How Milei’s Surprise Win in Argentina Defied the Market

Summary

Prof G Markets: "How Milei’s Surprise Win in Argentina Defied the Market"

Date: October 28, 2025
Hosts: Ed Elson, Scott Galloway
Guests: Oliver Stunkel (FGV - Brazil), Robert Armstrong (Financial Times)

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Episode Overview

This episode of Prof G Markets tackles two major financial stories. First, Ed Elson and guest Oliver Stunkel break down the surprising results of Argentina’s midterm elections and their market impact, focusing on President Javier Milei’s reform agenda and investor reactions. Second, Ed and Robert Armstrong analyze the latest US inflation print, exploring how tariffs, consumer sentiment, and market expectations play into the broader economic picture.

Tone throughout is sharp, insightful, and occasionally irreverent—delivering Prof G’s hallmark "no mercy, no malice" perspective.

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Key Segment 1: Argentina’s Election Shock and Javier Milei’s Reform Agenda

(Starting at 02:13)

Market Context

• US markets are up on trade deal optimism.
• Qualcomm surges on AI chip news.
• Argentina’s peso surges 9% against the US dollar, its biggest jump in 20+ years after President Milei’s party outperforms in midterms.

Breaking Down the Results

(Ed Elson & Oliver Stunkel, 04:12-06:18)

• Midterms: Half the House and a third of the Senate up for grabs.
• Milei, a self-described "anarcho-capitalist" and libertarian, gets a referendum on his two-year policy record.
• Despite economic pain from deep spending cuts (high inflation—though down—is still 130%, unemployment is rising, and real wages are down 20%), voters give Milei’s party more power.

Quote:

"The voters have, despite the negative short term impacts, given him a vote of confidence...to continue the liberalizing reforms over the next two years."
— Oliver Stunkel [05:24]

• Milei now has enough votes to override legislative vetoes, making it easier to push reforms.

US Bailout and Geopolitical Dynamics

(06:18–10:32)

• Just weeks ago, Milei looked vulnerable after poor municipal election results and an implosion in Argentina’s bond markets.
• US government (Trump administration) intervenes with a $40 billion bailout package contingent on further reforms.
• Market reversal believed to be influenced both by US financial support and investor fears of default.

Quote:

"The US certainly did have a role...the US government has now kind of offered a reward, so to say, for that strategy."
— Oliver Stunkel [08:07]

• The win is both a domestic and geopolitical victory, positioning Argentina closer to the US versus China and providing inspiration for similar right-leaning leaders in the region.

The Paradox of Libertarian “Shock Therapy” Needing a Bailout

(10:32–13:39)

• Despite libertarian rhetoric about “ending public spending addiction,” Milei needed a massive bailout.
• Progress made on cutting ministries and public payroll, but investor confidence remains shaky due to Argentina’s history of defaults.
• Structural obstacles: bloated public sector, bureaucracy, commodity dependence, and fragile infrastructure—meaning recovery will be slow and uncertain.
• Unusual global context: while Milei pursues classical liberal reforms, the world is turning more interventionist and protectionist.

Quote:

"It's going to be really interesting to see whether this kind of libertarian approach is still viable in this age of great power competition where everything seems to be politicized...Very few political leaders embrace the kind of ideology we're seeing in Argentina."
— Oliver Stunkel [13:09]

---

Key Segment 2: US Inflation Update and Tariffs

(16:02–30:14)

The New Inflation Print

• CPI rises to 3% YoY, up from 2.3% earlier in the year but slightly below the 3.1% estimate.
• Stock indices hit new highs; market expects a Fed rate cut.

Quote:

"Better is what I would say, but better with an asterisk next to it."
— Robert Armstrong on the inflation print [17:02]

Digging Into the Data (Ed & Robert Armstrong)

(17:02–22:42)

• Key series like durable goods (tariff-sensitive: cars, appliances) and non-energy services tick down—positive signs.
• However, much of the CPI dip came from volatile, lagging series: housing rent and vehicle prices, which could reverse.
• Tariffs are starting to pass through, as shown by category spikes (e.g., coffee up nearly 20%).

Quote:

"We know [tariffs] are passing a little bit, maybe a third or a quarter...onto the consumer. So that’s what shows up in this report."
— Robert Armstrong [19:41]

Is the Market Getting Ahead of Itself?

• Despite inflation still a full percentage point above target and financial conditions "very loose," markets are pricing in rate cuts.

Quote:

"I don’t think any rational person would look carefully at the numbers...and say inflation is beaten, the economy is slowing down, we have a percentage point or more of cuts coming."
— Robert Armstrong [21:20]

• The new culture: is “2% inflation” now anything starting with a 2?

Quote:

"Does 2% now mean the number starts with a 2?"
— Robert Armstrong [22:37]

Sentiment, Labor Market, and Gold

(23:47–28:58)

• Services inflation stubborn due to wage growth; jobs numbers are unreliable after data interruptions.
• Consumer sentiment (e.g., U Michigan Sentiment down 22%) is at multi-year lows, but that hasn’t been predictive of actual job or market trends.
• Gold’s recent boom is more a retail FOMO/momentum story than fundamentals—central banks are actually backtracking now.

Quote:

"Gold went past 3,000 up to 4,000. It was like, let's just make up stories about what's driving the gold price. But what was driving the gold price was the gold price."
— Robert Armstrong [27:43]

Big Tech Earnings Watch

• Upcoming week sees major tech earnings; despite skepticism, mega-caps continue to defy gravity.

Quote:

"Anytime I’ve been skeptical of these businesses...I’ve been wrong. So I’m just not gonna step in front of that steamroller again."
— Robert Armstrong [29:03]

---

Ed Elson’s Closing Analysis

(30:14–end)

• The current inflation uptrend exactly follows prior warnings: tariffs take time, but they will raise prices.
• Explicitly challenges the narrative that CPI undershooting an estimate is “good news” for consumers.
• Highlights tariff-driven spikes: audio equipment (+14%), beef (+15%), coffee (+19%).
• Predicts further inflationary pressure as tariff impacts deepen:

"There is absolutely no question tariffs are raising prices... Our prediction: next month... inflation will be even higher."
— Ed Elson [30:45]

---

Notable Quotes & Moments

• On Argentina’s about-face:

“Voters have given him a lifeline, and we’ll now see how this experiment will unfold.”
— Oliver Stunkel [05:45]

• On the paradox of US-backed Libertarianism:

“It’s a big question mark...whether this kind of libertarian approach is still viable in this age of great power competition.”
— Oliver Stunkel [13:09]

• On the inflation narrative:

“Just because economists were 0.1% off on how large the tariff impact would be in this specific month, that doesn’t mean there is no tariff impact.”
— Ed Elson [30:31]

• On gold as a story:

“What was driving the gold price was the gold price.”
— Robert Armstrong [27:43]

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Timestamps of Major Segments

• 02:13: Market recap and Argentina election breakthrough
• 04:12-13:39: In-depth discussion with Oliver Stunkel on Milei, US bailout, and challenges ahead
• 16:02-29:58: US inflation analysis and market reactions with Robert Armstrong
• 30:14–end: Ed Elson’s inflation “I-told-you-so,” tariff analysis, and closing remarks

---

Summary Takeaways

• Javier Milei’s surprising midterm victory gives him breathing room to continue radical reforms, but economic headwinds and the paradox of libertarian “shock therapy” needing US bailouts raise doubts about long-term success.
• US inflation is ticking up, and the latest CPI highlights both tariff pass-through and market denial. Despite feel-good headlines, underlying price pressure remains.
• The market’s faith in Fed rate cuts may be misplaced, especially as economic data ("lumpiness" aside) is far from conclusive.
• Commodity stories and sentiment indices are less reliable guides than ever; “the story follows the price.”
• Tariffs are proven to be inflationary; Ed Elson expects the trend to intensify in the coming months.

---

For listeners and market-watchers alike, this episode provided both a global macro lens and practical lessons on reading the signal through the market noise.

Transcript

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Today's number 1,100. That's how many chairs were recently stolen from restaurants in Madrid. The heist took place over two months and targeted the patios of 18 different restaurants. Damages are estimated at nearly $70,000, and authorities are calling it the lowest margin crime since Joker Part two.

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[Ed Elson]

Welcome to Property Markets. I'm Ed elson. It is October 28th. Let's check in on yesterday's market vitals. The major indices closed at record highs on hopes of a US China trade deal. The S and P ended the day above 6,800 for the first time ever. Meanwhile, gold dipped below 4,000. And finally, Qualcomm shares popped 11% after the company announced new AI chips that will compete with Nvidia. Okay, what else is happening? Argentina President Javier Milei led his party to victory in Sunday's midterm elections. His party doubled their representation in Congress and won nearly 41% of the national vote. President Trump congratulated Milei on social media, saying, quote, he's making us all look good. The peso surged 9% against the US dollar, its biggest one day gain in over 20 years. Argentinian stocks and bonds also rallied. This win should help Milei push through his economic agenda. Over his first two years in office, Milei has slashed spending, unified exchange rates, cut energy subsidies, and laid off tens of thousands of public sector workers. That will all likely continue because the recent $40 billion bailout from the US is tied to the condition that he makes further progress on those reforms. Still, Milei has his work cut out for him. Inflation, though down, remains above 130%. Unemployment is rising and real wages have fallen over 20% since 2023. The election turnout was 68%, the lowest in a national election in decades. And even after the win, his party does lack a full majority. Here to explain what this all means for Argentina, we are speaking with Oliver Stunkel, associate professor at FGV's School of International Relations in Brazil. Oliver, thank you very much for joining us on the show.

[Oliver Stunkel]

Thanks for having me.

[Ed Elson]

So we want to hear about this election just at a very basic level. Walk us through the election results. What does this mean for Javier Milei and what does this mean for Argentina going forward?

[Oliver Stunkel]

So those were the midterms. Half of the House of Representatives and a third of the Senate were up for voting and renewal. And it has been a surprisingly good result for Javier Milei, the self declared anarcho capitalist who's been in power for two years. And the elections were sort of a referendum on his policies. He's a libertarian, so his key argument has been that it's necessary to radically reduce public spending to reduce inflation to finally stabilize Argentina after decades of instability. And he did bring down inflation. However, the economy is still reeling from his policies of dramatically reducing public spending. So the economy is not growing. But he is saying that he still needs some time for the economy to finally recover, that this is the medicine which initially has a negative impact, but which will eventually put Argentina's economy on a stable footing. And the voters have, despite the negative short term impacts, given him a vote of confidence and said that basically signaled that they would like him to continue the liberalizing reforms over the next two years. He now has enough votes to override vetoes in the in Congress which were employed during the past years against his decrees when he tried to liberalize the economy. So I think we can expect him to continue like that for now. Now he still needs to deliver. So basically voters have given him a lifeline and we'll now see how this experiment will unfold.

[Ed Elson]

Yeah, help us with the context there. I mean, from my understanding, Argentina's been in the news a lot recently. We had this other election, this local election in Buenos Aires, which again us, we Americans weren't very aware of what was happening. But what we know is that it wasn't good for Milei. You saw this implosion in the bond markets, massive collapse in the peso, which was what led the US to come in and intervene and give them that $20 billion. So this is quite a reversal. As just an observer, it seemed as though Milei was in trouble. Now apparently he isn't. Help us with the context there.

[Oliver Stunkel]

Absolutely. So he had a pretty bad result in municipal elections in the province of Buenos Aires, which was traditionally more Peronist, which has been supportive of the traditional populist, economically populist policies. And it was seen as a bellwether election for yesterday's election. So expectations were low and the Trump administration made a big bet. I mean, they basically, you know, the US government promised a rescue package, a lot of financial support, seemed to somehow condition that on a good result for Milei.

[Ed Elson]

Yes.

[Oliver Stunkel]

And that good result now came to pass. I think that the US certainly did have a role in that because a lot of voters are aware of the fact that the Malay's policies haven't yet stabilized the Argentine economy. A lot of investors are still very concerned about the capacity to pay its debt. Argentina is one of the countries that has most frequently defaulted on its debt. Yeah, so that lifeline obviously from the world largest economy does play a role. So it's a vote of confidence. And in that sense it's also a win, a political, geopolitical win for Trump because a lot of countries in Latin America are moving closer to China or are sort of multi aligning, preserving ties to the United States, but also seeking strong ties to China. And Milei kind of stands out. He actually has actively sought to move closer to the United States. And in that sense, the US government has now kind of offered a reward, so to say, for that strategy. And I think in many ways a successful government in Argentina will certainly inspire similar figures in other electoral cycles in the coming months. So basically Milei has now gained another two years to reform Argentina's economy. But I think, I mean, were markets overly pessimistic? Perhaps a bit. I mean, last week I, you know, did speak to several investors and everybody expected Melay to not gain sufficient votes. So there was a sense of, you know, maybe investors will abandon Argentina. And I think that may have influenced voter behavior because they said, you know, they're actually concerned about MLA loss.

[Ed Elson]

Right.

[Oliver Stunkel]

And said, you know, let's give him that vote of confidence in order to help stabilize the economy.

[Ed Elson]

I'd also like to get your reactions to the $20 billion, which may become $40 billion bailout. And I call it a bailout because I think it, it is a bailout. They were in trouble and the US came in and they intervened to try to help Argentina. There are debates over whether it was to help Argentina or whether it was to help Treasury Secretary Scott Besson's buddies who are invested in Argentina. We don't need to have that debate. But what does it say about the Milei agenda and the Libertarian agenda, which was supposed to be about reducing spending? Shock therapy. Let's get rid of our addiction to spending in the short term to fix our problems, let's figure out long term solutions, let's get this inflation thing under control. And then suddenly they actually need an emergency wire transfer of $40 billion to prevent financial ruin, essentially.

[Oliver Stunkel]

Right? Yeah. So I mean, the first part of the question is some progress has been made in reducing public spending. I mean, you had a massive reduction of, let's say ministries, for example. Yeah, you did have know, tens of thousands of public workers which have been let go. But at the same time, these kinds of adjustments are inherently painful. And you know, Argentina's economy has been, has had low indices of, of productivity for a long time. You need initially at least investor confidence. And of course Argentina's history, you know, generates a lot of caution among investors. A lot of people got their fingers burned, you know, their, got burnt over the past decades betting on Argentina and then Argentina defaulted. It's still, there's no other country in the world that owes more money to the International Monetary Fund than Argentina. So in that sense it continues to be sort of a high risk investment and it may still very well fail. So the, the, the current, this recent result is so good news from Lay. He can continue to implement his reforms. He'd actually, I think even accelerate reforms because he didn't have a governing coalition in Congress. He still needs a party which is sort of center right, tied to former President Makri. So I expect him to advance faster now than during the past two years. But there's no guarantee. I mean, the country has, has had for a long time a very bloated public sector which attracted a lot of talent. This is a problem in several Latin American countries where sort of the smartest seek to enter government, where not necessarily they make the greatest contribution to economic growth. So these are structural issues. Of course, there is problem of still excessive bureaucracy, an excessive dependence on exporting commodities, issues with education, with infrastructure. So, you know, these things take time. And it's a, it's a big question mark, particularly now that, you know, we sort of see increasing state intervention in the economy around the world. You know, the United States actually, you know, you have the U.S. government, you know, purchasing stakes of strategic companies, you see protectionist trends, you see sort of a geopoliticization of the world economy. So it's going to be really interesting to see whether this kind of libertarian approach is still viable in this age of great power competition where everything seems to be politicized. Right. I mean, it's not like Trump promotes free trade or China or any other major power. We're kind of in this completely different age where very few political leaders embrace the kind of ideology we're seeing in Argentina.

[Ed Elson]

All right, Oliver Stankel, associate professor at FGV's School of International Relations in Brazil. Oliver, we really appreciate your time. It will be very interesting to see how this all unfolds in Argentina. Thank you.

[Oliver Stunkel]

Thank you very much.

[Ed Elson]

After the break, a look at the latest inflation report. If you're enjoying the show, give property markets a follow.

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[Ed Elson]

We're back with Prof. G. Markets. After a 10 day shutdown delay, the consumer price index is in. Prices rose 3% from a year earlier, the highest since January. Still, the result was under the 3.1% estimate and was up 0.1% from August. Major stock indices rose to record highs on the news and the report all but seals the deal for a rate cut at the Fed's meeting which takes place tomorrow. Here to explain this report and what it means for the economy, we are speaking with Robert Armstrong, US Financial commentator for the Financial Times and author of the Unhedged newsletter. Rob, great to have you back on property markets.

[Robert Armstrong]

Great to be back.

[Ed Elson]

So we want to get your reactions to this inflation print, this CPI. We're up to 3%. We were at 2.3 earlier in the year, now we're at 3. All that's on my mind is the tariffs and the fact that this is a reflection of tariff impact. But I want to get your angle, your initial reactions.

[Robert Armstrong]

Well, better is what I would say, but better with an asterisk next to it. So both on the good side, the series I like to look at are durable goods, which tends to be a series, as you mentioned, that's very much affected by import tariffs. So you know, cars, refrigerators, everything but kind of clothes and food and then at core services, services without energy. And both of those dip down a little bit and that's welcome news. We're still about a percentage point above the Fed's target, but at least we're trending in the last month or two slowly in the right direction. But I haven't gotten you to the asterisk yet.

[Ed Elson]

Yeah, let's say the asterisk.

[Robert Armstrong]

The asterisk is there were two very big items that went down a lot sharply down in this in September. And, and that was on the services side. That was housing rent and owner's equivalent rent. And on the good side, it was new and used cars. And these are big series that have a lot of weighting in the index, but they're lumpy and they move around a lot month to month. Also on the housing side, it's a very lagging number. It tells you a little bit more about the world six months ago than it tells you about the world today. But both of those were low. And so it could be that we sort of rolled the dice and got a lumpy month to the low side on those two things. And if you take those two out, we're still pretty warm. We're still well above 3%. If you take out those two now, it's not fair to just take out whatever you want. You can't, you know, go month by month and say, well, this year, this month we're not going to count housing. This month we're not going to count autos. What this is just telling you is that the numbers are lumpy and we have to be a little bit careful about reading too much into September.

[Ed Elson]

There are some items that are tariff sensitive that we are seeing rising in price. I think probably the best example would be coffee, which is up almost 20% year over year. I look at what's happening with inflation. The fact that we went from 2.3, the month of liberation day, it went up to 2.4, it kept going up, it went up to 2.7, then it went up to 2.9. Now we're up to 3%. Is it in doubt at all that tariffs are passing through?

[Robert Armstrong]

I don't think so. I mean, we know that tariffs are being charged at the border to the tune of many tens of billions every month. And we know who's paying those tariffs. As of right now, it's mostly the importers and the wholesalers who are doing the importing. But we know they're passing a little bit, maybe a third or a quarter of the tariffs onto the consumer. So that's what shows up in this report. Not the full impact of tariffs, but just the bit that the companies aren't eating. So one of the big questions for the next six months or so is are companies going to stop eating as much of the tariffs as they're going to eat? In which case you could see goods inflation, you know, which is not even half of the picture, but it's a significant amount of the picture. Total inflation, you could see good and goods inflation heat up in the next month, six months, year. And that's something I'm going to be watching really closely.

[Ed Elson]

We have no September jobs report, we'll have no October jobs report. This is obviously all very important in terms of the Fed's interest rate decision, which is happening, going to be happening tomorrow.

[Robert Armstrong]

I mean, the whole pick. I'll tell you, Ed, I think the whole picture is one where I think market commentary and the market itself has gotten a bit ahead of itself in terms of how many rate cuts we're going to get, where, you know, we're a solid percentage point above the Fed's target on inflation. If you look at things like the Goldman Sachs index of financial conditions, financial conditions are very loose, markets are extremely hot. And indeed, the economy, with the very important exception of the jobs reports, and we talked a little bit about those on the show in the past, looks pretty hot, too. So, you know, I don't think any, any rational person would look carefully at the numbers we're seeing right now and say inflation is beaten, the economy is slowing down, we have a percentage point or more of cuts coming. I just don't see the case.

[Ed Elson]

And yet we're looking at a, I think near 100% certainty of a rate cut. And the market appears to be unanimous. And in a lot of the reporting I was seeing, which surprised me, I agree. I think the commentary's a little, got itself in a bit of a spin because the commentary says this seals the deal. Now that we're at 3% inflation, hooray, now we're going to get a, now we're going to get a rate cut. It's like, hold on, we were at 2.3. I thought we were trying to get to 2. We're at 3 now.

[Robert Armstrong]

And that is something that is sort of in the background on everyone's mind, I think, which is, does 2% now mean the number starts with a 2?

[Ed Elson]

Right.

[Robert Armstrong]

You know what I mean? It's not 2%. Like 2.7% counts as 2. Now.

[Ed Elson]

Round up a number.

[Robert Armstrong]

You know, and I, I don't really know. I don't really know what the Fed's position on that is. And look, I'm sympathize with the people on the Monetary Policy Committee or the Federal Open Market Committee who are more dovish because the job situation is a little weird. Yes, you're looking at a very low level of job creation every month. You're reading a lot of announcements about layoffs and the fact that the rest of the indicators we have of the economy, of the economy look pretty strong. Other than that jobs number, that's only so reassuring. I mean, the Fed's mandate is employment. The Fed's mandate is not economic growth, it's employment. So they've got to take the jobs numbers, which are a little spooky. They have to take them seriously. But everything else that I can see is saying the economy's warm, financial conditions are loose and inflation is too hot for comfort.

[Ed Elson]

What would be your predictions for the next several months or so when it comes to inflation? I mean, I can just tell you where I stand on this. Prices are going up, tariffs beginning to pass through. We're starting to see it in the data and we're cutting rates. I think it's only going to get worse from here. I just want to sit here if you agree.

[Robert Armstrong]

I agree with you on the good side. I think there's good, there's good reasons to think that there will be more tariff pass through to consumer inflation. We're already seeing it in, you know, producer inflation. It's going to move towards consumer inflation. The services side is the is the real question. Wage growth is still pretty good, but again if you take housing out, services inflation, you know, haircuts, legal services, health insurance, all that kind of stuff, that stuff's pretty hot too.

[Ed Elson]

Right.

[Robert Armstrong]

So I think, but I just don't know. I feel less confident about what that's going to do. If the jobs number are telling us something about underlying weakness in the economy and we continue, continue to see very low job creation, it makes sense that non service, that service inflation would come in a little bit because that's where that stuff is really driven by wages and wages is driven by how tight the job market is.

[Ed Elson]

Yeah, we're also seeing a lot of sentiment reports coming out u Michigan sentiment down 22% from a year earlier. Trump is just increasingly polling badly when it comes to his handling of tariffs on the economy. I mean, I know that I struggle with these sentiment reports because I find them so political just by nature, but are you looking at these sentiment reports? Are they playing into your view of the economy?

[Robert Armstrong]

I look at them. The problem is, and I've written about this a little bit in recent weeks, is there's they're less, less and less predictive.

[Ed Elson]

Right.

[Robert Armstrong]

That the sentiment has been bad for a long time and in the last couple of years it just hasn't been a great guide to what markets are going to do, what employers are going to do. I think there is no question that the Liberation Day fiasco put employers in a mood to wait and see. I don't think there's any question that people like to hire when the future looks predictable and we haven't had a lot of that in policy making, but I think we might be getting over that a little bit. The shock and horror of that absolutely bizarre news conference is receding a little bit into the past and hopefully there's been some lessons learned there and sentiment will slowly recover.

[Ed Elson]

Okay, just while we have you, we only get to speak every so often. What else is on your mind? Anything happening in the markets right now that you're paying particular attention to that you're finding quite significant?

[Robert Armstrong]

It's fun watching gold wobble here because gold was an interesting case where it started out as a fundamentally backed story. So a year or two ago, it was like central banks were buying more gold as a kind of way to diversify their portfolios. Gold was cheap, the dollar weakened a little bit. All of this stuff was getting behind gold. But then the trade took on a life of its own, kind of a kind of FOMO momentum retail trade. And in the last couple of days, it's kind of been like, whoa, let's slow down here a little bit. And I'll be fascinated to see what that does. And you know, it's been a great case of when you have a price that's going up, the narratives will fall in place. Like, you know, gold went past 3,000 up to 4,000. It was like, let's just make up stories about what's driving the gold price. But what was driving the gold price was the gold price.

[Ed Elson]

Exactly.

[Robert Armstrong]

There's nothing else to it.

[Ed Elson]

Yeah, it's a classic case of fomo. And it's so interesting how the, the price increases in gold we did see in the reporting. Oh, it's because the central banks are buying gold, but that only explained a fraction of the price increase and, and.

[Robert Armstrong]

Explained it like two years ago. You know, the banks have actually backed off now, Right?

[Ed Elson]

Yes.

[Robert Armstrong]

Because if you're a central bank, you have an allocation to gold and it's, it's a percentage allocation of your portfolio price of gold goes up 50%, suddenly you're over your allocation, you have too much gold.

[Ed Elson]

Yes, right, exactly.

[Robert Armstrong]

So it's a very funny story. And of course we have. Ted, the other thing I would mention is just we, you know, we have big tech earnings rolling in this week and we always kind of hold our breath because, you know, this is a third of the market by value or whatever it is now. And we have five of the big ones reporting this week and we're going to be wa, of course, with bated breath for all of that.

[Ed Elson]

Any thoughts on what you think we can expect in the next week or so.

[Robert Armstrong]

I mean, anytime I've been skeptical of these businesses ability to just keep growing despite their incredible size. I've been wrong. So I'm just not going to step in front of that steamroller again. I mean, these businesses are just their ability to grow. And of course everyone's worried about their spending right now, but the fact is they've got the money. Yep, sales are growing. So I mean, these things are an incredible story and I think chances are good they'll just report another good quarter. It's the tail risk you worry about. The small percentage chance that one of these guys says, ah, we've been doing some thinking and maybe we have to change our strategy with regard to these data centers a little bit and then it's going to be game on. But I think the probability of that is low. But it's just going to be a high consequence event if it does, if the dice come up that way.

[Ed Elson]

All right. Robert Armstrong, US Financial commentator for the Financial Times, author of the Unhedged newsletter, which as everyone knows is my favorite newsletter. Rob, great to have you on the show. Thank you.

[Robert Armstrong]

Pleasure to be back. Invite me anytime.

[Ed Elson]

So the data is in. Inflation is up again. Last week we predicted that this would happen. We said that inflation would rise again and that it would continue to rise. Indeed, prices in America are now up 3% from a year ago. That's up from 2.3% inflation just a few months ago. Now why did we predict this? Well, quite simple. Our thesis is one, that tariffs raise prices and two, that it takes some time for tariffs to raise prices. That's why we weren't surprised when inflation was only 2.4% in May because the tariff impact hadn't taken effect. And it's also why we were so angry when we saw Treasury Secretary Scott Besant going around parading that number to the media as his evidence that tariffs don't raise prices. No, tariffs do raise prices, but it takes time. And that's exactly what we're seeing now. We had 2.3% in April, the month of Liberation Day. Then it went up to 2.4%. Then it went up to 2.7%, then to 2.9%. And now we are up to 3% inflation. There is absolutely no question tariffs are raising prices. That's also why the tariff sensitive items are exploding in price. Audio equipment prices up 14%, beef prices up 15%, coffee prices up 19%. This is the tariff impact. This is what we're seeing now for those of you who say, hey, you're wrong. Economists had expected 3.1% and we got 3%. So this is actually good. All I can say to you is that you are missing the point. Just because a group of economists were 0.1% off on how large the tariff impact would be in this specific month, that doesn't mean there is no tariff. Tariff impact, and it certainly doesn't mean the experts were wrong. The debate that we were having back in April was whether or not tariffs would reignite inflation. Many people said they wouldn't, including people in the administration. Well, we were at 2.3, now we're at 3. So there is no debate. Tariffs have reignited inflation. Tariffs have made America more expensive. And so long as the tariffs remain in place, prices will continue to rise. Our prediction next month, when we get the next CPI report, inflation will be even higher. Okay, that's it for today. This episode was produced by Claire Miller, edited by Joel Patterson, engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our research team is Dan Shalon, Isabella Kinsel, Kristen o' Donoghue and Mia Silverio. And our technical director is Drew Burrows. Thank you for listening to Profg Markets from Profg Media. If you liked what you heard, give us a follow. I'm Ed Elson. I will see you tomorrow.