat have proven to be baseless.
• Iran is demanding the removal of U.S. forces and the lifting of all sanctions before negotiating.

  The Iranians have made it clear that there's not going to be a deal that they are not going to even negotiate on a nuclear deal until their terms are met.

Geopolitical Consequences [27:30]

• The war has damaged U.S. prestige and credibility, potentially weakening the petrodollar.
• Other nations now see that they can stand up to U.S. military power, undermining the demand for Treasuries.

  We made Iran look tough. We made Iran look good. The leaders can say we stood up to the United States.

Economic Threat [29:15]

• The U.S. has extinguished a non-existent military threat while creating a larger economic one.
• Iran is waiting for the U.S. election, hoping for a political shift that favors their interests.

  They're going to wait out the elections. They've even said that. They said there's no point in negotiating with Trump.

Conclusion [30:45]

• The market's resilience is built on the false belief that the war is over and that the status quo will hold.
• Investors must prioritize understanding economic realities over political narratives.

  I hate to be right on this. I know I was right at the beginning. I was hoping and I said that I said, this is how it's going to go.