#041 Jim Bianco: Recession Has Become The New Bull Story On Wall Street

Macro researcher Jim Bianco (@biancoresearch), founder and president of Bianco Research, returns to The Julia La Roche Show for episode 41.  In this episode, Bianco makes the case that we’ve entered a different market era from 2009 to 2021 and why he doesn’t expect the Fed to cut rates or pivot anytime soon. He also breakdowns this paradox where for the first time most Wall Street strategists expect a decline in the stock market in 2023, which wasn't the case during the Great Recession or after 9/11.  He explains that a recession has become their bull story where the Fed will cut rates and the market will rise. Bianco also outlines how we’ve entered a post-pandemic economy marking the end of an era of cheap goods, labor, and energy. As such, he makes a case for why inflation won’t return to 2%.  Bianco notes that the market going forward will turn into a stock picker’s market versus buying indexes and ETFs and relying on the Fed put. He also outlines opportunities in fixed income, what he’s watching for in equities, and his thoughts on gold. Finally, Bianco weighs in on the FTX fiasco and explains why he’s still a big fan of cryptocurrencies and what’s needed for the space.  0:00 Macro view 0:31 2023 starts off with a divergence 1:10 A different era of persistent inflation 2:14 Market is a liquidity junkie 3:36 Paradox of wanting a recession 5:01 A recession is the bull story 5:35 Bianco’s view on a recession 7:05 What the Fed is hoping for 10:35 Inflation 12:41 Why we won’t get back to 2% 13:11 Watch what the MTA is doing with subway service 14:40 Giant shift in workforce attitude 15:42 China is a disaster right now 18:02 Era of cheap goods, labor, and energy is over 20:30 The path 2% requires killing the economy 23:00 Energy 27:48 What folks are missing on the China reopening story 33:10 Bank of Japan expands trading band for 10-year Japanese government bonds 35:58 Japan has an inflation problem 37:00 There’s a developed world inflation problem 38:22 More implications from the BOJ’s surprise move 40:29 It’s now a stock picker’s market 42:26 George Noble 43:33 Fixed income is becoming interesting 45:35 Equities 47:00 More on fixed income 50:45 Thoughts on gold 52:20 GLD 58:09 Thoughts on crypto in the wake of FTX/SBF 1:01:01 Crypto turned into a casino 1:02:48 Banking system is inherently unstable 1:05:37 Impacts of FTX on the crypto industry 1:11:40 Book recommendation