Latest / Financial Survival Network / Economic Concerns Spark Stagflation Fears - Dale Smothers #6199

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Economic Concerns Spark Stagflation Fears - Dale Smothers #6199 · Financial Survival Network

• 0:00
  Speaker 1: America is going to come out stronger. But in the
• 0:03
  Speaker 1: short term, this potential trade war as well as potential
• 0:07
  Speaker 1: deportations could not only hurt inflation, but also the labor market,
• 0:12
  Speaker 1: and we could start to hear this nasty word that
• 0:15
  Speaker 1: we talked about just a few years ago called stagflation,
• 0:19
  Speaker 1: and man and that happens, things could look a little
• 0:21
  Speaker 1: bit different.
• 0:22
  Speaker 2: You were listening to Carrie Leutz's Financial Survival Network, where
• 0:25
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• 0:29
  Speaker 2: to thrive in today's trying times. You need the Financial
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  Speaker 2: dot com and get your free newsletter and gift. Financial
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  Speaker 2: Survival Network now more than ever.
• 0:49
  Speaker 3: And welcome you are listening to and watching the Financial
• 0:53
  Speaker 3: Survival Network.
• 0:54
  Speaker 4: I'm your host, Carrie Leutz.
• 0:55
  Speaker 3: Well, who can believe we're just five weeks after the
• 1:00
  Speaker 3: election and the good news keeps coming in. We just
• 1:04
  Speaker 3: got the PPI numbers, and Dale Smothers is with us
• 1:09
  Speaker 3: now to help us make some sense of them. So
• 1:13
  Speaker 3: the CPI PPI both coming in higher than expected?
• 1:19
  Speaker 4: What does that really mean?
• 1:20
  Speaker 1: Hey, Gerry, a little bit higher than we were hoping,
• 1:23
  Speaker 1: But Honestly, this is not out of what I was expecting.
• 1:28
  Speaker 1: It's higher than what the experts were expecting. But I
• 1:31
  Speaker 1: do think that we will start to see inflation rearing
• 1:35
  Speaker 1: its ugly head once again. As you've heard me mentioned
• 1:38
  Speaker 1: many times on this show, I think that this could
• 1:40
  Speaker 1: be more of a balloon landing than an actual soft
• 1:44
  Speaker 1: landing that the FED is hoping for. We've got a
• 1:47
  Speaker 1: lot of headwind that we're facing here, Carrie, a lot
• 1:49
  Speaker 1: of headwind coming with the administration, and in my opinion,
• 1:52
  Speaker 1: I think it's something that needs to happen. America is
• 1:55
  Speaker 1: going to come out stronger. But in the short term,
• 1:58
  Speaker 1: this potential trade will or as well as potential deportations,
• 2:03
  Speaker 1: could not only hurt inflation, but also the labor market,
• 2:07
  Speaker 1: and we could start to hear this nasty word that
• 2:10
  Speaker 1: we talked about just a few years ago called stagflation,
• 2:13
  Speaker 1: and man, and that happens, things could look a little
• 2:15
  Speaker 1: bit different.
• 2:16
  Speaker 3: Well, some would argue that we've already had stagflation for
• 2:19
  Speaker 3: the past several years.
• 2:21
  Speaker 1: Very true, very true, and I would not argue against them.
• 2:25
  Speaker 1: You know, the numbers come in with these reports, Carrie.
• 2:29
  Speaker 1: You've heard me say this several times as well. They
• 2:31
  Speaker 1: come in. We trade on the news and we sleep
• 2:35
  Speaker 1: on the revision. You know, whether or not this one
• 2:38
  Speaker 1: gets revised higher than what we saw is one thing.
• 2:42
  Speaker 1: But you're going to have analysts who look at this
• 2:45
  Speaker 1: is a point two percent month over month rise in PPI,
• 2:50
  Speaker 1: and they're going to analyze this and then annualize that
• 2:54
  Speaker 1: point too and say, oh, that's right at our target.
• 2:57
  Speaker 1: But the reality is, if we look year over year,
• 2:59
  Speaker 1: we have seen a immediate surge. What did it come
• 3:02
  Speaker 1: in at three point four percent year over year in
• 3:06
  Speaker 1: PPI numbers? That is that is an almost unfathimable number
• 3:11
  Speaker 1: for us to then be cutting in. You know, that
• 3:14
  Speaker 1: number all together is not bad, but to say that
• 3:16
  Speaker 1: the Fed is going to continue to cut in spite
• 3:19
  Speaker 1: of that number, that would be shocking. And unfortunately, I
• 3:22
  Speaker 1: think that's what we're going to see.
• 3:23
  Speaker 3: Yeah, well, Powell wants to keep his job right, right,
• 3:27
  Speaker 3: and he's going to have to do something to a comedy.
• 3:31
  Speaker 3: But what about DOGE and what about the push to
• 3:35
  Speaker 3: eliminate needless governmental functions? If they're only halfway successful and
• 3:41
  Speaker 3: they can knock off a trillion, that's going to make
• 3:44
  Speaker 3: a big difference.
• 3:44
  Speaker 4: Isn't it.
• 3:45
  Speaker 1: This is going to make a huge difference. And one
• 3:47
  Speaker 1: of the things that it's hard to quantify is the
• 3:50
  Speaker 1: amount of growth that we'll see. The spending will be cut,
• 3:54
  Speaker 1: Hopefully growth follows with tax cuts, growth follows our GDP
• 3:58
  Speaker 1: continues to grow. We've got a mess we've got to
• 4:00
  Speaker 1: clean up here, Carrie. As you're aware, we talked last
• 4:03
  Speaker 1: about how much we spend and our debt to GDP ratio.
• 4:07
  Speaker 1: It's off the charts. This Doge move is one that
• 4:11
  Speaker 1: is long overdue if you ask me, and I think
• 4:15
  Speaker 1: they've got the right people looking at these budgets. I
• 4:18
  Speaker 1: do think that there will be some people who are
• 4:21
  Speaker 1: all about cutting government spending until it affects them and
• 4:25
  Speaker 1: then the real trench warfare sets in. So we could
• 4:28
  Speaker 1: see a little bit of a line and a division
• 4:33
  Speaker 1: of sides once we see what Doge is going to do.
• 4:37
  Speaker 1: But the theory behind Doge is one that I would
• 4:40
  Speaker 1: support hands down.
• 4:43
  Speaker 3: Yeah, And I mean people are making fun of it.
• 4:46
  Speaker 3: Maybe they're not taking it seriously, because if you were
• 4:50
  Speaker 3: alive when Ronald Reagan was president, they promised all these
• 4:55
  Speaker 3: initiatives and everything else.
• 4:57
  Speaker 4: Do you think this one's going to succeed.
• 5:00
  Speaker 1: I do when you talk about making fun of and
• 5:02
  Speaker 1: thinking it's not serious, it reminds me of a candidate
• 5:05
  Speaker 1: back what would that have been in twenty and fifteen
• 5:08
  Speaker 1: that announced his candidacy and eventually one because America is
• 5:13
  Speaker 1: sick and tired of being the bad end of a deal,
• 5:18
  Speaker 1: this trade war is going to help. It's going to
• 5:21
  Speaker 1: feel bad at the beginning. It is war. Unfortunately, no
• 5:23
  Speaker 1: one dies, but a lot of paychecks will be impacted,
• 5:28
  Speaker 1: and it won't go as far, perhaps for a period
• 5:30
  Speaker 1: of time, will come out the victor with that doze
• 5:33
  Speaker 1: is another one that I think is led by a
• 5:36
  Speaker 1: man who is headstrong and could care less what people
• 5:39
  Speaker 1: think of him.
• 5:41
  Speaker 3: You think, yeah, I know, kid. So how much do
• 5:44
  Speaker 3: they have to cut? And what can they really cut?
• 5:46
  Speaker 3: If you can't cut Social Security and Medicare, although you
• 5:50
  Speaker 3: can cut the fraudulent and the improper payments, but if
• 5:56
  Speaker 3: that's off the table, that's the majority of the spending
• 5:58
  Speaker 3: in the economy, right sure.
• 6:00
  Speaker 1: Sure, And when you look at the numbers, it begins
• 6:03
  Speaker 1: to it begins to get difficult to see where they're
• 6:06
  Speaker 1: going to cut trillions of dollars of spending. But you know,
• 6:10
  Speaker 1: it's very much like a drug and once once, once
• 6:14
  Speaker 1: you've had it, it can't get off of it. And
• 6:16
  Speaker 1: these politicians are are addicted to that spending. If you
• 6:21
  Speaker 1: think twenty years ago, if we could have done without it,
• 6:24
  Speaker 1: then surely we can get to the point where we
• 6:27
  Speaker 1: don't need it now. A lot of the government you
• 6:30
  Speaker 1: would think, you would think, and a lot of the
• 6:32
  Speaker 1: government spending is going to immediately impact people in ways
• 6:35
  Speaker 1: they never imagine. And again that's where that pushback is
• 6:38
  Speaker 1: going to come from. But if social security is not
• 6:41
  Speaker 1: on the table, which I am one hundred percent with
• 6:43
  Speaker 1: the clients that we work with, Carrie, you can imagine
• 6:46
  Speaker 1: social security is a big part of what we plan around.
• 6:49
  Speaker 1: I'm not a big advocate of touching social security. It
• 6:52
  Speaker 1: needs reform, it needs to probably be on the backs
• 6:55
  Speaker 1: of those who are say under the age of fifty,
• 6:58
  Speaker 1: and maybe it is means tested to a certain degree.
• 7:02
  Speaker 1: But if we get into cutting things, I think social
• 7:05
  Speaker 1: security should be off of the table. With that being said,
• 7:08
  Speaker 1: we know that we've got to be a strong country,
• 7:10
  Speaker 1: so our war budget should be off of the table
• 7:12
  Speaker 1: as well. Our defense is spending. But here's what I think,
• 7:17
  Speaker 1: go ahead carry.
• 7:18
  Speaker 3: I don't know about that, because look, the half the
• 7:23
  Speaker 3: money that the Defense Department spends is probably wasted here right, This.
• 7:29
  Speaker 1: Is where I was actually getting to that. I think
• 7:31
  Speaker 1: a lot of a lot of fluff is in the
• 7:35
  Speaker 1: defense spending budget. A lot of people have probably made
• 7:38
  Speaker 1: a whole lot of money carry, as you can imagine,
• 7:41
  Speaker 1: by charging four hundred times what a bolt should cost
• 7:45
  Speaker 1: or what a piece of scrap metal should cost. This
• 7:48
  Speaker 1: type of expense can be weeded out of the Defense
• 7:52
  Speaker 1: Department and we're still strong. You think about advancements like
• 7:56
  Speaker 1: technology enhancements in war and defense that could also help
• 8:01
  Speaker 1: a ton when it comes to staying a strong country,
• 8:04
  Speaker 1: keeping our border secure. But cutting some expenses here's a
• 8:08
  Speaker 1: big one. Though you asked me, what can we cut?
• 8:11
  Speaker 1: I think one of the things that we need to
• 8:12
  Speaker 1: stop doing is assisting countries who don't like us or
• 8:16
  Speaker 1: don't really need the assistance. This type of shipping money
• 8:21
  Speaker 1: overseas when we have people in North Carolina who are
• 8:25
  Speaker 1: still feeling the effects of the hurricane, I don't think
• 8:27
  Speaker 1: a single dollar should be sent to countries to fight
• 8:30
  Speaker 1: their battles until North Carolina and Florida looks as if
• 8:34
  Speaker 1: it never happened.
• 8:36
  Speaker 3: Yeah, yeah, I couldn't agree with you more and so
• 8:40
  Speaker 3: so you know, but they're having the spending wordy to
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  Speaker 3: the very end, isn't it.
• 8:48
  Speaker 1: This is true, That's exactly right. And when the music stops,
• 8:54
  Speaker 1: I'm afraid that the market might not react favorably to
• 8:57
  Speaker 1: it either, you know, thinking of the PPI if the
• 9:02
  Speaker 1: thinks do this, if the Fed continues to cut, which
• 9:05
  Speaker 1: is again what they expect to do, I've even heard
• 9:07
  Speaker 1: talks that they're considering a cut in March as well,
• 9:10
  Speaker 1: already predicting that the market is buying that up. They're
• 9:14
  Speaker 1: already taking that into effect. And you know this very well, Kerrie.
• 9:18
  Speaker 1: They have already priced in December's price cut. So if
• 9:22
  Speaker 1: a price, if a rate cut, becomes a rate pause,
• 9:26
  Speaker 1: well now we see an immediate reaction in the market,
• 9:29
  Speaker 1: and that reaction sets people up who have been predicting
• 9:32
  Speaker 1: recession or been predicting a pullback. This is it, and
• 9:36
  Speaker 1: so it becomes a fulfilled prophecy that was self fulfilled
• 9:39
  Speaker 1: and it's all a house of cards if we're not careful.
• 9:42
  Speaker 4: All right, So what is the investors supposed to do here?
• 9:45
  Speaker 3: The market? The market's looking a little toppy right now.
• 9:48
  Speaker 3: It hasn't done much as of late. Do you think
• 9:54
  Speaker 3: that's going to be the.
• 9:56
  Speaker 4: Future here or what? Yeah?
• 9:58
  Speaker 1: I do think we'll see. We'll see this constant bounce
• 10:01
  Speaker 1: off of the support and restraint until eventually something breaks through.
• 10:05
  Speaker 1: Either we have this potential growth opportunity that we hope
• 10:09
  Speaker 1: comes from a Trump presidency, or we could see the
• 10:13
  Speaker 1: markets start to take a nose dive if inflation rears
• 10:15
  Speaker 1: its ugly head, and God forbid, the Fed has to
• 10:18
  Speaker 1: now start hiking rates once again to combat that side
• 10:23
  Speaker 1: of their dual mandate. What an investor should be doing
• 10:26
  Speaker 1: from our perspective, we deal with a lot of people
• 10:28
  Speaker 1: who are close to retirement, and here's where we have
• 10:30
  Speaker 1: to be. If we're close to retirement, losses hurt us
• 10:34
  Speaker 1: more than gains help us. In this environment, we have
• 10:37
  Speaker 1: to be conservative in our approach. I like buffered strategies
• 10:42
  Speaker 1: if we want to still participate in market upside but
• 10:45
  Speaker 1: have some downside protection. There are buffered ETFs that buy
• 10:49
  Speaker 1: packaged options for us that give us upside participation and
• 10:53
  Speaker 1: some downside protection along the way. I like those for
• 10:55
  Speaker 1: an individual who still wants to have equity exposure if
• 10:59
  Speaker 1: you're considering setting on the sidelines, though, you know, a
• 11:01
  Speaker 1: four and a half percent type of money market, it's
• 11:04
  Speaker 1: not a bad place to be to see how things
• 11:07
  Speaker 1: shake out. So a cash like position isn't terrible. Gold
• 11:11
  Speaker 1: is touchy right now. Gold, in my opinion, could be
• 11:14
  Speaker 1: a place that you could lose a lot of money,
• 11:16
  Speaker 1: or you could see a little bit of capital appreciation.
• 11:18
  Speaker 1: I don't expect it to grow much. I don't expect
• 11:21
  Speaker 1: gold stock to appreciate much, but we could see volatility
• 11:25
  Speaker 1: in gold, especially perhaps bitcoin. I know you're a big
• 11:29
  Speaker 1: fan of bitcoin. If bitcoin ever becomes an actual alternative
• 11:33
  Speaker 1: to gold, we could see people flooding out of gold
• 11:36
  Speaker 1: and into bitcoin, which would help the bitcoin and crypto investors.
• 11:40
  Speaker 1: But those who are looking for the security and stability
• 11:43
  Speaker 1: of gold, you're aware of this. Over the last couple
• 11:46
  Speaker 1: of months, we haven't felt that stability in the gold crisis.
• 11:50
  Speaker 3: All right, So so interesting, interesting situation here. You got
• 11:57
  Speaker 3: a wonder of you know, this situation seems to be unsustainable, right.
• 12:04
  Speaker 1: I hate to use that word, but it is. It's
• 12:06
  Speaker 1: certainly going to have to change in some capacity. Things
• 12:10
  Speaker 1: can't continue to go up and again if you're an
• 12:13
  Speaker 1: investor who is considering retirement anytime soon. The number one
• 12:17
  Speaker 1: rule of investing carry me and you both came up
• 12:20
  Speaker 1: with this. You bilo and you sell high. If you
• 12:25
  Speaker 1: are considering sales, now is the time when the music stops,
• 12:30
  Speaker 1: it could be too late. I like to think of
• 12:33
  Speaker 1: the game that we used to play as kids, Musical Chairs, Right.
• 12:36
  Speaker 1: Musical Chairs is that game where eventually chairs start disappearing
• 12:39
  Speaker 1: and the music stops, and you've got to find a seat.
• 12:41
  Speaker 1: I think more people have gotten involved in the game
• 12:44
  Speaker 1: recently than ever before because of how the market has
• 12:47
  Speaker 1: increased month after month after month, and like you said,
• 12:51
  Speaker 1: good news continues. But when more people get in than
• 12:54
  Speaker 1: there are seats and the music actually stops, for our investors,
• 12:59
  Speaker 1: we just want to make sure we're really close to
• 13:00
  Speaker 1: a seat and we're safe to play for the next
• 13:03
  Speaker 1: round of the game.
• 13:05
  Speaker 4: So you don't think we're going to get tired of winning.
• 13:08
  Speaker 1: Well, I don't think we get tired of winning internally,
• 13:11
  Speaker 1: but I do think that with one pull it could
• 13:14
  Speaker 1: be a house of cards.
• 13:15
  Speaker 3: What is your opinion, could be a house of cards
• 13:19
  Speaker 3: or like you said, a balloon landing.
• 13:21
  Speaker 1: Absolutely yeah, And in that analogy. The balloon landing is
• 13:26
  Speaker 1: what we think is going to be solved ends up
• 13:28
  Speaker 1: seeing the nose of the plane starts to rise. And
• 13:32
  Speaker 1: it's all about the inputs in the controls that you
• 13:34
  Speaker 1: put in there as to whether or not you land
• 13:36
  Speaker 1: safely or you crash all together. I don't yeah, I
• 13:41
  Speaker 1: don't have a faith in the bed.
• 13:43
  Speaker 3: We could say it would be a partial parachute opening, right,
• 13:50
  Speaker 3: doesn't kill you, doesn't kill you, but you're not going
• 13:53
  Speaker 3: to land softly and bounce on your butt. You could
• 13:57
  Speaker 3: get injured in the process.
• 13:58
  Speaker 1: Right, you might have some bumps bruises along the way, Yes, sir.
• 14:01
  Speaker 3: All right, Hey, Dale, Just tell us where do we
• 14:04
  Speaker 3: find you on the internet. How do we connect with you?
• 14:07
  Speaker 1: Yes, sir, so our firm Ardismother's Wealth Management. You can
• 14:10
  Speaker 1: find us at rdswealth dot com. You can catch our podcasts,
• 14:14
  Speaker 1: the Retirement Matters podcast on any podcast streaming service of
• 14:18
  Speaker 1: your choice, railba to our website, sign up for our newsletter,
• 14:22
  Speaker 1: or shoot us an email.
• 14:23
  Speaker 4: All right, excellent.
• 14:24
  Speaker 3: Hey, The link is in the show notes of this
• 14:26
  Speaker 3: interview on Financial Survival Network dot com. While you're there,
• 14:31
  Speaker 3: well asked that you sign up for your free newsletter,
• 14:34
  Speaker 3: like sixty other sixty thousand plus other FSN members have.
• 14:40
  Speaker 3: And I've got a question for Dale myself. Shoot me
• 14:42
  Speaker 3: an email kl atcarrielots dot com. Dale, We'll talk to
• 14:46
  Speaker 3: you in real soon. Thanks, talk soon. Thank you, Kery,
• 14:49
  Speaker 3: thanks for listening to Carrie Let's this Financial Survival Network
• 14:53
  Speaker 3: your solution to today's trying times.
• 14:56
  Speaker 4: For the latest, go to.
• 14:57
  Speaker 2: Financial Survivalnetwork dot com. Financial Survival Network now more than ever,