The Pomp Podcast
Chief Economist: Inflation Has Peaked — Here's What Happens To Bitcoin Next | Stephanie Roth
- Inflation trajectory: CPI data came in flat in June, softer than expected forecasts of 0.2%+. Tariff-related inflation peaked post-"Liberation Day" and is cooling. AI chip shortages contributed short-term inflation pressure (~15% year-over-year in computer software and accessories) but should fade by mid-2025. Energy prices tied to Iran war uncertainty remain volatile but have settled in the $80s WTI range, manageable for consumers.
- Consumer resilience paradox: Consumers report high affordability concerns and negative sentiment despite solid income growth, payroll strength, and continued spending. The disconnect reflects a price-level shock from post-COVID stimulus and supply constraints rather than ongoing inflation. Most consumers can technically afford goods but dislike the elevated price levels compared to pre-pandemic baselines.
- Fed policy under Kevin Warsh: Warsh has shifted communication away from forward guidance, making markets more data-dependent. No rate cuts expected in 2025; potential September hiking possible if data warrants. Core PCE inflation near 3% remains too far from the 2% target for near-term cuts. Credibility and independence matter more than rate cuts for long-end rate management.
- Housing and work preferences: Mortgage rate increases have sidelined many buyers, but affordability constraints overlap with generational preference shifts toward renting and experiences over homeownership. Return-to-office policies face friction; productivity gains from remote work and AI adoption are shifting worker expectations toward efficiency and flexibility rather than face time.
- 2026 IPO wave: Mega IPOs (SpaceX, others) are not a bubble signal. Corporate buybacks outpace IPO issuance plus lockup expirations, providing liquidity cushion. AI investment remains only ~2% of GDP versus historical bubble thresholds of ~4%. Companies stayed private longer, waiting for favorable macro conditions and capital availability now present in 2025.
- Bitcoin/gold debasement trade cooling: Initial hype around Fed independence concerns and debasement peaked with Warsh's credible appointment. Trade has normalized; assets now trading on fundamentals (inflation dynamics, demand) rather than political Fed-independence fears.