Let's bring in Max Gachman.
He is deputy chief investment officer at Franklin Templeton.
Nice to see you again.
Come on this way and join me over here.
How are things and thanks for joining us today.
Yes, of course, glad to be back.
Drew.
You are rocking this tie handkerchief combo.
Awesome for a Friday.
OK, so this is the first day in 8 days the S&P 500 not in positive territory.
It doesn't feel as if the markets have had that type of momentum.
What did you see across the tape today after a pretty wild week for?
I think we're seeing what we should actually rationally expect is we've got negotiations kicking off in Pakistan and Islamabad on Saturday.
We've got a slate of financial earnings coming out on Monday, so we saw a risk really taking a bit of a back seat, and I think that makes a lot of sense.
There's not a lot of things that have often made sense in this market.
Today was actually very rational, yes, a bit more of a defensive risk off trade like we said.
I want to. your take on the CPI figures because this is the first big inflation print we've gotten to reflect pricing pressures since the start of the conflict in Iran.
March CPI 3.3% top line.
That's a big jump.
Core CPI, you removed the volatile elements of food and energy a bit more modest.
Was that your expectation to see such a severe jump on the energy side?
Absolutely.
And I think the headline number really tells the story there, right, is that we have that.
Effect of the closure of the strait, right, and we should expect to see that now this is gonna flow through to the core figures as well.
There is a knock on effect.
We should expect that if oil stays around $100 or more, that's gonna be anywhere from $50 to 100 basis points of added inflation.
So that is going to be something that the Fed needs to contend with, that investors need to contend with, and we are, as you said, just starting to see about.
But only in the headline number.
Yes, you also mentioned bank earnings, which we talked about a little bit at the top of the broadcast.
We got Goldman Sachs on Monday.
We love kicking off earnings season with a look at the big financial players.
They really tell us about the health of the consumer under the hood.
What are you going to be looking for as the banks kick us off Monday and Tuesday?
Well, I'm not going to be too surprised to see that more volatility means more trading revenue, so I think they're going to do well on that.
What I'm really looking for, especially from the bigger commercial banks like JP, is.
What is the lowest end of the consumer doing?
Are we seeing continued rising delinquencies in credit cards?
Are we seeing more rising delinquencies in mortgages?
There's a real danger that demand destruction could pretend to both higher inflation as we see from oil, but also slower growth.
If that happens, you kind of bring out the big S word which is stagflation, so that the signs of stagflation can come through the lowest end of the consumer.
That's what I'm.
Yes, we've heard Jerome Powell recently say don't be as concerned with stagflation.
He says what we lived through back in the 70s and 80s, that was real stagflation, but regardless, those conversations will certainly continue.
I want to get your take on the crypto majors, how they've been performing largely range bound here, Max, since the start of February.
Any big crypto catalysts to pay attention to?
Well, look, I think what's been really interesting is the volatility of crypto has actually been pretty muted relative to gold, global equities.
Global commodities, of course that is a whole new paradigm for what we would typically say is by far the most volatile asset class.
A lot of that is also because we've seen this massive the leveraging from the DTs coming out of the premium from hyper liquid cutting risk back in October of last year.
So now we had this major move with the SEC and the CFTC coming out of a common framework for digital assets.
So we're, I think we're gonna see more and more a.
Institutionalization of the market and I think that is really not like a single catalytic moment, but it's going to be a continuation of that momentum that should lower the volatility of crypto and that should be really good for making it much more of a proven asset class that investors can access.
Max Gockman, thanks for kicking us off here on the broadcast, the deputy chief investment officer at Franklin Templeton, thanks for being here, man.
Nice to see you again.
