What if Inflation is Bottoming, Not Topping?

Even though I have been out of my bond short since July I remain focused on the long-term inflationary dynamics still very much in play. The rate of inflation has slowed but that differs greatly than us experiencing deflation (Just go to the grocery store, pay your healthcare bill, various insurance costs, etc., for reference). 

That said, what Powell and The Fed decide matters much more than what I do. Hence, rate cuts are on the way in September, though we are "data dependent," which likely really means stock market dependent, as to whether we get 25bps or 50bps. 

But just as the 1970s saw inflation come roaring back with each period of Fed easing, I too expect this regime to feature similar dynamics with timing, of course, being the difficult part. 

With this in mind, DBA, which is the soft commodity basket ETF, still looks menacing from the bull side on long-term timeframes. 

The monthly DBA, below, for example, features a coiled bull flag above prior resistance (all highlighted). 

Even with corn and wheat (which look to be bottoming today, perhaps, by the way) stinking up the joint, coffee, cocoa, sugar, and other soft commodities have more than held their own.  

Again, if corn and wheat and actually bottoming here, along with perhaps oil, some nasty macro awaits us into 2025. 

Oh, and by the way, if you think oil and commodities simply cannot rally into an economic slowdown/rate cutting cycle, you may want to study up on what oil did into June 2008, well after Ben Bernanke had started cutting rate and after the economy had already slipped into recession.