YouSaid · the spoken record

Eric Pachman

lines on the record: 127
first: 2024-06-17
most recent: 2024-06-17
sittings or episodes: 1
sources: podcast

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“We've all seen it's very necessary. Like, if we're not doing it, somebody else has to do it because it's frankly shocking to me how, you know, I came in, I didn't really start working with this data like in the weeds until the beginning of this year. Doesn't make any sense. Like, why am I the one putting this stuff out? Like, everybody has their eyes on this data. And the data is all there on the BLS, BEA. It's there for consumption. And I mean, maybe this stuff exists behind paywalls. I don't know. Maybe we're the only ones dumb enough to actually put it out for free, but it should be there. You know, even just to improve the discussion that we're having about these really important topics rather than just chasing our tails, you know.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“People get curious about us and go read our perspectives, fantastic. Go do it. But you don't have to. The point is you don't have to. I mean, I personally am really just looking for how do we be of service to this crazy ridiculous bonkers market. And that may be through just better education and transparency, better tools. I mean, if your listeners are more interested on the macro side, like that's probably where we're going to be of service. And then, or it could be on like, you know, we're looking for an alternative to spies. And then that's where people may read up on what we're doing and be interested on that side. So that's where we are. And I just love the ability to, I'm just grateful to my colleagues that they supported me because I mean, clearly, like this is, you know, it's a side project, right? And it's become a very time intensive side project, especially the more media attention we get and everything.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Been building a lot of these visualizations because I did it in prior careers and everything. So this is just something I looked doing. I've been doing this for quite a while and been doing it internally and putting it at annual letters and stuff like that. And so I'm like, let's just go ahead and put these out and deliver them to the public. And that way, you know, people can decide, hey, we're really interested in your investment strategy. And maybe you can help us that way. Or they can say, we're not interested in your investment strategy, but we still have some something that we can offer because ultimately at least, you know, I've been in some professional capacity for 17 years and a lot of this is about kind of the meaning of the work that I'm doing. And so it does mean a lot to me to be having these discussions with you, to be helping people better understand the data, to improve education through this data. And then look, if that builds our brand on the side, fantastic.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Markets. Fast forward another three months to March and we decided that we wanted to take this and point it at develop non-US developed markets because there's just a dearth of opportunities to find high quality structural compound businesses outside of the US. International investing is just not in vogue at all. And so we're like, we can use our tools in order to do that as well. So we have those two public offerings, those ETFs. And at the same time, you know, we were having this internal discussion of like, okay, we've never needed a public facing kind of image or anything like that. We never had an advisory site. Everything we did was on private side. And so I raised my hand and said, hey, look, I don't want to just put a bunch of platitudes on a website. Like I'm just not, it does not get me interested at all. And so, but I had.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“So on and so forth. And he had come up with something that was extraordinarily compelling. And so we looked at it and we said, you know what? Like we actually could deliver this to the public markets in form of an ETF before it was too labor intensive and this version, we could do it in a fully quad fund to focus on finding long-term structural compounding businesses, but do it through quant. So it's like almost, it was very different, like applying quant to long-term investing. It was really cool, like really unique idea. And everything that we did supported that this was going to be a very compelling product. So middle part of last year, we started kind of, you know, the process of getting all that ready, which was a painstaking process. And we launched our first ETF towards the latter part of last year, which focuses on it deploys these unique tools algorithms, this engine.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Of time, we also have a chief data scientist. His name is Anton Yen, and he had been in the background, you know, this is where kind of the connection is, I think, between what I'm doing, what he does. We both love working with data and are very deliberate and intentional with how we work with data. So he was working on how do I take the mental model of Andrew Skadoff, who's the founder who developed the strategy when he was working for this family, and how do I actually turn that into algorithms for a black and better word and make this into a quant strategy. And initially when he came up with that idea, now he's like, you know, used to work for Lawrence Livermore and his brilliant dude. When he came up with that idea, I was like, good luck. Many people have tried, many people have failed. Well, three years later, after a lot of work and a lot of model evaluations, I mean, we evaluated billions of different model iterations.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so Van Greeks an investment management firm we were founded in 2021 by my best friend actually since third grade actually the name Band Creek came from the elementary school we went to which was named Panyon Creek Elementary down in South Florida where we played the stock market game so figured why not pay homage to that He worked for a family office for several years kind of developing what we thought was a pretty interesting and unique investment strategy public equities so not on the macro side it's very different from this and you know ended up leaving the family and the family was very supportive of him going out and supported us in building the company and we initially started working mostly on the private side SMAs for clients so on and so forth we had a couple coming to vehicles or have a couple of comingle vehicles as well and over that period”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Can look back at CPI all the way back to like 1920, 30, or however early the BLS publishes it for overall. Well, what you'll see is that different kind of levels of granularity will start popping on over time. And I think the housing one started in 1960-ish. And so we only go back to them. Before that, there was no data, so I couldn't go back any further in that. But yes, there has from where we are now, there has been, there is no historical precedent that we can get below 2.5%.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, no, so I mean, I was being generous with the analysis and optimistic. So when I did the analysis, I was looking at the run rate from Q4 2023 when we were kind of down on a low 30 basis point month over month increase for these major housing components like the OER rents. And I was doing all the math based on that, hopeful that it would continue to settle there because the data did look like it was settling. And then all of a sudden what happened was like January, February, March, it shot up back again, which is concerning, right? On a month over a month basis, sadly, I don't give that to you in the visualization, but if you pulled this data and you looked everything month over month, you'll see that that actually went up. And so we're worse off now than where I was when I did the analysis. So I can safely say that there are no data points in history. And that goes back to the beginning of 1960 because when you actually look back and we have another tool that”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“So, yeah, in 2005, it was 23%. Now it's 25. something percent. So it hasn't changed from us 2005, maybe the 1990s, but that'll be interesting to look at. Eric, I just want to put a point on you're saying that with housing inflation running where it is never, there's only one month in history where we have data where housing inflation was running sufficiently high where it is now, where inflation was at the Fed's target of 2% or below. Do I have that correctly?”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“It was 23.38, so it was still really high. Like, I was actually really surprised by that. I thought that it would be, I guess this is also recency bias, right? Because I thought, I'm like, oh my God, this has gone up by so much. It must be like way lower. But then you remember what happened in 2008, where this just got hammered and it was depressed for, I mean, you can look at the trend chart. It was just really, really depressed for quite a long time. And so the weight did not make any progress until we actually really started coming out of like out of COVID, you know. I mean, up until then, like you're talking about 3% inflation, like that's not really inflating much faster than the rest of the basket. And so it does make sense that the weight hasn't progressed that much. So it's always been very, very high, I think is the point.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“You know, I looked at that very early on, and I'm actually looking to the side because I'm trying to pull it up right now, but I could also show you how to pull it up if you want to. So if you go to Ban Creek, I'm going to the Ban Creek Inflation CPIU visualizer. I can't go as far back in time as you probably want, but in this viz, if you scroll all the way down to the bottom on the date filter, you get down to January 2005. And then if you click on owner's equivalence rent of residences, it basically says that the prior year relative importance. So relative importance is BLS parlance for week.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“And another saying is that when a measure ceases to be accurate when it becomes a goal. So, if everyone's targeting a PCE of 2%, then maybe the measure isn't as accurate. Eric, by any chance, do you know how the weighting of owner equipment rent has changed over time? Because I pulled up what the actual reading of OER was since it started in 1984. Surprise, prize, right after the inflation, you know, Volker is raised in 1981. It briefly dipped negative in 2010, but pretty much 2008 and before it was always above 2% and before 2000, it was average. It appears to average in the 3%. So it's interesting to me, if OER weighting was still as high, that, you know, we've had this problem before.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“And beverages category was exactly the same as medical care. Going back to 2007. So is it really more volatile? Or are we just working with outdated measures, outdated definitions that like we need to be like, has the economy changed in the last 50 years, 40 years? Like maybe it's time to revisit some of these things and make sure we have the right measurements. What did Peter Drucker say if you can't manage what you can't measure? I feel like that we're stuck with that right now.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, yeah, it really is. I mean, we're in a tough spot, right? And I think that the more people know that, the more we can really start talking about the true nature of the problem, which is like, okay, ultimately, the Fed needs to make the right decision. But should we all be looking at these metrics? Or are they too far gone? Or if things chart, right? I mean, a lot of, like I was looking back and the definition of core inflation, I think came up in the late 1970s, although it was coming out of like the oil crisis. Like, does that still apply to a world where, you know, the exons and the shells of the world are taking all their money and throwing it to buybacks rather than drilling? I mean, like, I don't know anymore. Like, I mean, should food be stripped out? Like, I went back and I looked at the actual volatility. You know, we've been told these are more volatile categories. And in some cases, they are, but the volatility, if you look back in the true measure going back to 2007 of the food.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, I think that the most nonsensical and potentially misleading part of CPI is owner equivalence rent. I don't know for this for fact, but I think the background could be that inflation used to be measured by how much a house cost and how much it cost to finance that with a mortgage. But the issue is, if housing prices go up because there's a real estate boom, then that increase in an asset is being necessarily a consumer price index if everyone is just speculating on real estate. Number two, if the Fed raises rates, if mortgage rates go up like they did for Volcker, then it looks like there's massive housing inflation, which is real. There is the actual cost on the ground. But I can understand why OER came to be. It's really something, isn't it?”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“That what does that come to? And it was like 3.7%. And I was like, that's still kind of high. Let me go back over the history of all the data going back to 1960 and see how many times have we been able to get sub 2.5 headline inflation, not headline inflation. When housing inflation Until OER in Rent's crack, and then motor vehicle insurance starts to behave.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Well, you know, Jack, it's never too late to do the right thing. I don't know. I mean, like everyone's paying into a quarter here, right? I get that. You know, there's the like, this is what we should do. It's easy for me to say, you know, talking to you, but I get that they're way more variables that behind the scenes. But we're just in a tough spot now, right? Because, you know, all I'm doing is looking at the math. Like we put out a report. I think the title of it was, can the US achieve 2% inflation without housing cooperation? And the report was, you know, I'm giving you much more of my personal views than I did in the report. The report was very much focused on the data. It was basically like, look, okay, late last year, the rate of sequential inflation, month over month inflation in like OER rents. It was softening. It was really good. This is like 30 basis points a month. I'm like, this is great. Okay. Then I step back. I'm like, wait a second. If I annualize this.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Makes a lot of sense why PCE is a better metric. But I also think one reason why Fed governors Federal Reserve members are reticent to go out there with front of the microphones and say CPI doesn't matter, CPI is higher than PC, but we focus on PCE is maybe some of them did that in 2021 when CPI was higher than PCE and they said focus on PCE and then PCE went up. I think that the transitorians had a lot of egg on their face. And so that I think that could be a background.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“At CPI for a Fed governor to come out and say we still need more work, we have to wait for multiple inflation prints. Like what would be helpful is like that metric's garbage. We've told you a million times that we look at PCE. Maybe we need to wait multiple months for PCE to go down, but why are you even paying attention to that? We told you back in 2000 when we haven't changed our mind. So I don't understand why they are feeding the confusion or sowing more confusion by lending credence to this besides the fact that they maybe they're painted into a corner and they have to because politics or whatever it may be or people looking at this number and getting so much media and press and whatever it is but I think that could be very easily dismissed in a much stronger way by saying like look come on everybody knows like look at this measure at this point in time like we've already told you this is not what we look at so let's all focus in this number and if that's sticky and we need more months of that just be more”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“I totally agree. I mean, I think that there's that discussion. There's also the discussion on healthcare. And even, you know, some of these other services like management consulting and everything, it's like, what do rates actually have some sort of direct control over or even like somewhat indirect? And what do they not? And then why are we looking at these highly aggregated amalgamated measures that are combining a whole bunch of things that the Fed has arguably very little control over with things that they do? And then saying, well, we have to look at this one measure to then decide what they are going to do. And in reality, I mean, maybe behind closed doors, they're actually like, look, we can't control any of this kind of stuff. But like the market perception, they're not helping the market perception, right? You know, and again, this is just me speaking is not bankrupt. But it does not help after.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“So you have one measure being too hot, one measure being too cold, you put everything together, maybe that actually gets to the theoretical aggregate, but I don't know. So I just want to say that, yeah, I mean, people, you know, maybe people are right when they say that CPI on PCE is not measuring reality.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“That if the prices went from 100 to 120, that there's still inflation if they stay at 120. If they stay at 120, there's zero inflation. It's the rate of change of prices, not the level of prices. So I understand the confusion, but the economic definition of inflation, it's just not that. And the third thing is the actual discrepancies between reality and fact, which sometimes may be overhyped, but I'm so glad that you're here to, you know, really do the deep dive here. For example, inflation, healthcare insurance inflation last year, I mean, there's almost no way to say it other than it was massively underreported. Healthcare prices probably increased and they probably increased a lot, and they definitely did not decrease by 30% year over year. Likewise, when it comes to owner-occupied rent, that's pretty laggy and it's kind of a fake measure. So maybe that overstated inflation.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“There's a sentiment out there that I want to seriously consider and give fair hearing to that actual inflation is not being measured by the measures of inflation, whether it is CPI or PCE. And I think there are at least three reasons for the disconnect. One is everyone lives in their own inflation universe. So if you have six kids that you're all sending to liberal arts school and education is increasing 20% year over year, the fact that cereal and televisions are cheaper now than they were in 1990s doesn't really mean that much to you. And so your personal inflation, your actual inflation is much higher than CPI doesn't mean that CPI is inaccurate for the aggregate. But there is no aggregate. No one is the average person. So that's number reason number one. Reason number two, and this I have been hard on people for, perhaps too hard, is that people are wrong about understanding what the meaning of flip. Some people are. They think that inflation means.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Arbitrarily measured things that the nature of what they're trying to do is very good and pure, with all sorts of adjustments, and you pile them all up on top of one another and we end up with a number that then we call inflation. But it's not inflation, it is the measure of inflation. And so then the next question is like, well, what is inflation? And then it's almost impossible to answer that, right? Because you have to get into which one of these items do I actually trust and which ones do I not? And then the whole thing kind of falls apart. It's like a house of cards.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so I would challenge any human being living in this country to say that they had 35% reduction in their premiums. 35% increase maybe, but reduction. When we publish the PCE tool, I put a comparison of health insurance within the PCE measure and the CPI measure, and they don't look anything alike. And they never have. Like, I mean, basically, the PCE is almost a perfect straight flat line of like, you know, some moderate, modest amount of inflation. And then CPI is like all over the place, right? So that further makes me just step back and be like, I have no idea what they're pouring out of this blender at this point in time. But I mean, it is heavily, heavily distorting these numbers. And again, kind of, you know, stepping back, it really, I mean, my words, it's concerning, right? That it's like, what is reality at this point in time? I don't really know. I just know that, you know, you have a whole bunch of somewhat.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Eric, it's safe to say that the massive deflation of 30 to 35 percent in health insurance of September was not experienced. It's not something you would experience if you're a consumer of healthcare. It's only in the data”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“You'll see hospital hosts are really starting to assert themselves. It's one of the big bonuses there. And so that's now 15% inflation impact. It's a pretty big deal. So healthcare is going back to doing what it does, which is inflate faster than the economy. And that is kind of making it harder, I think. So all this downward pressure, any downward pressure that we get on OER and rents, we have to look at the other side of it to say what's happening to health insurance because that was a weird anomaly type of situation going on and that is reversing itself out at this point in time.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“So that was a good guy of 34 basis points. So if that were zero, then we would have been over 4%, right? And so we have good guys last year that were based on these weird methodology type of things going on that are now reversing out. Plus, you also had kind of like an artificial kind of, I'd say, kind of lull an insurance within hospital costs. You'll see if you flip over to today or April, whatever the latest data point is.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Needless to say, as you can see, it got thrown completely out of whack. Whatever the methodology was, it got super distorted because of COVID, right? I don't know why, but it did. That's the data set. And what's happening now, and I've actually forecasted this, it's reversing out, right? So if you look at the month over month change just in the index for health insurance, it's going up now. And so we are rapidly kind of cycling out of this deflationary vitamin environment for health insurance and it's normalizing back to where it used to be, which is like, you know, moderately inflationary or something. And I believe that probably by the latter part of this year, this is going to flip from a good guy. And remember, if you go back to that number, you can see how much of that. So we in September 2023, we put up 3.7% for CPIU all items, hover over the health insurance bubble in that chart. And you'll see that that was an inflation impact of negative 0.342.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Wild chart okay, I cannot tell you all the nuances of this, but I did talk to the BLS and I'm like, what's going on? And they're like, this is the one item that is measured differently from all others. Like this is everything else is kind of a nominal price increase. This is taking into account experience. It's taking into account usage. There's a whole rat's nest of methodology to dissect within health insurance.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“That also tells you how different these measures are. You looked in the tool, and especially the tool allows you to bring you to rewind time, right? So you can look back to 2022. And one of the things that I've also been talking about a lot is that health insurance was massively deflationary. Like we're talking about, I think it peaked at like 35% deflation or something within CPI. It's probably not as big right now, but if you kind of flip back, go back to, I don't know, somewhere at the end of last year.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Yes, that does. Tell me about healthcare in PCE. I know that there actually was in some months recorded instances of massive deflation in healthcare, which is not the experience of anyone actually alive. But for some reason, they did that. Was that in CPI or PCE? And also, I'd be grateful if you helped me could define the bubble because I'm struggling.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“About Medicare, we talked about the employers that are paying for your commercial insurance. Like there are a lot of other expenses incurred outside of what you personally are incurring. Whereas within CPI, that's supposed to be from the consumer perspective. So you look at that and those numbers are starting to accelerate a little bit, at least in CPI. Or from all of the discussion that we have, it's probably, I wouldn't place a bet that, you know, oh, we're going to look at medical care for deflation going forward. And so if we need to go from 2.6 to 2.7 down to like say 2.2, 2.3, what I am telling you is that even though it's a smaller impact relative to CPI, this OER in rents, it's still far too large relative to where it's been in history. And so those really need to come down because you're going to get the most. You'll get 10 basis point chunks out of that once that starts coming down. Whereas everything else...”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“It stands for both. It stands for both. It's still like because, you know, if you're stuck at the 2.7 range, you got to look at where's like the lowest hanging fruit. Where are the biggest bubbles that we can work on in order to get them down? Because everything else is largely, I shouldn't say everything else, but a lot of the other stuff is really settled, as you'll see in the tool. I mean, you're not going to get much out of food inflation at this point in time. I think that that statement that I made about we really need OER computed, whatever it's called, and rental residences, it applies to both PCE and CPI. Because PCE, unless we're okay with PCE being at 2.6, 2.7, because you start losing candidates on where else am I going to get defletion from, right? Healthcare is a huge component within PCE. It's far larger at PCE than it is in CPI, which makes sense because PCE is supposed to represent the entire economy's perspective of this category. And think about, we talked about Medicaid.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Your point that inflation is going to be sticky to the upside because it consists of so much of owner equivalent rent and actual rent, that makes sense for me for CPI, which is not the Fed's target. So owner equivalent rent is 25.4% of CPI and actual rent is 7.5. So it's a bit 33, 34% of the CPI. And that is going to be sticky and super lagging. I get that. But when it comes to the PCE, which is the Fed's target, it's much smaller, as we pointed out, right? And 5.37. So it's 11%. So does your point, are you saying your point stands for CPI, but not PCE?”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“You can kind of look at all of this from month to month and be like, wow, we're kind of stuck with PCE. And that's where I think the discussion really needs to go because we're being told a lot. Just wait, just wait, just wait, just wait. Policy effects take time. And that may be true. But you know what we need to drop? We need OER, this imputed rental of owner-occupied residence. We need rentals. We need those to drop. And I think people are losing confidence that we just wait longer and those go down. But that's the real big kind of sticking point. That's like preventing us from getting down to low twos is these dropping back to any semblance of normalcy going back in history. And I mean, like think about it. If I called you up and I said, hey, how much could you write your house out for? And then mortgage rates went up. Like you would actually say more than you.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Well, that was basically responsible for the entirety of the change. But go back to use light trucks and look at the standard deviation bands. So my point is like, look, I don't know of any economists or data person that's going to come in here and be like, I'm going to tell you where the use light trucks are going, right? Especially knowing that these metrics are all just like very, I mean, they're derived from random measurement processes and everything. So even if you did know what utilized trucks were going to be, that doesn't mean that you're going to know anything about this measure. So the best way of predicting the measure is just to look at the historical data, you know, as it will be very representative of the measurement bias, so on and so forth. And so I look at that and I'm like, all right, it bumped down a little bit. It's plus or minus one standard deviation. My takeaway, nothing happened. You know, so the whole last month was like a whole lot of nothing. The prior month before that, again, a whole lot of nothing. Everybody, you know, was freaking out about PCE going.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Won't be able to It's like we play in this or something. That's great. So it was slightly lower deflation. You can barely see it towards the end. You see how it kind of like ticked down in that last moment.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Have in here item, sorry, piggyback on labor, and I just rack and stack, and I'm like, what was the highest inflation impact, which is imputed rental of owner-occupied nonform housing, probably 60 basis points, all the way down to the lowest? And I say, okay, what was that for the prior month? It all adds up to your 2.65 or whatever. Now, what is it for the current month? Just subtract the two. And what you'll notice is that I would say like 90% of all the items are zero. Like there's just no change from month to month. And this kind of speaks to how diffuse this thing is. It's just like there's, you have to have so many of them moving in the right direction all together in order to see like the types of changes and the types of compression that we saw over like the prior year and now you're to this point where it's like everything's just kind of like settling you know and so then you have like last month people got all excited because inflation went from like”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Nothing. I mean, that's the thing about PCE, which we've also written on this. Again, I'll free on our website. It's so diffuse. And this is actually one of the reasons why, you know, the Fed in 2000 said, we prefer PCE over CPI, you know, over policy purposes. It's just because there are so many components and the weighting is all much more distributed and it's like less top-heavy. And that's only grown more to be the case over the years. And so the issue with PCE that we have right now is that as we were coming out of the post-COVID inflation, there was all this cycling effect, right? So, you know, we were seeing wonderful kind of year over year numbers as like we were just cycling these crazy numbers. But now you've largely lapped a lot of that. And when you, what I do every month is I basically just rack and stack all of these like 185 different items or industries that I.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Right. So CPI, that's what a lot of mainstream people outside the Federal Reserve focus on PCE is what the Federal Reserve focuses on. So just to put a point on it, you're saying, so year over year, April CPI consumer price index was 3.35%, 60 basis points of that was auto insurance. So CPI, if there was zero inflation, that would have been 2.75%. So only 75 basis points above the Fed's metric. Of course, the Federal Reserve, not the Feds metric, but above the goal of 2%, although that goal is for PCE. Now, okay, so in PCE, I'm seeing portfolio management and investment advisory services. So that's only 1.37% of PCE price index, but it is having a 12 basis point. It's responsible for 5%. Inflation. So I guess it's not as big, but”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Year over year inflation. They get that from the BLS. PPI side of the fence, right? So you have two totally different measurements. One is coming from PPI, one's coming from CPI that are telling totally different stories, which again, you could read into that and say, oh, well, that's just the profit that's being taken in between the two. But again, when you dig into the methodology, it is not that clear. Like the methodology looks very similar for the two of them. That's one of the outstanding things I just have not been able to track that down. And frankly, I'm hoping more people that listen to this will start asking that question because it is just such a large, random and frankly stupid driver of these metrics, which everybody is hanging on thread of, you know, every single month.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Take just this, you can just literally do this if there was no inflation and auto insurance, you could just subtract 60 basis points. The way the tool works, subtract it right off of CPIU and what you get. You get like 2.8. You know, we probably would have been down at like 2.5, 2.6. We would have been cutting already, probably. I mean, I don't know. I don't know any better than you do, but I know that if inflation was 60 basis points lower than it is right now, then we would be having a whole global economy would look different. The trading mindset, all of this stuff, and it's driven, this is the tragic comedy part of it, is driven by this one random, unique idiosyncratic thing going on, which is also potentially highly polluted by measurements because it's not being replicated in PCE. And to make matters even worse, check this out. So PCE, their measure of auto insurance at the actual”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“It's a lot of food. Food is a much higher weight. And like, that's honestly, if you think about the methodology that you need, it's probably one of the easiest things to actually measure and one of the probably the most accurate measurements that you don't have to make all sorts of these random arbitrary adjustments to. And so I'm like, okay, yeah, that actually makes sense why they can cut, but why we don't have the visibility to look forward simply because it just is a totally different set of weights. Now, I've listened to your prior podcast, which all fantastic. Obviously, there were very big differences in the housing markets as well. I'm not going to go into that. I'm not an expert. I encourage your listeners to go back and listen to all your prior podcasts to brush up on that. But we're just talking about the weights. Even if the numbers were the same, we would be in very, very different position. I just want to touch on the auto insurance piece. I have been screaming from the rooftops on this. Like 60 basis points of CPIU is auto insurance.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so prior year weight is 0.56%. So this is kind of getting to, you know, recently I got a chance to work with Initial Times on a piece. And my quote to them was like, there are 330 million different perspectives on isolation in this country. Why? Not because these numbers. I mean, you could talk about the measurements or whatever, but everybody has a different basket. Everybody has a different set of weights. And at the end of the day, now that I've been so deep in the weeds, I just look at PCE and CPI as like two different sets of weights. And you can throw like the euro area on top of that. I just looked at that yesterday and I was like, they have a totally different set of weeds.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Oh, that's wild, isn't it? That thing is kind of scary, what's going on there. I mean, but that's the fun thing about this visualization is I always am like, what are these crazy outliers? You know, you're going to, you're in the, you know, this feel like, what is that game?”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“Well, because one, it's about, I think it was like rather than a 2.5% weight of CPI, I want to say it's like 60 basis point weight. And so the weight is much, much lower. And then also the percent inflation is like 7% or something like that. So it's towards the bottom of here if you're just going to keep going.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“So, for our audience, one of the biggest circles contributing to CPI for CPI, I could instantly find it was car insurance. I am struggling to find car insurance in this. So what is the difference? Yeah, I'm not going to check out the methodology, but what is the difference? I'll continue to look for it. Why, I mean, literally beef and veal PCE. Ethan Veal is appears to be a bigger percentage because you're bigger to PCE than current. But why is it e car insurance so hard to find it? Why is it so small?”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT
“They don't say that within the level of specificity. Like there is almost no perceptible difference beyond like real, real nuances within how they're measuring these, but they're both based on either real policies or survey policies. Some of them are every six months, some of them every one month. But it doesn't particularly say like, well, one of them is netting out the cost of repairing these vehicles or whatever. It's not clean. So I haven't been willing to actually say, you know, this is exactly what the difference between these two things are. And especially, I'm hesitant to say that simply because, you know, it wasn't there pre-COVID. By the way, I think this is really cool that you can't even find it.”
2024-06-17 · Forward Guidance · Relentless Hiring In Healthcare & Government Doesn’t Care About Fed’s Interest Rate Hikes | Eric Pachman’s Data-Visualizations On Why Inflation & Hiring Are Sticky · IDENTIFIED FROM THE TRANSCRIPT