#421 Chris Whalen: Double-Digit Inflation, Falling Home Prices & a Fed Forced to Hike

Julia La Roche (0:01)

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. In this episode, we talk about those recent inflation prints, and Chris says that we are already well on that path to double digit inflation, and why he thinks the Fed may be forced to hike just before the midterms. He was also fresh off that Mortgage Bankers Association conference in Chicago this week, and he explains why many industry insiders expect housing prices to decline between 5 and 10 percent. We also got an update on Stan Middleman's misery on the AIDS thesis, and whether or not that still stands. Elsewhere, we talked about the bank earnings since we got those reports this week, and what's that saying about the economy, as well as the AI trade and the reset there.

Chris and I love doing this for you all. Every single week, we have so much fun, and we hope you all enjoy this one as much as we did.

Hey, everyone. Welcome back to this week's 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 (1:25)

Nice to see you, Julia. Another fun week, eh?

Julia La Roche (1:28)

Another fun week and a special treat because The Wrap newsletter, part of the show, is back. You had a special edition out this week, which is a nice surprise, titled Trump Promises Dividends, Inflation Rises, and Home Prices Slump.

Chris Whalen (1:46)

Yeah. Those are the headlines this week, I'll tell you.

Julia La Roche (1:49)

Those are the headlines. All right. We got to kick things off. Let's start with, I guess, what you began the note with, which was flagging Trump's $5,000 cash dividend promise, of course, contingent upon Republicans holding both chambers.

I'm curious, how do you think about this? What is this signal to you? How do you square it with the affordability crisis everyone has been talking about, which has become a big mid-term issue?

Chris Whalen (2:25)

Well, the headline I put next to the item was Bread and Circuses, which is a reference to Roman emperors giving away free bread and holding gladiatorial games to keep the mob of Rome happy. But it also reminded me of my work in Latin America and Mexico, particularly in the old days, the ruling party would give away bags of groceries on election day to try and go out and buy votes. That's essentially what Donald Trump is doing. What's really interesting, though, is that the latest political contribution figures show that the Democrats have caught up with the Republicans in terms of fundraising. Everybody assumed that the Republicans would have a big advantage, and that's turned out to not be true.

I think it just indicates again that the Republicans could be in for pretty good-licking, particularly in the House. We'll see about the Senate.

But, you know, I did an interview, I think you saw, with Joe Costello, who's a very old friend of mine, veteran political analyst, Democrat. And he said, you know, Chris, money has limited utility. You can always, you know, you need enough money to do what you need to do in a campaign, but there's a point where spending more money on television ads doesn't get you anything. And he used the example of Susan Collins in Maine, who the Democrats have gone after repeatedly with huge amounts of money, hundreds of millions of dollars, and they failed to knock her out. So, you know, it's going to be fun to watch. I think we may actually have to turn the TV on and watch election returns in a couple of weeks.

Julia La Roche (4:01)

Yeah, you mentioned the interview with Joe Costello, and I think he told you this could easily be a 50-seat swing to the Democrats in the House.

Chris Whalen (4:12)

Yeah, that's... If you look at history, the real big ones, Obama was the last one, have had swings of 50 and 60 votes.

Julia La Roche (4:21)

Where, like, how... You had to boil it down to, like, the issue or the reason why. What do you think is, like, the biggest driver?

Chris Whalen (4:31)

I think affordability, clearly. Gasoline prices. Nobody likes high gasoline prices. Diesel fuel impacts everything, as you and I have discussed many times. And it's up considerably, and it's not going to go down.

President Trump has tried all sorts of gimmicks to convince people that things are going to be okay. But the reality is, is that this war is continuing. And until we at least have a truce with Iran, the Gulf States can't repair these big facilities that produce things that we need, like diesel fuel, like gasoline, like sulfur.