Morning Wire XX
[0] The S &P 500 officially slid into a bare market this week, adding to signs that a recession is coming soon.
[1] We speak to a Wall Street veteran who has some suggestions for the Fed and a dire warning for Americans.
[2] If anyone thinks this is going to be over in two months or three months, you've got another thing coming.
[3] I'm Daily Wire editor -in -chief John Bickley with Georgia Howell.
[4] It's Wednesday, June 15th, and this is Morning Wire.
[5] Day two of the January 6th committee hearing saw the Democrat -led committee focusing on what President Trump actually believed about the 2020 election results.
[6] I mean, that the claims of fraud were bullshit, and, you know, he was indignant about that.
[7] How much impact are the hearings having on the American public?
[8] And the PGA tour suspends 17 players after they join a new golf league backed by Saudi Arabia.
[9] We discussed the implications for the world's most popular golf league.
[10] Thanks for waking up with Morning Wire.
[11] Stay tuned.
[12] We have the news you need to know.
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[19] On Monday, we officially entered a bare market as one stock index lost more than 20 % of its value.
[20] The shift comes as producer costs continue to rise by more than 10%.
[21] In response to the crippling inflation, the Fed is poised to raise interest rates even more aggressively.
[22] We speak to Kenny Polkari, managing partner at Case Capital Advisors, about what we can expect.
[23] Kenny, welcome.
[24] Thank you for having me. It's a pleasure.
[25] Now, we are increasingly hearing that a recession is unavoidable at the time.
[26] this point, and that that actually might be the only way to curb inflation.
[27] What would a recession look like with inflation?
[28] And when can we expect to see it?
[29] Yes, I do think the recession is coming.
[30] There are some people that tell you the recession is already here.
[31] While there are other people that are tell you, based on the definition, we're not here yet.
[32] I do think that it is coming.
[33] I think it's coming sooner rather than later.
[34] But look, the Fed started stimulating during the great financial crisis of 2007, 8, 9, 10, 11, and 12, right?
[35] When they started in 2009, when COVID.
[36] it hit.
[37] They added more stimulation.
[38] They added more free money.
[39] They kept rates artificially low and they continued to buy up bonds and be the buyer of last resort across the spectrum, mortgage as well as bonds, right?
[40] They identified for years that 2 % was going to be the target.
[41] Once inflation at 2%, that was going to be the trigger point that was going to set the change in monetary policy.
[42] And in May of 2021, when the CPI went from 1 .6 % to 3 .1 % in one month, blasted right through the 2 % range.
[43] They stood up and said, well, yes, we're above 2%, but guess what?
[44] It's transitory.
[45] It's not going to last.
[46] We're going to keep stimulating.
[47] And then we saw CPI tick up and tick up and tick up and tick up every month while Jay Powell continued to stimulate and continued to tell us we were wrong.
[48] So now we're at this point where inflation is now running at 8 .6 % according to CPI on Friday.
[49] I still think it's running closer to 10 % if you're realistic about it, right?
[50] They take out food and energy because they say those two, those two seconds.
[51] are volatile.
[52] Damn right, they're volatile.
[53] But guess what?
[54] Those are the two sectors that affect every single person, every single day.
[55] Because how often do you go out and buy a new computer, or how often do you go out and buy a car?
[56] You don't, but you go every day to the food store.
[57] You go every day to the gas station.
[58] So you're shelling money out of your pocket every single day for things that you absolutely need.
[59] So one way or the other, is there a recession coming?
[60] Yes.
[61] I think it's coming later this year.
[62] I was under the, you know, I was one that thought it was originally coming in the first half of 2023.
[63] I absolutely think it's coming by the end of the year 2022.
[64] I think it has to come because I think in order for Jay Powell and the Fed to really consider trying to break the back of inflation, the only way they're going to do that is they're going to have to jack interest rates up above the level of inflation.
[65] Now, I don't know how old you are and I don't know where you were in 1979, 1989, 1981.
[66] I was 18 years old just getting out of high school, going to college, and inflation was running at 10 .5 % unemployment was 13%.
[67] And Paul Bulker, then Fed Chairman, jacked rates up to 21%.
[68] Why?
[69] Because he had to absolutely kill inflation and in the process kill the economy, right?
[70] The economy spun into a recession.
[71] It was not pretty.
[72] People lost their jobs, but inflation, they killed inflation.
[73] I'm preparing for a crash landing and hoping for a bumpy landing.
[74] That's what I'm kind of hoping for.
[75] But one way or the other, it's going to be a hard landing.
[76] The definition of hard is going to be your own definition.
[77] I think it's actually going to be very hard because I think that they've way overdone it.
[78] Now, a lot of millennial listeners might be wondering what this will mean for housing prices.
[79] Can we expect to see those drop?
[80] Here's what you have to understand.
[81] Housing is related directly to interest rates, right?
[82] Intervenates are going up.
[83] Housing prices have to come down.
[84] There's no way that housing prices can stay up as high as they are.
[85] And so if you're talking about buying a house because you just get married, you have two kids, and you need a place to live, guess what?
[86] You've got to buy a house because you're going to buy that house and then you're going to stay there for 10 or 15 years.
[87] But if you're somebody that's got money and you're saying, well, I'm going to buy real estate.
[88] Be careful because the price of real estate is directly related to the cost of money and the cost of money is mortgages, right?
[89] Unless you're going to pay cash for your house.
[90] But if you pay cash for your house, say you buy a piece of property and you want to pay cash rent.
[91] So you plug down $700 ,000 and you buy a house.
[92] Great.
[93] Interest rates are still going up and guess what?
[94] the price that house is still going down.
[95] So you're still on the house.
[96] That's great, but you're going to be able to ride out the cycle, and that cycle is probably going to be at least a decade.
[97] All right, Kenny, we're just about out of time, but thank you so much for coming on.
[98] That was Kenny Polkari, managing partner at Case Capital Advisors.
[99] Coming up, the January 6th committee focuses on what Trump did and did not actually believe about the 2020 election results.
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[103] Day three of the January 6th committee hearings was scheduled for today, but in the last second change, it's been delayed to Friday.
[104] Monday's testimony was dedicated to trying to show that former President Donald Trump knew that he lost the election to Joe Biden, and yet went forward with his claims to the contrary anyway.
[105] Here to discuss the hearing is columnist David Marcus.
[106] David, good morning.
[107] So what were the big revelations on Monday?
[108] Good morning.
[109] There weren't any major new revelations, no smoking guns, so to speak.
[110] But we did see video testimony from people in Trump's circle, including former Attorney General William Barr, campaign officials Bill Step in and Jason Miller, even Ivanka Trump, testifying that they told Trump he lost.
[111] Barr put it more colorfully, calling Trump's claims BS.
[112] And that his attempts to overturn the election would be futile.
[113] What was less clear is if Trump actually believed any of them.
[114] So why does the committee feel that whether Trump believed he lost is so important?
[115] What aspect of the case do they say hinges on that?
[116] Right.
[117] So an important question for the committee is whether Trump was simply exhausting his legal and political options to seek a true and secure outcome or if he's trying to thwart a legitimate election.
[118] And it's a complicated question at two members of the committee, Chairman Benny Thompson and Representative Jamie Raskin, voted not to confirm electors in previous presidential elections, won by Republicans, just as many GOP members did at Trump's urging in 2020.
[119] So the Democrat -led committee has to prove that in this case, Trump was not acting in good faith.
[120] Now, there was one salacious moment during the testimony where we heard that a drunk Rudy Giuliani was at the root of Trump's effort to overturn the election.
[121] Tell us about that.
[122] Stepian and Miller both testified that on election night, Mayor Giuliani was intoxicated and insisting that Trump declare victory, even though the results of the election were still unclear.
[123] Giuliani spokespeople deny that he was drunk, but it's a story that kind of cuts both ways because it shows that Trump did have advisors urging him to fight to use every measure he could, even while others urged him to concede.
[124] And yesterday the committee announced that the next hearing, which was supposed to be today, is now postponed to Friday.
[125] Do we know why?
[126] The committee cited technical difficulties, which is odd because they hired a TV producer.
[127] There was also a small dust -up yesterday between Liz Cheney who says they will pursue a criminal referral and the chairman, Benny Thompson, who said they wouldn't.
[128] So there's some confusion.
[129] Cheney has said that the next few hearings will be about Trump's efforts to influence Mike Pence.
[130] state officials and the Department of Justice.
[131] And again, the central question is whether Trump was asking them to find and reveal a true outcome or if he was knowingly trying to get them to investigate lies.
[132] Do we have any sense yet of how these hearings are playing with the public?
[133] Is there evidence that it's persuading audiences?
[134] We don't really know yet.
[135] Last Thursday's primetime event netted 20 million viewers for perspective.
[136] State of the Union in 2022 got about 38 million.
[137] The Oscars got about five.
[138] So it's a decent amount of viewers.
[139] But this has been a big story for well over a year.
[140] It's unclear how many persuadable Americans there are.
[141] It's possible the person the committee is really trying to persuade is current Attorney General Merrick Garland, who it seems they would like to see pursue criminal charges against Trump.
[142] But there's no indication as of yet that that's likely.
[143] All right.
[144] Well, we're going to continue to monitor.
[145] David, thanks for reporting.
[146] Thank you.
[147] That was Daily Wire contributor.
[148] The PGA Tour is under pressure as 17 tour players have defected to a new Saudi Arabian -backed Golf League, which held its first tournament last week in England.
[149] Here to discuss the controversy over the new league is sports writer and Crane & Coe co -host David Cohn.
[150] Welcome on, David.
[151] Thank you so much, John.
[152] So, David, this story is more interesting, the more I've learned about it.
[153] First, tell us about this new league.
[154] Sure, so Live Golf is a new startup professional golf tour, funded by Saudi Arabia.
[155] be a sovereign wealth fund.
[156] It's also headed by former world number one Greg Norman, which is interesting.
[157] And, you know, it's offering deals that the PGA tour is really struggling to counter.
[158] It really is sparking some intense debate among the golf community.
[159] Yeah, seems that way.
[160] It's kind of hard to believe.
[161] Are professional golfers really leaving the PGA tour to join a startup?
[162] And if so, why?
[163] Well, to answer the first question, yes, some are leaving 17 thus far.
[164] And the count is continuing to rise.
[165] To the second question, that's easy money.
[166] The Saudis are throwing very large sums of cash at these tour players, John.
[167] Many have even signed guaranteed contracts.
[168] Phil Mickelson and Dustin Johnson, both, for example, signed multi -year agreements estimated to be in the nine -figure range.
[169] I mean, that's unheard of on the PGA tour.
[170] Remember, players only make money on the tour if they perform well and make cuts into the weekend.
[171] Right.
[172] So here in this new league, they're getting guaranteed money rather than win -based prizes.
[173] Yes.
[174] How was the PGA Tour responded to these defections?
[175] Well, PGA Tour Commissioner Jay Monaghan has suspended all 17 players, which means they're no longer eligible to compete in PGA Tour events.
[176] Now, whether or not these players ever return and can compete on the tour again, right now that is an unanswerable question.
[177] Right.
[178] So they're blocked from playing.
[179] What is the PGA's rationale for banning them?
[180] Well, the PGA Tour thinks they have the greatest golf product in the world.
[181] And so this is a competitor.
[182] They don't want their players to be competing, especially in something that's backed by Saudi Arabia, where many think that the Saudis are trying to, quote, unquote, sports wash some of their human rights violations.
[183] You know, I can't speak too much to that.
[184] A lot of these players have had issues with the PGA Tour.
[185] Greg Norman being one of them and Phil Mickelson as well.
[186] So some of them are just trying to apply leverage to a PGA tour that they think hasn't looked out for players for a long time.
[187] time.
[188] But either way, the PGA Tour cannot allow their players to compete for a competitive golf league.
[189] Right.
[190] So there's a financial motive and maybe also a human rights element here.
[191] Sounds like it, yes.
[192] Now sponsors are obviously a key part of the game.
[193] How are they the sponsors responding?
[194] Many are cutting ties.
[195] I mean, Bryce and Deschambeau and Phil Mickelson have both lost sponsors, Rocket Mortgage being the latest this past weekend for Deschambeau.
[196] One facet of this, which is really interesting to keep your eye on, is how long will the Saudis operate this new tour at a net financial loss if they are unable to get any sponsors or TV deals of their own.
[197] Right.
[198] But meanwhile, as you said, the PGA has lost 17 players already.
[199] Are we witnessing the end of the PGA tour?
[200] I don't think so.
[201] I believe the fate of the PGA tour will come down to the major championships, which the tour does not control, remember.
[202] So if the powers that be who run those tournaments decide not to intervene in this escalating conflict between the tour and live, then the PGA Tour is in serious trouble because all the best players in the world naturally will take advantage of the earning potential live offers while still competing for the prestige that's provided by golf's oldest tournaments.
[203] Right, that makes sense.
[204] But if on the other hand, the majors remained aligned with the PGA Tour and refused to let these defecting players compete at their tournaments moving forward, then I believe you will continue to see the world's best golfers side with the PGA Tour.
[205] Well, it'll be fascinating to see which direction this goes.
[206] David, thanks for coming on.
[207] Thank you so much.
[208] That was Sports Writer and Crane & Coe co -host, David Cohn.
[209] Thanks for listening to Morning Wire.
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[213] Thanks for waking up with us.
[214] We'll be back tomorrow with the news you need to know.