To investors,
The government reported inflation metrics this morning and they came in freezing cold compared to economists’ expectations. CPI was forecast to be 3.1% year-over-year, but instead the data came in at 2.7%. That is 40 basis points lower than what economists predicted.
Core CPI was no different. Expectations were 3.0%, but the actual numbers came in at 2.6% year-over-year. Another 40 basis points below expectations.
As I have continued to say, deflation is smacking the US economy in the face. Tariffs are deflationary. AI and robotics are deflationary. Deportations are deflationary. Too many people have their brains broken by politics to understand what is happening right now.
Even Truflation, the most accurate inflation measurement in my opinion, is showing inflation at 2.5% this morning.
You can see from the reaction of the mainstream media that everyone has been convinced inflation is going higher and the economic policies being implemented could not possibly help bring down prices. Take a watch as the inflation numbers came out this morning:
While these year-over-year numbers are encouraging, Professor Jason Furman points out that the numbers of shorter timelines are even more encouraging. He writes:
Core CPI annual rates:
3 month: 1.6% (lowest since Feb-2021)
6 month: 2.6% (lowest since July -2025)
12 months: 2.6% (lowest since Mar-2021)
Geiger Capital shows “core CPI in November came in lower than all 62 forecasters in Bloomberg’s survey predicted…[and] core CPI is at the lowest level since 2021.” Warren Pies hits the nail even harder by explaining that “all 3 broad vectors: Shelter, oil, and labor [are] disinflating.”
Data is data. People may not like these facts, but it doesn’t change them. Harvard Professor of Economics Ken Rogoff said it best on CNN this morning when he said “I was surprised. It was a better number than anyone was expecting. It was positive news — there’s no other way to spin it.”
Again, politics broke the brains of a lot of people. Democrats are predicting inflation to be over 5% a year from now and Republicans are predicting the number to be around 1.5%. The truth is probably somewhere inbetween.
Your job as an investor is to tune out the noise. Look at the data. Read the source materials. Allocate your capital based on what is likely to happen, not based on what you want to happen.
Investors have to be truth seekers. Politics gets in the way of that pursuit. Inflation is coming down. Deflationary forces are assaulting the economy. And my guess is that GDP growth will accelerate in coming months and asset prices are going higher.
Have a great day. I’ll talk to everyone tomorrow.
- Anthony Pompliano
Founder & CEO, Professional Capital Management
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Pomp or anyone else -- I've asked before and I'll ask again -- how do you see tariffs as deflationary ?
I see only 2 legitimate possible deflationary impacts of tariffs and neither is good or actually relevant currently. one - tariffs transfer so much $ from private to government that deficits get reduced and therefore reduce pricing pressures. this one isn't relevant -- the current admin is actually spending more and growing the deficit. And two - tariffs slow economic activity and consumption which lowers demand and therefore prices. Jury is still out on this a bit depending on which consumer segment you're looking at but overall GDP is still strong.
similarly, I'd ask how you see mass deportation as deflationary ? for this I can't come up with a single legitimate argument but I'd love to be enlightened and learn.
I don't believe that data since Trump fired the head of the BLS because he didn't like that he was doing his job. Sorry, Anthony---not sure why you believe the data--seems incredibly naive and you don't come across as naive.