President Donald Trump Claims the U.S. "Should Have the Lowest Interest Rates Anywhere in the World," but Trumpflation and the AI Revolution Make That Impossible

The article argues that Trumpflation plus AI-driven supply constraints make rate cuts unlikely, highlighting tariffs (10%-12.5% on select imports from 80+ countries) and Iran-war disruptions to oil flows as ongoing inflation drivers. It cites July US PCE inflation at 3.7% (vs. 3.6% expected) with core PCE at 3.3%, showing persistent stickiness above the Fed’s 2.0% target. With entrenched inflation likely forcing the Fed to maintain or raise rates, higher lending costs could slow the AI data center build-out and weigh on the broader stock-market rally.

Analysis

Higher-for-longer is the bigger equity factor than the political rhetoric. In a sticky-inflation regime, the market stops rewarding long-duration narratives and starts paying up for businesses with near-term cash flow and pricing power; that favors power/electrical bottlenecks tied to AI infrastructure more than the high-multiple semis themselves. NVDA can still grow revenue, but its multiple becomes increasingly hostage to discount-rate pressure, while POWL-type names can keep compounding because grid/interconnect spend is harder to defer than chip orders once projects are funded.

The second-order loser is the consumer stack. Tariff- and energy-linked input costs tend to squeeze retailers and brands before they can fully pass through price increases, which is a margin problem for TGT and a volume problem for discretionary peers. Subscription platforms like NFLX are less exposed on demand, but they are not insulated from multiple compression if real yields stay elevated.

Consensus may be underestimating how quickly AI capex can become self-limiting if financing costs rise and utility interconnect queues lengthen. The bullish case on AI is not broken, but it likely shifts from "all growth wins" to a narrower trade in infrastructure enablers and cash-generators. Theses get falsified if core inflation rolls over for multiple prints and the Fed credibly reopens cuts; otherwise, the path of least resistance is continued valuation pressure on duration assets.

Key Decisions for Investors

• Long POWL / short NVDA as a 1-3 month relative-value pair: own the AI-enablement bottleneck, short the richer duration exposure. Thesis fails if NVDA re-accelerates guidance and yields fall materially.
• Add tactical downside protection on QQQ or XLK via 1-2 month put spreads into the next inflation print. This is a valuation hedge, not a growth bet; exit if core PCE shows a clean disinflation trend.
• Short TGT on any bounce ahead of the next earnings cycle: inflation makes it harder to protect traffic and gross margin simultaneously. Cover if management explicitly proves pricing elasticity is benign.
• Watch POWL for follow-through after any data-center capex commentary from hyperscalers; if order growth remains intact despite higher rates, it is a structural long versus rate-sensitive tech.