Latest / Financial Survival Network / Inflation Ain't Going Away -- David Wright #5856

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Inflation Ain't Going Away -- David Wright #5856 · Financial Survival Network

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With inflation being sticky, I think that the rate hikes that the Feds have
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instituted for the past you know, fourteen months or so aren't really being reflected
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yet in what you know, people are feeling. I think that things are
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going to get much worse when we get to the summertime, when we start
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looking at small businesses and renegotiating their loans, etc. I think that the
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market's going to have, you know, some challenges ahead. Even though these
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numbers are coming down with the CPI, I think that there's gonna have to
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be some more pain in the economy before we feel, you know, that
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things are under control and we can have a robust recovery. You're listening to
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Carrie Let's Financial Survival Network, where you get valuable information you just can't find
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anywhere else to thrive in today's trying times. You need the Financial Survival Network
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your free newsletter in gift Financial Survival Network now more than ever, And welcome
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you are listening to watching the Financial Survival Network. I'm your host, Jerry
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Luttz. Well, we got a CPI number out today that it has led
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to markets going higher, but also gold and silver taking off a bit.
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Bitcoin kind of shrugging it all off, what does it mean? Well,
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we have got for you eight thirty five years veteran of the financial wars here
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it's been advising, helping you retire or quite some time. And his name
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is David m Right. David, it's great to have you on the show.
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And so we got a CPI number out point two percent, So is
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that worthy of celebration? Actually, Carry, thank you for having me on
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the show. It's a pleasure to be here with you. Actually, the
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CPI number came out today at three percent. That was the headline CPI number.
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The core CPI which is excluding a food and energy, was still at
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a sticky kind of a four point eight percent. The Fed mandate they want
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to get core PCI and CPI actually down to about two percent, So we're
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a little bit away from that right now. We're at four point eight percent
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on that core CPI number, But frankly, I think they're waiting for Feds
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are waiting for the end of the month when the personal consumption expenditure the PC
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index comes out. That's a little bit better reading. Carry, that's what
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they look at a little more carefully to see what those numbers are going to
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show. So I'm going to be one of those people that's a little more
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cautious and bearish than maybe some of your other guests. Right so, point
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two percent month over month, but an annualized rate of three percent, as
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long as you don't eat and as long as you don't put gas in your
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car, right absolutely, I'll tell you what. Living on the boots down
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here and in Ohio, we certainly see a lot of people walking out of
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the stores with a lot less groceries under their under their arms just because of
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that. And in what I'm seeing here is that with inflation being sticky,
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I think that the rate hikes that the Feds have instituted for the past you
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know, fourteen months or so aren't really being reflected yet in in what you
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know, people are feeling. I think that things are going to get much
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worse when we get to the summertime, when we start looking at small businesses
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and renegotiating their loans, etc. I think that the market's going to have,
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you know, some challenges ahead. Even though these numbers are coming down
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with the CPI, I think that there's gonna have to be some more pain
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in the economy before we feel, you know, that things are under control
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and we can have a robust recovery more so than just fueled by AI,
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which is kind of leading the charge right now with a lot of different stocks
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in the SNPN, the NASTAC. Well, it's probably AI stocks that are
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being recommended by AI. There's probably no human intervention in it, all right.
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I love it absolutely absolutely, and why not. It's in about every
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sector, about every area of the economy you can find it, So why
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wouldn't it recommend itself with AI? You and I won't even need need to
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be here and probably twelve to twenty four months, right right, Well,
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it'll just buy itself too, It'll put out the recommendation and then it'll just
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trade it and talk about trading your own book here. Huh yeah, no
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kidding. I mean that that's a concern all of us. Ad where does
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this lean to? It certainly can be used for good, It's certainly an
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intuitive thing. But at what point does it create more harm than good.
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It's been estimated that AI could end up replacing far more jobs than robotics could
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have ever replaced. Back when you know the auto industry instituted all that stuff.
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Well, I can think of what is it five hundred and thirty five
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jobs that I would like to see it replace, because it's sure can't be
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worse than the people we send up to the capitol. Ken it, amen,
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I tell you what this, this spend spend spend has got to end
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ai at Ai government. What a what a wonderful thought that would be.
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Let's work our way through that one. If we have an election. Yeah,
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if AI was running things, we probably wouldn't be spending all this money
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in the first place. There'd be a lot more people alive and taxes would
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be a fraction of what they are now. Who knows, Maybe a I
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would have gotten rid of the Central Reserve too while they were at it,
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but b you never know. But in the meantime, we've got a PPI
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number coming up to what's the whisper number there? The whisper number is that
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it's going to be a little bit under the est of it, that the
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producer price index is probably going to be running a little bit lower than it
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was the previous month. Things are, you know, prices are coming down.
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A shelter, obviously, is a major component of the Producer Price Index
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and of the CPI, and those numbers are coming down. But I know
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that in our area a lot of people are just kind of staying put in
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their homes. They're not a lot of new house activity other than these young
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bucks that are building these houses at six and seven percent mortgage rates, or
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if you've got somebody older that's trading their homen for all cash deal on something
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else. But the PPI probably a whisper number is it's going to be a
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little bit lower estimate than what they expected. Okay, So there's two indexes
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that I pay attention to when it comes to what stuff really costs. Two
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numbers. Number one is the cost of a Thanksgiving dinner because that's always the
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same year and year out. The grand sauce goes up, the mushrooms or
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the stuffing goes down, but it's always the same basket. There's no hoodonic
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adjustment, there's no nothing. And then Fourth of July barbecue, which this
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year said the bill was down three percent from twenty twenty two, but it's
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still fourteen percent higher than prices two years ago. I don't know where they
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had this barbecue at. They must have been given away free hamburgers wherever it
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was, because mine went up absolutely same here. Maybe they went to the
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Nathan's Hotdog competition and got some free ones there. Who knows. Oh,
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I don't want to think about that. That's a bad visual. Seriously,
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Yeah, that's true. These numbers are just off the wall that seemed to
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have no relationship to reality. They just don't, you know. Carry you
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look at what our country produces in gross domestic product actually at one point three
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percent finalized number for the first quarter. But you compare that to our debt
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national deficit, which is currently at thirty two nearly thirty two trillion dollars.
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We're out of whack, you know, in that front. And you can't
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possibly measure what the effect of a zero at a five hundred basis point hike
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means to the rest of this year. I've seen estimates that AI could take
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us up another year fifty percent before the end of the year, or could
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reduce us down negative ten or twenty percent before the end of the year.
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There's just too much of a disparity here. I think that the Feds could
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very possibly hike again at the end of this month. If they do,
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they may hike again in September. Those things are going to create more pain.
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I think that the whole mandate was that they were supposed to get unemployment
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I thought up to about five percent. But unemployment in our country is still
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around three point six, right, three point six three point seven percent.
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So to me, I don't see that the Feds have created enough demand destruction
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yet. Although inflation is coming somewhat lower, it seems to me that we're
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gonna you know, there's some work to do yet. So what's an investor
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supposed to do when you got this silent, stealthy tax that effectively devalues the
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value of your by killing your purchasing power. What are you telling your people
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after all your experience? I think what's good is you and I both remember
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the inflationary sixties and seventies and early eighties. You would, I know,
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these things go in cycles. They don't just go away because the FED decided
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to raise rates one day and they've happened to follow through on their threat.
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Right, These things can go on for a decade or more. They really
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can carry they. I think that the reality of the situation is people have
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to come back to basics and understand what their money is for. If if
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if I'm working with someone, I'm just just this warning. Had somebody come
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in who you know, has a couple of million dollars part of the money
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they want to buy a lay cone with it. So if that's the case,
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then we ride the wave of AI We ride the wave of growth stocks.
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We watch it diligently and make sure that we don't get caught in a
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whipsaw effect. But by a large the majority of our my clientele, they
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rely on their four o one ks, their IRA accounts for income. So
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I know that a lot of growth advisors promote growth as an inflation hedge,
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right, but to me, getting caught in a down draft unexpectedly is the
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worst inflation hedge that you could have. So the reality of the situation that
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I see is creating income streams from the investments that you have. Having both
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you know, high dividend paying stocks that create some growth in years where growth
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can be made, and at the same time finding those companies that can be
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sustained beyond that with income dividends of five to seven percent. Knowing what your
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money's for and making sure that your pensions and so also security have that additional
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amount of cash flow that's reliable and repeatable from your investments is I think the
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way to go for the future. Okay, so, oh, can you
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give us some examples, not necessarily recommendations, because everybody's situations different, but
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what are some good dividend payers out there? Now, we've got quite a
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few. I'm not going to get in any names and stock picking here.
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They can go to write Financial Group dot com and get some of those names
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and recommendations, but you know, buy and large most of the AI stocks
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that are out there aren't paying much in the way of dividends, and we
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certainly want to stick with those companies that are, you know, consumer staples.
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We know that so far this year, consumer discretionaries still leading the way,
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but to me, that's going to be short lived. I know there's
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a lot of people at the airports, still a lot of people that are
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going on cruises and staying in hotels. But I think at some point we
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look at the debt consumer debt, what's going on there, people are are
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going to realize that they got to slow down the spending. So those companies
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that favor you know, repeat steady staples. Yeah, so you got your
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P and G type. You know, right, you got to have your
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razor blade. Women got to have their cosmetics. No matter what the economy
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is doing, they're going to be buying him. Right. Yeah, there
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you go. Exactly defensive names, basically absolutely, I know. So the
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defensive name is still the same. I mean, at one time Coca Cola
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was really a defensive stock, and now like less people with the sugar and
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all that. Cigarettes used to be defensive because you were addicted to the stuff.
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But less and less people smoking cigarettes, and so what are some defensive
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sectors let's put it that way. Well, I think the like you had
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mentioned already, consumer staples like like toiletries, like some of the comfort stocks
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like like Coca cola, like things that are you know, normal day to
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day items that people enjoy. People are still going to spend on themselves in
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that manner, and I think long term that's what people are going to have
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to get back to. What about healthcare that the administration, the current occupant
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in the White House is making all sorts of extravagant claims going to bring the
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price of healthcare down. If he can manage that, that would be the
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first time in my life and probably your life that that ever occurred, that
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place to be. Certainly one of the area is to be healthcare with with
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the itonomics plan, looking into negotiating drug prices with Medicare, I think is
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an excellent thing. I mean, just the cost of prescription drugs has just
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gone out, way out of control. So definitely if that can happen,
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that's certainly a good thing for the health sector. Hey, when when I
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come back in my next life, I am going to be a prescription drug
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benefit management company because they could just pick numbers out of the air and that's
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what you pay. You have no possibility to less. You go to Canada
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or Mexico, and that's got problems there too. I mean, a person
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purchased drugs, prescription drugs in Canada that were a third price of what they
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were in the US. In Mexico, I have my reservations about it.
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We'll just leave it at that. But other countries, like in Western Europe,
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you can do it. So obviously we're getting shafted here big time.
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But the taxpayer pays for everything in the end, regardless what they get back.
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Very very true. And while we're on that topic, Kerry, why
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don't we make a list of all your prescription meds for the month and then
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we can go out there and see if we can get get that lowered for
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you. I'll do it like I'll let them bid on me, like they
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do for like home improvement sites. I'll put I'll put it out there.
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I say, if you want my business, how cheap, you're gonna make
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it for me? Right right, exactly exactly. So how much do you
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think the twenty twenty four election cycle is gonna play in on the markets and
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all this crazy stuff that we're going on. I mean, you've been around
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the block is many years as me, maybe maybe a couple more, maybe
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a couple less. But you know there's always one big loser in every election
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in my lifetime, and that's the American people. So we're gonna have volatility
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because hey, people love traders love volatility. You want olatle markets if you're
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a trader, that's how you make money. Yeah, and nobody knows what's
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going on anyway, so volatility rules, and then afterwards we'll still have volatility,
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right, Yeah, that's it's an ever ending stream. And I guess
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there's a sucker born every minute too, to catch im, don't forgive absolutely
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all right, Well, hey, David, really appreciate you coming on sharing
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for decades of wisdom with us, because you got to put this stuff in
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perspective. Election cycles. We've both been through an inordinate number and hopefully we've
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got a bunch more ahead of us. And how much really changes after an
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election not very many of them, that's very, very true. And the
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Feds have more work to do. They've got quantitative tightening. They stopped that,
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by the way, during COVID, right they were they were reducing their
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allan sheet with all the money that was lent to the economy, but they
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stopped doing that. You know, you even if they pause on rdikes this
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year and start qt start quantity fighting, you know, there's more pain that's
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going to be inflicted on the economy. I think in the in the next
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year. We may not see this drop until till next year. But you
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know, just as sure as you're born, I think it's going to happen
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at some point. Yeah, it's got to play itself out. And we
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don't even talk about the banking crisis and the fact that they've basically it's QE.
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They're just calling it a different name. It's the Emergency Discount Window Bank
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Fund to bail out banks, right, and it's all their own fault.
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But next time we have you on, assuming that not much has changed,
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probably a couple more banks will have failed by the next time you come on,
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I would imagine, or will be merged in quotes. Yeah, which
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isn't a great thing. Yeah, you've got four now it's up to forty
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regional banks. Every time they rate ike or even leave things the way they
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are. Yeah, you're decreasing the net interest margin that these banks can make.
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They're they're they're squeezed, they're pinched with three percent loans on the books,
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and they got to pay out their customers four and five percent, so
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they're robbing Peter to pay Paul. That's just not going to be good long
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term for regional banks. And I think that the FEDS, I think,
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before they do anything else, and it remains to be seen what they'll do
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this month later, I think they're gonna have to really, really really look
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at the banking situation because if they if they if they're saying the FDIC is
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going to cover everybody's deposit, I think they're smoking dope on that. I
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mean, I really believe that they've got to shore up the banking industry because
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of people whose faith in that, I think we're all screwed. Hey,
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well, you know, fractional reserve banks is all about confidence, and the
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root word of confidence is con. You know that's true. So eventually the
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con game comes to an end, as all Ponzi's must. But they've been
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pretty good at keeping it to running here for one hundred, one hundred ten
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years now, David, You know, yeah, ten years, so obviously
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it's deteriorated over time, but at some point you get to the end of
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the road where they can can't be kicked down any further. Anyway, Hey,
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tell us again where we find you. Best way to connect with you
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on the internet, David, got a right financial group that's w r IGHD
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Financial Group dot com. You can log in there and see all about us,
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who we are, some of our my other appearances, what our philosophies
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are, what we think is going to happen, because you know, we
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have this big crystal ball there. But no, not really. But if
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you come to our website you'll see a little bit more about us and what
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makes us tick. Well, experience many times is better than a crystal ball
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or as good as you know, especially when you have decades of it and
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you're not tied up in the emotions of the time. Hey, don't forget.
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There's a link in the show notes to this interview right to David's site
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on Financial Survival Network dot com and just click it. While you're there,
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sign up for your free newsletter David. Always a pleasure. Thank you so
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much for joining us. Thank you Carrie for having me, Thanks for listening
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to Carrie Let's Financial Survival Network, your solution to today's trying times. For
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the latest, go to Financial Survival Network dot com. Financial Survival Network now
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more than ever,