Right. Let's get over now to our next guest, John Maya. He's the chief investment officer a Global x E t f S. And John, we had those uh consumer prices out of the US recently peak inflation. Are we there yet? Yeah? Thanks for having me on the show. Um. Yeah, the numbers were a little bit better than expected, but you
have to kind of put it into perspective. Inflation is a four year high and the FED is in its most aggressive tighten cycle since the mid nineties, and I think the markets want to believe that the FED will stop hiking once they believe that that that the FED has demand under control. Uh. And with inflation taking down, the market certainly has taken that as a positive tone. But there's still a lot of things of concern that will cause that I think may keep inflation at higher
levels going forward. So the markets may have gotten a little ahead of themselves, I think, John, do you think it's fair to say that the FED strategy of front loading may be coming clear in terms of its off activeness. I mean, the supersized rate hikes up front that they begin to kind of moderate them. Maybe we're looking at fifty basis points in September, and you know, maybe fifty basis points again at the following meetings, so that the
magnitude of these increases becomes a little reduced. I mean, I think that's that's possible. And and this FED is has in its DNA, they're more devish, but they have to and what they can controls demands by raising interest rates, but there's been there's there's a lot of other things to consider. There's wage inflation, that the labor market is is still very tight, and there's been a lot of under investment in areas like infrastructure and alternate sources of energy.
So these are all potentially inflationary because we're going to have to spend on some of these areas. So I do think that I'm not sure if it's fifty or seventy five that FED can control demand to a certain extent, but there's other things that they can control. So I think that's what we're going to have to contend with. You you mentioned wage inflation, and maybe inflation is peaked, but prices are still going up. With that in mind, consumers might be enjoying higher wages, but the still kind
of have to pay higher prices. How resilient. Does consumption look to you at the moment, Well, I think it'll be interesting to see some of the big retailers report this week in terms of how healthy is the consumer. So, as you pointed out, I mean, July headline CPI rose eight point five percent year over year, but it was flat compared month over months, so it's still very high.
And in terms of real wages, they're like they're declining, So the consumer is spending more on gas, uh, they're spending more on food, and I don't think that's likely going to change in the near term. So I think that's of concerning. You're seeing credit card balances increase at higher interest rates, so that will further exacerbate the ability
of the consumer to spend going forward. Um. But you know, that's not to say there's certain areas that I think make a lot of sense um in this current environment, a tech food innovation are particularly areas that are well positioned to gain from kind of some of the growing risk of global food insecurity right now. So I think there are as well as commodities. So, as you know, John, we had a rally in the equity market, uh Friday,
consumer discretionary lead to the upside. It seemed like the catalyst here was the Consumer Expectations Index reading from the University of Michigan. So everything that we're saying about maybe maybe the consumer being on shaky ground, the University of Michigan number really doesn't support that. Well. I think the consumer is you know, we're coming off two years with pandemic that they're looking to spend on things they haven't
spent them a long time. Um. And so I think you have if you take that out of the equation and you look more towards the beginning of that, that picture may change some. Um. That's not to say that there's certain areas that still make a lot of sense in terms of investment, but you have to remember that unemployment is so low right now. Um and uh, those are things to consider John very quickly. What do you
put money to work in this environment? What do you like? Well, as as mentioned, I think, particularly in light of the Inflation Reduction Act that said that passed on Friday that will be signance law by Biden, there's areas that this will be a tremendous amount of spending in the climate and energy area. So commodities certainly make a lot of sense,
certainly commodities that uh geared towards clean energy. Lithium I think is a commodity that makes a lot of sense because of the supports electric batteries, solar panels, and turbines and more are areas that I think are going to benefit from the spending that's going on with the i R, A bill that's going to be signed into law very soon. Yeah, the Inflation Reduction Act. John, good stuff, Thank you so much for being with us. John Mayer is the chief investment Officer at Global x E t f S