Why SocGen's Albert Edwards Sees Double-Digit Inflation Coming Back

Albert Edwards (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:21)

And I'm Joe Weisenthal.

Tracy Alloway (0:23)

Joe, I think a lot of people don't understand the role of bears in finance and markets.

Joe Weisenthal (0:30)

It's to create headlines for tweeting, right? Well, retweets.

Tracy Alloway (0:33)

Technically, it's to sell newsletters.

Joe Weisenthal (0:36)

I was gonna say, it's to get emails opened, right?

Tracy Alloway (0:39)

That's right. So I think being a bear who's selling a newsletter, we can all kind of see the business model there. But if you're an analyst at a big sell-side firm and you're known as a bear, that seems incredibly difficult to me because the tendency on Wall Street and investment and finance is towards optimism, right? You have to place bets on the future. You have to put your money to work.

If you're managing to be a long-run bear at a big sell-side institution, that's pretty impressive to me.

Joe Weisenthal (1:08)

Also, you're selling. Yes. You're selling. They call it the sell side. And if you know there's all these financial instruments that the financial institution has, and you're the bear, I was like, well, I'm not going to buy anything. You know what else? It's the sell side. You're supposed to have something to sell, not selling other people to sell.

Tracy Alloway (1:26)

The clue is truly in the name. But the other thing that's very impressive is if you're a long-run bear at a sell-side institution who also manages to be the top-ranked macro analyst in your category for 13 years in a row. That's pretty impressive, right?

Joe Weisenthal (1:43)

It is impressive. This gets to another important point which is people like to read. I think about this even with podcasts and other forms of any media, whether it's formal media and a PDF that a bank sells or a news organization, people like to consume ideas. It doesn't mean they're going to consume the ideas and say, oh, this was convincing by sell, but they like to hear a range of ideas. They like to have their thought process influence. They like to stress test.

Tracy Alloway (2:13)

Well, this is what I was going to say. To me, the role of a true bear on Wall Street is for big investors and institutional clients to actually test some of their thinking. If you have a bunch of analysts who are trying to pitch you tech stocks at the moment, you want to hear an opposing viewpoint that says, well, maybe here is the downside scenario.

Joe Weisenthal (2:33)

Well, here is the other thing right now. We are recording this in early May 2026, which is that equity markets around the world are very high.

Some would say bizarrely high, but they are very high for various reasons we could get into.

Bonds have been selling up very much. That is sort of the story. We are here in the UK right now, and the headlines are all about generally how much guilt yields keep spiking. But we're in this moment in which I would say there is a real mismatch between I would say gloom, which you could pick your poison. Why are you gloomy? You're gloomy because the AIs are gonna destroy the world. You're gloomy because the war in Iran. You're gloomy because high deficits, et cetera. You're gloomy because politics in so many countries seems to be deteriorated. There's plenty of reason for gloom out there. And yet, you're losing if you're not in the stock market, et cetera. It is just a very weird time. But yes, there is this weird mismatch, depending on how you look at it, between sentiment across many different attempts to measure sentiment and what certain, at least certain parts of the market are doing.

Tracy Alloway (3:40)

Yeah, I think that's exactly right. And also, you know, you mentioned bond yields going up. So we're recording this on May 6th, the 30-year UK guilt. We're in London still, by the way, hit like its highest since 1998 or something yesterday. And you're absolutely right. There does seem to be a tension between all these little glimmers of inflation that are out there and what's going on in the equity market, because you would expect with rates possibly going up, that equities were going to take a hit. But anyway, we do, in fact, have the perfect guess. Someone who is very well known, not just for being a bear, but also for having very long-term sort of paradigm views on the relationship between bonds and equities.

Joe Weisenthal (4:21)