Jim Bianco: Election Day SHOCKER - What Happens to Markets Next?

27:44and what I'm trying to argue here for people is, yes, pay attention to betting markets. Yes, let me tell you what they are. They are the summation of what we know into one probability. That's a probability. A key thing about probability is when you see people say, Trump is trading with a 33-point lead over Harris, 66 to 33. That's basically, let me tell you, I don't understand probabilities without saying I don't understand probabilities. That's not the proper way to look at a probability. 66 % means he's got a one in two chance of winning the election or two out of three chance to be more specific to win the election.

28:25To put this in football parlance, and then I'll talk about why I think it's appropriately valued because it is football season, if Trump is trading 66 on down and he's trading 66 on poly and he's trading 63 or so on Kelsey, he's got less than a three-point lead. A Harris field goal wins the game. That's how close this is. It's late in the fourth quarter. She's down by less than three points. If he trades between 66 and 80, he's got between a four and seven point lead. A Harris touchdown wins the game. It's a little harder, but not impossible. If he trades above 80, he's then trading more than seven points above, then it's two scores by Harris and that becomes a lot more difficult.

29:15So yeah, no, I think the problem is people look at these markets and they say 66 is very much different than 55. It really isn't. It isn't. Now, why do I think that mid-60s is appropriate? It's a futures market. It's a futures market that will expire, I agree with you, sometime next week. Should expire a week from today, but it should expire sometime next week. How do you price a futures market? You need three inputs. You need the spot rate, you need carrying costs, and you need expectations. So let's start off. What is the spot rate? Okay, I've argued, and I even tweeted about this the other day, look at Nate Silver's Silver Bulletin, or look at the 538 model, or look at the Economist model.

30:04These are modelers that use all of the unknown information, and they put out a model of what they think the probabilities of the election are. Trump is trading at 54 to 55 in all these models. So that's the spot rate. Start with that. The modelers have them at 54 to 55, carrying costs. I'm tying my money up with this. I'm not getting interest on it, but it's only a week. So there's really no, carrying costs are negligible. Expectations. All right, the spot rate's 54, 55. But Trump has been in an uptrend. And the perception is Trump is going to win. He should trade at a premium above the spot rate.

30:44In the futures markets, we call that contango. He should be trading with contango, which is what he is. And he's trading in the low 60s, 63 to 66, say 55-ish or so, 54 is where the spot rate is. It's all reasonable. That's exactly where it should be, that this whole talk about manipulation. Look, I first started trading in the betting markets in 1992. I lost a ton of money in the betting markets in 2000. by the way, the reason I say it that way is because I made a big bet that George W. Bush was going to win the recount. So I went in and I bet big that he was going to win the recount. He did, except I bet the wrong contract.

31:28I bet the contract that he was going to win the popular vote. He went to the White House and I wound up with zero. So my warning to everybody is read the contract, read the specifications of the instrument you're buying to make sure you understand what you're buying. I made that mistake in 2000. I will never make that mistake again. I always carefully read every contract that I'm buying. So no, these markets are appropriate. And every time you hear talk of manipulation, it's always the side is perceived to be losing. So yes, Trump is a favorite, but it's not impossible for Harris to win this game.

32:04um you know uh you know you know i said she's a field goal away from winning this game but he's ahead late in the fourth quarter and yes the scoreboard of him being a 63 to 66 because that's what i think manipulation is it's the coach you know stick with my football metaphor pacing the sideline going that scoreboard is wrong i'm winning this game no no you're behind but you it's doable for you to win if you'd stop complaining about the scoreboard and start constructing a strategy to win the game with a little bit of amount of time that's left. So he is ahead and that the betting markets, I think, are appropriately priced.

32:44Well, Jim, I think you managed to square the circle there because I think this disconnect was something that a lot of people have been thinking about. By the way, not a political statement, but if the Giants were up two points in the fourth quarter, I would assume they would find a way to blow the lead. Well, like my Chicago Bears did with the last play of the game against the Washington commanders on Sunday if you saw the 60-yard Hail Mary that they lost on. Yeah, it happens all the time. It doesn't mean it's going to happen this time, but that's the way you have to think about it if you're a Harris supporter.

33:14As we understand the data, and I'll make one comment about that, as we understand the data, he's ahead. But not that much, and it can be turned around. Now there's another argument you can make, too, that what we understand is wrong. That happened in 2016. As we understood the data, Clinton was ahead and Clinton was going to win. And that was wrong. And now is this wrong? Sure, it could always be wrong. In fact, I would even argue to you it is wrong. We just don't know how it's wrong at this regard. Remember in 2016, we under-polled Trump. He outperformed the polls. In 2020, we under-polled Trump again.

34:00He actually outperformed the polls by more in 2020 than he did in 2016. The difference was— When, by the way, in 2020, they told us that—the pollsters told us they had figured out a way to correct for it, and the spreads widened, to your point. Right, right. The pollsters told us that they corrected it, and it got worse. The difference in 2020 was Biden had such a big lead that when you have this lead, he still wound up winning the presidency. Clinton's lead wasn't big enough in 2016 that when you added in the polling error, it flipped the election. Now, 2024, did they fix the polling error? Everything I've seen, even Nate Silver says, we don't know.

34:40We just don't know if they fixed the polling error. Now, maybe they have, and maybe these polls are right, or maybe we're undercounting Trump again, like we did the previous two, or maybe we're underestimating Harris support or turnout or something like that. Sure, that's always possible, in which case you then have to say, look, buy available information. Trump is leading. But I think that there could be a mistake in the polling or in the perceptions. And therefore, Harris winds up winning. Sure, that's very possible. But, you know, you have to make that case. Most people make that case emotionally.

35:21I want Harris to win. So therefore, I will believe Harris will win instead of giving hard evidence. I think Silver's got it right. We just don't know if there's a polling error this time around. We will make the assumption that pollsters want to continue to be employed as pollsters. And what their primary objective is, is to be accurate so that they can continue to get gainful employment after next Tuesday. And that they're trying really hard to be accurate. And we'll find out in a week if they are accurate. Yeah, I actually subscribe to Nate Silver's Substack as well. And I want to read this.

35:59This is the opening line of Nate Silver's Substack, and it's been the same for the last 10 days or so. Let's cut to the chase. So who's going to win the election? Well, honestly, we don't know. exactly and that's why i would come back to what i said before people that are arguing 63 64 is wrong from 55 because his model is at 54 55 trump um you know is wrong that that's in a probability world the difference between 54 55 and 63 64 is not material uh and that that and you know people think that incorrectly because they'll say Trump's 20 points ahead as if that's a vote share, as if that's a runaway election.

36:45Remember, in a week, one of these is going to be one and the other one's going to be zero. That doesn't mean that Trump won every single vote in a country because he winds up paying off$100. It's understanding that these are probabilities and we overstate the importance of these probabilities by arguing that he should be five points lower in the markets. That's not material. But like I said, if you start off with the spot rate of say Silver's model at 54, 55, if you look at the chart of all the models and all the polls and that Trump has been going up, you'd say, okay, the expectation is that that trend will continue.

37:28He should trade at a premium and that's how you wind up in the low 60s. and understanding that in a week, it's going to be one or zero. So it shouldn't be like a one-point premium. It should be bigger. And the last thing I'll warn everybody is - Hopefully, hopefully in a week. Yeah, hopefully in a week, it'll be one or zero. You know, there's an argument, just a quick aside. I love this delish, Mark Halperin, who's a political analyst who runs the Two-Way Podcast, pointed this out that there's some pollsters that are saying, because of the sheer amount of people that vote early. And now that the pollsters have been analyzing early votes, there's actually an argument that could be made that they could actually call the election the day before the election.

38:11Not who they think is going to win, that it's already over because of early voting and that the election day is largely ceremonial. Now, no one's going to do that, but I just, I loved it because it's so deliciously contrarian that we can actually call it the day before the election, that you're going to win, that you've already won the day before. I'm not saying that it would be Trump. And I'm not saying it would even be the presidency. And he was more focused on Arizona. Something like 95 % of the balloting in Arizona is going to be done early. And that they could actually start calling like the congressional and the Senate race.

38:51They could call it at the end of the week before election day because they could just look at the early voting numbers as well. So, yeah, I mean, this is going to, you're right, we don't know who's going to win, and we need to understand that these are probabilities, these are not vote share totals. And when people say Trump's got a 25-point lead, they're implying that these are vote share totals and they're not vote share totals. Jim, I just had a mini epiphany while you were speaking, and you tell me if you agree with this or not. But one of the problems that we have is a word, a single word, And that word is prediction.

39:26We call these prediction markets, right? That's the term of art that most analysts use. They're not prediction markets. They're betting markets. You're not predicting. You're betting. You're seeing where you, based on the rate of return, the net present value of the bet, where you're going to get paid. And it's not a prediction. It's a bet. Right. We'd be better off calling these probability markets because, you know, that is a better option. Look, you know, as Silver would point out, as I would point out to you, if Trump is trading 66, just to use that number right now, that means if you had 100 elections, Harris wins 33 of them.

40:05That's a significant number. You know, that is not to suggest by any stretch of the, and this could be of the 100 iterations of that, this one could be one of the 33 that she wins. And that's the way you have to start thinking about these markets instead of stammering around that they're somehow manipulated or that there's a big whale that's put prices. There's whales in every market. Or discounting the idea that it's a bunch of crypto bros that are in their 20s wearing MAGA hats that are voting on it. Make one assumption, even if that is true. They want to make money. They're trying to make money.

40:47If you want to make that argument, then let's just say that Wall Street is full of old white guys. So how could they give an opinion about cosmetic companies? What do they know about cosmetic companies? All these old white portfolio managers. We don't think that because we assume that the portfolio managers are there to make money. So their demographic doesn't matter. Same thing with the bettors. We assume they're there to make money. And so their demographic shouldn't matter. let's shift gears here and talk a little bit about u.s equity markets as we're talking about pricing in net present value of future cash flows let's talk a little bit obviously six week winning streak snapped last week year-to-date basis this is interesting s &p 500 up about 23 percent year-to-date on a trailing 12 month basis up nearly 40 obviously these are some base effects and it's strange because we're very close to the end of the year but sometimes that's the way the trailing data set looks.

41:43Jim, what do you think about U.S. equity markets? What's your view right now? So, by the way, you want a fun fact about the U.S. equity market? You mentioned that the U.S. equity market's up 23%. The gold market's up a little in the low 30s, around 31, 32%. The number of times that the U.S. equity market and the gold market have both been up 25 % in the same year. Remember, we're up 23 % in the stock market, so we're close. Zero. So we're in the range of potentially doing that for the first time that both gold and stocks could be the big winner in the same year. So there's your fun fact for the day.

42:18So other than being a fun fact, what does that mean? I mean, that is really interesting. Yeah, you know, that is, it is interesting. And I think if I was to give you an explanation of that is what I believe has been the primary driver of gold this year has been the, and most of it has come in the second half of the year. Most of the gold rallies, not all of the gold rallies come in the second half of the year. I think it's been monetary largesse. I think that the gold market is looking at too easy policy with the rate cuts, the expectation of rate cuts, the reality of the rate cuts, that that policy has been too easy and that that policy is going to produce inflation.

43:01Remember what gold is. Gold is a hedge against uncertainty and bad things, whether it's war, it's pandemics, or it's inflation. It's not only inflation. It's what you buy when you think bad stuff is going to happen. And inflation falls into that category. But that monetary excess also could lead to strong nominal growth in the economy. Nominal growth means real growth plus inflation, the two together. If I'm running a business and I've got strong nominal growth, I can both raise my prices and people are walking in the door to buy things because the economy is moving forward, unlike Europe, which is a whole other issue, which their economies are in the opposite.

43:46that they're a mess, they're in recession or very close to recession. Ours is very, very strong. But if you have strong nominal growth, that's good for corporate earnings. That's good for the discounted cash flows. And that continues to push the equity market higher. Now, let me tangent this and throw in another argument here. Dr. Jeremy Siegel wrote the book Stocks for the long run. In the book, he talked about what should you expect for stocks going forward. Now what they've done, 23 % this year, 20 % last year, big negative in 22. But what should you reasonably expect for the stock market going forward?

44:29If you take the inverse of the PE, the PE ratio is in the low 20s, and you take the inverse of the PE and you add 2 % or 3 % real, So you can look it up in the book, and I'll give you the bottom line. A reasonable expectation for the stock market for the next several years is it returns you somewhere between, say, 6 % and 8 % a year. So it goes up 6 % to 8 % a year, somewhere in that range. It could go up 16 % one year, zero the next year, but that's what you should expect. Sure, you can get more. That's what you should expect. Okay, this was 2019. and we were saying, look, the stock market's going to give you 6 % to 8%.

45:08But the bond market's somewhere between 0 % and 2%. We used to scream the word TINA. There is no alternative. You've got to get all your money out of bonds, and you've got to get into stocks because stocks have returned. Bonds don't because of their low yield. Today, you don't hear anybody talking about TINA because now take the Bloomberg Aggregate Index. Its yield is about 4.8%. It is offering you about two-thirds of the yield is offering about two-thirds of the return of the stock market with probably one-quarter to one-fifth of its risk. At this point, a bad year in the bond market will probably be a zero return.

45:49A bad year in the stock market would be a down 20 % return. So what I'm arguing is the stock market has competition, and the competition is the bond market. Now, I know some people that are more crypto-oriented will, no, no, no, the stock market's supposed to go up 20 % a month or 20 % a quarter. Bitcoin's supposed to go up 8 % a month. These are high-risk investments. But the broader market should be about a 6 % to 8 % return. And in a world of 5 % or high 4s interest rates, that is real competition. Two other things about that. One, the flows in the bond funds this year is the highest it's ever been.

46:32And there's still two more months left in the year. And we've already set the yearly record. And second, this becomes the issue with the bond market. I've argued that as rates go up, that the bond funds become more attractive relative to stock funds. I could get most of the gains that the stock market would offer me with a lot less risk because of the big yield in the bond market, sign me up. Who does that? The people that have money. Who are the people that have money? Boomers. It's always going to be the way the world works. The older people have most of the money. In 20 years, the Gen Zers are going to turn up their nose and make fun of all those 60 year old millennials that they have all the money.

47:24And in 50 years, Gen Alpha is going to make fun of Gen Z being a bunch of 60-year-olds that have all the money. That's just the way the world works. So the boomers have all the money. What is a bear market? Bear market is time, not price. What do I mean by that? Sure, the stock market might sell off, and it might go down, and it might chop around sideways for a couple of years. If you're 35 years old, great. I wish we would have a sell-off so I could buy in cheaper and I can add dollar cost average at much lower prices. And then after several years, it's footing and it has another 20-year run.

48:03But if you're 65 years old, and I said that the stock market might be peaking and it might go into a sideways chop for five or eight years, you might be correct to say, isn't that half my life expectancy? I don't have time, that kind of time to wait around for the stock market to get its footing again. Bonds are offering me most of what the stock market can get with a lot less risk. I'll take those. And so that's why I think that the bond market is now offering real competition to the stock market. So as yields go above, the 10-year yield goes above four and a quarter. That's the point we've argued with it right now.

48:44The stock market starts to hit a headwind. And And that's been happening with it for the last couple of weeks. It peaked on the 14th of October, and it's been kind of chopping sideways. And I think really what it is is that it's yields. The move from 360 on the 10-year note, which is where it was in late September, to about 420 didn't bother the stock market. But as you get above four and a quarter and you start creeping up above that number, the stock market starts to get bothered by higher and higher yields because of the competition that the bond market offers. Jim, extremely well explained.

49:18We've gone from Tina to TIA. There is an alternative, 4.333 on my screen right now on the 10-year treasury yield. By the way, this is a perfect lead into a question that we just got from Paul E., one of our viewers, who wants to know, for those who are retired and looking for yield income, what duration do you think we should focus on to lock in income? A great question. And very much on point here. So I'm going to be very careful in answering this question because there's a bit of a conflict of interest in this question answered. Now, I'll give you the conflict of interest. I do manage an ETF, or to be more specific, I manage an index called the Bianco Total Return Index.

50:01Biancoadvisors.com, you can find out about the index. It is a discretionarily managed index. We basically set up a portfolio in the form of an index that we think will give you the best fixed income return. There is an ETF run by WisdomTree, WTBN, WisdomTree, Bianco, Nancy, WTBN, which is the WisdomTree Bianco fund that tracks our index. So we are effectively running an actively managed index. None have said that. I think active managed is probably the best way to go when it comes to fixed income, whether it's our fund or any of the other ones. And there's a lot of good ones out there. Why active management?

50:46Well, your first response might be, well, no one can beat an index, right? In equities, that is the case. Over the last three years, according to the S &P index versus active, which is called the SPIVA report, which looks at active manager returns, 85 % of active equity managers cannot beat their benchmark, like the S &P 500. So just buy an index, buy VOO or SPY or something. If you were to give your money to a professional manager, 85 % of them can't beat that anyway. So that's why indexation is so popular in equities. But in fixed income, over 50%, around 50 % of active managers can beat the index.

51:32So if your argument was, should I buy BND or AGG? These are indexes, BND and AGG are the two biggest bond ETFs in the world. They track the Bloomberg Aggregate Index. I believe AGG is Vanguard and BND is iShares, BlackRock, although I might have those reversed. But they track the Bloomberg Aggregate Index. But an actively managed index historically has a 50 % chance of outperforming. Why? The bond market's a very different animal. And I'll give you one simple explanation for why active managers in bonds can outperform, but active managers in stocks can't. In stocks, your biggest weightings, your magnificent seven stocks are your all-stars, your stocks that have gone up huge.

52:25If you're not all in all the time pressing the bet on all those magnificent seven stocks, that is half the game. The S &P is up 23 % this year. Something like 12 % of that is seven stocks. If you were not pressing the bet in those seven stocks, you had zero chance of outperforming the S &P. And that's very difficult for an active manager to do because those stocks, by most explanations, our understandings are overvalued, have overbought and present a lot of risk. But in fixed income land, your biggest weightings, your over-levered companies, are your countries that borrow too much money in structured products like mortgages, your bad structures.

53:09In other words, they're your problem children. Whether you're all-stars in equities, they're your problem children in bonds, and you can recognize them as problem children and avoid them. And that's a big reason why a lot of managers outperform in active management. So I would argue that the best way to look at it in fixed income land is look for active managers. In fact, it's one of the fastest growing categories in fixed income right now is actively managed ETFs. And that is probably the best way to do it because the bond market is structured in such a way. So the question is asking, should I put a bond letter in?

53:50Should I buy this index or should I buy that index? And then when should I change the index around? That's what active managers do. And that's why I think that they're very successful in fixed income, where they're not so successful in equities, because one is the all-stars and the other one is the problem children. Jim, that's so interesting to talk about. Obviously, we've had this conversation on Real Vision a lot about passive indexation, but you're talking about 50 % return from seven stocks. I mean, you could look at that on the face and say that seems like it's problematic, maybe problematic at the macro level, problematic at the level of potential.

54:27Go ahead. I would say this, 50 % of the return from seven stocks and that they're weighting is something like 27 % of the S &P, those seven stocks, that's unprecedented. That there is no, you know, when was the last time 50 % came from seven stocks? When the stock market was up 1%, or when the stock market was up half a percent. But when it was up 20 odd percent and 10 full percentage points of the S &P's return came from seven stocks, unprecedented. Not in 2000, not during the nifty fifties in the 1970s. There's no, not even in the early, in the late 1920s before the stock market crashed at 29.

55:09Did we see this big a concentration of stocks drive, have such a big weighting and drive such a big portion of the returns? Now you may say that sounds ominous. I wouldn't disagree with you, But I would warn, we have no historical example of how this resolves itself. I could give you a pessimistic way it resolves itself. I could give you an optimistic way it resolves itself. But what I can't give you is a historical example of how it's resolved itself. Yeah, such a good point. Jim, one other thing I want to ask you. I know you've got a hard stop here at 1130. Bitcoin creeping up to 72 ,000 on my screen right now.

55:5171 ,937 looks like. What's your outlook on Bitcoin? What's the expectation here? Is this pricing in a Trump victory and the expectation of regulatory clarity? I do have a few minutes past 1130 right now, maybe about 10. So if you wanted to go a little bit longer, but to answer your question, I think you're right with the way you structured the question. Remember that in July, Trump went and spoke at Bitcoin Nashville and he cemented the idea at that conference that the orange coin and the orange man are kind of joined. It is a partisan coin. So part, you like that one, huh? So part of what's going on with Bitcoin is it's rallying the same way that DJT is rallying.

56:41I've got it up on my screen. The Trump media stock is going absolutely vertical in the 66 percent that we talked about in the betting markets and everything else. That Bitcoin is part of that. Now, is this the by the rumor that Trump's going to win and sell the news on the election? Or is this something more than just the election that is being unfolding in Bitcoin? Two things I'd also want to throw out about Bitcoin. I've been somewhat critical of the ETFs. Not that they're a bad product, but that I've argued that they're a cannibalization product. The price of Bitcoin peaked to$74 ,000 back in March.

57:23Why are we sitting here in late October when there's been all this money that's gone into these ETFs, something like$23 billion or so year to date, smashed every record for a new ETF launch that we've ever seen. And we're still six months out and we still haven't made a new all-time high. Because where did that$23 billion come from? Now, everybody wants to say boomers. It's come from boomers that have never owned Bitcoin and that they're now buying the ETF because they can. No, I think the vast majority of it is coming from Coinbase accounts, Kraken accounts, Gemini accounts, cold storage wallets.

58:07It's already money that was in the coin to begin with. It's just transformed itself into a TradFi account. And ultimately, that, I've argued, is worrisome. because what that is saying to you is, you know that whole online community with cold storage accounts and everything else, it sucks. I would rather have my money in a regulated account. The whole idea of self-sovereignty and holding your own keys, which is the bedrock principle of Bitcoin, nah, not interested in it. I'd rather have Larry Fink hold my Bitcoin for me and run dominion over me in terms of regulations with him and the New York Stock Exchange and the SEC.

58:57That's worrisome. And that's one of the reasons why I think that Bitcoin, despite all this money, it's money that was already in the ecosphere, just transferring itself into a traditional brokerage account to buy the ETF. And this message there for the crypto community is, why? Why is everybody rejecting what you guys are doing and they just want to own it in their TradFi account? Now, there's some money that's coming in from endowments and trusts and from individuals that it's first-time money, but it's not nearly as much as everybody thinks it is as well. So what I've argued is what's holding back Bitcoin from going to 100 ,000 or 3 million, like I've heard some estimates now and stuff like that, is I think it's been development and adoption.

59:50You need more development. The basic question is, what does Bitcoin do? It could do a lot more. We've got ordinals. We've got sacks. We've got the Lightning Network, which is a little bit old. There's a lot of things it can do on top of those and even more. Let's get there. Let's get more development into the cryptosphere. Let's become maybe a means of payment. Let's become something more than a store of value with it, as opposed to, no, no, no, I'm just going to own it. I'm just going to own IBIT in my brokerage account, and I'm just going to wait for that magic number to go up and make me rich.

1:00:26It's only going to make you rich when we have some more breakthroughs and more development with Bitcoin. And I think if we're chasing all the money back into TradFi accounts and out of the self-sovereignty and out of the blockchain itself, that that ultimately is going to retard the development of the coins and make it harder for the price to go up. So this whole argument that somehow the ETF was going to be a gateway drug that people were going to buy IBIT, and then pretty soon they were going to start exploring Coinbase, and the next thing you know, they're going to own all their coins in a cold storage.

1:01:04It's going 180 degrees the other way. And that is where... So as positive as you thought that that was going to be the gateway drug to get everybody into blockchain, you should be worried that the reality is it's going the other way. And that is the biggest warning sign that I see from Bitcoin. So yes, it is rallying because it's the orange coin with the orange man. I fear that it might be a sell the news on the election, especially if it was to lose. But beyond that, we've had the halving. We've had the big inflows. We can't make a new high in price. We need development. We need more development.

1:01:40We need more use cases for it that will drive more online adoption, crypto adoption, as opposed to TradFi adoption. And then we could start to really see the price cook. And I'm still optimistic we're going to get it. It's just that it might be slower than we think because of this migration of money the wrong way back to TradFi accounts. Yeah, Jim, I agree, actually, with a lot of the points that you just made there. Boy, this is a whole show in itself. how do you want to own Bitcoin, even if you are bullish on it? And I think, obviously, there are a lot of options. And I think quite clearly, you would have been far better off trusting your money with Larry Fink than you would have with Sam Bankman-Fried.

1:02:18The worst way to own Bitcoin is an offshore exchange that's unregulated and that goes belly up. People lost huge amounts of money, obviously, with the distributions, they're getting it back with interest, but still a pretty terrible ride for those who did it. If you were on a regulated, or at least publicly traded, I guess I should say, might be the proper term of art, onshore exchange like Coinbase, you did just fine. But by the way, people who are very passionate about Bitcoin, as you point out, would say, not your keys, not your coins. People have lost money with self-custody, right? It is not an easy thing to do if you don't do it exactly correctly.

1:02:54And I think you're spot on by saying what the space really needs is more development, which I think is going to come. It's a process. The internet didn't arrive fully baked in one day. It's a process. but the UI, UX, user interface, user experience for digital assets, I think is going to improve over the years, but it does take time. And I think it can be frustrating for those of us waiting to get here. So it becomes as simple as, you know paying for something with Apple Pay. It's not there yet. Yeah, you know, you tell, you know you tell a normie, you speak to the crypto crowd you tell a normie that there's no 800 number to call when you lose your seed phrase to get your money back and that scares the living hell out of them.

1:03:29And, you know, multi-sig might be an answer to that There might be other kind of recovery solutions for that. But that's a big reason why I think a lot of normies are definitely afraid of basically owning their own keys. In the case of some regulated entities like a bank trust department or a pension plan or a trust or an endowment, they're even afraid to own it in that format because I might employ Ash Bennington. And Ash might know the seed phrase as part of his job working for my endowment. And then one day Ash leads. I can't change the seed phrase. And I can't change the seed phrase every time somebody leaves.

1:04:20There's a vulnerability there. And how do I overcome that vulnerability? And so this is what you got to do in order to get people on chain. Otherwise, if they stay in their TradFi account, we're not really fulfilling the mission of Bitcoin. I think you're right. I think it's multi-sig and I think it's wallet abstraction. The idea that you can program in an arbitrary amount of logic into wallet abstraction is probably the solution. But again, to your point, Jim, it doesn't arrive overnight. That's not going to be here next Tuesday. Yeah, those are the, those, you're right. Those are the solutions.

1:04:57But you know what? It's October 29th and they're not here now. And that's the, you know, are they going to be here tomorrow? You know, then we could start making the case, the IBIT crowd, get into, come back this way instead of going the other way. But they're not here yet. I will never miss an opportunity to run long on a Jim Bianco show, but I know you do have to go in a couple of minutes. So I want to give you this opportunity. Final thoughts, key takeaways. We've covered a lot of ground here. We did the big picture from where we are today on September 29th. What do you think is happening? Big picture.

1:05:27What do people need to watch going forward until you can rejoin us again on Real Vision? Well, other than the election, I do think that they should basically watch interest rates. And keep in mind the simple fact that rising interest rates are neither good or bad. Falling interest rates are neither good or bad. You have to ask the question why they're rising. So since they're rising, I'll stick with that one. Are they rising? Because economic growth is growing. And so therefore, to borrow money in a fast-growing economy, you can pay a higher rate of interest, and the banks can charge a higher rate of interest, and you'll happily pay it because your opportunities are such that you can make money with a higher rate of interest.

1:06:09That's good. Are interest rates rising because your purchasing power is being devalued because of inflation, and you need more dollars to buy the same thing? Remember, we talked about$100 to$122 in four years at the grocery store. That's bad. So as interest rates rise, the question we have to ask ourselves, is it for a good reason or is it for a bad reason? I would suspect that as we continue to creep above four and a quarter and stay above there and keep going higher, if the stock market struggles because of rates, it's telling you it's a bad reason. And it's telling you that there's more of an inflation problem.

1:06:48And remember, we cannot emphasize as much that that hits 100 % of everybody. So watch interest rates. They're telling you quite a bit and ask the question, is it the good reason or the bad reason that they're rising? Maybe the stock market will answer that question as we go forward from here. You could argue that up until this point hasn't been a problem because we're near very close to the all-time highs. But if rates keep going up from here and the stock market keeps struggling with it, then maybe it is a signal that it is going up for the bad reason, too much inflation or too much fear of inflation.

1:07:23and the Fed cutting rates is only going to make that situation worse. Jim Bianco, awesome conversation, as it always is when you join us here on Real Vision. Thank you so much for joining us. Thank you, I've enjoyed it. Hey, and by the way, before I go, I should say, if you're interested in the kind of conversations that we were just having about technology and about digital assets, crypto gathering taking place in Miami at the end of January. Details and to get your ticket, Go to realvision.com forward slash CG25, as in crypto gathering, realvision.com CG25, 2025. Have a great afternoon, everybody.

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