Summary of "Is the Stock Market Bubble Coming to an End? with Jim Bianco"

Summary of “Is the Stock Market Bubble Coming to an End? with Jim Bianco”

Key Finance Topics Covered

Macroeconomic Context & Bond Markets

The US 10-year Treasury yield was the only developed market 10-year yield to decline in 2025, contrasting with rising yields in Japan, Europe, and other major bond markets.
This decline was largely due to political influence: former President Donald Trump and Treasury Secretary Scott Besson pushed to keep the 10-year yield down by adjusting auction schedules.
The US economy showed stronger growth and relatively higher inflation compared to peers, so the yield drop was not caused by weak growth or low inflation.
Expectations for 2026 include:
- Other major central banks (ECB, Bank of Japan) are expected to raise rates due to inflation concerns.
- The US Federal Reserve may become more hawkish, especially with potential leadership changes.
- Without weaker growth or falling inflation, US yields could snap back higher violently.
The Fed’s recent policies (rate cuts and ongoing quantitative tightening or reserve management purchases) have had limited success in lowering yields, as bond markets often rejected the Fed’s moves, pushing yields higher despite cuts.
The Fed may try quantitative easing (QE), yield curve control, or other liquidity measures in 2026, but these may not lower yields if the market remains unconvinced due to inflation and growth concerns.

Inflation & Labor Market Dynamics

Inflation remains sticky and above the Fed’s 2% target, averaging 4.2% since April 2020, with a current rate around 2.7%.
Japan’s inflation is unexpectedly high, partly due to tax inclusion in CPI calculations, marking the first time in 50 years that Japan’s inflation exceeds the US.
The US labor market is affected by a dramatic decline in net immigration, with net inflows near zero or negative for the first time in a century.
This immigration drop is a major headwind for labor supply, reducing the number of new jobs needed monthly from approximately 250,000 in 2023 to possibly as low as 12,000 or even negative by late 2026.
Despite low headline job creation numbers, when adjusted for population growth, the labor market remains relatively strong.
To attract more workers from a large pool of non-working individuals (~58 million), wage inflation may increase due to labor shortages.
Immigration restrictions and deportations reduce labor supply, but the undocumented population still consumes goods, delaying disinflationary effects on housing, food, and energy prices.
The demographic trend (aging baby boomers, below replacement fertility) suggests long-term low population growth and persistent inflation pressures for the next 5–7 years.

Fed Leadership & Policy Outlook

The traditional Fed model where the chairman unilaterally decides policy is breaking down; policy will now be decided by vote tallying among FOMC members, introducing more uncertainty and potential volatility.
Trump’s preferred Fed chair candidate (Kevin Hasset) was rejected, possibly because he lacks the forceful personality needed to control the committee.
Trump is seeking a Fed chair who:
- Supports a 1% federal funds rate target.
- Can get confirmed by the Senate.
- Is personally trusted by Trump.
New candidates (e.g., Michelle Bowman) have emerged, indicating uncertainty about the Fed’s direction in 2026.
This shift may cause more market volatility but is viewed positively long-term as it reduces groupthink and allows diverse views in policy decisions.

Markets & Investing Themes

Gold and silver have rallied strongly in early 2026 (silver +30%, gold +14%), driven primarily by concerns over Asian economies, especially China’s slowing growth (4.5% GDP growth, lowest in 3 years).
Precious metals markets are small relative to equities, bonds, and real estate, so modest capital flows can cause significant price moves.
Equities are currently supported by:
- Stronger-than-expected economic growth.
- Sticky inflation that supports earnings.
- Labor supply constraints keeping employment numbers low but signaling strong demand.
- Potential margin expansion from AI adoption, which could justify high valuations.
AI is viewed as a major structural driver of productivity and new business models, potentially replacing middle management and automating many jobs.
AI’s net effect on employment is expected to be positive over time, creating more jobs than it displaces, though transition risks and social pushback (decelerationist vs accelerationist camps) exist.
Infrastructure and technology built around AI will likely sustain new business growth even if an AI “bubble” bursts.

Methodologies / Frameworks Discussed

Labor Market Adjustment for Population Growth: Adjust monthly job creation targets based on immigration and fertility trends to assess true labor demand/supply balance.
Fed Policy Decision Process: Transition from chairman-driven decisions to committee vote tallying. Market pricing must align with Fed policy for effectiveness.
Bond Market Reaction to Fed Actions: Rate cuts and QE can be rejected by bond markets if growth and inflation expectations remain high.
AI Impact on Economy: Balancing job displacement versus job creation, productivity gains enabling new business models, and social/political risks during the transition.

Tickers, Assets, Instruments Mentioned

US 10-year Treasury note (10-year yield)
WisdomTree Bianco Fund ETF (WTBN) – tracks the Bianco Research Total Return Index (fixed income)
Gold and Silver – precious metals markets rallying in 2026
Etsy – smallest cap stock in S&P 500 (~$6 billion market cap)
Bianco Research Total Return Index (BTR IDX) – fixed income index managed by Jim Bianco’s firm

Key Numbers & Timelines

US labor break-even jobs/month: ~250,000 in 2023; down to ~12,000 or possibly negative by late 2026.
Inflation averaging 4.2% since April 2020; current ~2.7%.
Gold +14%, Silver +30% year-to-date as of January 20, 2026.
China GDP growth 4.5% (lowest in 3 years).
Fed rate cuts since September 2025: 175 basis points.
US 10-year yield: 3.6% in Sept 2024, 4.8% in Jan 2025, 4.2% in Jan 2026.
Baby boomers aging; US population growth at lowest in 100 years (2025).
Fed chair transition expected around May 2026.

Explicit Recommendations / Cautions

Be cautious about expecting yields to stay low in the US without weaker growth or inflation.
The Fed’s ability to control yields via QE or yield curve control is limited if market expectations differ.
Investors should consider the structural changes in labor supply and inflation persistence.
AI is a significant positive long-term driver but carries transition risks.
Precious metals may continue to rally in the near term due to geopolitical and economic uncertainty, especially in Asia.
The Fed’s new policy decision process introduces uncertainty and potential volatility in markets.

Disclosures

Jim Bianco’s firm manages the Bianco Research Total Return Index and partners with WisdomTree on the WTBN ETF.
Comments are macroeconomic and market analysis, not direct financial advice.

Presenters / Sources

Jim Bianco – President and Macro Strategist at Bianco Research
Anthony Fatsies – Host of the “What the Finance” podcast

Summary

Jim Bianco discusses the unique behavior of US bond yields in 2025 influenced by political intervention, sticky inflation, and labor supply constraints driven by near-zero immigration. He foresees continued inflation persistence, potential Fed hawkishness with a changing leadership dynamic, and market volatility due to a shift from chairman-led Fed policy to committee voting. Precious metals rally on Asian economic concerns, while AI is highlighted as a transformative economic force justifying high equity valuations despite risks. Investors should be aware of these macro shifts and evolving Fed dynamics heading into 2026.

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Summary of "Is the Stock Market Bubble Coming to an End? with Jim Bianco"