Convince Me in 15 Minutes that we are in the early stages of an inflationary era
With Tavi Costa
Tavi argues that we are seeing the deceleration of the first inflationary wave with expectations of two more inflationary waves to follow. He points to the three inflationary waves of the 1930s-1940s and the 1970s as previous examples.
0:40 We’re seeing the trifecta of macro imbalances. We’ve never seen all three imbalances – debt, valuation, inflation – all at once.
1:45 The three waves of inflation. We saw three inflationary waves in the 1970s and also during the 1930s and 1940s. Tavi argues we are currently at the tail end of the first wave.
4:28 The pillars of inflation – Fiscal spending Early stages of several fiscal agendas – social programs, defense, manufacturing, reshoring, energy transition creating feedback loop toward inflation.
6:45 The pillars of inflation – Chronic underinvestment in natural resource industry.
8:35 The pillars of inflation – Wealth inequality and the re-emergence of populism – trend where government is forced to intervene with growing social programs.
10:36 The pillars of inflation – Wage prices spiral and the trend toward higher wages. Labor costs relative to profits today are historically low. A reversion back to average trends will put inflationary pressures.
12:05 The pillars of inflation – Deglobalization leading to an increase in defense spending.
13:39 Summary of the pillars of inflation
16:10 Question: What tamed inflation during the previous examples you showed?
17:45 Question: Why is there a disconnect between historical precedent and current policy?
22:05 Question: What areas are the winners and losers of inflation?
27:17 Question: Soft landing or disruptive event?
32:46 Question: FAANG 2.0
34:12 Metals and mining industry the most distressed opportunity I’ve ever seen. Gold is trading at all time highs but a property that has gold in the ground is at historically low valuations. There are reasons for that – bad management, poor allocation of capital But is that already priced into the markets.
36:11 Poor quality assets and high quality assets are priced at the same levels – that allows you to buy quality for really cheap.
