Episode summary
US Inflation Surprise Curbs Fed Hike Bets | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 41 min · Hosts: Carol Massar, Tim Stenovec · Guests: Mike McKee, Lindsey Piegza, David Bahnsen, Mike McGlone, Jennifer Palmer
Summary
The show centered on the latest inflation data and what it means for the Fed. The host and a guest said the core PCE report was revised lower, but the bigger message was that inflation has not really changed much, with core PCE still running at 3.4% in August. They argued that services inflation remains sticky, mortgage rates have moved up sharply, and the Fed still has room to tighten if upcoming CPI and PPI reports come in hot. A guest also said the next Fed meeting falls just before the midterm election, making the timing of any hike especially sensitive.
The discussion also emphasized how resilient the U.S. consumer remains despite higher energy and shelter costs. A guest said spending is still outpacing income growth and is being supported by savings, buy-now-pay-later, hardship withdrawals, and intergenerational wealth transfers, but that support is not indefinite. Another guest argued that consumers are shifting dollars away from discretionary spending toward essentials like housing, fuel, and heating.
Later segments moved to AI valuation risk, with one guest warning that frontier labs may be priced for perfection and could face a capital squeeze if markets stop cooperating. The show closed on energy, where a guest said surging oil and heating fuel prices should eventually destroy demand and reverse, and on non-bank lending, where a founder described asset-based lending as a non-dilutive way to fund working capital for consumer brands and female-led businesses.
Key takeaways
- A guest said core PCE was revised lower, but August still showed 3.4% core inflation, suggesting little real progress on prices.
- The host and Mike McKee said the Fed could still hike again this year if upcoming CPI or PPI data come in hot.
- Lindsey Piegza said consumer spending remains impressive, but income growth is lagging and the gap is being bridged by savings and other one-off supports.
- David Bahnsen argued frontier AI labs may be overvalued because no one knows how they will monetize and capital markets will not cooperate forever.
- Mike McGlone said high energy prices are likely to trigger demand destruction, with heating oil and diesel costs eventually moving lower.
Notable quotes
“The question is what did it tell us about the direction of inflation? And basically to my mind it gives us uh the idea that inflation hasn't changed a whole lot”
“we saw the core PCE revised down from uh July to 3.4% from 3.7% but then it was still 3.4% in August”
“the economy is going strong if not uh expanding and that is always uh adds the possibility of more inflation”
“Consumers continuing to outpace the growth that we're seeing on the wage side”
“I wouldn't touch those companies as they were going public with a 10-ft pole that was found on another galaxy”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. — This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenc.
Oil is something I've been focusing on over the course of the day. Christine, I know you have been uh as well. We report a lot on uh what is getting in and out of the the straight of four movies.
It does seem like according to reports that we've seen uh those levels are back close to what they were before this war and something that's right pipeline from Saudi is back at capacity, maybe running even hotter than they were uh before the war, trying to get some of that product out to market. And it does seem like we're getting a lot of reports from industry analysts saying they don't think it's caused long-term damage to the systems to uh to the production there. But to me, the the issue is always not just production, it's the risk factor, and it's all the other pricing that goes into it.
So, I think
Refinery. Yeah, we'll get into that a little bit later in the show.
Uh but first, we're going to go to Mike McKe. He is our international economics and policy correspondent here at Bloomberg TV. Because amid all the economic data this week, of course, we've got PCE, we've got CPIs, we've got Fed.
Okay. So many acronyms, but let's start with uh the core PCE data. Can you start high kind of at the 30,000 ft?
Christina Rafini will understand this level and then you can dig into whatever really stood out to you.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- us inflation
- fed hike bets
- personal spending
- core pce
- economic outlook
Companies and tickers mentioned
- SF
- Stifel
- The Bahnsen Group
- Bloomberg Intelligence
- JPalmer Collective
Watch the episode
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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