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--:-- John Bickley: The S&P 500 officially slid into a bear market this week, adding to signs that a recession is coming soon. We speak to a Wall Street veteran who has some suggestions for the Fed and a dire warning for Americans.
--:-- Georgia Howe: If anyone thinks this is going to be over in two months or three months, you got another thing coming.
--:-- John Bickley: I'm Daily Wire editor-in-chief John Bickley with Georgia Howe. It's Wednesday, June 15th, and this is Morning Wire. 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.
--:-- Georgia Howe: I mean, that the claims of fraud were bullsh**. And, you know, he was indignant about that.
--:-- John Bickley: How much impact are the hearings having on the American public?
--:-- Georgia Howe: And the PGA Tour suspends 17 players after they join a new golf league backed by Saudi Arabia. We discuss the implications for the world's most popular golf league.
--:-- John Bickley: Thanks for waking up with Morning Wire. Stay tuned. We have the news you need to know. Again, text WIRE to 989898 and secure the gains you've made while you can.
--:-- John Bickley: On Monday, we officially entered a bear market as one stock index lost more than 20% of its value. The shift comes as producer costs continue to rise by more than 10%. In response to the crippling inflation, the Fed is poised to raise interest rates even more aggressively.
--:-- Georgia Howe: We speak to Kenny Palkari, managing partner at Case Capital Advisors, about what we can expect.
--:-- Kenny Palkari: Thank you for having me. It's a pleasure.
--:-- John Bickley: Now, we are increasingly hearing that a recession is unavoidable at this point and that that actually might be the only way to curb inflation. What would a recession look like with inflation? And when can we expect to see it?
--:-- Kenny Palkari: Yes, I do think the recession is coming. There are some people that tell you the recession is already here, while there are other people that tell you, You know, based on the definition, we're not here yet. I do think that it is coming. I think it's coming sooner rather than later.
--:-- Kenny Palkari: But look, the Fed started stimulating during the great financial crisis of 2007, 8, 9, 10, 11, and 12, right? When they started in 2009, when COVID hit, they added more stimulation. They added more free money. 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? They identified for years that 2% was going to be the target. Once inflation hit 2%, that was going to be the trigger point that was going to set the change in monetary policy.
--:-- Kenny Palkari: And in May of 2021, when the CPI went from 1.6% to 3.1% in one month, blasted right through the 2% range, they stood up and said, well, yes, we're above 2%, but guess what? It's transitory. It's not going to last. We're going to keep stimulating. 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.
--:-- Kenny Palkari: So now we're at this point where inflation is now running at 8.6 percent, according to CPI on Friday. I still think it's running closer to 10 percent if you're realistic about it, right? They take out food and energy because they say those two sectors are volatile. Damn right they're volatile. But guess what? Those are the two sectors that affect every single person every single thing Because how often do you go out and buy a new computer or how often do you go out and buy a car You don but you go every day to the food store You go every day to the gas station So you're shelling money out of your pocket every single day for things that you absolutely need.
--:-- Kenny Palkari: So one way or the other, is there a recession coming? Yes. I think it's coming later this year. I was under the, you know, I was one that thought it was originally coming in the first half of 2023. I absolutely think it's coming by the end of the year 2022. 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.
--:-- Kenny Palkari: Now, I don't know how old you are, and I don't know where you were in 1979, 1988. You won. I was 18 years old, just getting out of high school, going to college, and inflation was running at 10.5%. Unemployment was 13%. And Paul Bulger, then Fed chairman, jacked rates up to 21 percent. Why? Because he had to absolutely kill inflation and in the process, kill the economy, right? The economy spun into a recession. It was not pretty. People lost their jobs, but they killed inflation. I'm preparing for a crash landing and hoping for a bumpy landing. That's what I'm kind of hoping for.
--:-- Kenny Palkari: But one way or the other, it's going to be a hard landing. The definition of hard is going to be your own definition. I think it's actually going to be very hard because I think that they've way overdone it.
--:-- John Bickley: Now, a lot of millennial listeners might be wondering what this will mean for housing prices. Can we expect to see those drop?
--:-- Kenny Palkari: Here's what you have to understand. Housing is related directly to interest rates, right? Interest rates are going up. Housing prices have to come down. There's no way that housing prices can stay up as high as they are. And so if you're talking about buying a house because you just got married, you have two kids and you need a place to live, guess what? You 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. But if you're somebody that's got money and you said, oh, I'm going to buy real estate, be careful because the price of real estate is directly related to the cost of money. And the cost of money is mortgages, right? Unless you're going to pay cash for your house. But if you pay cash for your house, say you buy a piece of property and you want to pay cash. So you plug down $700,000 and you buy a house. Great. Interest rates are still going up. And guess what? The price of that house is still going down. So you're still on the house. 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.
--:-- John Bickley: All right, Kenny, we're just about out of time. But thank you so much for coming on.
--:-- Kenny Palkari: That was Kenny Polkari, managing partner at Case Capital Advisors.
--:-- John Bickley: Coming up, the January 6th committee focuses on what Trump did and did not actually believe about the 2020 election results.
--:-- Georgia Howe: You can get this show and all of the content you love wherever you are, all on the Daily Wire app. Even if you're not a Daily Wire member, you'll be the first to know what's trending with mobile notifications for the latest news, and you'll get content from all of your favorite Daily Wire shows.
--:-- John Bickley: Download the Daily Wire app and keep up with the facts no matter where your day takes you.
--:-- Georgia Howe: Day three of the January 6th committee hearings was scheduled for today, but in a last-second change, it's been delayed to Friday.
--:-- John Bickley: 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.
--:-- Georgia Howe: Here to discuss the hearing is columnist David Marcus.
--:-- David Marcus: Good morning. So what were the big revelations on Monday?
--:-- David Marcus: Good morning. There weren't any major new revelations, no smoking guns, so to speak. But we did see video testimony from people in Trump's circle, including former Attorney General William Barr campaign officials Bill Stepien and Jason Miller even Ivanka Trump testifying that they told Trump he lost Barr put it more colorfully calling Trump claims BS And that his attempts to overturn the election would be futile.
--:-- David Marcus: What was less clear is if Trump actually believed any of them. So why does the committee feel that whether Trump believed he lost is so important?
--:-- David Marcus: Right. 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. And it's a complicated question.
--:-- David Marcus: 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. So the Democrat-led committee has to prove that in this case, Trump was not acting in good faith.
--:-- David Marcus: 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.
--:-- Georgia Howe: Stepien 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.
--:-- David Marcus: Giuliani's spokespeople denied 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.
--:-- Georgia Howe: And yesterday, the committee announced that the next hearing, which was supposed to be today, is now postponed to Friday.
--:-- David Marcus: Do we know why? The committee cited technical difficulties, which is odd because they hired a TV producer. 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.
--:-- Georgia Howe: So there's some confusion. Cheney has said that the next few hearings will be about Trump's efforts to influence Mike Pence, state officials, and the Department of Justice.
--:-- David Marcus: 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.
--:-- Georgia Howe: Do we have any sense yet of how these hearings are playing with the public? Is there evidence that it's persuading audiences?
--:-- David Marcus: We don't really know yet. Last Thursday's primetime event netted 20 million viewers. For perspective, State of the Union in 2022 got about 38 million. The Oscars got about five. So it's a decent amount of viewers.
--:-- David Marcus: But this has been a big story for well over a year. It's unclear how many persuadable Americans there are. 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.
--:-- Georgia Howe: But there's no indication as of yet that that's likely.
--:-- John Bickley: All right. Well, we're going to continue to monitor. David, thanks for reporting.
--:-- David Marcus: Thank you.
--:-- John Bickley: That was Daily Wire contributor David Marcus.
--:-- Georgia Howe: 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.
--:-- John Bickley: Here to discuss the controversy over the new league is sports writer and Crane & Co. co-host David Cohn.
--:-- David Cohn: Welcome on, David. Thank you so much, John.
--:-- John Bickley: So, David, this story is more interesting the more I've learned about it. First, tell us about this new league.
--:-- David Cohn: Sure. So Live Golf is a new startup professional golf tour funded by Saudi Arabia's Sovereign Wealth Fund. It also headed by former world number one Greg Norman which is interesting And you know it offering deals that the PGA Tour is really struggling to counter It really is sparking some intense debate among the golf community Yeah, it seems that way.
--:-- John Bickley: Are professional golfers really leaving the PGA Tour to join a startup? And if so, why?
--:-- David Cohn: Well, to answer the first question, yes, some are leaving. 17 thus far, and the count is continuing to rise. To the second question, that's easy money. The Saudis are throwing very large sums of cash at these tour players, John. Many have even signed guaranteed contracts. Phil Mickelson and Dustin Johnson both, for example, signed multi-year agreements estimated to be in the nine-figure range. I mean, that's unheard of on the PGA Tour.
--:-- John Bickley: Remember, players only make money on the tour if they perform well and make cuts into the weekend. Right. So here in this new league, they're getting guaranteed money rather than win-based prizes.
--:-- David Cohn: Yes. How has the PGA Tour responded to these defections?
--:-- David Cohn: Well, PGA Tour Commissioner Jay Monaghan has suspended all 17 players, which means they're no longer eligible to compete in PGA Tour events.
--:-- John Bickley: Now, whether or not these players ever return and can compete on the tour again, right now, that is an unanswerable question. Right. So they're blocked from playing.
--:-- David Cohn: What is the PGA's rationale for banning them?
--:-- David Cohn: Well, the PGA Tour thinks they have the greatest golf product in the world. And so this is a competitor. 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.
--:-- John Bickley: You know, I can't speak too much to that. A lot of these players have had issues with the PGA tour, Greg Norman being one of them and Phil Mickelson as well. 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.
--:-- David Cohn: But either way, the PGA tour cannot allow their players to compete for, a competitive golf league. Right. So there's a financial motive and maybe also a human rights element here.
--:-- John Bickley: Sounds like it, yes.
--:-- David Cohn: Now, sponsors are obviously a key part of the game. How are they, the sponsors, responding?
--:-- David Cohn: Many are cutting ties. I mean, Bryson DeChambeau and Phil Mickelson have both lost sponsors, Rocket Mortgage being the latest this past weekend for DeChambeau.
--:-- John Bickley: 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.
--:-- David Cohn: Right. But meanwhile, as you said, the PGA has lost 17 players already. Are we witnessing the end of the PGA Tour?
--:-- David Cohn: I don't think so. I believe the fate of the PGA Tour will come down to the major championships, which the tour does not control, remember. 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.
--:-- John Bickley: Right, that makes sense. 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.
--:-- David Cohn: Well, it'll be fascinating to see which direction this goes.
--:-- John Bickley: David, thanks for coming on.
--:-- David Cohn: Thank you so much.
--:-- John Bickley: Thanks for listening to Morning Wire. We created this show to bring more balance to the national conversation. If you love our show and you stand with our mission, please consider subscribing, leaving us a five-star rating, and most importantly, sharing our podcast with a friend.
--:-- Georgia Howe: That's all the time we've got this morning. Thanks for waking up with us. We'll be back tomorrow with the news you need to know.
