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Jim Bianco, founder of Bianco Research LLC, joins Jack Farley to explain how the meltdown in the British bond (“gilt”) market, which occurred on Wednesday, September 28th, is exposing serious cracks in the plumbing of the financial system. Bianco argues that the Bank of England’s injection of liquidity was necessary in order to prevent the failure of a major institution. Bianco tells Farley that the Federal Reserve is not close to “pivoting” to a looser policy because the labor market remains strong. Bianco breaks down key bond market concepts, such as convexity and duration, explains why we are likely already in a recession, and argues that the work-from-home trend is here to stay. Filmed on Thursday, September 29th.
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(00:00) Introduction
(00:30) Chaos In the U.K. Government Bond ("Gilt") Market
(08:53) What's Next To Break?
(15:41) What Can Bring Inflation Down (Other Than A Global Recession)?
(19:18) The Stress On Banks Is Tremendous"
(33:46) Are Bonds Attractive At These Levels?
(36:56) Bianco's Outlook on Stocks
(38:47) I’m Going To Channel My Inner Zoltan Pozsar Here"
(51:05) Why Working From Home Is A Permanent Trend
(57:09) Closing Thoughts On The Labor Market and The Fed
(1:02:14) Asset Allocation in Stocks, Bonds, and Crypto
(1:04:49) Outro
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
