Evercore founder Roger Altman: This inflation was caused entirely by the pandemic

our next guest says that the markets appear to be enjoying a Goldilocks macroeconomic environment and that a soft landing for the economy is near to learn more about the markets, the economy and much more that we want to bring you Roger Altman, he is the

founder

and senior president of

evercore

and Roger we are very close to all-time highs. Do you think the market deserves these valuations? I do

this

because we are seeing evidence that the economy is beginning to slow down. See the work from the first quarter? First quarter growth slowed a bit. growth slowed a little bit abandoned vacancies a little weaker average hourly earnings growth a little weaker uh and that should open the way to reduce

inflation

and then allow the FED a little later to finally relax uh , personally I think there will be a rate cut in September, I don't know if there will be more than that

this

year, but I do think that the markets are responding to the positive, to the positive of this, slowing the prospects for lower

inflation

, the prospects of monetary flexibility. and that is why both the stock and fixed income markets have recovered strongly.

I think the big question is how long does that process take for inflation to come down. This week we will receive other clues or other readings with the PPI and the CPI. If those numbers turn out to be higher than expected, would you take your idea of ​​a rate cut in September off the table? Probably because the FED needs to see evidence that inflation is improving and you know we have a CPI number this week. The market expects that I think the 3.6% annualized rate is a little better than the last print, but if it were the other way around, I think the markets would go quite negative because they would see that the prospects for a rate cut are now more distant Let's talk a little bit about tariffs because this is the news this morning, the idea that Biden is considering raising tariffs, which we knew was coming for things like electric vehicles and solar panels.

I didn't realize that medical items would also be on that list and I didn't do it. I don't realize the number that's now being raised, um tariffs on electric vehicles, something like 102%, which is significant, it's a four-fold increase from where we are now at 25%, which has to be symbolic until certain point, because even at 25% you're not putting many of these cars on the market. Well, I think what Biden is doing here, assuming this plays out as we hope, is trying to protect American manufacturing, which is obviously focused on restarting and trying to protect supply. chain, especially when it comes to clean energy products, and China is also resorting to an old, I would say tired, strategy of heavily subsidizing manufacturing, expanding manufacturing production far beyond possible Chinese domestic consumption, and flooding to the United States and flood Europe with heavily subsidized energy. exports and when it comes to clean energy, where we need our own production, for example, solar panels, I think that's what Biden is trying to reject and the reaction that you think will be from the American manufacturers of the markets, well , there is an ideological attitude. debate about tariffs, for example, Donald Trump wants to impose a 10% tariff on all imported goods, that's one of his approaches, and Trump was a tariff guy during his first Trump, so there's a big debate about how useful What tariffs really are. uh, because at the margin they are inflationary uh, but we are in an era where we are trying to rebuild American manufacturing and we are trying, for example, with semiconductors to avoid the obvious risk of Taiwan being totally dependent on tsmc for advanced semiconductor drivers and you have to have steps like this if you really want to do that Roger, we have the first hot inflation number that we got in January or February that was like an outlier of seasonal inventories, blah blah blah, then we got another one then we had another one?

Were you surprised by what we saw? Has he had this kind of um, I guess moderate view on inflation all along and his view has been shaken? I'm just wondering, I'd like to believe you that we're going to see, you know cooler numbers for inflation, but that means we've had a number of outliers and when does that become? When do you say I was wrong? Maybe inflation is returning to 4%. Well, first of all, I'm not. right Joe, I mean, I certainly could be wrong, you said that if we get a big number, I certainly could be wrong, but let's back up a minute, this inflation was

caused

, at least in my opinion,

entirely

by the

pandemic

.

I think there is a lot of evidence for that. that and that's why it's taking a that's open to discussion, it's fair and we could debate that, but that's my own point of view, and it's taking a long time to get out of the system now that we're in the middle of the three or half to high 3 on the CPI, a little below three on the core PCE, yes, so we are going in the right direction. I don't think there's much doubt that if the economy really slows down, as we just discussed, it's too much, you spent, you spent some. time at the White House last Wednesday, I think with the president along with a bunch of other CEOs, what was he telling you about what he thinks the economy is going to be like over the next year and what were you guys telling him?

The purpose of that meeting was really for Biden to hear from a number of CEOs what they were seeing, well, um and uh, it was interesting that a couple of uh and I'm not going to mention names, but a couple of really leading people. CEOs talked about their inability to get enough workers and in large numbers, I mean really large numbers, and I think that's really significant on many levels, but it doesn't suggest a slowdown in the labor market or the economy that would come in handy. uh I mean hopefully the labor market won't slow down dramatically, but we all saw that last month's number was lower and I think it'll probably slow down a little bit because it correlates with growth, uh, but we wait.

It's in many quadrants of the economy that we have or in sectors where we have labor shortages and that's a real problem. Listen. Biden is obviously not doing as well in terms of voter attitudes toward the economy as he would like. With just under six months to go, in my opinion, whether it starts to do better to that extent will depend a lot on inflation because I think what it carries with it as a burden is the legacy of this inflation. that Americans really don't like