The Private Market Doesn't Believe The Government Economic Data Anymore
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To investors,
We all want a crystal ball to see into the future. If you had one, you could buy stocks low and sell them high. You could avoid the problem areas. And you would be richer than you could have ever imagined.
But none of us have a crystal ball, right?
Well, not so fast. We finally have data that supports what I have long been saying…Truflation is the most important measurement of inflation in America.
I measure importance along two aspects: speed and accuracy.
Truflation is more accurate and it gets you the accurate data much faster than the government. But you don’t have to believe me anymore. Mark Hackett pointed out yesterday that Truflation has a 97% correlation to CPI with a 1 month lag.
In layman’s terms, Truflation is a crystal ball into what CPI is going to say a few months later. The fact that correlation between the two is 97% should be compelling enough for people to start paying attention, but add in the fact that Truflation tells you weeks in advance, and it is a no brainer to merely watch Truflation and completely ignore CPI at this point.
So what is Truflation telling us will happen in the next 2-3 months?
Bloomberg’s new AI feature summarized it well by writing:
“The model forecasts CPI year-over-year will decline to approximately 0.9% - 1.3% by March 2026 and continue falling toward 1.0 - 1.5% in April, representing a significant disinflationary trend. This forecast stands in stark contrast to the consensus Q1 2026 estimate of 2.59%, suggesting a divergence of approximately 0.8 - 1.0 percentage points. If the Truflation-based forecast proves accurate, it would indicate inflation falling well below the Federal Reserve’s 2% target within the next two months, potentially opening the door for more aggressive monetary policy easing than currently priced into markets. The February CPI release on March 11, 2026 will serve as a critical validation point for the indicator’s predictive power during this period of rapid disinflation.”
But Truflation is not the only crystal ball that people seem to be acknowledging now. Yesterday the Federal Reserve put out a paper titled Kalshi and the rise of Macro Markets.
PredictionDesk summarized the paper with the following points:
Kalshi has correctly predicted every single Fed interest rate decision the day before the meeting since 2022
Fed funds futures, the tool Wall Street has relied on for decades, performed worse than Kalshi with statistical significance Kalshi outperforms the Bloomberg survey of professional economists on inflation forecasts
The paper calls Kalshi "the most mature and comprehensive prediction market for economic forecasting"
Polymarket gets one line about operating in a "legal gray area"
Kalshi is the only market that shows you the full range of possible outcomes for GDP, inflation, unemployment, and payrolls
The researchers plan to publish Kalshi's distributional data daily on a public website called EconFutures(.)com for policymakers and researchers
The paper positions Kalshi's CFTC designation (same classification as the CME) and market making from Susquehanna as structural advantages over competitors
Retail access through Robinhood and Webull is framed as a feature, giving the Fed a window into how everyday investors view the economy
So now we have two different measurements that are outside the traditional financial system. Kalshi is using a market-based approach to better forecast various economic data points than traditional tools. Truflation is using a centralized approach to collect, synthesize, and calculate data better than the government.
My big takeaway from these two revelations is simple: the private sector no longer trusts the government data, but rather than complain about it…they are now directly competing.
They have built solutions that are faster and more accurate. That makes these solutions more important and more valuable.
That is how capitalism is supposed to work. If you don’t like something, build a better version. Truflation and Kalshi seem to be doing that. And now it is just a matter of time before all the large pools of capital stop listening to the BLS and start paying attention to the private market solutions.
Hope you have a great day. I’ll talk to everyone tomorrow.
- Anthony J. Pompliano
Founder & CEO, Professional Capital Management
Billionaire Investor Reveals Why Bitcoin Keeps Dropping | Mike Novogratz
Mike Novogratz is a veteran macro investor and the founder & CEO of Galaxy. This conversation was recorded live at Bitcoin Investor Week in New York.
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Great points Pomp.