Is It Time to Start Buying Bonds? | Jim Bianco

Demetri Kofinas (0:00)

What's up, everybody? My name is Demetri Kofinas, and you're listening to Hidden Forces, a podcast that inspires investors, entrepreneurs, and everyday citizens to challenge consensus narratives and learn how to think critically about the systems of power shaping our world. My guest in this episode of Hidden Forces is Jim Bianco, founder of Bianco Research and Bianco Advisors, where he manages a pragmatic approach to fixed income investment. He has recently turned bullish on bonds after having spent much of the last six years warning that they were overvalued. And in the course of this conversation, you will come to understand why Jim believes this, as well as what his views are on the equity market, the valuation of AI-related companies that are now responsible for the majority of the US stock market's gains, why there is a persistent disconnect between the positive economic data and the felt experience of the majority of the public, how the midterm elections could impact his thesis, and what the fiscal pressure is building, not only in Washington, but in Paris, London, Tokyo, and elsewhere will mean for markets, the economy, and investors over the next three to five years.

We spent the first hour of this conversation discussing Jim's thesis on the bond market, the K-shaped economy, and why asset ownership and capital gains, rather than wages, are now driving both consumer spending and the public sense of how the economy is doing. We also discussed the increase in concentration of US stock market gains in a small group of AI-related companies, and how the rise of agentic AI is already reshaping the economy, including our own businesses in the fields of financial research and continuing education.

The second hour is devoted to the fiscal constraints facing the United States and other major developed economies. We take a particularly close look at France and the warning signs emerging in the French bond market, what a dislocation in French bond yields and funding stress for the Fifth Republic could mean for the sustainability of European Monetary Union, the competing risks of financial repression versus those of potential balance sheet recession caused by the enormous capex spend being undertaken to fund the AI boom, the case for allocating to gold, the Fed's retreat from forward guidance, and how the outcomes of the midterm elections and populist elections around the world could shape the direction of fiscal and monetary policies over the next 10 to 20 years. If you want access to all of this conversation, go to hiddenforces.io/subscribe and join our premium feed, which you can listen to on your mobile device using your favorite podcast app, just like you're listening to this episode right now. If you want to join in on the conversation and become a member of the Hidden Forces Genius Community, which includes Q&A calls with guests, discounted access to third-party research and analysis, and in-person events like our intimate dinners and weekend retreats, you could also do that on our subscriber page. And if you still have questions, feel free to send an email, at info at hiddenforces.io.

And I or someone from our team will get right back to you. Lastly, because this conversation deals with investing, nothing we say on this podcast can or should be viewed as financial advice. All opinions expressed by me and my guests are solely our own opinions and should not be relied upon as the basis for financial decisions. And with that, please enjoy this incredibly timely and important conversation with my guest, Jim Bianco.

Jim Bianco, welcome back to Hidden Forces.

Jim Bianco (3:30)

Thanks for having me. Looking forward to the conversation.

Demetri Kofinas (3:32)

So am I, Jim. It's actually been a while. Some housekeeping notes for listeners. I'm going to be interviewing former president of the Federal Reserve Bank of St. Louis, James Bullard for the CFA Society of New York's annual celebration at the Plaza Hotel on October 27th.

I just checked that it looks like they're sold out, but you can still get on the wait list. So if anyone's interested in doing that, they can go to cfany.org and they can find the event and they can put their names on the wait list. It's going to be a very timely interview, especially considering not just the upcoming rate decision, but the midterms and everything else. So Jim, like I said, it's great to see you again. You were on the, when was the last time you were on the show? It's been a while.

Jim Bianco (4:14)

Two or three years. Yeah, a couple of years ago, but I've been on before, yeah.

Demetri Kofinas (4:18)

And I also interviewed you and Mike Green and Michael Kantrowitz at, was it at the NASDAQ?