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Rob Arnott & Campbell Harvey on Why They Believe Inflation Hasn’t Peaked | #438

E438 • Aug 29, 2022 • 69 mins

Today’s guests are Rob Arnott, founder and Chairman of the board of Research Affiliates, and Campbell Harvey, Head of Research at Research Affiliates and Professor of Finance at the Fuqua School of Business at Duke University. In today’s episode, Rob and Cam touch on the state of the economy, Cam’s research recessions and yield curve inversions, and why the Fed is not positioned to handle the inflation crisis we have today. They share why they both have a non-consensus view that inflation hasn’t peaked yet. Then they touch on what areas of the market look attractive today. Be sure to stick around until the end when we chat with Cam on his interest in DeFi and what he’s most excited about in the space.

Key Points

The episode suggests that yield curve inversion is not just a predictor but a cause of recession, as it reflects the Federal Reserve's actions to deliberately stifle growth in order to control inflation.
Rob Arnott and Cam Harvey express a non-consensus view that inflation has not peaked yet and anticipate a return to higher inflation rates, possibly reaching double digits in 2022 due to factors such as housing costs and persistent supply chain issues.
The discussion highlights the potential for diversification in investment portfolios during inflationary periods, with suggestions to consider real assets like commodities and real estate, as well as opportunities in emerging markets and value stocks.

Follow Rob: Website; X; LinkedIn

Follow Campbell: Website; X; LinkedIn

Resources: Rob's appearance on the podcast in May 2021 Cam's appearance on the podcast in August 2019 Rob & Cam on the possibility of a recession The Price of Time King of the Mountain Cam’s paper about inflation surges and consumer durables Conditional Skewness in Asset Pricing Tests DeFi and the Future of Finance Wagmi United

Speakers

Meb Faber

Host • 20%

Rob Arnott

Guest • 34%

Campbell Harvey

Guest • 45%

Chapters

0:00	Introduction and discussion on the state of the economy and inflation crisis
1:27	Sponsor: Y Charts
2:30	Conversation with Robert Arnott and Campbell Harvey on yield curve inversion
12:02	Discussion on interest rates, economic growth, and monetary policy
17:15	History of warnings about the Federal Reserve policy and upcoming podcast preview
18:22	Detailed discussion on inflation, calculation methods, and Federal Reserve constraints
24:16	Creative policy solutions to address inflation crisis and example of grassroots effort
30:04	Catch-up inflation and its impact in the next few years, and audience sentiment towards inflation
35:13	Inflation's impact on the stock market and investment strategies
46:46	Q&A: Most exciting insights in their careers, and the need to consider downside risk in portfolio design
55:40	Introduction to Campbell Harvey's new book on decentralized finance and the concept and potential of DeFi
1:08:03	Wrap-up, thank you to Campbell Harvey, and closing remarks

Transcript

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