원문 보기
The market is pretty sure that producer price inflation is going to surpass consumer price inflation on a year-over-year basis for three consecutive months this year. Now, that's very interesting. Uh Now, what is this saying? Well, you can see it started out closer to uh 25 or 20% probability, moved to 30 uh as the initial stages of the war in Iran to Gulf.
And then everyone thought it was going to be over quickly, settled back, and you can see what has happened since. Uh this is more extended than many observers uh predicted. Hey guys, welcome to Everyday Finance. Emerging technology, declining interest rates, and shifting macro conditions all seem to be coming together to generate a gigantic, system-changing cycle in the Bitcoin market.
As signs point to a possible macroeconomic shift toward lower inflation, declining interest rates, and AI-driven productivity surges, prominent financial figures are becoming more optimistic. This is further supported by the fact that Bitcoin is once again outperforming gold as risk appetite returns, according to Cathie Wood.
Additionally, Tom Lee sees an even more significant shift in which blockchain and artificial intelligence combine to build the fundamental framework of the world economy, turning cryptocurrency from a simple commodity into the fundamental system for identity, payments, and financial settlement. If these patterns hold true and drive Bitcoin to $250,000, Ethereum may follow with goals ranging from $12,000 to $60,000, depending on how deeply integrated it is.
This forthcoming cycle will be quite different and possibly more explosive than any previous one. Now, here's um productivity, which uh is a part of that story. Uh the technology uh the innovation platforms that I just mentioned uh involve 15 different technologies. Uh they're converging, and we think that productivity growth is going to soar in uh in the next few years.
So, here we ask the question, will non-farm productivity uh increase above 3% in any quarter? This is on a year-over-year basis. In any quarter in '26. And you can see there's a 42% uh probability. Um well, we think the probability actually is is much higher than that. And it's actually a for a statistical reason.
If you look at productivity today, you can see we're at roughly 2.5%. And you can also see, again, if you look across this chart, this is in the higher half of the history of this chart. So, uh pretty strong. Uh and as we have said on in the know many times, we've been in a rolling recession, and this is what has happened.
That's so interesting. Housing has been down and out. Manufacturing's been down and out. Small business down and out. Consumers have been in a funk uh as measured by sentiment. And productivity is at 2.5%. So, we believe that these technologies are already having an impact on productivity. And we think in the first quarter, when the numbers are reported, and they'll be revised uh two times, I think, but when uh the the first quarter number is reported, if it is up at all on a quarter-to-quarter basis, uh so, from the fourth quarter to the first quarter, um because last year's first quarter was down uh roughly 0.9% on a quarter-to-quarter basis.
If it's up at all, now that's annualized. If it's up at all uh in the first quarter, and we think it will be on a quarter-to-quarter basis, that will take the year-over-year above 3%. Now, I know why it's probably at a low 42%. It's because people are looking at some very big productivity numbers in the second and third quarter of last year, 4.2%, 5.2%.
And if we're below those uh numbers, uh then, you know, this will come back down. Nonetheless, that first quarter might actually be above 3%. So, and here's unit labor costs, 2.3 to 2.4% on a year-over-year basis. Uh and so, for those of you worried about inflation, uh you can see this looks very different from post-COVID.
Uh unit labor costs soared, and one of the reasons is wage growth is very well-behaved, very well-behaved. It was not uh after COVID as companies were scrambling to find employees to so that they could survive, the companies could survive, and the employees actually. Um that's not the case right now.
In fact, a lot of uh employment indicators uh suggest uh we're on we're we're in a a weak environment, and part of it is AI. Entry-level jobs are not there for college graduates the way uh they have been in the past. Uh so, unit labor costs, this is um underlying uh inflation 2.4%. What's interesting about that is if you look at the tips market, that's what the tips market says inflation is going to be.
In other words, no real improvement for from here. If we're right and productivity starts scaling 3 and into next year 4 or 5%. This unit labor cost growth rate will come down and underlying inflation will come down. Here is some other reasons inflation's coming down. Again, very different from post-COVID when we had that supply shock and many people are saying we're in another supply shock and we are when it comes to oil for sure, but we are not in a broad-based supply shock like we were after COVID.
Nothing like it. In fact, quite the opposite in housing. Housing inflation is nil for existing home prices and still negative for for new home prices. And and yet here you do see the supply shock when it comes to oil. How long will this last? Well, the longer the Middle East turmoil continues, the longer this supply shock will last and the question is who's going to pay for it?
Is it going to get through to the consumer price level or is it going to be eaten by the the um by by the consumer companies who have to pay up, but can't get their pricing through to the end consumer? And we have a strong point of view about that. Here's another chart. This is commodity broad-based uh commodity index and you can see uh a bit of a supply shock, but I would submit that it is more than that.
It is demand going up relative to supply. And this is a call for action, a call for more supply. Uh again, who's going to pay for this is the question. Is it going to get through to the consumer price level? Now, here is the cal- Cal sheet betting on that. Uh this is the PPI a year-over-year percent change minus the CPI year-over-year percent change.
Uh is it going to be uh is the PPI inflation rate going to be above the CPI inflation rate for three consecutive months in 2026? So, you can see here that the market is pretty sure that producer price inflation is going to surpass uh consumer price inflation on a year-over-year basis uh for three consecutive months this year.
Now, that's very interesting. Uh Now, what is this saying? Well, you can see it started out closer to uh 25 or 20% probability, moved to 30 uh as the initial stages of the war in Iran took off, and then everyone thought it was going to be over quickly, settled back, and you can see what has happened since.
Uh this is more extended than many observers uh predicted. As Bitcoin starts to beat gold once more, a historical indication that frequently signals the beginning of a strong cryptocurrency run, a small but fundamental shift is taking place beneath the surface of the market. In a classic shift from defensive assets driven by fear to growth assets fueled by recovering liquidity and risk appetite, gold's initial jump owing to macro concern has started to wane just as Bitcoin quietly gains strength.
A lack of corroboration from the larger metals complex further highlights this divergence, indicating that gold's earlier advance may have been caused by transient dislocations rather than a persistent worldwide trend. This environment creates a strong basis for risk assets, signaling not a peak but the start of a new growth trend that could accelerate much faster than most market participants anticipate, especially when combined with recent manufacturing data that shows global growth is stabilizing rather than weakening.
Interesting about this is we already have two months where the PPI inflation rate has surpassed the CPI inflation rate two consecutive months. Last In February, the PPI was 3.4% at a year-over-year rate and the CPI 2.4. Um and so this, when the PPI is released on April 14th, this contract will probably close out and you know, we'll probably roll into another one, maybe six consecutive months or or something like that.
We shall see. Um but let me show you Yes. Uh I've shown you the the total PPI and CPI, but here on this chart is the core CPI minus the core PPI. And you can see that even really be or maybe it is in conjunction with the war, a lot of the producer price is other than food and energy have been increasing at an accelerated rate while the CPI, which you see there in purple, has been decelerating.
That's interesting. That's really interesting. What does this say? It's saying perhaps that consumer goods companies are not able to pass the cost increases along and that their margins probably will be squeezed. And here you can see that that is true according to Trueflation. So as measured by Trueflation the year-over-year price consumer inflation rate is about 1.7%.
Now it got as low I think as 1.4 1.3 has come up a little bit here but has not gone anywhere near that 3.4% PPI inflation rate even though gasoline prices are a big a big psychological um and and impactful category other prices must either be coming down or or or I find it difficult to explain and even more so when we look at the core Trueflation inflation rate it's at 1.1% and you can see it struggled in the 2 to 3% range for 2 and 1/2 years or so it has resolved to the downside and if you look at what's going on right now we haven't seen this kind of CPI inflation core inflation rate since COVID when we were in dire straits so that is very interesting.
And here you can see one of the things that's going on with the PPI. The PPI is reflecting what's going on in the manufacturing sector, to be sure. This is the purchasing managers index, and and there's a clear pickup. Uh, now I think uh that this is related to our tax package, uh as I explained before, and some of the stimulus is getting into our economy, stimulating the supply side of the economy, which will be good uh longer run for the overall inflation rate.
Manufacturers are responding to uh those higher prices, and they are producing more. Uh here you can see this is an outright boom, um it's uh an indicator that I I believe uh uh that Piper Sandler um uh gave us or produced, uh and you can see it is flat This is US flatbed truck market demand index. So, this is an indicator that something's booming out there, uh and no one's using the word boom, uh but I think there is a call to action, the pricing certainly is is one reason, but I also think there's a lot more foreign direct investment coming into the United States.
Some of it might be tariff related, some of it is because deregulation and tax policy are so friendly. Uh so, that's interesting. Uh you can see on the services sector, uh both orders and unfortunately prices, prices again I think being impacted by what's going on in the Middle East, and it may be opportunistic pricing around that.
Um normally uh when we see uh new orders pick up, uh the the prices are are coming down. Uh and I do think that uh that the the purple chart will resolve to the downside once the Middle East turmoil clears up to some extent. Here is why the pricing's not getting through. Sentiment is terrible as measured by the University of Michigan.
And these are the three income levels, low, mid, and high. The lower income level in the last month dropped back to its recent low. So, affordability, unfortunately, still a massive problem and could really impact the midterm elections. Unemployment, here's confidence in as measured by jobs easy to get minus jobs hard to get.
Confidence is deteriorating here. According to Cathie Wood, the macroeconomic environment seems to be changing toward a scenario for which the majority of the market is unprepared. Interest rates may actually decline going forward as a result of peaking inflationary pressures. Inflation may decrease far more quickly than anticipated as supply chains return to normal, energy prices stabilize, and businesses use automation and artificial intelligence to boost productivity.
This would relieve the pressure on interest rates to rise. Concurrently, the overall financial system is holding up remarkably well as shown by historically tight high yield credit spreads, contained bank risk indicators, and stronger than expected corporate profits that are ready to withstand short-term pressures through efficiency gains driven by AI.
In the end, this confluence of declining inflation, stable credit markets, and increased productivity produces a potent environment where reduced interest rates might serve as a huge stimulus, propelling both stocks and cryptocurrencies into their next significant run upward.
Comments 0