He connects the dots between an understated CPI (Consumer Price Index), the rally in stocks tied to hopes for rate cuts, and why those cuts would be bearish for bonds, inflationary for the economy, and ultimately harsher on workers than many realize.

He opens by framing the CPI release as the last obstacle to the market's expectation of imminent cuts and why the number mattered so much to traders and policymakers alike:

The reason that it's been so highly anticipated is because everybody is now betting on rate cuts starting next week and a benign CPI report was the last obstacle. I mean, maybe if this thing came out way hotter than expected, somehow it may have rained on the rate cut parade. So everybody was anticipating eagerly this release just to make sure that the rate cut train wasn't going to get derailed. And we got the number and it actually was slightly worse than expected, but not enough worse to rain on the parade.

Peter then argues that the official inflation measures are deliberately low and that real inflation is being hidden from the public — a point he makes to explain why markets can't trust the headline CPI to guide policy:

The CPI has been rigged. It has been engineered to come out with a smaller number than the actual increase in prices which again doesn't even measure inflation which is the expansion of money and credit. It measures the effect of inflation which is an increase in prices but it deliberately understates the degree to which prices are going up by design. So you really kind of have to double whatever the official number is to get something close to the actual rate. So if inflation is right now annualizing at 5% then it's probably 10% which makes a lot more sense to me than 5%.

He puts the market's recent rally into context: it's a relief bounce driven by a single narrative — rate cuts — rather than improving fundamentals. That mismatch, he says, explains why stocks are pricing in a soft landing that may not exist:

As a result of a horrific week, and the week's not over yet because this is just Thursday, but as a result of a horrific 80% of a week for jobs, we've had this big rally in stocks. The rationale is the Fed's going to cut, so that's great for stocks. People also think that the rate cuts are going to help the economy. They're going to help the housing market. They're going to stimulate because they look back at prior episodes where the Fed has started a rate cutting cycle, whether it's 2001, 2002, after the bursting of the dot com bubble, whether it's 2008, 2009 with the financial crisis or 2020 with COVID, right?