Get Christmas Tree Early on Omicron Inflation Threat, Bianco Research Founder Says

(Bloomberg) -- Those people who start the Christmas season while clearing the Thanksgiving dishes might be right.

“You’re lucky you got your Christmas tree when you did,” James Bianco, founder and president of his eponymously named research firm, said in support of the early birds. “It might actually be harder to get it in the coming weeks” as the new omicron coronavirus variant further clogs supply lines, threatening to push U.S. inflation even higher above 6%. 

“We’ve already got record demand for durable consumption, record demand for retail products,” Bianco said in an interview on Bloomberg TV’s Surveillance on Monday. “Yet we don’t have those products to meet them. They’re either stuck in the Los Angeles port or we’re just not going back to work to make them. That might mean more inflation.”

Unlike earlier Covid-19 surges, the threat is that omicron -- with the travel and other restrictions it brings -- will constrain supply and keep people from returning to the workforce at a time when inflation is already high, he said. “This is going to change the calculus quite a bit, especially for the Federal Reserve,” Bianco said.

Should omicron slow the economy, and the Fed decide to keep its stimulative stance in response, “you might wind up making it worse” by causing inflation to accelerate, Bianco said.

“The bond market might not like it,” he said. “The stock market might like it. But you won’t get the same reaction out of both markets like we have every other time.”

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