Single Best Idea with Tom Keene: Ed Yardeni & Constance Hunter

**SPEAKER_2** (0:02)
Bloomberg Audio Studios, podcasts, radio, news.

**Tom Keene** (0:15)
Single Best Idea, an extraordinary set of conversations as a president attends China. I believe tomorrow within our show will be when the president lands in Beijing. We'll have to see on that as we move forward. But all sorts of conversations wrapped around a 5% 30-year bond, wrapped around a print of 108 on Brent Crude earlier this morning, and more than anything, wrapped around 3.8% inflation. And Eric Winograd of Alliance Bernstein was quite heated that there's rich people inflation and poor people inflation. And he would model out poor people inflation is a very painful 5% plus. It is a most unusual time.
Ed Yardeni with all of his decades of work on economics and market strategy suggests higher for stocks. Here is Ed Yardeni of Yardeni Research.

**Ed Yardeni** (1:12)
We definitely are climbing a wall of worry and that's the best kind of bull market you can have. You don't want everybody being bullish. You want people to have concerns.
I don't want people to worry on a personal level, but on a professional level, when I see a lot of bearishness from a contrarian perspective, it usually works. I've made some of my best calls on market bottoms when my gut was hurting and everybody was in a panic mode. So, we're not in panic mode right now, but on the other hand, there are a lot of people worrying about what's going on in the Middle East, and I'm not saying that's not worrisome, but it's certainly adding to the concerns. They're worrying about the bond market.
They're worrying about a K economy, that the consumer's not going to continue to spend, and they're worrying about too much capital spending. So, there's a lot of worries out there, but meanwhile, it's really pretty simple. The market is also getting kind of thrust up, but it's been a rocket ship because of earnings.

**Tom Keene** (2:23)
Ed Yardeni there with Yardeni Research looking out for, I think the interpolation to Dow is Dow 60,000 plus out a year or so within his bull market. I want to take a moment to do a massive shout out to Simon White. You may not know the name. Simon White is in London. He is one of our great quant strategists writing for Bloomberg Macro, and he did an absolutely brilliant piece that went viral globally on Gamma Today. When you hear the Greek letters Alpha, Beta, Gamma, Delta, Epsilon, they all mean something, and there's many other letters as well. I'm beholden to Theta, which is the time function and all sorts of mathematics. But he did a wonderful thing on the Gamma within the option market. This is the movement of the options market, how people are hedging and betting along with dispersion and correlation.
Absolutely brilliant. I'll try to get that out on Twitter and LinkedIn. Simon White with just some brilliance out of London today. Also, always brilliant, off of EIU as Constance Hunter here on the inflation report, 3.8%.

**Constance Hunter** (3:37)
It's painful and it's going to get worse. That's, I think, the important story here.

**Tom Keene** (3:40)
You can predict a 4% inflation number.

**Constance Hunter** (3:42)
We think it's going to be above 4.2% average for the second quarter, yes.

**Tom Keene** (3:47)
Wow. How does that change the political debate in America? All your study of the analog of presidents having to get up in front of a 4.2% inflation rate.

**Constance Hunter** (3:57)
I think it's going to come back to bite. I think that's one of the reasons that people had anticipated that we would bring an end to the war in Iran because the political implications are so strong. As I said, this administration seems to have its own perception of political feedback loops which may prove to be a bit inaccurate.

**Tom Keene** (4:17)
Constance Hunter there on the Inflation Report today. Thanks to all of our guests for wonderful and differing perspective on your inflation. As I tape this here within our studios, copper hits a new high.
Some people will say, pay attention to Dr. Copper. Please stay with us over the next couple of days in News Flow Extraordinary. On podcasts out at Spotify and Apple on YouTube Podcasts, it's Single Best Idea.