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00:00So Michael Barr had a tweet yesterday about something called the Bold Web Effect. Not really sure what he meant by the bullet effect but he's talking about this phenomenon at retailers where their inventories are building. And if you have your retailer and your inventories are building what that means is that you're eventually going to have to cut prices which is deflationary. And there's all kinds of deflationary signals going on in the market right now. We're getting all this economic data and it's getting worse and worse and worse. Commodity prices are actually falling. I mean you may not realize this but in the last two or three weeks commodity prices have been falling a lot. And if you take all this together what it probably means is that the next CPI print that comes out this month is going to be less than eight point six percent. I do believe that inflation is going to fall which kind of brings up an interesting argument. You know is inflation transitory. And we have these effects where and you had lots of pandemic hoarding. So what the Fed is trying to see is progress on inflation. And what that what do they mean by progress. Well probably you know two or three months worth of declining inflation data. And if you take this in combination with the rest of the data which is absolutely collapsing you know I think it's very possible that the Fed could pause in September. And what I mean by that is they actually might have a 25 basis point hike. So Michael Barr isn't saying anything original. There's there's really there's a lot of people in the markets who have the same beliefs that he do that we're actually having a deflation area impulse. But when he says it adds a lot more weight. And I think people should pay attention because we're of this mindset that we're in this big inflationary supercycle. And I do think that's true. But over time in the short term we're going to have a short term deflationary impulse.

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What Is the 'Bullwhip Effect' Michael Burry Is Talking About?

Bloomberg Opinion's Jared Dillian explains what the "bullwhip effect" is and why hedge fund manager Michael Burry was tweeting about it. (Source: Bloomberg)

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