Episode summary
CPI and the AI Trade | Bloomberg Surveillance
Bloomberg Surveillance
· · 53 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Eric Winograd, David Rosenberg, Jim Bianco, Rob Sockin, Ted Mortonson, Ernesto Revilla
Summary
September CPI came in hotter than expected, with headline inflation at 3.7% year over year and core at 2.6%, and the panel spent much of the hour debating whether that is a temporary setback or evidence that inflation is settling above the Fed’s target. One economist argued the report was roughly in line with a mid-0.2% core monthly print and that inflation is elevated but not accelerating, while another said the U.S. is stuck in a 3%-ish inflation world because tariffs, deglobalization, wars, and supply-chain problems are keeping goods prices sticky.
The discussion split between those who think the Fed can still move cautiously and those who think the data strengthen the case for more tightening. The host and guests said the market’s reaction was immediate, with Treasury yields rising and the October meeting briefly back in play, though December remained the base case for some. Several guests argued that the Fed is more politically constrained heading into the midterms, while one guest said skipping October would look more political than hiking.
Beyond rates, the conversation widened to AI, where a technology analyst said demand for chips and infrastructure remains historic, but the buildout is inflationary and is crowding into capital markets. A Latin America economist argued the region is becoming more business-friendly, with political swings, commodities, and a weaker dollar supporting investment, even as fiscal and execution risks remain.
Key takeaways
- One guest said core CPI around 0.3% month over month is hot enough to keep October alive, but not enough to make an October hike the base case.
- Another guest argued the U.S. is stuck in a roughly 3% inflation regime because tariffs, wars, and deglobalization are keeping goods inflation sticky.
- A third guest said the Fed’s biggest problem is political credibility, with the midterms making an October decision harder to read.
- The technology discussion framed AI infrastructure as both a demand boom and an inflationary buildout that is already affecting GPUs, memory, and capital markets.
- The Latin America segment argued the region is turning more business-friendly, with Brazil and Mexico benefiting from political shifts, commodities, and a weaker dollar.
Notable quotes
“we expect roughly in line with consensus, sort of a mid.2 month-on-month print for the core CPI figure”
“I think that between two and two and a half is something that people can live with over time”
“I think it is. It's enough to keep October in play”
“we're stuck in a 3ish% inflation world. We're not going up”
“I think the reason we're going to have a hard time disinflating is from when China joined the WTO in 2001 to 2020, goods inflation stuff was deflationary”
How the episode opens
Bloomberg Audio Studios podcasts radio news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m.
Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Four minutes away from the inflation report.
Uh right now, Eric Winiggrad with Damian Sassau and me as we begin our coverage. We are commercial free to the 9:00 hour. Winigrad, David Rosenberg, and Rob Sak.
And that's the way that we roll. Eric, what do you expect to see? What will this inflation report state to America?
So, I think what we, you know, we expect roughly in line with consensus, sort of a mid.2 month-on-month print for the core CPI figure. Uh I I think the message that that sends is inflation is still higher than we would like, but it's not running away. It is, you know, maybe not coming down as fast as we would like, but it's not accelerating either.
And I think that that gives everyone a little bit more time to see how things play out.
Alliance Bernstein, do we get used to a 2%ish plus near 3% inflation? Can America survive with that elevated rate? So, in our forecasts for a long time now, we we've argued that inflation is going to be between 2 and 2 1.5%.
Remember, pre- pandemic it was running between 1 and a half and 2%. Um, so we have always or for a long time expected it to be somewhat higher. I think 3% is too high, but I think that between two and two and a half is something that people can live with over time.
Um, that that to me is not disruptive.
Eric, our last guest was talking about the underlying drivers inflation and that they are primarily supply shocks.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- cpi
- us inflation
- ai trade
- tech outlook
- latin america growth
Companies and tickers mentioned
- AB
- C
- AllianceBernstein
- Rosenberg Research
- Bianco Research
- PGIM Credit
- Baird
- Citi
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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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