Instead of daydreaming about 2% inflation like it’s a Disney fairy tale, seasoned investors—unlike the PhD troupe at the Fed—can actually count:
• To hit that mythical target, CPI would need to moonwalk below 0% every month—good luck pulling that off in a tariff-choked, WW3-flirting world.
• At the current 0.2%+ prints, we’re gliding toward 3.5%–4.5% CPI by year-end.
And when that reality check hits, not even Donald Copperfield sawing the “Central Banker in Chief” in half will hide the fact that cutting rates into an inflationary boom might be the Fed’s dumbest magic trick yet.

In a nutshell, September’s CPI was another masterclass in delusion—headline inflation cooled just enough for the Fed’s PhD circus to pop champagne, while real prices keep climbing and the “Trump Stagflation Express” barrels ahead.

According to S&P Global’s latest flash PMI, the U.S. economy is apparently sprinting into Q4, with the composite output index jumping to 54.8 — a level that screams “expansion,” at least on paper. Factories are booking the most orders since early 2023, and service providers are reportedly buzzing, though manufacturing jobs slipped and service hiring barely budged. Prices paid remain high, selling prices are cooling, and export demand is shrinking — but never mind the contradictions.

In a nutshell, the U.S. economy is “booming” again—if you overlook weak hiring, shrinking exports, and factories drowning in unsold goods.

While the “CP-Lie” keeps insisting inflation is a ghost of the past, American consumers seem to be living in a different reality—one where grocery bills still sting, gas prices bite, and economists keep telling bedtime stories about “transitory” inflation. The University of Michigan’s sentiment index just sank to a five-month low, with households expecting prices to rise nearly 4% over the next decade. Sure, official data claim inflation “eased,” but cereal and coffee costs are still creeping up while gasoline’s back on its usual joyride. In short, the only thing truly deflating these days is consumer confidence.

In a nutshell, despite the government’s fairy tales, consumers aren’t buying the propaganda—prices still sting, gas still bites, and confidence just tanked to a five-month low.

A few days after Fitch, Moody’s gently tapped the perpetually floundering French government on the shoulder to announce a “negative” outlook, while graciously reaffirming the Aa3 rating—a figure more cosmetic than comforting, designed to make investors feel slightly better about the republic of debt. Moody’s sniffed ominously that if the delay on the oh-so-controversial retirement-age hike from 62 to 64 drags on for years, France’s fiscal headaches will only multiply, and the economy’s growth potential might get a polite kick in the pants. Somehow, this illusion of stability keeps France sitting seven notches above junk, rubbing elbows with the UK and Czech Republic in the high-rated fantasy league.

🤵 The Macro Butler Weekly Digest 🤵

🌐 When ‘Educated Yet Idiots’ run the show, bonds crumble, cash loses trust—and the Banana Republic Portfolio of stocks & gold thrives. 🌐

Read more here: https://themacrobutler.substack.com/p/the-banana-republic-portfolio-the

Listen to a summary of The Macro Butler weekly newsletter via podcast on Substack; YouTube; Rumble & TikTok.

https://themacrobutler.substack.com/p/the-banana-republic-portfolio-the-58f

The Macro Butler grabbed a coffee with Metals and Miners to discuss why bonds and other “promises to pay later” have become financial poison in a world run by the Educated Yet Idiots.

The verdict? When the EYIs run the circus, you’d better own the Banana Republic Portfolio—an equal blend of stocks and precious metals—because no matter where you live, reality eventually catches up with paper promises.

Grab a coffee, polish your gold bars, and enjoy the show.

https://themacrobutler.substack.com/p/interview-with-metals-and-miners-299

Stablecoins are finally having their “real-world moment.” Since Donald Copperfield waved his pen over the Genius Act in July, dollars-on-the-blockchain have been zipping around faster than ever. Over $10 billion in stablecoins changed hands in August — almost double last year’s pace. Sure, it’s still pocket change next to Visa or Mastercard, but the growth curve looks like it just slammed a triple espresso.

Businesses are leading the charge, too. B2B payments now hit $6.4 billion a month, up 113% since February — the first time companies have outpaced consumers. Why? They’re done with the “send-to-this-bank-that-sends-to-another-bank” relay race. With an average ticket size of $250,000, speed matters. Even Zelle is joining the party, using stablecoins for global transfers. When the old system moves like dial-up, blockchain’s looking like Wi-Fi on steroids.

In a nutshell, America’s in its “Stablecoin We Patch” era — plugging the holes of a creaky banking system with blockchain band-aids, as businesses ditch slow wires for instant, digital dollars.

As the great “Closed-Down Circus” drags into its fourth glorious week, the U.S. Treasury somehow managed to juggle $69 billion in 2-year notes. The yield came in at a thrilling 3.504% — the lowest since August 2022 — because apparently, investors just can’t get enough of lending to a government that’s half on vacation. And in true clown fashion, the bond even tailed the When-Issued by a daring 0.1bps — its first tail since April. Bravo, Washington, the show must go on!

The bid-to-cover ratio perked up slightly to 2.590 from 2.513 in September — a hair above the six-auction average of 2.581. But the real entertainment was in the internals: Indirects apparently took a coffee break, dropping to 53.7% from 57.8%, their weakest showing since March 2023 (you know, when banks were busy imploding). Meanwhile, Directs strutted into the spotlight, scooping up a hefty 34.8% — the second-highest on record. Looks like someone’s feeling bold while the rest of the crowd’s still nursing trauma.

That left a modest 11.6% for Dealers — right in line with the usual 11.5% average. In other words, they showed up, did the bare minimum, and went home.

Overall, it was a mixed auction — a reminder that most U.S. investors still haven’t grasped the obvious: bonds are the worst seat in the house when stagflation hits. Only the so-called Banana Republic Portfolio — an even mix of stocks and gold — will help them navigate the inevitable Trump-era stagflation storm.

After flogging billions in 2-year notes while Donald continues his grand Asia tour, the U.S. decided to auction a 5-year note—landing at a “staggering” 3.625% yield. Not only was this the lowest high yield since September 2024, it also managed to squeak past the 3.626% When-Issued level by a mere 0.1bps—the first stop-through for the 5-year since May. In many ways, it was a perfect little déjà vu of the morning’s earlier theatrics, proving that Treasury auctions can be just as thrilling as watching paint dry.

The bid to cover - which has traded in an extremely narrow range in the past year between 2.30 and 2.50 - rose from 2.34 to 2.38, the highest since May, and above the 2.36 recent average.
The internals were more impressive, with Indirects jumping from 59.42 last month to 66.84, the highest since May and above the 64.2% recent average: this sharp increase in foreign demand was also a mirror image to the slide in Indirects in earlier 2Y auction. And with Directs awarded 23.9%, or down from 28.6% and the lowest since May (a far cry from the near record Directs in today's 2Y auction, if above the recent average of 22.1%), Dealers were left with a modest 9.3% of the 5Y auction, below the recent average of 10.7%.

Overall, it was a far sturdier auction—a stark reminder that most U.S. investors still haven’t caught on: bonds are the worst place to be when stagflation hits. Only the so-called Banana Republic Portfolio—a balanced mix of stocks and gold—offers any hope of weathering the inevitable Trump-era stagflation storm.

The Macro Butler rolled out of bed at dawn, fueled by caffeine and mild existential dread, to chat with BFM 89.9 about why money keeps streaming into U.S. equities.

After all, in a world where bonds are secretly the riskiest asset and the planet is ruled by Educated Yet Idiots, there really aren’t any better alternatives than stocks and… well, more stocks and gold.

https://themacrobutler.substack.com/p/interview-with-bfm-899-malaysia-28102025