Episode summary
Markets Price in April CPI | Bloomberg Surveillance
Bloomberg Surveillance
· · 32 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Constance Hunter, Sarah Hunt, Eric Winograd, Ed Yardeni, Marc Pinto, Jordan Rochester
Summary
The conversation centered on a hotter-than-expected CPI print and what it means for the Fed, inflation expectations, and politics. The guests argued that headline inflation could run near 4% and even average above 4.2% in the second quarter, with gasoline, airfare, shelter, and transport services doing the damage. One guest said the Fed is likely to move to a neutral bias rather than cutting soon, while another warned that the market is underpricing the inflation effect of the Iran conflict and a potentially closed Strait of Hormuz.
The equity discussion stayed constructive. Ed Yardeni said the market is climbing a wall of worry and that strong earnings are overpowering concerns about geopolitics, tariffs, and a narrow leadership base. He said small-cap and mid-cap earnings are improving and that other sectors should join the rally, even as he kept a bullish S&P 500 call.
Private credit was presented as a real stress test but not a crisis. Marc Pinto said the sector is seeing a liquidity test and some deterioration in asset quality, especially in non-traded BDCs, but not a systemwide breakdown. Jordan Rochester then shifted to the UK, saying Labour’s instability reflects a stagnant post-Brexit economy, while the dollar-yen move remains heavily influenced by Japan’s intervention and oil prices.
Key takeaways
- A guest expects U.S. CPI to run above 4.2% in the second quarter, with gasoline and travel prices most visible to consumers.
- One guest said the Fed is more likely to adopt a neutral bias than cut rates soon because inflation is reaccelerating while jobs remain only modestly firm.
- Ed Yardeni said the equity rally is being driven by earnings strength, and he expects broader participation beyond the Magnificent 7.
- Marc Pinto said private credit is facing a liquidity test and rising dispersion in performance, but not yet a full credit-cycle break.
- Jordan Rochester said the UK’s political instability reflects post-Brexit stagnation, while Japan’s yen intervention is fighting rising oil prices.
Notable quotes
“I think everybody was very bullish on what the Malay administration is doing in terms of deregulation, in terms of trying to get the economy back on track”
“We're not properly pricing this into inflation. We're not properly pricing this into equity markets”
“The the market is also uh getting kind of thrust up. It's been a rocket ship because of of earnings”
“what we just saw was a test. It wasn't the test and it was a liquidity test”
How the episode opens
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Concerts Hunter. Uh, just back. I got to do this 30 seconds. Latin America. You just visited three countries. What was your take on the prosperity of South America?
So, I hadn't been to Argentina since 2018 and the city felt less vibrant and that some people pointed out to me that could be a COVID effect. I think everybody was very bullish on what the Malay administration is doing in terms of deregulation, in terms of trying to get the economy back on track, but as you know, first quarter GDP was weak. And so I think I think that's that's not going to be a straight line up for Argentina.
They've they've got a lot of work to do to deregulate that economy. Uh Brazil is doing better, doing stronger. The one thing that Latin America really has going for it is that it is not energy dependent on the Middle East and they produce lots of agricultural commodities.
Just because of time, I got to get the CPI. I got a 3.7% year-over-year survey uh number here. Could we come in at 4% on this this report? — Yes, we absolutely could. We absolutely could. And there's some there's some wild there's some of those factors are things we should look through. So, some of it we expect shelter to add back some some a couple of percentage points to CPI because of some technicalities of the way that that survey is done and the timing of the shutdown in October.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- april cpi
- us economic outlook
- equity rally
- private credit stress test
- dollar and geopolitical risk
Companies and tickers mentioned
- MCO
- MFG
- Economist Intelligence Unit
- Alpine Saxon Woods
- AllianceBernstein
- Yardeni Research
- Moody's
- Mizuho Financial Group
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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