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There's a gentleman and it's Bill Murray, and it's Tailor 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 nineteen forty five, one hundred and eight years of losing, losing, And that pressure cooker of twenty sixteen is exactly like MSG tonight, isn't it.
Absolutely When in twenty sixteen 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 were 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 Mileston own in this city's history.
And the pressure on those players is so great. I wonder if they're gonna have to do the same as the Cubs and win this on the road.
You were you at Game three?
I know I watched the Game three. I was at the Tops Games ten years ago.
Okay, I mean, what do you think of Alexis?
I mean, 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 looked like a huge, you know, 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.
Right, You're not disappointing the Spurs. You're only disappointing your home team. When you have a situation like that.
Montreal Canadians were exactly the same young kids up there. These kids are twenty twenty two and the frenzy of the Vatica.
Even for veterans, it could be a lot. But let's hope you're wrong.
That's okay, wrong?
Should we continue on this theme or actually talk about it? Let's you are the arch call ages Ago in lonely with Muhammad al Arian. I get him credit saying inflation will be resilient what's the quality of our resilient inflation now? Above four percent?
Yeah, you know, we should get it about four percent today, it'll be sixty three months that it's been above two percent the FEDS target, and even core inflation is going to start creeping towards three percent. 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 CA 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 four percent inflation rate that we're seeing as the average right now.
So it's still with us that it's still a problem.
You mentioned sixty three months of this inflation. What's let's just x out the energy stuff from Iran and so that what's driving inflation higher than the two percent? And is two percent even a realistic number of these days in this economy?
No, I don't think it's a realistic number. But I think what's driving it is the cycle turned in twenty twenty. I think, you know, every time we have a recession, we come out of a recession, the economy changes. And I like to say change. I didn't say dystopian, it's just it's different. This is a post pandemic economy. Post pandemic economy is a work from home economy. That structure restructured the entire workforce, the office market, and the way we live because we're at home a lot more. It's
a deglobalization 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 forty 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.
I think one of the reality is there. Eric emails in from a childcare center in New York. Thank you for that, Eric, and he notes that pigs 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 expense is surging thirty four percent as well. Basically our farm economies flat on their back because of inflation.
Right, Yeah, it is struggling.
But one of the things that the farmers have going for them is they've got other income. I've got a bunch of friends that are in that business. So they could put up solar panels, they could work with data centers, and they could make income off of a lot of that stuff to kind of keep the farms going. But you're right, if you're looking at purely being a farmer trying to grow corner wheat or soybeans and make a living off of it, it's very difficult right now.
So this deglobalization which we all grew up with globalization, and they're resulting lower prices now to the extent that there's a de globalization trend out there. The America first type of thing is higher inflation the new norm? And does the FED have to adjust to that?
Yes, I do think higher inflation is the new norm, And I.
Like to be clear that I think it's like a three percent maybe three high threes inflation world, not an eight times Zimbabwe inflation world. So when you know, when you say inflation, you don't want to give that. But yeah, the Fed does have to start thinking about it in those terms, because not are they no, because they think that the neutral rate is still three percent. They come up. They arrive at that by saying that the long run
inflation rates two plus one for our star. But if that two percent numbers closer to three three and a half, then neutral might be right where we're at right now, and that they don't need to be cutting rates anymore.
Do they need to be raising rates? I mean, I'm looking at the warp function kind of suggesting maybe a little bit.
Oh it's not even just a little bit.
It's one hundred percent chance that they're going to raise rates by the end of the year. I think, no, they shouldn't be raising rates. Maybe at next week's meeting. They don't have to be that urgent. But I think that as the market starts to move forward, if we're going to be in a high inflation world.
I'll quote Bob Michael. He has a great line that I.
Attribute to him that as a bond investor, I can stop panicking when the FED starts panicking.
So if the Fed doesn't feel.
The need to panic at four percent inflation, then maybe bond investors should start panicking and leave. So maybe they should consider raising rates or at least talking a little bit more hawkish to calm bond investors.
So then discuss the ambiguity of a level or Bianco like higher rate regime on the equity market.
You know, I don't think it's a I don't think it's a problem. I think what the President has done is a very good job of telling everybody think of interest rates like a real estate guy. Right, lower is always better for whatever reason, and higher is always bad for whatever reason. But that's not the way rates should work. They should approximate a they're a little more nuanced of fair value. If the economy is stronger, if the inflation's
moving up, they should creep higher. And that's what they've been doing. And as long as they do that, I don't think it should be a problem for the equity market. But no, the equity market thinks of it like a real estate person. Oh they went up, it's bad, So that's kind of the way they think we're.
Gonna run here.
But in thirty seconds, are you is Bianca looking for a modest move higher in rates, or you with the wordzagg and posing that we could see a real jump condition.
I'm looking for a modest move higher in rates. The jump condition would occur if I think a the FED seems to be dismissive about inflation or b the story today that's got the market down. If we do get something that produces a massive jump in crude oil prices, that could a jump.
Lets of emails in from the other side of the studio, Nicks or Spurs.
I'm gonna go with the Knicks and seven just because you're killing me seven.
Seven, geez all right, Spurs are good team. Heard that.
I don't want to hear that, but I do hear you though.
Go away shouldn't be on. Thank you so much in our studios from Chicago. Greatly appreciated today. He's been just fabulous on his higher inflation regime.