MacroVoices #496 Jim Bianco: The Post Covid Economy

Summary

• Post-COVID Economy: Jim Bianco emphasizes that the COVID-19 pandemic has created a new economic cycle, distinct from pre-pandemic norms, challenging the notion of returning to previous economic conditions.
• Fed Rate Cuts: The discussion highlights the potential risk that cutting short-term rates could lead to higher long-term yields due to inflationary pressures, contrary to traditional expectations.
• Inflation Concerns: Bianco argues that the current inflationary environment is not adequately recognized by policymakers, with core inflation at 3.1% being significantly higher than pre-pandemic levels.
• Labor Market Dynamics: The podcast explores the impact of reduced immigration and low fertility rates on U.S. job growth, suggesting that the economy may not need to create as many jobs as previously thought.
• Trump Administration's Economic Policies: The potential for significant changes in the Federal Reserve's composition and policy direction under the Trump administration is discussed, including the integration of stablecoins into the financial system.
• Digital Currency and Stablecoins: The conversation touches on the possibility of replacing the petro-dollar system with a stablecoin-based system, potentially increasing demand for U.S. Treasuries.
• Market Outlook: The podcast concludes with a technical analysis of various markets, including equities, the U.S. dollar, crude oil, gold, uranium, and copper, providing insights into potential future trends.

Transcript

[Music] This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is. Bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Serezna. Macrovoic's episode 496 was produced on September 4th, 2025. I'm Eric Townsendant. The week after Labor Day has been called the most important week in markets when the senior traders are back on the desk from the Hamptons and new market trends sometimes emerge. And Macrovoices is diving into the financial high season with our countdown of the top five regular guests ever to appear on Macrovoices. Starting with Bianca Research founder Jim Biano, who returns as this week's feature interview guest. Jim and I will discuss whether a Fed rate cut is even a good idea, inflation risks, the unobvious relationship between the jobs report and the southern border, why cutting short-term rates could actually shock long-term yields higher, and much, much more. We're also going to experiment with a show format change. Starting this week, after the feature interview, Patrick will be presenting the big picture trading trade of the week. Wherever practical, this will be a trade designed by Patrick and the Big Picture Trading team to express the views expressed by the feature interview guest in the feature interview. So, be sure to stay tuned for that new segment right after my interview with Jim Biano. And I'm Patrick Szno with the macro scoreboard week overweek as of the close of Wednesday, September 3rd, 2025. The S&P 500 index up 81 basis points trading at 6448. The market price action is getting heavy right before the much anticipated jobs numbers. We will take a closer look at that chart and the key technical levels to watch in the postgame segment. That US dollar index down three basis points to 9815. The dollar continues to consolidate. The October WTI crude oil contract down 28 basis points trading at 6397. It failed to hold its breakout leaving oil bouncing around in a trade range. The October Arbob gasoline up 203 basis points trading at 2011. The December gold contract up 542 basis points trading to 3635 a key breakout to all-time highs. We will talk about the upside targets in the postgame. The December copper contract up 312 basis points to 463. Uranium up 262 basis points trading at 7640. Finally, U308 showing signs of life after a month of sideways price action. US 10-year Treasury yield down one basis point trading at 421, trading along its multimonth lows. The key news to watch this week is Friday's jobs numbers. And next week we have the PPI and CPI inflation numbers, the ECB monetary policy statement and the University of Michigan inflation expectation numbers. This week's feature interview guest is Biano Research founder Jim Biano. Eric and Jim discuss the new postcoavid economy and the new higher inflation regime. Eric's interview with Jim Biano is coming up as macrovoices continues right here at macrovoices.com. [Music] And now with this week's special guest, here's your host, Eric Townsend. Joining me now is Biano Research founder Jim Biano. Jim, congratulations on being the first of the five finalists that we are interviewing in our countdown to episode 500. I want to start by clearing the air because I get almost as much credit as you get for having called the COVID pandemic back in January of 2020. I got it from you. I do take credit for being very smart. What I did was I was smart enough to know better than to not take Jim Biano seriously. That's pretty much where my uh my expertise started and ended. Tell us a little bit about how you got that call so right back five years ago since we're starting with your track record here. Thank you, Eric, and I'm honored to be uh one of your five finalists. It was back in January of 2020 when I saw COVID and I got very worried that this was going to be a real big problem when I saw what was happening in China and that was in January and then you'll remember the markets ran to a new high in February and for a while there it looked like it wasn't going to work and then it all came crashing down but I also remember I think it was late January early February 2020 I was on a podcast with you and I think Ben Hunt I forgot which podcast. It was to be honest with you and we were talking about it back then at the time and we were very worried that it was going to become um a real problem. That's kind of where the origins of that came from. And I might add as we go through and talk about some of these topics, one of the underlying themes I've been using is that event, the COVID shutdown and restart of the economy is the biggest economic event of our lifetime. It is bigger than the financial crisis, 911, the inflation of the early 80s. It is really the thing that you could really, as I like to say, we are in a postcoid economy and too many people like J. Paul keep talking about the economy normalizing or going back to pay preandemic levels. It's not. That's an old cycle. We're in a new cycle alto together. So that was and continues to be a major event that people need to start thinking about that whether or not we're past the virus which we are is are we in a new kind of economy a postcoid economy and I think we are. Jim I couldn't agree more. So, let's move forward into today's economy and talk about one of those examples of something where people might be expecting it to work one way, but it might actually work a different way. And that is the hottest topic going right now, which is the Fed rate cut everybody wants. Why does everybody want the rate cut? Well, obviously the expectation is you cut short-term rates, that's going to transmit into bringing down lower long-term yields, right? That's how it works, isn't it? Everybody knows that. Except that's not the way it worked a year ago. Because when the Fed did cut rates a year ago, you did see that long-term yields went up, you know, the Fed cut 100 basis points and long-term yields went up 100 basis points. But you go going back to the whole postcoavid economy thing. If you listen to JP Paul, if you listen to John Williams, the New York Federal Reserve president, they, in fact, John Williams gave a speech on this the week before we're recording where he said it's very clear that he still thinks that the Fed's neutral rate is down around 3%. And he said that's because nothing has changed since CO that all of the metrics and all of the understandings of the economy are still the same. And Jay Paul seems to be saying that a lot of people seem to be saying that the sub 2% inflation world that we had for a decade plus before COVID is still in effect even though we're now in month 54 of having inflation above 2%. Don't worry, we're in a sub 2% world. Even though we're almost down five years into before we've the last time we've seen sub 2% inflation. So there is this resistance by a lot of people to say that the economy has changed. Now I know why there's resistance. They the reason that there's resistance is they'll scream at you, okay, how's it changed? You know, I need chapter and I need verse and I need stanza and I need to know exactly how it's supposed to work and the answer is unsatisfying. I don't know all of the answers. I just know that the old playbook you were using from 2019, that one isn't working. the new playbook that we're going to be using post 2020. We're still in the process of writing it. So, I still don't know exactly how it's going to work or what is going to be the uh rules of the road. I just know the old ones are not. Well, I agree with you. The old ones are not. I just want to confirm. So, you're saying cutting rates looks like maybe the risk is cut short-term rates, higher yields. You're saying you don't really have a solid explanation for that other than the expectation that you cut short-term yields to long-term ain't going to work or hasn't worked recently. Well, yeah. Let me be specific. I miss I guess I must have not explained myself well enough. The reason that you see last year when the Fed cut rates higher long-term yields and you see it with the ECB cutting rates and the Bank of England cutting rates higher long-term yields. is the market I still think is worried that we're in a higher inflationary world. And if we're in a higher inflationary world, cutting rates is supposed to be stimulative. And what the fear is is that will just stimulate more inflation. And we already have too much of it to begin with. And that's what you're seeing with higher long-term yields compensating for that expectation of more inflation. Now, I got to be clear. We're talking about 3ish% inflation to 4ish% inflation long-term. You know, it might be higher, some periods might be lower, not sub 2. And why does that matter? Because in a 3 to 4% world of inflation and core CPI is 3.1. So, we're getting to the bottom end of that range again. we've been slightly below it for a little bit while is that's what suggests that 4ish% inflation 4ish% interest rates is about neutral. It's about where interest rates should be. Well, that's where we're at. We're at four and a quarter on the funds rate. And if the Fed is going to ramp up and start cutting rates, they keep saying that we're mildly restrictive. They're using their precoid models to make that statement. But if if I'm right in this postcoid world and we're at neutral now, they're going to go too easy and they're going to spark an inflation concern and that's what you've been seeing with long-term yields with all the central banks when they cut rates that long-term yields go up. Okay? So, the risk is that with an inflationary backdrop, that's where cutting short-term rates can result in higher long-term yields potentially creating the reverse effect of the one that was intended. So, it's about the inflationary backdrop that really is driving it. Jim, it seems to me like the Trump administration does not share the view that inflation is a problem. Is this a setup for them to essentially shoot themselves in the foot by unleashing inflation, by pushing for this uh this cut? >> Yeah, I think it is. You know, you're right. Trump has been very clear that there is no inflation. Inflation has been vanquished and actually it hasn't been. Like I mentioned earlier, we're at 3.1% core inflation. In 2019, 3.1% core inflation would have been absolutely unacceptable by any metric from the Federal Reserve or the Federal Government. But today, now they're trying to tell me that 3.1% is no inflation. It's not. And again, why is that important? because if it's 3% inflation plus some kind of premium on top of that which the Fed calls ourstar, we don't have a lot of room to cut rates, nor um should we be cutting rates. But I also think the other problem is I'll tread very lightly here because I don't want to upset too many of my friends in the real estate business. The absolute worst person to ask about interest rates is somebody who's in the real estate business because they would argue to you that the proper interest rate is zero and they should go to zero and they should stay at zero all the time. When you have an affordability crisis, we should have interest rates go to zero. When you have falling prices on houses or real estate in general, that is alleviating your affordability crisis because affordability crisis is home prices are too expensive. Well, when they go down, interest rates should go to zero. When home prices are too expensive, interest rates should go to zero. That's the problem you have with somebody in the real estate business telling you where interest rates should be, is that they always think that they should immediately be going down and they should be staying somewhere near zero all the time. And I won't just indict Donald Trump. I'll also throw Bill PTE, the head of the financial the FHFA, the uh regulator for Fanny May and Freddy Mack. He's been echoing similar sentiments too that interest rates should be h on their way to, you know, something approaching zero immediately. >> Jim, we've got the jobs report coming out Friday. That'll be tomorrow on the day that this podcast drops on uh on Thursday. We recorded this interview just for our listeners edification back on Monday of this week. Tell me about the jobs report, what your expectations are, but particularly how does that relate to the border? Something that might not be obvious. I think that what we need to understand about job growth in the United States or any developed country is you have to start with two major factors that give you job growth. One is productivity. How productive is your economy? If it's more productive, it has room to hire more people. And the second thing is what is your population growth? This is what the Fed refers to as the supply of labor. Now, what's happened in the last four months or so, four months now, pushes this back to April or May, is the border's been shut. And Trump has been talking about that there's no more immigration coming into the country through the border. And as a matter of fact, with all of the arrests of undocumented workers by ICE, there has been, New York Times highlighted this about a week ago, we might be seeing net negative immigration for the first time in a hundred years. Net negative means more people are leaving the country than are entering the country. The last time that happened was in the during the Great Depression uh when a lot of uh Mexican workers left the country because there was no more job opportunities. Now, if we're having net negative immigration, let me throw in one other statistic. The fertility rate in the United States is at an all-time low and has been for decades. So, all of our population growth is really coming from immigration. Well, we don't have any more immigration. We don't have any more population growth. So all you've got then is productivity to basically drive job growth. Now the American Enterprise Institute and Jud Klo over at uh the Peterson Institute uh he's the former Jud Klo is the former head of um chief economist at Indeed and Trurillio. They've put pen to paper and have made the case that with this lower level of immigration growth and with our kind of average to slightly below average productivity growth that by the time you get to next year that the break even rate for jobs, this is a statistic we don't really talk a lot about because we never had to. How many jobs does the US economy need to create? Well, the American Enterprise Institute is saying by 2026, which is only four months away, it could be as low as zero or most likely could be 10,000 jobs. That anybody anything above 10,000 jobs a month is enough. Now, the problem with 10,000 jobs a month is President Trump just fired the head of the BLS, accusing them of rigging the numbers for political purposes. I don't think they were doing that at all. But the premise there was 19,000 14,000 35,000 on a 3-month average was too low, unacceptably too low. And this is the hardest thing for people to understand is no. If we have no job, if we have no population growth, that's enough jobs. That's all we really need to be creating. And my fear is going back to the Fed, if they're still of the opinion, and I think Chris Waller, who's been one of the leading voices on the Fed pushing for a rate cut, still thinks that this economy should be churning out a 100 plus jobs a month consistently. Now, you could do that this month, you know, when we get the August numbers at the end of the week for a month or maybe two, but consistently without job growth. The only way you're going to get that kind of job creation is if you take people that are not in the workforce and get them into the workforce. Quick statistic, we always have this statistic called labor force participation rate. That is the percentage of the population between the ages of 60 and 64 that have a job. It's about 62%. The other 38% are either students, military, incarcerated, housewives. there's a reason they don't they're not in the workforce, they're disabled, uh, or they're independently wealthy and they don't want to work. Well, to get those other 38% into the job market, you're going to have to raise wages. That's wage inflation. That's just another level of inflation. So, I think that the supply argument is the problem with this is, and you'll hear this economist look at the numbers and go 19,000 jobs a month, panic, the economy is going into recession. but they're not yet willing to get their arms around the idea. Well, if the borders closed and we've got no population growth, maybe that's enough. That's all we need. And if you're going to try and stimulate this economy into 80,000 or 100,000 jobs a month consistently, you're just going to wind up producing inflation. Jim, you make excellent points, but hang on. President Trump's going to go the opposite direction and say the fact that there's a low jobs report absolutely commands that we have to cut rates right now. Is that a setup for essentially unleashing inflation? >> It could be. It could be very much because he would be using that mentality that because let me back up. Precoid we never ever talked about what is the potential number of jobs the economy needs to create because population growth was fairly stable. Immigration was fairly stable. It was the same number year in and year out around 80,000 100,000 jobs. and we just kind of got used to the whole idea that that's what the economy should do. Well, 21 to 23 when we had millions of people coming into the country, there was an argument to be made that that number had ballooned up to 150 to 200,000 jobs a month. And that's why we weren't even though we were printing 120,000 jobs beginning at 24, we weren't creating enough jobs because of the ballooning population growth. And that's why we saw the unemployment rate go up. And that was last year when the Fed panicked about the unemployment rate was rising and that we need to do something and cut rates on that. Well, this year we got the opposite. Now that we've got no population growth, the unemployment rate is not rising. It's the same level, 4.2% as it was exactly one year ago. That is a sign that labor demand is okay. It's just that the supply is way down. There's also one other thing that Trump has been doing which I think is a error. He has been criticizing the Fed and about a month and a half ago he wrote on Axe uh or excuse me on Truth Social that was reposted on X like a handwritten note to JPL with all of the central bank rates and he circled on all the countries that have zero and it was like Cambodia and Japan and some other countries that are very close to zero and he said we're the hottest, we're the best country, we should be here with these countries, not down here at 4% where we are. The error that he's making is he's thinking that the United States is like the mortgage on Trump Tower. The lowest rate goes to the best mortgage. Why do you get a low mortgage rate on your on your office building in Manhattan? Because you have high occupancy and you have a desire for people to want to be in there. In other words, what I'm trying to argue is you have very little credit risk. He's arguing that the US has very little credit risk. I agree with them. It has practically no credit risk that the federal government is going to default, especially as a reserve currency. We'll print the money to pay you back, but we're not going to not pay you back. Where interest rates for sovereign yields are set is not on credit risk. It's set on growth, inflation expectations, and supply. And those are the things that are holding our rates up to 4%. So when he's trying to argue we're the hottest country, everybody wants to be here. What he's trying to say is we're good credit risk. So it's just like the mortgage on Trump Tower, it should be lower than the mortgage across the street because it's a more desirable property and therefore it's less risk. But that's not how you set sovereign yields. And that's what he's going to have to resolve in this issue. And I think that the market understands that. And that's why we're seeing long-term yields still stay in this mid to high forest area because it's not about us being the best credit risk. It's not about whether or not we're a better critter than the UK or the or France or Canada or Japan. Japan is, you know, got interest rates that are still with a one handle one and a half%. And it's all because of their growth and their inflation aspects and their supply situation suggests a much lower interest rate than the United States. Not about credit or their ability to pay. >> Well, that's the basic theory, isn't it, of of macroeconomics is that on a relative basis at least, the performance of one country's economy versus the other. It's the strength of the economy that determines the relative interest rates. the higher interest rate goes to the stronger economy. No, >> that is correct and that is the way it works and that's why I use the word developed countries. Now when you get into developing countries that's what you know then you can get into a situation where there can be a credit risk because there can be default. Venezuela famously's defaulted um you know some African countries have famously defaulted as well too. So it is it's a relative strength on your economy. So, interestingly, when Trump says we're the hottest economy in the world, I want to say, you know what, you're probably right, and that's why interest rates should be going up, not going down. And Eric, there's another thing in in this conversation I should throw out there. We've kind of gotten trapped into this mentality that interest rates, lower always good, higher always bad. That is not the case when it comes to government yields. It's fair value is always good and when you deviate from it too low or too high bad things happen. So the cost of money which is what an interest rate is. It's to borrow money. You have to pay you have to pay for it to to borrow money. You want to make sure that is at an appropriate level for your economy. If it's too high and you're paying too much you're going to retve the amount of borrowing because that's the base level the government yield. And then you know bank loans and corporate bonds are have some other credit risk premium on top of that and then there's not going to be enough borrowing in your economy and you're going to slow it down. If it's too low you're going to overstimulate too much borrowing, too much speculation and you're going to wind up with bubble markets and or inflation. So you want to strive to be in that kind of middle fair value range. So what I'm arguing here is down is not always good when it comes to interest rates. It's good if you make the case that we are fundamentally too high relative to the economics. And I don't think we are with a 3.1% core inflation rate. And if if you're going to force it down, I know everybody's saying, "Well, this is good. Rates are going down." But it might not be because it could be too stimulative. Just like when rates go up, it might not be bad because maybe your economy is speeding up. you have a little bit more inflation and they should be going up. Jim, let's back out to the big picture of the Trump administration's policy goals and what they're trying to accomplish cuz let's face it, look at what happened with tariffs. They said there was going to be some tariff action and then we got shock and awe. One of the the biggest tariff negotiation campaigns ever. Then they said they were going to hold some of the previous administration uh officials to account for bad actions. Now we've got what seems like a a massive uh accountability shock and awe campaign. I think the next shock and awe campaign is yet to come and I think it is one which will be under the command of financial delta force commander uh Scott Bessant who has already installed his spec ops commando Steven Moran in the Fed to be the inside man there. Don't forget Steven Moran is literally the guy who wrote the paper on the Mara Lago accord. And I think what they're doing, I'm not sure who they're going to put into uh the Fed and other places, but I think what they're doing is they're installing the commandos that are going to do an assault or a takedown on the global financial system and rearchitect it to their own liking. And I think that's going to involve crypto integration, not central bank digital currency, but a stable coinbased crypto integration. And I think it's probably going to leave Don Jr. doing pretty well in his crypto business. I know it sounds crazy. Is that nutcase conspiracy stuff? >> No, not really. I mean, there's a lot to what you just said, especially Scott Besson being played by Jason Stadium in the next movie that they do about this. Uh, but I know he he'll he'll really appreciate I said that. But um I do think that you're right. Steven Mirin is the author, the architect of the Marilago Accord. He wrote last November when he was at Hudson Capital, which has been kind of like one of the papers that's been driving what the the Trump administration is doing. And there is a desire to want to try and reorient the entire financial system and to be more aligned with the trading system that we have. And there's no doubt that crypto is going to play a big role in that, which is why they've been pushing, you know, the passage of the Genius Act and they've been pushing the Clarity Act, which is supposed to clarify regulations. But I think where you're going with this is what are they going to do with the Fed? Because, you know, what we've got is we've got Michelle Bowman and Chris Waller. These are two Trump 1.0 know uh appointees which have been basically those are the two that dissented at the July meeting calling for a cut. Chris Waller has been leading the forefront at the Fed for a cut. Andrea Krueler left the Fed early. She wasn't supposed to leave till January. She left in August. Presumably the reason is is that she wanted to return to Georgetown to be so she didn't lose her tenure ship as a professor there. She couldn't wait till January. She had to be there before the school year started. So that means that Stephen Morin goes in as a third Fed governor and now they're trying to fire Lisa Cook for cause and assuming that they get that done and I'll assume they will that would give Trump four appointees of the seven on the Federal Reserve board. Now why is that important? for a number of reasons and including one of them will eventually become the new chairman in May of next year when Paul's term is done. But I think it also is gives them the ability to shape the Fed the way they want because a lot of people don't realize this and be honest with you I had to be reminded of it that every Federal Reserve Bank president has a term that end it runs five years. It ends at the end of February and years beginning in one and six. So in February of 2026, all 12 Federal Reserve Bank presidents terms expire. Now that's been a formality for a hundred years. Their boards would reappoint them and then they have to be approved by the board of governors. They need at least four of the seven votes to approve them. And in the last hundred years, there's never been a no vote of any bank president ever. Well, now the theory is they're all going to expire. their boards will all put them up for renomination. And if Trump has four of the seven governors, they could start saying no in effectively firing some of the bank presidents, the more hawkish ones or the ones that are not aligned with their policy with their policy aims. And they could then force those boards to go back and find somebody that would be acceptable to get past the board of governors. and that could help remake the Fed as well too. Now, let me be clear. This is a possibility when you have four governors. It is not a certainty that they're going to do this. And again, I'll remember the reason you've never heard this before is that no Fed governor has ever voted no on the reappoint of a Fed president. Uh but that is something that has been floated out there as well. so that they could be remaking the Federal Reserve, the most important of the central banks, into the image that they want. So this is why you hear people talking about a loss of independence. So why is the markets so sanguin about this possibility? I think twofold. I think one, it's still all theory and we'll have to see if this is actually a little bit too, you know, we're a little bit too over our skis with these theories. maybe that they're not that going to be that aggressive. Second of all, I do think that the central bank has not done itself any favors with the way that they've conducted their policies over the last many years. Not the least which was cutting rates last September 50 basis points. That was the first time in decades that they changed policy before an after Labor Day in an election year. Let me be clear on what I just said. changed policy. If they were hiking going into the Labor Day election year, they could keep hiking. If they were cutting, they keep cutting. If they were holding, which is what they were doing going into Labor Day, they would keep holding. No, they reversed and they cut and they cut by 50. And so when Trump yells at them that they were political, trying to get his opponent to win, you could quibble whether they weren't or were doing it or weren't doing it. But if they wanted to do it, try and sink the election for them, that's exactly what they would have done is an aggressive rate cut right after Labor Day. And so the timing of it doesn't the optics of it doesn't look good at a minimum as well. So they've not done themselves any favors. So when the Fed when economists and Fed officials keep were fretting about central bank independence and I've heard some of them say and the market doesn't seem to be bothered by it. I don't know why. It's like cuz you've done a pretty good job of showing yourself as to maybe not being as independent as you think you are and the market is open to the idea that the Federal Reserve needs change. And so if there's some change at the Fed, it will embrace it. If there's too much change, meaning a loss of independence that the president is going to start running monetary policy, it might get worried about it, but it might get worried about it later on. So, what I'm trying to say is I kind of agree with you. It's a red flag that or maybe a red flag is a little strong. It's a yellow flag. It's a yellow flag right now that could become red as this situation unfolds. And so, no, I don't think it's, you know, outlandish what you just said. Let's talk about the role of digital currency and how it's going to evolve. We started with the Bitcoin community hopeful that maybe someday Bitcoin would compete with governmentissued money and and you know compete with the US dollar for global reserve currency status. Uh I took the the uncommon view that that was not likely to happen. The central bank digital currency was more likely to be invented which it was. But what I didn't see coming and what I think is now happening is the realization by the Trump administration that they can basically replace the petro dollar recycling system with a stable coin recycling system that ties everything into US treasury demand but still uses the Bitcoin blockchain in order to tokenize those assets. Is that where we're headed? And if so, what would that mean both for uh the people in the Trump administration and for the rest of us? Yeah, I think you know that is a way that we're headed. If there was one quibble I would give with that, it would be maybe not the block the Bitcoin blockchain, but the Ethereum or the Tron blockchain. That's why you've seen over the last two months, Bitcoin's unchanged. Ethereum is up 70%. Now what they're attempting to do is with a stable coin and the Genius Act also had another provision in it that really re relaxed the regulations for building payment systems. So the analogy I've heard is the stable coin is the rails. We're going to build rails. We're going to build railroad tracks. And after those railroad tracks are built will come the trains and the cars that will follow it. So if we're going to build these payment system, these payment rails in order to effectuate payments that then everything else will follow. You know, let me give another statistic here. 80% of the world has a mobile phone. 80% even in the least developed countries in the on the planet, the majority of the population has a mobile phone. Why is that important? Because everybody has access to an electronic wallet, even in poor countries. So what they're offering is here's a stable coin. It's tied one for one to the US dollar. It's a digital representation of the dollar. You are in a country where you've got shaky banking systems. You've got currencies that are constantly devalued. We're going to give you this tool that you can use that's on a decentralized platform and it's permissionless. So no one can take it away from you. No one can hack it or anything. you can store your wealth on that system. And we're hoping that this will attract a lot of money that people will want to, you know, instead of using the bank account in whatever bank, whatever country they're in, they will use this a stable coin which will then be backed by a one for one by a treasury security and then will create extra demand for treasuries. Now, I got two small quibbles with it. I understand the argument and it could very well be the case. Quibble number one is that's not going to be the case for American investors and European investors or developed world investors. If Americans like you and me and everybody that most everybody that's listening to this podcast or even if you're European, you say, "Yes, I want to keep my money in a stable coin." Well, where was it already? It was already in a regulated bank that was backed by something like a US Treasury. So, you're just you're just substituting it to another Treasuryback security or Treasuryback instrument. So there's no new net demand. So in the developed world, there's not going to be a whole lot of new net demand. In the developing world, I could see that dem that demand coming. But is there trillions of dollars of wealth that is being sitting around in Africa and Asia and in southern Africa, Southern Asia, and Latin America that's looking for a more stable banking system to park it in. I don't think there is that much money out there. there was they wouldn't be developing countries. So I think that the amount that they could very well get is going to be much smaller than they think. But let me also throw out something else about this whole idea about building rails that you know payment rails that you will use a stable coin then to um be the medium of exchange on that payment rail. We are living in a digital world and we have an analog banking system. And let me explain where we should be if we were. Think of email and texts. You can send as many emails as you want. And a lot of us do send bulk emails to lists or texts and they're free. The marginal cost to send one is free and they arrive instantaneously. Why isn't our payment system like that? Why can't I send money to everybody instantaneously and for free? And let me go you one step further. Why is it that if I agree on my paycheck a certain amount of money money per month, why am I paid lumpy once a month? Why am I not paid in real time all the way through the month? Every second, every microscond, every minute, I get money goes into my account for the amount that we agreed on that you're going to pay me per month. Furthermore, my rent, my mortgage, every second, every minute, money goes out of my account for the agreed upon amount for rent. Now, why am I arguing that that's the kind of payment system we have, which we don't have with AC, the automatic clearing house or the Swift system or this new Fed now? He can't handle anything like this. Because ultimately, why do we all pay monthly service? Why do we all pay monthly fees to Netflix or to whatever else that you want to pay? because that's the only thing our banking system can handle. We should ideally I'll use streaming services as my example there. You should have no account on a streaming service. You should connect your wallet. You should then watch something and every minute, you know, it takes a penny or two out of your account or a sub penny if it's a if it's a lesser popular show, even a less a sub penny. And as long as you're connected and watching it, you pay. The minute you stop watching it, you stop paying. You go to the New York Times and you want to read a story. Oh, that looks interesting. Click on it. Three cents comes out of your account or five cents or 10 if it's a more popular story. But you don't have any monthly fees. That's the way we should be paying. What I've tried to describe is a payment system similar to the way we send texts and the way we send emails. We can send an unlimited number of them is whenever we want. They arrive instantaneously and there's no marginal cost. So, if I want to get paid every second and if I want to pay every second, I should be able to. I can send a text every second if I want to. Why can't I get paid every second or send a payment every second without incurring an economic cost? And that is the type of system that I think the digital economy wants. So, I'm all for what we're trying to do with this system. Now, is the Trump administration, you know, trying to get in there with their world, you know, financial coin and everything else? Sure, they are. And the day we're recording, the Wall Street Journal is saying that they've amassed $5 billion in wealth because of it. And yes, that makes me a little bit uncomfortable that they're doing that. But that doesn't detract from the idea that what they're trying to do is a worthwhile ent effort. So much of what Trump does is like this. The idea behind it is a very good one. The way he goes about doing it makes me want to question it, you know, and stuff. Firing the BLS chief, I think the BLS has got some problems. And if you want to fire the BLS chief, I don't have a problem with it. But then accusing them of being political and partisan and trying to make them look bad and everything, that's when I start having part problems. and then you're going to replace them with a partisan who's just going to basically monkey with the numbers so that they make them look good as opposed to saying that there's been some real problems at the BLS with the way that they do this data and maybe we ought to fix it. So the intention, the idea there you kind of agree with. Then it's the execution of the way they want to go about it that makes me really question it. >> Jim, final question. Think about the way they've taken this shock and awe approach to other policy objectives such as tariffs. What do you think the next shock and awe things might be? What what are the things we might be shocked with as they move forward on this agenda of doing something to reshape the global financial system? >> Well, let's not forget immigration too that they've done, you know, shock and awe on immigration as well. But I do think that the next shock and awe, if I had to guess, would be in the realm of taxes. Trump has talked about tariffs are going to be this new thing called the external revenue service. He believes that they're going to raise trillions of dollars in tariffs. All right, maybe they do, maybe they don't. I don't know if they are. But his ultimately what he's been arguing is that he wants to go to this idea where we could get rid of the internal revenue service and replace it with an external revenue service and therefore we don't have to ever pay taxes again. I don't see us raising that. That's $4 trillion a year that the Internal Revenue Service raises. Could there be a reduction in taxes because of of tariffs? Sure. But an elimination, that's a little bit too much for me to see. Um, as well. And finally, as long as I'm on tariffs, real quick, I still have a question about how successful this is going to be. As I've joked a lot about that if Trump could find a way, all tax policies always, we need to get some other rich person, not you, to pay for our taxes. We're taking it to the ultimate extreme now. The other rich person, not you, to pay our taxes now as a foreigner through the form of tariffs. And furthermore, Trump wants me to believe that we're going to get a lot of it from China so that they could take all that tariff money they got from China to buy weapon systems to protect us from China. And I said, you know, if he could pull that off and eliminate the external revenue service or the internal revenue service with the external revenue service, then let's just put them on Marshmore right now. But I say that sarcastically thinking that it's not going to be the as big as it is. So, well, they got all these big plans on taxes. All right. I don't think they're going to go all the way to no income tax, but I would not be surprised if you are going to see before the end of Trump's second term some radical restructuring of the current tax law bases on the idea that we are getting some tariff revenue and that they could start making changes. Well, Jim, I can't thank you enough for another terrific interview and for all of the previous terrific interviews you've given us over the years, making you one of our top five all-time Macrovoices guests. Before I let you go, please tell our listeners a little bit more about what you do at Bianca Research, how people can follow your work, and what services are on offer for our institutional investors. >> So, two things. Um, my my original job was I am a macro researcher at biancorressor.com. You can follow me at Biano Research on YouTube, on X Twitter, and Jib Biano on LinkedIn. We do offer an institutional product. If you wanted to request a free trial, you go to biancorresearch.com and take a look at it. Uh if you're not a research, if you're not an institutional service, I do try to post a lot on u social media. The second thing we do uh is we do manage an index called the Biano Research Total Return Index. It's a fixed income total return index. yonkoadvisors.com. You find out more about the index. It's designed to maximize fixed income returns because that's ultimately where I start and still believe I still am as a bond guy. And there's an ETF that tracks our index. It's the Wisdom Tree Biano Fund. WTBN Whiskey Tango Biano Nancy is its ticker symbol. >> Patrick Sznda and I will be back as macrovoices continues right here at macrovoices.com. Now back to your hosts, Eric Townsend and Patrick Serzna. >> Eric, it was great to have Jim Biano on the show. I loved his perspective on how things have materially changed in this postcoavid economy. And that's a perfect opportunity to segue to our new segment, the Big Picture Trading Trade of the Week. Patrick, tell our listeners how you'd put a trade on to express Jim's view that cutting short-term rates could actually risk increasing long-term yields. Now, Eric Jim's got a lot of interesting takes, but the one that really stood out for me was his view on higher inflation regime and what it means for bonds. His argument is pretty straightforward. Rate cuts could actually be inflationary. They juice up demand, push up inflation risk premiums, and ironically that could lead to selling in the long end of the curve. To me, that screams steepener. I'd rather look at the 530s than the 210s. It lines up better with the idea of long duration bonds under pressure. Right now, that spread is around 121 basis points. As you can see on page two of the chart deck, we've moved a long way off the 2023 inversion. But when you zoom out, history is clear. In the last two big steepening cycles back in 2020, the spreads widened north of 200 basis points. So, there's still room to run if rates meet sticky inflation. Now, sizing the trade is the tricky part. You can't just throw on equal contracts. The 30-year moves a lot more per basis point than the 5-year. You've got to balance by duration, so both sides react evenly. On futures, that works out roughly to a 4:1 ratio. I've attached a Bloomberg screenshot of that on page three of the chart deck for those that want to take a closer look. In regards to risk management, I'd keep it simple. Two things kill the trade. E one, if inflation expectations roll back to the pre-COVID norms, or two, bullish technicals showing demand coming back in the long end. Either of those would be a clear signal to scale back. So, in that bigger picture, if Jim's right and the Fed is cutting into sticky inflation, then history says that the 530s still have plenty of room to steepen. Patrick, that was a great explanation for our professional audience. We don't have time to delve into all the details of a retail version of this trade. So, how about giving our retail listeners just a quick 10,000 ft overview. A lot of retail investors shy away from this trade because futures and duration matching sound complicated. But you don't actually need to mess with futures to play the theme. There are simple ETF-based ways to do it. For example, you can use Harley Bassman's Simplify Short-Term Treasury Futures ETF, and pair that with options on the TLT, which is the EyesShares 20 plus year Treasury Bond ETF that gives you exposure to Jim Biano's Bond View without having to dive into futures. Thanks, Patrick. And I'm sure a lot of our listeners would have liked a more complete explanation. So, how about doing one of your famous Big Trading webinars on this topic? And while you're at it, how about hooking up our macro voices listeners with a free ticket? On Monday, September 8th on our members webinar, I'm going to walk through exactly how retail investors can set up trades to take advantage of Jim Biano's bond market view with no futures required. If you're a macro voices listener and you want to see how it's done, you can jump on for free. Just register for a free trial at bigpicturertrading.com. And listeners, be sure to let us know what you think about this new big picture trading trade of the week format on X. We're experimenting with this format and trying to decide whether we're going to continue it beyond this countdown series. Now, let's move on to our usual postgame chart deck. Listeners, you're going to find the download link for the postgame chart deck in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoices.com. Just go to our homepage macrovoices.com and click on the red button over Jim's picture saying looking for the downloads. Patrick, it's starting to look like the S&P chart could finally be topping after hitting my target of 6,500. But are we topping or just pausing? Uh, frankly, I'm not sure. And I think newslow is going to determine the answer. What are the charts telling you? >> Well, Eric, I have to agree with you because this is a heavy market. uh while the big rally was through June and July, August has actually seen some sort of heavier distribution and topping formations developing. Now really the jobs numbers is going to decide what happens next. Uh but if the market does break down uh uh in the post jobs numbers period uh it certainly has now created enough distribution along the high to kick in a bigger and deeper market correction. Now, if we did have a market correction, it will typically start with a 5% uh garden variety correction, which is we'll probably get down towards 6,200 on the S SNP. The big tell will be if we get that type of a correction, how fast and with what velocity the bulls buy the dip. If a a quick 5% correction happens and then uh by October we're back to 52- week highs then uh actually that muchneeded correction would only actually be favorable for the bulls because in the end it would have unwound the overbought state of the market create the correction and the backdrop from which a bull continuation pattern can actually happen. But at the same time, if we had a breakdown of a five plus% variety and the markets uh stay down there and fail to rally and is immediately m met with distribution whenever there is a short-term rally, let's say not be able to get back above 6,400 in that condition, then that could pivot a lot of systematic traders. uh whether the vault targeting funds that have been net buyers over the last 3 months uh or the uh CTAs that are generally net long now will start giving signals uh to sell and then all the short gamma on the dealers books could all uh together begin a much bigger and deeper correction that could then spur sentiment shift in the markets. Now that's very premature to jump to those conclusions. At this stage, we are long overdue for a 5% correction, especially we're now almost 150 days into a rally off the April low uh without a correction. And so a correction is a very natural thing to happen. But the bigger question is how will the bulls react when we get it? All right, Eric, let's move on to that US dollar. Well, Patrick, we've been in a horizontal consolidation pattern on the Dixie centered on 98 for 4 months or so now. Most of the action has been between 97 and 99 with occasional excursions out to 96 or 100, but we really need to see a sustained move above 100 or below 96, which obviously is a very wide range before we really know that we're we're into a new trend and uh we haven't seen it yet. So, my fundamental bias is unchanged. Still uh strongly bearish, but subject to let let's wait out this consolidation. I think it will eventually resolve to the downside. We'll see another leg down, but it'll be several steps before we eventually get to my target of 89. Well, Eric, I appreciate the bigger picture bearish view because there are all sorts of bigger picture macro reasons to be bearish, the dollar, but when I look at the technicals, uh what we see is a primary bearish downtrend that's been in place since the start of the year. But over the last two months, uh even arguably three months, we have seen the dollar find a fair value zone. uh that has uh created the sideways trade range that you've spoken about. The bigger question here is that will that trade range act as a support line to potentially spur a uh US dollar counter trend rally? That would purely be technical if it was to emerge. But when you really look at the underpinning crossurrencies, you can see the euro has been incredibly heavy. The pound sterling has made a decisive breakdown below its 50-day moving average. The uh US dollar yen has decisively broken out of a wedge on the upside. And even the US dollar CAD is actually rolling up out of a flagging formation. There's a lot of these crosscurrencies that are actually setting up for what could be at least on a temporary basis a US dollar counter trend. Now again, that wouldn't be a big macro call, but rather a technical move, but it'll be very interesting to see if something like the jobs numbers or the Fed rate cuts actually spur a uh US dollar rally. We'll uh certainly find out in the weeks to come. All right, Eric, what are your thoughts here on crude oil? Well, Patrick, I think this market is finding solid support around $60 WTI. The question is whether or not we're ready to mount a meaningful rally higher. Uh backwardation is moderating. We we had more than a dollar on the front spread a few months ago. Now we're down to 39. Now part of that is seasonality. It's expected that you have a lot of backwardation right around the end of summer driving season and the shoulder season. It starts to come off. So it is a seasonality thing, but it's coming off pretty quickly. It's possible that we could be in a pattern that eventually takes us into a structural contango market. Um I I doubt it. I think we're more likely to see this market move higher and reestablish backwardation at least at the front half of the curve. But that's the thing to watch in my mind is if we get into a contango market, if the the uh if the spreads that are currently in backwardation, if those expire and we go past them and the spreads which become the front month spreads don't move into backwardation in the next few months, that's going to tell me that maybe there there is a structural change in the market that's bearish. But I think it's more likely to resolve the other way. This backwardation moderating though is definitely uh a concern in my mind saying maybe we are headed towards a uh a move significantly lower in prices before this is over. Well, Eric, I want to look at this purely on a technical basis, which is uh that uh we had a substantial sell-off in the early part of August and then we bounced and that bounce was essentially a 50% retracement to the $66 and a very temporary close back above the 50-day moving average. And almost immediately, that was met with a huge reversal and selling it right back down to the uh the bottom of its August lows. This is still distributive price action and uh the on the short term the vulnerability of crude oil potentially weakening is there but there are some bullish signs. First of all we have a key support line along the April and May lows which uh overall suggests that maybe at most we have a 10% downside volatility risk on crude. Uh but when we take a look at energy stocks, we can see very clear accumulation happening there. And the interesting part there is what are the energy stocks telling us? Like when usually if we have this kind of weak price action in oil, it usually leads to distribution in energy stocks and that's just not the case right here. Are we in a situation where oil just needs to bang out its short-term lows and as soon as we do that uh something into October we may see it giving bull signals on the upside. You can draw that trend line along those summer highs from the June, July and August highs and simply watch for when crude oil finally bases out, trades back above its moving averages and uh breaks that uh descending trend line. uh if we do maybe an oil counter trend in October is entirely possible. All right, Eric, let's take a look at that chart on gold. What's your thoughts here? Well, as predicted here on Macrovoices, the gold market was coiled up for an upside breakout to new all-time highs, and that's exactly what we got. I think the move is on to at least 3750, maybe 3,900 by Christmas. But don't chase it here. Uh we got what, six big green candles in a row. It looks like just as we're into the Wednesday overnight into Thursday session, we're starting to paint a red candle. Maybe we'll come back down at least to the 5day moving average around 3560 or so. We'll see what happens. But this market is extreme overbought. We could easily easily come back down oh I don't know to say 3475 uh even lower than that without it really even being a correction. and it would just be part of the uptrend. So, we're extremely overbought here. We got to have at least some pullback, but I think we're seeing the beginning of a significant breakout that takes us probably to at least 3750, maybe even uh 4,000 by Christmas. Well, Eric, definitely a huge breakout to all-time new highs. Gold is clearly started a new bull trend. The big question here is is that how does it react during a consolidation? So, whenever we see a a one or a two-day pullback, something that gives back uh even up to 50% of the breakout rally, we want to see whether the bulls are buying dips. Now, what were all of its previous highs should act like support? Do we see that general accumulation in there? If we see uh gold continuing to demonstrate that positive bullish price action, uh then your upside targets are very real realistic. In fact, if you take the length of the market rally from its November December lows and use that as a a measured uh move for uh an upside target, we definitely have potential to see even 4,000 on the upside by year end. So, your targets of 3750 and 3900 are very realistic. All right, let's move on to uranium. Patrick, the long awaited moment is finally upon us. This week is the pivot point where seasonality favors uranium of September to February approximately. The World Nuclear Association conference in London is ongoing right now. It has often in the past been the catalyst to sort of start the buying season. The fuel buyers come and get together at that conference, compare notes, go back to their offices, and start putting their RFPs together in order to buy uranium. So, there's been lots and lots of action. the uh Sput ATM. SPUT did another raise at the money. But most importantly, sput is now starting to close approximately at the money. It's been in a steep discount, which means new retail investors just coming into the market buying sput. It doesn't really take any physical uranium off of the market because they're just buying up that discount in sput below its net asset value. it has to get up to and start to exceed its NAV in order for the fund to actually buy more physical uranium. I think we're right on the cusp of that starting to happen. That's a self-reinforcing virtuous circle once it gets going and I think maybe it's about to get going. So, everything looks absolutely phenomenally great to me with just one really big caveat and that is just too many people all think exactly the same thing at the same time. And anybody who's an experienced trader knows too many people on the same side of the boat means it gets really messy if there's a sudden gust to wind nobody saw coming. So this trade is not crowded overall, but almost among the people who are in it, everybody's got this idea that the WNA conference is going to be the catalyst for a big upside move. That means everybody's positioned for it. That means there's not a lot of cash on the sidelines. And that means that a broad market risk event, which hey, maybe it looks like we're starting to see the beginnings of the S&P rolling over. If that got worse, it could easily be the catalyst to get something going in the uranium market. So, it feels too easy to me. I my base case is still the moonshot from here. I I think this is an incredibly opportune market, but there's so many people who believe exactly the same thing. the market is probably going to throw us through some kind of loop before we eventually see much higher prices. >> Well, Eric, I want to just focus on talking about uranium stocks versus uranium itself, the U308 and the ETFs or close-end funds that uh track it. What we clearly have had is an incredibly strong run in uranium equities over the last few months and uh it's has them continuing to trade at their uh all-time highs. But we when we take a look at uh the U308, it didn't move very much uh over that period. And uh what we saw is consolidation. And so when I look at that spot physical uranium trust here, what you can observe is that while we have definitively u broken out of its descending trend line, uh we have not seen uh uranium prices itself actually participate with all of the euphoria or excitement in the uranium equity space. But that has changed here in the last week. We have a very clear upshoot in the U308 and these closed end funds have all targeted back to their June highs asking the question is this the cycle from where the U308 uh underlying yellow cake commodity is actually going to catch up and so uh we're certainly watching whether this breakout happens and if it does that could result in even a 10 plus% move on the upside in the in the next few months. All right, let's touch on copper. >> Well, Patrick, we're finally starting to see at least a little bit of a bounce, but not much of one. It's kind of muted and looks like it's even starting to roll over again already. Well below the 200 day moving average, all the the moving averages really. So, lots and lots of work to do to repair this chart. Well, certainly there's been some strength in the last little bit, but what's interesting is that the copper equities are continued to take flows and continue to do well. uh we are much closer to the key lows of copper over the last year. Uh and so I think that the asymmetry is in the favor of the bulls just simply because I don't see copper breaking down below $4 or anything like that uh in this cycle. And so it it's all in my opinion about uh where it's finishing off this basing and when we'll start seeing some bullish price action to the upside. And Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. Now, Eric, when we take a look at the US government 10-year Treasury bonds, I know uh we talked about Jim Biano's views uh that there could generally be a steepener and then that could be stress on the long end of the curve. But when you actually looking at this chart, we have seen throughout the summer sequentially lower highs in yields going from 460 to highs at 450 to highs below 440. We're now down uh under the 420 level on yields and more importantly these are right along the lows of the yields uh for the summer. I mean we are in a situation where if there's any technical breakdown here we could be heading towards uh the April lows under 4%. the when I uh see this chart then I kind of step back and say well I do get Jim's idea that we could see the long end under stress but technically on the short term we could see a scenario where the yields go down and bonds rip giving actually a better entry into that bigger thesis maybe even several weeks from now let's see whether or not the 10-year yield breaks down here or not folks if you enjoy Patrick's chart decks you can get them every single day of the week with free trial of BigPictur Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. Patrick, tell them what they can expect to find in this week's research roundup. Well, in this week's research roundup, you're going to find the transcript for today's interview, as well as the chart book we just discussed here in the postgame, including a number of links to articles that we found interesting. You're going to find this link and so much more in this week's research roundup. That does it for this week's episode. We appreciate all the feedback and support we get from our listeners and we're always looking for suggestions on how we can make the program even better. Now, for those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email at researchroundup@macrovoices.com and we will consider it for our weekly distributions. 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