Moneybeat - The assassination of an economic world leader

MARY REICHARD, HOST: Next up on The World and Everything in It: the Monday Moneybeat.

NICK EICHER, HOST: Time now for our weekly conversation on business, markets, and the economy with financial analyst and adviser David Bahnsen, head of the Bahnsen Group . Good morning!

DAVID BAHNSEN, GUEST: Well, good morning. Good to be with you, Nick.

EICHER: Before we get into economic data, I suspect you’re following the Elon Musk and Twitter deal. But now, it appears the deal’s in big trouble. What happened? Why is it falling apart?

BAHNSEN: Because the stock is way down. And he was overpaying and he's trying to get out of the deal. It's very simple.

He's gonna get sued. And he's going to make his case for why he want[s] out of the deal. The deal is airtight, the issues he's publicly presented are not going to hold up. But he can stall and really make it very difficult for the deal to get closed. And ultimately, I just think they'll end up settling, settling could mean closing the transaction at a much lower price. Or it could more than likely at this point mean, he just walks away and pays them money for his trouble. The deal has a $1 billion breakup fee, but that's the minimum. The billion is just if for any reason the deal doesn't happen. The billion is not to say I'm allowed to walk away from the deal. He's not allowed to walk away. And so he could be forced to actually comply. His best bet would be if he can't get the financing, but he does have the financing. And these investment banks are not prone to go perjure themselves by saying, oh, yeah, we were unwilling to do the debt, you know; they, they are willing to do it under certain conditions. So it's a really messy situation, and I don't expect it to get resolved anytime soon. But whether or not the resolution ends up being that Elon Musk owns Twitter, I actually don't really have a good feel for that right now. What I do know is he's not going to own Twitter at $44 billion. And one way or the other, Twitter's gonna get something out of this, either cash or a deal done at a lower price.

EICHER: Pretty solid jobs report for the month of June—372,000 jobs. So, continued strong job growth—unemployment rate still below 4 percent—but yet we’re talking recession. How can that be? What’s your assessment?

BAHNSEN: Yeah, I mean, it isn't just my assessment. This is indisputable. If you have a recession, with job creation, like this, and unemployment like this, then it's just never happened in human history. There's still nearly, you know, 11 million job openings as well. So what you have is very low unemployment, still a strong ability to get a job, positions that are unfilled. I am increasingly seeing certain data points that are quite contradictory to the recession narrative. You don't have a recession, when people who want work can get work. And yet the idea that we end up going into recession, it simply means that we believe that dynamic will change, that all of a sudden jobs will start to go away, that employers who right now are looking to hire will stop hiring and will start firing. And that is entirely possible. I don't hold that as an impossible condition. I think it's unlikely in three to six months, but it becomes more possible if economic conditions worsen in nine to 18 months.

Now, there's plenty of data points that coincide with the recession narrative. So this is what we have to deal with in economics all the time is conflicting data. Things are never as simple and easy as we want them to be. But it was a strong jobs number. And the thing I like to push back against consensus is this continued narrative of oh boy, this is bad news that the jobs number was so good, because it means inflation is still strong and the Fed is gonna have to cut. Those who believe people being employed as inflationary do not understand economics.

EICHER: And before I let you go, we should mention the assassination of the former prime minister of Japan—Shinzo Abe. He was longest-serving prime minister—still relatively young—most recently having left office in 2020. But importantly, a major economic player on the world scene.

BAHNSEN: Shinzo Abe, actually much like we referred to Reaganomics, has the Japanese economic policy named after him, Abenomics. There's plenty of people who can criticize it. There's plenty of people who can say it's worked out quite well for Japan. He inherited absolutely no good options - 25 years of deflation and a real economic stagnation. And I'm not interested in assessing the good and bad points of Abenomics. I am just blown away that a person who is equivalent to Ben Bernanke and Barack Obama in our country was killed and the American press is barely even talking about it. That, you know, remember in Japan, they don't separate the Fed and the White House the way we do in the United States, the BOJ and their equivalent to Prime Minister office is essentially heavily accorded together. And remember, he was over it in 2006 to 2020. This isn't like the guy back in Jimmy Carter years, you know, this was like yesterday, and he was there for 15 years, double the length of Bernanke, double the length of Obama. And it's as if the equivalent of Obama and Bernanke, both were killed in the third largest economic country in the world. And the American press is not even talking about it. I think it's a huge story. And I do not think that we should ever pass over the assassination of a major country's top leader. It's really quite surreal.

EICHER: All right, that's David Bahnsen. He's a financial analyst and advisor and head of the financial planning firm, the Bahnsen group. David’s daily writing is at DividendCafe.com. You can read him online or sign up there to receive his daily missive by email.

David, thanks again.

BAHNSEN: Thank you.

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.