Jay Hatfield's firm publishes its own inflation index, and it reads 1.3%.
The Federal Reserve is weighing a rate increase next week against official inflation readings above 2%. Hatfield said the official numbers are wrong in a way anyone can check: the shelter component is built from renewal rents collected six months late, while market rents are already negative year over year.
"So we do not have an inflation problem. We do have a political problem because the FOMC wants to demonstrate their independence."
Hatfield runs Infrastructure Capital Advisors, where about three quarters of assets under management sit in fixed income, and he first recommended Marvell on this program when the stock traded below $100 a share.
I listened to the full segment so you can skip it.
Here are the 6 takeaways that matter.
👤 Guest: Jay Hatfield, CEO, founder and Portfolio Manager of Infrastructure Capital Advisors, which runs preferred-stock and income ETFs and publishes its own rent-based inflation index
🎙️ Hosts: Tom Keene and Paul Sweeney, who co-host Bloomberg Surveillance on Bloomberg Radio
📰 Published: 9 September 2026, on the Bloomberg Surveillance podcast feed
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 9 min
Key Takeaways
The Fed's preferred inflation gauge is 30% imputed, so it should be using the consumer price index instead
The Bureau of Economic Analysis is already revising its two worst components, and Hatfield said the corrected reading would sit just above CPI
Two rounding effects mean CPI can print 2.4% year over year this week without anything improving
A high month is rolling out of the annual comparison, and the unrounded annual number is already below the headline
Underlying inflation is 1.3%, because official shelter uses rents six months stale
His firm's own index reads 1.3%; market rents are negative year over year while CPI assumes about 3%
A hike next week would make the Fed look political rather than independent
His only case for moving this year is a cut, and only if oil prices fall
Marvell is at least a $300 stock on his 2029 numbers, and Broadcom is worth $450
Marvell's Google contract carries $120 billion of potential revenue against total company revenue of $12 billion this year
1. The PCE Is 30% Imputed
Tom Keene set the topic up as the alphabet soup of inflation gauges, noting that the Fed has historically preferred personal consumption expenditures over the consumer price index, and asked why Hatfield wants the Fed looking at CPI instead.
Hatfield's objection is that the PCE index was never built to be a price index at all. It exists to adjust gross domestic product, he said, and a large share of it is estimated rather than observed.
His case is that the Fed should be using real consumption and real prices
"Well, we think that the Fed should use real consumption and real prices instead of the PCE."
"So it's 30 percent imputed, which is a fancy way of saying made up."
He said the Bureau of Economic Analysis understands the problem and is revising its two worst components, software and portfolio management
On his math, correcting both would put the PCE reading just above CPI rather than below it
Keene's reply was that the arithmetic was impressive for a man who had not slept: "That's a lot of math for having not slept a lot last night."
2. CPI's Two Rounding Effects
Hatfield's second point was mechanical rather than analytical, and it came with an aside to the show about not rounding the numbers it publishes.
Two effects are working in the same direction into this week's print. A high monthly reading is rolling out of the year-over-year comparison, and the unrounded annual rate is already lower than the published headline suggests.
On his arithmetic, a monthly CPI reading below 0.28 rolls the annual rate down to 2.4%
"So as long as CPI for the month is less than 0.28, we're going to roll down to 2.4 year-over-year."
He said the month rolling off is 0.31 and the year-over-year figure is 2.47
He framed that as decisive for next week: "And even this Fed would not raise rates when we've rolled down 0.5 on CPI."
On his reading the annual rate has already fallen from 2.9 to 2.4 in four months, with a four-month annualized rate of 1.8%
He said correcting PCE for portfolio management and software would produce the same 1.8% figure
3. Underlying Inflation Is 1.3%
Paul Sweeney asked what the underlying rate of inflation actually is, noting Brent crude at $100 a barrel. Hatfield answered with a single number and then explained where it comes from.
His firm publishes its own index, and it reads 1.3%
"It's 1.3%."
"We publish our own index that is at 1.3%."
The gap is shelter. Official CPI assumes rents are running about 3%, he said, while real-time market rents are negative year over year
The cause is the data source: the official series uses renewal rents rather than market rents, which he said delays it by six months and longer
His method is not proprietary — "And we use this thing called the internet." — and he said the Bloomberg terminal carries the same real-time rent prices
He does allow one channel from oil into core inflation: airline fares, which he put at about 0.2 of CPI right now, and that is why he would not cut immediately
A hike would be self-defeating. Hatfield said the Federal Open Market Committee's problem is political rather than economic, because it wants to demonstrate independence.
"So they possibly could raise rates, but that would be incredibly stupid because they would be raising rates when anybody can see it's declining."
His view is that raising into falling inflation would make the Fed look political and therefore put its independence at more risk, not less
Asked whether the Fed should move at all this year, his answer was one word in the other direction: "Only potentially a cut if we do get lower oil prices."
Keene's verdict on the exchange: "I like how Jay doesn't hold back."
4. Marvell Back to $300
Keene asked for the top pick. Hatfield's is Marvell, and he walked through his own history with it rather than pitching it cold.
He first recommended it on this show below $100, downgraded it at $300, and it then fell to $180
"Well, that was first recommended on this show at less than $100 a share."
The downgrade came because Nvidia's Jensen Huang had endorsed the stock
The substance is a transaction with Google carrying $120 billion of potential revenue, against total Marvell revenue this year of $12 billion
The stock went to 200 on the announcement, which he did not think reflected the size of the deal relative to the company
The disappointment was that Marvell did not guide to 2029 at the same time, which he said it will do on October 6
On his 2029 estimate of $12 of earnings, he called it at least a $300 stock
"And with these rapidly growing companies, if you just hold them over two or three years, you're going to have fantastic returns."
5. Broadcom's $450 Target
Keene asked about Broadcom next. Hatfield opened by saying the position is lonely: "I think we're the only ones who like it."
The trigger was a 25% increase in guidance, after which he said the stock fell about 6% that day
His price target is $450, and he called that conservative
He said the very large chip companies, Nvidia included, are being priced as though they are at the top of the cycle
His advice on both names was the same: "Same thing. Be longer term. Don't look at what happens during earnings."
6. The Case for Preferreds
Sweeney gave him thirty seconds on preferred stocks, saying the show never covers them.
Hatfield's pitch is that ordinary investment-grade fixed income pays about 4%, and that preferred shares run by a good manager pay much more for a fraction of the equity market's volatility.
He claims equity-like returns at roughly 0.4 times the market's volatility
"So you can get 0.4 betas, 8, 9, 10% returns."
He named his own fund, PFFA, as the example
He positioned it as an income asset class for more conservative investors, including inside a retirement account
The firm's whole focus on interest rates follows from its book: "The reason we obsess about interest rates at 75% of our AUM is fixed income."
He closed by noting he had seen a number of convertible bonds come to market over recent weeks
Bonus Insights
Keene opened by noting Hatfield had been at the US Open the night before for the Ben Shelton–Carlos Alcaraz match, which Hatfield said ended "at like 3.30 a.m."
He left before the finish and said he would have stayed if Shelton had won the first set, but that the first set alone told him Shelton belongs in the elite tier: "American tennis is in a good spot right now."
On Keene's teasing about rounding, Hatfield's answer was "I'm a big rounder."
Sweeney read a headline off the Bloomberg terminal mid-interview: Uber had set the size of its debut euro bond sale, which he took as a sign the new-issue market was reopening after the holidays
Hatfield's bottom line is that the inflation data is falling fast enough that the only defensible move is no move, and that a hike next week would be a political gesture rather than a monetary one.
Products, Companies & Tools Mentioned
Marvell (His top pick: a Google contract carrying $120 billion of potential revenue against $12 billion of total company revenue this year, and at least a $300 stock on his 2029 earnings estimate)
Broadcom (Raised guidance 25% and the stock fell about 6% that day; he says he may be the only one who likes it, with a $450 target he calls conservative)
Google (The counterparty on the Marvell transaction he says the market has mispriced)
Nvidia (Jensen Huang's endorsement is why he downgraded Marvell at $300; he now says the largest chip names are priced as though the cycle has peaked)
Infrastructure Capital Advisors (His firm, where about 75% of assets under management are fixed income, and which publishes its own rent-based inflation index)
PFFA (His preferred-stock ETF, offered as the way to get "0.4 betas, 8, 9, 10% returns")
Uber (A headline crossing mid-interview: the company had set the size of its debut euro bond sale, which Sweeney read as the new-issue market reopening)
Books & Resources Mentioned
The personal consumption expenditures price index (The Fed's traditional gauge, which he says is 30% imputed and was built to adjust GDP rather than to measure prices; the BEA is revising its software and portfolio-management components)
The consumer price index (What he thinks the Fed should use instead, though he says its shelter component is six months stale)
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