YouSaid · the spoken record

Jim Bianco

lines on the record: 106
first: 2023-09-15
most recent: 2023-09-15
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Right, right. It would be a stable coin. It could very well be a stable coin and it could even be on the Bitcoin blockchain. We're at a crypto conference. This is why as a traditional TradFi guy, I look at this and I say, this is the future of finance. This is where we're going with a lot of this stuff”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“But is it going to be a stable coin that does all the stuff? Because Bitcoin, yo, it's great at going up. We all know that. But it's kind of too hard money. It's too hard of a money to buy coffee. That's what I was saying. Right, right. It would be a stable”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“You got family in Ecuador. It costs you 15% of your paycheck in two weeks to send you money back to Ecuador. Let me restate that. You work one month a year to pay the bank, send your money to your family in Ecuador. That's outrageous. That is outrageous. It should be instant and cost nothing. It is in some parts of the world. It is not yet if you work in the United States. The system is Byzantine slow and horribly expensive. And I would argue on purpose. And so trying to bring that away. Bukali tried to do that. El Salvador by bringing Bitcoin and bringing Bitcoin transfers to people in El Salvador. That's what he was trying to get rid of. You can argue whether or not it's been successful, but that's what they're trying to get rid of. We in the United States, this should have been eliminated 50 years ago in the United States.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Right. Look, we all think no. I'm looking at my watch and we're saying we all think that this is really cool technology that I could just use my watch to pay Apple Pay. In India, you can walk into a store and you scan your eye and you pay. You don't even need to have this. You just need an eyeball. And you can, that's India. In the United States, we are the backward country right now in the United States. And all of these programs really enable the poor to be lifted out. That's why I'm such a big fan of digital finance and getting rid of remittance payments and stuff than helping the poor. Last offer, the average remittance payments, you know, you work in the United States as in housekeeping for big. So you got family.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“I've never done it. I think a lot of people look at the money transfer systems or the money payment systems in the rest of the world, you will look at the US as being the most backward of all the countries. In India, they've got an Irish scan system for consumer...”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“The fear was if I was going to buy your cow, I would have to bring a bag of money and somebody hit me over the head and take my money. You could argue, oh, the itch over your head and take your phone, but it's not clear that you have money because they could say they could come up to you and say, here's your phone, text me money, but I only have 83 cents in my account or I have $300 in my account. They don't know. But if you have a bad money, they know that, you know, and you're going to buy a cow, they know that. So it really does allow for the, and it allows for the ubiquity that I can get money from my wife to pay for my bus ticket and stuff. And it's really helped the poor.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“The same way that cash they pay their bills, they pay their phone bill, they can extra pay their phone bill, and then they have a credit balance with Safari.com, and then they can text that money to somebody else using their phone. So a poor farmer could go to another poor farmer and say, I want to buy your cow and I could send you money and we've made a transaction.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“That program has lifted people out of poverty because you brought financial inclusion to the poor in Africa, poor in Kenya, and it has really lifted them out. And the World Bank has said a simple thing like that has been one of the most effective programs to lifting the poor out of poverty. Give them these tools to be able to do this stuff. And this is why I think the digital revolution has to come because it will not just benefit the rich, it will benefit the poor. And the poor is Asia, Africa, and the Middle East. That's why it's so popular with the rest of the world. We're all rich Americans. We all like Venmo. We all like e-trade. Well, Venmo is great if you have in a bank account with several thousand dollars in the bank and that you don't get charged fees. Okay, I've just excluded 98% of the world by just making that if you just had a bank account with several thousand dollars, then you.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Right, yes. But it doesn't cost them anything. It's all free in its instant. What prevented them from doing it in the past? Because the poor farmer would carry a bunch of Kenyan shillings in his pocket. He'd get mugged. And now he's worth zero because that's gone and he can't get it back.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Very open and very accessible to people. One quick example about bringing digital into the world. The World Bank has done very studies of programs to lift people out of poverty in Africa. The program that is work the best has been a program called MPeso. MPESA is run by Safari.com in Kenya. Safari.com is the mobile phone company. You can put money, and they use the old mobile phones, not even smartphones. You could put money on your mobile phone. And you can text that money to somebody else. So a poor farmer, everybody has a mobile phone in Africa. Farmer could be in town, and he needs 50 cents to take a bus home. His wife could text him the money, and then he could text it to the bus driver, and he could get on the bus. Then a poor farmer could go to another poor farmer and make a deal and he could text for money prior to that.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“And when we get there, I think it will create more financial freedom for a lot of people. The financial system right now is really unfair for the poor, shuts out a lot of people. It's too complicated. What the digital system will do is it will make it”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“But you don't know it's my account unless I decide to purposely tell you it's my account. And so, but that's really where I think the hang up is, is that they're so afraid to allow that anonymity in order to own these assets because they'd come up with this idea, well, then it opens it up for drug dealing and illicit activities. I got news for you. That stuff has been going on for a thousand years. It's going on now with all the rules. With cash. Right. We can't allow digital assets because the drug dealers have come in. Oh, we have no drug dealing problem now. We have the biggest drug dealing problem we've ever had with all these AML and KYC rules. So I'm trying to leave it on a positive note. We are moving towards this and we are moving towards more financial freedom and we are moving towards more ubiquity in these digital assets. And I think it will be a good thing. And we're getting there.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Well, yes, but what I'm getting at is it was the ultimate decentralized asset. Yeah. We're trying to create a digital version of that in decentralized assets that there is no KYC or AML. There was no KYC or AML in bare bonds. Well, we didn't have those rules, but even if we did, you couldn't because of the very nature of it. We're trying to create a digital”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“And say, Before the 1980s, just one thought for me. We used to have a thing called Vera Bonds And a bare bond was a bond. It had no name on it. If you held that piece of paper, it was like cash. Yeah, if you held that piece of paper in your hand, you were the owner of that bearer bond.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“It is coming. So, on the one hand, you said, okay, it should be totally laissez-faire, no regulation, and on the other side, it's everyone's criminal. We need a regulatory crackdown, regulation by enforcement. What about it? Just meet in the middle and say, hey, look, you have to have rules. In the same way, if Tesla reports a quarterly earnings report, they file something with the FTC or file with some exchange. It doesn't have to be the SC. You have to have transparency and you have to have, you know, where it's not professionals who are spending 100 hours a week on Shane who only know what the hell is going on. You have to have, you know, before transparency.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Well, the happy note is, I think it's coming, it's coming, those changes, and this is coming to this industry. It's just, you know, it's been more painful than we thought, but it is coming.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“To me, it doesn't seem like it's a partisan thing. I mean, it's sort of kind of looks partisan. It's really older members of Congress don't understand it and they're against it. Younger members of Congress kind of get it and are in favor of it. And do we have to just wait for them to die in order to have some kind? There's an old saying in the scientific community that progress is made one funeral at a time. I mean, maybe that's what happens in finance now too as well.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“For these new assets, you cannot keep forcing these assets into citrus grove shares from the 1940s. That's the Howie Task won the Supreme Court came up with it. We need a new set of rules. Chairman Gessler says, no, we don't. We could do it just fine with the rules we have. Yeah, and his answer is you can't do any of it, is what his answer is. But like I said, they're doing it overseas. Is that where you want finance to be? is in some country other than the United States because when that happens the reserve currency is going to go there too maybe it's not Singapore but it's just not here and that's the risk I think there are more and more people in Congress under the age of 2000 that are starting to get it that this is kind of important but those that are in Congress over the age of 2000 are really kind of pushing back on it and the reason I jokingly say that is”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Right. The set of rules that the SEC was given was before we even vented digital assets. And now we've invented something that doesn't quite fit those rules. And we're trying to force that square peg into the round hole is what she's trying to say. And she's 100% right. We need Congress to come back and give us a new set of rules.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“She's saying Congress Congress's job. No, she's right because the job of a regulator is you're given a set of rules. Make sure everybody follows the rules”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, you're much more familiar. I did speak with Commissioner Pierce of the SEC. You're much more familiar with her work than I am, but what she said in the interview is she said it's Congress's job. I think her view is the SC, she's against the crackdown. She's against the regulation by enforcement, stern critic of that, but I don't know if she is proposing an alternative regulatory framework. She's saying Congress Congress's job.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“And the problem that they're going to face is somebody in Singapore or somebody in Dubai or even somebody in London because Rishi Sunak, the Prime Minister of the UK, is very, very open to crypto. They will let them do it. And then all of the business will move away from us to them. So that's the thing is that what I hear from regulators is, no, you can't do it. Instead of let's work together for to find a way that you can do it without it being disruptive or injure the current system that we have. And that's a mindset that we're not ready to go with. But more and more, that mindset is changing towards let's figure out ways to do it. You interviewed Hester Pierce here and she's been on the leading edge among regulators to figure out ways to open the doors to allow this to happen.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Is that a security? It could very well be, it could very well be a security. I'm not an expert on securities law, but if the answer should be Government, the religors, the regulators should say here's how you should or can do it. Instead, their answer is you can't do it.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Put this genie back in the bottle with what's been happening with digital finance or with cryptocurrencies. And we have to move along with it. Yes, we developed the Howie Test in the 1940s. For orange grove trees, it worked well in the 1940s for orange grove trees. But in 2023, when we're talking about digital assets, it doesn't work well for digital assets.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Next thing they'll do when they're new financial centers is they'll find a new reserve currency and they will leave us out. We have to be part of this evolution that is happening in the world. You cannot”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, to your first point, are they securities by the definitions that we have of securities? Yes, probably. But there are bills in Congress and we have to start to redefine that. If you want to hang your hat on us, we have these securities laws and we have to follow the securities laws to how we test and all these other things that we talk about with securities laws. Fine. The rest of the world's going to move beyond this and they're going to leave us behind. But if we have to recognize this is the future of finance, and that's why I've been so high on it, it is the future of finance, we have to adjust and move along with it. And if we want to just say it's all scammers and hacks and it's fraud and no one can touch it, then we'll just let the Middle East and Singapore become the new financial centers and we will be left out because then...”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“So, two things. Let me take the last part first. So, synthetic a protocol used to trade Apple, Tesla, the S&P 500. The difference there was that they were inventing it out of whole cloth. And the fear that you have when you do it that way is you could create Tesla shares synthetically into infinity and you could devalue all the Tesla shares because you could create these into infinity. What we're talking about here is you take one Tesla share out of the TradFi market, tokenize it, put that one Tesla share into the digital market. You haven't changed the supply of Tesla shares. You've just changed where they're traded. That can work. Well, the synthetics problem was giving them the ability to invent Tesla shares of whole clock.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“So I agree with you, and I have long believed that for crypto to grow it, it does have to be attached to the real world and does have to have claims on real assets, housing, stocks, all this. In the same way that if you own a stock, you participate in the share of its future cash flows or a bond. You have a certain guarantee. Probably most of those are securities. If the crypto gets a larger claim of the real world assets and you do have the S&P 500 on a blockchain, or you do have houses trading and security, a mortgage-backed security on a blockchain, by definition, wouldn't those things be securities and wouldn't they have to be regulated? And by the way, you can't have blockchain associated tokens. You can't have Tesla coin, okay? And because is it backed by Tesla share? It's a synthetic.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Stable coins are just a representative of the dollar. That's a real world asset. That's really where the adoption is going to come from. But I think that the people that are waiting for everybody to discover Chainlink or Solana or Ethereum and want to bid those coins to the moon, I don't think that the institutions, the BlackRocks, the Goldman Sachs of the world, that's not what they're going to do. They're going to bring the S&P 500 and bonds in real estate to this space once they feel like the technology is stable enough that they can trust it.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“And then there's the UI UX thing where is it easy to use? Once they get that resolved, I think where the adoption comes from is real world assets come plowing into it. Last thought for you. There is one real world asset that everybody's called in this conference calls the killer app for crypto, stablecoins.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yes, healthcare and finance. Because people lose their money or they die. If you put up in a mess around or a bridge and it gets hacked, grinders looking for developers. Go work over there because you cannot make that mis. And I'm serious, Grinder is looking for developer. You cannot make that mistake in this industry. So you've got all these institutions lined up and going, man, we should look at this DeFi stuff. And then there's a hacker next white. It ain't ready. It ain't ready. You cannot make that mistake. And yet they, like I said, they have that gaming mentality. Throw it out there halfway done and we'll keep fixing it and make it better along the way. Fine. If I'm playing a game and the game gives me the blue screen of death, no one dies. No one loses their money. They're just frustrated for five minutes. But in this industry, people lose all their money. In healthcare, they die and you can't do that. And that's the biggest problem they have. So once they kind of get that result.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“You guys came out of the gaming industry. You could put up a 1.0 that's kind of buggy and then put up a 1.1 and a 2.0 and a 3.0. There's two industries you cannot do that with that they have to be perfect from the get-go”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“And generate huge fees for the holders of those protocol tokens or for those of the utility tokens. But if you think that the JP Morgans and the Goldman Sachs are going to show up to buy Chainlink, they're not. They're going to show up and say, I like your DeFi thing. We're going to trade the S&P this way is what they're going to do. That's where the adoption, I think for crypto is going to come. What really kills that, in my opinion, whenever I talk to institutions that want to do that, it really looks good. And then there's a hacker, there's an exploit. We can't do this. We can't do this. You know, as I've said to a lot of my developer friends in this space.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“This morning, in one of the panels, Rob Leschner, formerly of compound, was saying, I got news for you guys, and I'm going to really rain on your parade. The institutions aren't coming to crypto. And what he meant was they're not going to say, oh, wow, look at crypto. We got to get in there. We got to buy Chainlink. We got to buy Uniswap. We got to buy Ethereum. They're not interested in any of that stuff. We got to buy Solana. They're not interested in that. What they are interested in is look at DeFi and look at the cool things you could do with DeFi. Let's trade the S&P 500 that way. Let's trade bonds that way. Let's tokenize real estate and trade real estate that way. Let's take our assets, stick them on there. And if you're waiting for them to buy Solana or Ethereum or a Chainlink or Uniswap, they're not going to buy those. Now, the Solana is the ChainLinks and Uniswaps could benefit because those real world assets could become trillions of dollars.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“I don't care if it goes up or down over many, many years, it's going to go up 9 or 10 percent. I can pull my money in a money mark fund and get more than half that with a no risk whatsoever. That is much different than 2019 when my option was zero. So I think that the headwinds of macro are going to remain with crypto unless they can break free of that. Now, what I mean by break free of that is we all know that crypto, what it really needs is it needs adoption. It needs people to be dragged into the market as well. I happen to think we didn't talk about this on the panel, but I happen to think that the where crypto is going to see its adoption is in the letters RWA, real world assets.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“A lot since people have bought, and I'm talking when I talk about coin price, really going beyond Bitcoin and Ethereum into the next one, not necessarily all the shit coins, but the next level behind them, not the stables, but even you could even throw in the stables because you could stake those and you could put those in liquidity pools on curve and stuff and get some interest rates. The reason that I say interest rates matter is because there's always an option. I could put my money in crypto or I could put it in TradFi. Within crypto, I could also stake it and I could get an interest rate compared to what I could get in TradFi. And this is those rates go up, those options get higher. I explained it the other way, right? I could buy the stock market if I'm a young person and say.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Said it would be a tale, excuse me, a headwind. I said it'd be a headwind because of higher interest rates. As I said earlier, every investment is an option, right? If you're a crypto investor, you can invest in the trap fight markets. If you're a crypto investor, you can stake your coins. You could put them in a liquidity pool. You can earn interest. Five, six percent interest on a Uniswap pool. You could get from Lido or some other staking service. You could get 3-4%. That was great in 2020 because you could leave your money in a money market fund and get zero. Now you get five and a half percent from the government without any risk. So now you have to start thinking if I buy these coins and I stake them, I get the same interest rates as the government. Now I'm betting that the coin prices are going to go up. But that hasn't been working for the last 18 months or two years. In fact, a lot of these coin prices are down.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Investment great spreads aren't going to go. Not only will rates go down to compensate you, but if you had a credit issue in 2019, you could take them all the way to zero. And if you're in Europe, you could take rates to negative if you had to bring down those rates. So, yes, that credit spread widens, but you could go so far down with that interest rate the Fed can and market-based rates that you could still drag them down. What I'm saying now is that the floor on interest rates is not zero or negative like it was in 2019, negative being in Europe and Japan, but it's like two and a half. So the Fed's got 300 basis points to cut they wouldn't do it all at once. And if”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“So normally rates would go down to somewhat compensate you by credit spreads. But if you don't think we're going to have a severe recession, maybe invest in great spreads aren't going to go out to 7%. They'll go out to 200 face points.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, the overall level, it will come down not nearly as much as people want. Because keep in mind, if we are in a 3% inflation world, a 2% inflation world, something greater than a 2% inflation world, gone are the days of 2019 where the Fed would say next recession would cut rates to zero. They cut rates to two and a half. This is what they wind up doing. They don't go all the way back to zero. Well, if you cut rates to two and a half and there's a credit issue and credit spreads really widen, interest rates don't go down as much. Or maybe not at all. And so that relief that you would expect the economy to get from lower interest rates may not materialize to the degree that they think.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Right, yeah, right. Well, see, that's that will be the thing is that I think what's holding interest rates up is the Fed, which is duration if you want to use the bond market parlance that's pushing those rates up, not credit, you know, not the spread on credit. Well, what could very well happen in a downturn is the Fed will push down interest rates and then so the duration will come down, but then the credit spread widens. But what I'm saying is the composition changes, but the overall level doesn't. Oh, okay.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“So just going to that fixed incoin point about how does that align with your macro framework about credit risk versus duration risk in the bond market? And I also point out agency mortgage-backed securities, which were at the scene of the crime for Silicon Valley Bank, they're actually trading at the 99th percentile widest spread to treasuries, even though they now have positive convexity, which I think has never happened. Right.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and in Amazon and in Google and in Apple, they issued 40 year bonds, they're issuing about the same rate as the government, the United States Treasury, because people don't think they think their credit is almost as good as the U.S. Treasury's credit. So they don't really have to pay those kind of a very, very high rates. But that will definitely, you know, there are issues out there and maybe there is a credit issue that comes along right now.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Which is shorter term. They didn't, you know, Amazon issued 40 year bonds in 2020, 2021. They didn't do that. They borrowed from the bank. And the bank, they roll over their loans every three, five, seven years. Yeah. Yeah.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Well, you know, the one thing I was going to say when you talked about leveraged loans, loans, those are bank loans. You're right. When you look at credit spreads, market-based spreads, what high yield spreads, investment grade spreads are very, very low. But when you look at bank loans, if you need a bank loan, Those spreads are very wide and they're getting wider all the time. And that's because of the bank walk, the banks need that bigger spread to hold their net interest margins. And that's why those micro cap companies are suffering so much, those one company 2,000 to 3,000, because some of those companies, if they need to borrow money, they don't necessarily go to the, you know, they don't call an investment banker to issue bonds. They go to a bank for a loan. Which is short.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“And so yields on bonds and loans are high because the Fed raised rates, but the spread over those risk-free treasuries are very narrow. You know the data I know, but investment grade bond spreads narrow, high yield bond spreads, narrow, close to as narrow as they were in 2021. Leveraged loan spreads interestingly pretty wide because the banks are having some issues. But if you were, you know, I talked to some fixed income strategists and your other, if you think of the economy's going to slow down, your long duration and under overweight duration underweight credit, if you think the economy is going to boom, your overweight credit risk, underweight duration risk, where would you be on that spectrum?”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Right. And you never know when a credit issue is going to pop up because usually credit issues come up because of a mistake somebody made and it's not very obvious where the mistake is. The last mistake that they made was with the apps and the bank walk. And it really didn't show up until the spring. But if you think about the way I've explained the bank walk, you could say that makes a lot of sense. That's very simple to see. How come we weren't talking about 22? How come we weren't talking about it in 21? Because there's a lot of things that once they unfold, you say the signs were there. We just didn't pay attention to those signs. And a credit issue is kind of like that too. There's always signs that there's going to be a credit issue and a lot of them aren't. But eventually one of them is and you go, well, we should have known it. Yeah. And the 12 others that never happened either, we should have known that those were going to be credited events.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think if you're right that we don't have a recession and credit losses remain very low, which they have been. I said about mortgage delinquencies, lowest on record, I actually think some banks could do well just because they'll make a lot of loans at higher yields and then they'll reprice their book. But yeah, if we have a credit issue, then that's a whole nother story.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Going to be fine as a bank. They're going to be fine as a place to deposit your money. Are they going to be financed as stock because all stocks are about cash flow, earnings, and what you expect them to make in the future, you know, discounted cash flows? There you could argue that the earnings of the bank might be suffering from here and that the stock won't necessarily appreciate as an investment. But no, if you want to hold your money there, I wouldn't be worried that somehow you're going to be trapped like we were worried about with Silicon Valley Bank in March that you will be unable to access your own money. That's not the way I like to use the phrase walk where a run is a panic because the bank is going to close and I won't be able to get my money.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“And banks, you know, the reason people said banks make money when interest rates rise is because the idea of they're very asset sensitive, their credit cards and auto loans that are floating rates and you can always turn them over. So at 5%, you're going to make a lot more money than at 0%. But banks honestly, they really resemble the thrifts of the 1970s and 80s because of the refinancing in 2020. But Bank of America bought half a trillion dollars worth of agency mortgage-backed securities and their unrealized losses on that is 100 billion. And they're going to make that back because they're holding interest rate, their deposit costs are going to be much lower than what they could do on new loans. And Bank of America is definitely going to be fine. But it's just...”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT