The Fed's Rate Cutting Cycle Is Already Over | Jim Bianco on March Fed Meeting, Trump Tariffs, and 4/5/6 Markets
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The Federal Reserve just had its meeting. They downgraded the economy, lowering their growth forecast for 2025 and 2026 and raising their inflation expectations, but keeping their interest rate projections the same. I am joined by Jim Bianco of Bianco Research. Jim, welcome back to Monetary Matters.

We are speaking just after Jay Powell spoke, Chair of the Federal Reserve. The stock market is up. The credit market has eased. The bond market yields are down. How are you interpreting what happened? The dot plots, the summary of economic projections, and Powell's comments? Well, I think if you look at all of those taken in total, you've got

kind of bad news, bad news and bad news, right? He downgraded the economy. So that's bad. They upgraded inflation. So that's bad. And there's more uncertainty. So that's bad as well. So that's the kind of where they've taken it all. What's interesting about all that bad news is what does it mean for the Fed?

If you look at the market, not a whole lot right now because it's only putting the Fed. Remember, let's back up. Remember, they cut 50 base points in September. They cut November. They cut December. They paused in January and they paused today. So the next meeting is May 7th.

the market is only putting a 23 percent probability of a fed cut may 7th a 77 chance they're going to hold this is post press conference right now so well less than 50 percent they're not going to move i would argue to you that given all of that news downgrade economy more uncertainty yes even higher inflation but you downgraded the economy more than you raised inflation so that would technically mean nominal gdp fell that if you look go to the may 7th meeting

and you don't find a reason to cut rates, there isn't a reason to cut rates. It's not going to materialize this summer. You've already got your 10% correction in the stock market. You've got 1% moves in the stock market every day. Everybody's hyperventilating that this is the most uncertain period that they've ever seen.

And yet you still are telling me that in two months, you're still not going to find a reason to cut rates. The rate cycle, the rate cutting cycle ended in December. And so that's kind of my initial takeaway. My other takeaway from it is

You know, this might be my partisan bias, but I just thought that Paul was a lot. He was it's Trump's fault. Something bad happened. It's Trump's fault. You know, it's Trump's fault that we have this uncertainty. It's Trump's fault that we might get inflation driven tariffs. It's Trump's fault that we had to downgrade the economy. Everything was fine until Trump showed up. He didn't say it in those words, but that's strongly the impression that I was left with coming out of the presser as well, too.

So Jim, saying everything is Trump's fault, that is something that a partisan Fed chair would do. I totally grant you that. But isn't it also possible that Trump's policies of the four pillars, immigration, tariffs,

fiscal policy and regulation, they are dramatically going to change the outlook for real growth and inflation. And in this instance, downward for real growth and upwards for inflation. In the same way, Biden printed a bunch of money and had a bunch of stimulus and that had high nominal GDP and high inflation definitely played a part. You don't have to be a partisan to point that out. No, no, no. You don't have to be a partisan to point that out. And yeah, somebody's yelling at me going, but it's great. It is his fault.

Okay, but then I'm old enough to remember that between 21 and 23, they never said anything about 10 million illegal migrants coming into the country. They never said anything about the CARES Act potentially in government spending driving inflation to 9%. So there's lots of instances where the Fed could point to government policy or to the specific policy of the president and say, this is a problem.

They only do it with Trump. That's kind of the partisanship of it. If they had been a little bit more balanced about it, it wouldn't have been as big a deal. It wouldn't have stuck out to me as much as I saw today. Jim, do you fundamentally disagree with the claim that tariffs, which are the big one, tariffs are bad for real growth and that either will lower nominal GDP or they will raise inflation or both. And as a result, real GDP goes down. Do you think that that is a false statement?

No, I don't think it's a false statement. I think it's an inconclusive statement. And I'll point out, let's back up a second. Let's talk about tariffs. Trump is a transactional kind of guy. He's not ideological. But it seems like there's an ideology driving his policies. But he doesn't state those because being a transactional guy, he might change his opinion tomorrow.

And that ideology seems to be that the big move towards globalization over the last umpteen decades has been good for the top half of income and bad for the bottom half of income, the K-shaped economy.

that those at the top half of income, you own a home, you have a portfolio of assets with stocks, bonds, crypto, all of them, and they all go up in value and they increase your net worth. You're in the bottom half of income, you rent, you don't have a portfolio because you live paycheck to paycheck. And over the last four or five years, inflation has outstripped your paycheck. So your real cost has gone down. You can't even buy as many things as you were able to three or four years ago because of inflation.

And Trump has tapped into that. And he said, look, it's globalization that is really hollowed out manufacturing and heavy industry and the like and push those products overseas. And we're going to correct that with tariffs.

Now, Paul did say something interesting about tariffs during the press conference, that in their assumptions, when Trump announces a 50% tariff on aluminum and steel going into Canada, and he says in his tweet, I'm doing this because you're putting a 25% tariff on electricity coming back to the United States, so it'll stay there as long as you do the electricity thing.

Paul said, like so many other people, okay, let's assume until the end of time, there's a 50% tariff on steel and aluminum. And what does that mean for the economy?

And it doesn't even make it to dinner time because an hour later, Ontario drops their 25 tariff and he rolls back half of it. And so this is the problem is that because he's not ideological, he's using these tariffs as a weapon to try and correct an imbalance that he sees in this economy.

And yet what we always say is, well, April 2nd is going to be a big day because they're going to announce these reciprocal tariffs. And then we're going to go out and we're going to assume let's assume that the reciprocal tariffs last for 100 years unchanged. What does that mean for the economy? They might not even make it to dinner time the way that Trump works. And so that's the that's kind of the rub with it. Now, let me back up or let me conclude, excuse me.

With highlighting what Jamie Dimon and Lloyd Blankfein have said. Jamie Dimon, the chairman of J.P. Morgan, Lloyd Blankfein, the former chairman of Goldman Sachs, have both come out, Blankfein in an op-ed Monday, two days earlier from when we were recording, in the Wall Street Journal saying, you know what, maybe Trump's got a point.

maybe the middle of America that owns no assets has been hollowed out by globalization. Maybe they need policies to help them. Maybe he's right

to stop focusing on this S&P 500 and focus on getting the 10-year yield down. Because if you increase growth and you reduce inflation and you get more employment in the economy and bring the deficit down, all of that, if you can do all of that, should bring down the 10-year yield.

And then even Blankfein went one step further, that if we reshore, and by the way, I know, Jack, if you've heard this, but what is the opposite of globalization? It's a new word to me, at least segmentation. So we're starting to push the idea that we're going back to a segmentation type of economy, that if we go back to a segmentation kind of economy, Blankfein suggests this, maybe a car cost a couple thousand dollars more.

But maybe if it's made by American workers and we've employed hundreds of thousands of people with wages that they can raise a family on, we're better off as a country. Now, I understand the argument against that. But what I'm saying is we're just assuming tariff bad, not tariff good. Yes, if you're in the top 10% and you own assets and you own a home and you want asset prices to go up,

That's probably true. If you're in the bottom 50% and you don't own assets and you don't have a job because your job's been shipped overseas, and here's a guy that's saying, I'm going to engage in these policies to try and get your job back. Maybe he doesn't, but at least he's trying.

You know, in the case of Obama 10 years ago, remember he said, "What is he going to do, wave a wand? Those jobs aren't going to come back. Sorry, you're not going to get a job back." So this is the end. And in an attempt to get those jobs back, he's using tariffs as a leverage tool, not as a permanent revenue tool. And so that's why it's so uncertain, inconclusive to understand what these tariffs mean for the economy.

Just quickly, so on Lloyd Blankfein and Jamie Dimon writing an op-ed and saying, maybe Trump is right on tariffs. I have a slightly more cynical view. I think that bankers want to be with public opinion and with the president. So just as in 2021, they were saying nice things about being woke and DEI, maybe they are now preparing those things back. Maybe they didn't really believe them in the first place. Maybe now they're just kind of saying what will make

the majority of the country and President Trump happy. But Jim, to the meat of the issue, you mentioned Lloyd Blankfein. That made me think of a great clip of Lloyd Blankfein being interviewed on Charlie Rose saying, "People likes to think of Goldman as a great predictor. We're actually just really great risk managers and we can move so quickly that it looks like we predicted things."

The Fed, is it not just a Federal Reserve is just a giant risk manager? Is it not? Why not prepare for the worst case that tariffs do what the economic textbooks say of lowering real growth? And yes, OK, we've got Commerce Secretary Howard Lutnick going on saying President Trump is the greatest dealmaker to ever sit in the Oval Office and perhaps the greatest dealmaker ever.

that that can be our right tail and if that's the case who cares if interest rates are too restrictive because other countries tariffs are going to go down why shouldn't the federal reserve prepare for the left tail of real growth going down and inflation going up which is what appeared on the dot plot then you were back to we're going to manage this stuff to the upper half of income into the s p 500. what about the bottom half of income right what about you know

Chairman Paul ends every press conference, well, he starts every press conference with a prepared statement. The last couple of sentences of the prepared statement is, we are here to serve the American people. We understand the hardships that inflation puts on people in the lower income brackets, the bottom of the K. Okay, here's a guy that is attempting to help them. And you see nothing but risk in warning signs.

What have you done for them? You said inflation was transitory and it went to 9%. And even if you want to argue tariffs are wrong, what are we doing for them? What are we doing for them? Well, I understand that we've got a lot of people moaning and complaining that they're already into late March and they haven't made a profit on their S&P ETFs.

And I said that in a cynical way on purpose. But what are we doing for them? Like I said, he's trying. Look, I am completely open and we could develop into this before. I'm completely open to the idea that this is the wrong approach.

But what I would argue to you, let me go there right now. What I would argue to you is Trump, Besant, Treasury Secretary, Lutnick, the Commerce Secretary, Jason Furman, National Economic Council Chairman, Stephen Mirren, Council of Economic Advisers head, and the 80 million people that voted for Trump all believe that going into the November election,

We were in a crisis. The crisis was $36 trillion to debt, $2 trillion deficits, $7 trillion budget from the United States, which is almost a quarter of GDP is coming from government activity, a $2 trillion trade deficit that that status quo could not hold.

So Trump comes in and says, we cannot continue with the status quo. And he is pushing for this wholesale realignment of the economy, the Mar-a-Lago Accord, you know, that everybody's talking about that I've been talking about as well, too. And you could be saying this is the wrong approach. OK, fine.

But what we cannot do is say Trump cannot come out and say, okay, I've rethought it. No more tariffs. We're done with that. I fired Elon. No more Doge. We're going to give the Ukraine an open check to defeat Russia, whatever it takes, and on down the line.

What would be the reaction in financial markets to that? I would argue the bond market would go, prices would go straight down, yields would go straight up because you just announced that you're going to have a mind-boggling sum of bond issuance coming and the bond market can't handle it unless we get much higher yields. And that could produce the same work outcome. So if you want to push back on these policies,

What a tariff to me. What a tariff to me. The implication is, oh, just stop. Just don't do this. We can't just stop. If you don't like the Mar-a-Lago Accord, you got to give me a Mar-a-Lago Accord 2.0.

You cannot just tell me, let's just go back to endless deficits and gigantic budgets and run the debt from $36 to $40 trillion. That's kind of their operating premise. Now, you could scream at me, but we're not at that crisis level. Maybe we're not.

Trump thinks it, his advisors think it, his voters think it, his approval rating is not in the tank. No one is going to stop him from doing this. So this is the reality that we live in.

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Thanks for listening. Let's get back to the interview.

I completely agree with you, Jim, that President Trump wants to rewire the global trade system because he thinks the rest of the world has treated the United States, as he would say, very unfairly. His advisors are on board with him and they have the technical chops to make it happen. And his approval numbers in both the Republican and the Democratic elections.

party, as well as many different demographics, is high enough that he's not yet seeing any downside from tariffs yet. You said that well. His approval rating is high enough because I could hear people yelling at me, but it's 47%. Yeah, but it's high enough that no one is going to force him to change. So that's an important point. Yes. And I saw his approval ratings...

that were high. And I saw that on the very well-known conservative channel MSNBC, which for our foreign viewers is a very left-wing liberal channel. So Jim, the one group of people who are revolting is the folks, maybe perhaps who are listening to this, on Wall Street. The stock market was down 7% to 8%. Credit spreads had widened marginally as the dollar sold off.

Jim, why is Wall Street wrong that these things, these terrorist policies are bad? On monetary matters, recently I've had on a lot of bears, so perhaps it's good for you, you're here to give balance to the view. Why? I think you're absolutely right, President Trump cares much more about the people who voted for him than he does about the stock markets and perhaps even the credit market.

Why is that a good thing for risk assets? Because I actually, I have the same view as you about President Trump that he's just going to, you know, he's driving a steamroller and he is going to do what he wants and he's not going to be deterred by a 10% decline in the S&P or maybe even a 20% decline. Why is President Trump's determination to reorder global trade, which we both agree on, why is that a positive thing for markets or risk assets that may be bad for the bond market or good for the bond market?

and why not a bad thing. And by the way, I'll just take the egg on my face today. You know, on the interview I recorded yesterday that aired today with Chris Cedillo, I said that the Fed meeting at the FOMC could be a bloodbath for the stock market. And the stock market is up well over 1%. So there's, there's a, I totally have egg on my face. So I'll take a bad call for me. So, uh,

bad call for me and also the credit spreads that had widened marginally about half of that, a little under half of that had didn't retrace. So the risk assets love apps, you know what happened today in the fed market, but, but basically why are the bears wrong, Jim?

So just real quick on the last part, you know, it's good for you to take that egg on your face. But we're up 1% today. We were down 1% yesterday. We were up 1% on Monday. Check back at 24 hours and see how that looks, Jack, because you just don't know where it's going to go. So I think really what Trump is addressing is the elephant in the room, right? And that is

the debt situation in the United States, that that is the problem, that we've got so much debt, we had such a huge deficit, that that is really the Achilles heel that needed to be attacked, needed to be addressed. And that's what he's been trying to come at in a very bold way.

The economic historian Neil Ferguson wrote an essay in the Wall Street Journal a couple of weeks ago. Now, he's been saying this for years, but he summarized it well. He quoted a 17th century Scottish economist called Adam Ferguson, same last name, not related. And he talked about the Ferguson ratio, which is Adam Ferguson's ratio.

And what Adam Ferguson said was a great nation that spends more on interest costs than defense stops being a great nation. And Neil Ferguson went through the last 200 years that every time a country starts spending more on interest costs than defense, and the US crossed over in 2022, either you reverse that quickly or you stop being a great nation.

Whenever Elon Musk is interviewed about Doge, why do we need to do this? The first thing he says is we spend more on interest costs than defense. We have to correct this deficit situation. So this is the thing that needs to be addressed. And this is why I think that

If he is doing it wrong, he is going about it at least in an honest way. And like I said, if you want to complain that he is doing it wrong, offer an alternative. And by the way, that alternative is not tax the rich because that's what the status quo was. That's what we've tried for 60 years. Let me give it to you bluntly. One of the things in addition to tariffs, he's trying to do something else.

He's arguing $36 trillion of debt, right? Where do we get most of that debt from? Well, that's been 80 years of the US being the policeman of the world, fighting communism, then fighting terrorism, being the lead in the Iraq War, the Afghanistan War, this money we've spent in the Ukraine, on and on and on. And Trump is now saying, look, now that we're at a point where we're spending more on interest costs than defense,

He's going to say he's going to do what every other great power in history has done when they get to this point. That is, you look for the biggest pool of money and the biggest pool of money is usually your neighbors and people outside your country. Now, in the olden days in Europe, we would just have an army. We go plunder your country and take all your money. And that's how we would pay our debts. In 2025, what Trump is effectively saying is to the NATO allies, everybody else, here's a bill.

Here's a bill for our defense, and it's running trillions of dollars, and you need to pay it to relieve us of this interest burden. By the way, they have said that this interest cost is a national security issue. So when they sit around and say, what are we going to do about interest costs? They'll have the Secretary of State and the Defense Secretary in the room because it matters to that part of the economy so much.

So they're sending a bill to our NATO allies. And guess what our NATO allies are saying? They're saying, you're right, we need to pay this. And that's why you see Germany releasing its debt break. That means that they get deficit spend. They want to spend $500 billion over the next decade on defense. Europe in total wants to spend $3 trillion in defense. They're willing to do it.

So what he's attempting to do is not just pump prime the S&P to ever higher levels, just government spend, deficit spend, print, print, print, print, print, and get the S&P up. By the way, I don't think that's going to work anymore. And the reason I don't think that, the reason it worked for so many years is you could go to zero, go to negative interest rates, and you could print money through quantitative easing all you want if you have no inflation.

But now that we actually have inflation, if you attempt to do that, you're going to get the opposite reaction. You know, on Twitter, I hear people all the time. Oh, the Fed's going to cut rates and go to print. Oh, and yeah, S&P will fall 50% if they do that. Because if they cut rates to zero and print, inflation is going to go straight up and it's going to devastate the market.

Look at what happened in September. September, the Fed cut 50 basis points. What happened? Interest rates went straight up. Why did they go up? Well, if you want to believe some people, it's all about Trump. It's Trump's fault. No, in September, Harris was leading in the polls.

The Fed cut rates and rates turned around and went straight up right around the September 18th meeting when they cut 50 basis points. It was weeks later that we finally realized mid-October that the Fed, that Trump was actually pulling ahead in the polls at that point. And the move higher rates was well on its way. The concern in this market is inflation.

And I know the Fed wants to pretend that there is no inflation problem. That came clear today in the press conference that the inflation expectations is all about tariffs. Take that out. There is no inflation problem. I disagree with that. But I think that that is really where we're going is he is trying to address the issue of debt. And if you bring down the debt and you bring down the value of the dollar and make have middle industries more competitive,

that that will bring everything back into balance. The last thought is there is no easy way to do this. It would be nice for me to tell you, here's the policies we're going to do. And why we do this, you will see a 12 VIX and a 14% gain in the S&P every year and barely notice what we're doing over here.

That doesn't exist. If you're going to do this realignment, there is going to be an adjustment period. That's what Trump said at the State of the Union or a detox, which is what Scott Besson said. And we're in the middle of that. Now, I've said that these policies don't have to produce disaster. They might just produce a three, four or five percent return this year.

But after 20% and 25% returns, that sounds bad, but it really isn't. It's just our expectations are unrealistic. - So, Jim, I'll totally agree with your final point. No one in the stock market is owed a 15% per annum return in the stock market. No one is owed just a smooth line up without a 10% or even a 20% or even higher of a pullback. Investors in the stock market and risk assets should be aware of risks.

The president, neither the president nor the treasury secretary nor the Federal Reserve owes them anything and the like. But what about, Jim, this argument that the benefits of tariffs, which sounds like you believe in them, will come in the long term? Apple has announced $500 billion investment in

SoftBank, $200 billion. Another firm, maybe TSMC, $100 billion. All those have been announced. President Trump has said them. They're in the headlines. But in terms of the actual benefit, they will come over the next four years, if not later. And the investment will come over the next four years. Maybe the benefits will come even later. The negative downside of tariffs, of prices going up and GDP and spending going down or the growth rate going down could be almost immediately and very likely will be much, much quicker. And this is an argument that James Aitken in my interview that

came out earlier this week said, so folks listening should check that out. In other words, this adjustment will be quite painful. Nothing you said is false, Jim, but that probably credit spreads are widening out one to 200 basis points and the S&P will go down a good chunk. Maybe it won't be true panic, but certainly the Bloomberg and Financial Times and myself will call it panic and it will get pretty ugly. Why is that wrong?

- Scott Hawksworth: Yeah, first of all, James Akin, the Lord of the Dark Matter, which is what his nickname is from Bill Fleckenstein, great interview. So I'm going to plug that one for you right there. But no, you're right that these things are going to come in an uneven way. So what Trump is suggesting is with tariffs, if we could reduce the value of the currency, we could correct some of the imbalances that we've seen from other countries.

that over time, these investment things that people have said, look, and SoftBank is, you know, SoftBank is, you know, could be like a lot of other, remember in Trump 1, 1.0, there was a bunch of investment ideas that were made. Foxconn made that big announcement that they were going to build that gigantic plant to start making up technology in Wisconsin.

Never happened. It never happened. So yeah, this could be the case with some of these investments. But what the plan is, is if we could bring things back into balance, and as Trump likes to say with tariffs, it's going to cost you the same to build it here as it would to build it somewhere else and ship it. So you might as well build it here.

I'm not a fan of tariffs. What I'm a fan of is I know what we were doing up until January 20th, 2025 wasn't working. So let's try something else because that wasn't working.

to fix the deficit, to fix the debt, to fix the imbalances in the economy, to fix what we've seen with the hollowing out of manufacturing. That was not working. So let's try something new. And if this doesn't work, the transactional president will probably shift to something else and we'll try that something else. But what he won't go back to is what we were doing on January 19th, 2025. So that's what I'm a fan of, that we got to try something else.

And this is trying to help people that don't own stocks.

And that's the other thing that we have to keep in mind, too, that and so I don't think, yes, you're right. And remember, the other part of his policy is not only tariffs to bring things back into balance, but deregulation to make it easier to start a business, to expand a business. He wants to what we call extend the Trump tax cuts, although I think that's a misnomer because if they get passed, there's no tax cut. It's just the current level that we've had taxes under for the last five years continues.

Otherwise, rates go up if we don't pass it. But there is no tax cut. No one gets to pay less taxes if this thing passes. They just pay the same rate that they've always been paying for the last five years. So all of that, he's hoping, will boost the investment on the other side. Because, of course, the flip side of this is, if you bring down the deficit, right? What is the conveyor belt, how things work? We in the United States buy stuff from around the world.

We pay with dollars. What do you do with dollars in China or in Mexico or in Canada or Europe? You recycle them back into the United States by buying bonds or buying assets in the United States. So if we have a $2 trillion trade deficit, that means we're sending $2 trillion overseas to pay for this stuff. And a lot of those dollars come right back into our financial markets.

Well, does a lower trade deficit then mean we have less dollars to come back in to buy our markets? Yes. But in theory, if we get that deregulation and that extra growth and we bring down the deficit, we'll have less bonds to issue.

So while we'll have less dollars to recycle, we'll have less bonds issue. But you're right, that won't be for every dollar less because of the trade deficit, we'll have a dollar less of bonds we have to issue and they'll come dollar for dollar and it'll be a smooth transition. It won't be. It won't be a smooth transition.

let me finish this this argument by reminding everybody do you think we were in a crisis going into the end of last year too much debt too much deficit too much government too many imbalances that we could not continue the status quo trump his advisors and his voters think the answer was yes that's why we've got this push towards a realignment

The problem, of course, with the flip side of that argument is if you want to scream, no, we weren't, we can go back to the status quo, then we could go back to the status quo. And I know usually people that say that and we could tax the rich.

It's like, no, there's not enough money for the rich. But if we go back to the status quo, because we're not at a crisis, we don't need to tax the rich. And besides, like I said, history always shows there's a bigger pile of money than the rich in your own country. It's your neighbor. And we're sending a bill to the NATO countries saying pay for the defense that you've lived under for the last umpteen years.

or start ramping up your own defense spending so you can do it in place of us so we could back off and presumably spend less on it in coming years. Not the current budget, but in future budgets. And Jim,

Take your numbers, Guy. Take us through the numbers of how the U.S. is, let's not say balanced the budget, but get to a 3% budget as a percentage of GDP, part of Treasury Secretary Besson's goal. How do you get there? Because, okay, you know,

Doge is cutting programs, but are the programs really that big? And is Doge going to be hacking away at the Department of Defense? And, you know, I mean, Commerce Secretary Lutnick on TV, and, you know, I'm quoting him, paraphrasing, but a quote saying that 10 to 20% of Social Security and Medicare and Medicaid is financed.

fraudulent. If that's the case, then there is a pot of gold under the rainbow and you can save a tremendous amount of money by cutting what is truly waste, fraud and abuse. Are they going to do that? Or if it's actually not fraud and the waste, fraud and abuse is shock, still very large numbers, but shockingly low as a percentage of total GDP and benefits, then are they going to actually cut Social Security, Medicare and Medicaid, which is what I believe in Medicare and Social Security, Trump has explicitly pledged that he would not. What is actually going to be cut?

Well, let's put a couple of numbers on it. You wanted to talk about numbers. The last 12 months ending in February, the federal government's rolling 12-month budget was $7.1 trillion, about 25% of GDP. One year ago, February of 2024, was $6 trillion. It's up $1.1 trillion in a year. Ten years ago,

It was $3.3 trillion. It's more than doubled. So when Elon says I could get rid of a trillion dollars out of the budget right now, he's only taking it back to the level it was at 365 days ago.

And that's how much added we have added to this budget. And so there's a lot of room that they could remove stuff and remove fraud and remove useless projects in the government in order to bring down the amount of money that the government is spending. Now, the problem is they're running into is everything they do, some judge stops them somewhere down the line. Well, that'll have to be adjudicated by the Supreme Court.

eventually. So there is room that they could bring down the budget because it's grown so fast. Look, this budget pre-COVID was $5 trillion. It's now $7 trillion, up one in the last year. It's astronomical how big it is. And that's why we've got such a gigantic deficit, so they could bring it in. What ultimately is Elon? People have talked about, well, you only spend like 4% or 5% of the

budget on personnel and they keep firing all these people in mass. What are they trying to do there? I think it's part of the deregulation push. I think it's part of the deregulation push that we need to get government off the back of businesses and people trying to expand and create GDP, if you will. And the best way to do that is get rid of the people that are on their back, and that is government workers. Get rid of the government workers.

As far as the 3% budget goes, you're right. Right now we're at about 6.5% budget deficit to GDP. Let me put that number in perspective for you. That is the largest peacetime budget in the history of this country, a deficit, excuse me, as a percent of GDP, 6.5%. The only times it's been, well, the only times it's been larger, there's been five times in American history it's been larger than it is now, the COVID response.

the worst part of the financial crisis in just barely. That one was 7%, and this is 6.5%. World War II, World War I, and the Civil War. Those are the only times the budget deficit in the United States has been as big as it is right now. And so the argument that we could get back to 3% is a reasonable argument because you have to start from the case that government spending is completely unprofitable.

out of control. It's way too big considering the state of the economy right now. We're not in recession. We're not in a war. We have no national emergency that we need to be spending trillions of dollars for like COVID was or like the financial crisis was.

was and that this level of government is where we're at and then the final thing I mentioned about this Elon is kind of thrown this out too remember when he took over Twitter the first thing he did was he like fired 75 of the people at Twitter um there is a school of thought now you can argue it doesn't apply to government but there is a school of thought that when you go into a broken organization and we can agree maybe that government is a broken organization you get rid of everybody

And it's easier to get rid of everybody and then say, okay, well, maybe these people we need back. And you hire them back instead of trying to incrementally get rid of, you know, cut the fat out, but leave the muscle because you need to change the culture. And that's what this radical movements are about is culture changing within the government. So I do think that they can do it. And Besson, like he says, he wants to get the 3%. He wants to get there by 2028. So, you know, he's not saying he wants to get there next year.

They want to get deregulation. Well, one of the ways to get rid of deregulation is get rid of the regulators, and that's government employees. And as far as cutting a trillion out of the budget, we were there a year ago. So it's not like we were going to go to some draconian level. Was the government spending being screamed at that it was too little a year ago? No. And it's just gone completely out of control since then.

Jim, I think when some of our audience hears, oh, the federal deficit has increased by a trillion relative to a year ago, I think they think Janet Yellen, Joe Biden, Kamala Harris all got in a room and said, how can we waste money? And not that they intended to do it, but that's what happened. I think you know, and you and I would probably agree that

The real reason it increased by so much is because more people got old and our Social Security benefits went up because they're tied to inflation. Interest expense went up because interest rates went up as well as there was a delay, there was a lag, and many other factors that are non-mandatory, right? And so in other words, why can't we-

A trillion, let's just go back to it. No, I mean, you can go, you're not going, you can cut a trillion, but you can't go back to the world. Like what happened is mandatory spending. That's just the way our economy is set up. And you can cut that if you want, but then benefits will be lower as a percentage of GDP than they were before. Yeah, but I also think the other problem was in the last two years with, you know, a Democrat Congress and a Democrat president,

that pretty much anything that anybody wanted got put into a bill and got signed into law. And there was really no pushback or any friction to spending money on anything that you wanted to spend money on. And that's why the budget got so big so fast.

It wasn't the case that we had an unusual number of people retire in the last year. We had a usual number of people go on disability in the last year. We just had the ability to basically treat every bill like a Christmas tree, put everything into it. Republicans couldn't stop anything. We had a Democrat president and

And that just greased the skids for all of this excess spending that we've seen. That's why you've heard this term like with a lot of the government workers that they're hiring are what's called probationary workers. And no, that doesn't mean that they got in trouble probationary. What it typically means is that when you get a job with the government for the first 90 or 120 days, you're on a probation period that they can fire you at will.

and that they're firing tens and tens of thousands of probationary workers, meaning that they just hired them within the last two or three months prior to January 20th. And that's how rapidly the government was expanding. And so that's really what I think we're starting to see in a lot of this data. So it really comes down to that budget.

I just don't think that it's necessarily to say that these budgets were reasonable because what you're arguing then is going back to we're not in a crisis. We can go back to January 19th. We can go back to all of the spending and we can go back to all of the massive issuance.

and go back to the argument that we just issue more bills and less notes and bonds, and that will take care of the issue, and that will keep interest rates low. Actually, I don't think it will at this point, because the only reason that rates backed off of that was that we started... Rates backed off and they hit their high point in mid-January.

And what happened in mid-January? Trump came in. And now we're starting to understand that this policy is going to be some kind of a realignment policy. We're not sure it's good or it's bad in the long term. That's why the markets are gyrating, the stock market is gyrating. But interest rates are kind of gone from 480, which is where they were in mid-January, to 430, 425 right now, on the hope that whatever the policy is,

Maybe we're going to finally see some movement on getting the budget deficit down, slowing down the level of growth of debt.

Scott Bassett points out what their goal is, is not to pay off the debt, is not to reduce the level of debt, is to get it to grow slower than GDP. So that if GDP grows faster than the debt, the debt to GDP level will go down. That's what they want out of debt. And so I think the markets have seen some relief out of that, some relief, because we got from 430 to 425. We didn't go back to 360 where we were in September.

Because of this idea that maybe this policy will work and that it will reduce the deficit and it will slow down the growth of debt.

So, Jim, I agree with you that I think President Trump 2.0 is way less concerned about the stock market than most presidents and President Trump 1.0 for sure. And we talked about this, that his economic goals, he wants to achieve them, not that concerned about the stock markets. But Jim, are you willing to go a step further? And I've heard this theory that actually Trump investment wants to tank the market and maybe even cause a recession quickly and then be able to

blame it on predecessor Biden, because I've heard Howard Lutnick say that the President Trump doesn't have any accountability. He's not responsible for the economic data until Q4. So you've got to cause a recession in Q2, Q3, it gets bad and then you blame it on Biden and then boom, obviously, anytime you emerge from a recession, the data is insanely good. What do you think about that? Sort of. And the reason I say sort of is I don't think he wants to intentionally tank the economy.

But I think he's not afraid to be aggressive. And if there's adverse consequences to that adjustment process, to do that sooner rather than later.

The example that you might want to look back in history was Reagan. Reagan came in and also had a mandate to kind of upset the status quo. And he brought in the Reagan revolution with all the deregulation and the tax cuts. And he did all that stuff very fast in the first six months of his administration.

And he came in in January of '81. By mid-late '82, Reagan's approval rating was down to 35% because we had a recession. Not because Reagan wanted it, but because that massive change caused a recession.

But by '84, it was morning in America. Everybody saw that the policies were working and he won reelection with 49 states. Now Trump's not running for reelection, but the concept is the same. If we're going to do something that is going to be disruptive, require an adjustment, do it as soon as you can, because then maybe by mid-26 into 27,

we'll start to see that, oh, maybe this is working. Maybe this is better. We're better off. And that would beyond that adjustment process,

You know, maybe by mid 26 in terms, you know, for the midterms or 27 for whoever his successor is going to be. I'm talking about the Republican nominee, if it's J.D. Vance, whoever it happens to be, that's going to run for president in 28. But don't linger in dilly dally with this, because if you do, you'll stretch out that adjustment period for a long period of time and really upset people.

Let's get it done as quickly as we can. No, I don't want a recession, but I'm not afraid to do upsetting things right now. And so that's what I think that why I say sort of.

- And for people, you know, I like to try and avoid politics on the show. I always have in my interviews, but it seems like the political economy and politics really is impacting the economy and markets. So that's why we've kind of been brushing up against politics. And so people watching this on YouTube or listening to some podcasts, you know, leave a comment and let us know

Oh, I actually like this kind of touching on politics or actually no, Jack, you know, you got, you should stick in your lane. Don't talk about this at all. You know, I always appreciate your feedback. And by the way, people watching on YouTube, please like and subscribe. It helps the show. Jim, what are your views? You just said there could be a little bit of a pain or,

on the way. What are your views in the short term, three to six months on the stock market, on credit and on interest rates? You for a while have had the view that as a credit investor, a bond market investor, you got to take risks, either inflation risk, duration risk, or credit risk. You want to take credit risk and stay away from that duration risk. In other words, you think credit is going to perform well, the economy is going to be hot, no landing, and that

interest rates are probably going to go up on the long term. So don't take that interest rate risk. Is that still your view? And then tie that into your view on the overall economy in the short term as well as the stock market. So let me just answer the very first thing you mentioned about politics.

I'm like you, I try not to talk a lot about politics, but when you get into a new president trying to completely realign the global trading system, you can't help but go down the route of politics because that's really what's driving all this. That is what the Mar-a-Lago Accord is all about.

Where does the name come from? Every time there's been a major realignment of the trading system or the currency systems of the world, they name it after the resort or the hotel where it took place. A lot of people don't realize this, but the Bretton Woods Agreement, Bretton Woods is still a resort in New Hampshire to this day.

And the Plaza Accord was named after the Plaza Hotel. So Mar-a-Lago Accord is kind of riffing off that idea. There isn't an accord. There isn't going to be a meeting where there's going to be some signature of something. It's where Trump lives. And Trump is the center of all of this. And that's why they call it the Mar-a-Lago Accord. And so the idea of them, it's an idea. The idea is we're doing this massive realignment.

of the of the global trading system including getting europe to pay for security and so you gotta look at politics you can't you can't brush those off because that's what's driving this volatility in these markets and that's what's driving the next move in interest rates is this going to work is it going to last maybe his approval rating tanks badly and in six months

He won't change, but members of the Republican Party will turn their back on him out of their own self-survival, and he won't have the mandate to continue with this. Hasn't happened yet, but we'll see whether or not it does. So that's why the politics thing is important. Now in the markets, let me work the question backwards, Jack. Let me talk longer term and then come back. I've been arguing that from this moment forward, we're going to be in what I call the 4-5-6 markets.

cash is going to return you 4%. The funds rate is four and a quarter to four and a half right now. And as I said, if the Fed doesn't move in May, I don't think they're going to have a reason to move. And if they move in May, probably going to be one move this year, maybe two. 4% money market rates, that looks like the world we live in, 4%. So if you want to take no risk, no risk at all, you can park in a money market rate, you can get 4%.

Bonds. I think bonds are going to return 5%. The reason I think bonds are going to return 5% in this environment is because that's what the average coupon is. And so you're going to get the coupon on bonds in some years like 2024, when interest rates go up and prices go down, you'll get closer to a 3% return, 2% return. In years where prices go up, you'll get the coupon plus some price appreciation. That'll be like 23, where the bond market returned almost 9%.

but it'll average about 5% year in and year out. Stocks, this is the tricky one. If you look at the valuation in the stock market, and I'm going to talk about the Shiller-Cape ratio, the adjusted PE at 37. If you look at the history of the Shiller PE, and he's got 150 years of data, what is the return of the stock market over the next decade when you have a PE ratio starting in the mid to high 30s?

And the answer is about 1% over the bond market. So whatever the bond market is going to return you about 1% more excess return is what they refer to it as. That's about 6% maybe 7% if you want to be a little bit more generous. So I just use 6% because it makes the alliteration better. Four or five, six markets.

Those are the markets that we are going to be in from here. The reason the stock market is going to have a problem is valuation. People like to say valuation is not a timing tool. You're absolutely right. It was never designed to be a timing tool. It's an expectations tool. If I'm going to buy hugely expensive stocks, I have to have an expectation of huge gains in profits or these stocks are going to struggle.

And when you buy an index or a whole market of hugely expected rich stocks, you better see some kind of blowout monster earnings reports. And we're not in the environment to give us that. Or you're going to see the market struggle. Now, I noticed I said plus six. I didn't say like a bear market or we're going to get wiped out or anything. Just a substandard way. Now, keep in mind that

The history, kind of like we were talking about with debt, just have that debt grow less than GDP and the ratio goes down. How do you get that Shiller PE from 37 down to say the low 20s? Well, if you have a 6% return in the stock market over the next decade and earnings continue to do what they've done for decades, return about 9%, that'll get your PE ratio down. You know, just kind of sideways stocks with earnings keep going up, the PE ratio goes down. And in a decade, stocks look reasonably valued.

But I think there'll be opportunity within there to find other options. As far as the bond market goes, just to kind of go back to the bond market, there's two things I'll mention about the bond market. One, active management.

Active managers in stocks usually come in at around the 80, 85th percent. The index, the benchmark comes in about the 85th percentile. In English, what does that mean? That means that if you pick an active manager in equities, about 15 to 20% of them can beat an index. The other 75 to 80 usually underperform the index. That's why buying indexes like the S&P 500 are so popular because they're cheap and they beat most of the managers anyway.

But in bonds, if you pick an index like the Bloomberg US Aggregate Index, the broad based investment grade index, it comes in about the 50/55th percentile, thereabouts.

So what that means is 45 to 50% of active managers can beat that index. It has to do with the construction of the indexes and a couple of other things too. But the point is active management works in bonds. So you could probably get a little bit more than 5% by picking an active manager. You got a coin toss chance of getting one that will do it anyway because so many of them can as well. Second of all, I think in this environment, I'm going to change what you asked me.

is that if the stock market is going to struggle from here because of high valuations, the credit has the same issue, very tight spreads, high valuation. I think that credit struggles too. I think you're better off looking towards, if you're looking for yield,

to either look for convexity risk, and that's like, say, mortgages, buy mortgage bonds that have a higher yield. What is your risk if you buy a mortgage bond? Mortgage bonds have no credit risk because Fannie and Freddie will pay you if your mortgage defaults. And if Fannie and Freddie run out of money, the federal government will pay Fannie and Freddie to pay you. So there's effectively no risk there, no credit risk.

You have an interest rate risk or what we call a convexity risk. What is the risk of buying a mortgage bond? Interest rates plunge. You buy a mortgage bond with a 6.5% yield. Man, this is great. No credit risk. I'm going to get 6.5% for the next umpteen years. What's my risk? Interest rates plunge. Everybody refinances those mortgages in the mortgage bond and you're handed a pile of cash.

at a low interest rate until now you get to reinvest it at a much lower rate. You've lost a gigantic opportunity. That's what your risk is with a mortgage. Because remember, we can all refinance our mortgages without penalty. What happens when I buy your mortgage and I expect you to pay me a 6.5% coupon for the next 29 years because your mortgage is a year old and you refinance? I don't have a piece of paper that's going to pay me 6.5% for the next 29 years. I'm handed a bunch of cash.

and then i'm told i can reinvest that cash in something else well when am i handed that cash after interest rates plunge and you refinance and now at the worst possible time as a bond investor am i handed cash and said go ahead and invest it now all the rates are low i don't want to invest it now and that's the that's the risk you have with a mortgage so i would probably take more that mortgage risk that rates will stay kind of at these levels and a little bit higher now why

Because I'm of the opinion that inflation is going to stay sticky. It's going to stay in this 3-ish percent to 4% range. I'm not in the 8-10 or Zimbabwe argument for inflation. But sticky inflation means the funds rate stays at 4, bonds stay at 5. With the high valuation and those interest rate returns, stocks as an index level struggle at 6%.

That's kind of my bigger picture. Now in the short term, I think you're probably going to see a little bit more volatility in that, probably angling for a zero return in the stock market this year, maybe a little bit less than that. But I'm not of the opinion that you're going to see down 20 or down 30% or anything like that. I think structurally, it's very hard to get those kind of sell-offs without a major catalyst.

because so much, you know, go ask Mike Green, so much of the money is just automatically flowing into the market because of passive investments, 401ks and the like, that there's that constant bid for the market. That doesn't mean we can't have a struggling year. I think we will. It just means that in order to have a catastrophic year, you need to have catastrophic events to really scare the hell out of everybody.

These tariffs are an uncertain event. They're not a catastrophic event. That's why I think we'll see maybe around a zero return in the stock market this year. Best performing asset this year right now of all the major asset classes is either gold, if you consider it an asset class, or bonds because they've beaten cash, they've beaten stocks, and they've beaten crypto right now.

So the 4, 5, 6 market and this year you expect that roughly the S&P to be around flat. Like the S&P now is down 3% for the year, down maybe 4%. So yeah, not spectacular returns you forecast.

Right. You know, and it's already had a 10% correction. It might get to be a bit of a deeper correction than that, but you know, we're also probably on a rebound that's going to basically kill every short before we start in down on the way down. And that's going to be kind of the nature of,

of these kind of markets. You go back and you look at the early stages of 22, that was kind of the same way too, right? It was almost impossible to short the market because you short the market, the market goes down, and then you get these massive rallies that just squeeze to kill you off, kill everybody that's a short in the market. And it was just hard to hold onto it all the way down. And so, yeah, I think that it'll gyrate around, but I think when all is said and done,

It's not going to be a disastrous year. It's going to be a zero year. That's the premise I'm operating on. Bonds will be a better place to be. But coming after the last two years that we've had at 20 and 25%, you should almost expect something like that, right? And I mean, the only reason you would expect a third 20% year is if you could make the case to me that earnings are just going to rip.

And if earnings are just going to rip, that means the economy's got to rip. And that's not what this economy is doing. I don't think it's a recession, but certainly ain't ripping at this point. Right. And Jim, that's such a good point that let's say the Fed's forecast for 1.7% real growth in 2025 comes true. That's way lower than the 2.3%, 2.5% growth of last year. But that's not a recession. Even 50 basis points of real growth

That's not a recession. Recession is consecutive quarters of real GDP declines and is declining in spending, income, industrial production, employment and the financial system. So yeah, even if a little bit weak, it's not a recession. Can I can I dissect that real quick? And I'll say this really fast.

If you look at the way that GDP is calculated, exports and imports, whenever we import a car from Japan or from Europe, BMW, you import that car. I'm going to say this simply.

The GDP calculation says that that was production done somewhere else in Japan or in Bavaria, and that's lost production for the US. So an import is a subtraction to GDP and export. We make a car here and we ship it somewhere else. That is an addition to GDP.

So what we've seen in the last three or four months is a massive surge of imports. Why? Because everybody knew tariffs were coming and they ran in there and they surged their imports. Get that stuff in now before we have to pay the tariff. And so the warehouses are stuffed to the brim with imported stuff beating the tariffs. That made the net export number hugely negative and that dragged down the GDP number.

But if you look at the consumption part of GDP, that's 68% of GDP, over two thirds of GDP is consumption. Look at Wall Street's consumption forecasts for 2025. They're still running at around 2%, maybe 1.9%. That's not

That's not terrible. That's like a C, C-minus is what that is. If I was to put it on a grading point, maybe a solid C to a C-minus. It's certainly not DNF category. So if you take the exports out of the equation, the economy is...

you know, it's hanging in there. It's doing all right. It's not terrible at the moment. Now, maybe that changes in the next few months. But, you know, even Chairman Powell pointed out today something that I've been pointing out. All the weak economic data you see right now is all survey data. It's all what we call soft data. It's all ask people their opinion about the economy. They think it sucks. But when you look at the actual data of what they're doing,

It's not that bad. And I think that that is going to continue. And then you've got this unusual circumstance with these exports. By the way, I think you're going to get a rebound in that because if everybody front loaded exports and rushed everything into the country, right, what's going to happen in the next few months? You've already imported everything to beat the tariffs, right? So what's my order to import something in March and April and May? Very little because it's already here. And

And so you should see the net export number that grew hugely negative come snapping back a little bit in a rebound in the economy. That's probably a story for later this year.

Jim, I'm so glad you brought that up. The Atlanta Fed GDP now cast, which has been a guiding star for so many economists, definitely myself, it turned extremely negative in early March, as low as 2.6 or 2.7%. Most of that, nearly all that was negative.

the huge amounts of imports, as you said, in particular gold imports, which are called metallic objects from Switzerland and England. And you and I agree that just because metal arbitrageurs are importing tons of gold to front run tariffs,

That doesn't mean the economy is weak. The flip side of that, Jim, is let's say over the next three months, imports go way down and net exports rise tremendously, i.e. they get less negative. That will show up in real GDP as a huge positive. But I don't think that just because we're not importing so much, that's a huge positive. Chinese real GDP and Chinese GDP is so high because they have very high exports, but

the Chinese economy is not as high, not as good as the 5% GDP growth they suggest. So that's really important distinction to draw. You know, just to follow up on that real quick, the Atlanta Fed is like at minus 1.4 is the last number I saw this week. They do offer a breakdown on that. And they say that something like minus 3% plus of that number is net exports.

So what is the economy doing without exports? It's growing at around 2% is what they're telling you. 2% is not an awful number at all. So there is this distortion. And again, it's perfectly logical, right? Why did we get everybody to get this surge of imports? Because we all knew tariffs were coming. Maybe we could argue that it's necessary to rebalance the economy, but nobody wants to pay them. So hurry up and get your stuff in before Trump gets in there and starts slapping tariffs on stuff.

And that's exactly what we've seen. And like you said, we've already ordered the stuff. So when they call me up and say, what's your order for imports in March and May, April, Jim? And I'm going to say nothing. It's already here. I don't need it. So you're going to see, you know, call me again in July or August. I'll probably need some more stuff then. So you're probably going to see a rebound in that net export number. That's probably a second quarter number is where you're going to see it, you know, not necessarily in the first quarter.

And Jim, we've talked about U.S. markets, your views on U.S. stocks versus U.S. bonds. A huge theme of the past month has been the U.S. markets declining as European and Chinese stock markets surge. Is that a trend that you think can continue? How bullish or not bullish at all are you on the European and Chinese stock markets relative to the U.S.?

So bullish on the European markets, little less so on the Chinese markets. Bullish on the European markets because let's start off with when I said the American markets, you know, had these 24, 25 PE, forward PEs and very, very rich markets.

The European markets are very cheap. They were beaten up. They were given up for dead. If there's one truism in life, is that pay close attention to the World Economic Forum in Davos and do the opposite of what they say. Because what they all kind of came back from was they all went to Davos.

And all of the elitist globalists of the world said, the one thing we can agree on is Europe sucks and that they're just never going to get better. And about 10 minutes later, the European market started to rally huge right after Davos.

The reason it is, is that twofold. I'm kidding. I'm sort of kidding about Davos, but they're a good contrarian indicator. If you got cheap markets and then here comes a massive amount of stimulus in the form of defense spending, infrastructure spending and the like, you're going to see these markets surge. The other little thing that people don't realize about the European markets is the amount of concentration in those markets.

So we like to talk about the mag seven is 33% of the S&P, and it's like the highest we've seen in 50 years of five stocks or seven stocks, you know, being concentrated in the S&P. SAP is 16% of the German stock market. 10 stocks in Germany are over 60% of their stock market.

And most of these are industrial electronics kind of companies. And so when you get this infrastructure spending thing, bam, those markets go. And they're cheap to begin with. So I think the European markets got more room. They got more legs to go with. The Chinese markets...

The problem with the Chinese markets is they've been overhyped by hedge funds and the like for many years. I've used to joke that why did God create the Chinese stock market? To create a bunch of former hedge fund managers because that's about all the Chinese market has ever done. And I still think that it is still somewhat overhyped. And part of the problem with the Chinese market is

the rule of law and the amount of government involvement in those markets is a little bit more than I would be comfortable with. The problem with all emerging market investing in China's emerging market is you trade growth for rule of law. You're going to buy a country with a lot of growth, but there's going to be a lot of corruption in that country and you're going to have to give up some rule of law.

China's growth rates are going down. So I'm not getting a lot of growth and there is a lot of corruption in the Chinese market. Remember, China's the market where they jail, where they throw people that write negative brokerage reports in jail.

and send them to re-education camps in order to get their mind right and start writing bullish economic reports. I'm not kidding about that. They do that in China. So therefore, I'm more into the Europe story. But I do think that for the global markets, Europe is going to have a consequence. That consequence is while their stock markets will probably surge, their interest rates are going to surge too because all that spending is going to bring back some inflation. And you've seen their interest rates surge.

And I think that the developed world economies are tied together. If you get inflation out of Europe, it's going to trickle back into the US and you're going to see a little bit higher inflation, not dollar for dollar, but it's going to be an upward push on inflation. The last thing I'll point out, just a risk to think about. When I said that those markets are very concentrated in Europe, like the German stock market,

The ownership of stocks in Europe among the public is very small. Less than 33% of the public owns stocks in Europe.

The other risk you find in Europe, because they're very progressive, they're very green, is, hey, our stock market is roaring. Yeah, well, it's 20% of the country and they're all rich people owning 10 stocks. And that's where they're all making money. We, the vast majority of people, don't participate in this and don't like this. And we're going to elect more greens and more progressives to kind of hammer them. That's always your risk. We're in the United States.

Over half the people own the stock market and there is about half the people own the stock market thereabouts, depending on the measure you use. And that is considered, stock owners are considered a constituency that must be respected in the United States. They are not a constituency that needs to be respected in some European countries. The stock ownership could be like Italy and stuff like that, could be as low as 10% of the public.

So that is not a constituency there. So you might run into hostile government policies more than you would here.

Jim, I think you gave very smart analysis, definitely on a longer term. But everyone should focus on the longer term. But the reality is a lot of people do focus on the shorter term. We talked that Trump might not care if the US stock market continues to decline. James Aitken, in a recent interview, he said that Xi of China wants the Chinese market to be higher, which the short-term thing could be quite bullish. Do you agree with that?

Yes. And the only caveat I would give to what the Lord of the Dark Matter said is that she has been saying that for a while. In September, coming out of the Lunar New Year, remember, for those who are not familiar, they have like a week where they close the markets because of the Lunar New Year. And then coming out of the Lunar New Year, it was like almost every night,

Every night in the US, daytime in China, they were announcing another massive stimulus program in late September. And that their market took off and went up like 20% in a week.

And David Tepper, the big hedge fund manager and owner of the Carolina Panthers, who never make the playoffs, he comes out and says, buy anything with the name China on it. And their market peaked October 1st, and it hasn't done much basically since then. So the Chinese market, I agree, Xi wants the market to go up. He's been trying for months and he hasn't had any success.

He has jailed speculators. He has put people that write negative things about their economy in reeducation camps. He is printing money and throwing money at his market to try and get it to go up. And he got some traction for one week in September. He hasn't done much since then. It is up a lot recently.

Well, it is up a lot, but it also kind of came down from that September level as well. You know, that if you bought the market in late September, you know, you've suffered through a whole lot of pain and a whole lot of suffering in their market as well. So,

All I'm trying to say is I get what she has been saying. That's not new. If you were to have bought the market on the idea that she said he wants it to go up, you would have bought it in late September and seen 20-25% decline before you've seen the recent advance.

It's a very, very difficult market to play in. I think you're better off in Europe. That's all I'm trying to say. Jim, thanks so much for joining. People can find you on Twitter at Bianco Research. I am JackFarley96 on X, and people should check us out on YouTube. Please like and subscribe. Also check us out on Apple Podcasts, Spotify, and wherever else you can find your podcasts. Thanks again, Jim. Appreciate everyone listening.

Thanks for watching. Remember to check out vanEck.com/NLRJack to learn more about the VanEck Uranium and Nuclear ETF. Thank you. Just close this door.