Jim Bianco: Markets at All-Time Highs – So Why Is the Fed Cutting Rates?
Summary
Market Outlook: Jim Bianco highlights that financial markets, including stocks, gold, and bonds, are at all-time highs, questioning the need for the Federal Reserve to cut interest rates.
Economic Insights: The labor market has slowed significantly, with job creation dropping from 158,000 to 29,000 per month, largely due to a dramatic decrease in population growth caused by reduced immigration.
Federal Reserve Policy: Bianco argues that the Fed's interest rate cuts may be a policy error, as they could stimulate unnecessary inflation without addressing the real issue of low population growth affecting job creation.
Inflation Concerns: Inflation remains a concern due to factors like increased tariffs and the rise of remote work, which empowers labor to demand higher wages, potentially leading to wage inflation.
Investment Strategies: The podcast discusses the 60/40 portfolio strategy, with suggestions to diversify into assets like gold and Bitcoin, reflecting a risk-taking sentiment among investors.
Market Dynamics: Bianco notes the influence of passive investing and retail buying, which may lead to market mispricing and overvaluation, particularly in sectors like AI.
Social and Economic Implications: The discussion highlights the potential societal impact of inflation, which disproportionately affects the bottom 90% of income earners, increasing economic inequality.
Future Fed Leadership: Speculation about future Fed leadership includes potential candidates like Kevin Hasset, with an emphasis on aligning with Trump's preference for lower interest rates.
Transcript
I would say to them, look at where the financial markets are. You know, stocks are at all-time high, gold at an all-time high, M2 at an all-time high, home prices are at an all-time high, bonds are rallying. What problem do we need to fix? What you can fix with cutting interest rates doesn't need to be fixed. That would be my argument to the Fed. >> Hey everyone, I am thrilled to bring to you this special in-person episode of the Julia Larose Show where we are joined with a fan favorite of the show. We have Jim Biano, president of Bianca Research. This is our first time meeting in person. So wonderful to meet you. >> It's wonderful to meet you, too. I'm looking forward to the conversation. >> Likewise, and we love having you on the show. And so, we're thrilled to have you back as always. And Jim, we got to start where we always start. Big picture macro view for you today. What do you make of where we are in the markets and the economy? What's on your radar now? And where do you see things headed? >> All right. So, the big picture I think is right now is probably with the economy. We're getting no data, so we're all guessing on what it is. >> Yeah, there's no data. >> Yeah. >> Fourth, we'll get some. Right. >> Right. There is some data to be to be fair about it. There's plenty of data out there that's in the private sector that you could kind of piece together what's going on. And I think from the economic standpoint, the most interesting thing is to talk about what's happening in the jobs market or the labor market. It has slowed down a lot. uh it is showing signs that we're not we were producing 158,000 jobs in the last 6 months per month last year. We have produced in the last 3 months through August the last data point we got from the government 29,000 jobs. Now normally that would be viewed as a disaster and the Fed is sort of thinking that way because they've cut interest rates and they're talking about cutting them again the end of October. However, something's changed and something's changed in a dramatic way in the economy in the last six months and that is the population growth of the country. >> Yeah. >> Uh the fertility rates down. Um so population does not come from organically having more kids. It comes from immigration and we have no immigration in the country. We've closed the border. Um the data that we're getting, we used to see 250 300,000 um contacts or um you know contacts by border patrol at the border back in late 22 23. We're down to 24,000 now. But of those 24,000 about 24,000 of them have contact with Border Patrol and then they send them back. They don't even get in the country. So it's effectively zero. That has taken the population growth of the country from January above average to an 80year low in the space of four, five, six months. Now, why does that matter? We're producing 29,000 jobs a month. How many should we be producing? And the answer is what Jay Pal said at his press conference last month. Somewhere between zero and 50,000. Average being 29 thou 25,000. The Dallas Federal Reserve put out a study about two weeks ago. They estimated it at 30,000. So if we're producing 29,000, that's enough, right? >> Given the population growth of the country. >> So this is the biggest question among economists. What's the state of the labor market? And they'll say, well, it's went from 158,000 to 29,000. So it looks bad. Okay, I understand that. But how many jobs should we be creating? And if the answer is only 25 or 30,000 because we've got no population growth, maybe we're still in balance. Why is that important? Because if the Fed is cutting interest rates, saying we have to juice the economy to get more jobs, if we don't have people coming into the country and we don't have population growth because we're not having kids, we have to have it through immigration, then we're not going to get to 100,000 jobs a month unless we have massive wage inflation. And so that's really the biggest issue in the economy right now. markets. Well, they're all going up. Everything, what's not going up? I mean, even the bond market's rallying now. Um, you know, crypto's rallying, gold, silver's rallying, the stock market's rallying, the bond market is rallying, foreign markets are ringing. The only thing that's not railing is the dollar at at this point. So, they're engaged in, you know, kind of a a happy medium or numa nirvana. We've they're perceiving that the economy is doing okay, that inflation is a little bit low. I don't agree with that. And so we've got all the markets going higher. >> Wow. Okay. So let's talk about the Fed and um the employment side of the equation. So it sounds like 29,000 that's we're producing enough yet. A lot of folks don't necessarily recognize that or see that because they're looking at as you point out like the old way before when you had to cut off the immigration spigot. >> So are they making a policy error by cutting then? That is the risk that you know now as of the day we're recording the mark you would actually argue the markets think no because the 10-year yields slightly under four percent and the stock market is after selling off a week ago it's almost back to its all-time high but there the risk is out into the future that they could be because if they're cutting rates on the idea that we need to and I'll use the term that Jay Powell used at his press conference risk risk management agement cut. I thought they were data dependent. I don't know what risk management means. I don't know if he knows what it means, but it sounds >> sounded buzzy. Yeah. >> Yeah. It it if I had to give you a cynical definition of risk management cut, it's it's to get the orange guy off my back, you know? So, I'm going to cut rates because he's been he's been calling me too late forever and so therefore I kind of get him off my back. Well, if that's the case, and they're probably talking themselves into, well, the employment numbers are down, you know, and the argument that Paul has used is, yeah, it's gone from 158 to 29,000, but how do we know that it's not on its way to like minus 50,000 next year or something like that? Well, we don't. You mean it could be the case, but you also said that you don't like to forecast, right? So, the riskmanagement cut, the risk is you're going to cut rates. you're going to try and stimulate the economy when it doesn't need it and you create inflation and then you could recreate a backlash in the in the financial markets because you created inflation. If you want an example of that, last year last year in September 24, the Fed cut 50 basis points followed up in October and no uh December with two more cuts of 100 basis points. And what happened? Uh long-term yields went up during that period. They went straight up because they were saying we don't need this. You're just going to create inflation. And that's the risk you have is a repeat of that again. >> Okay. So, right now the markets are okay with it. And I think it's fine. How about on the inflation side of the equation? When you think about the Fed's mandate, what about I haven't heard your latest on inflation. >> I think inflation is an issue and I think it's going to stay an issue. And I think that there's two things that I've argued that are going to cause inflation. tariffs >> and um and remote work. So tariffs, let's start with tariffs. U that's been a difficult one for people to get their head around. Just to give you some idea of where we're at, the average tariff rate was 2 and a half% at the beginning of the year. It is estimated by the Yale Budget Lab right now to be about 17 and a half 18%. So it's gone up 6x. Um the average tariff collected is about 10%. Okay. What if the tariff rate is 17 and we're collecting 10? There's a lot of people that have been making the argument, well, that's because export countries like China or importers like Walmart are eating some of that higher price and not passing it along to the final um customer. So, that's why they're being shielded from it. That was true probably in April and May and June right after Liberation Day when Trump made the tariff announcement because a lot of companies didn't know what to make of these tariffs and they were more concerned about protecting their market share than they were about passing along the prices. Well, by June or July that ended and they're like, "Nope, this is the world we live in. We're not going to eat these prices forever." And they're starting to pass them along. So I suspect that that 10% actual tariff rate that they're collecting, that's just the value of the tariffs divided by how much goods get imported is 10 by 10%. Is going to keep going up. Tariffs are embedded in the price. That is more inflation. So the inflation rate, which let's use the core inflation rate of CPI because that's what's coming out on Friday, is 3.1% through August. If Wall Street's estimates are right, it's going to stay at 3.1%. But I think it will continue to go higher maybe to three and a half or four by some point between now and next summer. And so it's going to keep going up. Now the other part of it is remote work. Um remote work has been a tectonic change in the way that we work. Um you are no longer encumbered by your job location-wise. You can get a job remotely anywhere you want. So before COVID about 7% of the workforce was remote. Let me give a definition of that so everybody knows what we were talking about. >> You get paid to do your job not at an a central location. So not in an office, not at a hospital, not at a school, not at a site. You get paid to do it anywhere somewhere else. That's remote work. Every day of the week is work from home. So work from home is just a a subset of remote work. So it was 7% before COVID, it's 27% right now. About half the jobs in America cannot be done remotely. So a waitress can't be remote, a fireman can't be remote, a surgeon can't be remote, a policeman can't be remote. So that means about over half the jobs that could be done remotely are currently being done remotely. That gives labor workers more power to make demands on management. Give me what I want or I quit and I don't have to move to get a new job. And you're seeing that with companies now like Amazon, Microsoft who have been making these big pushes, everybody back in the office and people are saying, I'm not going to go back. I'll quit. And there's like, okay, most everybody back in the office is kind of where where they're at. And you've seen this with GM. You've even seen this with the federal government to some extent, too. Um uh and so a lot of people are are are pushing back. And it is a sign that labor has more power. And if labor has more power, they can also push on wages too. So wages will continue to go higher, tariffs will continue to push inflation higher. And I think even though you will get some deceleration of inflation because of housing, you know, rents going down, it will be more than absorbed by these other factors that will keep the inflation rate elevated at least for another year or so. >> Gold keeps setting new all-time highs, but price appreciation isn't the only way to profit from owning gold. Monetary Metals is redefining the future of precious metals investing. Instead of paying to store gold, imagine getting paid to own it. With Monetary Metals, you can earn up to 4% on your gold paid in physical gold. That's right. Your ounces grow each month, not just your paper balance. A yield on gold paid in gold means you're stacking more ounces every single month. And you still benefit if gold's prices rise. You're earning more gold every month and enjoying potential price appreciation at the same time. Go to monetary-medals.com/jullia to learn more and see how you can start earning 4% on your gold paid in gold. And do you think going back to like the job side of the equation, do you think that in order you were saying earlier that you would get wage inflation if you tried to like move that number up? Yeah, because how does >> that work? >> If you you know you usually there's two things that create jobs in this country, right? Um or to create the potential supply of workers. Uh that is you know um uh population growth. How many we define let me start say it this way. We define the workforce as anybody between the ages of 16 and 64. How many people are between 16 and 64? 212 million is the answer right now. Um, and what we want to see is how many people are being added to that group every year. Used to be about two or three million. And so you'd have to say that the supply of labor, the number of workers, they're they're looking for an additional 2 million jobs every year just because of the natural growth of the population. Well, that's down to by some estimates zero, other estimates a couple hundred thousand now, not two million. So that's really been, you know, the the the big change there. So if we're going to demand a 100,000 125,000 jobs a month that we want to try and create, which would be about a million and a half or so a year, um where are we going to get the people to fill these jobs? Well, there's 212 million people in the country that have that are in between 16 and 64. There's 160 million that have jobs. So there's 62 million in that cohort that don't have jobs. Why not? Well, starts at 16. If they're students, they don't have jobs. They're housewives, they don't have jobs. If they're disabled, they don't have jobs. If they're in the military, they don't have jobs. If they're independently wealthy, they don't have jobs. So, there's lots of reasons that they're not in the workforce. Well, if you need to get a 100,000 jobs a month, you need to say, "We got this pool of 62 million. We're not adding to it that much. we need to entice them to take these jobs, raise wages, wage inflation. That's the way you would you that's the way you would wind up doing it. And if you raise wage inflation, typically infl the overall inflation rate should follow the wage inflation rate. So in other words, if the average person is getting a 3% raise every year, prices should go up by hopefully a little bit less than 3%. So, you make some real gains, but they're not going to go up one and you're going to get three because every because what'll happen is everybody will get so wealthy they'll start bidding on stuff. Man, I'm making more money and it's not costing me anything more to make to buy stuff, but I really want this stuff, you know, so I'll bid on these vacations or I'll bid on these products that I want. In other words, I'll pay more for them. And that's how you get that, you know, that demand pull on uh on inflation higher. So this is why it's very important that this a lot of the economic data really revolves around the population growth of the country. The other half of it is is um productivity. How more productive can we be with our current workforce? If we could be more productive, then I don't need as many workers and then that existing pool of two 62 million, they'll be let go because I can do it with less and they can go find another job that the market is out there looking for. But productivity isn't the main driver of the supply of workers. It's population growth. And that has dramatically changed from March. In March, it was something completely different. That's about the time that Trump really got going with closing the border and increasing deportations to where we are right now. >> Okay. So, the FOMC is coming up end of the month. >> If you were in that room in that presser with J Pal, what what would you ask him? >> Well, I would chain myself to the door and say no one's raising rates and no one's going to be allowed out of the room until you all agree with me. But I will lose that argument >> because ultimately that would be a policy mistake then. Okay. I I fear that it will be a policy mistake. I would argue against it. I don't think, you know, I would say to him, look at where the financial markets are. You know, stocks are at all-time high, gold at an all-time high, M2 at an all-time high, home prices are at an all-time high. Um, bonds are rallying. What problem do we need to fix? And he might say, low employment. And I would say stocks are an all-time high. M2 is an all-time high. >> Nobody's cutting rates. Don't cut rates. >> Right. I was going to say, yeah, >> where are the financial markets worried about the low employment report? They're not. >> Remember that monetary policy, to quote a term that the Fed likes to use, works through the financial channel. They cut rates to stimulate financial markets to make us feel better and make more money to grow the economy. Why do we need to stimulate the financial markets? What problem are we trying to fix by cutting rates? Now, if you said to me the low pl the low labor market, I would say you're right. It's low. There are other fixes. Maybe immigration, maybe leg, not illegal immigration, but being more liberal on legal immigration, worker permits. That could be a way to get more labor supply into the market. Um, but it isn't going to happen because you you can't fix that with cutting interest rates. What you can fix with cutting interest rates doesn't need to be fixed. That would be my argument to the Fed. And I know that that that will fall in deaf ears and they will cut rates because they've pretty much signaled that's exactly what they're going to do. >> And the market's gonna love it >> for the market's gonna love it. See, the thing about this is is on social media, everybody comes back to they're all momentum players. What do you know? The market's at an all-time high. And I like to say it is until it isn't. You know, because what you're saying is it's at an all-time high, so tomorrow it'll be an all-time high, but then tomorrow sits at an all-time high. The next day it'll be an all-time high. So, it will never ever go down again. We can end the show right now, right? They're just going to go up every day forever. But that's a momentum argument. They obviously the market goes up until it doesn't until it realizes either it's made a mistake or the situation has changed. And what I would argue is these are the kinds of things that can change the situation if the Fed is erring. Now, maybe they're not. Maybe they're right that there is some serious weakness and they're cutting rates to try and address that weakness and it isn't apparent yet. Um but maybe they're not and that's the real the real question. >> What do you make of the behavior that we've seen in the markets across asset classes? Like you said everything's pretty much up except for I guess the dollars whatever but yeah >> every like gold gold today I think was up 163 bucks 4,300 >> 4,400 4 Wow. See, I didn't even check the latest. >> Right. Right. >> And it >> last week Jamie Diamond said that he could see gold going to five or 6,000. Did he realize that that could be like 10 days later? Because we're less than a week after he said that we're already at 4,400. >> Wow. >> Yeah. Um it is an interesting it is an interesting thing about what's going on with the markets. They're all going up right now. And it's a combination of animal spirits and I think passive investing. Animal spirits. Everybody's bullish at this. Everybody's bullish about the prospects for financial markets. Um I was just at a a wealth manager conference today is sponsored by Atoria financial. There was a lot of speakers there. One speaker is Mike Green. I think you've had >> he's been on the show. Yeah. Talking about the passive bid. >> Yeah. Yeah. And he was talking about the passive bid and we were talking about that all these people were talking about the 6040 portfolio. That's 60% stocks, 40% bonds. What do we do with the 6040 portfolio? And other people said, "Well, maybe it should be 60 2020 20 60% stocks, 20% bonds, 20% something else like gold, Bitcoin, fill in the blank. Or maybe it should be 60 3010 with the 10 being cash or something like that." And then Mike said something to interesting. He goes, "How come nobody's ever thought about it being 4060 that we should go 40% stock, 60% bonds?" And the answer is because everybody's in a risk-taking mode. And when they talk about what are we going to do with this 6040 portfolio, it's like we want to keep all our stocks and that 40% part of bonds. How do we put more risk in that? How do we buy juicier stuff there? We all want to take more risk is really that's the animal spirits. The passive bid is we all, you know, as Mike says, you know, you you you hand the market money, the market buys. The the act of buying bids up the market that excites the animal spirit to hand them more money. So the market buys and the the and the passive bid just keeps going and going and it and it has the appearance of a perpetual motion machine which is the way the markets have traded for the last couple of years. You know whenever they sell off it's been very short COVID uh after the Silicon Valley bank failure or earlier this year um after liberation day very sharp down rebounds very hard up on the other side. The passive bid is definitely there and the buy to dip mentality is there. JP Morgan pointed out that in April when the market sold off 15% after liberation day, it was professional investors that were selling. It was every retail investor buying as much and as hard as they could >> and the market's up 40%. Mhm. >> Since that last week, the market sold off on the story, two Fridays before we were recording, sold off on the story that Trump was going to impose tariffs on China and the market sold off 2.7%. The next Monday, the market rebounded and JP Morgan said it was the lights were dimming that retail investors were plowing into the market so much. If you go on the Reddit boards, it's almost like it's like the world's upside down. They want bad news. They want terrible things to happen because that will scare somebody else to sell the market so I can buy the dip because the market always comes back from the dip. Now they're right. Yeah, they're right. It always does. But when you get that aggressive and that cavalier, you could get that it doesn't period. >> That's an interesting thought though, like the retail buying and just the massive amount of retail buying. That's probably not necessarily like a bullish sign for the long term. then >> it isn't only because when you get that kind of aggressiveness in buying and that um you wind up getting mispricing in markets that the markets don't discriminate between I mean the whole idea of markets and capitalism is to give money to good ideas take money away from bad ideas but when you're investing in index funds and broad-based funds and you're investing aggressively everybody gets money even the bad ideas get money so you're not discriminating and that can create dislocations and problems in markets. And I'll give you an example. Look at what's happening with AI right now. U Michael Kemblas over at JP Morgan has put together a list of 41 AI and AI adjacent companies. AI adjacent would be like the power companies that supply the data centers and stuff. Those 41 companies of the S&P 500 are 47% of the market cap. They're half the comp. They're half the market. Basically, the other 459 com or 359 459 companies in the S&P 500 are 40 are 53% of the market. Furthermore, if you go back to November of 2022 when Chat GPT came online, those 41 companies are 70% of the gain in the stock market. The other 459 companies are 30% of the gain in the stock market. Now, what's going on here? No one is discriminating. It's AI. It's AI related. It's the two letters next to each other. Just buy anything associated with it. We saw this in the late 90s when some people slap.com on the end of their company's name and the company would double overnight. The problem is, is AI going to be a big deal? Yeah, I think it is. I think it's going to be bigger than the internet. I think it's going to be the one of the biggest things we've ever seen. But there's going to be losers in there and not everybody can be a winner. and you get massive ma what you would call malinvestment. A good example that's data centers. People have pointed out the the sheer amount of data centers that we're going to build and the power requirements that they need is not realistic. So how do all these deals get done? Because everybody's pricing every data center deal as if it's going to be a winner. We saw this in the late 90s. There was a company called Global Crossings. Global Crossings raised so much money to lay fiber optic cable around the around the earth so many times that when it blew up and went out of business in the early 2000s, there's more fiber optic cable than humanity will ever need that was laid by Global Crossings. There's dark fiber to this day that that just means it's not turned on that they laid 25 years ago because everybody thought every inch of cable was going to be a winning investment. and we so overbuilt it and that's the risk you face that you have these kind of dislocations. Yes, there's going to be winners and there's going to be losers. And as a matter of fact, in AI, if you look at people like Sam Alman at a at OpenAI, Yep. Uh he he gave an interview recently and he basically said AI's in a bubble and it's going to be ugly. Not for me. My deal is going to work, but everybody else's deal screwed. you know, and you've heard all you've heard other people, Jeff Bezos, you know, David Solomon, they all kind of said the same thing like, yeah, AI is a bubble and it's gonna, you know, a lot of these deals are going to go out of business, but all the deals that Goldman Sachs in invested in, those will be the winners. And this is the other mentality that reminds me of the late 90s is, yeah, you all, you guys are screwed, not me. My deal is the good deal. You all got the bad deals. And it doesn't quite work out that way. >> Well, let me bring that back um to an individual level. So, like, okay, if I open my statements, I look at my 401k. >> Wait, what's a statement? You mean you look >> I look at the paper statements. Oh, come on. No, I look at some paper statements. >> Oh, you are really old school. >> Oh, yeah, I'm old school. We're lazy. Um, so you open up your statement. I just made one of them digital. So, I'm like, "Oh, there's my gold." Looks >> What's the carbon footprint on your state? >> Who knows? They're probably losing money on me on stamps. Who knows? But like, okay, so let's say you look at your statements on your phone, wherever you look at them. Oh, my gold looks great right now. Okay. Oh, my 401k, it looks great right now. Little stocks I'm playing around in, they look great right now. They're fun. Oh, my Bitcoin looks great, you know, because So, is there a mentality where we all kind of feel like winners? It doesn't seem right. Like, I shouldn't probably be feeling that way all the time. Well, looking at this stuff, >> it's not it's not that, you know, some some kind of Calvinistic idea that we need to have some kind of, you know, um pain and suffering to go with our life. The problem is if everybody wins um and everybody wins to this degree, it's nothing wrong with everybody winning to a certain degree, but if everybody wins to this degree, my statement looks great. Look at my gold is up 50%. My silver's up 70%, Bitcoin's doubled in the last two years. Stocks are roaring. Everything looks good. I want to buy a new car. So, I don't want to deal with the just pay the sticker price, you know, just just pay up for everything and then you get inflation. >> Yeah. So here's the problem. >> Um >> might feel more prosperous early on. >> So here's the here here's the issue I I'll I'll point out is that u and I'll quote um I'll quote David Kelly JP Morgan who was at the conference I spoke at today. 50% of all income in the United States is made by the top 10%. And 50% is made by the other 90%. So the top 10% are making all the income. And by the way, the savings rate for the top 10% is around 35%. Because you know, if you're making north of 250,000, way north of that, you don't spend that much money. You give it to a wealth manager who puts it in the markets and the markets go up uh as well. But the bottom 90% collectively their savings rate is zero. Um because the bottom 30% they have a negative savings rate. Uh you know, they get government assistance to make up for the difference. Uh, and so if the top 10 or so percent are just making money, making money, making money, and to use the crypto argument, you know, they're all out there, they're all out there buying neon colored Lambos and bragging about how much money they make and stuff like that. They're going to pay up for stuff and they're going to push prices higher. Now, they can get about with I can get a bomb with it if you're in the top 10% because you've got assets, you've got a home, you've got everything else that's going up in price. bottom 90% loses because the bottom especially the bottom 50% they don't have assets. They rent and they live paycheck to paycheck. So prices are going up because everything's being bid out of sight and they can't keep up. Their paycheck can't keep up with prices going up. They lose. That's why inflation is so important. Inflation destroys cultures. It destroys economies because it really separates you in an inequality way. The top half owns these assets that go up in price that helps them afford things that get ever more expensive. The bottom half doesn't. The bottom half resents that they can't keep up with the top half. They're not asking for neon lambos. They're just asking for can $100 today at the grocery store buy me the same thing for $103 in a year because in a in a year my boss will give me a 3% raise. Can I buy exactly the same thing for 103? Uh hopefully the answer is yes. But if you have so many people with so much money, the answer will be no. They'll be bidding up. They'll be demanding so much stuff, they'll bid the prices up and that could create a lot of a lot of um u distrust and a lot of uneasiness. And I'll give you one quick example. >> Yeah, this is great. >> Last year during the election, >> this the poll said what is the number one economic issue? Inflation. The Biden then became Harris campaign correctly said, "Yeah, but it was 9% in 2022 and it's like around three now. So, it's way down. It's under control." But you're missing the cumulative effect over all of those years. And it is such a psychological damage. I go to the store, you know, I'm in the top 10%. I go to the store, I see the prices, I have a choice four-letter word for holy the price. >> I just pay it and move on with my life. Somebody in the bottom 50%, they see the price, have that same four-letter word. But here's the difference to put that into my basket to buy it. I got to take something else out. And that's what's happened in the last couple of years. And that's why inflation is so damaging. And to give you one last in, you know, anecdote, a lot of the polls have asked people, would you trade a 1% lower unemployment rate for 1% higher inflation rate? And the overwhelming majority of people say no. In other words, they view unemployment as somewhat, to use a Fed term, transitory. I lost my job, but there's another job out there maybe somewhere. I don't like it. It's terrible, but I can get another job. But when prices go up, they never ever go back down again. That is a permanently high level that they're at. And then we have inflation on top of that. And they keep going up and they keep going up. So since prices never ever correct, they would rather say, I if you told me that 1% of the population needs to be unemployed to keep prices down, unemploy them. Don't let prices go up. That's how dangerous inflation is. And that's why going back to what I said before, I chain myself and tell the Fed you cannot raise or cannot cut rates because you cannot make the inflation mistake because if you do it's devastating and I would be so you know uh you know looking out for that mistake and I'm afraid that they're discounting that mistake in terms of the unemployment mistake that they're worried about. What do you think will be the longer term ramifications if they make that mistake with your thesis? Like all roads lead to inflation. What are the bigger side effects? I imagine there's some serious ones as it relates to society too. Probably why certain types of candidates maybe and >> Yes. Yes. You get candidates, you get protests, you get, you know, picture, >> right? But you also at the top end of the equation, you also get um retarding markets. I mean, you know that markets aren't all as jubilant as they have been because of inflation. Um, it can change things. Now, I want to emphasize we don't have it now, >> but we're what I'm seeing from the Fed is I'm not worried about that. I'm worried about unemployment. I want to try and goose, you know, the financial channel to, you know, get the um people more employed. And I'm like, but we're at an all-time high and everything. What is it? Like I said, what what problem are you trying to fix? And if the answer is you want more employment, then those there's lots of ways you could fix the unemployment problem, but one of them is not cutting interest rates. >> Yeah. Um on the inflation side, so all roads lead to inflation. Isn't there like a like some inflation's good or like addressing the fiscal picture like we kind of need to inflate our way out of some of our debt? That's a that's an argument that's been made that you know what happens is is that if you issue a billion dollars worth of bonds um what's the best way to pay them off? Well, if the inflation rate doubles and everything's worth $2 billion, you still have a billion dollars worth of bonds and it looks like half it relatively speaking it's half of of what it used to be relative to prices. Yeah, that's a way to fix the problem is to inflate your way out of it. problem with with inflating rate of is what we were just talking about. The damage you do to the bottom end of the of the bottom half of the economy. The damage you do is is is tremendous. You know, it's funny because JP Paul just three years ago in 2022 was aggressively raising rates. He raised rates from 0 to 4% one year, eventually went to 5% by 2023. And he used to give speeches and I used to jokingly call his speeches do your patriotic duty. Remember 22 the stock market was fel correct at 20 25%. Bitcoin got under 15,000 or maybe down under 20,000. I know went under 20,000. >> Definitely crypto winter. Yeah. >> Yeah. Exactly. And it was like do your patriotic duty. You and the upper half lose money. lose money and be proud you're losing money because you're helping the bottom half by us hoping down inflation. You need to lose money because we don't need you to be making tons of money going out and buying neon lambos and exasperating the situation. So lose money. That was his argument in 22. Now we've got the opposite argument. You're not making enough at all-time highs. We're going to try and goose things and keep going up. I understood the argument in 22. I mean, I didn't like it, but I understood it. don't understand the argument in 23 because I don't think like I said I don't think the problems that he's trying to address can be fixed with interest rates. All he can do is just shove asset markets higher and people are just going to make more money spend it and create more inflation. That's the risk I see. >> I listened to a podcast with you recently. I cannot remember who hosted it, but I learned that you interviewed for a Fed Fed >> Yes. >> Was this Was it a Fed governor role? Like what? >> Yes. Fed governor. as Fed got pretty cool. Yeah. So, >> I'll tell you the whole story. It was May It was May of 2019. So, Larry Cuddlo is the National Economic Council chairman, NEC director that Kevin Hasset has right now. And he had nominated uh or Trump had floated the idea that he was going to nominate two guys uh Steve Moore of the um Club for Growth and Herman Kaine who ran for president >> and was the CEO of Godfather Pizza. >> That's right. He had like a 999. >> Yeah. Yeah. 9%. I can't remember. Yeah. Something like that. >> So, they were met with backlash and then there was a day in late April of 2019 that they were both withdrawn. Uh, and I know Larry and I got Larry's email and I I dashed off an email to Larry and I said, "Hey, Larry, looks like you've got some openings for Fed Governor dot dot dot. I'm available." And I I said it half jokingly and half serious. And 10 minutes later, I get a response. When can you come to the White House? >> Oh my gosh. >> So, I went to the White House about three weeks later and um I met with him and Andrew Olman, who was the assistant uh uh NEC director who's now at Mayor Brown and um we talked for about 75 minutes. So, two things that um came out of that out of that was just anecdotally, Larry was about 20 minutes late. So, I'm sitting in the west wing, his office on the third floor, uh, on a couch, and every third person that walked by, everybody had a colored badge, but every third person walked by was in complete Kevlar with with a automatic weapon and hand grenades. And I was like, they were military. They were the Yeah. And I was like, is this the most dangerous place in the world, the safest place in the world, the White House? And I decided it was both at the same time. And then finally I got in there and Larry said he apologized because Trump was in his office until two minutes before I got in there and and that's why I was late and and he said, "Yeah, Trump comes in here like a hundred times a day to ask where the stock market is." And Larry's like got his reading glasses on in the end of his nose. And I said, you know, he he tweets all the time. He could just look in his phone if he wants to see where the stock market is. And he looks at me like that's not the way Trump works. You know, he he comes in here and he asks me 80 times a day where the stock market is. And he goes, "Hopefully." He goes, "So don't be surprised if Trump doesn't walk in here on us." Unfortunately, he didn't. I would have been thrilled beyond belief if Trump would have barged in and said, "Where's the stock market, Larry?" But he didn't do that. >> And that would have been your test though or something. >> Yeah, exactly. So, I interviewed with Larry and we talked about uh the Fed. And my pitch to Larry was that the Fed needed more expertise on financial markets. Um and um he actually took that to heart because after he interviewed me, he interviewed a guy named Scott Miner who used to be the chief he passed away. Yeah. >> Yeah. He passed away a couple years ago, but he was the chief investment officer at Guggenheim for exactly the same reason. And he interviewed some other people and they wind up picking Judy Shelton, who I supported. >> Oh, yeah. She's been on this show before. >> Yeah. I supported her uh immensely. and Chris Waller. >> And so Chris Waller got through Senate confirmation in December 2020, like 14 months later. Judy came up like one vote short. And >> somebody was missing though, right? >> Right. What happened was was two things happened. First of all, um Mitt Romney, Susan Collins came out. These are Republican senators from Utah. Mitt Romney, Susan Collins from Maine came out against um her nomination. Um and all the Democrats were going to vote no. So she couldn't lose another vote. It was going to be 5050 with the vice president Pence breaking the tie. But then uh Chuck Grassley, the Republican senator from Iowa got co and he couldn't he was not allowed on the floor to vote. They actually talked about putting him in a space suit and bringing him down there to cast the vote. So that's why she wound up coming up one reschedule the vote. No, because it was late December. >> Yeah. >> And and like a couple of days later, the new Senate was going to come in and it was going to turn over to being a Democrat Senate because Biden had just won the election. >> So, they were at the end of the line. They could have reschedled it if they tried. You remember it took 14 months. Oh my gosh. Yeah. >> Yeah. So, they waited waited way too long. So, that's how she wound up coming up one vote short, unfortunately. But Waller made it through and he's not one of the leading votes or leading people to become the um Fed chairman right now. >> Interesting. I haven't met anyone who's interviewed for the role before. So, >> it was just, you know, >> shoot your shot, right? >> Yeah. Exactly. He said, "When can you come in?" And and Larry said I was a serious candidate. And I I don't doubt it, you know, but I I I I use the analogy to my wife. It's like, you know, the Olympic finals in 100 meters, there's nine people. All right? You know, I probably finished eighth or ninth, but I was in the Olympic finals. >> That's still cool. >> I was in the Olympics. >> I've never been in the White House, so I can't >> Exactly. I got a chance to go to the White House. I got to see Larry. I got to make my pitch. He I obvious I'd like to believe I obviously had an impression on him because he brought in another market guy, Scott Miner, to talk to him about potentially filling the job with a market person. So, but they didn't go in that direction, but they seriously thought about it. So, I'd like to say that at least at the margin I made a difference in that, but it was it was an experience that I would have liked. My wife, by the way, >> was super thrilled I didn't get the job. She just like the idea of me becoming a bureaucrat, working for the Fed, moving to Washington and stuff like that. She was like ready to vomit over the idea. >> Still a great experience. Okay, so speaking of the Fed, maybe some predictions. Who do you think is going to be the next Fed share? Like, how do you see the Fed kind of playing out until next May? I I was on a panel today at the Historia conference with Neil Duta, RenMax, chief economist, and I'd been talking to Neil about this before. Um, so let me give you an interesting idea and then a realistic idea. >> The interesting idea is who does Trump want to be Fed Chairman? Who is he repeatedly said he's my first choice? Scott Bessant, the Treasury Secretary. and Scott Besson, the Treasury Secretary, has said, "No, I'm happy as being the Treasury Secretary." Now, the same names that we're talking about, whether it's Kevin Walsh, Kevin Hasset, Chris Waller, you know, some of these these are some of the names that we've we've been talking about these names forever and ever. Trump hasn't made a decision on any of these people. >> I think maybe the argument is he don't like any of them. He wants Bessant and he's going to spend the next two months twisting Bessant's arm to reconsider and being the Fed chairman. Now, assuming that Bessant doesn't relent and take the Fed chairman job, and I know Trump said he'd be fine with him being both Treasury Secretary and Fed chairman at the same time, but it realistically >> I don't think you can do that. >> Yeah, it >> I don't know. There's a loophole. I have no idea. >> Well, I legally you can do it. Illegally, you can do it. Uh before the in the 1930s and earlier, the Treasury Secretary used to be on the FOMC. >> Interesting. Okay. >> But then they they they had what's called the Fed Treasury Court in 1951 and split them up. >> Legally, you can do it. Oh, there's Let me let me rephrase that. There's no legal reason to not allow you to do it. >> Um but there's a they're both full-time jobs. >> Yeah. >> You know, Trump thinks that the Fed chairman job is just, you know, as he's joked, you know, it's the easiest job in the world. You meet once a month and you make an incorrect call on interest rates. That's what he said as a Fed chairman. But the problem is they're the they're banking regulators >> and um that there's I mean 80% of the time that you do your job as a Fed official is it's really about banking regulation and to have the Treasury Secretary also being the primary banking regulator is a major it might be legal it's a major conflict of interest. So assuming that Bessant doesn't do that, who of the le the next list of people uh is most likely to be a Fed chairman, I'd say Kevin Hasset, the NEC director. Why? Trump has made it very clear he wants interest rates down to 1%. And he wants somebody who's not going to pow him. That's a new term, right? Pow him. P him is, yeah, you're going to tell me everything I want to go. I agree with you. I agree with you, Donald Trump. I'm going to do everything you say. Yes. Yes. Yes. And then the minute you get confirmed by the Senate, oh things have changed and we're going to go in a different direction. Hassid is probably the one guy that would not do that. You want funds, you want the funds rate at 1%, I'll put the funds rate at 1% as Fed chairman. And that's why I think he's the leading choice. I think the best choice might be Waller. Um, but I don't know if Trump can trust Trump doesn't know Waller, but whether or not Trump could trust Waller to follow through on his dovishness that he's been, you know, and I've even questioned some of his doubbishness, too. If you saying this because you're in the running for Fed chairman, are you saying this because you actually believe it? Because the fear is once you become Fed chairman, you might go in a different direction. That's the fear that Trump would have. So, I'd say it would be Hasset at this point unless something changes. But last thought I would give you something might change because Trump has had the same names for four or five months and he hasn't made a decision on any of these people. Why not? And I still think it's because he's not enamored by any of them and he's kind of saying to Bessant, why don't you take the job? And Bessant's saying, I don't want the job. Well, he's like, well then give me a door number two. Give me some other options here or something like that. So I wouldn't be surprised if if even that happened. >> Jim, I have to say I always enjoy our conversations. Um They're usually virtual, but this is great having you in person. I hope this isn't our last in person. Would love to get you back in when you're in the city. Before I let you go, will you let folks know where they can follow you, find your work, support your work, any of your research? I know you also manage ETFs. Not sure what you can say there. Any parting thoughts for this audience? The floor is all yours. Anything you want to say? >> So, two two ways you could do the two things. One, you could follow me on social media. Biancore research on Twitterx Biano Research on YouTube um Jim Bianco on LinkedIn um and our website for our research business biancorresearch.com. Uh second thing is we do manage an index. It is a total return fixed income index. So when I was talking about the 6040 portfolio, we've been holding ourselves out is what do you do with this 40 part? How do you buy the bond market? We have an index that we manage that tries to do that and our partners at Wisdom Tree have an ETF, the Wisdom Tree Biano Fund, WTBN is its ticker that tracks our index. Um, and so that's how we've we've set it up that way for various reasons that I'm an index manager, not a portfolio manager. Um, and then we have an ind we have a ETF that just tracks our index and I set the parameters on the index and it's biancoadvisors.com is the website that explains everything about that. Um, and so we've been doing that for about two years. Uh, actually our performance has been pretty good. Uh, I've been very happy with the way that it's been going so far. Um, so if you're interested in in a a fixed income investment, that would be one way. Otherwise, if you're interested, you can follow me on social media or you can look at our website at Bianco Research. Jim Biano, president of Bianca Research. So wonderful. Thank you so much for um sharing all of your knowledge, your wisdom, helping us all learn and get better. Really appreciate you taking the time. Thank you.
Jim Bianco: Markets at All-Time Highs – So Why Is the Fed Cutting Rates?
Summary
Transcript
I would say to them, look at where the financial markets are. You know, stocks are at all-time high, gold at an all-time high, M2 at an all-time high, home prices are at an all-time high, bonds are rallying. What problem do we need to fix? What you can fix with cutting interest rates doesn't need to be fixed. That would be my argument to the Fed. >> Hey everyone, I am thrilled to bring to you this special in-person episode of the Julia Larose Show where we are joined with a fan favorite of the show. We have Jim Biano, president of Bianca Research. This is our first time meeting in person. So wonderful to meet you. >> It's wonderful to meet you, too. I'm looking forward to the conversation. >> Likewise, and we love having you on the show. And so, we're thrilled to have you back as always. And Jim, we got to start where we always start. Big picture macro view for you today. What do you make of where we are in the markets and the economy? What's on your radar now? And where do you see things headed? >> All right. So, the big picture I think is right now is probably with the economy. We're getting no data, so we're all guessing on what it is. >> Yeah, there's no data. >> Yeah. >> Fourth, we'll get some. Right. >> Right. There is some data to be to be fair about it. There's plenty of data out there that's in the private sector that you could kind of piece together what's going on. And I think from the economic standpoint, the most interesting thing is to talk about what's happening in the jobs market or the labor market. It has slowed down a lot. uh it is showing signs that we're not we were producing 158,000 jobs in the last 6 months per month last year. We have produced in the last 3 months through August the last data point we got from the government 29,000 jobs. Now normally that would be viewed as a disaster and the Fed is sort of thinking that way because they've cut interest rates and they're talking about cutting them again the end of October. However, something's changed and something's changed in a dramatic way in the economy in the last six months and that is the population growth of the country. >> Yeah. >> Uh the fertility rates down. Um so population does not come from organically having more kids. It comes from immigration and we have no immigration in the country. We've closed the border. Um the data that we're getting, we used to see 250 300,000 um contacts or um you know contacts by border patrol at the border back in late 22 23. We're down to 24,000 now. But of those 24,000 about 24,000 of them have contact with Border Patrol and then they send them back. They don't even get in the country. So it's effectively zero. That has taken the population growth of the country from January above average to an 80year low in the space of four, five, six months. Now, why does that matter? We're producing 29,000 jobs a month. How many should we be producing? And the answer is what Jay Pal said at his press conference last month. Somewhere between zero and 50,000. Average being 29 thou 25,000. The Dallas Federal Reserve put out a study about two weeks ago. They estimated it at 30,000. So if we're producing 29,000, that's enough, right? >> Given the population growth of the country. >> So this is the biggest question among economists. What's the state of the labor market? And they'll say, well, it's went from 158,000 to 29,000. So it looks bad. Okay, I understand that. But how many jobs should we be creating? And if the answer is only 25 or 30,000 because we've got no population growth, maybe we're still in balance. Why is that important? Because if the Fed is cutting interest rates, saying we have to juice the economy to get more jobs, if we don't have people coming into the country and we don't have population growth because we're not having kids, we have to have it through immigration, then we're not going to get to 100,000 jobs a month unless we have massive wage inflation. And so that's really the biggest issue in the economy right now. markets. Well, they're all going up. Everything, what's not going up? I mean, even the bond market's rallying now. Um, you know, crypto's rallying, gold, silver's rallying, the stock market's rallying, the bond market is rallying, foreign markets are ringing. The only thing that's not railing is the dollar at at this point. So, they're engaged in, you know, kind of a a happy medium or numa nirvana. We've they're perceiving that the economy is doing okay, that inflation is a little bit low. I don't agree with that. And so we've got all the markets going higher. >> Wow. Okay. So let's talk about the Fed and um the employment side of the equation. So it sounds like 29,000 that's we're producing enough yet. A lot of folks don't necessarily recognize that or see that because they're looking at as you point out like the old way before when you had to cut off the immigration spigot. >> So are they making a policy error by cutting then? That is the risk that you know now as of the day we're recording the mark you would actually argue the markets think no because the 10-year yields slightly under four percent and the stock market is after selling off a week ago it's almost back to its all-time high but there the risk is out into the future that they could be because if they're cutting rates on the idea that we need to and I'll use the term that Jay Powell used at his press conference risk risk management agement cut. I thought they were data dependent. I don't know what risk management means. I don't know if he knows what it means, but it sounds >> sounded buzzy. Yeah. >> Yeah. It it if I had to give you a cynical definition of risk management cut, it's it's to get the orange guy off my back, you know? So, I'm going to cut rates because he's been he's been calling me too late forever and so therefore I kind of get him off my back. Well, if that's the case, and they're probably talking themselves into, well, the employment numbers are down, you know, and the argument that Paul has used is, yeah, it's gone from 158 to 29,000, but how do we know that it's not on its way to like minus 50,000 next year or something like that? Well, we don't. You mean it could be the case, but you also said that you don't like to forecast, right? So, the riskmanagement cut, the risk is you're going to cut rates. you're going to try and stimulate the economy when it doesn't need it and you create inflation and then you could recreate a backlash in the in the financial markets because you created inflation. If you want an example of that, last year last year in September 24, the Fed cut 50 basis points followed up in October and no uh December with two more cuts of 100 basis points. And what happened? Uh long-term yields went up during that period. They went straight up because they were saying we don't need this. You're just going to create inflation. And that's the risk you have is a repeat of that again. >> Okay. So, right now the markets are okay with it. And I think it's fine. How about on the inflation side of the equation? When you think about the Fed's mandate, what about I haven't heard your latest on inflation. >> I think inflation is an issue and I think it's going to stay an issue. And I think that there's two things that I've argued that are going to cause inflation. tariffs >> and um and remote work. So tariffs, let's start with tariffs. U that's been a difficult one for people to get their head around. Just to give you some idea of where we're at, the average tariff rate was 2 and a half% at the beginning of the year. It is estimated by the Yale Budget Lab right now to be about 17 and a half 18%. So it's gone up 6x. Um the average tariff collected is about 10%. Okay. What if the tariff rate is 17 and we're collecting 10? There's a lot of people that have been making the argument, well, that's because export countries like China or importers like Walmart are eating some of that higher price and not passing it along to the final um customer. So, that's why they're being shielded from it. That was true probably in April and May and June right after Liberation Day when Trump made the tariff announcement because a lot of companies didn't know what to make of these tariffs and they were more concerned about protecting their market share than they were about passing along the prices. Well, by June or July that ended and they're like, "Nope, this is the world we live in. We're not going to eat these prices forever." And they're starting to pass them along. So I suspect that that 10% actual tariff rate that they're collecting, that's just the value of the tariffs divided by how much goods get imported is 10 by 10%. Is going to keep going up. Tariffs are embedded in the price. That is more inflation. So the inflation rate, which let's use the core inflation rate of CPI because that's what's coming out on Friday, is 3.1% through August. If Wall Street's estimates are right, it's going to stay at 3.1%. But I think it will continue to go higher maybe to three and a half or four by some point between now and next summer. And so it's going to keep going up. Now the other part of it is remote work. Um remote work has been a tectonic change in the way that we work. Um you are no longer encumbered by your job location-wise. You can get a job remotely anywhere you want. So before COVID about 7% of the workforce was remote. Let me give a definition of that so everybody knows what we were talking about. >> You get paid to do your job not at an a central location. So not in an office, not at a hospital, not at a school, not at a site. You get paid to do it anywhere somewhere else. That's remote work. Every day of the week is work from home. So work from home is just a a subset of remote work. So it was 7% before COVID, it's 27% right now. About half the jobs in America cannot be done remotely. So a waitress can't be remote, a fireman can't be remote, a surgeon can't be remote, a policeman can't be remote. So that means about over half the jobs that could be done remotely are currently being done remotely. That gives labor workers more power to make demands on management. Give me what I want or I quit and I don't have to move to get a new job. And you're seeing that with companies now like Amazon, Microsoft who have been making these big pushes, everybody back in the office and people are saying, I'm not going to go back. I'll quit. And there's like, okay, most everybody back in the office is kind of where where they're at. And you've seen this with GM. You've even seen this with the federal government to some extent, too. Um uh and so a lot of people are are are pushing back. And it is a sign that labor has more power. And if labor has more power, they can also push on wages too. So wages will continue to go higher, tariffs will continue to push inflation higher. And I think even though you will get some deceleration of inflation because of housing, you know, rents going down, it will be more than absorbed by these other factors that will keep the inflation rate elevated at least for another year or so. >> Gold keeps setting new all-time highs, but price appreciation isn't the only way to profit from owning gold. Monetary Metals is redefining the future of precious metals investing. Instead of paying to store gold, imagine getting paid to own it. With Monetary Metals, you can earn up to 4% on your gold paid in physical gold. That's right. Your ounces grow each month, not just your paper balance. A yield on gold paid in gold means you're stacking more ounces every single month. And you still benefit if gold's prices rise. You're earning more gold every month and enjoying potential price appreciation at the same time. Go to monetary-medals.com/jullia to learn more and see how you can start earning 4% on your gold paid in gold. And do you think going back to like the job side of the equation, do you think that in order you were saying earlier that you would get wage inflation if you tried to like move that number up? Yeah, because how does >> that work? >> If you you know you usually there's two things that create jobs in this country, right? Um or to create the potential supply of workers. Uh that is you know um uh population growth. How many we define let me start say it this way. We define the workforce as anybody between the ages of 16 and 64. How many people are between 16 and 64? 212 million is the answer right now. Um, and what we want to see is how many people are being added to that group every year. Used to be about two or three million. And so you'd have to say that the supply of labor, the number of workers, they're they're looking for an additional 2 million jobs every year just because of the natural growth of the population. Well, that's down to by some estimates zero, other estimates a couple hundred thousand now, not two million. So that's really been, you know, the the the big change there. So if we're going to demand a 100,000 125,000 jobs a month that we want to try and create, which would be about a million and a half or so a year, um where are we going to get the people to fill these jobs? Well, there's 212 million people in the country that have that are in between 16 and 64. There's 160 million that have jobs. So there's 62 million in that cohort that don't have jobs. Why not? Well, starts at 16. If they're students, they don't have jobs. They're housewives, they don't have jobs. If they're disabled, they don't have jobs. If they're in the military, they don't have jobs. If they're independently wealthy, they don't have jobs. So, there's lots of reasons that they're not in the workforce. Well, if you need to get a 100,000 jobs a month, you need to say, "We got this pool of 62 million. We're not adding to it that much. we need to entice them to take these jobs, raise wages, wage inflation. That's the way you would you that's the way you would wind up doing it. And if you raise wage inflation, typically infl the overall inflation rate should follow the wage inflation rate. So in other words, if the average person is getting a 3% raise every year, prices should go up by hopefully a little bit less than 3%. So, you make some real gains, but they're not going to go up one and you're going to get three because every because what'll happen is everybody will get so wealthy they'll start bidding on stuff. Man, I'm making more money and it's not costing me anything more to make to buy stuff, but I really want this stuff, you know, so I'll bid on these vacations or I'll bid on these products that I want. In other words, I'll pay more for them. And that's how you get that, you know, that demand pull on uh on inflation higher. So this is why it's very important that this a lot of the economic data really revolves around the population growth of the country. The other half of it is is um productivity. How more productive can we be with our current workforce? If we could be more productive, then I don't need as many workers and then that existing pool of two 62 million, they'll be let go because I can do it with less and they can go find another job that the market is out there looking for. But productivity isn't the main driver of the supply of workers. It's population growth. And that has dramatically changed from March. In March, it was something completely different. That's about the time that Trump really got going with closing the border and increasing deportations to where we are right now. >> Okay. So, the FOMC is coming up end of the month. >> If you were in that room in that presser with J Pal, what what would you ask him? >> Well, I would chain myself to the door and say no one's raising rates and no one's going to be allowed out of the room until you all agree with me. But I will lose that argument >> because ultimately that would be a policy mistake then. Okay. I I fear that it will be a policy mistake. I would argue against it. I don't think, you know, I would say to him, look at where the financial markets are. You know, stocks are at all-time high, gold at an all-time high, M2 at an all-time high, home prices are at an all-time high. Um, bonds are rallying. What problem do we need to fix? And he might say, low employment. And I would say stocks are an all-time high. M2 is an all-time high. >> Nobody's cutting rates. Don't cut rates. >> Right. I was going to say, yeah, >> where are the financial markets worried about the low employment report? They're not. >> Remember that monetary policy, to quote a term that the Fed likes to use, works through the financial channel. They cut rates to stimulate financial markets to make us feel better and make more money to grow the economy. Why do we need to stimulate the financial markets? What problem are we trying to fix by cutting rates? Now, if you said to me the low pl the low labor market, I would say you're right. It's low. There are other fixes. Maybe immigration, maybe leg, not illegal immigration, but being more liberal on legal immigration, worker permits. That could be a way to get more labor supply into the market. Um, but it isn't going to happen because you you can't fix that with cutting interest rates. What you can fix with cutting interest rates doesn't need to be fixed. That would be my argument to the Fed. And I know that that that will fall in deaf ears and they will cut rates because they've pretty much signaled that's exactly what they're going to do. >> And the market's gonna love it >> for the market's gonna love it. See, the thing about this is is on social media, everybody comes back to they're all momentum players. What do you know? The market's at an all-time high. And I like to say it is until it isn't. You know, because what you're saying is it's at an all-time high, so tomorrow it'll be an all-time high, but then tomorrow sits at an all-time high. The next day it'll be an all-time high. So, it will never ever go down again. We can end the show right now, right? They're just going to go up every day forever. But that's a momentum argument. They obviously the market goes up until it doesn't until it realizes either it's made a mistake or the situation has changed. And what I would argue is these are the kinds of things that can change the situation if the Fed is erring. Now, maybe they're not. Maybe they're right that there is some serious weakness and they're cutting rates to try and address that weakness and it isn't apparent yet. Um but maybe they're not and that's the real the real question. >> What do you make of the behavior that we've seen in the markets across asset classes? Like you said everything's pretty much up except for I guess the dollars whatever but yeah >> every like gold gold today I think was up 163 bucks 4,300 >> 4,400 4 Wow. See, I didn't even check the latest. >> Right. Right. >> And it >> last week Jamie Diamond said that he could see gold going to five or 6,000. Did he realize that that could be like 10 days later? Because we're less than a week after he said that we're already at 4,400. >> Wow. >> Yeah. Um it is an interesting it is an interesting thing about what's going on with the markets. They're all going up right now. And it's a combination of animal spirits and I think passive investing. Animal spirits. Everybody's bullish at this. Everybody's bullish about the prospects for financial markets. Um I was just at a a wealth manager conference today is sponsored by Atoria financial. There was a lot of speakers there. One speaker is Mike Green. I think you've had >> he's been on the show. Yeah. Talking about the passive bid. >> Yeah. Yeah. And he was talking about the passive bid and we were talking about that all these people were talking about the 6040 portfolio. That's 60% stocks, 40% bonds. What do we do with the 6040 portfolio? And other people said, "Well, maybe it should be 60 2020 20 60% stocks, 20% bonds, 20% something else like gold, Bitcoin, fill in the blank. Or maybe it should be 60 3010 with the 10 being cash or something like that." And then Mike said something to interesting. He goes, "How come nobody's ever thought about it being 4060 that we should go 40% stock, 60% bonds?" And the answer is because everybody's in a risk-taking mode. And when they talk about what are we going to do with this 6040 portfolio, it's like we want to keep all our stocks and that 40% part of bonds. How do we put more risk in that? How do we buy juicier stuff there? We all want to take more risk is really that's the animal spirits. The passive bid is we all, you know, as Mike says, you know, you you you hand the market money, the market buys. The the act of buying bids up the market that excites the animal spirit to hand them more money. So the market buys and the the and the passive bid just keeps going and going and it and it has the appearance of a perpetual motion machine which is the way the markets have traded for the last couple of years. You know whenever they sell off it's been very short COVID uh after the Silicon Valley bank failure or earlier this year um after liberation day very sharp down rebounds very hard up on the other side. The passive bid is definitely there and the buy to dip mentality is there. JP Morgan pointed out that in April when the market sold off 15% after liberation day, it was professional investors that were selling. It was every retail investor buying as much and as hard as they could >> and the market's up 40%. Mhm. >> Since that last week, the market sold off on the story, two Fridays before we were recording, sold off on the story that Trump was going to impose tariffs on China and the market sold off 2.7%. The next Monday, the market rebounded and JP Morgan said it was the lights were dimming that retail investors were plowing into the market so much. If you go on the Reddit boards, it's almost like it's like the world's upside down. They want bad news. They want terrible things to happen because that will scare somebody else to sell the market so I can buy the dip because the market always comes back from the dip. Now they're right. Yeah, they're right. It always does. But when you get that aggressive and that cavalier, you could get that it doesn't period. >> That's an interesting thought though, like the retail buying and just the massive amount of retail buying. That's probably not necessarily like a bullish sign for the long term. then >> it isn't only because when you get that kind of aggressiveness in buying and that um you wind up getting mispricing in markets that the markets don't discriminate between I mean the whole idea of markets and capitalism is to give money to good ideas take money away from bad ideas but when you're investing in index funds and broad-based funds and you're investing aggressively everybody gets money even the bad ideas get money so you're not discriminating and that can create dislocations and problems in markets. And I'll give you an example. Look at what's happening with AI right now. U Michael Kemblas over at JP Morgan has put together a list of 41 AI and AI adjacent companies. AI adjacent would be like the power companies that supply the data centers and stuff. Those 41 companies of the S&P 500 are 47% of the market cap. They're half the comp. They're half the market. Basically, the other 459 com or 359 459 companies in the S&P 500 are 40 are 53% of the market. Furthermore, if you go back to November of 2022 when Chat GPT came online, those 41 companies are 70% of the gain in the stock market. The other 459 companies are 30% of the gain in the stock market. Now, what's going on here? No one is discriminating. It's AI. It's AI related. It's the two letters next to each other. Just buy anything associated with it. We saw this in the late 90s when some people slap.com on the end of their company's name and the company would double overnight. The problem is, is AI going to be a big deal? Yeah, I think it is. I think it's going to be bigger than the internet. I think it's going to be the one of the biggest things we've ever seen. But there's going to be losers in there and not everybody can be a winner. and you get massive ma what you would call malinvestment. A good example that's data centers. People have pointed out the the sheer amount of data centers that we're going to build and the power requirements that they need is not realistic. So how do all these deals get done? Because everybody's pricing every data center deal as if it's going to be a winner. We saw this in the late 90s. There was a company called Global Crossings. Global Crossings raised so much money to lay fiber optic cable around the around the earth so many times that when it blew up and went out of business in the early 2000s, there's more fiber optic cable than humanity will ever need that was laid by Global Crossings. There's dark fiber to this day that that just means it's not turned on that they laid 25 years ago because everybody thought every inch of cable was going to be a winning investment. and we so overbuilt it and that's the risk you face that you have these kind of dislocations. Yes, there's going to be winners and there's going to be losers. And as a matter of fact, in AI, if you look at people like Sam Alman at a at OpenAI, Yep. Uh he he gave an interview recently and he basically said AI's in a bubble and it's going to be ugly. Not for me. My deal is going to work, but everybody else's deal screwed. you know, and you've heard all you've heard other people, Jeff Bezos, you know, David Solomon, they all kind of said the same thing like, yeah, AI is a bubble and it's gonna, you know, a lot of these deals are going to go out of business, but all the deals that Goldman Sachs in invested in, those will be the winners. And this is the other mentality that reminds me of the late 90s is, yeah, you all, you guys are screwed, not me. My deal is the good deal. You all got the bad deals. And it doesn't quite work out that way. >> Well, let me bring that back um to an individual level. So, like, okay, if I open my statements, I look at my 401k. >> Wait, what's a statement? You mean you look >> I look at the paper statements. Oh, come on. No, I look at some paper statements. >> Oh, you are really old school. >> Oh, yeah, I'm old school. We're lazy. Um, so you open up your statement. I just made one of them digital. So, I'm like, "Oh, there's my gold." Looks >> What's the carbon footprint on your state? >> Who knows? They're probably losing money on me on stamps. Who knows? But like, okay, so let's say you look at your statements on your phone, wherever you look at them. Oh, my gold looks great right now. Okay. Oh, my 401k, it looks great right now. Little stocks I'm playing around in, they look great right now. They're fun. Oh, my Bitcoin looks great, you know, because So, is there a mentality where we all kind of feel like winners? It doesn't seem right. Like, I shouldn't probably be feeling that way all the time. Well, looking at this stuff, >> it's not it's not that, you know, some some kind of Calvinistic idea that we need to have some kind of, you know, um pain and suffering to go with our life. The problem is if everybody wins um and everybody wins to this degree, it's nothing wrong with everybody winning to a certain degree, but if everybody wins to this degree, my statement looks great. Look at my gold is up 50%. My silver's up 70%, Bitcoin's doubled in the last two years. Stocks are roaring. Everything looks good. I want to buy a new car. So, I don't want to deal with the just pay the sticker price, you know, just just pay up for everything and then you get inflation. >> Yeah. So here's the problem. >> Um >> might feel more prosperous early on. >> So here's the here here's the issue I I'll I'll point out is that u and I'll quote um I'll quote David Kelly JP Morgan who was at the conference I spoke at today. 50% of all income in the United States is made by the top 10%. And 50% is made by the other 90%. So the top 10% are making all the income. And by the way, the savings rate for the top 10% is around 35%. Because you know, if you're making north of 250,000, way north of that, you don't spend that much money. You give it to a wealth manager who puts it in the markets and the markets go up uh as well. But the bottom 90% collectively their savings rate is zero. Um because the bottom 30% they have a negative savings rate. Uh you know, they get government assistance to make up for the difference. Uh, and so if the top 10 or so percent are just making money, making money, making money, and to use the crypto argument, you know, they're all out there, they're all out there buying neon colored Lambos and bragging about how much money they make and stuff like that. They're going to pay up for stuff and they're going to push prices higher. Now, they can get about with I can get a bomb with it if you're in the top 10% because you've got assets, you've got a home, you've got everything else that's going up in price. bottom 90% loses because the bottom especially the bottom 50% they don't have assets. They rent and they live paycheck to paycheck. So prices are going up because everything's being bid out of sight and they can't keep up. Their paycheck can't keep up with prices going up. They lose. That's why inflation is so important. Inflation destroys cultures. It destroys economies because it really separates you in an inequality way. The top half owns these assets that go up in price that helps them afford things that get ever more expensive. The bottom half doesn't. The bottom half resents that they can't keep up with the top half. They're not asking for neon lambos. They're just asking for can $100 today at the grocery store buy me the same thing for $103 in a year because in a in a year my boss will give me a 3% raise. Can I buy exactly the same thing for 103? Uh hopefully the answer is yes. But if you have so many people with so much money, the answer will be no. They'll be bidding up. They'll be demanding so much stuff, they'll bid the prices up and that could create a lot of a lot of um u distrust and a lot of uneasiness. And I'll give you one quick example. >> Yeah, this is great. >> Last year during the election, >> this the poll said what is the number one economic issue? Inflation. The Biden then became Harris campaign correctly said, "Yeah, but it was 9% in 2022 and it's like around three now. So, it's way down. It's under control." But you're missing the cumulative effect over all of those years. And it is such a psychological damage. I go to the store, you know, I'm in the top 10%. I go to the store, I see the prices, I have a choice four-letter word for holy the price. >> I just pay it and move on with my life. Somebody in the bottom 50%, they see the price, have that same four-letter word. But here's the difference to put that into my basket to buy it. I got to take something else out. And that's what's happened in the last couple of years. And that's why inflation is so damaging. And to give you one last in, you know, anecdote, a lot of the polls have asked people, would you trade a 1% lower unemployment rate for 1% higher inflation rate? And the overwhelming majority of people say no. In other words, they view unemployment as somewhat, to use a Fed term, transitory. I lost my job, but there's another job out there maybe somewhere. I don't like it. It's terrible, but I can get another job. But when prices go up, they never ever go back down again. That is a permanently high level that they're at. And then we have inflation on top of that. And they keep going up and they keep going up. So since prices never ever correct, they would rather say, I if you told me that 1% of the population needs to be unemployed to keep prices down, unemploy them. Don't let prices go up. That's how dangerous inflation is. And that's why going back to what I said before, I chain myself and tell the Fed you cannot raise or cannot cut rates because you cannot make the inflation mistake because if you do it's devastating and I would be so you know uh you know looking out for that mistake and I'm afraid that they're discounting that mistake in terms of the unemployment mistake that they're worried about. What do you think will be the longer term ramifications if they make that mistake with your thesis? Like all roads lead to inflation. What are the bigger side effects? I imagine there's some serious ones as it relates to society too. Probably why certain types of candidates maybe and >> Yes. Yes. You get candidates, you get protests, you get, you know, picture, >> right? But you also at the top end of the equation, you also get um retarding markets. I mean, you know that markets aren't all as jubilant as they have been because of inflation. Um, it can change things. Now, I want to emphasize we don't have it now, >> but we're what I'm seeing from the Fed is I'm not worried about that. I'm worried about unemployment. I want to try and goose, you know, the financial channel to, you know, get the um people more employed. And I'm like, but we're at an all-time high and everything. What is it? Like I said, what what problem are you trying to fix? And if the answer is you want more employment, then those there's lots of ways you could fix the unemployment problem, but one of them is not cutting interest rates. >> Yeah. Um on the inflation side, so all roads lead to inflation. Isn't there like a like some inflation's good or like addressing the fiscal picture like we kind of need to inflate our way out of some of our debt? That's a that's an argument that's been made that you know what happens is is that if you issue a billion dollars worth of bonds um what's the best way to pay them off? Well, if the inflation rate doubles and everything's worth $2 billion, you still have a billion dollars worth of bonds and it looks like half it relatively speaking it's half of of what it used to be relative to prices. Yeah, that's a way to fix the problem is to inflate your way out of it. problem with with inflating rate of is what we were just talking about. The damage you do to the bottom end of the of the bottom half of the economy. The damage you do is is is tremendous. You know, it's funny because JP Paul just three years ago in 2022 was aggressively raising rates. He raised rates from 0 to 4% one year, eventually went to 5% by 2023. And he used to give speeches and I used to jokingly call his speeches do your patriotic duty. Remember 22 the stock market was fel correct at 20 25%. Bitcoin got under 15,000 or maybe down under 20,000. I know went under 20,000. >> Definitely crypto winter. Yeah. >> Yeah. Exactly. And it was like do your patriotic duty. You and the upper half lose money. lose money and be proud you're losing money because you're helping the bottom half by us hoping down inflation. You need to lose money because we don't need you to be making tons of money going out and buying neon lambos and exasperating the situation. So lose money. That was his argument in 22. Now we've got the opposite argument. You're not making enough at all-time highs. We're going to try and goose things and keep going up. I understood the argument in 22. I mean, I didn't like it, but I understood it. don't understand the argument in 23 because I don't think like I said I don't think the problems that he's trying to address can be fixed with interest rates. All he can do is just shove asset markets higher and people are just going to make more money spend it and create more inflation. That's the risk I see. >> I listened to a podcast with you recently. I cannot remember who hosted it, but I learned that you interviewed for a Fed Fed >> Yes. >> Was this Was it a Fed governor role? Like what? >> Yes. Fed governor. as Fed got pretty cool. Yeah. So, >> I'll tell you the whole story. It was May It was May of 2019. So, Larry Cuddlo is the National Economic Council chairman, NEC director that Kevin Hasset has right now. And he had nominated uh or Trump had floated the idea that he was going to nominate two guys uh Steve Moore of the um Club for Growth and Herman Kaine who ran for president >> and was the CEO of Godfather Pizza. >> That's right. He had like a 999. >> Yeah. Yeah. 9%. I can't remember. Yeah. Something like that. >> So, they were met with backlash and then there was a day in late April of 2019 that they were both withdrawn. Uh, and I know Larry and I got Larry's email and I I dashed off an email to Larry and I said, "Hey, Larry, looks like you've got some openings for Fed Governor dot dot dot. I'm available." And I I said it half jokingly and half serious. And 10 minutes later, I get a response. When can you come to the White House? >> Oh my gosh. >> So, I went to the White House about three weeks later and um I met with him and Andrew Olman, who was the assistant uh uh NEC director who's now at Mayor Brown and um we talked for about 75 minutes. So, two things that um came out of that out of that was just anecdotally, Larry was about 20 minutes late. So, I'm sitting in the west wing, his office on the third floor, uh, on a couch, and every third person that walked by, everybody had a colored badge, but every third person walked by was in complete Kevlar with with a automatic weapon and hand grenades. And I was like, they were military. They were the Yeah. And I was like, is this the most dangerous place in the world, the safest place in the world, the White House? And I decided it was both at the same time. And then finally I got in there and Larry said he apologized because Trump was in his office until two minutes before I got in there and and that's why I was late and and he said, "Yeah, Trump comes in here like a hundred times a day to ask where the stock market is." And Larry's like got his reading glasses on in the end of his nose. And I said, you know, he he tweets all the time. He could just look in his phone if he wants to see where the stock market is. And he looks at me like that's not the way Trump works. You know, he he comes in here and he asks me 80 times a day where the stock market is. And he goes, "Hopefully." He goes, "So don't be surprised if Trump doesn't walk in here on us." Unfortunately, he didn't. I would have been thrilled beyond belief if Trump would have barged in and said, "Where's the stock market, Larry?" But he didn't do that. >> And that would have been your test though or something. >> Yeah, exactly. So, I interviewed with Larry and we talked about uh the Fed. And my pitch to Larry was that the Fed needed more expertise on financial markets. Um and um he actually took that to heart because after he interviewed me, he interviewed a guy named Scott Miner who used to be the chief he passed away. Yeah. >> Yeah. He passed away a couple years ago, but he was the chief investment officer at Guggenheim for exactly the same reason. And he interviewed some other people and they wind up picking Judy Shelton, who I supported. >> Oh, yeah. She's been on this show before. >> Yeah. I supported her uh immensely. and Chris Waller. >> And so Chris Waller got through Senate confirmation in December 2020, like 14 months later. Judy came up like one vote short. And >> somebody was missing though, right? >> Right. What happened was was two things happened. First of all, um Mitt Romney, Susan Collins came out. These are Republican senators from Utah. Mitt Romney, Susan Collins from Maine came out against um her nomination. Um and all the Democrats were going to vote no. So she couldn't lose another vote. It was going to be 5050 with the vice president Pence breaking the tie. But then uh Chuck Grassley, the Republican senator from Iowa got co and he couldn't he was not allowed on the floor to vote. They actually talked about putting him in a space suit and bringing him down there to cast the vote. So that's why she wound up coming up one reschedule the vote. No, because it was late December. >> Yeah. >> And and like a couple of days later, the new Senate was going to come in and it was going to turn over to being a Democrat Senate because Biden had just won the election. >> So, they were at the end of the line. They could have reschedled it if they tried. You remember it took 14 months. Oh my gosh. Yeah. >> Yeah. So, they waited waited way too long. So, that's how she wound up coming up one vote short, unfortunately. But Waller made it through and he's not one of the leading votes or leading people to become the um Fed chairman right now. >> Interesting. I haven't met anyone who's interviewed for the role before. So, >> it was just, you know, >> shoot your shot, right? >> Yeah. Exactly. He said, "When can you come in?" And and Larry said I was a serious candidate. And I I don't doubt it, you know, but I I I I use the analogy to my wife. It's like, you know, the Olympic finals in 100 meters, there's nine people. All right? You know, I probably finished eighth or ninth, but I was in the Olympic finals. >> That's still cool. >> I was in the Olympics. >> I've never been in the White House, so I can't >> Exactly. I got a chance to go to the White House. I got to see Larry. I got to make my pitch. He I obvious I'd like to believe I obviously had an impression on him because he brought in another market guy, Scott Miner, to talk to him about potentially filling the job with a market person. So, but they didn't go in that direction, but they seriously thought about it. So, I'd like to say that at least at the margin I made a difference in that, but it was it was an experience that I would have liked. My wife, by the way, >> was super thrilled I didn't get the job. She just like the idea of me becoming a bureaucrat, working for the Fed, moving to Washington and stuff like that. She was like ready to vomit over the idea. >> Still a great experience. Okay, so speaking of the Fed, maybe some predictions. Who do you think is going to be the next Fed share? Like, how do you see the Fed kind of playing out until next May? I I was on a panel today at the Historia conference with Neil Duta, RenMax, chief economist, and I'd been talking to Neil about this before. Um, so let me give you an interesting idea and then a realistic idea. >> The interesting idea is who does Trump want to be Fed Chairman? Who is he repeatedly said he's my first choice? Scott Bessant, the Treasury Secretary. and Scott Besson, the Treasury Secretary, has said, "No, I'm happy as being the Treasury Secretary." Now, the same names that we're talking about, whether it's Kevin Walsh, Kevin Hasset, Chris Waller, you know, some of these these are some of the names that we've we've been talking about these names forever and ever. Trump hasn't made a decision on any of these people. >> I think maybe the argument is he don't like any of them. He wants Bessant and he's going to spend the next two months twisting Bessant's arm to reconsider and being the Fed chairman. Now, assuming that Bessant doesn't relent and take the Fed chairman job, and I know Trump said he'd be fine with him being both Treasury Secretary and Fed chairman at the same time, but it realistically >> I don't think you can do that. >> Yeah, it >> I don't know. There's a loophole. I have no idea. >> Well, I legally you can do it. Illegally, you can do it. Uh before the in the 1930s and earlier, the Treasury Secretary used to be on the FOMC. >> Interesting. Okay. >> But then they they they had what's called the Fed Treasury Court in 1951 and split them up. >> Legally, you can do it. Oh, there's Let me let me rephrase that. There's no legal reason to not allow you to do it. >> Um but there's a they're both full-time jobs. >> Yeah. >> You know, Trump thinks that the Fed chairman job is just, you know, as he's joked, you know, it's the easiest job in the world. You meet once a month and you make an incorrect call on interest rates. That's what he said as a Fed chairman. But the problem is they're the they're banking regulators >> and um that there's I mean 80% of the time that you do your job as a Fed official is it's really about banking regulation and to have the Treasury Secretary also being the primary banking regulator is a major it might be legal it's a major conflict of interest. So assuming that Bessant doesn't do that, who of the le the next list of people uh is most likely to be a Fed chairman, I'd say Kevin Hasset, the NEC director. Why? Trump has made it very clear he wants interest rates down to 1%. And he wants somebody who's not going to pow him. That's a new term, right? Pow him. P him is, yeah, you're going to tell me everything I want to go. I agree with you. I agree with you, Donald Trump. I'm going to do everything you say. Yes. Yes. Yes. And then the minute you get confirmed by the Senate, oh things have changed and we're going to go in a different direction. Hassid is probably the one guy that would not do that. You want funds, you want the funds rate at 1%, I'll put the funds rate at 1% as Fed chairman. And that's why I think he's the leading choice. I think the best choice might be Waller. Um, but I don't know if Trump can trust Trump doesn't know Waller, but whether or not Trump could trust Waller to follow through on his dovishness that he's been, you know, and I've even questioned some of his doubbishness, too. If you saying this because you're in the running for Fed chairman, are you saying this because you actually believe it? Because the fear is once you become Fed chairman, you might go in a different direction. That's the fear that Trump would have. So, I'd say it would be Hasset at this point unless something changes. But last thought I would give you something might change because Trump has had the same names for four or five months and he hasn't made a decision on any of these people. Why not? And I still think it's because he's not enamored by any of them and he's kind of saying to Bessant, why don't you take the job? And Bessant's saying, I don't want the job. Well, he's like, well then give me a door number two. Give me some other options here or something like that. So I wouldn't be surprised if if even that happened. >> Jim, I have to say I always enjoy our conversations. Um They're usually virtual, but this is great having you in person. I hope this isn't our last in person. Would love to get you back in when you're in the city. Before I let you go, will you let folks know where they can follow you, find your work, support your work, any of your research? I know you also manage ETFs. Not sure what you can say there. Any parting thoughts for this audience? The floor is all yours. Anything you want to say? >> So, two two ways you could do the two things. One, you could follow me on social media. Biancore research on Twitterx Biano Research on YouTube um Jim Bianco on LinkedIn um and our website for our research business biancorresearch.com. Uh second thing is we do manage an index. It is a total return fixed income index. So when I was talking about the 6040 portfolio, we've been holding ourselves out is what do you do with this 40 part? How do you buy the bond market? We have an index that we manage that tries to do that and our partners at Wisdom Tree have an ETF, the Wisdom Tree Biano Fund, WTBN is its ticker that tracks our index. Um, and so that's how we've we've set it up that way for various reasons that I'm an index manager, not a portfolio manager. Um, and then we have an ind we have a ETF that just tracks our index and I set the parameters on the index and it's biancoadvisors.com is the website that explains everything about that. Um, and so we've been doing that for about two years. Uh, actually our performance has been pretty good. Uh, I've been very happy with the way that it's been going so far. Um, so if you're interested in in a a fixed income investment, that would be one way. Otherwise, if you're interested, you can follow me on social media or you can look at our website at Bianco Research. Jim Biano, president of Bianca Research. So wonderful. Thank you so much for um sharing all of your knowledge, your wisdom, helping us all learn and get better. Really appreciate you taking the time. Thank you.