#419 Chris Whalen: Mortgage Funeral, No Bond Rally & the Deficit Washington Won’t Talk About

Julia La Roche (0:01)

Hey, everyone, welcome back to another episode of The Wrap with Chris Whalen. We break down what's happening on Wall Street, Washington DC and everywhere in between. In this week's episode, we talk about the upcoming midterms and the big issues there, and Chris' outlook for the elections, and what this means for investors going forward. He also gives his take on our friend Jim Bianco's bullish outlook on bonds, and why Chris disagrees with Jim. Elsewhere, we talk about why he thinks financials are dead in the water and mortgages are in a funeral, and we take some viewer questions. I really enjoyed this episode with Chris. We love doing this with you every single week, so I hope you all enjoy this one as much as we did.

Hey, everyone. Welcome back to another episode of The Wrap with Chris Whalen, where we break down what's happening on Wall Street, Washington, DC, and everywhere in between. Chris, great to see you.

Chris Whalen (1:08)

Nice to see you, Julia. Another great week, huh?

Julia La Roche (1:11)

Another great week, and I got to give a shout out to our partners over at Monetary Metals. You can go to monetarymetals.com/thewrap to learn more, but we appreciate their partnership to make this possible every single Saturday.

Chris Whalen (1:27)

Yes, we do.

Julia La Roche (1:27)

All right, Chris, we're just a month away, actually less than a month away from the midterms, and all of the conversations that I've had with major investors on the podcast, they've been talking about the midterms, Ray Dalio talked about it being a risky period, post midterms even. But as we head into the election, I know this is something you've been following, and it does matter for investors. We don't need, I know everyone's like, oh, don't talk about politics, but we got to talk about politics, y'all. How are you thinking about it now that we're less than a month away?

Chris Whalen (2:00)

Well, President Trump has done just about everything he can to hurt Republican chances this year. I think this illustrates the fact that he's not really a Republican. Trump is a populist who tends to shoot from the hip. He doesn't think a lot about what he does. So, for example, the war with Iran was a terrible miscalculation. And so as we go into the midterms, affordability, which was already the big issue even before February of this year, is now front and center. And then you have the economy more generally, and Trump's handling of the economy is kind of the next couple of issues. There are others as well. AI has sprung into the foreground. You have people like Bernie Sanders saying he would like to have a moratorium on AI globally.

So it's a silly season. That's what politics is about. It's not helpful to investors at all.

But I think what we're probably going to see, and I always look at my friend Mark Kalpren when I want to know what's going on, is that the Democrats will probably take at least one or both houses of Congress. We will spend the next two years with an Inquisition focused on Mr. Trump and all of his cabinet members and family and friends.

You know, there's a lot of material here for them to work with. And I think that, you know, at best, it's going to be a negative for the investment world. The market actually doesn't do too bad when you have Democrats in the White House. If you look at Joe Biden, for example. But this time around, you know, after four years of a relatively laissez-faire attitude from the White House, a very pro-business, anti-regulation perspective, if we go back to the Inquisition that we had under Joe Biden, where they tried to regulate everything and anything in the economy, I think that's going to be very negative for the markets.

Julia La Roche (4:02)

Okay, you were just mentioning the issues. If you had to pick the number one issue, is it still affordability?

Chris Whalen (4:09)

Yeah. Prices of all kinds.

Our friend Adam Josephson has been really doing a good job on consumer products. If you read his work, every single earnings report that he's written up going back to the end of the second quarter has talked about lower volumes, a more difficult environment in terms of consumers. They're looking for deals. They're looking for anything they can to try and alleviate the price pressures they're under. So I think that's going to be the theme as we go into the third quarter. We just wrote up our thoughts on the world for our premium subscribers this week in the blog. Financial is kind of dead in the water, not really going anywhere. Mortgages are a funeral. I'm heading out to the Mortgage Bankers Association annual on Sunday. That's going to be an interesting meeting, which I will write up by the way.