Peter Boockvar: Inflation Is The Core Disease

**Guy Adami** (0:00)
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**Dan Nathan** (1:08)
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Welcome to the Risk Reversal Podcast. I am Dan Nathan. That is Guy Adami.

**Guy Adami** (1:38)
This is Guy Adami and I am so excited. Do you know why, Dan?

**Dan Nathan** (1:42)
Yeah, because of our guest.

**Guy Adami** (1:44)
The great Peter Boockvar, who has joined us numerous times and the pantheon of guests.
He's right up there. He's in it, Dan.

**Dan Nathan** (1:54)
He is in it. So Peter is the CIO at OnePoint BFG Wealth Partners. Peter, welcome back to this 27th time with Guy and me over the last five and a half years.

**Peter Boockvar** (2:06)
I love it. I appreciate all the opportunities I get on to chat with you guys. Obviously, there's always something to discuss and it's always one of my favorite parts of the day.

**Dan Nathan** (2:16)
Well, here's the deal. We got plenty to discuss today. We want to go over some data last week and just maybe try to find some through lines between the inflation data that we saw on Wednesday and Thursday, and then the move, I think, in yields or the lack thereof, and then some of the data that we had on Friday morning about consumer confidence and retail sales, and then we're going to look ahead to some of the earnings, the Fed minutes.
So a lot to talk about. Guy, where do you want to start?

**Guy Adami** (2:41)
I think we should start with the inflation data, Peter, which, listen, according to the pundits you listen to or read, a lot of people thought they came in soft, light, better than expected, whatever term you want to use. And you know what? That's fine. I'll give you that. But what's remarkable to me, and I think Dan sort of alluded to it, as we're sitting here, bond market doesn't seem to care all that much. As a matter of fact, I'm shocked by how resilient yields are, how weak the bond market is. So let's start there.

**Peter Boockvar** (3:09)
Well, the inflation stats, if you include the revision upward in PPI, that was spot on, as was CPI. I think notable in the yield curve is the two-year yield has dipped, while the 10-year yield is pretty persistent here at 465-ish in change. So the yield curve is steep in the touch, but in a bare steepener fashion. I think noteworthy within the inflation stats is that PPI is still running well above CPI.
When I hear people tell me about their inflation argument and what the Fed should do, they only look at CPI.
And I continue to argue that the full picture on inflation must include wholesale prices because somebody has to eat that. And I heard many times both at the company level, but also in the Fed's beige book that we saw in July was some companies are having success and passing on their higher costs, but others are not. So if a price pressure gets stuck at the producer level, doesn't flow through to consumers, doesn't mean that it disappeared. So I think the Fed needs to look at both in order to make a better educated inflation outlook, which then obviously flows through to rates.

**Guy Adami** (4:24)
You know, which is, and I'll say this quickly, I mean, that's why you don't look at things on just sort of the surface. I mean, you sort of get down to three standard deviations away. And I just want to sort of add this.