Inflation Is Exploding, the AI Bubble Is Cracking, and Wall Street Is Still Selling You a Fantasy

The Inflation Data They Cannot Easily Lie About

Forget CPI for a second. Forget the government’s carefully massaged, seasonally adjusted, hedonically tinkered inflation numbers. Let us talk about import and export prices, because this is where the raw truth lives.

Import prices jumped 1.1% in a single month. Export prices surged 2.2%. Annualize that and you are sitting at 8.1% and 11.6% respectively. Those individual monthly moves, if you annualized them on their own, get you to 14% and 30%. There is very little room to play games with this data. Goods are crossing borders at real prices, and those prices are screaming inflation.

I told you this was coming. I have been telling you for a long time. This is not some great revelation. This is the predictable consequence of years of reckless monetary policy and the refusal of the people in charge to acknowledge basic economic reality.

Global Chaos Is Actually Capping Our Interest Rates

Here is something that does not get nearly enough attention. The reason 10-year and 30-year Treasury yields are not completely spiraling out of control despite this inflation data comes down to one thing: compared to the rest of the world, we are the least bad option.

Consider what is happening in France right now. The leading left-wing candidate for president is running on a platform that includes a simple proposition: just cancel the national debt. Do not pay it back. Walk away. And this person is polling at roughly 30%. That means nearly one in three French voters thinks defaulting on sovereign obligations sounds reasonable.

When the alternative is buying the debt of countries where a significant chunk of the voting population is comfortable with outright default, investors park their money in U.S. Treasuries. That dynamic is creating a ceiling on how high our yields go, even with hot inflation data pouring in every week.

And here is the other side of that coin that Wall Street does not want to say out loud:

• 5% plus Treasury yields are now competition for your stock portfolio
• That is a genuine alternative that did not exist three years ago when rates were pinned to zero
• The crowd that told you low rates were great for everyone was lying to you, or at minimum, only told you half the story
• Safe, reliable income is back on the menu and it does not require you to gamble on speculative tech stocks

The AI Bubble Is Starting to Show Cracks

This week we watched a meaningful rotation out of AI and technology stocks, and the reason being cited on Wall Street is that the math is not mathing anymore. Huge capital expenditures are being poured into AI infrastructure, and the revenue growth needed to justify these astronomical valuations is not materializing at the pace the hype machine promised.

I have been saying this. The AI story is real, meaning the technology is genuine and transformative. But the valuations slapped on many of these companies were built on enthusiasm, narrative, and the assumption that money had nowhere else to go. Now money has somewhere else to go. You can sit in a Treasury and collect 5% without losing sleep.

Not every AI company is the same. Some have real businesses, real revenue, and real competitive advantages. Others are momentum trades dressed up in a futuristic story. The market is beginning to sort these two groups out, and if you have been riding the wave without asking hard questions about what you actually own, this is your wake-up call.

What the Establishment Will Not Tell You

Here is the bottom line that cuts through all the noise:

• Inflation is not under control, and the data that is hardest to manipulate confirms it
• Treasuries at current yields are a legitimate, serious option for investors who need safe income
• The AI rotation is just beginning, and the companies without real fundamentals are going to get exposed
• Global political instability is keeping a floor under U.S. assets, but that is not the same thing as a strong economy

The financial media will continue to spin this in ways that keep you confused and dependent on products that serve their advertisers. Pay attention to the actual data, not the story being sold to you.