“It Hasn’t Kicked In Yet” — The Inflation Shock Markets Are Missing | Stefan Rust
Summary
Inflation Data: Trueflation argues legacy BLS prints are lagging and less transparent, offering daily updates and T-1 forecasting that traders and investors can use for an edge.
Oil Prices: Near-term inflation pressure from Iran-related disruptions, shipping lags, and low reserves is expected, with potential relief in six months as supply normalizes and the UAE’s OPEC shift adds barrels.
AI Infrastructure: Massive $800B–$1T+ annual capex for data centers is near-term inflationary (labor, materials, power) but ultimately deflationary as efficiencies compound.
Data Centers: Surging demand for power, cooling, transformers, concrete, and skilled trades underpins a multiyear buildout cycle tied to AI adoption.
Regional Outlook: The United States is presented as the best place to invest; China has vast resources but faces transparency and accessibility challenges.
Real Estate: Expect softness in major coastal cities and strength in secondary markets (e.g., Austin, Miami) as talent disperses and SMEs hire AI/developer skills.
Food Inflation: Fertilizer and input constraints during planting season raise risks of 30%+ food price spikes and social unrest, with historical parallels like Egypt.
Crypto and Markets: Bitcoin and Ethereum are framed as digital gold/oil, while stablecoins and prediction markets offer new ways to price and hedge inflation and macro trends.
Transcript
the supply and inflation will will come. I think everybody's in La La Land at the moment. It's like everybody's really enjoying um has it hasn't kicked in yet. Nobody's realized it. I think people are going to have to eat humble pie um and especially politicians that hate doing that to make decisions that is going to keep a nation fed if the food doesn't come to the table. That's when if food prices go up 30%. You see unrest in population. Welcome everyone back to the wealthy on pot. I'm Chris Perkins the CEO of 250 digital asset management and today I'm with my friend Stefan Rust the CEO of Truflation. Welcome sir. >> Welcome. Thank you. Nice to have a back. Nice to be back. Good seeing you again. Um yeah. So thanks for having me. >> Awesome. So there's a ton going on with macro. Um but today we're going to take a deep dive on inflation and uh hopefully the investors understand just how important it is what you're doing. Uh tell us about trueflation. What's what's the goal? What what are you seeking to achieve and uh how did this all come together? So it all came together when Janet Yellen and Jerome Powell told us inflation was only going to be transitory and and that was sort of a set off a large you know just alarm bells and looked under the hood how the Bureau of Labor and Statistics were calculating inflation and noticed very quickly that it's antiquated outdated and not suited for a world where that we're entering into right now AI based and is totally intransparent and So that's why we then set out to do that. We can do 10x better than that. And so pulled the team together, built an MVP, and then we got a lot of interest. Everybody thought we were crazy at first. Um, but selected individuals thought we were really doing something innovative, backed us, and today we're now a source of truth for calculating true inflation. Um it peaked around the time when inflation according to the BLS was 8% we tracked 12% people believed our numbers more we were down at 6% at one time and people believe that number more to be an accurate reflection of where inflation was headed and then we went into um the Iraq Iran war and that ultimately spiked and that was the floor basically and we've been going up since we just broke 2% % um in inflation. Where's this all going? We just felt that or I felt that the number one scorecard for any administration is the inflation metric. It is also the foundation for quantitive easing, tightening, money printer, interest rates, etc. And it aggregates all of economic data into that one single number called inflation. It can be consumer price inflation. It can be asset price inflation. Whichever you prefer, but you have ultimately prices that move, which is a sign of a economy moving forward and goods getting better and hence charging a little more. >> Well, tons to unpack there. Uh let's start. You made a comment that your measure of inflation was 10x better than the Bureau of Labor and Statistics or BLS as we'll refer to going forward. >> Yeah. Let's talk about the old way. Um, why is it so flawed? What do they do that's so wrong? >> They were tracking the data manually. So, they had people going to 477 individuals going to the various grocery stores and clocking prices. They survey 1,000 households nationwide, which they rotate on a monthly basis to capture household spending um, and the patterns throughout that. Um, we felt that in a world of digitization, a lot of it moving to e-commerce and online, um, we could capture a lot of those prices in real time. So instead of waiting one month plus 14 days before they actually announce it, we can do it daily. So we clock our number daily. We update all the data sets um on a daily basis at 2 am UTC um so that it's in computer language as well. And yeah, that's that's sort of the big differentiators. And we sort of changed waiting a little bit, right? So we didn't look at the waitings that they do. We extracted um utility costs out of shelter costs because we felt the variability and the um movability associated with utility costs is far greater than that of rent itself or mortgage payments that you've got on a on a house. Um and so we felt that those should be separated from shelter things like that. >> Yeah. So so markets tend to be in my mind source great sources of truth um and and they're highly efficient but you still see markets oftentimes react to the legacy BLS print. Um what does that mean? Does it mean that you know that many traders are getting are are relying on crappy data or is it an opportunity where people actually are trading around it because they you know use metrics like yours to to understand the truth? >> So we have sort of three customer segments. I'll call them the financial researchers, the quants, the analysts, I'll have the traders themselves and then we have what we call investors. The investors look at one year plus and you can bucket them into pension funds or annuity funds um that are managing long-term investment horizons. Traders, they're trading yield, they're trading gold, commodities um and equities um and are looking for a faster turnaround, quicker ins and outs and higher volume, lower um marginal changes. Um and then with the researchers right the researchers really like trueflation our number and they are building um trading signals and research using the trueflation CPI. The traders themselves, they care about the BLS CPI and our ability to slow down our data and map it to that of the Bureau of Lagging Statistics so that we can map our number to our data to the BLS number. And we do really good at forecasting. Enterprise customers get that five days ahead. And we've just opened it up to retail so that everybody can get it one day ahead of the government. So you get it first, one day admins and that's our forecast which we do. That's for the traders. Investors care about long-term horizons. They want multiple perspectives. They want to know what is true inflation forecasting in the future. And that's where they really look at our times time series foundational model to help them with forecasting. We're really good going up to a year in advance, but then as soon as you go out five years and some of them want to look out 10 years in advance, um I don't know how you forecast inflation 10 years out, but um yeah, I guess they just want to run scenarios and probabilities. Yeah, we we uh trade rates out to 50 years. So maybe that's something you can there'll be a liquid market in the future. So So let's unpack the the differences. You talked about different weightings, different data sets. Um as you look at the bureau and you said the bureau of lagging statistics um and true inflation, >> what are the core differences that have like you know are there areas that you wait differently that are having a bigger impact on your trueflation number versus how they weight their approach? What what are the drivers? You know, obviously timing is a big difference here, >> but beyond that, as you're looking at components and waitings, are there other things that they do wrong that you think you do right? >> Yeah. So, they bundle a lot into shelter and um you shelter in their waitings is about 30 plus%, 35%, I can't remember the exact number off the top of my head. Um but it's around that. We take it down to like below 20%. So, we're just in the 20% rate. Why? we extract a lot of variables out of there. Um and and so that's one big example. I mean the the the drivers don't really change. It's just how fast can you incorporate the changes associated with those drivers and then ultimately how and what is the waiting of those drivers when included in the specific categories. So oil obviously has a far bigger impact in utility costs and utility costs as a standalone with a waiting of around 8% or 6% I can't remember the number um but we all disclose it on our website so everybody can see the waiting and the changes of the waitings um but yeah you can actually go and see that has a lower impact than if it's bundled into a 35% shelter cost um and it's just a slight flight element inside of that. Um those are small things that that do it but I mean the biggest driver of all inflation that doesn't change right oil is is one of the biggest drivers uh and the cost of gas um in it impacts transportation cost heating cooling um you know yeah and a whole bunch of and the whole supply chain. So if that's the case, true inflation must be just screaming right now based on where we're seeing uh Brent and WTI. Um would love for you to talk about the some of the largest deltas that you've seen. You said that during COVID uh when chairman Yellen was talking about transitionary uh inflation, you said wait a second, you know, the actual inflation is much higher. Obviously that was a big data point. want to understand that a little bit better what you know what you found during that period and then talk through other other times or sequences where true diverged materially from BLS. I mean largely right now, right? I mean, after um Trump came into um into government and his administration took over last year, early last year, we saw inflation come down significantly. We bottomed at about 6 and all the meanwhile, you know, the lowest that the BALS was reporting was 2.8%. So there's quite a big difference. And we saw especially in food categories the cost of food came down significantly. Um eggs for example have nearly a 50% drop in deflationary uh you know impact in in the overall equation. Um so the things that matter were addressed really quickly uh with the new administration coming. Food people go to the grocery store 10 times a a month. So every time they go to the growth, they feel that pain each time they're in there. And so things like that have had a significant change. And that's where we manage to illustrate that a lot faster and a lot more accurately than the BLS has been able to do. >> And now with Iran, uh what are you seeing? >> Yeah, I mean I think the same as everybody else, right? I mean um gas costs are up obviously significantly. Um and we don't see that changing and actually we see that having and growing continuously to grow. Why, you know, only now are the ships that left two months ago arrive the last ships are beginning to arrive at ports where I mean not the US necessarily but you're looking at ports in China in Korea in Japan ports over especially Asia or but maybe even Europe over in Germany their last ships are coming in so all of a sudden it's now dropping into the reserves how many and how big are the strategic reserves at the various nations around the world, you're already seeing rations take place in places like Philippines, in Pakistan, in in India, uh where they're already beginning to ration a lot of the energy consumption. What does that do to the GDP in those specific markets in the US? We think that it's going to be it there's not much of an issue. Gas price, they're going to be the beneficiary of increased gas prices. um exporting to Europe, uh getting from Canada, which needs to funnel it to the US ports because they don't necessarily have the ports to take that kind of volume um across to Europe possibly and Europe's going to be buying from the US. Um so that's that's sort of what we're seeing. Food um you're also seeing fertilizer, ura, uh sulfuric acid. I mean, we all know the numbers that are coming out. Uh planting season is right now. The supply hasn't been coming. Um, and so is it going to be as bad as everybody anticipates? I don't know, but we'll find out. And we think that it's going to take another two if all things go well and we come to a conclusion around the Iran war by the end of this month, let's say, so June, you still have a three minute month lag before everything come picks up and then let alone getting back to normal. Add another two, three months on that. We're looking at least best case a six month sort of um drought before we may hit a gluttony right where everything comes onto the market. UA you know the UAE has announced its departure from OPEC. So oil is just going to come onto the market and flood the market um really quickly. So the prices then in six months time should be a reflection and we should be seeing deflation in the gas prices again. >> Wow. So essentially uh we're going to be on a build up on inflation for the next 6 months or so, maybe longer depending on when the Iran stuff gets sorted and then you just see this precipitous drop. >> And how does the economy is doing really well, right? I think what a lot of people don't realize is the economy in the US is doing really well. The US is the best economy, the best place to put your money right now um compared to anywhere in the world. The only other factor might be China where you've got more energy than the rest they're producing more energy than the rest of the world combined. They've got bigger reserves than the rest of the world combined. They have all the fertilizer raw material and fertilizer reserves more than the rest of the world combined. So they have a big stockpile. Um so those are the two markets that are interesting. But the lack of transparency in China, the boundaries, the Great Wall of China is going to make it very challenging over there. So the US is in a really good state. We're seeing a huge shift in employment and real estate. What's happening is big cities, San Francisco, LA, New York are going to see a decline in in housing prices, but we're going to see a rise in housing prices in secondary markets. Employments at the big enterprises, at the big tech companies, at big banks are dropping whereby smallmedium businesses are hiring new tech talent, are looking for AI skill sets, developer skill sets, and that's going to result in a big migration of the population from the big central cities into sort of other um secondary cities that will grow significantly. Look at Austin. you're looking already you're seeing what's happening in Miami um and Fort Lauderdale and places like that. >> I was just at the Milkin conference and Ken Griffin was talking about all of his angst associated with New York, >> but I don't know if I agreed with you that that housing is going to come down in New York. Um I don't know, maybe I'm going to push back there based on what we're seeing and experiencing and >> yeah, >> you know, maybe demand comes down, but I think taxes are going to keep going up. So, how do you think about that? >> Yeah, I mean taxes is um is what does that do? that reduces consumer spending and increases hopefully government spending. But in our experience, government hasn't been very efficient in deploying capital and allocating the capital towards asset appreciation or infrastructure that helps facilitate growth in a city or in a nation, right? And so the private sector has been very good at that. the private sector allocates a lot more efficiently um and looks for an ROI due to the way the market's structured, right? The the market rewards great allocation of capital and a good return on equity, a good return on investments. Um >> that's a thesis, isn't it? Like you know same goes for data. Their data is inefficient and garbage and then you know you guys are on the private side are much more efficient, robust and timely. >> Um so Stefan Yeah. Go ahead. >> Yeah. No, we we just I mean we're trying to make our data open. We want to democratize a lot of this data. How do we do that? And one of the things is, you know, we started off selling data. Why? Because that was the SAS model at the time. That was the right thing to do. All in parallel. We've been trying to develop trust around the true brand name and build out financialization models with the data. So the data actually can be made available to anybody and it's up to you to build financial products associated with that data. What do financial products with inflation or economy look like? Those are inflation per that you could build out. Those are inflation swaps that pension funds can trade amongst each other and hedge against future inflation. Um those are prediction markets with all the economic data that people can start trading on based on the knowledge and the expertise and then be able to assess where markets and industries are going and put your money where your mouth is and and those are sort of products that we've been looking to build out in order to democratize and make all of this data available to everybody. Yeah, I want to get to that in a second, but you you said something just previously around AI, and I think this is uh you know, we saw incoming chairman of the Federal Reserve Kevin Worse talk about how AI is going to have this massive deflationary impact >> on the economy. Um and you know, that's a lot of his justification for likely keeping interest rates low. Um can you just talk more about and you talked a little bit about it but h is that the right way to think about it that inflation's coming down materially how much due to AI like you know you hear this narrative constantly how do you feel about it >> I think gradually then suddenly is is a quick answer right um I think I don't I think it's a techn I think Ken Griffith said it as well really well in at the Millennium conference it's a technology right It's going to drive significant amount of efficiency. It will create a whole slew of new jobs that we don't even talk about today. We don't know what type of jobs they're going to be, but it will do that. We saw that with the internet. Uh we saw that with cloud compute. All of these um have have really helped um create new types of jobs um that we didn't know about 10 20 years ago. And so that is one perspective and one way I look at it. the other way. Yes, it's going to be deflationary, but definitely not in the short term. We still have huge capex. The capital of co the cost of capital with the capex deployment is very high. The demand for skilled labor associated with the deployment of capital and the buildout of infrastructure is demand, you know, is creating a huge demand on that limited talented skill set. Um, and so that's actually having a slight inflationary, you know, just looking at the mag seven or you you see the numbers out there as well, you know, Goldman's published it, Morgan Stanley, you name it. Um, they're all saying about a trillion dollars in capex this year alone for data center buildouts. I mean, that's a huge amount of money. Um and then you yeah you include all the other ones the anthropics and the ones that are open AIs that not publicly listed and don't disclose those numbers. You've got a significant investment and remember growth and GDP consists of consumer spending, government in spending but also investment. So capital investment and capital deployment and then export minus imports. Um and so capital investment is a big chunk of the GDP and we see that going to grow um obviously with all these AI type investments. >> Yeah. I mean you captured the the talk of the town at Milkin this week and it was to your point MA like incredible optimism. >> It was you know they mentioned 800 billion to a trillion dollars in capex this year. >> Wow. >> That doesn't go to zero next year. it's probably going to go, you know, just as high, maybe higher, who knows, right? And so you see this massive, it's it's almost like, you know, going back into the 20s or something where people are building the skyline of New York. Um, incredible capex and to your point, people have to build that stuff. the amount of demand for bluecollar workers, um electricians, you name it. Construction workers, um this is going to be very stimulus type economic, you know, all the cooling needed. I need the electricity management, the transformer industry, you know, the concrete, what sort of concrete and material will I be using, you know. Yeah, it's just it's it's it's a whole slew of different types of segments of the industries that are going to be impacted by this. >> So, is this kind of like your oil thesis where we see a near-term spike but then a precipitous drop in inflation? >> Yeah, I mean oil there's going to be a huge demand for oil. Um, and the supply just isn't keeping up with that demand. Russia is, you know, is curtailed because of its uh the sanctions set upon it. Um yeah, you got China, they're not giving anybody their oil. Um and um you know, I think one thing that you're seeing is they have a huge reserves. Um Asia is going to need a lot of demand. I mean, Philippines, Japan, all import nations for energy. uh Korea huge hubs Taiwan you know all the semiconductor you know are being developed AI is dependent on Taiwan um Korea and Japan right remember Korea has Samsung has high right some of the biggest component suppliers to the semiconductor industry um how they need energy they need the material they need they're part of the supply chain so how are they going to be getting their energy >> yeah and then once you turn those data centers on they are very hungry for power and energy. >> Um h how do you think about you you look at inflation globally um how do you think about trends uh US visav other jurisdictions? >> Yeah, I mean I think other jurisdictions will suffer greater. I mean the the supply and inflation will will come. I think everybody's in La La Land at the moment, you know. I was like I think I think it's like everybody's really enjoying um has it hasn't kicked in yet. Nobody's realized it. Um you know you're hearing about flights the number of seats on the airlines are being cancelled. Some 20,000 seats last month were cancelled especially across Europe. Uh lufans are shut down some two million seats or something. So sorry 20 million seats. So, uh, they is that because of the jet fuel and or is that just using it as an excuse to shut down unprofitable, you know, lines that they've been filling? Um, I don't know yet and I'm not very clear on that. But also, jet fuel standards apparently are different. There are different standards and requirements in the UK, for example, versus the US. So, what does that mean for US airlines flying back to the UK and they're not allowed to use the standard that those jets use and have to use different jet standards? I don't know if that's the case, but that's one thing people were saying. And apparently the UK has just dropped that law. The zero, you know, the what's it? Net zero standard is is is is being yeah pushed out by another couple of years or decades. Um, so a lot of policies will be changing. Um, but I think people are going to have to eat humble pie. Um, and especially politicians that hate doing that to make decisions that is going to keep a nation fed if the food doesn't come to the table. That's when if food prices go up 30%. You see unrest in population. >> Yeah. I' I've uh I've I've read about this recently where it's really food inflation that causes um uh like big issues with with um hunger and uh famine. Uh >> we saw that in Egypt. Egypt the uprisings in Egypt were because bread costs went up greater than 30%. >> Yeah. Yeah. That's what leads to famine. So yeah, I hear you. All right. We talked a little bit about uh financialization. So, you're a listener, you know, you're kind of into the markets and you're like, "Wow, this stuff's pretty interesting. I could get an edge if I use Truthion. H how should people be using your data?" Um, and you talked about prediction markets, swaps, like prediction markets are obviously available to retail users. Um, tell us how that's coming along. And then I think most of the swaps like inflation swaps, basis swaps, those are more institutional products. But if you're a listener, h how should people be using your data? >> So I mean right now you can go on to Cali and you can predict some of the trueflation indexes. We track some or we've created some 400 indexes uh outside of just the CPI using all the economic data that we aggregate and verify and qualify. And one of the most popular products right now on KHI is our EV index. which takes the raw material and the commodities needed for the four different types of EV vehicles and is weighted according to the requirements of those raw materials to each of the EV vehicle and then puts that into a basket and prices that and so that's been one of the most interesting products on Kali from Truthflation which was a bit surprising to me um but yeah It just goes to show to me that from a prediction market perspective, people are looking for different innovative type products versus just how many times are they going to drop the word X inside their press conference or what is the color of the tie that you're going to be wearing tomorrow. Um, and so it's actually a bit more predictable. It's a bit more calculated. U, you can use a bit of intellectual science. And I think also commodities are going to be really interesting. How can we create baskets that tie in and couple commodities into prediction markets? To me, prediction markets is the fastest way to monetize your data. >> Yeah, for sure. Um, so it's about this EV contract essentially. It's it's a commodities underlying EV technologies and that's what you're tracking. >> Yeah. >> So, it's like almost a derivative of inflation where you have all this data now. You can create indices based on all this this incredible data set. Really cool. The other one that we've done is we've taken the World Bank's pink sheet which takes um which is basically a consumer think of it as the CPI for commodities. What type of commodities across energy are we consuming the world economy consuming? What type of agricultural products are they consuming? Metals and precious metals and that's weighted across each of the categories. So in energy you'll have oil, coal and and and I think it's what do we have gas. So we have those three and those are weighted into the energy index, agriculture, etc. And so that's weighted. We've created a basket associated with that and we've priced that in dollars and against Bitcoin. So how does it perform against Bitcoin and and what does that look like? Um, how many baskets does a Bitcoin buy you and how does that change over time? >> All right, now you're talking my language. Um, >> so you're an old Bitcoin guy uh back in the day uh just for the listeners. So, you know, all of most of inflation to date has been against dollars and we know dollars are deflationary asset arguably a very good store of value on a relative basis vis other fiat currencies. And going back to chair uh Federal Reserve chairman, incoming chairman Wars, he said, "Look, um Bitcoin will keep the dollar honest. What role does crypto have in this entire inflation game going forward from your perspective?" >> So yeah, I mean I think you know I mean yeah, we're we're both OGs in Bitcoin and stuff and Ethereum. I mean Bitcoin to me is the the gold of the digital era. You've got Ethereum. To me, that's the oil of the digital era and and then you have other refined areas of oil, right? So, I've got maybe just the raw oil is Ethereum and then I get all the different types of jet fuel, diesel fuel, um you know, what gas, etc. And then Salano, maybe the gas type thing, right? And so, that's sort of how I view it. I think you'll see the brilliance about crypto and bitcoin at the time and maybe even stable coins less so because stable coins to me is just an extension of the dollar and that is now moving retail it's going to put a lot of pressure on central bankers especially non US central bankers um as the consumer base will flock to a USDC or a USDT um just mainly because they don't trust their own government, their own money, the money that's printed and all regulatory barriers that you try to put in place are only going to create more demand. Money moves uphill, right? It's sort of people will go where they can try and get it. Um, but other overall I think the currency was created to facilitate trade. As trade moves digital, the currency of choice in a digital world is a lot broader. all of a sudden, do I need Bitcoin? Do I need Ethereum? Do I need Salana? Do I need Sooie? Do I need XRP or whatever currency that is out there? Um, Cardano, I don't know, you know, truth network, truth tokens. Um, all of those will become currencies. And like all of a sudden for your trade needs, you're given a selection, a choice. What is the currency of your choice? And all of a sudden there is to facilitate trade a alternative class or an alternative asset class that wasn't available before uh for people to do trade in and I think that's the exciting bit and to your comment holding governments accountable or giving alternative choices for a currency that is now coming to reality. And then what happens when agents come in? You're not trading between people anymore. It's agents between agents. How and what will they choose and how will they make their choices? >> You think a genetic activity is going to how's that going to impact inflation? >> Oh, hugely. Um, we're so GDP is largely consumer b one of the biggest factors is consumer. Uh, the consumer spends a lot of money today in real world products. In a digital world, that consumer, is it still going to be a person or is it going to be an agent? and you're paying an agent to do the work for you. You pay them in tokens. So that's an income for that agent. That agent then goes on your behalf and spends your money. And so the more agents you have, you may be spending it on many more different products. And so the growth of an economy will no longer necessarily be tied to a single agent or a single individual. It will be tied to an agent who may be incorporated in the body of a robot. And so all of these things are going to change the economy significantly. Um, and they will have different requirements. Their requirements won't be food. Their requirements will be oil and will be spare parts and will be, you know, semiconductors in there. And so they'll have to go and buy their own, you know, not food, but their equivalent of food, right? And then will they be taxed? If an agent is generating income, is that agent a taxable unit and you know so how are we going to deal with an agentic world? Will they you know no taxation without representation? Will they start becoming you know demanding representation if they have to pay tax on agents and robots? >> I feel like the government's going to figure out taxes one way or the other. They they tend to Benjamin Franklin death and taxes. >> So I'm sure that's going to get sorted. As you step back, I mean, you're looking at massive amounts of data. You're you're synthesizing them. Are you bullish on markets right now? >> Yeah. I mean, I think this is the greatest time to be alive. I think it's very confusing the markets to invest. Where do you invest? And how do you filter out the signal from the noise? um there's a lot of noise and I think it's really hard without the data and without the compute resources to filter out the noise um and get to that signal and I think that's the real challenge um there will and the volatility is the other thing I think the world we live in right now is hyper volatile it's going through a lot of change if you're coming from crypto you're used to it it's normal um if you're coming from you know yield income or bond you know interest rate income you know that's that's a very different world and I think the challenge is this transition from the traditional world into this highly volatile startup type environment you know I think David Saxs was saying the US government is operating and running like a startup now right they're breaking things moving fast and creating a lot of confusion Um that's and so as a result the world is beginning to feel that and is struggling to come up to speed with what that means and how to operate in that world. Look at Europe. I mean Europe goes on a weekend and says, "Oh, we'll set up a committee meeting on Monday when we all get back to the office when we go to war over the weekend." Right. And so it's like I don't know a startup that could afford to do that. >> Yeah. I mean I I totally agree. It's an exciting time to be alive. You have crypto, you have AI, pretty soon you'll have quantum. And and these things are just accelerating each other at such massive pace. You've got space going on. Elon's going to, you know, recognizing the amount of energy in space. So like there's so much innovation happening. Um it feels like everything's rewiring and it has to rewire if you're going to be competitive. Like you talked about some of the restructuring and some of the excuse because of AI, well I'm going to fire, you know, 16% of my of my force. So probably long term you're going to hire more people back, but they may be a little bit different, right? And and they may have different skill sets. Maybe we want to go find that humanitar that humanities major uh literature major because of the way they think and put them in a room with the computer scientists and see what happens. So yeah, it just feels like this massive time of rewiring. Um and it doesn't feel like >> Yeah. I don't know if you know have you listened to Rory Southerntherland maybe I should >> he's he provide I mean he's a British marketing guy and he really talks a lot about you know if you let the world be run by computer scientists and mathematicians you know you'd spend a gazillion dollars to get from A to B within you know within with a five five minute improvement whereas if you'd hire a marketing person his argument of course protecting the marketing side and you spent, you know, a tenth of that amount and hired, you know, um, you know, had great movies on the pl on the train and for example, and you have, you know, nice cocktail drinks and you'd give them out for free on the journey and you they'd be served to you by lovely ladies or lovely men and they would all be charming and wouldn't you prefer that? You'd want the trip to be 10 minutes longer or 30 minutes longer. And so I just think that's a different perspective and we need to blend those two together to your point. >> Yeah. So Stefan, as you're looking forward, you have um the flagship trueflation index. You're starting to financialize it. And I think the one thing that we've realized is that financial markets are truth. These prediction markets are helping us with real data points that can inform our strategies about exactly where the world is rather than wait this late latent data that's probably really wrong. So you've got true inflation. You talked about the EV index. As you look into the future, what product areas are you focusing on as new products or new areas of focus? >> Yes. I don't want to share too much right now, but um broad >> we've got I mean financial products, where are the gaps in the financial services industry, right? And um I think you you would know what I'm talking about. And um u but yeah, we're really trying to build out um certain areas um that we feel again is a niche that we can dominate. What are those niches that you can dominate? I don't want to go where there's red sharkinfested waters. I want to go where there's a blue ocean out there and and try to find opportunities and just be a tiny I mean nobody everybody thought we were crazy when we did inflation. Why do we need inflation? The government's already reporting inflation. And so all of a sudden that was a niche. Our competition was the Bureau of Lagging Statistics. And so we just need to be fast. If we can do it fast, we can do it daily. We don't have 5.5 or$130 trillion in worldwide bonds coupled to our metric yet. But that's somewhere where we've got to get to. And um we decided to focus on that niche. And how do we do the same with prediction markets? what is the niche out there um that we can go after that's very interesting and has liquidity, right? I think the biggest thing with anything that we do in the financial markets has to have liquidity and that's obviously one of the biggest challenges. >> So, you're you're uh slugging it out every day as an entrepreneur working around the clock making things happen. How did it feel when Secretary Bessant came out and started talking about your product? >> Yeah, it was definitely rewarding after all the people called us crazy. the amount of nos you get and and and it's just you know I think what a lot of people don't realize as an entrepreneur it's it's persistency tenacity you got to love what you do >> and you got to have a level of yeah stick it to the man right so if you said no I'm going to show you that it's going to be yes and when Scott Besson started talking about it um you know Kathy Wood's been a big supporter Daniel D Martino Booth Ral Pal you know we've had a number of big supporters really early on Balaji um you know Brian Armstrong that all every time you hear a a a leader or an influencer I wouldn't call them influencers I think they're leaders thought leaders and actual practitioners and executioners talk about the brand and and and what we've been doing it's it's extremely rewarding not monetary monetarily but it's actually rewarding you know sort of satis gratifying let's put it like Well, we're I'm sure you're going to get there on the monetary side. Well, yeah. All the faith in the world. >> Anyway, um any last thoughts, sir? >> Yeah. No, I think, you know, it's um to your point, one thing is like would you go and live on the moon? Would you, you know, to me actually as you brought it up, space, I'm super excited about space. I think it's the new frontier. It's, you know, it's the new go west. It's like Columbus when he went across the Atlantic. You know, everybody thought it was a flat world. he's going to fall off the edge. He went and foraged out there. Um, landed up somewhere where he thought was India, but it actually wasn't India. But, you know, sort of space, you know, it's like, would you buy a ticket to go to the moon and and spend a holiday on the moon? You know, it's like, yeah. >> Awesome. Uh, and how can people reach you? >> Yeah, look, um, uh, on X, you know, the real srust um on trueflation.com. Follow us, sign up to the newsletters. Uh we've got a lot of new products coming out right now. Uh we launched at Tminus one. So we give you the BLS forecast be one day before the government number comes out using our number, their waiting and our accurate calculations associated with that. So you don't need to wait. You can actually prepare for when their number comes out. Um we've got a whole bunch of other things coming. prediction markets we spoke about and given all the data that we've had, given all the work that we've been working on over the last four years, we have our time series foundational model coming live in about two weeks time. >> Wow, it's pretty exciting. >> That's going to be really exciting. >> Well, thanks for coming on today. Really appreciate it. Uh, ladies and gentlemen, Stefon Russ, CEO of True Flation. Really, really appreciated your comments today. >> Thanks a lot, Chris. Thanks for having me. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free.
“It Hasn’t Kicked In Yet” — The Inflation Shock Markets Are Missing | Stefan Rust
Summary
Transcript
the supply and inflation will will come. I think everybody's in La La Land at the moment. It's like everybody's really enjoying um has it hasn't kicked in yet. Nobody's realized it. I think people are going to have to eat humble pie um and especially politicians that hate doing that to make decisions that is going to keep a nation fed if the food doesn't come to the table. That's when if food prices go up 30%. You see unrest in population. Welcome everyone back to the wealthy on pot. I'm Chris Perkins the CEO of 250 digital asset management and today I'm with my friend Stefan Rust the CEO of Truflation. Welcome sir. >> Welcome. Thank you. Nice to have a back. Nice to be back. Good seeing you again. Um yeah. So thanks for having me. >> Awesome. So there's a ton going on with macro. Um but today we're going to take a deep dive on inflation and uh hopefully the investors understand just how important it is what you're doing. Uh tell us about trueflation. What's what's the goal? What what are you seeking to achieve and uh how did this all come together? So it all came together when Janet Yellen and Jerome Powell told us inflation was only going to be transitory and and that was sort of a set off a large you know just alarm bells and looked under the hood how the Bureau of Labor and Statistics were calculating inflation and noticed very quickly that it's antiquated outdated and not suited for a world where that we're entering into right now AI based and is totally intransparent and So that's why we then set out to do that. We can do 10x better than that. And so pulled the team together, built an MVP, and then we got a lot of interest. Everybody thought we were crazy at first. Um, but selected individuals thought we were really doing something innovative, backed us, and today we're now a source of truth for calculating true inflation. Um it peaked around the time when inflation according to the BLS was 8% we tracked 12% people believed our numbers more we were down at 6% at one time and people believe that number more to be an accurate reflection of where inflation was headed and then we went into um the Iraq Iran war and that ultimately spiked and that was the floor basically and we've been going up since we just broke 2% % um in inflation. Where's this all going? We just felt that or I felt that the number one scorecard for any administration is the inflation metric. It is also the foundation for quantitive easing, tightening, money printer, interest rates, etc. And it aggregates all of economic data into that one single number called inflation. It can be consumer price inflation. It can be asset price inflation. Whichever you prefer, but you have ultimately prices that move, which is a sign of a economy moving forward and goods getting better and hence charging a little more. >> Well, tons to unpack there. Uh let's start. You made a comment that your measure of inflation was 10x better than the Bureau of Labor and Statistics or BLS as we'll refer to going forward. >> Yeah. Let's talk about the old way. Um, why is it so flawed? What do they do that's so wrong? >> They were tracking the data manually. So, they had people going to 477 individuals going to the various grocery stores and clocking prices. They survey 1,000 households nationwide, which they rotate on a monthly basis to capture household spending um, and the patterns throughout that. Um, we felt that in a world of digitization, a lot of it moving to e-commerce and online, um, we could capture a lot of those prices in real time. So instead of waiting one month plus 14 days before they actually announce it, we can do it daily. So we clock our number daily. We update all the data sets um on a daily basis at 2 am UTC um so that it's in computer language as well. And yeah, that's that's sort of the big differentiators. And we sort of changed waiting a little bit, right? So we didn't look at the waitings that they do. We extracted um utility costs out of shelter costs because we felt the variability and the um movability associated with utility costs is far greater than that of rent itself or mortgage payments that you've got on a on a house. Um and so we felt that those should be separated from shelter things like that. >> Yeah. So so markets tend to be in my mind source great sources of truth um and and they're highly efficient but you still see markets oftentimes react to the legacy BLS print. Um what does that mean? Does it mean that you know that many traders are getting are are relying on crappy data or is it an opportunity where people actually are trading around it because they you know use metrics like yours to to understand the truth? >> So we have sort of three customer segments. I'll call them the financial researchers, the quants, the analysts, I'll have the traders themselves and then we have what we call investors. The investors look at one year plus and you can bucket them into pension funds or annuity funds um that are managing long-term investment horizons. Traders, they're trading yield, they're trading gold, commodities um and equities um and are looking for a faster turnaround, quicker ins and outs and higher volume, lower um marginal changes. Um and then with the researchers right the researchers really like trueflation our number and they are building um trading signals and research using the trueflation CPI. The traders themselves, they care about the BLS CPI and our ability to slow down our data and map it to that of the Bureau of Lagging Statistics so that we can map our number to our data to the BLS number. And we do really good at forecasting. Enterprise customers get that five days ahead. And we've just opened it up to retail so that everybody can get it one day ahead of the government. So you get it first, one day admins and that's our forecast which we do. That's for the traders. Investors care about long-term horizons. They want multiple perspectives. They want to know what is true inflation forecasting in the future. And that's where they really look at our times time series foundational model to help them with forecasting. We're really good going up to a year in advance, but then as soon as you go out five years and some of them want to look out 10 years in advance, um I don't know how you forecast inflation 10 years out, but um yeah, I guess they just want to run scenarios and probabilities. Yeah, we we uh trade rates out to 50 years. So maybe that's something you can there'll be a liquid market in the future. So So let's unpack the the differences. You talked about different weightings, different data sets. Um as you look at the bureau and you said the bureau of lagging statistics um and true inflation, >> what are the core differences that have like you know are there areas that you wait differently that are having a bigger impact on your trueflation number versus how they weight their approach? What what are the drivers? You know, obviously timing is a big difference here, >> but beyond that, as you're looking at components and waitings, are there other things that they do wrong that you think you do right? >> Yeah. So, they bundle a lot into shelter and um you shelter in their waitings is about 30 plus%, 35%, I can't remember the exact number off the top of my head. Um but it's around that. We take it down to like below 20%. So, we're just in the 20% rate. Why? we extract a lot of variables out of there. Um and and so that's one big example. I mean the the the drivers don't really change. It's just how fast can you incorporate the changes associated with those drivers and then ultimately how and what is the waiting of those drivers when included in the specific categories. So oil obviously has a far bigger impact in utility costs and utility costs as a standalone with a waiting of around 8% or 6% I can't remember the number um but we all disclose it on our website so everybody can see the waiting and the changes of the waitings um but yeah you can actually go and see that has a lower impact than if it's bundled into a 35% shelter cost um and it's just a slight flight element inside of that. Um those are small things that that do it but I mean the biggest driver of all inflation that doesn't change right oil is is one of the biggest drivers uh and the cost of gas um in it impacts transportation cost heating cooling um you know yeah and a whole bunch of and the whole supply chain. So if that's the case, true inflation must be just screaming right now based on where we're seeing uh Brent and WTI. Um would love for you to talk about the some of the largest deltas that you've seen. You said that during COVID uh when chairman Yellen was talking about transitionary uh inflation, you said wait a second, you know, the actual inflation is much higher. Obviously that was a big data point. want to understand that a little bit better what you know what you found during that period and then talk through other other times or sequences where true diverged materially from BLS. I mean largely right now, right? I mean, after um Trump came into um into government and his administration took over last year, early last year, we saw inflation come down significantly. We bottomed at about 6 and all the meanwhile, you know, the lowest that the BALS was reporting was 2.8%. So there's quite a big difference. And we saw especially in food categories the cost of food came down significantly. Um eggs for example have nearly a 50% drop in deflationary uh you know impact in in the overall equation. Um so the things that matter were addressed really quickly uh with the new administration coming. Food people go to the grocery store 10 times a a month. So every time they go to the growth, they feel that pain each time they're in there. And so things like that have had a significant change. And that's where we manage to illustrate that a lot faster and a lot more accurately than the BLS has been able to do. >> And now with Iran, uh what are you seeing? >> Yeah, I mean I think the same as everybody else, right? I mean um gas costs are up obviously significantly. Um and we don't see that changing and actually we see that having and growing continuously to grow. Why, you know, only now are the ships that left two months ago arrive the last ships are beginning to arrive at ports where I mean not the US necessarily but you're looking at ports in China in Korea in Japan ports over especially Asia or but maybe even Europe over in Germany their last ships are coming in so all of a sudden it's now dropping into the reserves how many and how big are the strategic reserves at the various nations around the world, you're already seeing rations take place in places like Philippines, in Pakistan, in in India, uh where they're already beginning to ration a lot of the energy consumption. What does that do to the GDP in those specific markets in the US? We think that it's going to be it there's not much of an issue. Gas price, they're going to be the beneficiary of increased gas prices. um exporting to Europe, uh getting from Canada, which needs to funnel it to the US ports because they don't necessarily have the ports to take that kind of volume um across to Europe possibly and Europe's going to be buying from the US. Um so that's that's sort of what we're seeing. Food um you're also seeing fertilizer, ura, uh sulfuric acid. I mean, we all know the numbers that are coming out. Uh planting season is right now. The supply hasn't been coming. Um, and so is it going to be as bad as everybody anticipates? I don't know, but we'll find out. And we think that it's going to take another two if all things go well and we come to a conclusion around the Iran war by the end of this month, let's say, so June, you still have a three minute month lag before everything come picks up and then let alone getting back to normal. Add another two, three months on that. We're looking at least best case a six month sort of um drought before we may hit a gluttony right where everything comes onto the market. UA you know the UAE has announced its departure from OPEC. So oil is just going to come onto the market and flood the market um really quickly. So the prices then in six months time should be a reflection and we should be seeing deflation in the gas prices again. >> Wow. So essentially uh we're going to be on a build up on inflation for the next 6 months or so, maybe longer depending on when the Iran stuff gets sorted and then you just see this precipitous drop. >> And how does the economy is doing really well, right? I think what a lot of people don't realize is the economy in the US is doing really well. The US is the best economy, the best place to put your money right now um compared to anywhere in the world. The only other factor might be China where you've got more energy than the rest they're producing more energy than the rest of the world combined. They've got bigger reserves than the rest of the world combined. They have all the fertilizer raw material and fertilizer reserves more than the rest of the world combined. So they have a big stockpile. Um so those are the two markets that are interesting. But the lack of transparency in China, the boundaries, the Great Wall of China is going to make it very challenging over there. So the US is in a really good state. We're seeing a huge shift in employment and real estate. What's happening is big cities, San Francisco, LA, New York are going to see a decline in in housing prices, but we're going to see a rise in housing prices in secondary markets. Employments at the big enterprises, at the big tech companies, at big banks are dropping whereby smallmedium businesses are hiring new tech talent, are looking for AI skill sets, developer skill sets, and that's going to result in a big migration of the population from the big central cities into sort of other um secondary cities that will grow significantly. Look at Austin. you're looking already you're seeing what's happening in Miami um and Fort Lauderdale and places like that. >> I was just at the Milkin conference and Ken Griffin was talking about all of his angst associated with New York, >> but I don't know if I agreed with you that that housing is going to come down in New York. Um I don't know, maybe I'm going to push back there based on what we're seeing and experiencing and >> yeah, >> you know, maybe demand comes down, but I think taxes are going to keep going up. So, how do you think about that? >> Yeah, I mean taxes is um is what does that do? that reduces consumer spending and increases hopefully government spending. But in our experience, government hasn't been very efficient in deploying capital and allocating the capital towards asset appreciation or infrastructure that helps facilitate growth in a city or in a nation, right? And so the private sector has been very good at that. the private sector allocates a lot more efficiently um and looks for an ROI due to the way the market's structured, right? The the market rewards great allocation of capital and a good return on equity, a good return on investments. Um >> that's a thesis, isn't it? Like you know same goes for data. Their data is inefficient and garbage and then you know you guys are on the private side are much more efficient, robust and timely. >> Um so Stefan Yeah. Go ahead. >> Yeah. No, we we just I mean we're trying to make our data open. We want to democratize a lot of this data. How do we do that? And one of the things is, you know, we started off selling data. Why? Because that was the SAS model at the time. That was the right thing to do. All in parallel. We've been trying to develop trust around the true brand name and build out financialization models with the data. So the data actually can be made available to anybody and it's up to you to build financial products associated with that data. What do financial products with inflation or economy look like? Those are inflation per that you could build out. Those are inflation swaps that pension funds can trade amongst each other and hedge against future inflation. Um those are prediction markets with all the economic data that people can start trading on based on the knowledge and the expertise and then be able to assess where markets and industries are going and put your money where your mouth is and and those are sort of products that we've been looking to build out in order to democratize and make all of this data available to everybody. Yeah, I want to get to that in a second, but you you said something just previously around AI, and I think this is uh you know, we saw incoming chairman of the Federal Reserve Kevin Worse talk about how AI is going to have this massive deflationary impact >> on the economy. Um and you know, that's a lot of his justification for likely keeping interest rates low. Um can you just talk more about and you talked a little bit about it but h is that the right way to think about it that inflation's coming down materially how much due to AI like you know you hear this narrative constantly how do you feel about it >> I think gradually then suddenly is is a quick answer right um I think I don't I think it's a techn I think Ken Griffith said it as well really well in at the Millennium conference it's a technology right It's going to drive significant amount of efficiency. It will create a whole slew of new jobs that we don't even talk about today. We don't know what type of jobs they're going to be, but it will do that. We saw that with the internet. Uh we saw that with cloud compute. All of these um have have really helped um create new types of jobs um that we didn't know about 10 20 years ago. And so that is one perspective and one way I look at it. the other way. Yes, it's going to be deflationary, but definitely not in the short term. We still have huge capex. The capital of co the cost of capital with the capex deployment is very high. The demand for skilled labor associated with the deployment of capital and the buildout of infrastructure is demand, you know, is creating a huge demand on that limited talented skill set. Um, and so that's actually having a slight inflationary, you know, just looking at the mag seven or you you see the numbers out there as well, you know, Goldman's published it, Morgan Stanley, you name it. Um, they're all saying about a trillion dollars in capex this year alone for data center buildouts. I mean, that's a huge amount of money. Um and then you yeah you include all the other ones the anthropics and the ones that are open AIs that not publicly listed and don't disclose those numbers. You've got a significant investment and remember growth and GDP consists of consumer spending, government in spending but also investment. So capital investment and capital deployment and then export minus imports. Um and so capital investment is a big chunk of the GDP and we see that going to grow um obviously with all these AI type investments. >> Yeah. I mean you captured the the talk of the town at Milkin this week and it was to your point MA like incredible optimism. >> It was you know they mentioned 800 billion to a trillion dollars in capex this year. >> Wow. >> That doesn't go to zero next year. it's probably going to go, you know, just as high, maybe higher, who knows, right? And so you see this massive, it's it's almost like, you know, going back into the 20s or something where people are building the skyline of New York. Um, incredible capex and to your point, people have to build that stuff. the amount of demand for bluecollar workers, um electricians, you name it. Construction workers, um this is going to be very stimulus type economic, you know, all the cooling needed. I need the electricity management, the transformer industry, you know, the concrete, what sort of concrete and material will I be using, you know. Yeah, it's just it's it's it's a whole slew of different types of segments of the industries that are going to be impacted by this. >> So, is this kind of like your oil thesis where we see a near-term spike but then a precipitous drop in inflation? >> Yeah, I mean oil there's going to be a huge demand for oil. Um, and the supply just isn't keeping up with that demand. Russia is, you know, is curtailed because of its uh the sanctions set upon it. Um yeah, you got China, they're not giving anybody their oil. Um and um you know, I think one thing that you're seeing is they have a huge reserves. Um Asia is going to need a lot of demand. I mean, Philippines, Japan, all import nations for energy. uh Korea huge hubs Taiwan you know all the semiconductor you know are being developed AI is dependent on Taiwan um Korea and Japan right remember Korea has Samsung has high right some of the biggest component suppliers to the semiconductor industry um how they need energy they need the material they need they're part of the supply chain so how are they going to be getting their energy >> yeah and then once you turn those data centers on they are very hungry for power and energy. >> Um h how do you think about you you look at inflation globally um how do you think about trends uh US visav other jurisdictions? >> Yeah, I mean I think other jurisdictions will suffer greater. I mean the the supply and inflation will will come. I think everybody's in La La Land at the moment, you know. I was like I think I think it's like everybody's really enjoying um has it hasn't kicked in yet. Nobody's realized it. Um you know you're hearing about flights the number of seats on the airlines are being cancelled. Some 20,000 seats last month were cancelled especially across Europe. Uh lufans are shut down some two million seats or something. So sorry 20 million seats. So, uh, they is that because of the jet fuel and or is that just using it as an excuse to shut down unprofitable, you know, lines that they've been filling? Um, I don't know yet and I'm not very clear on that. But also, jet fuel standards apparently are different. There are different standards and requirements in the UK, for example, versus the US. So, what does that mean for US airlines flying back to the UK and they're not allowed to use the standard that those jets use and have to use different jet standards? I don't know if that's the case, but that's one thing people were saying. And apparently the UK has just dropped that law. The zero, you know, the what's it? Net zero standard is is is is being yeah pushed out by another couple of years or decades. Um, so a lot of policies will be changing. Um, but I think people are going to have to eat humble pie. Um, and especially politicians that hate doing that to make decisions that is going to keep a nation fed if the food doesn't come to the table. That's when if food prices go up 30%. You see unrest in population. >> Yeah. I' I've uh I've I've read about this recently where it's really food inflation that causes um uh like big issues with with um hunger and uh famine. Uh >> we saw that in Egypt. Egypt the uprisings in Egypt were because bread costs went up greater than 30%. >> Yeah. Yeah. That's what leads to famine. So yeah, I hear you. All right. We talked a little bit about uh financialization. So, you're a listener, you know, you're kind of into the markets and you're like, "Wow, this stuff's pretty interesting. I could get an edge if I use Truthion. H how should people be using your data?" Um, and you talked about prediction markets, swaps, like prediction markets are obviously available to retail users. Um, tell us how that's coming along. And then I think most of the swaps like inflation swaps, basis swaps, those are more institutional products. But if you're a listener, h how should people be using your data? >> So I mean right now you can go on to Cali and you can predict some of the trueflation indexes. We track some or we've created some 400 indexes uh outside of just the CPI using all the economic data that we aggregate and verify and qualify. And one of the most popular products right now on KHI is our EV index. which takes the raw material and the commodities needed for the four different types of EV vehicles and is weighted according to the requirements of those raw materials to each of the EV vehicle and then puts that into a basket and prices that and so that's been one of the most interesting products on Kali from Truthflation which was a bit surprising to me um but yeah It just goes to show to me that from a prediction market perspective, people are looking for different innovative type products versus just how many times are they going to drop the word X inside their press conference or what is the color of the tie that you're going to be wearing tomorrow. Um, and so it's actually a bit more predictable. It's a bit more calculated. U, you can use a bit of intellectual science. And I think also commodities are going to be really interesting. How can we create baskets that tie in and couple commodities into prediction markets? To me, prediction markets is the fastest way to monetize your data. >> Yeah, for sure. Um, so it's about this EV contract essentially. It's it's a commodities underlying EV technologies and that's what you're tracking. >> Yeah. >> So, it's like almost a derivative of inflation where you have all this data now. You can create indices based on all this this incredible data set. Really cool. The other one that we've done is we've taken the World Bank's pink sheet which takes um which is basically a consumer think of it as the CPI for commodities. What type of commodities across energy are we consuming the world economy consuming? What type of agricultural products are they consuming? Metals and precious metals and that's weighted across each of the categories. So in energy you'll have oil, coal and and and I think it's what do we have gas. So we have those three and those are weighted into the energy index, agriculture, etc. And so that's weighted. We've created a basket associated with that and we've priced that in dollars and against Bitcoin. So how does it perform against Bitcoin and and what does that look like? Um, how many baskets does a Bitcoin buy you and how does that change over time? >> All right, now you're talking my language. Um, >> so you're an old Bitcoin guy uh back in the day uh just for the listeners. So, you know, all of most of inflation to date has been against dollars and we know dollars are deflationary asset arguably a very good store of value on a relative basis vis other fiat currencies. And going back to chair uh Federal Reserve chairman, incoming chairman Wars, he said, "Look, um Bitcoin will keep the dollar honest. What role does crypto have in this entire inflation game going forward from your perspective?" >> So yeah, I mean I think you know I mean yeah, we're we're both OGs in Bitcoin and stuff and Ethereum. I mean Bitcoin to me is the the gold of the digital era. You've got Ethereum. To me, that's the oil of the digital era and and then you have other refined areas of oil, right? So, I've got maybe just the raw oil is Ethereum and then I get all the different types of jet fuel, diesel fuel, um you know, what gas, etc. And then Salano, maybe the gas type thing, right? And so, that's sort of how I view it. I think you'll see the brilliance about crypto and bitcoin at the time and maybe even stable coins less so because stable coins to me is just an extension of the dollar and that is now moving retail it's going to put a lot of pressure on central bankers especially non US central bankers um as the consumer base will flock to a USDC or a USDT um just mainly because they don't trust their own government, their own money, the money that's printed and all regulatory barriers that you try to put in place are only going to create more demand. Money moves uphill, right? It's sort of people will go where they can try and get it. Um, but other overall I think the currency was created to facilitate trade. As trade moves digital, the currency of choice in a digital world is a lot broader. all of a sudden, do I need Bitcoin? Do I need Ethereum? Do I need Salana? Do I need Sooie? Do I need XRP or whatever currency that is out there? Um, Cardano, I don't know, you know, truth network, truth tokens. Um, all of those will become currencies. And like all of a sudden for your trade needs, you're given a selection, a choice. What is the currency of your choice? And all of a sudden there is to facilitate trade a alternative class or an alternative asset class that wasn't available before uh for people to do trade in and I think that's the exciting bit and to your comment holding governments accountable or giving alternative choices for a currency that is now coming to reality. And then what happens when agents come in? You're not trading between people anymore. It's agents between agents. How and what will they choose and how will they make their choices? >> You think a genetic activity is going to how's that going to impact inflation? >> Oh, hugely. Um, we're so GDP is largely consumer b one of the biggest factors is consumer. Uh, the consumer spends a lot of money today in real world products. In a digital world, that consumer, is it still going to be a person or is it going to be an agent? and you're paying an agent to do the work for you. You pay them in tokens. So that's an income for that agent. That agent then goes on your behalf and spends your money. And so the more agents you have, you may be spending it on many more different products. And so the growth of an economy will no longer necessarily be tied to a single agent or a single individual. It will be tied to an agent who may be incorporated in the body of a robot. And so all of these things are going to change the economy significantly. Um, and they will have different requirements. Their requirements won't be food. Their requirements will be oil and will be spare parts and will be, you know, semiconductors in there. And so they'll have to go and buy their own, you know, not food, but their equivalent of food, right? And then will they be taxed? If an agent is generating income, is that agent a taxable unit and you know so how are we going to deal with an agentic world? Will they you know no taxation without representation? Will they start becoming you know demanding representation if they have to pay tax on agents and robots? >> I feel like the government's going to figure out taxes one way or the other. They they tend to Benjamin Franklin death and taxes. >> So I'm sure that's going to get sorted. As you step back, I mean, you're looking at massive amounts of data. You're you're synthesizing them. Are you bullish on markets right now? >> Yeah. I mean, I think this is the greatest time to be alive. I think it's very confusing the markets to invest. Where do you invest? And how do you filter out the signal from the noise? um there's a lot of noise and I think it's really hard without the data and without the compute resources to filter out the noise um and get to that signal and I think that's the real challenge um there will and the volatility is the other thing I think the world we live in right now is hyper volatile it's going through a lot of change if you're coming from crypto you're used to it it's normal um if you're coming from you know yield income or bond you know interest rate income you know that's that's a very different world and I think the challenge is this transition from the traditional world into this highly volatile startup type environment you know I think David Saxs was saying the US government is operating and running like a startup now right they're breaking things moving fast and creating a lot of confusion Um that's and so as a result the world is beginning to feel that and is struggling to come up to speed with what that means and how to operate in that world. Look at Europe. I mean Europe goes on a weekend and says, "Oh, we'll set up a committee meeting on Monday when we all get back to the office when we go to war over the weekend." Right. And so it's like I don't know a startup that could afford to do that. >> Yeah. I mean I I totally agree. It's an exciting time to be alive. You have crypto, you have AI, pretty soon you'll have quantum. And and these things are just accelerating each other at such massive pace. You've got space going on. Elon's going to, you know, recognizing the amount of energy in space. So like there's so much innovation happening. Um it feels like everything's rewiring and it has to rewire if you're going to be competitive. Like you talked about some of the restructuring and some of the excuse because of AI, well I'm going to fire, you know, 16% of my of my force. So probably long term you're going to hire more people back, but they may be a little bit different, right? And and they may have different skill sets. Maybe we want to go find that humanitar that humanities major uh literature major because of the way they think and put them in a room with the computer scientists and see what happens. So yeah, it just feels like this massive time of rewiring. Um and it doesn't feel like >> Yeah. I don't know if you know have you listened to Rory Southerntherland maybe I should >> he's he provide I mean he's a British marketing guy and he really talks a lot about you know if you let the world be run by computer scientists and mathematicians you know you'd spend a gazillion dollars to get from A to B within you know within with a five five minute improvement whereas if you'd hire a marketing person his argument of course protecting the marketing side and you spent, you know, a tenth of that amount and hired, you know, um, you know, had great movies on the pl on the train and for example, and you have, you know, nice cocktail drinks and you'd give them out for free on the journey and you they'd be served to you by lovely ladies or lovely men and they would all be charming and wouldn't you prefer that? You'd want the trip to be 10 minutes longer or 30 minutes longer. And so I just think that's a different perspective and we need to blend those two together to your point. >> Yeah. So Stefan, as you're looking forward, you have um the flagship trueflation index. You're starting to financialize it. And I think the one thing that we've realized is that financial markets are truth. These prediction markets are helping us with real data points that can inform our strategies about exactly where the world is rather than wait this late latent data that's probably really wrong. So you've got true inflation. You talked about the EV index. As you look into the future, what product areas are you focusing on as new products or new areas of focus? >> Yes. I don't want to share too much right now, but um broad >> we've got I mean financial products, where are the gaps in the financial services industry, right? And um I think you you would know what I'm talking about. And um u but yeah, we're really trying to build out um certain areas um that we feel again is a niche that we can dominate. What are those niches that you can dominate? I don't want to go where there's red sharkinfested waters. I want to go where there's a blue ocean out there and and try to find opportunities and just be a tiny I mean nobody everybody thought we were crazy when we did inflation. Why do we need inflation? The government's already reporting inflation. And so all of a sudden that was a niche. Our competition was the Bureau of Lagging Statistics. And so we just need to be fast. If we can do it fast, we can do it daily. We don't have 5.5 or$130 trillion in worldwide bonds coupled to our metric yet. But that's somewhere where we've got to get to. And um we decided to focus on that niche. And how do we do the same with prediction markets? what is the niche out there um that we can go after that's very interesting and has liquidity, right? I think the biggest thing with anything that we do in the financial markets has to have liquidity and that's obviously one of the biggest challenges. >> So, you're you're uh slugging it out every day as an entrepreneur working around the clock making things happen. How did it feel when Secretary Bessant came out and started talking about your product? >> Yeah, it was definitely rewarding after all the people called us crazy. the amount of nos you get and and and it's just you know I think what a lot of people don't realize as an entrepreneur it's it's persistency tenacity you got to love what you do >> and you got to have a level of yeah stick it to the man right so if you said no I'm going to show you that it's going to be yes and when Scott Besson started talking about it um you know Kathy Wood's been a big supporter Daniel D Martino Booth Ral Pal you know we've had a number of big supporters really early on Balaji um you know Brian Armstrong that all every time you hear a a a leader or an influencer I wouldn't call them influencers I think they're leaders thought leaders and actual practitioners and executioners talk about the brand and and and what we've been doing it's it's extremely rewarding not monetary monetarily but it's actually rewarding you know sort of satis gratifying let's put it like Well, we're I'm sure you're going to get there on the monetary side. Well, yeah. All the faith in the world. >> Anyway, um any last thoughts, sir? >> Yeah. No, I think, you know, it's um to your point, one thing is like would you go and live on the moon? Would you, you know, to me actually as you brought it up, space, I'm super excited about space. I think it's the new frontier. It's, you know, it's the new go west. It's like Columbus when he went across the Atlantic. You know, everybody thought it was a flat world. he's going to fall off the edge. He went and foraged out there. Um, landed up somewhere where he thought was India, but it actually wasn't India. But, you know, sort of space, you know, it's like, would you buy a ticket to go to the moon and and spend a holiday on the moon? You know, it's like, yeah. >> Awesome. Uh, and how can people reach you? >> Yeah, look, um, uh, on X, you know, the real srust um on trueflation.com. Follow us, sign up to the newsletters. Uh we've got a lot of new products coming out right now. Uh we launched at Tminus one. So we give you the BLS forecast be one day before the government number comes out using our number, their waiting and our accurate calculations associated with that. So you don't need to wait. You can actually prepare for when their number comes out. Um we've got a whole bunch of other things coming. prediction markets we spoke about and given all the data that we've had, given all the work that we've been working on over the last four years, we have our time series foundational model coming live in about two weeks time. >> Wow, it's pretty exciting. >> That's going to be really exciting. >> Well, thanks for coming on today. Really appreciate it. Uh, ladies and gentlemen, Stefon Russ, CEO of True Flation. Really, really appreciated your comments today. >> Thanks a lot, Chris. Thanks for having me. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free.