Latest / Financial Survival Network / Consumer Confidence and the Broader Economy - Anthony Saccaro #5847

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Consumer Confidence and the Broader Economy - Anthony Saccaro #5847 · Financial Survival Network

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  Yeah, absolutely. And you look at the VIX. The VIX is down
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  dramatically as well too. There's no fear trade indicated there, and with the
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  jobs as high as they are, kind of goes back to that. I
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  think at the lunchpin of the economy is the jobs. The fact that there
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  are tons of jobs available for every worker that's out there. As long as
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  there are jobs or as long as there are jobs available, what it's doing
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  is it's causing workers to that you know, to still make their money and
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  to still spend money. You're listening to Carrie Letts's Financial Survival Network where you
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  more than ever, And welcome. You are listening to the Financial Survival Network.
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  I'm your host, Kerry lets Well. Good news today. Consumer confidence
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  is rising and levels are high. Even the consumer expectation index is up a
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  bit. What does it mean? What does it mean? Are we going
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  to avoid a recession? Our good friend Anthony Sakara is with us now,
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  Anthony, great to have you back on So consumer confidence, I don't know
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  if it's a lagging indicator or a leading indicator, or if it's a meaningless
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  indicator. What's your take on it? Yeah, Kerrie, thank you for
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  having me back. Always great to be here. Yeah. I tend to
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  look at consumer confidence as more of a lagging indicator because consumers tend to think
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  about what's happened, not necessarily about what's going to happen. When it comes
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  to just general consumers, there's a lot of reasons to be optimistic about what's
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  going on with the economy. You know. The question that everyone wants to
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  know is are we going to have a recession? Is it going to be
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  a soft landing hard landing if we do have a recession. I think it
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  was just a month about and a half ago or so that the odds of
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  a recession were like forty percent, and I think now they've come down to
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  something like twenty percent or maybe twenty five percent, but they've dropped dramatically.
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  And you know, I think it was just six months ago or so that
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  the question was not whether we were going to have a recession, but how
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  you short and shallow or how deep and long? And now it's come to
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  a point where the recession ers have been talking about recession for so long that
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  it's it's entirely possible we avoid one completely. And I, you know,
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  hope that that's the case. And I think that is what consumers are focused
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  on, and you know, in the fact that we may not have a
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  recession, and that's based on what's happened so far in the past. Right,
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  So the europe is obviously in a recession. Now, they've got the
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  Ukraine War going on, We've got Putin's almost to almost coup, and so
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  much going on. But I don't know what's your take. I mean that
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  that's gotta have a lot to do with consumer expectations and consumer confidence, right
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  what does I also think it's gonna be short lived. I mean, you
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  have to remember that when this whole Russian war started, you know, it
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  was all the media all the time about that, and I last at about
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  a week, and after about a week, it kind of all went away,
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  and then consumers forgot and it hasn't been reflected in the stock market.
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  Right. The stock market, you know, has now officially out of bear
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  market territory, which I think that's even important to know that that doesn't need
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  We're back at the record highs, so I think a lot of consumers don't
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  know that. You know, we dropped twenty percent and then getting out of
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  a bear market means we increased twenty percent, but that doesn't bring us back
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  to where we were. That brings us only to, you know, sixteen
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  percent back of where we were. But the stock market is recovered or is
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  in the process of recovering, and that's despite everything that's going on Europe.
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  I think what is the reason that the stock market has on in there is
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  because even though the economy is kind of weakening around the edges, the labor
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  market is still strong. And it really boils down to the labor market.
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  It boils down to the fact that even though again that's the weakening it is,
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  I think there's still seven jobs. I'm sorry, I think there's still
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  one point seven jobs available for every worker. That's come down a little bit
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  in the last six months, but there's still a lot of jobs available.
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  And as long as there's jobs available, as long as people are working,
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  that's going to keep demand high. And as long as the demand is high,
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  people are still going to keep you know, the people are still going
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  to keep spending money, and that's going to keep inflation elevated. So there's
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  a lot of people that think that the unemployment market has to come down dramatically,
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  or I should say, the employed have to come down the unemployment the
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  unemployment rate has to go up dramatically in order for a recession to occur.
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  And we're just not seeing that. And I don't really see the ampatus for
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  that happening. Yeah, it will, it's so rates they paused, the
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  fen paused, but they aggressively paused. Whatever the heck that me in Santhony.
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  But you know, today we found out also US new home sales uh
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  exploded higher in May. They were up twenty percent year over year. Uh.
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  Is that like another little piece of evidence that says maybe the recession you
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  know, imagine if they threw a recession and nobody came. Yeah, it's
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  it's not just a little piece of the puzzle. Home prices are a major
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  piece of the puzzle. And if you'd have asked me a year and a
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  half ago, uh, you know, when when the Fed funds rate was
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  at you know, twenty five basis points you know that. You know,
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  if you'd have told me that over the next year, the Federal fund rates
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  is gonna, you know, raise from a quarter twenty five basis points up
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  to five, you know, five point two five, and that home sales
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  are going to go up and prices are going to increase twenty percent, I
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  would have thought you were nuts. That's just the opposite reaction of what really
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  should be happening. And I'm going to suggest that that's probably the number one
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  fear of the FEDS is home sales continuing. If we have another home sale
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  explosion, that's going to cost the FED to apt to raise rates more aggressively,
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  and who knows what the end result of that is going to be.
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  That's that's probably that's a critical factor and looking at whether we're gonna have a
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  recession or not. Okay, So I will point you to Lenar. I
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  don't know if they're the largest out there, but certainly among the largest home
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  builders out there, and you know, as of today, they're at a
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  five year high. It's pretty darn remarkable, you think, with everything that's
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  gone on to one five twenty one, and when we go back to twenty
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  nineteen, it was at fifty. It peaked back in December of the twenty
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  twenty one over at one hundred and sixteen. Now it's at one hundred and
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  fifty. You know, just really came up in the past couple of months.
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  So if any stocks are going to be sensitive to interest rates and the
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  economy is going to be these home builders, isn't it. Yeah. And
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  the fact the other statistics that you just quoted in one of the big company,
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  you know, largest home builders in the world. Uh, you know,
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  the fact is that that's just more proof that the housing market is strong,
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  and high interest rates and strong housing markets don't go together. Um.
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  But that's that's kind of the way it's been over the last few years too.
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  When you think about even other asset classes that normally correlate opposite each other.
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  Think about stocks and bonds, right, Stocks and bonds usually correlate opposite
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  each other, but for the last few years they've kind of been acting in
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  lockstep. Um. And you know, anything with housing interest rates, interest
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  rates go up, housing goes down, demand goes down, bill prices go
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  down. But that's not what's happening right now. So we're in a pretty
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  weird environment. And that's leaving a lot of people wondering what do we do.
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  Do we, you know, go into the stock market now if all
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  of a sudden we think that, you know, there's only twenty percent chance
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  that we're gonna have a recession, do we do we overload the boat and
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  get into the stock market now, go overweight? Do we wait for a
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  better time, knowing that we've been waiting already for a year for a better
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  time and it hasn't come, You know, what do we do? That's
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  the question that a lot of people are are asking themselves at this point.
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  Yeah, and that's a good question. I mean, all the major home
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  builders are at five year highs now, and like who would think? And
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  then we're looking at gold. Gold, you know, was hit an all
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  time record and now it just basically it's fading. It probably going to go
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  below nineteen hundred again. So the fear trade seems to be abating, doesn't
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  it. Yeah. Absolutely, And you look at the VIX The VIX is
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  down dramatically as well too. There's no fear trade indicated there, and with
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  the jobs as high as they are, kind of goes back to that,
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  I think at the lynchpin of the economy, is the jobs, the fact
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  that there are tons of jobs available for every worker that's out there. As
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  long as there are jobs or as long as there are jobs available, what
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  it's doing is it's causing workers to you know, to still make their money
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  and this still spend money. And if you're an employer like I am,
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  not only you know, does a job market make it harder to get employees,
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  but it also makes it harder to keep employees. Got my payroll has
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  gone up dramatically over the last year and a half because I understand as a
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  lot of business owners do that. I would, you know, rather pay
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  someone more than lose them to another opportunity and then have to go hire someone.
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  That's a more expensive proposition. And you know, but what that does
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  is that becomes a permanent part of inflation. You know, early on with
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  the inflation battle, the question was is this inflation transitory or you know,
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  is it going to be permanent? And of course the Fed got that wrong
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  a long time ago. I mean, now we're talking about a couple of
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  years ago. But the answer is both. You know, even if inflation
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  comes down back down to two percent, which you know, that's that's a
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  struggle that's a battle. But even if that happens, the inflation it's already
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  built in, that's not going anywhere. The races I've given my employees that
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  have to get passed onto our consumers, that's not going anywhere. Inflation may
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  come down to two percent and this and the job market over the next couple
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  of years may loosen up. But I'm curious, you know, I would
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  I'm not curious. I know how the conversation would go if I went to
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  one of my employees and go, hey, remember all those big races you
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  got, Well, you know, inflation is now, Lord, we gotta
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  we gotta take it back, so it's work to work. Great, Yeah,
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  it's just not going to go all show up on Monday when you pull
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  that sense on Fridays, say, have a good look at this paycheck.
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  It's the biggest one you're going to get for the next year. Right,
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  That's exactly right. And so so that part of inflation, it's permanent.
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  I will never get that back, will never recover from that. You know,
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  and I'm a small firm, But think about the grocery stores, think
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  about you know, the service industries out there. You know that that you
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  know have higher level management and so on. The reality is inflation is here.
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  What what's happened is already baked in. And maybe we slow down the
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  rate of inflation going forward, but we're not going to take back the inflation
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  that's already occurred for a couple of years. Agreed, agreed. So it's
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  built into the base, and so is the debt for that matter, and
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  debt is going nowhere. But uh so, these are the things I guess
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  you really need to think about. So you've got to remain defensive as far
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  as more interest rates go. But you can't throw out the baby with the
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  bathwater as it is, right, Yeah, one percent. And you know,
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  the question that I'm asked a lot when I'm doing TV interviews and my
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  own clients is what do we do at this point? And I like,
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  you know, to focus on what you can count on, and that is,
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  if you have an income portfolio, income in the form of interest and
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  dividends that's a high quality portfolio, then we know that over the next decade
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  you can count on your interests and dividends, and that might be the only
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  thing you could count on. But if you're getting three to four percent interest
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  and dividends over the next decade. You know, right now that sounds like
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  well three to four percent, what's that? I mean? I could get
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  a you know, I get a one or two year treasury for you know
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  from four percent, or you know, a CD for five percent for one
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  year. But at some point in time, the economy is going to stop
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  in the Federal Reserve is going to lower interest rates. Interest rates are not
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  going to go up forever. Inflation is not going to stay high forever.
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  There's always these epps and flows, and I don't know whether it's six months,
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  whether it's two years, but at some point they're going to lower interest
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  rates. And if you're stuck in a one year treasury bill at five percent
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  and that matures, you're now going to be hurting yourself. So the reality
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  is is that is that you know, I think if you set yourself up
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  for long term income, long term interest and dividends, it's a great time
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  to capitalize on the fact that you can get ten plus years at five percent
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  maybe six percent on you All right, I see your point. You know,
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  there are people among us. I felt the same that the company,
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  the country in the world is just calling the drain. But maybe it's all
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  just part of the cycles. We're in a nasty one right now that hopefully
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  we're gonna snap out of. But does the dollars stay the reserve currency and
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  what effect does that hand on the whole scheme? Yeah, um, you
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  know, you're absolutely right. The dollar, of course has been strong,
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  that's weakened a little bit. I'm not concerned that it's gonna be uh dethroned
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  as the world's reserve currency anytime soon. Now that doesn't mean that you know
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  that that that decades down the road, that can happen. It's possible and
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  no one knows for sure. But now you start to get into worst case
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  scenarios up you know, and people will ask me the question as well too
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  as a financial advisors. You know what happens if the dollar becomes worthless?
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  Um? And you know then then at some point in time it becomes a
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  silly conversation where you're gonna have to deal with it. I don't have the
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  answer for what happens if the dollar goes away, the dollar becomes worthless,
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  uh. And so that's that's like asking a police officer, what are you
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  going to do to protect me if Russia decides to nuke me, you know,
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  nuke the city. I mean, there's there's just no answer at some
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  point. But it's not something I'm concerned with that. There's so many countries
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  that um that own government bonds at this point. Uh, you know,
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  oil is traded in US dollars. The simple fact is that it's so intertwined
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  that if the US dollar went away, um, it would be it would
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  be massive upheople. And I don't think there's one person that has the answer
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  to you know, what the what the solution would be. I think if
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  there was any one answer at all, it'd probably be real estate because if
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  everything went where then you know what do you need? You need roof over
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  your house and food? Right, Yeah, that would help, That would
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  help? All right? Well, Anthony, always enlightening speaking with you.
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  Can you just tell us where we find you and how we connect with you
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  on the web and where we find your podcast? Yeah? Absolutely so.
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  My website is Anthony Sekharo dot com Anthony Sekharo dot com and it's s acc
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  A R O two CS one R Anthony Sacar dot com. That leads you
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  to all my other websites that we have, so all right, and the
• 15:13
  link is in the show notes This interview on Financial Survival Network dot com.
• 15:18
  While you're there, why don't you click subscribe so you can be among the
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• 15:35
  Really appreciate you coming on. I've got a question for Anthony or myself.
• 15:39
  Shoot me an email k l at Karry Lutz dot com. Anthony,
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  we'll talk to you again soon. Gary. Thank you for having me,
• 15:45
  Thanks for listening to carry Lutz's Financial Survival Network, your solution to today's trying
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  times. For the latest, go to Financial Survival Network dot com. Financial
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