Jeff Sherman, DoubleLine’s co-chief investment officer, believes the days of 2% inflation are over for now. He told Yahoo News, “I don’t think we are going back to the old school one and a half to 2% inflation because it’s permeated the psyche for a period of time. And so I think we are going to have to deal with higher levels of inflation, and the front end of the bond curve is telling you that if you look at breakeven spreads.” He believes inflation will sit at 4% this year. In related news, Laffer Tengler Investments president Arthur Laffer Jr. believes the Fed will take a lackadaisical approach when it comes to controlling inflation.

 

Yahoo Finance/Brian Sozzi
Don’t expect ‘old school’ inflation anytime soon: DoubleLine’s Jeff Sherman

The days of sub 2% inflation — as measured by the Consumer Price Index (CPI) — look over for quite some time, thinks DoubleLine’s co-chief investment officer Jeff Sherman.

Sherman assigns the blame to the ongoing COVID-19 pandemic, and in part the extremely easy monetary policy employed by the Federal Reserve to gin up the economy throughout the health crisis.

“I don’t think we are going back to the old school one and a half to 2% inflation because it’s permeated the psyche for a period of time. And so I think we are going to have to deal with higher levels of inflation, and the front end of the bond curve is telling you that if you look at breakeven spreads. Long-term still, you look at 10-year breakevens they are at 2.5%. It has priced in an elevated level of inflation for the next couple of years,” Sherman told Yahoo Finance in an interview.

Sherman expects headline inflation to clock in at 4% this year. He added the upcoming CPI release out next week could hit 7% on the headline.

Read the full story, here.

 

Fox Business
The Fed won’t be aggressive ‘at all’ in raising interest rates: Laffer Jr.

Laffer Tengler Investments president Arthur Laffer Jr. argues the Federal Reserve will take a ‘wait and see’ approach to controlling inflation.

You can watch the full interview, here.

 

Kitco News/Anna Golubova
Gold can surprise with a 20% gain in 2022, says Blackstone’s Byron Wien

In an unexpected move, gold can surge 20% in the new year as it reclaims its inflation hedge status, according to Byron Wien, vice chairman of Blackstone’s private wealth solutions business, and chief investment strategist Joe Zidle.

The statement was made in Blackstone’s annual ‘Ten Surprises of 2022’ post and came as gold registered its worst annual performance since 2015, down 3.6%.

The 2022 surprise prediction sees investors fleeing to the yellow metal for protection against problematic and more persistent inflation.

“The price of gold rallies by 20% to a new record high. Despite strong growth in the U.S., investors seek the perceived safety and inflation hedge of gold amidst rising prices and volatility. Gold reclaims its title as a haven for newly minted billionaires, even as cryptocurrencies continue to gain market share,” Wien and Zidle wrote.

You can read the entire article, here.

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