(Kitco News) – Markets are sitting near record highs, but Peter Boockvar says investors are mispricing both risk and reality.
“We have an economy that’s weakening, and inflation that is re-accelerating,” said Boockvar, Chief Investment Officer at Bleakley Financial Group and editor of The Boock Report. “That’s not a good combination. And the markets are way too complacent in pricing that in.”
Boockvar spoke to Kitco News on July 14 ahead of Tuesday’s June CPI release, which he said could serve as a wake-up call to those betting on a disinflationary environment.
“I think the CPI is going to continue to frustrate the disinflationists,” he said. “The headline CPI is going to be 3.2%, 3.3%. That’s not 2%. And with rising insurance premiums, healthcare costs, rising rents, rising food prices again, inflation is going to become much more of a problem than it already is.”
Boockvar argued that the bond market is underestimating risks. “You’re going to start to see more rate volatility and bond market volatility that is not going to be friendly to those that have stretched duration and think inflation is dead,” he said. “There’s a lot of duration risk.”
The 10-year Treasury yield held around 4.35% on Monday, while gold remained steady near $3,300 and Bitcoin touched a new record high above $121,000.
Boockvar said the divergence between hard asset markets and bonds is striking. “Bitcoin and gold are telling you something completely different than what the bond market is,” he said. “One of these is going to be very wrong.”
On the fiscal front, Boockvar raised alarm over the potential inflationary impact of Trump’s new tariff schedule, set to take effect August 1. “This notion that tariffs are disinflationary because it shifts demand to domestic production - sure, but that domestic production is much more expensive,” he said. “And you can’t even find enough of it because of labor shortages and inefficiencies. So it’s inflationary.”
White House economic advisor Kevin Hassett claimed Monday that “patriotism in the data” was keeping prices down. Boockvar dismissed that theory outright. “That’s a total misread,” he said.
Boockvar also pointed to structural problems on the fiscal side. “You have a situation where $9 trillion of Treasuries are maturing in the next 12 months,” he said. “That’s not something we’ve seen before. That’s a huge refinancing risk for the U.S. government.”
He warned that inflation expectations are too optimistic. “They think we’re going back to 2%. And we’re just not. And we’re not because of the damage done to the supply side, and the persistent demand-side influences from fiscal spending,” he said.
Boockvar remains critical of the Fed’s current stance. “They continue to talk about restrictive monetary policy—but real rates are not restrictive enough to bring inflation down,” he said. “They’re now in the wait-and-hope camp.”
Watch the full interview above for Peter Boockvar’s full breakdown of what he sees ahead for rates, inflation, the Fed, Bitcoin, gold, and how investors can navigate the volatility.