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Core inflation as measured by Trueflation. Later in our program, we will show you exactly where the price drop is occurring. Because, given the situation with oil and official government figures, something must be getting cheaper, which government statistics do not record. Inflation is 1.5 %. From a historical perspective, the Fed, looking at this chart, will not tighten policy.
She will not strengthen it. And I think now that we're getting the monthly numbers and the jobs report, the Fed isn't getting a lot of signals about the need to tighten. Hello everyone, welcome to Everyday Finance. Renowned industry experts Katie Wood and Raoul Pal suggest that the cryptocurrency market is approaching a tipping point due to improving macroeconomic, technical, and fundamental conditions .
Katie Wood highlights that Bitcoin is regaining momentum amid strengthening on-chain metrics and easing inflation concerns, arguing that the convergence of Bitcoin, stablecoins, and the expansion of the digital economy opens the way for farsighted investors to make significant gains amid technological change.
Raul Pal is currently observing rare “bullish” technical signals on the long-term charts of Bitcoin, Ethereum, and Solana, as well as early signs of improving global market liquidity. However, he urges patience, noting that while the full influx of capital needed for a broad market breakout has not yet occurred, the foundation is actively being formed to make 2026 a pivotal year for crypto assets.
The fact is that oil prices peaked at $147, it seems , in 2008. And even despite the two wars we have seen, we have not managed to exceed this price. Moreover, we have come down from the post-COVID price peak. We just matched it , and the price immediately went down. We have analyzed the supply and demand for oil and believe that a significant surplus is brewing.
One of the biggest influencers is Abu Dhabi. In May, the UAE withdrew from OPEC. And their production volumes have reached a historic high. That's approximately 4.11 million barrels per day. I think under the OPEC quota system, production was capped at, say, a low of three million. It was probably a little over two million.
And now the country has simply " broken off the chain." Why do we think this happened? I have been to Abu Dhabi. Abu Dhabi is one of the most innovative countries in the world. Sheikh Tahnun focused on artificial intelligence. In 2021, I gave a presentation in Abu Dhabi to a group of world leaders on the topic of artificial intelligence.
And I remember talking to leaders there, and they asked, "What steps should we take to benefit from this emerging technological revolution ?" And back then we didn't even have ChatGPT. This became a wake-up call for many people. And I answered: develop autonomous mobility, simplify the regulatory framework.
Wow , how did they do it? I think they pushed our own Federal Aviation Administration (FAA) into action. They have invested aggressively in cryptography, robotics, certainly AI, and also in healthcare and the impact that AI will have on it . So what conclusion did they probably reach? They must have decided that the price of oil had peaked, and I remember telling them that I thought the price would collapse.
Of course, it seems a bit silly now. Maybe, maybe not, because it really started to fall, didn't it? And then, of course, two wars began: Russia and Iran. And now it is decreasing again. Abu Dhabi probably decided to try to get the maximum price for oil. Let's sell as much as possible now. Because oil prices are falling.
I think they see that thanks to the transition to autonomous technologies, the power grids will ensure the operation of transport, and the energy for them is not oil, but natural gas, hydropower, solar energy, renewable sources and wind. So I believe that the price of oil will drop significantly. And that's how we'll get our beneficial deflation, because for most countries in the world it's like a tax cut.
Although I must say that for the US this is not as significant a tax cut as it was before. Since 2015, our exports have grown from almost zero to 6, 6.3 million today. And it continues to grow. We are a net producer of energy, so this will affect us, but mostly in the regions where energy resources are extracted.
Here it is again with commodity prices, same story. We have reached about the same level of supply chain bottlenecks as we had post-COVID. We're back to that. This is largely due to oil. Now we are starting to decline again, except for some prices, such as copper, which reached an all-time high due to its importance for data centers and electric vehicles.
So, there is a reason for this. You know, the demand curve shifts upward. Demand is growing relative to supply. The price rises as a signal to increase production. So, will the core CPI fall below 2%? Most people think not. And we, we this year. So, we have until December. We think it's possible that if oil prices fall, it could have an impact.
This is a baseline indicator, so it does not include energy carriers. But energy is part of many other products. And we're starting to see consumer prices fall because consumers are suffering , mostly low- and middle-income earners. So we're starting to see companies cutting prices to stimulate demand.
And for this reason, we are seeing margin compression. Here , in purple , is the core CPI . And green is the base CPI. Although CPI prices have increased, you've seen it in commodity prices, this core CPI inflation rate has essentially stabilized, but we believe it is starting to come down again and will do so more quickly.
Now on inflation: I think Kevin Warsh is looking at private figures, and here you see that the overall rate according to Trueflation is now about 2.5%. It has increased compared to the past level, mainly due to oil prices, but look what happened to core inflation according to Trueflation. In the next issue, we will show where exactly we see these price reductions.
After all, given what happened with oil and government indicators, something must be going down that the government is not noticing. Inflation at 1.5% in a historical context means that the Fed, looking at this chart, will not tighten policy. She will not strengthen it. And I think now that we're getting the monthly indicators and we have this employment report.
The Fed is not getting many signals that it should tighten policy. Katie Wood argues that Bitcoin is entering a strong recovery phase, supported by improving network performance , reflecting a historical pattern where network strength recovers ahead of market sentiment. Overcoming fears that stablecoins will undermine the utility of Bitcoin, we see a mutually beneficial digital financial ecosystem where stablecoin infrastructure and Bitcoin reinforce each other.
This vision is being actively implemented in 2026 as major payment institutions like Visa scale stablecoin settlement protocols in parallel with AI-powered commerce. Meanwhile, issuer Circle reports massive growth in USDC transaction volumes of 151% year-over-year . Rather than displacing Bitcoin, the rapid adoption of digital dollars as permanent programmable settlement levels for autonomous AI agents is expanding the mainstream adoption of digital assets, laying the structural foundation for the sustainable growth of cryptocurrencies as seller pressure in the market eases.
Uh, it's just more recent data and you see a further slowdown. So, we are back to where we were before COVID. Um, I think this is, uh, important. I think this is important for the Fed. Well, as I mentioned at the beginning, however, it will become apparent, if we are right and we are in a rapidly growing economy, that some of the rewards associated with productivity growth should be reflected not only in margins but also in compensation.
That is, the average hourly wage. So when we start talking about the labor shortage again— we don't now, which is interesting—but when we start talking about it, especially in the younger age groups, the unemployment rate will start to come down significantly. Then I truly believe we will see wage growth.
along with productivity growth, and that's normal. Here you see a big surprise in the performance report we received this week. These were non-labor costs per unit of output. What the hell is this? So, you know, we look back and ask ourselves: what do n't we understand? So we delved into this a bit.
That looks very inflationary, doesn't it? This is not true. What it calculates is accelerated depreciation. We know, of course, that this accelerated depreciation is probably the most extreme we've seen, because the tax package contributed to it. If you're building a manufacturing facility over the next, well, two to two and a half years, if you start it, you can depreciate it 100% in the first year instead of 30 to 40 years.
So, you get a huge tax refund in advance. The same goes for equipment, internal research and development, and software costs . So this accelerated depreciation actually accelerates capital expenditures. This is good news. Here's more about monetary policy or what the Fed can focus on. I just gave you some metrics that they're looking at and trying to figure out.
The last one is very interesting. Uh , this is another landmark , at least for me. Um, there has been a downward trend since 2008-9 in the yield curve, which is measured as the ratio of the yield on 10-year Treasury bonds to the yield on 2-year bonds. Hmm, what does this tell us? Usually, usually this rise or steepening of the curve occurs because long-term bond yields are rising faster than 2-year yields, which are much more sensitive to Fed policy.
What's happening now is that recently short-term rates have been rising more than long-term rates. And I think that's because there are more and more signals that inflation is coming in lower than expected, and that we may be in an era similar to the Industrial Revolution, when it was a period of deflationary trends, so the yield curve was negative more than half the time, and on average it was 100 basis points lower.
We could be heading back to a period that I know will be a big surprise for fixed income markets. Katie Wood argues that recent market concerns, particularly concerns about whether Michael Saylor's strategy could force the company into forced asset sales due to debt and preferred stock dividend pressures, are being addressed constructively, as recent weighted bitcoin sales, along with the creation of a substantial $4.65 billion cash reserve, demonstrate proactive liquidity management without compromising the underlying treasury thesis.
With subdued systemic financial risks and the neutralization of concerns about corporate insolvency, an extremely favorable macroeconomic situation can be highlighted, resulting from a combination of easing inflation and accelerating technological innovations in the areas of artificial intelligence, robotics, and blockchain ecosystems.
This structural disinflation is expected to unlock central bank policy flexibility while boosting overall economic productivity, positioning the current market volatility not as a long-term peak but as a fundamental basis for the next major technological uptick, dependent only on the emergence of broader market liquidity , as Raul Pal has emphasized, to catalyze the next major cryptocurrency breakout.
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