He also diagnoses the source of high housing and education costs that have made the economy feel so brutal to everyday Americans.

Peter notes how this week's PPI report, which came in better than expected, may reveal margin pressure on American business:

"Trade services actually includes a lot of the markups that retail companies would charge, and so the fact that this number went up less than expected may indicate there's some pressure on margins going forward and that companies are eating a larger percentage of their increased costs. And so that doesn't bode well for earnings if that's the case. People like Elizabeth Warren are always accusing greedy companies of gouging the customers with price hikes, but more often than not, most companies do everything they can to insulate their customers. Raising prices is almost a last resort!"

The media is celebrating a slightly better-than-expected CPI report as well, but Peter reminds us how long it took to make this progress. Such a meager improvement is not the sign of a job well done:

"The headline number, which had gotten above 9% at the peak - it first went down to 3% in June of 2023. So 13 months ago, the CPI was at 3%. Now it's at 2.9%— 13 months later. So what? It took us 13 months to shave one tenth of one percent off the CPI? … Why should the Fed be cutting rates? If anything, the Fed should be looking at these numbers and say, 'You know what? Rates are too low. We stopped too soon.'"

With expectations building for rate cuts next month, the Fed will likely deliver:

"I still believe that, despite this data, we're gonna get a rate cut in September. And the main reason we're going to get a rate cut in September is because now the markets are counting on a rate cut in September. That's why we rallied back from the sell off on Monday! And so now that the market is pricing in a September rate cut, there's no way that Powell is not going to deliver. … He always meets market expectations. … What he doesn't want to do is pull the rug out from under the market."