Jim Bianco

"I would probably term them more fair value... they're probably a decent investment that you can put your money into and probably get mid-single digit returns." Commodities have run up due to Asian demand (hedging against local economic failure) and the realization of a sticky inflation world. While no longer "cheap," they fit the "4-5-6" return model and offer protection against geopolitical shocks or sticky inflation. LONG (Hold) for steady, mid-single-digit compounding. A resolution to Asian economic woes could lead to selling (profit-taking) from Asian investors.

Payrolls surprised upside (130k), and inflation remains sticky around 3%. The market is perpetually pricing in cuts that don't happen. If data stays strong, the neutral rate is likely higher (4%), meaning yields must rise (prices fall). SHORT US Treasuries (Expect higher yields). A sudden economic cliff dive necessitating emergency cuts.

TIPS (Treasury Inflation-Protected Securities) offer attractive real yields of 2.5-3% above inflation, providing a safe diversifier in a 5-7% return portfolio and a hedge against rising inflation.

If Iran allows oil transit through the Strait of Hormuz, the geopolitical risk premium will evaporate, causing crude oil prices to drop significantly.

"I would probably term them more fair value... they're probably a decent investment that you can put your money into and probably get mid-single digit returns." Commodities have run up due to Asian demand (hedging against local economic failure) and the realization of a sticky inflation world. While no longer "cheap," they fit the "4-5-6" return model and offer protection against geopolitical shocks or sticky inflation. LONG (Hold) for steady, mid-single-digit compounding. A resolution to Asian economic woes could lead to selling (profit-taking) from Asian investors.

The AI trade remains the dominant market theme and has further upside. AI has the potential to replace the entire software stack, concentrating spending away from many SaaS products into a single AI context window. This justifies the current high valuations and concentration in AI-related stocks (48% of S&P 500). While risky, the AI trade is not a bubble and still has room to run.

Short CRM because customers will switch to a cheaper, tested AI alternative, forcing CRM to cut costs or lose market share.

The Strait of Hormuz blockade will be protracted because there is no military solution and Iran is willing to endure economic pain. This will keep oil prices elevated for an extended period. The December 2026 Brent crude oil futures contract is making new highs, indicating the market does not expect a quick resolution. Jim Bianco recommends long oil positions via DBC (Deutsche Bank commodity index ETF), USO, or direct crude oil futures.

Buy tanker stocks (e.g., TNK) because the rerouting of Middle Eastern crude to the US will dramatically increase ton-mile demand, while fleet expansion is a 3-5 year process, supporting higher day rates.

The Trump administration has given at least Department of Energy approval for a new nuclear power plant to be built in the United States, the first one in 50 years that's gotten approval. Agentic AI and massive data centers require more electricity than the current grid can provide. Tech hyperscalers are willing to fund their own power generation, and the regulatory environment is finally opening up for Small Modular Reactors (SMRs) to meet this zero-emission baseload demand. LONG because the intersection of AI energy demands and deregulation is creating a generational renaissance for nuclear power and uranium demand. Environmental lobbies could successfully sue to block SMR deployments, or a broad market liquidity event could drag down uranium equities despite their strong fundamentals.

The Trump administration has given at least Department of Energy approval for a new nuclear power plant to be built in the United States, the first one in 50 years that's gotten approval. Agentic AI and massive data centers require more electricity than the current grid can provide. Tech hyperscalers are willing to fund their own power generation, and the regulatory environment is finally opening up for Small Modular Reactors (SMRs) to meet this zero-emission baseload demand. LONG because the intersection of AI energy demands and deregulation is creating a generational renaissance for nuclear power and uranium demand. Environmental lobbies could successfully sue to block SMR deployments, or a broad market liquidity event could drag down uranium equities despite their strong fundamentals.

The resolution of the Iran conflict is a risk-on catalyst for equities, as reflected by the S&P 500's gains.

"I would probably term them more fair value... they're probably a decent investment that you can put your money into and probably get mid-single digit returns." Commodities have run up due to Asian demand (hedging against local economic failure) and the realization of a sticky inflation world. While no longer "cheap," they fit the "4-5-6" return model and offer protection against geopolitical shocks or sticky inflation. LONG (Hold) for steady, mid-single-digit compounding. A resolution to Asian economic woes could lead to selling (profit-taking) from Asian investors.

"I would probably term them more fair value... they're probably a decent investment that you can put your money into and probably get mid-single digit returns." Commodities have run up due to Asian demand (hedging against local economic failure) and the realization of a sticky inflation world. While no longer "cheap," they fit the "4-5-6" return model and offer protection against geopolitical shocks or sticky inflation. LONG (Hold) for steady, mid-single-digit compounding. A resolution to Asian economic woes could lead to selling (profit-taking) from Asian investors.

"If four is the neutral funds rate, then about four and a half is the neutral two-year note and around low fives is the neutral five. We're about a 100 basis points below those." Bond yields and prices move inversely. Bianco argues the market is mispricing yields by ~100 basis points too low. As the market accepts the "3% inflation world," yields must rise to 5-6%, causing bond prices (TLT/IEF) to fall. SHORT long-duration Treasuries to capture the move to higher yields. A sudden economic collapse or recession could force yields down (flight to safety).