Gene Goldman, Chief Investment Officer at Cetera, joins TheStreet to explain why inflation isn’t getting better any time soon.
Transcript:
Caroline Woods: So first I want to get your reaction to the latest inflation data basically came in line with expectations, although core inflation a little hotter than expected. What’s the big takeaway there?
Gene Goldman: Yeah so first of all, core PCE, the Fed’s preferred measure of inflation as we all came in hotter than expected. That’s the first time it’s risen since February of this year. I think it’s an important number. You know, whether it’s up a little bit or a lot a bit I don’t think we were too worried because we know inflation is coming. I think what really worried me more was personal income and personal spending actually deteriorated. And that suggests that there’s more pressure on the economy. And what you might have talked about before is that the pressure on the economy suggests the Fed should cut rates. But inflation the Fed can’t cut rates. So they’re in this hole like this spectrum, where they’re trying to balance both sides. Of course, it’s their dual mandate, but they’re willing to sacrifice the economy in order to fight off inflation. But the inflation number was stronger than expected. And we’ve been saying this. And one thing you and I talked about before is that tariffs are deflationary at first because they impact economic growth, their demand destruction. But then they also put pressure on economically sensitive commodities like energy, like oil, like copper. So it’s always deflationary at first. We’re going to start seeing the numbers in July. I definitely believe we will. And you’re already seeing inflation numbers pick up in PMIs and flash readings from manufacturing. Like even earlier this week we saw PMI. PMI prices came in well above expectations. And 70% of companies said they are raising prices pushing them on consumers. And as another note, CFO study came out yesterday or two days ago from the Fed. And if you read between the data, one of the Fed’s special questions was about tariffs. And 41% of CFOs said they’re raising prices passing on costs to consumers. That’s inflation. Inflation is coming in that environment. As I’ve said to you before, the Fed can’t cut rates as much as they said they would.
Caroline Woods: So the takeaway is that inflation is going to get worse?
Gene Goldman: Yeah that’s my opinion. It will get worse.
Caroline Woods: So those hopes that the Fed is going to cut rates as soon as July are off the table now.
Gene Goldman: Yeah I mean I think even on Powell’s press conference at the last Fed meeting, he said, we want to see more summer data to gauge the impact of inflation. That just says nothing in July. On the other hand, you have, like Waller and Bowman, everyone coming out and saying they should cut rates in July. I don’t think that’s the case. They can’t cut the rates. They won’t have enough data points at this point to actually make that.
Subscribe |
Earn. Live. Invest. |
TheStreet Pro |
#inflation #economy #jeromepowell
source
