Turn Off the TV: The Market Is Screaming Inflation
And this is what I am buying...
Last night I watched the movie Network, Howard Beale screams into the camera: “You people are the real thing. We are the illusion.” He begs viewers to turn off their televisions, to stop swallowing the pre-packaged narrative. The same applies to markets today. Everyone is glued to the screen, waiting for Donald Trump or Joe Biden to “explain” inflation, waiting for Jerome Powell to soothe or scare. But if you step back and look at the market itself—the real thing—the message couldn’t be louder.
For five years straight, we’ve had higher inflation than the previous decade. And yet we’re told over and over again that “Trump caused it” or “Biden caused it.” That’s the illusion. The truth is simpler: it was always the Fed.
And now, for once, the Fed is trying not to juice inflation further. Powell warns cutting too quickly will reignite it. He’s probably right. But here we are, with relentless pressure to cut and keep cutting. And if they keep giving in like they did last week, it wont stop inflation—it accelerates it.
Meanwhile, interest rates are telling the real story.
The CRB and Yield Curve: A Reflation Signal
Look at the energy-heavy Reuters/Jefferies CRB Index pressing against resistance while the 3-month/10-year yield curve bull steepens. Historically, when commodities push higher while the Fed cuts, the long end takes over—and the curve steepens through reflation. That’s not an illusion. That’s the market’s truth.