Episode summary
Indicators Rule Out Inflationary Spiral for Now, Says ECRI's Lakshman Achuthan
Bloomberg Surveillance
· · 6 min · Guests: Lakshman Achuthan, Fawad Razaqzada
Summary
The guest argues that inflation is still not signaling a new spiral, even after the tariff scare and the political noise that surrounded it. He says the bigger question for 2026 is not the daily headlines but the direction of the inflation cycle, and for now the evidence still points to a “down but sticky” pattern rather than a renewed surge. That view matters because higher inflation expectations would lift required bond yields, strain debt markets, and change how the Fed can maneuver.
He says the market has already absorbed the earlier recession and tariff panic and that growth has remained resilient. On that basis, he sees no immediate reason to expect the Fed’s policy path to be derailed, though he stresses that an inflation upturn would be a watershed event. He also ties the discussion to portfolio positioning, warning that investors should not assume the current calm will last indefinitely.
His prescription is to stay diversified and keep liquidity, especially because private credit and private equity can become hard to value when rates move and volatility picks up. He favors exposure to assets like commodities, credit, and other hard assets as part of that diversification, while cautioning that the U.S. still looks relatively attractive compared with alternatives abroad.
Key takeaways
- The guest says inflation is still “down but sticky,” not in a renewed spiral, despite tariff and political noise.
- He argues that the key risk for 2026 is an inflation cycle turn, which would be a watershed event for markets.
- He says higher inflation expectations would push up bond yields and matter more because of the large stock of debt.
- He recommends diversification and liquidity, especially for investors exposed to private credit and private equity lockups.
- He points to commodities, credit, and hard assets as useful portfolio diversifiers while saying the U.S. remains relatively strong.
Notable quotes
“We nailed it last year”
“On my radar. It's all about inflation. What's the inflation cycle going to do”
“We nailed the down but sticky and that's staying”
“you have to protect against this inflation cycle turn”
“If there's a cycle turning point, I think that's the watershed event in 2026”
How the episode opens
We nailed it last year. Okay. There was in spring of last year, as you might recall, ancient times, Liberation Day tariffs.
Inflation's going to take off and there's going to be going out of business apples going out of business, and there's going to be a recession. I can't believe the statistics. So I brought it for you.
Less than 20% of CEOs thought we'd dodge a recession. Hmm. Look at where we are now.
Look, I was just saying, okay, we're totally in a different position at the Claudia's time as well. Yeah, So just as well, you got to get this call right. If you don't get this call right, the rest of it's, as we were saying earlier, noise.
So in 2026, looking forward. On my radar. It's all about inflation.
What's the inflation cycle going to do? We nailed the down but sticky and that's staying. That's still there.
And it hurts like hell for anyone who eats or drives a car, right? Because energy took off 30. The prices rose 30% and they've come down and the pace has come down, but the levels are still high.
So that's that's why everybody's upset. But. All of this stuff is priced off of your rates and all of your rates are putting in growth and inflation together to get to your rate.
And growth, as we've said, is resilient. Jobs are not going to collapse. Inflation sticky if it turns up.
That's such a game changer, such a big deal. In what way? For the Fed?
I mean, I know for us as consumers. Yeah. So the headline so the headlines are all, you know, what's happening with the Fed, the politics around it.
The really big issue I think underneath that is we have a lot of debt and you have to pay interest on that debt.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- inflation outlook
- fed rate cuts
- cpi vs pce
- inflation swaps
- chip stocks
Companies and tickers mentioned
- TSM
- NVDA
- ASML
- ECRI
- Taiwan Semiconductor Manufacturing Co.
- Nvidia
- ASML Holding
Watch the episode
Watch “Indicators Rule Out Inflationary Spiral for Now, Says ECRI's Lakshman Achuthan” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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