00:00Clearly, we've seen tariffs and immigration policy, whether or not you agree with it,
00:07drive inflation higher, and then this war in Iran boosting us another leg to a point where CPI was
00:14at 4.2, so more than twice the Fed's target. But now it seems like the war is over and
00:22the
00:23Strait of Hormuz is going to open up again. Oil has dropped. The gas price has come down
00:27considerably. Now we're at $4 national average. Is inflation no longer a concern for this country?
00:33It's not that straightforward, but the Strait being open and oil prices being down will absolutely
00:39help because I think there was a bleed from high oil prices into other items, and I think that
00:45bleed will stop. Here's the structural issue. We are in the midst of a historic CapEx boom in the
00:53United States, driven by infrastructure for AI, data centers, power, creating compute.
01:02And at the same time, as you mentioned, we've got this infrastructure boom that creates demand
01:09for materials and labor. We've got constraints because of tariffs to some extent, and we have
01:15constraints because of sluggish, very little labor force growth. And so that is naturally creates
01:22some inflationary dynamic. The thing that oil coming down will do, it will help get goods
01:31inflation back to hopefully where it was several months ago, i.e. goods were disinflating. Ground zero
01:38is still services. But but I think this structural CapEx boom, it's not a consumer spending boom. It's
01:49a CapEx driven boom. I think that's what the Fed's got to be watching and trying to understand whether
01:54its policy setting is appropriate in light of that situation.
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