WEBVTT - Jim Bianco Talks Bond Yields

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, joining us some land.

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<v Speaker 2>Of Schlitz and paps, blue ribbon. Jim Bianco, I believe

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<v Speaker 2>is with us all right now? Rich, do we have

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<v Speaker 2>mister Bianco? Okay, we do, Thank you Rich Truman for that.

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<v Speaker 2>This morning, Jim Bianco is nailed the sticky inflation call.

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<v Speaker 2>We get an update, Jim like good news this morning.

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<v Speaker 2>Futures up twenty five. We're getting knocked around here in

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<v Speaker 2>immense emotional volatility. What does a Bianco view on inflation?

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<v Speaker 1>That it's still sticky and that you're starting to see

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<v Speaker 1>signs that even people are starting to become nervous about it.

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<v Speaker 1>The surveys like Michigan and the Conference Board are showing

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<v Speaker 1>that people are expecting even higher levels of inflation. The

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<v Speaker 1>FED might call that being a bit unanchored. And I

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<v Speaker 1>think that it's going to, you know, stay with us

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<v Speaker 1>and be a problem. Now now that I've said that

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<v Speaker 1>it's a three percent three and a half percent problem,

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<v Speaker 1>it is not an eight ten or Zimbabwe problem, but

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<v Speaker 1>even still a three to three and a half percent

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<v Speaker 1>problem means that interest rates, even though the bond market

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<v Speaker 1>is rallied down, the four point three you know, we

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<v Speaker 1>don't have a whole lot more on the downside to go.

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<v Speaker 1>If we've got such that kind of sticky inflation.

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<v Speaker 2>How will the FED adapt to our new I love

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<v Speaker 2>this phrase fiscal space. How does the FED adapt to

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<v Speaker 2>you know, forget about the legislation overnight and the ramifications

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<v Speaker 2>of x numbers of zillions of dollars of debt added

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<v Speaker 2>on where we are now, how do they adapt to

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<v Speaker 2>our fiscal policy?

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<v Speaker 1>Well, I'll answer the question by saying I hope they adapt,

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<v Speaker 1>because their attitude right now has been well, we have

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<v Speaker 1>to wait and see, and we have to sit on

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<v Speaker 1>our hands and see what happens with tariffs and see

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<v Speaker 1>what happens with the budget and then kind of assess

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<v Speaker 1>it from there. And that's why the market doesn't expect

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<v Speaker 1>the FED to move until June at the earliest. At

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<v Speaker 1>this point, so I think the FED is going to

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<v Speaker 1>have to learn to adjust that there is a plan

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<v Speaker 1>out there by this administration, and it isn't just a

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<v Speaker 1>bunch of disconnected things like you know, tariffs or a

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<v Speaker 1>sovereign wealth fund or demanding the Europe pay for it

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<v Speaker 1>more security so that we could relieve our own defense budget.

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<v Speaker 1>It's what I've been talking about for the last couple

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<v Speaker 1>of weeks. It's the mar A Lago Plan. That is

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<v Speaker 1>the plan, and we're getting all the phases of that plan.

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<v Speaker 1>And the idea is to lower the value of the dollar,

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<v Speaker 1>is to bring the US into a more competitive position.

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<v Speaker 1>Is to relieve us of the debt burden and bring

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<v Speaker 1>down interest rates. But right now the Fed seems to

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<v Speaker 1>think like there's kind of three random things that are

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<v Speaker 1>happening side by side and hasn't put that together. Once

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<v Speaker 1>they do, hopefully they'll understand the plan.

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<v Speaker 3>So it's interesting. Jim Torsten slockover to Apollo's out with

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<v Speaker 3>a note this morning and just kind of talking about

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<v Speaker 3>the reverse of globalization. He calls it segmentation, as in

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<v Speaker 3>talking about the how that puts structural upper pressure on inflation, goods,

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<v Speaker 3>inflation in labor, keeping industry structurally higher for longer. How

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<v Speaker 3>do you think about that? Is that something that can

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<v Speaker 3>be a real headwind for global economy?

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<v Speaker 1>Oh? I think it is a headwind for the global economy,

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<v Speaker 1>and it will be for both that and inflation. Torsten's

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<v Speaker 1>right about that. It will put upward pressure on inflation.

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<v Speaker 1>And if you look at the global economy, especially if

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<v Speaker 1>you look at the European economy, they're not doing very

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<v Speaker 1>well right now. The Chinese economy is not doing well

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<v Speaker 1>at all. Right now. The bright spot in the globe

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<v Speaker 1>is United States, at least at the top line. The

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<v Speaker 1>United States economy is stronger than most of the other

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<v Speaker 1>developed countries, and it continues to do well. But that segmentation,

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<v Speaker 1>or that deglobalization as it was called before, that that's

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<v Speaker 1>been underway now pretty much since the financial crisis and

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<v Speaker 1>got accelerated post COVID, and I suspect we're going to

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<v Speaker 1>continue to see that happen. That's the impetus behind tariffs,

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<v Speaker 1>and why President Trump keeps talking about we have unfair

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<v Speaker 1>deals is that he's trying to correct that. But that

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<v Speaker 1>means we're going to see more segmentation.

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<v Speaker 2>Jim Mianco, We've had a series of conversations. If you're

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<v Speaker 2>just joining us, James Bianco with us from Chicago threat

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<v Speaker 2>he could be with us with Jim Bianco research. Jim,

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<v Speaker 2>I I look at the last couple of days of

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<v Speaker 2>conversations and a lot of people are yeah, yeah, but

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<v Speaker 2>we're cautious, and it's the politics and all that A

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<v Speaker 2>headline out three minutes ago Elon Musk will attend Trump

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<v Speaker 2>cabinet meeting today that according to Fox News Jim Bianco,

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<v Speaker 2>how do you participate in the market, in the stock market,

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<v Speaker 2>given the newsflow we're all having right now, Well, that

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<v Speaker 2>is the thing you want to definitely get yourself, you know,

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<v Speaker 2>away from, is getting a bogged down into all of

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<v Speaker 2>these situations, whether you know there's this or that that's happening,

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<v Speaker 2>or even the mar Alago accord.

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<v Speaker 1>I think you'd want to take a longer term perspective

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<v Speaker 1>and to decide what you like what you don't like. Now,

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<v Speaker 1>not that I've said that, I'll a note precaution. The

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<v Speaker 1>other problem that the stock market has, while I think

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<v Speaker 1>it's having indigestion more than anything else, is we started

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<v Speaker 1>the year with very high valuations in the market, and

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<v Speaker 1>the max evenstocks had extremely high valuations. They need everything

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<v Speaker 1>to go right when you have those kind of valuations,

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<v Speaker 1>you know, to put it into you know, in baseball terms,

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<v Speaker 1>you need to score eight runs, and if you score

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<v Speaker 1>six runs, that's not enough, even though six runs sounds

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<v Speaker 1>like a lot, because that's the problem when you have

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<v Speaker 1>high valuation, and that I think is why we're starting

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<v Speaker 1>to see people be more cautious more than anything else

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<v Speaker 1>is those type of issues, and it gets kind of

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<v Speaker 1>wrapped up into, you know, the news flow of the day. Jim.

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<v Speaker 3>We're about ninety percent of the way through the SP

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<v Speaker 3>five hundred reporting season here obviously and video big, big,

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<v Speaker 3>big name after the close. What have you learned from earnings?

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<v Speaker 1>Yeah, and Vidiao's the biggest name. But the earnings numbers

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<v Speaker 1>have looked great so far. The year over year earnings

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<v Speaker 1>numbers for the fourth quarter to fourth quarter for the

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<v Speaker 1>S and P five hundred is running around twelve or

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<v Speaker 1>thirteen percent. That's been a very good number. Even sales,

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<v Speaker 1>which is kind of an analogous to nominal GDP because

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<v Speaker 1>they're like trillions of dollars of sales, is five and

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<v Speaker 1>a half percent, and so these numbers have been looking

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<v Speaker 1>very good. Now that I've said that, remember that those

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<v Speaker 1>are the numbers they report it. They don't have much

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<v Speaker 1>forward guidance, But even the companies are offering guidance that

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<v Speaker 1>is somewhat positive right now. So that is that is

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<v Speaker 1>a good thing, but that is also running into that

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<v Speaker 1>high valuation thing. So even though those numbers might be good,

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<v Speaker 1>they might not be good enough.

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<v Speaker 2>Shib biancle way too early from shimmy uncle, thank you

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<v Speaker 2>so much for joining us.