Peter Boockvar: Inflation Is The Core Disease

Inflation data remains a focal point as the bond market shows surprising resilience despite soft CPI and PPI figures. The economy is currently driven by massive AI capital expenditure, which sustains earnings growth across tech, communication services, and financials, masking underlying labor market deterioration. Consumer confidence remains low, particularly among those struggling with wage growth that barely tracks inflation. Retailers like Walmart and Home Depot face a bifurcated consumer landscape where value-seeking behavior persists. Energy stocks continue to perform as a geopolitical hedge, while the potential for a Bank of Japan rate hike in September signals a shift in global monetary policy that could trigger capital repatriation. Meanwhile, the rapid advancement of Chinese AI models threatens the long-term profitability and business models of U.S. tech leaders like OpenAI and Anthropic, raising questions about the sustainability of current AI-driven valuations.