#120 Dr. Gary Shilling On Recession Risk, Inflation, Rate Cuts, And Bonds

Dr. A. Gary Shilling, President of A. Gary Shilling & Co., an economic consulting firm and a registered investment advisor, joins Julia La Roche on episode 120 for a wide-ranging conversation on the economy.

In this episode, Dr. Shilling predicts an imminent recession, citing key indicators such as the inverted yield curve and actions of the Federal Reserve, which is determined to curb inflation even at the risk of triggering a recession. He expects the Fed to be slower in cutting rates in the event of a recession, emphasizing their focus on ensuring inflation is under control and considering the labor market's slower response to economic changes.

Elsewhere, Shilling explores the correlation between Treasury bond yields and inflation, indicating that excess supply leads to lower inflation and, thus, lower interest rates. He believes the peak of interest rates has been reached and expects a rally in Treasuries. 

He also shares his investment approach, favoring long treasuries, the US dollar, and short positions in stocks and commodities like copper. He's skeptical about the potential of commercial real estate and sees it as a current bubble.

0:00 Welcome Dr. Gary Shilling to the show

0:53 Macro picture today, recession outlook 

3:40 Federal Reserve’s 2% inflation target 

4:30 Globalization 

6:30 Rates and inflation 

12:18 Bond market 

15:20 Hard landing 

18:13 What’s ahead for the Fed? 

20:00 Higher for longer? Maybe, but I’m not convinced

21:17 Winners and losers in this environment? 

23:44 Oil 

26:26 U.S. Dollar outlook 

28:09 Agnostic on gold 

29:13 Bullish on Treasuries 

30:46 Housing 

37:37 A contrarian? 

40:27 Commercial real estate bubble 

42:46 Forecasting as an art 

46:00 Beekeeping 

51:20 Parting thoughts