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Peter Boockvar: Inflation Will Handcuff the Fed

Tom welcomes a new guest Peter Boockvar of the Bleakley Group, to the show. Peter explains how inflation is affected by technology and production efficiency. These improvements over the past twenty years have helped to keep inflation low. However, the service side of the economy has experienced considerable and consistent inflation.

Today, service inflation is accelerating, and the critical question is where are goods prices going from here. Peter believes that inflation will be longer-lasting and that it’s likely to surprise many.

Peter explains how the Fed uses the PCE inflation benchmark when it calculates inflation and why it’s inaccurate regarding housing and health care. He argues that basically anything the government subsidizes becomes more expensive.

He explains how persistent inflation could bring serious problems for the Federal Reserve. The dollar is experiencing issues due to the amount of money printing. They realize there is a limit to how much they can stimulate the economy, and Peter won’t be surprised if they slow down the stimulus and spending.

A gold standard creates a limit to how much currency can be created because it has to be backed by metal in a vault. Such a standard once helped to hold politicians accountable.

The Fed’s plans mean almost nothing, but most likely, they will take a less dovish approach from here.

He expects the bull case for gold and silver to remain intact as the risks of continued high inflation will persist. However, persistent inflation will catch many by surprise and may develop into a black swan event.

It’s getting harder and harder to make money in the markets. So there will be a lot more bumps in the road over the next couple of years. He discusses some strategies that Bleakley use to mitigate inflation risks.

Time Stamp References:
0:00 – Introduction
0:33 – Categorizing Inflation
4:46 – Commodity Valuations
6:00 – CPI Accuracy
7:26 – Free Vs. Subsidized
9:18 – Inflation & Rates
13:00 – Fed Kryptonite
16:32 – Gold Standard
17:55 – Debt Repayment
19:10 – Feds Future Plans
21:17 – Commodity Trade
22:34 – Fed & Housing Markets
24:52 – The Biggest Risk
26:56 – Bond & Negative Rates
32:18 – The End Game
35:46 – Strategies
38:17 – Wrap Up

Talking Points From This Episode

  • Technology and production improvements and inflation.
  • Inflation benchmarks and Federal Reserve plans.
  • Why persistent inflation will be unexpected and bring further instability.
  • The End Game for the Fed and strategies to protech and build wealth.

Guest Links

In his role as Chief Investment Officer of the Bleakley Financial Group, Peter Boockvar leads the team that is responsible for the development, management, and oversight of Bleakley’s investment management program, managing the investment committee, and setting the firm’s overall investment philosophy, global investment outlook and asset allocation decisions. Peter also acts as the manager of a global macro multi-asset portfolio strategy for select clients.

Before joining Bleakley, Boockvar was a managing director and the Chief Market Analyst for the Lindsey Group – a macroeconomic and market research firm founded by former Federal Reserve Governor Larry Lindsey. In this role, Boockvar was responsible for global economic & market research at the firm.

Before his time with the Lindsey Group, Peter worked as a macro analyst and portfolio manager for Omega advisors and had previously been a partner at Miller Tabak & Company, where he was an equity strategist and portfolio manager.

Industry leaders frequently seek out Peter’s market insights and, for the last several years, he has been a frequent guest and contributor on CNBC programs. He is also regularly quoted in Forbes, Barron’s, Bloomberg, CNN Money, and several other news outlets. Peter graduated magna cum laude with a BBA in Finance from The George Washington University.

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