Latest / Financial Survival Network / Pivot, Pivot, Pivot - The Fed Has No Choice -- David Wright #5909

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Pivot, Pivot, Pivot - The Fed Has No Choice -- David Wright #5909 · Financial Survival Network

0:00
Hey, like they can say nice things and the economy is doing this or
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that, but they're going to have to lower rates. That's the upshot.
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The pivot's coming, right, Yeah, the pivot's coming. I think though,
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if they indeed, if the bezz indeed treat the balance sheet, continue
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to shrink the balance sheet, which I suspect they're going to continue doing,
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decrease the monetary supply them too. I think that great decreases most likely could
0:26
occur somewhere out about a year from now. You're listening to Carrie Let's Financial
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Survival Network, where you get valuable information you just can't find anywhere else to
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thrive in today's trying times. You need the Financial Survival Network now more than
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in gift Financial Survival Network now more than ever. And welcome you are listening
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to watching the Finance shall Survival Network. I'm your host, Carry Luttz.
1:02
Well, well, all the Fed hath spoken, and as it's spoken clearly,
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do you know what the Fed did yesterday? Sometimes doing nothing is a
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lot more than doing something. And here to discuss it with us right now
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is David Wright financial expert and proprietor of the Right Financial Group. You find
1:26
him at Right Financial Group dot com. Hey, questions comments for myself or
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David or anything else about the economy, stocks, etc. Just shoot me
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an email kl at carry Lutz dot com. David, it's great to have
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you on the show. So the Fed has spoken, or shall we say
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they haven't spoken. They didn't raise hikes where you surprised, not at all.
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I think most of the economists predicted it would be a nothing for or
1:53
this time. The big question is, you know, what are they going
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to do with the remaining two meetings of this year. Carry they've kind of
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gotten themselves into this predicament that if they raise rates anymore than they do right
2:07
now, they risk even more demand destruction and bank stress, you know,
2:10
things that are going on. They felt right now that the economy is in
2:14
a good enough place. Things are kicking along. We had a recent IPO
2:20
of ARM that came about that went pretty well. Doing well. The economy
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right now in and up and down state. As far as consumers look concerned,
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I think they're looking at the auto strike. I think they're looking at
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consumer debt. I think they're looking at a host of bigs carry that are
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of concern to them. Raising rates right now could just break the backs of
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banks and consumers as well as companies. And there are future rings right all
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right. So it's better to do nothing than to keep pushing it. What
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of the banks, the regional banks, past few days, we're getting hit
3:00
pretty hard. Seems like maybe they're bouncing back now, but they seem to
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be a key indicator. The other indicator is that the FIDS emergency discount,
3:09
the window borrowing program to keep the banking sector afloat every week has been going
3:16
up. So to this uneducated eye here, David, it really looks like
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things maybe aren't that good in the banking financial sector. Well, they certainly
3:28
are, because you know, a base at to mark their books, mark
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to mark with their loans really are worth at any given time. And with
3:36
mortgage rates being doubled up the read they were two and a half years ago,
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mortgage activity is greatly slowed down. I don't think my own situation where
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either we're trying we're trying to downsize, Ryan size unintended, but we're trying
3:53
to size and we want to make it a cash deal from our house to
3:57
another house so if we want to upgrade a little bit more from where we're
4:02
at right now. And finally, as any of it, who wants to
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finance it at seven point two nine percent? Right, So all those things
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are playing into bank profits. Profitability of banks are under question. But I
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think the bigger question is, you know, how will the FEDS continue to
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manage the sticky inflation. Inflation has made progress, Gary Almanta. Progress has
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come from nine point one last year, as I'm sure your notes will indicate
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down to you roughly now. I think on the CPI aadline c guy was
4:38
three point seven core CPI drop a little bit, but the bends really a
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little bit more pc which comes out at the end of September, but it's
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it's still pretty sticky. I think what the feats they're going to have to
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do is this. I don't see them raising hypes in November or even raising
5:00
anything in December. Oh way you see them doing is shrinking the balance sheet.
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I think what they're going to have to do is all this four point
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by trillion they print it during COVID stimulus, all of those treasury bonds they
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purchased to inject cash into the autonomy as those treasuries start to mature, they're
5:20
not going to reissue them. They're going to let them roll off. They're
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going to diminish the monetary supply from all the federal reserve banks, which in
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effect will cause inflation, I think, to drop just by tidening the money
5:34
supply. So I think that's going to be how they regulate the inflation and
5:41
the future, not buying, you know, war rate hikes. But there
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are plenty of people on the other the other side, and say, I
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think you're wrong. I think they're going to have to continue to addie because
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you look at oil right now, over ninety around ninety a barrel. You
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know that's going to get all the American silvers with gas prices next year when
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they go to the blow, that's gonna shrink their budget. It's gonna end
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companies. It's gonna hit the trickle down board all manufacturing and retail when gas
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prices go back up. And no, he started on this find that change
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in ev movement. It just all this stuff works in in this one big
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ball that it's going to be hard to get out of. Right. Well,
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yeah, and not to mention the deficits running a couple trillion a year,
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and we got a surplus of the treasury debt on the market, and
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the dollar keeps going up. We got war is a war in Europe and
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potentially in other places. So this balancing act, it seems like the Feds
6:46
balancing a lot of plates. They're like that guy the contortionist, spinning a
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quickly all over the place. But in some points the plates are going to
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break, right, Yes, I think so. And in this part of
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it, you know the by toonomics of the presidential stance on a lot of
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the things that are going on right now with climate change. I'm not against
7:12
climate change, amount against that movement, but to completely transition over to evs
7:19
in California by twenty thirty two, it just isn't reasonable to do that.
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We need fossil fuels to create arts for those evs. And if if we're
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under a situation where the current administration says they're pro union, if they're really
7:35
pro union, but they're back at the EV market, we know that forty
7:40
percent less workforce is required in EV manufacturing and that trivial down effect to all
7:47
the suppliers of EV vehicles. So all of this stuff is going to contribute
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to I think a lot more unappointed demand to structure. So you know,
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we're we're, we're I think, in an heap of trouble for the moment.
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It's a balancing act, for sure, it's a balancing act. So
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M two. All right, velocity of money keeps going down, that's generally
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a bad thing because it's as a deflation. Yeah, inflation was at nine
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point something percent, but you and I both know, David, the actual
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inflation rate, the real inflation rate substantially higher in double digits, right,
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of course, well into double digits. I don't have the exact number,
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but I can prove it to you. I mean, when the fetus has
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made that uh what I want to call it a brain fart of saying that
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the inflation is transitory. Come on, ATA is never transitory. It's permanent.
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It's what the rate of acceleration is. Yeah. Now, maybe the
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rate of acceleration has decreased from nine to three point seven or four percent.
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But the reality is I have clients that are doing very well, and i'd
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ask some clients that are just getting by following no one's an issue inflation being
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the problem for them and the monetary supply shrinking. Just yesterday, I'd had
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somebody walk in with their four oh one K account and they said, I
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need to cash this in. I have a house of bayment I gotta make
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I got to cash this in. I had somebody else I had an appointment
9:24
with on Zoom yesterday, Carrie. There is something that is ready to retire
9:30
there. They're they're near their retirement and they've got over fifty thousand credit card
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goals and no way of getting out of that unless they use their retirement accounts
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to pay them all. Consumer debt four oh one K loans and credit card
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increasing credit card debt is it's gonna kill everyday Americans. So people really need
9:52
to wise up and get lean and mean right now if they want to have
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any kind of a hold of a happy Yeah. No, it couldn't agree
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animal or couldn't agree with you more. I mean, they like they can
10:07
say nice things and the economy is doing this or that, but they're going
10:11
to have to lower rates. That's the upshot. The pivot's coming, right,
10:15
Yeah, the pivot's coming. I think though, if they indeed,
10:18
if the BEZ indeed treat the balance sheet continued to hrink, the balance sheet,
10:22
which I suspect they're going to continue doing decrease the monetary supply them too.
10:28
I think that great decreases most likely could occur somewhere out about a year
10:33
from now September twenty twenty four. Although the big five hundred down elephant in
10:41
a room is holm. Is this new aw strike gone this tomorrow? Horany
10:45
at noon is when it's supposed to be, you know, some sort of
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it's being resolved that I don't see it being anywhere near it are my hometown
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where right financial group is located to leo is Homemost Stilantis, which is your
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company of largest you've done? Why out? Yeah, they're nowhere near every
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mid year nowhere near all right? So what are you supposed to do as
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an investor, as a saver all these things? How do you short a
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course for survival and even prospering in these uncertain times? Here, David,
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great question, Carrie, and I think the number one thing that to do
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in their own because it is look at what the purpose of your money is,
11:31
for purpose over performance, Because if you shoot for Gormans, you're going
11:37
to try to find that stock that can appreciate what you may guess long.
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So what you need to do is decide not the money's for if it's or
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going most of my clientsy, or which is for income. We find things
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right now that because inflation is still steady and the treasury one year treasuries are
11:54
at by plus percent, we have people taking advantage of walking in higher short
12:03
duration things that can get them through this time frame where their money can be
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you know, have some principal protection and have some interest paid, also using
12:13
things that generate interest and dividends from bond, bond like securities or birds,
12:18
things like that of that nature that even if there's shifts, if the fence
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at bind wand and the bets do raise intertras if bond and bondelike instrum istumus
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drop in value, the same income, so the process can survive financially survived
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through that type horizon where the bond drops in value but they still get the
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same payment of income through that time variated the bond matures at its value and
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the bond like securities act similar to that. And then the third thing is
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to take advantage of any long term plays of money. You know, you
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don't meet for income. You know, look around and some of the mega
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tech stuff and see if there's anything they need. Can buy out a data
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because this idea, that arm that just came out showed the market that ideas
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aren't dad. It's been about sixteen months since they've been any sort of IPOs
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in the market. So those are the three tips. Money you need for
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income and stability, short buried securities, treasuries, short term accounts in bond
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bond like instruments to provide you dividends and interest. Also, one I didn't
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mention dividend stocks. There's a lot of dividends spots out there now. Dividend
13:37
stocks haven't done as well this year next to new probo stocks because of the
13:41
AI movement, but the dividends stocks normally will outperform in this sort of an
13:48
environment because you're getting paid everywhere. You're really a nice quogly dividend cha that's
13:52
going to go back into your checking accounts. So those are the best stits
13:56
that I can give. And you know what, I've been in the business
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long enough with this gray or you can tell that I know it works.
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All right, here's a question for you. We don't recommend stocks here.
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I'm not a financial advisor like you. But I've been watching Verizon. It's
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yield is up to eight percent. It's got really healthy cash flow. I
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mean, they're the number one or number two cell phone provider in the United
14:22
States. Right market maybe is not as much of a growth market as it
14:28
was, but they've also got their fiber network in the Northeast. Do you
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go for that dividend there? What are your misgivings about it? Put it
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that way, I would not be a layer necessarily in Verizon fullheartedly, although
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I would probably hold a smaller position. I think we old a smaller position
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in Verizon. Got to be careful purity that you don't chase a dividend.
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But sometimes you might get yourself into a you know, a dividends trap or
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you're you're just going for a eye dividend. But I think Verizons one of
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those companies, like some of the megattacks said. You know, I think
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they're got a too big to fail. I think they're going to be fine
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long term, but the eight percept dividend is a Sir Lincoln Colling, do
15:13
you think they'll cut the dividend? I mean, they really can't cut the
15:18
dividend, can they? Well, that's what rate hikes do. Right,
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every two money and more above its out of this every time interest free try
15:26
the value of all financial assets degrees. So obviously, if if there's no
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rate of heights, all of these cumpanies not does Verizon, They're gonna have
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to cut their their rage. They already did it. That's the mist.
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A year ago they cut dividends so that the fear of able could come in
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and look like, you know, oh we in our dividend, we're on
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darket. Yeah, but you cut the dividend last year, you know,
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by several or sin so that you knew you'd be able to match it this
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year. So on yesterday, Gary, those things will you know, have
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to all self adjust if rates go ar, APO cancer produce all right,
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I like it all right, So it's a right Financial group dot com.
16:07
Make sure you click the link in the show notes of this interview on Financial
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16:15
Got one going out any moment now, David, Always a pleasure,
16:19
Thanks for stopping by, as always a pleasure. Thanks for listening to carry
16:23
Lets's Financial Survival Network your solution to today's trying times For the latest, go
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