Jim Bianco Talks Resilient Inflation, Restructured Economy

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, podcasts, radio, news.

**Tom Keene** (0:07)
There's a gentleman, and it's Bill Murray, and it's Thaler of Chicago, the Nobel Laureate. And then there's Jim Bianco, who hang out at Wrigley Field.
And as we look to the Knicks, and what we're observing in New York, Jim Bianco has lived it. John Lester came to the rescue with Joe Madden, but it was brutal, 1945, 108 years of losing, losing, losing. And that pressure cooker of 2016 is exactly like MSG tonight, isn't it?

**Jim Bianco** (0:39)
Absolutely. In 2016 with the Cubs, it wasn't a sporting event. It was in a milestone in human history. And the pressure on the team, the pressure on the players was so great, they lost all the home games. They won the World Series by winning the away games.
I kind of felt that way watching the game three, in Madison Square Garden. That is, it's not just a basketball game, it's a milestone in this city's history. And the pressure on those players is so great. I wonder if they're going to have to do the same as the Cubs and win this on the road.

**Paul Sweeney** (1:07)
Were you at game three?

**Jim Bianco** (1:09)
No, I watched the game three. I was at the Cubs games 10 years ago.

**Tom Keene** (1:13)
I mean, what do you think, Alexis?

**Paul Sweeney** (1:14)
I mean, the pressure's low. I have to tell you, I hear what you're saying, and I kind of feel it a little bit myself. I was watching, and it just looked insane. Everybody with their lights on, it looked like a huge music concert.
The sound was just booming, and you just wonder if that, yeah, maybe they want to throw off the Spurs, but are you throwing off your own guys in the process?

**Jim Bianco** (1:33)
Right, you're not disappointing the Spurs. You're only disappointing your home team when you have a situation like that.

**Tom Keene** (1:39)
Monterey Canadians were exactly the same. The young kids up there, these kids are 20, 22, and the frenzy of the Vatican.

**Paul Sweeney** (1:46)
Even for veterans, it could be a lot, but let's hope you're wrong.

**Tom Keene** (1:48)
Unbelievable.

**Paul Sweeney** (1:48)
Let's hope you're wrong.

**Tom Keene** (1:49)
Should we continue on this theme, or actually talk about inflation? Let's do that. You are the arch call, ages ago, and lonely with Muhammad O'Leary, and I'll give him credit, saying inflation will be resilient. What's the quality of our resilient inflation now above 4%?

**Jim Bianco** (2:08)
Yeah, you know, we should get it above 4% today. It'll be 63 months that it's been above 2%, the Fed's target, and even core inflation is going to start creeping towards 3%, so it's just not, oh, gasoline. It's more than gasoline. I think that the inflation rate is continuing to be problematic.
I also think if you were to break it down and look at the so-called K-shaped economy, it's actually worse at the lower end because they tend to spend more of their income on stuff like food, think beef prices or gasoline prices as a percentage of their income than the higher end, so they're getting a higher inflation rate than even that 4% inflation rate that we're seeing as the average right now. So it's still with us and it's still a problem.

**Paul Sweeney** (2:52)
You mentioned 63 months of this inflation.
Let's just X out the energy stuff from Iran and stuff like that. What's driving inflation higher than the 2% end? Is 2% even a realistic number these days in this economy?

**Jim Bianco** (3:06)
No, I don't think it's a realistic number, but I think what's driving it is the cycle turned in 2020 I think every time we have a recession, we come out of a recession, the economy changes. I like to say change, I didn't say dystopian, it's just different. This is a post-pandemic economy. Post-pandemic economy is a work from home economy that's restructured the entire workforce, the office market and the way we live, because we're at home a lot more. It's a de-globalization economy, and unfortunately, it's an economy with more war, because according to the Institute of War, we've got the most war now in 40 years around the world that we're seeing. So all of those things are leading to frictions and higher prices, and that's the state of the world we live in right now.

**Tom Keene** (3:47)
I think one of the realities here, Eric emails in from a childcare center in New York. Thank you for that, Eric. He notes that Piegsa and Bianco of Chicago got the inflation call right. I look at the farm. I look, you wake up in Chicago, you look south, you look west. It's a whole different view than looking out at the Hudson River. I got since COVID, farm production expenses surging 34 percent as well.