OUT IN ABOUT TWO HOURS’ TIME.
WE’LL LOOK AT INFLATION.
JOINING ME NOW IS DOMINIC TAKE T
AND REBECCA WALSER.
ALSO JOINING THE CONVERSATION
ALL MORNING OF LONG, JAMES
FREEMAN AND THE KING’S COLLEGE
IN MANHATTAN PROFESSOR OF
BUSINESS AND ECONOMICS, BRIAN
BRENBERG.
GREAT TO SEE EVERYBODY THIS
MORNING.
THANK YOU FOR BEING HERE.
DOMINIC, YOUR EXPECTATIONS FOR
THIS MARKET AS TECHNOLOGY
CONTINUES TO ROLL OVER, WHERE
ARE WE IN THIS SELLOFF?
>> WELL, WE HAVE A TREMENDOUS
AMOUNT OF MONEY NOW COMING BACK
INTO THE ECONOMY AS A RESULT OF
THIS NEW STIMULUS BILL AND
THERE’S INFLATION EXPECTATIONS
AGAIN.
SO THAT HAD GOTTEN A LITTLE
MUTED OVER THE LAST WEEK OR SO.
WE SAW THE 10 YEAR COME BACK
DOWN TO THE 1, 5 RANGE, NOW OVER
1, 6.
THAT IS BAD NEWS FOR TECHNOLOGY.
THAT’S BAD NEWS FOR THE LARGE
CAP GROWTH SPACE.
MARIA: YEAH.
AND WE’RE SEEING THE YIELDS MOVE
UP THIS MORNING AND TECH MOVE
DOWN.
REBECCA, WHAT’S YOUR TAKE ON
THIS?
PRESIDENT BIDEN SIGNED HIS
ADMINISTRATION’S $1.9 TRILLION
COVID RELIEF PACKAGE INTO LAW
YESTERDAY, $1,400 DIRECT
PAYMENTS COULD BE DEPOSITED INTO
BANK ACCOUNTS AS EARLY AS THIS
WEEKEND.
DO YOU SEE THIS FLAIRING UP
INFLATION THE WAY WE ARE SEEING
SOME MARKET PARTICIPANTS VIEWING
THIS?
>> ABSOLUTELY, MARIA.
IF YOU LOOK AT WHAT HAPPENED IN
JANUARY WHICH IS A $600 STIMULUS
CHECK, WE HAD A 2.4% PERSONAL
SPENDING INCREASE IN THE MONTH
OF JANUARY AND THIS TIME WE’RE
GETTING 1400 AND THAT’S FOR
ADULTS AS WELL THAT ARE
BASICALLY DEPENDENT ON SOME KIND
OF CARETAKER.
IT’S GOING TO BE MORE PEOPLE
THIS TIME AT 1400 AND I EXPECT
THE INFLATIONARY PRESSURE THAT
WILL COME AND DOES COME WHEN
PEOPLE SEE THE YIELDS GOING UP
LIKE THAT, THEY CAN TAKE SOME
GAINS AND GO TO SAFETY AND
THAT’S EXACTLY WHAT WILL HAPPEN.
MARIA: I MEAN, I GUESS WE’RE
GETTING THE PPI TODAY.
DOMINIC, WHAT’S YOU’RE
EXPECTATIONS FOR THE PPI?
ARE WE SEEING INFLATION ON THE
PRODUCER LEVEL?
>> SO FAR, HONESTLY, MARIA, IT’S
ACTUALLY BEEN MUTED.
I THINK THAT HAS TO DO WE’RE NOT
YET AT A POINT WHERE THE
ECONOMY’S COMPLETELY OPEN AND
PEOPLE ARE FREE TO SPEND.
WE TALKED ABOUT THIS IN THE
PAST.
WE TALKED ABOUT FOUR AND-A-HALF
TRILLION DOLLARS SITTING IN BANK
ACCOUNTS RIGHT NOW WITHOUT THE
STIMULUS COMING IN.
THERE’S A HUGE AMOUNT OF CAPITAL
SITTING IN BANK ACCOUNTS, PEOPLE
ARE ANXIOUS TO SPEND THAT MONEY.
WHEN THEY’RE FINALLY FREE AND
ABLE TO DO SO, THERE’S GOING TO
BE A LOT OF PRESSURE ON THE
GOODS SIDE BECAUSE WE HAVEN’T --
THE PRODUCTION HASN’T STARTED
YET.
UNTIL THAT HAPPENS, UNTIL THE
ECONOMY GETS ROLLING, THERE’S
GOING TO BE A LOT OF PRESSURE ON
PRICES AND THEY CAN ONLY GO
HIGHER.
MARIA: ALL RIGHT.
WE’RE GOING TO BE WATCHING THAT,
OBVIOUSLY, WE’LL GET THE PPI OUT
IN TWO AND-A-HALF HOURS.
JAMES FREEMAN, JUMP IN HERE.
JAMES: I’M WONDERING WHERE IT
GOES BEYOND THE SHORT AND MEDIUM
TERM.
YOU MENTIONED 1.6% TON # 0 1.6%
YEAR IS HISTORICALLY LOW.
FEDERAL RESERVE CREATED ABOUT 3
AND-A-HALF TRILLION OF MONEY.
HOW BAD DO YOU SEE INFLATION?
AND WHAT DOES THAT MEAN FOR
INTEREST RATES GOING FORWARD?
>> SO WE’VE SEEN A SPIKE
ALREADY A YEAR AGO WE WERE AT
0.6 ON THE 10 YEAR TREASURY.
I BELIEVE INFLATION IS GOING TO
BE SPECIFIC TO PRODUCT OR
PRODUCTION.
SO WE TALKED ABOUT PRICES OF
LUMBER AND PRICES OF STEEL.
PRODUCTION IS NOT UP-TO-SPEED
YET.
WE’RE GOING TO SEE THIS INITIAL
SPIKE.
IT’S GOING TO LOOK SCARY.
NOT TODAY, BUT I THINK AS WE GO
INTO THE YEAR WE’RE GOING TO SEE
INFLATION WELL OVER 2%.
I THINK ONCE PRODUCTION STARTS
TO GET BACK INTO -- LOOK AT CAR
PRODUCTION RIGHT NOW BECAUSE WE
DON’T HAVE CHIPS.
SO ONCE THE CHIPS COME IN AND
PRODUCTION OF THOSE CARS CAN
START GOING AGAIN, EVENTUALLY
THINGS WILL LEVEL OFF.
SHORT-TERM WE GET A LITTLE
SPIKE.
LATER ON IN THE YEAR, I THINK
THAT LEVELS OUT AND SOME OF THE
FEAR COMES OUT OF IT.
BUT AS WE GO INTO NEXT YEAR, YOU
COULD SEE REALLY LARGE INCREASES
IN INFLATION AND SUBSTANTIALLY
HIGHER INTEREST RATES.
MARIA: YEAH.
I MEAN, YOU ALSO HAVE THIS IDEA
THAT ALL ADULTS WILL BE ELIGIBLE
FOR THE VACCINE COME MAY 1st,
REBECCA.
THAT WAS A BIG STATEMENT FROM
PRESIDENT BIDEN LAST NIGHT.
YOUR TAKE ON THAT AS IT LEADS TO
A FURTHER OPENING OF THIS
ECONOMY AND A NORMALIZATION THAT
WE’RE ALL HOPING FOR.
>> IT’S ACTUALLY KIND OF
SURPRISING, MARIA.
THAT’S SIX WEEKS AWAY.
YOU’RE TALKING ABOUT EVERY ADULT
IN AMERICA IN SIX WEEKS WILL
HAVE THE OPPORTUNITY TO GET THE
VACCINE.
THE LOGISTICS OF THAT, I HOPE
THAT’S ALREADY THERE BECAUSE
THAT WOULD BE ALMOST IMPOSSIBLE
TO GET DONE IN SIX WEEKS.
BUT OBVIOUSLY THE MORE CONFIDENT
-- I DON’T THINK IT’S ABOUT A
VACCINE OR ANYTHING.
THE SURVIVAL RATE ON THIS THING
WAS SO HIGH ANYWAY.
IT’S ABOUT THE CONSUMER HAVING
THE CONFIDENCE TO GET BACK OUT
AND SPEND AND A TRAVEL AND
HOPEFULLY BUSINESSES TO HAVE
CONFERENCES AGAIN AND LET’S OPEN
CONCERTS AND ALL OF THOSE THINGS
THAT WE’RE NOT DOING AND WE’RE A
70% CONSUMER DRIVEN ECONOMY.
WE MUST GET BACK OUT AND GET
BACK TO SOME LEVEL OF NORMAL,
WHATEVER THAT IS, MARIA, I DON’T
KNOW.
BUT IT’S NOT THIS WITH
GOVERNMENT STIMULUS CONSTANTLY
FOR THE LAST 12 MONTHS, THAT IS
NOT A CYCLE THAT CAN BE
PERPETUATED INDEFINITELY.
MARIA: DO YOU WANT TO BUY
STOCKS HERE, REBECCA?
>> THE INTERNET OF THINGS, WE’VE
ALREADY GOT A SHORTAGE.
MARIA: YOU’VE GOT TO BE REAL
SELECTIVE.
DOMINIC, HOW ABOUT YOU?
YOU WANT TO BUY STOCKS OR ARE
YOU PULLING BACK HERE?
>> YOU WANT TO BE VERY CAREFUL
WHERE YOU BUY.
WE JUST ADDED IN THE EMERGING
MARKETS SECTOR A PULLBACK OF
10%, A BUYING OPPORTUNITY FOR
US.
MARIA: WE’LL LEAVE IT THERE.
DOMINIC, REBECCA, GREAT TO SEE