Why Inflation May Be Much Cooler Than You Think

Joining me now is Jay Hatfield.

He's the CEO and CIO at Infrastructure Capital Advisors.

Jay, welcome to the New York Stock Exchange and to taking stock.

Thanks, Ashley.

Great to be on.

All right, so you are saying that inflation is cooler than headlines.

Suggest why do you have that hot take?

Well, we actually think that the Fed chair is going to switch us away from PC core to CPI because if you really look at it, what they put out is just complete fantasy.

In fact, they say portfolio management inflation is 21%.

I wish that were true.

Then I'd be making 21% more.

So we actually are very bullish about inflation and think as soon as the strait reopens, the Fed will start looking at rate cuts.

You're also looking into shelter data for our viewers who aren't familiar with that.

Could you define what that is?

And you say that it's flawed.

Why do you have that perspective?

Other than portfolio management, the perspective is, first of all, they wait 6 months.

So it's like we were reporting on the close six months ago, so they just randomly don't update it every 6 months.

And then they use renewing rents, so those are delayed.

So for instance, the CPI says that shelter inflation is 3.4%.

We use sources from this thing called the internet, and they're down year by year, not in New York City, by the way, but nationally.

And so it massively overstates inflation.

Can you break down what shelter data is for our viewers?

It's just a fancy way of saying rents, rents, OK, rent, OK.

And you say the most recent CPI print takes a rate hike off the table.

Why do you have that?

Well, so if you look at CPI, which again is the right one to look at, not PC.

PC uses made up numbers.

So if you look at that data.

Um, year over year dropped 2.9 for just over the last three months, 2.9% to 2.5.

And if you annualize the last three months, it's 1.6%.

So that would actually be data that would support a cut.

Now there's a bunch of hawks that want to demonstrate their independence from the presidents, so they're not going to cut, but they have zero argument for making an increase at this point.

And you say you doubt the validity of the PCE numbers.

Why do you have that tape?

Well, that 70% of it is just another fancy word, imputed.

Imputed is a way of saying made up.

So it's not actually the ratings aren't what consumers pay and the numbers they provide are fantasy.

So in other words, when rates go up, the inflation they measure goes up because they say that bank accounts, the cost of a bank account is related to the interest.

So they're they're simply estimating numbers that aren't real.

CPI except for shelter is really.

A real number.

So that's what you should look at.

That's what the Fed should look at corrected for shelter, and we think these task force forces are going to concur with that.

And if you look carefully, the Fed chair has already suggested that we would switch from PCE to CPI.

All right.

And what does this all mean for investors?

Well, we have an 8100 target in the S&P, which is decent upside from here, but it kind of makes sense.

Flatten out if the strait reopens and this data starts to come out and we get these corrections, we could get much lower rates and our upside target is 9000 on the S&P.

That's about 13% from here.

So it's really a great market to be invested in, particularly as we get this better inflation data.

All right, Jay Hatfield, CEO and CIO of Infrastructure Capital Advisors, thanks for joining us on Taking stock.

Thanks, Ashley.