#1340 Darius Dale | Inflation Is Sticky & Bitcoin Will Skyrocket?!

— "No landing" scenario as the most probable economic outcome over the next 12 months, where trend or above-trend growth allows inflation to decelerate but remain above the Fed's 2% target.

— Inflation bottoming in Q3 at levels inconsistent with 2%, with reacceleration expected in Q4; the Fed likely to eventually accept 3% as the new structural inflation target.

— Broad-based inflation persistence across median CPI (5%), trim mean CPI (4.3%), and core services inflation (6%), contradicting the "immaculate disinflation" narrative.

— Mixed leading indicators: Some surveys (ISM services, University of Michigan sentiment) support continued disinflation, while others (NFIB small business survey, manufacturing data) show inflation pressures re-emerging.

— Reflation market regime explaining why stocks, crypto, and risk assets rally despite rising interest rates—consistent with historical reflation dynamics, not stagflation.

— Fed policy assessment: The Fed is tightening less than markets assume; policy is not particularly restrictive given a resilient economy that doesn't require rate cuts.

— Three-month annualized headline CPI popped to 3.9%, now trending sideways at around 3% year-over-year.

— Core CPI accelerated to 4.1% through May; core services inflation remains stubbornly high at 4.3%.

— Core PCE deflator popped to 3.5% in the most recent month, second consecutive month of acceleration.

— Equity and crypto strength at all-time highs despite rising bond yields, attributed to reflation regime favoring long risk assets over defensive positions.

— Rate cut expectations recalibrated: Markets pricing in ~2 rate cuts for 2024, down from 7–8 expected at year start; zero cuts now discussed among Fed officials.

— Monitor the disinflation inflection point carefully: If inflation bottoms above 2% and reaccelerates into Q4, this will signal problems for asset markets; current leading survey data are beginning to crack on this theme, requiring real-time portfolio reassessment.

— Build robust, multi-signal investment processes using orthogonal data sources rather than relying on single indicators; survey methodologies matter less when analyzing rate-of-change signals and detecting whether data accelerate or decelerate relative to trend.

— Position for reflation dynamics, not stagflation: Rising yields + rising equity and crypto prices is a reflation market regime; maintain exposure to risk assets while avoiding long bonds and the dollar as policy normalizes in a resilient, non-recessionary economy.