With or without the Federal Reserve's involvement, Peter Boockvar of the Bleakley Advisory Group sees signs inflation is making a comeback.
His call comes two days before Fed Chair Jerome Powell is scheduled to deliver a key policy speech at this week's virtual Jackson Hole event. During his comments, Powell is expected to tackle how the central bank can return inflation to a healthy level from historic lows.
"The Fed and any central bank always has to be careful of what they wish for when they want higher inflation," the firm's chief investment officer told CNBC's "Trading Nation" on Tuesday. "Higher inflation is typically associated also with a higher cost of living, reduced purchasing power for the average consumer and also higher interest rates, and I think that's not the kind of environment we should be rooting for."
Boockvar, a CNBC contributor, believes more effective coronavirus treatments and a vaccine will help drive inflation.
"When you get a vaccine, you're going to have a big pickup on the demand side where people try to go back to the way they were living beforehand," he said. "They're going to want to go for dinner again. They'll want to do things that's also going to be combined with that supply chain upheaval. That's going to lead to higher inflation than the Fed wants."
Boockvar, who has spent much of 2020 on inflation watch, predicts a meaningful resurgence could materialize later this year or next year.
"Inflation, I do think, is going to surprise people to the upside," Boockvar said.
He lists FedEx and UPS shipping surcharges expected around Christmas, surging used car prices due to factory shutdowns and doubling lumber prices as examples of supply side inflation that's already hit the marketplace.
If inflation headwinds get more serious, he warns it would harm the year's most profitable plays: mega-cap growth stocks.
"One of the big benefits to inflating the P/E multiples of these big-cap tech stocks, to use them as an example, have been interest rates that have essentially been pinned to the floor," Boockvar said. " If you do get a rise in longer-term interest rates ... that could help depress inflated P/E multiples. And then, all of the sudden a 35 times P/E stock could be at 25 times or can be at 20 times."
This group may see challenges, but he predicts inflation may add pep to sluggish value stocks.
"Investors should be looking at some of the beaten-up names that could benefit from higher inflation," Boockvar said. "That's the commodities sector such as energy, agriculture, industrial metals, gold and silver – maybe even the bank stocks if the yield curve steepens, as I would expect it to."