Investor Peter Boockvar has dealt a blow to the Federal Reserve as rising inflation is driving up the cost of essential, big-ticket items.
As Fed policymakers gathered for a two-day meeting on interest rates, Boockvar warned that there was nothing they could do to cool prices.
“Monetary policy has a major and significant influence on the demand side of the economy, especially the interest-sensitive sectors of the economy,” said chief investment officer at Bleakley Advisory Group.Trading country“on Tuesday.
His warning extended specifically to homes and cars.
“House prices go up 20 percent year on year,” Boockvar said. If you’re looking to rent an apartment or a house, those prices go up 18 percent. “The record high auto prices are partly due to supply, but the cheap currency also affects demand.”
The latest economic data released on Tuesday confirm inflation is booming. Producer Price Index, which tracks wholesale prices, rose to its fastest-ever record in November.
Boockvar, who tracked inflation in mid-2020, see little relief ahead.
“The Fed needs to pull back,” said the CNBC contributor. “The bug wasn’t done before. So now they’re just playing catch.”
Boockvar also sounded the alarm about the impact of Fed policy on the housing market in an August interview on “Trading Nation.” He warned first-time homebuyers paying down payments of 5% or less in this environment are most vulnerable to the damage.
His concerns now extend to US companies as inflation affects profit margins.
“That’s really the key. The companies, at least in the third quarter, have had great success … in eliminating these higher costs,” he said. “The question is how much more can they do in raising prices to offset those costs, particularly labor costs.”
Boockvar suggests that balances are a big wildcard for 2022. If multiples and earnings both fall, he said, it will pose a challenge for equities.
Boockvar is finding protection in groups that typically thrive when prices rise.
“I’m still bullish on some commodities. Hold silver, oil and gas stocks. Fertilizer stocks are bullish for the agricultural sector,” Boockvar said. “There are still a lot of low-priced stocks in the US. We’re used to just focusing on technology and there are other parts of the market that have been overlooked a lot.”
https://www.cnbc.com/2021/12/14/fed-mistake-is-behind-surging-housing-auto-prices-peter-boockvar-says.html Peter Boockvar says Fed’s mistake was behind skyrocketing house, auto prices