Peter Schiff doubts inflation is cooling off narrative.

Prices fell in December by 0.1% every month, which is near market expectations. Stripping out food and energy prices, which tend to be more volatile, core CPI came in at 5.7%, down from November’s 6% annual rate and up 0.3% from the month before.  

“Prices fell in December by 0.1% every month, which is near market expectations”

WEALTH TRAINING COMPANY

POTUS makes a policy victory lap
“It all adds up to a real break for consumers, real breathing room for families, and more proof that my economic plan is working,” said President Joe Biden on Thursday. “We have more work to do, but we’re on the right track.”

Then bulls breathe a sigh of relief, believing that peak tightening, the trough in the central bank liquidity cycle, is in situ. The Great pivot comes in stages, smaller rate hikes, then a pause, and eventually a cut in rate hikes. Stocks improving and rallying into a presidential election year 2024 is a familiar playbook.

But not everyone is buying it
Peter Schiff doubts inflation is cooling off narrative.
“A one-month, .1% dip in #CPI doesn’t mean #inflation is cooling off. The core was up .3%, which annualizes to 4%, double the #Fed’s 2% target. YoY CPI still rose 6.5% and with the dollar weakening, federal budget deficits & consumer credit soaring, inflation is poised to heat up.

“It all adds up to a real break for consumers, real breathing room for families, and more proof that my economic plan is working”

JOE BIDEN

Peter Schiff explained in his latest podcast that most people are still clueless about what is going on. “This lull in rising prices is likely temporary,” he said.

What investors are trying to figure out is ‘has inflation peaked?’ Have we seen peak inflation? Now, I think the answer to that question is no. I don’t think inflation has peaked. Now, it may have peaked for a short period. It may take until the second half of 2023 before we get a year-over-year rate of inflation that is higher than the high water mark for 2022.

“the days of low inflation are over, and we’re living in an era of high inflation” – Peter Schiff

Who knows? Maybe it will take into 2024. But the one thing that we are certain of is that we’re not going anywhere near 2%. And that is what investors still don’t understand — that the days of low inflation are over, and we’re living in an era of high inflation. That is a complete game-changer for the Fed and the Fed has yet to come to terms with this new reality, nor has the market,” said Peter Schiff.

Indeed, we have been forecasting that the Fed might need to raise its inflation mandate from 2% to 4% to remain credible.

Geopolitics, the move away from a dollar-centric world, and the disruption of global trade could mean the end of abundance, cheap goods, energy, and food commodities. So as more US dollars are created to finance the ballooning public deficit, Congress approved in December a 1.7 trillion US dollar spending bill, and there are fewer buyers for those treasuries in a bipolar world. In other words, the above dynamics suggest higher treasury yields, and higher inflation, in a bipolar world where TINA no longer applies. A commodity-backed currency is an alternative to a debt-based one.