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

“Yeah, no one did that. Now you go on your phone for five minutes and boom, you're in e-trade and you're getting five and a half percent. That's why the bank walk now is much different than the bank walk was then. We pushed everybody to the technology of using banking gaps, 120 million people a month use a banking app, mostly for transferring money and paying bills. We're talking about transferring money here. It wasn't an issue because the Fed squashed interest rates at zero for 12 years. Well, now that we've got 5.5% of money market for eight and banks are trying to hold deposit rates at one, it is an issue. Yeah. And that's why we're seeing money plead out of the banks every month. Again, doesn't mean a bank fails. It just means where are they going to make money? That's why their stocks are down so much.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Is did this exist in 2005? Yes. But if you said the bank's paying me 1%, I could get five and a half. It's exactly the same number in 2005. You had to take a day off of work. There was no remote work. You had to go to the branch and you had to fill out a bunch of forms. And as I like to jokingly say, and then you had to wait a week, and then the branch would tell you that some of the forms were filled out wrong. You had to come back a second day off. Yep.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Right, yeah, because Morgan Stanley owns e-trade. Yes, it could be going from that as well, too. But it's not Morgan Stanley. And so a lot of these banks to keep the deposits in the bank have to start raising their deposit rates in their net interest margin. The difference between what they have to pay their depositors and what they get from their people that borrow money from them has been collapsing. So the bank walk is not get away from the bank because it's going to fail. It's I'm walking away from low interest rates and it's squeezing their profitability. And that's why the bank's stocks have been suffering because we look at their business model and go, where are they going to make money? They have to continue to raise that cost of funds that they're getting from their deposit base and they can raise interest rates on the people that they're lending money to, but only so much. They're already there anyway. And now they have to start raising their deposit rate. What's different, again, to use my prop again.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“And what you could do with your phone is you could pick it up and you could transfer your money to a money market fund in five minutes. So the banks are seeing their deposit base leave for a money market fund. Now, if they're a big enough bank, it might be from Chase Bank to Chase Securities, but it's not the bank.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“That's right. And what's been happening with the mortgage market is these banks buy a lot of these securities, as you said, when interest rates go up, the price goes down. They're sitting with an unrealized loss. They have to show that unrealized loss, and it hurts their profitability. They've also got the problem of what I call the bank walk. And the bank walk, it's not a run. It's not, oh my God, get out of the bank before it fails. They're not failing. But what people are doing is they're starting to see that the banks are paying them half a percent, one percent, one and a half percent on their money in their bank deposit. And money market funds are paying 5%, five and a half percent. And now we got this new technology. You've got your phone.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Ton yeah Maybe I'm a conspiracy theorist. I was not old enough to remember that. But looking back, Fed cut rates to 1%, I think you said mortgage rates went down to some marginal spread above that. And so many people refinanced. And banks who owned mortgages or mortgage-backed securities who thought they were going to get that income, they get paid $100 back, but they bought it for $105, $110. And maybe, who knows, maybe that's what pushed them into Subprime because that was safer on the duration front, although way more dangerous on the credit front. We have the same issue right now with the duration, right? I mean, you've been somewhat bearish on the banks for quite some time, and banks are having a lot of issues with the mortgage-backed securities and mortgages are underwater. They're being paid lowest mortgage delinquency rate ever on credit. It's totally fine, at least in the data so far, but they're just being paid 3% is just not cutting it when rates are 5.5%.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“It was the government sector that levered a ton. Yeah. And so they were coming into this at a relatively delevered spot. I'm old enough to remember if you went back to 2005, 2006, the national pastime was not baseball, it was not football. It was refinancing your mortgage is what it was. Everybody, you know, you'd go to the cocktail party, go, did you see the Super Bowl last week? No, but let's talk. I tell you what, I got my adjustable mortgage. That was the national pastime at that point. And then the housing market blew up because we kind of overdid it. And so we delevered. So we weren't necessarily in that same position like we were in 2005.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“And the pain that Waller said, you're not seeing it on the borrower's corporate credit. A lot of people, the corporate sector and individual homeowners, the consumers, they termed out their debt and consumer debt as a percentage of income is actually quite small. I mean, people, just the narrative is, oh my God, everyone's so levered up. But actually, 1985 to 2000, that was the huge levering up of the consumer. It's been pretty flat over the past 20 years as a percentage of income or GDP.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Also been saying that for about 18 months. That's true. So we'll see. I mean, it doesn't mean that they're wrong because it's been slower to unfold.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“But it also comes back to nominal growth in the early 80s, my argument, it wasn't that high. Those were restrictive rates. Where five and a half percent and a six percent nominal world might not be as restrictive now as people think it is. It is definitely the speed of the move is definitely huge. And the relatives move is definitely huge. But is it hurt? I'll come back to Chris Waller again. Chris Waller fed governor has given that speech and he said. Economy is okay, stock market's okay. We keep printing 200,000 plus jobs a month. Where's this gain that everybody's talking about? And if there isn't, where's this demand that we have to cut rates? And so that's the argument is that now maybe, you know, the people that are forecasting recession would say it's coming. You wait six more months and you'll see that pain.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“There hasn't been one of those for at least 50 years. And so I don't know what this garden variety in recession is that people are looking at.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Right. 2001, the recession, the recession was so mild in 2001 that some of those same economists on the Cycle Dating Committee say that after the fact that there might not have been a recession. Wow. But it is still, they called it a recession, and it is. But 2001 was 9-11. And then if you go before 2001, you got to go back to 1990. That was the recession before that. 1990 was Iraq's invasion of Kuwait. And the oil spike. Remember, oil went from $7 to $8 to $40. It went up 400%. If you go back before that, you had the inflation spike of 1982. You had two recessions real quick in 1980. And then if you go back before that, you had the OPAC 74 was the recession before that. And that was the OPAC oil or the Arab ore oil embargo, as we called it at the time. What I'm trying to bring up is I'm not going back 50 years. Yeah.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“But I don't. Let me back you up. So 2020 was an exogenous effect with COVID. 2008 was an exogenous event with the housing crisis falling apart. The recession before that was 2001.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“So that is a really convincing case that maybe we have a slowdown of sort of vanilla recession, but a type of recession where a 2008 tile recession or a 2020, when it was caused by an exogenous force, I don't see that exogenous force. And maybe that's the sign that it actually.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Right. And that financial crisis, even if you're not a banker, if you're just a housewife in the middle of the country, holy crap, look what's happening with the economy. I better stop buying things. I better change my behavior. And then the whole economy goes down. So what I'm saying is you're going to see rolling recessions. But what is the hallmark of an economy that overall goes down? Something worse than last year is what you need to have happen.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“But overall, you might not be yet at a point where you see the whole economy slowing down. What has been the hallmark of an economy that has gone into recession in the last 30 years? It has been a financial crisis associated with the two. Some sector goes bad. The markets freak out, everybody changes their behavior because the markets freak out. I'm talking about like 08 and in 2000. A lot of what happened in 2008 was the housing sector went bad. Okay, but everything else was okay. But the banks fell apart. The stock market fell apart.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“You know, healthcare. Healthcare has always been a very strong part of the economy and offset that. And that in total, the economy continues to move forward. So a lot of those indicators can be correct that maybe manufacturing, maybe transportation and some are going to experience banking is probably experiencing a recession right now. But there are other sectors of the economy, tech, AI, healthcare, which are multi-trillion dollar sectors too, that are doing very well and there can be an offset. And that's why you might not see that global slowdown that a Federal Reserve would want to see to back off on interest rates. So what you have is you have a constant economy that some parts are constantly in recession, some parts are constantly in a strong recovery.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Mailed it to him Yeah, so the other thing to keep in mind, too, is that the total economy, GDP, nominal, that's with inflation, is approaching $30 trillion in the US, 25 to 30 trillion in them, which depending on which measure you use it. When you start seeing the economy that big relative to what it used to be, you can have multi-trillion dollars sectors of the economy, manufacturing, transportation, have a very difficult time and they could be in recession, but you could have other sectors of the economy, especially in the service sectors, booming.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“And the 20 million layoffs in March and April of 2020. I mean, there's so much volatility in finance, it's often said that's dangerous to say this time is different because that's what you say at the peak of a bubble and then this time it isn't different. But Howard Marks, I think it's he who has a great quote that 20% of the time it is different. And you're going to be wrong if you don't. And I think a reasonable case could be that, yeah, in 2020, you shut the entire global economy down. You print tons of money and you don't only just give it to the banks and corporations, you give a lot to them, but you give it to everyday people. You mailed it. Check out checkable deposits went up 80, 90% and 20 million people laid off and you had a very tight, very, very lots of slack in the labor market, tons unprecedented. And now you have a very tight labor market as the economy reopens and demand and everyone wants pelotons and now no one wants pelotons and everyone wants red sweaters. Total loss of volatility. But when it comes to those leading indicators, durable good spending.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, but it's up like 50 or 60 percent in the last six months from a very low level, but it's heading back up again. The supply chain is going to be very volatile and highly cyclical. What would hell is if we had that 1946 mentality? You know what? This is a post-pandemic economy. This is different than 2019. Stop waiting for normalization. Let's figure out how to restructure this economy. Instead, we want to argue, do we need to restructure it? Do we just need to wait? Things are returning to normal. Normal, again, is it's like it was before 2020. The implication there is that was a one-off thing and it didn't have any lasting consequences to shut down restarted economy. Those lasting consequences alone of remote work are the biggest things that have happened to the labor market since we invented the eight-hour workday, five-day work week in the late 19th century.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“No, they have not. As a matter of fact, if you start looking at some of the supply chain numbers, you know, we all looked at the cost of shipping a container was really high at the end, beginning of 22.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“To say, you know, you used to send me red sweaters, and I used to call you up and say, I need more blue sweaters, and you'd have them on the boat, you know, from China over here within 48 hours. Well, now I don't need red sweaters or blue sweaters. I need pants. And I don't need pants to be delivered to the Long Beach port. I need it to be delivered to the Charleston port. And what we're told by the suppliers is two years. It will take me two years to ramp up from sweaters, different colors to pants, and move them from to Long Beachport to the Charleston port. The supply chain is very robust within channels. But we're now talking about taking it and putting it in a different channel.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“You were home two days a week, Saturday and Sunday. Today, you're home four days a week, probably Saturday, Sunday, Monday, Friday. You go to the office three days a week. You've doubled the amount of time you're at home. Your lifestyle's changed. Your lifestyle's changed because of that. Who knows this more than anybody else is the retailers. For the last two years, the retailers have been struggling. Hey, the economy's reopening. COVID has been past us. Stock the shelves. People are going to come back to the store. Okay, what do we stock it with? What do we put on the shelves in 2019? And what did we learn? They're not buying stuff in those requirements. We have simultaneous shortages and bloods of stuff at the same time. We have to figure out what has changed. Four days a week at home versus two. So the taste, the preferences, the demands that people want, those have changed as well. Now that we've changed those tastes and preferences, now we have to go back to the suppliers.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Let's start with two things. Let's start with remote work. That is not only do you have to restructure the whole idea of why I go to the office? What do I do at the office? What is the purpose of an office? What are we going to do with these hundreds of billions of dollars of offices? Let's also remember too, pre-pandemic, if you had a service job, a service job being defined as you had to go to an office to do something, a white-collar job.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“We don't need them anymore. And immediately the day after that happened, we all said we have to start restructuring to a consumer economy. And we did. We're in 2023. And we're still arguing whether or not we need to restructure anything. That thing in 2020, that was a one-time event. It's over.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“This and I agree with him that that's why inflation has to come down and they have to deal with that. But if we're in a post-pandemic economy with these frictions that is holding inflation higher, ultimately the way to fix that is we need to recognize it and we need to restructure. Now the closest example we have in history of this would be the end of World War II. In that when the war ended in September 45, the October 45 payroll number was minus 2 million, and that held as the biggest monthly decline until the pandemic. But we celebrated that because those were 2 million people that were working on making Sherman tanks and P51 fighter planes.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“YouGov did a poll recently in May, something like 15% of the American public says, and this is confirmed with other studies, they have no savings, their net worth is zero. They live literally paycheck to paycheck. 50% of the public has a net worth of somewhere between $0,000 and $10,000. If you add that up, you're at around 60 to 65% of the public has less than $10,000 of savings or no savings at all. If inflation is going to continue to rise faster than wages or around the life of wages, these people just lose. They just lose because they don't have investments. They don't have savings to say things are getting more expensive. Well, I got a lot of money in the bank. I'll just pay a little extra for it because I've got that money in the bank. The Federal Reserve Jay Powell understands.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“That they worked in 2019, but others, especially in the labor market, don't. I think more people now in the labor market are more transactional about their job. I'll take a job, I'll do this job for, especially if you're trying to career-oriented job. I'll take a job at a big box retailer. I'll work very hard at the job for six months. They promote me to assistant manager. And then I quit and I go skiing for the winter. And I'll take another job in the spring. That is more common, or the gig economy is more common now than it was 2020. So I think what has happened is the economy is out of line. There are frictions in the economy that is leading to higher inflation that needs to be dealt with. Why does higher inflation need to be dealt with? If you look at a lot of the studies,”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“At any given day today, globally in offices, one-third of those desks are empty. Those people are working remotely, where prior to 2020 it was 5% of those desks were empty. That's one signal that something has fundamentally changed with people's attitudes with the way the economy works. I've argued that in this new era, we have to understand these cyclical indicators. Now, some of the ones you pointed out about trucking and stuff like that, they might still work the same way.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“My argument has been that after the reboot, the economy is fundamentally changed. And I'm talking global economy now. It is not what it used to be. You hear a lot of people on Wall Street talking about normalization. Normalization means going back to the way things were in 2019. We're not. We're a little bit different because that was the economic event of our lifetime. It wasn't 2008. If you're old enough, it wasn't the 87 crash. It wasn't 9-11. It was the shutdown reboot of the economy in 2020. Now that I've said that it's changed, I want to be clear, that's not dystopian. That doesn't mean it's worse. It means it's different. And because it's different, I've argued it's a little bit out of line with what we understand. The biggest example I give people about it being out of line is remote work.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Well, the short answer is yes, it is concerning. But let me back up and give you an assumption that I've been working with since 2020. We did something extraordinary in the spring of 2020. We shut down the global economy and then we restarted it. We rebooted the economy.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yes, look at how much rates went up. That has to hurt the economy. Rates matter. You're right, except if all it's doing is following nominal higher, it's not as restrictive as you think it is, and that maybe this is why the economy is able to weather this and it might take even higher interest rates to become restrictive to slow things down. That's my fear is that it can't handle these rates. We are going to have stickier inflation and we're going to have to realize Rates have to go even higher to bring that inflation rate down.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, 4.3, 4.2. The point I'm trying to bring up is interest rates might not be that out of line. They might not be that restrictive, that that big rate rise that you saw, I'll stick with the 10-year note. In August of 2020, it was at 50 basis points, half a percent. Today it's 4.3%. Maybe most of that rise has been because of extra inflation and higher nominal growth, interest rates have just been following its fair value higher and they really haven't gone to that really restrictive level yet. So that's why that all these rate hikes, and this is why economists keep saying we're going to have a recession in six months because they look at all these look at how much rates went up.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Well, that's a good question because the big question is, what is the appropriate? Yeah, should it be well that our star is yeah, our star is only different than that that's the Fed funds I'm talking about long term interest rates. But should it be one? Should it be 20? Should it be 10? Should it be five? What's the right number? The right number is conceptually whatever nominal GDP growth is. What's nominal? That's the inflation rate plus some real growth rate. Well, if the nominal growth in the economy this year looks like around 6%, you know, some quarters better, some quarters worse, but around 6%, that would tell you that 10-year yields and stuff, they should be somewhere around 6%. Now that might be a little bit hot. So maybe we back that off a little bit to 5% or 4.5.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“But this one really hasn't broadened like we've seen with the other ones because what's unusual about this case is this has come about with the Fed being uber aggressive raising interest rates. In 2002, they cut rates to an unfathomable level at that point, which was one. And they held it there for two years while the market took off. In 2009, they cut rates to zero, your point negative. And they held it there for six years. And then the market took off. But now they are raising rates throughout the bear market and they're raising rates throughout the recovery. And if we just go with my opinion, there's going to be more rate hikes, but the market's still 50-50 that they're still yet another one coming before the end of the year.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Right. You know, April 2020, June of 2009, March of October of 2002. These are the bottoms of the last three bear markets. You're right, a handful of speculative stocks go, but eventually the rally broadens.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I hear what you're saying that it's been a narrow rally. Large cap stocks leading the way. And that typically when you have a bull market and everything is rallying and then only 70% of the stocks are rallying and then only 50% and then only 30, that precedes a bear market. But we didn't have that. We came out of a bear market and the narrow stocks are leading us out. Like April 2020, I bet it was probably pretty similar of Apple and Microsoft leading the way. And then that made room for the sort of more speculative stocks.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“You have to be careful that there might be a period in the future where those seven stocks falling apart are dragging everything down with them and you're going, but everything else is okay. Yeah, well, now you're getting the other side of that story that you had in 2023 with the seven stocks brought everything up.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Right. So it has not taken out its February peak. So, my point is. That higher interest rates is impacting a lot of companies, except for seven companies that are all wrapped up in two letters, AI, artificial intelligence. They're running on their own cycle and their own hope and dreams about whether or not artificial intelligence or what it means and doesn't mean. But the rest of the companies that aren't AI generated or AI-based kind of companies like auto companies, consumer product companies, manufacturing, industrial companies, they're looking over at higher interest rates and those companies and they didn't do very well last year and they're struggling to really rebound. So yes, interest rates are having an impact on the market. Now, most people buy broad-based ETFs like SPY or QQQ. They're all happy because they've got this handful of stocks that have taken the whole index with them. I understand that.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“All of a sudden, you know, let's look at what's referred to as the Russell microcap. That's the bottom 1,000, so company number 2000 to 3,000. That as of late last week was still down on the year.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“We have to really look at the way that the stock market has rallied this year. There's seven stocks, Facebook or Meta. Apple, Amazon, Netflix, Google, Tesla, NVIDIA, Microsoft. I actually named Date there. Take out Netflix. But those seven are referred to as the Magnificent Seven. They are, the S&P is up 16, 17% for the year. They're 11, 12, 13% of that 16, 17%, those seven stocks. So it has been by some measures the most concentrated rally that we've seen in at least a generation, if not half a century because such a small handful of stocks is most of the game. Let's look at the Russell 2000. That is the small cap index. That is stock number, looking at stocks in their size as market cap sizes. That's stock number 1001 to 3000. Those companies that index are up mid single digits for the year five, six.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“So that argument, that higher interest rates should somewhat mechanically reduce the value of equity in it because now you have a competition, your cash yields something, that makes a lot of sense to me now. And it made a lot of sense to me in October of last year as Federal Reserve raised interest rates so rapidly and the stock market didn't crash but had a continued decline in equity prices that were quite substantial. But as you know, the stock market has been on a tear. And as the Fed has continued to raise rates, race has been going higher. The stock market has been going higher as well. So how do you explain that and are you someone who says long term the theory that high interest rates are not good for stocks that will hold play is just that so far it hasn't played out”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“As opposed to owning this thing called the SP 500 ETF or something like that, and it might do like it did last year and lose a quarter of my money again. So not necessarily by saying no recession, I'm also saying stick your inflation and potentially higher interest rates.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Is a choice of alternatives. It's do I get into the stock market or don't I get into the stock market? It's do I get into the stock market compared to what? Well, in 2019 it was compared to zero in a money market fund. 2023, it's compared to 5.5% in a money market fund. That's a gigantic difference. Long-term studies done by Ibotson and Associates in the University of Chicago saved long-term many, many years. The stock market should return 9%. Money market funds, which have no risk, are giving you 5.5%. They're giving you two-thirds of the gain of the stock market with zero risk. So if rates are going to stay up, that is going to change the calculus for a lot of investors because I can get more than half of what I was hoping to get over long periods of time and sleep at night.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it was a slowdown. Maybe it was a soft landing, but I think that was the weakness and we're on the rebound from that weakness. That might not necessarily be bullish. Oh, we had the slowdown of the soft landing last year. We're cool. We got four years of no recession. We're off to the races. Not necessarily because if, as I said earlier, the inflation rate had bottomed in June. It starts drifting towards four. The economy stays reasonably strong. Payroll numbers stay reasonably strong. The argument is sticky inflation. The argument is no rate cuts. Maybe more rate hikes, as I argued, than the stock market has the competition of higher rates. Remember, all investing.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Well, let me back up and say that in 2022 we had the first and second quarters were negative GDPs. That has been widely considered to not be a recession. By the way, what is a recession? There is actually a business cycle dating committee of six Puba economists and a couple of them are actually very good economists. And they get together and they proclaim that this was a recession. It wasn't. And some of those economists on that group, Bob Gordon and Northwestern University, who happened to know very well, is they've already said that they don't think that was a recession. I'll disagree with them. I actually think it was, but I'm quibbling here a little bit. If nothing else, that was the only time in American history had two negative quarters of GDP. That wasn't a recession.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“That's not too bad days in the stock market, and that's not just one payroll number that kind of comes in below expectations. It's like the definition of pornography. We'll know it when we see it, when things go bad.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Started to fall apart and they were trying to stop a recession. So I've always been of the opinion that the Fed learned the lesson of the 90s, even though Paul wasn't there, the staff was, that the next time they're going to cut rates is when they see serious weakness in the economy. It won't be, we did our job, we can now back off on rates. We did our job and we don't need to be as restrictive. Fed Governor Waller gave a speech the week before we're recording, in which case he talked about do we need to cut rates. He said, well, we've raised rates this much and the economy's strong, the stock market's up. It doesn't seem like these high interest rates are hurting anything. So why are we in any hurry to pull back on it? And I think that that's that higher for longer narrative. Only when things start looking bad will the Fed actually start thinking about cuts.”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Can I jump in on that? If you look at the cycles in the stock market for the last 30 odd years, when does the Fed cut rates? Well, in the 90s, they cut rates in 95 and they cut rates in 99. And those were, if I could use the phrase, those were victory cuts. We vanquished inflation. We accomplished our job. We can now start backing off in the rate cuts. Well, in 95, the S&P went up 37% in 10 months. And in 99, the NASDAQ went up 85% in a year. And the Fed said, or the Fed kind of acknowledged, you know, we kind of sent the animal spirits running by cutting rates. The last three rate cuts, 2000, 2008 and 2020, came about as a panic because the economy”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I've always been skeptical of the narrative that the Federal Reserve is going to cut rates when the economy is doing fine just to help out the stock market. And I expect that to not occur. But I just want to go back. Can I jump in on that?”
2023-09-15 · Forward Guidance · Jim Bianco: No Recession, No Landing · IDENTIFIED FROM THE TRANSCRIPT