One Data Point Closer to a “Terrifying Bull Market”

This morning’s Producer Price Index (PPI) shows that inflation is still with us.

While traders were betting that the Fed would cut interest rates next month, that’s being rethought today. And with a rate cut already priced into markets, prices are trending lower.

Given how far markets have already gone, the prospect of interest rate cuts isn’t bullish for the economy – it’s actually bearish. It’s a sign that the real economy is struggling and needs cheaper access to capital.

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Markets are overpricing economic conditions and could be ready for a big pullback (Source: X/Twitter)

The staggering 0.9% month-over-month increase shows that inflation isn’t going away – and may be about to accelerate.

If so, that could cause conditions for a crack-up boom – or what Mark Jeftovic refers to as a “Terrifying Bull Market” – a stock market that rallies, but because investors are trying to get out of the dollar by any means possible.

Today’s data print isn’t the end of the world – the market isn’t even down that much this morning. But it’s one more nail in the coffin for the value of the dollar.

~ Addison

P.S. Some companies are thriving under the shifting tariff regime — and from other Trump policies that are decidedly pro-growth. But “pro-growth” also means you need lower interest rates. At least in the Trump Great Reset playbook.

The tricky part? Government printing debt out of thin air usually means more inflation. Under normal circumstances, the Federal Reserve would be leaving rates unchanged in September… or even raising them.

Therein lies the pickle we’re in.

You can’t let interest payments on the existing debt swallow the government budget. This means that, in addition to “pro-growth” economic strategies, you need lower interest rates.

But lower interest rates also mean higher consumer prices for necessities like energy, food, housing, health care and tuition.

The bond market doesn’t like deficits or debt, either. Investors demand higher interest rates to lend the government money.

Like we said, it’s a pickle.

We’ll be digging into both sides of that equation — plus our latest research — in this week’s special session of Grey Swan Live! tomorrow, Friday, August 15, 2025… exactly 54 years since Nixon “closed the gold window.” Members will get the sneak peek before anyone else.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

This morning’s Producer Price Index (PPI) shows that inflation is still with us.

While traders were betting that the Fed would cut interest rates next month, that’s being rethought today. And with a rate cut already priced into markets, prices are trending lower.

Turn Your Images On

Markets are overpricing economic conditions and could be ready for a big pullback (Source: X/Twitter)

The staggering 0.9% month-over-month increase shows that inflation isn’t going away – and may be about to accelerate.

Today’s data print isn’t the end of the world – the market isn’t even down that much this morning. But it’s one more nail in the coffin for the value of the dollar.

~ Addison

Therein lies the pickle we’re in.

You can’t let interest payments on the existing debt swallow the government budget. This means that, in addition to “pro-growth” economic strategies, you need lower interest rates.

But lower interest rates also mean higher consumer prices for necessities like energy, food, housing, health care and tuition.

The bond market doesn’t like deficits or debt, either. Investors demand higher interest rates to lend the government money.

Like we said, it’s a pickle.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

Trump and Powell are no buddies. They’ve been fighting over rate cuts all year—Trump demanding more, Powell holding back. Even after cutting twice, Trump called him “grossly incompetent” and said he’d “love to fire” him. The tension has been building for months.

And Trump now seems ready to install someone who shares his appetite for lower rates and easier money.

Trump has been dropping hints for weeks—saying on November 18, “I think I already know my choice,” and then doubling down last Sunday aboard Air Force One with, “I know who I am going to pick… we’ll be announcing it.”

He was referring to one Kevin Hassett, who—according to a recent Bloomberg report—has emerged as the overwhelming favorite to become the next Fed chair.

Here we sit — investors, analysts, retirees, accountants, even a few masochistic economists — gathered beneath the leafless monetary tree, rehearsing our lines as we wait for Jerome Powell to step onstage and tell us what the future means.

Spoiler: he can’t. But that does not stop us from waiting.

Tomorrow, he is expected to deliver the December rate cut. Polymarket odds sit at 96% for a dainty 25-point cut.

Trump, Navarro and Lutnick pine for 50 points.

And somewhere in the wings smiles Kevin Hassett — at 74% odds this morning, the presumed Powell successor — watching the last few snowflakes fall before his cue arrives.

With U.S. stocks trading at about 24 times forward earnings, plans for capital growth have to go off without a hitch. Given the billions of dollars in commitments by AI companies, financing to the hilt on debt, the most realistic outcome is a hitch.

On a valuation basis, global markets will likely show better returns than U.S. stocks in 2026.

America leads the world in innovation. A U.S. tech stock will naturally fetch a higher price than, say, a German brewery. But value matters, too.

As copper flowed into the United States, LME inventories thinned and backwardation steepened. Higher U.S. pricing, tariff protection, and lower political risk made American warehouses the most attractive destination for metal. Each new shipment strengthened the spread.

The arbitrage, once triggered, became self-reinforcing. Traders were not participating in theory; they were responding to the physical incentives in front of them.

The United States had quietly become the marginal buyer of the world’s most important industrial metal. China, long the gravitational center of global copper demand, found itself on the outside.