The palo market wants to be where uh it’s able to have mega cap technology and that sustainable earnings growth but scott. I agree with what steve said and i think the chairman is in a difficult position as he looks to be reappointed because the real question comes. Is he now observing fiscal policy and somewhat challenging it? Inflation runs hot for longer than we expect, but steve points out. 30 percent of the jobs we lost in march and april of last year, haven’t come back and guess what i don’t think they’re coming back and if they don’t come back, the chairman is in a very difficult spot because he then has to rely on fiscal policy To make up that difference, that’s very challenging for him, yeah steph. What do you make of the activity today in the market? The fact that the statement comes out stocks start to rip a little bit. We hit new highs across the board and now you’ve, given it all up, you’re, barely holding on to green from the three major averages i mean the nas and actually the nasdaq is still is still negative by some nine points or so yeah i mean this market Is a bit confused, scott myself, included by the way um, because we’re kind of trying to figure out? Where is growth? Are we at peak growth um or can we? How can we grow above trend? Is inflation transitory? What does even transitory mean for? How long has you just pointed out? Is it three months? Is it six months? Is it a year? Supply chains are not going to be corrected overnight and i think it’s going to take a lot longer, just listen to what micron said it could be years before the supply chain actually gets better.
So so i get it. There are parts of the inflation story that are transitory commodities for certain, but i do think that wages and shelter increases now as the moratoriums are lifted. That is something to watch, and so we have to wait and see you’re right and again, i don’t know what that time frame is, but i still believe very very strongly that we are going to continue to see solid economic growth because we have a lot of Stimulus in the system, the consumer is doing just fine in terms of savings rates, home prices, wages, confidence and manufacturing. Inventories are at five year. Lows and isms are comfortably above 50 they’re in the 60s, so that’s actually very positive, and then one last thing: new orders, which are leading economic indicator for earnings and cap x, that’s been above 60 for 12 straight months. You add all this stuff together. I don’t know so i don’t see how you can’t see some parts of inflation and when i see a headline number of cpi at 5.4 percent annualized in ppi at 7.3 percent, i just kind of scratched my head. I do think powell is being a bit stubborn at this point. All they have to do is is talk about tapering that’s, all they have to do, and then people will get confident that powell and team are on the ball right now, we’re kind of just scratching. Our heads and i think the market is confused myself included steph.
I i just want to offer. Maybe the market is confident. Maybe the idea is out there that hey if this inflation comes along and i’m just throwing this out there. But you know how do you trade at 137 on the 10 year, of course, there’s a lot of fed purchases in there, but the market seems able to go up and down? How do you trade at 137 on the 10 year, when you have inflation about 5? Well, you got to believe somewhere in your heart of hearts. Is the market, if you’re in the market, that the fed is able to control inflation and will control inflation over time? I wonder if that’s something that underlies the trade over the last several. What do you make, though, steve of the fact that you know you’ve got a seasoned investor like stephanie link, saying that she’s a little confused you’ve got larry fink, who runs the the biggest asset management company on planet earth with all of the assets that they have Under management, you’ve got paul, tudor jones mnuchin, who used to be in the white house all suggesting that maybe the fed is looking at the wrong thing when it suggests that inflation is in fact transitory. But yet the fed is staying its course. That powell is not willing to move off of his view in any way, shape or form, even with a slight out, as you put it earlier. In our conversation, the only one that bugs me about being confused is stephanie link because she is always like straight ahead with what she believes and doesn’t hold back at all.
So when stephanie’s confused that’s, when you should really panic, no, i i really think that uh. This is a close call. Scott, you said it earlier it’s a difficult call. Uh powell has his ideas here that they’re going to not have a tape or tantrum that’s, very important, uh they’re, going to reduce uh in a modest way. I think personally, i kind of joined the larry think camp of things. I think the fed ought to have eased back a while ago on its asset purchases and take an account for the fiscal stimulus. But if the inflation proves temporary, then the market that then powell will have ended up being right and he will not have reduced stimulus. Earlier than he needed to so i think he’s got a few more months to play with, and i think what stephanie has to do and she’s always done this. Is you can’t buy stocks in this environment? You have to buy individual stocks because i think the story is some companies will do well in the face of higher prices, and some will do poorly you can’t just say: stocks are good and higher inflation or stocks are bad.