Introduces Cooper Howard and asks for thoughts on the CPI print.
Sam
Cooper Howard
CPI was hot but not hotter than expected. Headline high due to Middle East conflict and oil prices, which act as a tax on the consumer. Core number showed some improvement.
Gasoline prices up 21% month-over-month. Higher oil/gas prices long-term could pull back consumer spending and affect the economy.
Asks about market reaction and if CPI was priced in.
Sam
Cooper Howard
Market cares about 'better or worse' vs. expectations. CPI was better than expected. Pre-war data shows inflation may be moderating.
Uses phrase from colleague Liz Ann Sonders.
Asks about Yardeni's view that inflation was heating up pre-war and will continue.
Sam
Cooper Howard
Too early to tell. Duration of Middle East situation is key. So long as oil prices remain elevated, inflation pressure persists.
If oil prices move lower quickly, inflation could prove transitory.
Asks about impact of war costs and government spending on rates.
Sam
Cooper Howard
Agrees we're seeing that impact. Elevated term premium is a factor that will keep longer-term yields elevated.
Government spending requires larger issuance and potentially higher yields to support it.
Asks for fixed income opportunities given fragile ceasefire.
Sam
Cooper Howard
Recommends defensive bias: up in credit quality, focus on investment grade corporates and munis, target ~6 year duration. Not time for extra risk.
Suggests a ladder strategy to manage interest rate risk.