Think 5% Bond Yields Are High? You Ain't Seen Nothing Yet... | Jim Bianco

**SPEAKER_1** (0:00)
This episode is brought to you by State Farm. Knowing you could be saving money for the things you really want is a great feeling. Talk to a State Farm agent today to learn how you can choose to bundle and save with the personal price plan. Like a good neighbor, State Farm is there. Prices are based on rating plans that vary by state. Coverage options are selected by the customer. Availability, amount of discounts and savings, and eligibility vary by state.

**SPEAKER_2** (0:27)
You know that feeling when someone shows up for you? Just when you need it most? That's what Uber is all about. Not just a ride or dinner at your door, it's how Uber helps you show up for the moments that matter. Because showing up can turn a tough day around or make a good one even better. Whatever it is, big or small, Uber is on the way so you can be on yours. Uber, on our way.

**Adam Taggart** (0:55)
You basically said everybody's talking about how hopefully rates are going to come down now that they're approaching 5 And you're saying, hey, that's not going to happen in the short term. And in fact, midterm, longer term, we might be nostalgic for 5%.

**Jim Bianco** (1:13)
Exactly. Everybody over the weekend is running around with their hair on fire. Oh my God, look at rates. They're up. They're going to kill everything. These 5% rates, you know, get me a paper bag to breathe through because we have 5% rates. And what I'm trying to argue is 5% isn't a problem. That's really what we should be at right now, I think. If these deficits are going to really kick in and cause problems, then rates are going to go much higher than this.

**Adam Taggart** (1:44)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. The Game of Thrones Special Tariff Edition continues at its wild, unpredictable, and ever-changing pace. The latest development as of this recording has the US placing a pause on its recently announced 50 percent tariffs on the EU until July 9th. So as we now have a little more clarity in data to look at since Trump's Liberation Day, what conclusions can we start drawing about the implications of these tariffs? Are they strengthening or weakening America's hand? Are they inflationary? Are US consumers better or worse off on net? For insights, we've got the good fortune today to welcome back to the program Jim Bianco, President and Macro Strategist at Bianco Research. Jim, thanks so much for joining us today and happy Memorial Day.

**Jim Bianco** (2:35)
Happy Memorial Day to you too.

**Adam Taggart** (2:37)
Thank you. Well, look again, I really appreciate you making the time on this important national holiday. We'll get you talking back, hanging out with your family, hopefully quite soon. But a lot to talk about and you've been really busy on X recently, Jim, with a lot of, I think, seminal points that I want to try to walk through here. Real quick before we get to them and we'll get to tariffs in just a second, but just at a high level, how do you assess the state of the economy and markets today?

**Jim Bianco** (3:03)
Uncertain. We're trying to figure out what all of this is going to mean. Let me explain that. The natural state for an economy, a capitalist economy like the US is to grow. It could grow slow, it could grow fast, but it grows. Now, about 10 percent of the years since World War II, we've had a recession. What causes a recession? Usually, it's an exogenous shock that comes across and changes everything. People stop doing economic activity, they stop buying things, and the economy contracts.
I've referred to this as the economy being murdered. The big question right now is, are these tariffs murdering the economy? We go back and forth on this idea that they're murdering the economy, we being the bigger picture of everybody, right? That they are, they aren't. If they stick around, they will. If he gives a pause, they won't. That's going to be the big question. I had been arguing that I've been giving an answer that I don't like, but it's the best one I could come up with, that I was 50-50 on a recession, but within 90 days, I'll either be at 80% or 20 And right now, I think I'm moving more towards the 20% that we're not going to have that recession. We're not going to have that contraction in the economy. But what we are going to have, what I'm worried about is higher prices and higher inflation. And that's going to matter, because as I read Wall Street and as I read everybody is, okay, inflation is dead. Let's spend all this time talking about employment. Let's talk about what the economy is doing. Let's talk about all these other things and whether or not they're going to get the Fed to cut rates. And the answer is none of that matters if we have pricing freezes. And the Fed is not going to move at all. And interest rates are going to stay up if we have that inflation.