Oct 14, 2026 · 1h 1m
Listen from 26:36
Listen at 26:36
Hot CPI revives the inflation and rate-cut debate
CPI and the AI Trade
The report tests whether inflation is cooling enough for the Federal Reserve to pause, while reshaping views on bonds, equities, commodities, AI investment, and emerging markets.
- 1The hot September CPI keeps October and December rate decisions unsettled, with upcoming data now carrying greater policy weight.
- 2Guests debate whether tariffs, deglobalization, energy costs, and resilient growth could sustain inflation near 3%.
- 3AI infrastructure demand and Latin America’s political shift create separate investment opportunities, but both face capacity and execution risks.
Don't miss
Ted Mortonson’s account of semiconductor and memory shortages, long AI booking horizons, and infrastructure demand reframes AI as a potential source of inflation.
The brief
September’s hotter-than-expected CPI lifted Treasury yields and reopened the question of whether the Federal Reserve could hike in October or wait until December.
David Rosenberg, Jim Bianco, and Robert Sockin debate whether tariffs, deglobalization, energy costs, and above-trend growth have created a durable inflation problem rather than a temporary shock.
The portfolio debate favors bonds at current yields and selected hard assets, while warning that concentrated equity markets and inflation-sensitive valuations leave little room for policy mistakes.
Ted Mortonson describes AI infrastructure demand as unusually intense, with semiconductor and memory shortages, long booking horizons, and possible crowding-out effects across capital markets.
Ernesto Revilla sees a rightward political shift improving Latin American sentiment, but Brazil’s fiscal needs, Mexico’s security risks, and Chile’s implementation problems remain decisive.
What was said on this episode
46 statements · 18 positive · 22 negative · 3 mixed · 3 neutral
Core inflation remains elevated but is not accelerating sharply
“inflation is still higher than we would like, but it's not running away”
Listen at 2:32
“inflation is going to be between two and two and a half percent”
Listen at 3:00
A 3% inflation rate is excessively high.
“three percent is too high”
Listen at 3:11
“between two and two and a half is something that people can live with over time”
Listen at 3:13
Current supply shocks will fade in coming months
“we expect that they will fade in the coming months”
Listen at 3:34
Rising short-term inflation expectations could make the Fed hesitate
“if that is something that continues, it might give the Fed pause”
Listen at 4:39
Paycheck-dependent households have lost purchasing power
“if you are relying on your paycheck for your income, you have lost ground over the last year”
Listen at 5:16
The CPI report keeps an October Fed hike possible
“It's enough to keep October in play”
Listen at 8:42
Fed guidance points more toward a December hike than October
“Most of it seems to point toward December rather than October”
Listen at 9:02
The CPI report is insufficient to force an October hike
“I don't think this print is hot enough to push them to move in October”
Listen at 9:06
Residential property is currently unattractive for investment.
“residential property is not a good place to be in right now”
Listen at 12:37
Residential property is currently unattractive
“residential property is not a good place to be in right now”
Listen at 12:37
Rosenberg raised his bond allocation to 30%
“we just raised actually our allocation to bonds to 30%”
Listen at 12:40
Current nominal and real bond yields are attractive.
“we like these yields, both normal and real, where they are right now”
Listen at 12:44
Inflation breakevens are not reliable indicators.
“I don't trust the breakevens”
Listen at 13:09
Wage agreements near 3.5% are not inflationary.
“collective bargaining agreements are containing annualized wage increases of around 3.5%. That is not inflationary.”
Listen at 14:02
Wage agreements near 3.5% are not inflationary
“collective bargaining agreements are containing annualized wage increases of around 3.5%. That is not inflationary.”
Listen at 14:02
Existing-home average prices fell 2.8% sequentially for three months.
“Average prices were down 2.8% sequentially down each of the past three months.”
Listen at 14:50
China is experiencing domestic excess capacity and disinflation.
“They're battling excess capacity and deflationary, disinflationary situation domestically.”
Listen at 15:53
China is experiencing excess capacity and domestic disinflation
“They're battling excess capacity and deflationary, disinflationary situation domestically”
Listen at 15:53
Goods deflation will not return
“We're not going to get goods deflation again.”
Listen at 19:56
U.S. core-goods inflation is disinflating.
“we are seeing disinflation in core goods”
Listen at 20:14
Core goods inflation is currently disinflating
“we are seeing disinflation in core goods”
Listen at 20:14
Only one-quarter of the tariff shock reached final inflation.
“Only 25% of that tariff shock, okay, made its way through to final inflation.”
Listen at 21:40
Tariffs and supply constraints will keep inflation above 2%.
“I think it's going to continue to keep it above 2%.”
Listen at 22:32
Tariffs and supply constraints will keep inflation above 2%
“I think it's going to continue to keep it above 2%”
Listen at 22:32
U.S. home prices are down 7.5% year over year
“home prices are down 7.5% year over year”
Listen at 26:18
U.S. home prices are down 7.5% year over year.
“home prices are down 7.5% year over year”
Listen at 26:18
Rent and home-price deflation will eventually enter CPI with a lag
“All the deflation that we're seeing in rents and in home prices are not filtering just yet. They will with the lag into the CPI data.”
Listen at 26:32
Falling rents and home prices will eventually lower CPI readings.
“They will with the lag into the CPI data.”
Listen at 26:36
If shocks fade, headline and core inflation will approach 2%.
“then we will see headline and core gravitate down towards two percent”
Listen at 32:31
Adjusted U.S. inflation would be at or below 2%
“underlying inflation and headline would be at or below 2% right now”
Listen at 33:54
Including current rents and home prices would put inflation at or below 2%.
“underlying inflation and headline would be at or below 2% right now”
Listen at 33:54
Markets currently show unusually widespread imbalances and valuation extremes.
“I have not seen such widespread imbalances, divergences, and extremes”
Listen at 34:34
Markets currently show unusually widespread imbalances and valuation extremes
“I have not seen such widespread imbalances, divergences, and extremes”
Listen at 34:34
Ten companies represent over 40% of total market capitalization.
“10 companies comprise more than 40% of the market cap”
Listen at 34:42
Ten companies comprise over 40% of market capitalization
“10 companies comprise more than 40% of the market cap”
Listen at 34:42
Non-shelter services inflation remains sticky and is not cooling
“it's still very sticky, non-shelter services inflation. That is not AI-related, and it's shown no signs of cooling.”
Listen at 36:54
A Fed pause could trigger a large rise in long-term yields.
“you might get a pretty big response on the long end of the yield curve if they don't hike at this meeting”
Listen at 39:12
AI infrastructure investment is positive but inflationary
“This infrastructure build is very positive and, quite frankly, Tom, very inflationary.”
Listen at 44:06
GPU and semiconductor prices rose 15–20%, while memory prices rose triple digits
“GPUs or raw semis are up 15 to 20 percent. Memory is up triple digits.”
Listen at 44:16
Unused older GPUs are appreciating by nearly 20%.
“an old GPU is going up on price almost 20% if it's not being utilized”
Listen at 45:54
Microsoft, ServiceNow, and Salesforce will drive enterprise AI adoption
“those are three companies that are going to fuel the AI revolution”
Listen at 47:38
Restricting AI development would disadvantage U.S. defense relative to China
“if we would ever restrict AI development, we're putting our defense industry complex at a huge disadvantage versus China”
Listen at 48:10
Mexico has become the United States' largest trading partner.
“Mexico has surpassed China and Canada to be the main trading partner of the U.S.”
Listen at 56:52
Mexico is well positioned to benefit despite tariff uncertainty.
“Mexico is ideally positioned to benefit despite the noise”
Listen at 57:04
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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