Jim Bianco: AI Eats Everything, Oil Shock Risk, Stablecoins & Crypto’s Real Mission

**Jim Bianco** (0:00)
A famous line that Larry Page said, that he would rather Google go bankrupt than lose the AI race. And this is why I'm so bullish on AI, because if they...

**SPEAKER_2** (0:11)
Today's guest is Jim Bianco, president of Bianco Research, who built a reputation as one of Wall Street's leading independent macro strategists and now helps investors navigate AI, inflation and global markets.

**Rupert Pickering** (0:22)
Can you relate where we are today as far as the markets are concerned?

**Jim Bianco** (0:25)
Historically, if I use the S&P 500, it's 48% related to AI stocks. We have not seen anything like this level of concentration.

**Rupert Pickering** (0:34)
What do you make of this geopolitical situation?

**Jim Bianco** (0:37)
If this war doesn't end, we're going to realize the world doesn't have enough oil for the consumption that it's doing.

**Rupert Pickering** (0:43)
What's your assessment in regards to how this is going to go?

**Jim Bianco** (0:46)
I think that we're making a fundamental error in trying to understand what the Iranians want and thinking that they care about what we care about.

**Rupert Pickering** (0:54)
What do you see in terms of inflation?

**Jim Bianco** (0:56)
The average inflation rate since COVID has been 3.5%.
Short term, it's all being driven by oil. Next week, we'll get the May CPI for the United States. The estimate is it will be over 4%.

**Rupert Pickering** (1:08)
I've got to ask your opinion on the crypto markets.

**Jim Bianco** (1:11)
The cycle that I've seen in crypto has been trying to create an alternative financial system. But then what happens is it gets overtaken by the casino mentality.

**Rupert Pickering** (1:21)
Do you see stable coins as a route to dollarize the world?

**Jim Bianco** (1:24)
They could be. Now, where I think that they've kind of lost their way with stable coins is with the Clarity Act and the Genius Act. I think this has all been a giant mistake.

**Rupert Pickering** (1:36)
Welcome back, ladies and gentlemen, to The Allin Crypto Podcast. I'm your host, Rupert Pickering. And today, I am delighted to be joined by Jim Bianco, the founder and president of Bianco Research and one of the most respected independent macro voices in global finance. Jim, how are you?

**SPEAKER_2** (1:55)
I'm doing good.

**Jim Bianco** (1:56)
Looking forward to the conversation.

**Rupert Pickering** (1:57)
The pleasure is truly all mine. Very excited to be having this conversation, certainly with everything going on in the world. Hopefully, we can tackle a good chunk of it.
I guess the first question that I want to ask you, Jim, before we get into the variables, is can you relate where we are today as far as the markets are concerned, maybe in regards to the concentration of what's driving them and the backdrop of the kind of economic situation or geopolitical situation that we're facing, can you relate where we are today to any point in your career or historically?

**Jim Bianco** (2:28)
You know, to take the first part, not my career as far as the concentration of AI technology stocks that we've seen. The estimate right now is, in fact, I updated it this morning, that something like if I use the S&P 500 as an example, it's about $75 trillion in value, it's 48% related to AI stocks, which will probably go well over 50%, unless there's a big correction, when SpaceX gets included in it, because it's supposed to be coming public soon. And then we're going to get entropic, and we're going to get open AI, and it could go well over 50%.
Now, the last time we've seen that level of concentration was probably the railroads in the late 19th century, when they hit about 65, 70% of the entire capitalization of the stock market. So no, we have not seen anything like this level of concentration. This is way above what we saw during the internet craze in the late 1990s, way above what we saw with the PC craze in the early 1980s. So this is somewhat unique in that regard. I think the thing you also to are actually, I'll say to take your other part of your question on geopolitics.
I think when you look at markets, you have to say, what are the assumptions that markets or the expectations that markets are operating under? And when people say to me, I don't understand these markets are crazy markets. They don't make any sense to me.
What you're telling me is you don't understand the assumptions that they're operating under. So let me take that with geopolitics. What is the assumption? The assumption is the war is going to end soon, like in a matter of days or a couple of weeks. And it's thought that since the early days of the war. This is why every time President Trump says, we've got a deal, we're finishing a deal, the Iranians want a deal, the straits going to open, the market reacts positively over and over. And you might go, why does it fall for that every single time? Because it believes it. That's why it falls for it. It's consistent with its assumption. And the flip side of that is, why isn't the price of oil at $200? That's the other problem that everybody's asked. Because we're operating under this assumption, just hang on a couple of more weeks, and it will return to normal. We've seen this massive drawdown on inventories in oil, whether it's commercial stocks by oil companies or the like, or it's strategic stocks of strategic petroleum reserves in Europe, the United States, especially in Asia and especially in Japan. They're really drawing them down. They're drawing them down almost to the point where you'd say they're being reckless. Because if this war doesn't end in a month or two or less, we're gonna be, the phrase that the energy analysts use is tank bottom. And then we're gonna be really suspect to spikes in oil. But the market's calm with that because it thinks this is gonna end. It thinks we're gonna find a way around. We're gonna build a pipeline. Yeah, we're gonna build a 1,500-mile pipeline through the desert the next week in a half. And we're gonna get the oil out. Or the ships are sneaking out or something like that. These are always the assumptions that it's operating under. And that's why we've been drawing these inventories down aggressively to believe that, oh, it's all gonna end here soon. Now, if it does, markets can be right on their assumptions. If it does, then what we've seen with the ignoring of the war in the markets, fine, we'll be okay. But if it doesn't and we roll in to the end of June, July, August, wherever that point, tank bottom point is, we're gonna realize the world doesn't have enough oil for the consumption that it's doing. Right now, the world consumes about 105 million barrels of oil a day. The world was getting 105 million barrels of oil in production a day until the war started. Now, it's around 90 to 95 million, depending on who you ask.