Why Inflation is About to get WAY Worse! (Uncut) 02-13-2025

Think Prices are High? Why Inflation is About to get WAY Worse!

You will not want to miss this. We have just released the must-have report of the year, Outlook 2025, why the worst is yet to come, and how to prepare. This took months in the making.

It’s compiled from exclusive interviews. This report isn’t speculation. It’s built from a series of in-depth conversations.

It’s unfiltered insights from the experts, everyone ranging from Dr. Ron Paul, Gerald Celente, Danielle DiMartino Booth, and so many more. You can get it at dannyoutlook2025.com. Again, that’s dannyoutlook2025.com. Hi, this is Daniela Cambogia. Welcome back to the Daniela Cambogia Show in studio today, live from Times Square with Chris Versace.

He is the portfolio manager over at the Street Pro Portfolio and the CIO of Thematica. Research. Research.

I got that. You do. It’s a mouthful.

You do a lot. Hey, I do, but you wanted to get it all in, so here we are. How are you, first and foremost? I am fine.

I’m a little cold in this chilly New York weather, little on guard, given all that’s happening on the geopolitical front. All that’s happening, and that’s what I want to talk about with you today. I wanted to bring you in and give everyone your assessment, your take on the economy.

So many moving pieces, as you say. The Fed is in a difficult position, I think. This is my opinion.

No, no. I see. I know where you’re going.

Okay. I know where you’re going. Because we know President Trump is saying, I want the demanding- That is correct.

Demanding, quote, lower rates. Powell saying, you’re not- We’re independent, is what Powell says. We’re independent.

And to the Fed’s defense, I mean, it’s difficult for them. I mean, how are they even supposed to implement policy when there’s so many moving parts right now with we don’t know what’s going to happen with tariffs, et cetera? Correct. Yeah.

Well, so I think that what they’re doing is probably smart, which is waiting to see what the next round of data is. You really have to read between the lines with Powell and what he says. But I think the message is pretty clear when you really think about it.

The Fed is going to proceed cautiously with incremental rate cuts. They just delivered 100 basis points at the end of last year. But are we seeing inflation start to turn back around and move towards that 2% level? If we take a look at the December CPI, PPI, we look at what we saw in the January PMI data.

It’s at best sticky, worst, kind of trending the wrong way. So that tells us that the Fed should not be in a rush to do anything. But you are correct, though.

We do have these other uncertainties. And I think that’s keep the Fed in standby mode until it really sees sustained progress. Life is not going to get cheaper anytime soon is what you’re telling us.

Not only because interest rates are likely to stay higher for longer, but eggs, chocolate, cocoa all going higher. So no. OK.

Talk to me about your read on the tariffs. Now we see obviously Canada, Mexico getting that pause, but China and its impact on Apple. How do you see this playing out, Chris? I know you’ve been following this closely.

Yeah. So I mean, you have to, right? It’s like every night before you go to bed, you got to read the latest and you got to read it super early in the morning. And the landscape we have right now is the tariffs for Mexico, Canada are pushed off for 30 days.

Market breathed a sigh of relief, turned right around. China slaps retaliatory tariffs on. Have they spoken with President Trump yet? Not yet.

But as you pointed out, we are hearing reports that China officials are going to probe Apple’s App Store. And I think, not to be conspiracy theorist here, but if you look at the timing of that, it’s pretty close together. So my thinking is that this could prompt a perhaps retaliatory response from Trump as well.

And that just starts to escalate things. And I think that brings another round of uncertainty into the marketplace. Well, this begs the question of, is the tactic really, he just is pressuring these American companies to make more at home.

Is that really his ultimate goal here? I think that his goal is to place wins on the table. And I think that’s going to be in a variety of fronts, whether it’s saying, yes, we are getting troops at the border or we are standing tough and we’re bringing jobs back. There’s a variety of areas that he’s seeking to deliver wins on.

So I think we need to take a comprehensive approach on that. And they don’t necessarily have to be big wins. Just because it’s a win, I think that’s good enough.

So let’s talk S&P now. What’s in store? What direction are we heading here? I think we’re going to trade sideways for a little while. Just with this geopolitical uncertainty.

We have the tariff front. Now we have what’s unfolding with Gaza. That’s another round of uncertainty.

And while Israel likes it, our other allies, at least initially, don’t seem to like that. So more uncertainty in the marketplace. And we are continuing to move through the December quarter earnings season.

And so far, earnings have been good. There’s some weak spots in there, like we’re seeing today with, for example, Google, because their capital spending is significantly higher than people thought. And mortgage rates are still trending higher.

So I think folks are really having… We’re going to move higher eventually, near term. I think we’re going to, like I said, trade sideways. But as an investor, you’ve got to pick your spots.

You’ve got to pick your spots. And I want to get the spots you like. But first, do you think it’s interesting? Because as soon as the election was done, there was this huge sense of optimism.

Do you think that’s coming down a bit? And folks are a little bit, especially investors, don’t know what to do here because there are so many uncertainties. Yeah. So I think if you look at the data, right, optimism out of the gate, November, after the election, December, it moved higher.

If you look at some of the new order data, it moved higher. But now Trump is in office, and he’s starting to enact some of the things that he said he would. So now we’ve kind of got that follow through.

So I think we are seeing a little bit of a, oh, this is what’s going to happen now. Now I need to remember that Trump likes to operate in the gray, so to speak, keep his opponents off balance. But that means uncertainty.

So as an investor, we’re going to have to continue to deal with that. That said, sectors, Chris Versace likes. Oh, well, you know I don’t talk sectors.

I talk themes and that kind of thing. Hence thematica. Correct.

So let’s talk about AI. I continue to think we’re in the early innings there. There’s a great report out from McKinsey just a couple of days ago that said that while 94% or something like that of companies plan to increase investing in AI over the next three years, the amount of actual adoption remains sub 5% today, telling us that there’s a long runway for what’s to come.

You’re embracing it? Yeah. Oh, 100%. So in the StreetPro portfolio, do we own Google? Yes.

Do we own Meta? Yes. Amazon? Do we have NVIDIA? Do we have Marvell? 100%. But we also have Microsoft on the service side.

We have ServiceNow in the portfolio as well. And I’ll stop there so I don’t give the whole portfolio away. But we do like all of those.

You have GLD. We do not have GLD. You know we do not, because I told you this.

But to be fair, we had GLD in the portfolio last year. We did extremely well with the run up in gold prices. Given the uncertainty that we’re seeing in the marketplace, I think there’s a couple of different ways to play that.

One, I think, is going to be with some GLD in the portfolio for someone. We don’t have it, but someone. We actually went a different direction.

We actually slapped in on Monday, just giving the potential tariff uncertainty, geopolitical uncertainty, some inverse ETFs in the portfolio. One for the S&P 500, one for the NASDAQ 100. Well, because look, $3,000 gold.

It’s not crazy talk anymore. No, no, no. It is not.

It is not. And I was happy that we participated. But as I just sit here and think about the Fed not lowering interest rates, the geopolitical uncertainty, the stronger dollar that we’re seeing, those are all good signs for gold.

So if we didn’t have the inverse ETFs, maybe we would consider a GLD position. Dollar goes higher from here? I think so. I think so, yeah.

But would I be, as an investor, buying the dollar? No. I tend to think of it more as, if we have interest rates higher for longer, we have a stronger dollar, what’s the headwind for companies? What’s the impact on revenues? And that’s really what we’re hearing. As companies give guidance for, some for 2025, some just for the current quarter, we’re hearing more internationals cite dollar headwinds, or I should say currency headwinds.

I want to get your thoughts on another executive order. I mean, how many have we seen now? I don’t even know anymore. Well, just keep in mind, we’re how many days with Trump in office? Not even two weeks, right? Or two weeks? Just over two.

Oh, just over two weeks, right? Okay. The sovereign wealth fund that he’s speaking about. Talk to us about- Well, in concept? Yeah.

I like the idea, right? Now, I’m not going to say that it should be a vehicle for buying TikTok, which is what we’re hearing a lot of. But if we think about moves to reshore chip capacity and make other strategic investments, whether it’s AI or something else, it would be nice to have a vehicle to do that. So from that perspective, I like it.

The question is always, though, where’s the money going to come from? And that, I think, is the big uncertainty. And what do you think overall about his push for getting things made back in America? How viable is it? Yes, it’s such a beautiful, romantic concept, and we probably all want that. Sounds good, doesn’t it? It sounds good.

It sounds good. I mean, there’s nothing wrong, just to bring our conversation all the way back to the ADP employment report. More people working, earning real wages, that’s a good thing for the economy.

The economy is driven directly and directly two-thirds by consumer spending in the US. So that’s a good thing. Now, whether or not you’re able to reshore all those different jobs, make them competitive, pay the wages so that companies can deliver the profits and the margins that people expect, that’s murky at best.

I think there might be some industries where you can do that, but not across the board. So Chris, bring it home for us. For everyone watching, what would you want their takeaway to be? How should they be looking and preparing three months out here? Oh, okay.

So let’s just kind of game that out, right? Over the next three months, we’re going to get a lot more inflation data. We’re going to get a lot more job data or other jobs about the economy. So as we get that, we want to look for any progress on inflation.

I don’t think as of right now, we’re going to see tremendous progress on inflation. Personally, I don’t think the Fed cuts maybe until the second half of the year. We’ll see, subject to the data.

So you’ve got to focus on areas in the market that companies and consumers are continuing to invest or spend on. If I had to ask you to take it one step further, do you think the Fed wants to purposely keep that inflation here? Ah, that’s an interesting question. I hadn’t really thought of it that way.

No, I think the Fed would like to be in the position to bring rates down. This might be a little simplistic, but at some point, we will have a recession. And I think the Fed would like to get monetary policy back into a place that when and if that happens, it has firepower.

I know other economists have told me that, like it or not, that is coming, right? That all signs point to the recession. But you know that President Trump is not going to want that R word. No, definitely not.

But look, the question is, will we have one eventually? Sure. But if you look at all the data right now, the manufacturing PMI from January, back in growth territory, orders signaling more of it, the January services PMI, still in positive territory, orders expanding, more people working. These are signs that the economy is going to grow above 2% trend.

Now, is there a wild card in there with these tariffs and everything that could happen? Sure. But it just means that we’re going to have to continue to do what we do. Pay attention to the data, break it down day by day, week by week, and update our thinking.

We don’t, as investors, what I like to say, crockpot invest. You have a family. You know what a crockpot is, right? You throw everything in and you walk away.

You can almost forget about it. No, we cannot do that. Normally, you can’t do it.

Now, more than ever, you can. No crockpot investing. Right.

There you go. That’s the takeaway. That’s the takeaway.

Chris Versace, so good to see you. I know you’re here for a couple of days. For a couple of days with your family.

Some of my family, some of my friends, and other interviews, and of course, visiting the folks at the street. Fantastic. Oh, and if folks want to find more of your work, where can they go? Two places.

Probably the best is going to be pro.thestreet.com. There you go. Chris Versace, everyone. We’ll have more content coming your way.

Be sure to stay tuned to the Daniela Kambone Show. Sign up at danielakambone.com, and don’t forget to subscribe to our YouTube channel. We’ll see you soon.