In this week's Stansberry Investor Hour, Dan welcomes Jim Bianco to the show. Jim is the president of Bianco Research. Since 1990, Jim's commentaries have offered a unique perspective on the global economy and financial markets.

Jim kicks things off by explaining a post he made on social media platform X, where he stated that bond traders could stop panicking once the Federal Reserve starts to panic. In short, over the past two years, when the Fed was cutting rates to curb inflation, yields on bonds have risen. So Jim believes that bond investors don't need to be worried if the Fed decides to cut rates later this year. He then discusses the dollar's position as the global reserve currency and says that regardless of anyone's plans, it cannot be toppled until another currency exists that can sufficiently replace it...

The U.S. dollar is the reserve currency because it has rule of law. It has deep liquid capital markets, and it's accepted by everybody around the world. It's not going to stop being that until an alternative shows up that can do all that. Show me a currency that can trade $10 trillion a day, that has derivative markets, deep liquid markets, and has a 100-year history of rule of law... I don't see another fiat currency ever approaching where the U.S. dollar stands.

Next, Jim shares why the bond market is the most important market – even if it isn't the most profitable one. He says that it sets the price of money, and every other investment is dependent on that basis for determining value. However, money needs to be priced properly. It cannot be too high or too low, or you'll encounter economic problems. And while Jim doesn't believe that we're currently close to a credit crisis, one could emerge without warning...

I don't think we're near big trouble right now. Most of the metrics in the credit markets are really holding up OK. But the metrics in the credit markets can change really fast. So I can tell you on Monday, "Hey, I don't see any problems," and I [can] come back to you on Friday and say, "Now I see problems"... I don't see [private credit] being any worse than anything else that you might find in high yield or investment grade right now, but like I said, that can change quickly. It did in 2007, and it certainly did almost by the hour in 2020.

Finally, Jim reveals his fears about persistent 3% to 4% inflation. He says that the Fed will eventually respond by raising interest rates, which will make money more expensive. Additionally, he believes that economic expansions are "murdered," which is succeeded by a recession and a fundamental change in the economy (a recent example being remote work being a common practice following the COVID-19 pandemic). And Jim says that a lot of folks aren't measuring inflation properly. He says the prices of services should be measured, not goods – and those have been rising rapidly...

When you talk about inflation and you talk about prices, [the one thing I caution people] to keep in mind is that the majority of money that we spend [and] businesses spend is on services. It's not on goods. Goods is only about a third of what the consumer spends their money on... I think that [official inflation numbers] are overweight towards things we could measure online, and things we could measure online tend to be more goods. But [there are] a lot of things we spend money on: childcare... getting your lawn mowed. Medical services that are very difficult to measure online. And those inflation prices have been historically rising much faster.

Click on the image below to watch the video interview with Jim right now. For the audio version, click "Listen" above.

(Additional past episodes are located here.)

The transcript is coming soon.

This Week's Guest

Jim Bianco is the president and macro strategist at Bianco Research. Prior to joining Arbor and Bianco Research, Jim was a market strategist in equity and fixed-income research at UBS Securities and equity technical analyst at First Boston and Shearson Lehman Brothers. During his time at Bianco Research, Jim's wide-ranging commentaries have addressed monetary policy, the intersection of markets and politics, the role of government in the economy, fund flows, and positioning in financial markets.

Jim appears regularly on CNBC, Bloomberg, and Fox Business. He's often featured in the Wall Street Journal, Bloomberg News, Grant's Interest Rate Observer, and MarketWatch. He is a chartered market technician ("CMT") and a member of the Market Technicians Association. Jim has a Bachelor of Science degree in finance from Marquette University and a Master of Business Administration from Fordham University.