Odd Lots - For The First Time In Years, Why People Are Suddenly Talking About Inflation Again

Episode Date: March 12, 2018

For years, nobody seemed particularly concerned about inflation. Outside of a few blips, in the wake of the financial crisis, people have become accustomed to low inflation, and central banks providing ample stimulus to the economy. But suddenly that's changing. There seem to be hints that the macro backdrop is shifting, and that has investors on edge. So why the shift and what's going on? On this week's Odd Lots, we speak with Michael Ashton of Enduring Investments, a specialist in analyzing the inflation data, and helping clients trade on it. He offers his theory of what drives inflation, and where it's going to go next.See omnystudio.com/listener for privacy information.

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And sadly, Tracy Eloy is out today. She is traveling. But I think I could sort of imagine the conversation that we would have prior to bringing in our guest if she were here. We would probably talk about how for the first time in a while, we've been seeing market volatility lately. how a lot of the stories that we've been discussing since the financial crisis seem to be mutating. And at the heart of these big changes that we're seeing is a very important debate about the economy.

And that is whether we're really seeing a pickup in inflation for the first time in a long time. And so if you weren't aware, basically since the crisis, we've been seeing this incredibly mellow inflationary environment around the world. not much pricing power, not much acceleration in wages or anything else like that. And of course, that's made central bank's job very easy because they're tasked with maintaining stable prices or in the U.S. stable prices and full employment. But if prices are just really stable, then that makes it easy. They don't really have to do anything for the most part. And so if we're starting to see a turn, if we're starting to see inflation really gain

some teeth and accelerating prices and so forth, then then that's the start to see inflation. And that raises the question of whether central banks are going to really have to change their approach since the crisis. And if central banks change their approach since the crisis, that could have potentially big ramifications for all sorts of markets, risky assets, bonds, and so forth. So this question of whether the Goldilocks era of inflation, not too hot, not too cold, is going to persist is top of mind for a lot of people these days. And so answering this question is crucial. And so that is what we're going to try to do on today's episode. So without further ado, I would like to bring in our guest. His name is Michael Ashton of Enduring Investment. And he is

on Twitter at the inflation guy. And he tweets very knowledgeably about inflation. Every time new data comes out, he breaks it down. And there's probably nobody, there's probably nobody better to help us answer the question of what the heck is going on and what's about to happen. Michael, thank you very much for joining us. Thank you very much, Joe. It's good to be here. And I'm sure I speak for Tracy and saying that I'm really sorry that I'm missing this. I feel very sorry for Tracy that she's missing this huge issue will be devastated.

But I'm very excited. Let's talk first about your background. So as I mentioned, you're the inflation guy. That's literally your Twitter handle. So you write every time there's a new economic data release that has the latest inflation data, you really dive in and break it down and look, what are the components? Why did it move higher? Why did it move lower?

What's your background? How did you get to be the inflation guy? Well, let's see. I've been in financial markets since the early 1990s, I guess since 1990. And I've spent a long time as a strategist, fixed income strategist, for a lot of the big shops out there, Bankers Trust, J.P. Morgan, that sort of thing. And then got into trading around 2000 for Barclays. And I was trading options for Barclays when Barclays, which at the time viewed themselves as, actually they styled themselves as

the inflation house. You know, at that time, inflation derivatives were just getting started in Europe and they were just getting started in the U.S. U.S. and Barclays said, you know, we really need to get the U.S. inflation derivative's market going because that's good for Barclays. And I was, you know, I had a good strategist background, a good trading background. I spent a lot of time writing as I do now and explaining things, teaching training, and so on. And so I had a very good, well-rounded background to go and be be made the inflation guy. So you come to it from both a theoretical, with a theoretical background, but also the

trading world background. That's right. Inflation derivatives. So inflation is an economic measure. But derivatives are essentially instruments that people can use to bet or hedge on specific outcomes in the economy. So theoretically, you could construct a instrument that'll pay off X if, say the CPI rises to 2.5% next year or something like that?

That's right. And actually, inflation derivatives generally pay off on the price level. And we've tried a couple of times to create CPI futures. Actually, one of my big flubs was in 2003. I persuaded the Chicago Mercantile Exchange to launch CPI futures. And I suggested they should look like Euro dollars. And it turns out that that's not at all the way they should look. And so I was the market maker for these futures, and they didn't really do anything and eventually got delisted.

But we figured out that rather than trading on a rate, in general, what you're really trading is you're trading the price level. And so you can obviously figure out the price level today versus the price level 10 years from now. We can figure out what the rate is. And that's what goes into yields and things like that, is that expectation. But it's really the future prices that you're trading. I don't want to go too far down the rabbit hole with inflation. derivative. But anytime I hear about something like this, one of the questions that I always ask in my mind is, who are the natural sellers and buyers of this product? So I could imagine

that a fixed income portfolio manager whose assets would stand to lose a lot of money, would want to protect against higher inflation. Who is the natural seller of that protection? Yeah, it's interesting. I think the way that inflation derivatives are structured, you really do tend to have an imbalance. And so the supplier tends to be the government through tips. Oh, I see. Right. So the government tends to be the payer of inflation. And that's actually been one of the big problems with the inflation markets over the year is that lots of people and most consumers, you know, we're exposed to headline inflation or something which kind of looks like it. And that's what tips pay. But the issuer side in corporates, they aren't

exposed to headline inflation. They're exposed to, you know, if you're a caterpillar, you're exposed to farm implement inflation or, you know, things like that. And so we haven't seen corporates issue that sort of bonds. Oh, that's interesting. I hadn't thought about it. So they are affected, but it's a very narrow slice of what we call inflation. Yeah. Focused. Let's fast forward a little bit to the post-crisis period. And what do you describe what we've seen in inflation in general over these last several years, which I sort of set up the sort of Goldilocks scenario. Yeah, you know, it really turned out to be a wonderful thing for central banks, as you alluded to, you know, if you're fighting fires and you don't have to worry about any, you know,

nearby buildings, then it turns out to be much easier than if you have to worry about everything else catching on fire. And central banks didn't have to worry over the last nine years about anything catching on fire. They could spray their hoses however they wanted and not really cause any inflationary problems. And so we've had this continued low flation. A lot of people have called it initially after the crisis that was caused by housing prices going down. But even since then, as housing prices have come back up and housing inflation has come back up, other prices in the economy and mostly import goods have tended to restrain the overall level of inflation. How much of this restrained inflation is essentially a matter of underutilization of economic resources?

So we overbuilt a lot of houses prior to the crisis during that boom. And so then if you owned houses for a long time, you didn't have much pricing power on rent and so forth or selling your house. And there was a lot of unemployment. And it's taken a long time for unemployment to come down. So if you're a worker, you don't have a lot of theoretical bargaining. power, various versions of the same story of overbuilding, lots of resources that are still being underutilized, and when resources are underutilized, no one can really raise prices. How much does that explain, in your view, the muted inflation?

Well, I tend to push back a little bit on that whole notion. It's certainly true at, you know, in bubble periods, things like houses that got, you know, too expensive and then got very cheap. and that tends to cause ripples in inflation. But over time, what you're really looking at with inflation is what's happening to the currency, in general, what can you buy over time? And that's not really caused by the relative supply and demand dynamics. It's caused by how much money is out there chasing how many goods,

the classic monetarist explanation of the thing. All the other things that you describe and shortages of this or that, too much of this or that, cause relative price changes relative to the overall rising tide, if you will. And so, you know, we have these general forces on housing that have caused housing prices to escalate faster than incomes for a while. And you have the strong dollar and you have globalization that has tended to depress goods prices for a while. But overall, over time if you keep adding money to the system, then the overall price level changes. And this view that you espouse the sort of monetarist, money-driven view, it's not really

the, I mean, a lot of people at the Fed would sort of take my, the way I said it. Absolutely. Which is this sort of more Phillips curve style, you're not going to get inflation as long is you have capacity underutilization and that inflation will really kick in now or soon once we finally are using everything and everyone is labor bargaining power. So talk a little bit about this debate and this sort of like, because I think it's really a fundamental ideological question about what causes prices to rise. Yeah, I think it's really interesting. Obviously, when we go, we learn economics, we tend to focus on supply and demand curves. And so we tend to think about

the idea that if you increase supply, you decrease prices. And if you increase demand, you increase prices. And I think that the problem comes is when you try to aggregate that to the overall economy, in ISLM curves, and there's lots of fancy Keynesian macroeconomics to go and describe what happens. But you sort of lose the forest for the trees. Again, you start talk, you take what are really micro effects, and they don't really aggregate very well. So when you look at the central bankers around the world. Ironically, I guess, since they're supposed to be managing the money supplies, you don't have very many monetarists left. You have, you had Daniel Thornton at the St. Louis Fed, who's retired, and then my friend Samuel Raynard at the Swiss National Bank, who's still publishing,

but other than that, there aren't any publishing monetarists out there anymore. Does this differing framework explain, in your view, why the Fed has been basically persistently wrong on inflation throughout this entire cycle. Incidentally, they've been pessimistic relative to what happened on employment. So, unemployment keeps falling faster than what they expect. But they keep missing on the inflation front, too. So they expect inflation to come in higher than it does. And every time it comes out, it disappoints them. Is that error, in your view, attributed to what you see is an incorrect model? Oh, absolutely. I think that that you can take, an incorrect model and try to parameterize it better and you still have an incorrect model.

And that's what's happened is every time they have a bad prediction, they look at the model and they say, oh, well, I guess, you know, natural rate of unemployment must be lower. Well, yeah, or maybe that doesn't have anything to do with it. I mean, it's possible. So what is happening right now? Because as I set up in the intro, after many years, it feels like the debate is back. And maybe for the first time in a while, people think inflation could go meaningfully higher. Before we ask why, like would you agree with that, that it feels like we're at some sort of turning point, at least in the debate? Well, certainly the debate has, and we see it in our business every day. With the amount of inquiry we've gotten over the last couple of months

is just an order of magnitude different from what we had the three months before that. So the Keynesians would say we're finally tapped out that, you know, maybe we've been underestimating how strong the labor market could get, but we were, we knew it. going to get somewhere and we're finally hitting it and there really aren't any spare workers left or very few and that means that the people that are in the labor market there's a lot of demand coming they're going to ask for wage increases that they're going to go out and spend more on rent and they're going to buy stuff that we can't build and all this and we're finally seeing that so what is wrong with that story pretty much everything but you know I really love the the

wage push inflation you know argument is always sort of fun to me because Because if you think about it, if wages caused inflation, if higher wages caused higher inflation, then we would all love inflation, right? Because our wages would go up and then prices would go up. And so that leaves us in a good position, right? And businesses would hate it. And in fact, we see exactly the opposite, that some inflation is good for businesses because they don't have to make wage adjustments right away. So wages tend to follow inflation. Actually, I've got to give some credit to Bob Schiller. He wrote a paper about that probably 30 years ago when he surveyed people. And the name of the paper is

something like, why do people hate inflation? And it turns out that we all know that if prices go up, that our wages aren't going to go up first. They're going to go up afterwards. Do you think there's a inflation fetishism to some extent where we forget that nobody really likes to pay more for stuff? And we talk about things like, oh, the Fed is missed on inflation or inflation came in weak or whatever, as if people just sort of have got into their minds that higher prices are good? Yeah, it's strange, too, because, you know, if you talk to somebody from South Africa or from South America where inflation is higher and they look at our obsession with one

and three quarters versus two and a quarter, and they just laugh. I mean, it's just absurd to be that, you know, focused on these little things. But I think that the general view in the economic community. I guess I don't disagree with this, is that some small amount of inflation add some lubricant to the economic system allows you to decrease your real costs without decreasing the real wages you're paying without decrease the nominal wages you're paying and so on. I'm glad you brought in the international angle on this because I wasn't thinking about that, but I always have found it to be pretty funny when you hear things like, oh, Japan,

and they can't seem to generate any inflation. It's this big crisis. Meanwhile, unemployment is at 30-year lows. They have a standard of living that's the envy of the world. That sounds like a pretty great problem to have. If unemployment's really low and they're one of the richest countries in the world, and your big problem is that prices aren't going up. Yeah, that doesn't really sound that bad.

No, I've never really understood that. And I've asked people, I've asked guests on TV and other stuff, like, what's the big problem? And I have to say, I've never totally heard a satisfactory answer to why it's so bad. No, I think that it is funny that for as good as that situation is, the Bank of Japan is working very hard to completely ruin the entire future of Japan, right? I mean, it's, they really didn't necessarily have to do anything. Actually, going back to the money supply, you know, the Bank of Japan for many years struggle with money growth in Japan being around 2% or 1%. and that's the reason they had low inflation. Now it's getting up to four, something more reasonable, and they're starting to see inflation.

But in the process, they've managed to completely nationalize their financial markets. It would be a very interesting experiment. Right. We'll see how that. All in the service of getting inflation from zero to two. It does seem a little odd when you put it that way. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris.

And I'm Karen Moscow here to tell you about our new on-demand news report delivered right to your podcast feed. Bloomberg News Now is a short five-minute audio report on the day's top stories. Episodes are published throughout the day with the latest information and data to keep you informed. Yes, there are other products like this from a variety of news organizations. But they usually rerun their radio newscasts throughout the day. That's not what we do. We create customized episodes that can only be. be heard on Bloomberg News Now.

And we don't wait an hour to publish breaking news. When news breaks, we'll have an episode up in your podcast feed within minutes. So you're always getting the latest stories and developments. Get the reporting and the context from Bloomberg's 3,000 journalists and analysts we're all over the world. Listen to the latest from Bloomberg News Now on Apple, Spotify, or anywhere you listen. All right, let's go back to the U.S. and air. You mentioned that the last three months, you've seen so much more

inbound interest in figuring out what inflation is going to do versus the three months prior. We're certainly talking about it a lot more here. You've dismissed the Keynesian story, which is that the unemployment rate finally hit a point where there's not much more slack. And so you've dismissed the sort of wage push story. Okay. So if that's not right, what is changing? Okay.

So there's a couple of different things here. One is that the increase in interest in the last couple of months is mostly due to the optics of inflation. You know, optics, it looks like inflation is suddenly accelerated. It really hasn't. The underlying level of inflation, if you look at, you know, median inflation or you look at something that moves more slowly, you see that inflation itself hasn't moved very much. But what we're, what's happening is that these, we had all these one-offs, you know, cell phones. We've been talked about a lot. But there's other one-offs, and they're all fading.

And so we had this decline in core inflation that's just coming out of the data. And over the next six months, we're going to have core inflation going from where it is now to, you know, up to 2.3, 2.4, and people are going to think the sky is falling. But most of that's an illusion. Inflation is going slowly higher, but a lot of that's an illusion. That's why we're getting all the calls. But the underlying process has sort of two risks right now. One of them is, I guess, policy, and one of them is more the,

inflation dynamics as a whole. The policy part, we've been talking about a lot the last couple of days, that, you know, the risk when President Trump was inaugurated was that was not, you know, the Trumpflation, we're going to run the economy too hot. The risk was that we're going to reverse globalization or at least stop it. And globalization is a real, it's the main reason we've had such a great tradeoff of growth and inflation over the last, really since the fall of the Burles, Lynn Wall in the early 1990s. Go ahead. Yeah, explain the mechanism there.

So I could think of a couple different ways in which theoretically globalization could reduce inflation. And so one of the obvious ways is, okay, well, you've just opened up all these new manufacturing markets. And so if you want to build a cell phone or you want to manufacture a bunch of t-shirts, then there's a factory with really cheap labor in an emerging economy. that could just do it cheaper than you could in the U.S. So that's one way I could see it reducing inflation. The other mechanism, it seems to me that globalization could reduce inflation is that if there's

no barriers on who could trade with whom, then everyone just sort of operates at the max efficiency and capitalism is all about making the economy more and more efficient and competing on wages and that sort of cheap emerging market labor aside that an economy that sort of faces fewer artificial constraints would just sort of ring inefficiencies out of the system faster and that will diminish inflation. That's exactly right. So what is the sort of relate, you know, you mentioned since the fall of the Berlin Wall, this extraordinary period of globalization, how did that reduce inflation? Yeah, no, you have it exactly right.

I think that capitalism is about arbitraising out these inefficiencies. And as you do that, the, you know, that allows you, you know, again, you can think about it as a, as a manufacturer. Let's think about someone who's manufacturing T-shirts. You know, and prior to the 1990s, we manufactured all our own apparel. Now we manufacture none of it. And the reason we manufacture none of it is that it turns out to be much cheaper for the manufacturer to go in and make these T-shirts overseas, which allows one of two things to happen. Either I, as the manufacturer, either I can lower prices for my T-shirts and get the same profit or I can raise profits. That's found money.

As you globalize, you have more and more opportunities to do that, not just on the labor front, but also, you know, getting cheap other goods, cheap inputs abroad as well. So, as you said, the sort of, I remember right after the Trump got elected in early November, or sorry, in November 2016, we saw, a big initial sell-off in treasuries and people started talking about trumpflation and, okay, is this going to change the tide? And in your view, the key variable that may have changed or that may be changing under Trump is this, is the renewed relationship and the renewed trajectory of globalization or de-globalization. That's exactly right. I wrote that actually right after he was elected in our quarterly piece that if you go through all the things that he'd said on the campaign most of them would have no meaningful long-term impact on inflation.

We don't really know about the repeal of Obamacare what that would do exactly, but in the long run, probably not huge. But the one thing you can really do is put the Berlin Wall back up. Now, he can't do that, obviously. But we're sort of seeing that not just... Well, we're talking about our own wall, of course. Well, yeah, exactly, right. We're putting a wall back up.

But it isn't just us either. It's, you know, Europe is having, you know, many more cross-border conflicts and the general trend to globalization looks like it's at least coming to a slowdown anyway. The interesting thing to me about this pivotal role that Trump plays in the inflation story is that central banks or the Fed seems totally out of the picture on this question. And so it's the central bank's job to lift inflation or maintain stable prices. And central banks, to some extent, really pride themselves on having defeated inflation over the 80s 90s and 2000s, and they congratulate themselves on sort of maintaining very low inflation expectations,

which they say then feeds back into low inflation. But according to your story, there are other really big factors that are completely unrelated to the central bank and maybe it's someone on the political side that could actually get the inflation rate back up to where they want. Yeah, look, I think that central bank power is exaggerated in their own minds and in reality. You know, that if the only thing you have is a hammer, everything looks like a nail. And the only thing that the central banks can really do, other than police the financial system and make sure it doesn't collapse, is maintain money and reserves.

And it turns out that doesn't do everything. You know, the one thing they can do over time is raise or lower the price level. And that's kind of all they can really do. And that's, you know, Greenspan used to say that by maintaining low and stable inflation, that's the best thing the Fed can do to create better long-term growth. Let's, you know, the other policy lever that Trump could pull besides de-globalization could be something on the fiscal front. And we've seen an unexpected or in 2018, we're going to see an unexpected positive fiscal impulse that I think a lot of economists weren't

expecting. Part of it is the tax cuts. Part of it is also the elimination of the budget caps from the debt ceiling in 2011. That's a lot of money going into the economy, theoretically, a lot of new funding for domestic programs. Again, I guess this gets back, though, to the sort of Keynesian equation because the way people talk about that is this is a lot of new money at a time when we don't have a lot of spare resources. But on the fiscal side, does that do much in your view to lift inflation?

No, not really because, you know, and it can change the texture, the near term texture of inflation, but it can't really change it that much. You know, to go spend money, the government has to borrow it. And so they have to take dollars from somebody and, you know, whether they're taxing it from you to spend it somewhere else or they're borrowing it from you to spend it somewhere else. The dollars are neutral. You know, the amount of liquidity in the system doesn't change.

And so, yeah, we can favor one industry over another industry. And we can change with tax policy. We can change, you know, the near-term contours. but we can't really change the level of inflation very much with fiscal policy. It's difficult to do other than, other than by, well, I guess this isn't really fiscal policy, but putting up trade barriers will do it. This is a really contentious point, this question of the fiscal dominance and whether it can change their trajectory.

And I have my own personal idiosyncratic views, but I don't want to like, don't want to get into that here. But let's go back to what's happening right now in inflation. When you look at, let's say we get the next CPI report, what are you going to be looking at? I mean, one of the things that you do on Twitter, which is really great, is you really dive into the data and you look at rent and health care and various trimmed mean measures of breaking down the CPI report. What are you doing when you look into all this stuff?

How come? Okay, sure. So I'm an inflation nerd. Someone's got to be. It's been said. And it's, yeah, exactly. Somebody's got to do that. You know, the BLS produces 280 some odd different subcategories.

of inflation. You know, so, you know, eggs, you know, fresh, you know, which they aggregate up into fresh food, which aggregates up into food, which aggrate, you know, so you can really break down. When you get the headline number, it really doesn't tell you a whole lot because it can be a big thing moving a little or a little thing moving a lot. And so it's important to kind of look down at those little pieces. You know, recently what I think is. the story is going forward over the next few months is what happens to used autos, but also

what's happening to medical care. So medical care is in services X housing. It's kind of roughly a quarter of the of the CPI pie is services X housing, less rents of shelter. And medical care is an important part of that volatility-wise. So, you know, if medical care had been going down for the last year, so we think that's one of the temporary things. And so in the last month or two, it looks like it might be hooking back positive. And so we're going to watch for that, see if that hook continues. And then the other, about another quarter of overall inflation is core goods. And once the dollar's gone down for a while, you expect core goods to go positive. Core goods have been in a deflation forever. And so we would

expect that to start going a little positive. And so those are sort of the big, well, the big little pieces that we look at. How do you protect against, because as you say, there's so much data. There's so many ways to look at some time series and lop off something like, oh, we're going to look at CPI Services X Energy, which was something we were focused a lot on during the oil crash in 2015 and all that stuff, because, okay, that's an idiosyncratic one-time factor. How do you guard against essentially finding the series that fits a narrative? If you take everything out that went down and it goes up, right? Well, you know, you have to have a general, you have to have a longer-term view, I think,

of what's driving a particular series. And I think that economists tend to have a longer-term view of what's driving inflation, but they don't really have a view of what's driving apparel. And so this last month, we had this big jump in apparel prices month on month, and lots of economists said, oh, you know, that's going to be reversed next month. But if you have a longer-term view, you'll notice that the prior few months, months, it had been really, really low. And so we're actually just back on trend. And so we don't think that's going to do anything. But you have to have, this is the reason that I delve into the

numbers as much as I do is you've got to have some idea of over a longer time frame than last month what happened to the numbers. You know, you mentioned eggs and they feed out. How do they tell the price of eggs? They just go out to a grocery store and look like, what is the process? Yeah, I mean, it's pretty close to that. You know, they obviously different sorts of prices are gathered in different ways. But to some extent, all the grocery store stuff is really still done by people walking around in a grocery store with, you know, the electronic equivalent of clipboards and looking for the same thing they bought last month and saying, oh, okay, now here's the price. And you have lots and lots of people doing that over many, many different goods.

And then they all send it back to the BLS, who goes and does their little mathy thing on and gets the right answer. But what's interesting is it seems like it, the measurement of inflation is not particularly sensitive to exactly how you gather these things. It all comes out in the wash. Well, you know, so the Billion Prices Project at MIT, you know, you might have heard about, they gather all their prices online. And, you know, you can't gather some things online very well. But nevertheless, when they do that, they get almost exactly the same figure that the BLS comes

up with doing it the old-fashioned way. And so it turns out that, you know, there's a lot of complaint about, you know, what you do, with substitution if something is not available this month that was available last month and how you hedonically adjust things. A lot of complaint about that, but at the end of the day, it turns out not to make that much difference. Interesting. To wrap up, I mean, as you said, the big question, or the reason your phone is ringing off the hook is people want to know what's coming next. Are we about to see a turning point or has there been a lot of noise that's a result of some screwing numbers a year ago that's making me?

the year-over-year figures look weird, or in the case of the recent CPI report, is it something about apparel prices, just compensating for the months earlier? What do you give us a forecast or sort of tell us what you think is happening now? Sure. Well, look, I think that, you know, I sort of gave you the short-term contour. I think that the longer term, you know, we have these two risks and one of them was the policy risk we talked about, but the real risk, the big risk, And by the way, I think that investors should look at risks and they should manage risks. They shouldn't listen to me and what I think is going to happen. They should be, you know, everyone should recognize you have inflation risk.

And you haven't seen it for 20 years, but you still have that risk. And particularly when it's cheap to hedge, you should do so. But the bigger, longer term risk is that, you know, we know that inflation has these long tails. We know that over the last hundred years, you know, a third of the time that inflation was over four. It was also over 10. And there are inflation dynamics which cause that to happen. And the risk right now is that we've had this period since the early 1980s of a virtuous cycle of lower interest rates causing lower money velocity, which causes lower inflation, which causes lower interest rates and so on. And we seem to have come to the end of that cycle.

And the risk now is that normalizing interest rates kicks in the vicious cycle. of all those things going in reverse. And if that happens, then, yeah, it's not necessarily this cycle's concern. It's one or two or three cycles down the road. You go to 3%, then you go to 5%. And we don't have central bankers who believe that, and they aren't doing the right things to counteract it. Michael Ashton of Enduring Investments,

the Inflation Guy on Twitter. Thank you very much for joining us. Great to be here. Thank you very much. Well, there you have it, folks. Trace is not here, so I have nobody to banter with. But I really enjoyed that conversation, obviously, and I think this is a topic about which all of us are going to be very focused on, at least for the next several months, as we see whether this is some sort of temporary uptick we've seen in inflation due to some distortions, or whether we really are on the verge of some sort of inflation tail risk or a new paradigm or a meaningfully new trend.

And so hopefully we'll revisit this on the podcast at some point and we'll actually have an answer. Just kidding. None of these questions ever truly get answered. We just try and get a little smarter over time. Anyway, this has been another episode of the Odd Lots podcast. I'm Joe Wisenthall. You can follow me on Twitter at the stalwart. You can follow my co-host Tracy Alloway on Twitter at Tracy Alloway.

You can follow Michael on Twitter at The Inflation Guy. And please follow our producer on Twitter. Tofer Forges at Forges T, as well as the Bloomberg head of podcast, Francesca Levy, at Francesca today. Thanks for listening. On April 4, 23, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, we did this to you. What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App.

Berg Podcasts. This is Foundering, The Killing of Bob Lee, beginning April 16.