Dear Reader,
The CPI was the big number this week. It came out yesterday and it’s basically in line with expectations, which is good news.
But it’s funny – while the CPI was coming up another piece of information also hit – which I talk about in today’s Diary video.
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BREAKING: Nvidia buys 7 million shares of AI biotech
There’s an AI biotech selling for just $7 a share that seems poised to soar in 2024…
ARK Investment recently bought 6.8 million shares…
Bayer just signed a deal worth as much as $1.5 billion to have them develop new drugs…
And NVIDIA just bought 7 million shares.
Get the name of the stock here.
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CPI rose 2.9% in July from a year earlier, marking the first time CPI has come in solidly below 3% since early 2021.
This was basically in line with expectations and speaks to a cooling economy.
So the inflation argument is starting to move away as we predicted, and we’re moving towards more of a slowdown scenario which gives the Fed incentive to cut rates.
As I’ve said before, a lot of folks are hoping the Fed will cut rates 50 basis points in September, but to me 25 basis points makes sense; housing prices are still really high.
But the SHOCKING news, even for me…
I’m sitting there, split-screen – the CPI number is coming out on one side and then…
BAM! The debt number comes out and basically:
The U.S. government deficit hits $1.5 trillion in the last 10 months…
July alone added $244 billion…
And the biggest shocker of all:
Federal debt just increased by $100 billion in two days.
It’s unbelievable.
U.S. public debt just hit $35.1 trillion. Another all-time high.
If this pace continues, it’s going to hit $36 trillion in 20 days and $40 trillion by the end of 2024.
Our government is spending at CRISIS levels!
We are spending money as if we’re fighting Nazi Germany and Japan at the same time.
As I’ve said here before, when you’re spending like a drunken sailor in good times…
You’re depleting your balance sheet for when there’s a real crisis… i.e. China attacks Taiwan, Russia moves tanks into Europe – something that is an existential threat to us.
So I’m watching this split-screen…
And while everyone’s focusing on CPI…
The Fed’s in a really, really tight box.
Because at the end of the day they want to keep things like housing prices lower, but also balance inflation with weakening employment numbers.
So government spending is the thing I’m most focused on.
They’re going to have to figure out how to cut government spending.
And look, as I’ve said before, no matter who wins the election there is $5 trillion of spending scheduled to automatically come off the books next year:
Trump’s tax cuts and $1.5 trillion from Biden’s “inflation reduction act.”
The next President of the United States will be forced to make a difficult choice – let Trump’s tax cuts expire to help get our fiscal health back in order, or let them keep running to keep this spending binge going.
You know by now what camp I am in.
“The Buck Stops Here”
P.S. If you haven’t yet watched my documentary on how all this government spending is going to play out, go here and watch it now.
I made this for my children – to protect them from the inevitable and I’m sharing it with you, my Diary readers.
Please do not ignore this serious situation. Stream here now.
