• Jim Bianco, president Bianco Research with me taking a look at the big picture here. And it's great to see you always. What are you thinking here when you see the markets bounce back? You had obviously one of those 90% down days, felt like 100% down day on Friday right where every single thing is lower and then things bounce back. That's sort of how the markets often act. What did you think about the bounce back today? What does it tell you about going forward the rest of the year?
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  • Jim Bianco
    What you saw Friday and what you saw today is all reaction to the tariff news. This will continue for months or years. Trump puts tariffs on, the market blows up, then Trump says it won’t be as bad, and the market rebounds. This rebound is only half the losses on Friday, so skepticism remains. This is the market environment now.
  • How do you feel the bond markets are driving? Bond markets close today; the 10-year yield is 4.07%, low since May. Do you think the bond market is driving the stock market?
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  • Jim Bianco
    Yes. The bond market is an alternative to stocks, offering 5-6% returns with less risk versus stock volatility. When yields approach 5%, the stock market gets bothered because bonds become more attractive alternatives. Yields recently are just above 4%, not rising, helping stocks for now.
  • Let's talk about the Bianco Research Index, underweight corporates and overweight mortgages. What is the rationale?
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  • Jim Bianco
    Our index is short duration and underweight corporates because of high stock valuations and tight corporate spreads. We prefer overweight mortgages, which have offset corporates well. Active fixed-income management can outperform indices; we track this in ETF WTBN.
  • You also have a 5% position in local currency emerging market debt. Tell me more.
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  • Jim Bianco
    Emerging market debt yields ~6.8% and plays on a weakening dollar, which we've seen all year. We underweight China and tariff players to avoid risks. Emerging markets are risky but have performed well excluding China.
  • Jim Bianco
    I believe inflation will stay problematic. October 24 CPI should show 3.1% core inflation, too high historically. Five years after the shutdown, inflation remains above 3%, so we hold short-term TIPS.
  • If folks want to look at that index, it is BTRINDX.
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