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Supply chains: COVID-related absenteeism is hitting ‘China in a big way,’ Jim Bianco says

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Bianco Research President Jim Bianco joins Yahoo Finance Live to discuss how Omicron is more of a risk to the supply chains than people think and how high demand could lead to greater inflation.

Video Transcript

ALEXIS CHRISTOFOROUS: Well, most market experts that we talked to believe that inflation is the biggest risk to the economy, but Jim Bianco of Bianco Research says Omicron is actually a bigger risk this year than people may think. And Jared Blikre got into this with Jim yesterday. I know, Jared, you had your webinar, and this was something you touched on sort of towards the end of your conversation. Tell us what else he had to say.

JARED BLIKRE: Mainly on DeFi, decentralized finance, but we did get into some interesting topics about the Fed, China. He has some really interesting insights into Omicron and why it's still probably mispriced, at least the risk, the headline risk, in the market. So let's take a listen to that.

JIM BIANCO: It's not necessarily a health risk, but what it is is that anybody that tests positive can't go to work for 10 days. And there-- we've got huge absenteeism. The production of the world-- and that's really coming home in China in a big way because China has a zero COVID policy. They lock everybody down and lock you in your house for weeks on end until COVID goes away. Production is going to wane, but our demand for stuff is not. Same demand, less production, higher prices, even more inflation.

So what I'm most worried about as we go through in traditional is I'm at the top of that list with inflation, but the one that finished on the bottom underscores that idea. If we're not worried about health concerns, I'm not going to stop ordering Amazon boxes. I'm not going to stop ordering stuff that I want.

JARED BLIKRE: I hear you completely.

JIM BIANCO: But they're going to have a harder time fulfilling that.

JARED BLIKRE: Yeah, and there you go. We're concerned about inflation right now. If China shuts down, what do you think that's going to do to the supply chains, all those goods not reaching us? Not the base case here but definitely a huge headline risk that we should keep an eye out for, Alexis.

ALEXIS CHRISTOFOROUS: Yeah, not a lot-- not enough people are talking about that but definitely a good point that Jim Bianco brought up. Thanks for bringing that to us, Jared Blikre. We'll see you a little later on.

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