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.

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.

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.)

By then the receipts on my desk had arranged themselves into a sort of chorus. I heard, faintly, another refrain—one from Kentucky. In the first days of the shutdown, Senator Rand Paul stood alone among Republicans and voted against his party’s stopgap, telling interviewers that the numbers “don’t add up” and that he would not sign on to another year that piles $2 trillion onto the debt.

That, I realized, is what the tariff story shares with the broader budget theater: the habit of calling a tax something else, of shifting burdens into the fog and then celebrating the silhouette as victory. Even the vote tally made the point: he was the only Republican “no,” a lonely arithmetic lesson in a crowded room.

Senator Rand Paul, (R. KY), who was the sole Republican to vote against a continuing resolution, seems to care about the actual finances of the government. “I would never vote for a bill that added $2 trillion in national debt,” Paul said in various interviews over the weekend.

The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.

Oy.

We liked what Liz Wolfe at Reason wrote on Friday, so we’ll repeat it here: “One of the dirty little secrets of every shutdown is that everything remains mostly fine. Private markets could easily replace many federal functions.”

It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.

The Liberal Democratic Party victory has sent Japanese stocks soaring, as party President Sanae Takaichi – now set to become Japan’s first female Prime Minister – is a proponent of stimulus spending, and a China hawk. The electoral win is a vote to keep the yen carry trade alive… and well.

The “yen carry trade” is a currency trading strategy. By borrowing Japanese yen at low interest rates and investing in higher-yielding assets, investors have profited from the interest rate differential. Yen carry trades have played a huge role in global liquidity for decades.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.

Affordability is much more of an issue. Food, rent, healthcare, and childcare are all rising faster than wages. Households aren’t jobless; they’re stretched. Job “quits” are at crisis-level lows.

In addition to the top 10% of earners, consumer spending is still strong. Not necessarily because of prosperity, but because households are taking extra shifts, hustling gigs, working late into the night, and using credit cards. The trends hold up demand but hollow out savings.

It’s the quiet form of financial repression. In an era of fiscal dominance, savers see easy returns clipped, workers stretch hours just to stay even, and wealth slips upward into assets while daily life grows harder to afford.

The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.

Oy.

It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.