Latest / Financial Survival Network / Are Rate Cuts the Cure for Economic Challenges? - Eddy Gifford #6083

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Are Rate Cuts the Cure for Economic Challenges? - Eddy Gifford #6083 · Financial Survival Network

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  So rates have been higher for longer. We have these rates that are kind
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  of kicking everybody's butt right now when it comes to commercial real estate, consumer
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  debt, like all of that type of stuff. And so even the FED
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  would have been like or cutting a quarter point today. Okay, so then
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  your credit card went from twenty nine point nine to nine to twenty nine point
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  seventy four. Right, It's not going to make a huge dedicate impact on
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  anything. But what it could do is it could say, hey, like
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  we understand the lag effects are kicking in. Let's slow them down before they
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  break everything. You were listening to, Carrie. Let'sa's financial survival Network where
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  now more than ever. And welcome you are listening to and watching the Financial
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  Survival Network. I'm your host, Carrie Lutz. Well, we got the
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  news today. The inflation is down. How convenient? And if inflation's down,
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  then how far off can rate cuts be? Well, our good friend,
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  Eddie Gifford is here to explain. Eddie, it's great to have you
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  back on. So when's the rate cuts coming? Well, not today,
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  we just found that out. You know, I was is that has been
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  coming in. We're starting to notice that it really looks like the lag effects
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  of the higher rates combined with the high inflation is really starting to make things
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  crack, maybe even crumble a little bit. So you know, if I
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  was Powell, I probably would have cut a quarter point today, but that's
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  not what happened. So, as you mentioned earlier, CPI still slowing right,
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  not going down, but still slowing, and we got beat today where
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  I actually came in lower than expected, so the market was super happy about
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  that. FED held rate steady and then but then you know they they basically
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  said that they're only projecting one cut this year. So it's a It's very
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  strange because for God like me that talks to main street USA every day and
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  sees people that are challenged right now, that doesn't seem to be the picture
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  that they're painting for us. Uh huh. So you know, I guess
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  what choice does he have? Figures to the elections probably cooked already. Nothing
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  you can do there, so might as well just do what's right for the
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  country or do what's wrong for the country. Well, I think if we
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  look back throughout history, but the FED has never got it right. And
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  you know, generally speaking, what happens is they wait too long to cut
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  and so by the time they cut, things break and crumble. And the
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  reason they're cutting is because something broke. And you know what we're we've been
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  seeing it for a while. We've seeing we've seen utilities outperforming, although they've
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  pulled back a little bit. We've seen gold outperforming. We're starting to see
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  treasuries outperform again. We're starting to see all these like flickering risk off signals.
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  But of course, you know, everybody keeps telling me, no,
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  the sign is different, it's time, it is different. And then in
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  two years we're going to look back and be like, oh my gosh,
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  all the signs were there. Why didn't why didn't anyone do anything? What
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  was going on? So it just feels like we're barking up that same tree
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  that we're always barking up, and consumer's going to end up being the one
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  who gets hurt by it. Mm hmm, Well do you think that rate
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  said the cure for all that all that ails us here, No, because
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  that there's already been I mean, think about it. So rates have been
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  higher for longer. We have these these rates that are kind of kicking everybody's
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  butt right now when it comes to commercial real estate, consumer debt, like
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  all of that type of stuff. And so even the FED would have been
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  like or cutting a quarter point today. Okay, so now your credit card
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  went from twenty nine point nine to nine to twenty nine point seventy four.
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  Right, it's not going to make a huge dedicate impact on anything. But
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  but what it could do is it could say, hey, like, we
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  understand the lag effects are kicking in. Let's slow them down before they break
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  everything. And that's just not what's happening that. You know, the the
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  problem with being like overlay data and as you get up in this situation where
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  the data has to show that things are bad or you know, abysmally bad
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  before you do anything, well, by the time that happens, it's too
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  late to cut. It's too late to do these things. So I think
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  that they've already waited too long. And you know, obviously the fear is
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  the inflation factor we're seeing that slow. It's still not you know, heading
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  down to two anytime soon. But you know, we can get it down
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  to two or one or zo would be a delation ravent where everything pops and
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  we see this significant correction in the stock markets and we're prime. I mean,
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  it's easy to look at it and say, hey, this is a
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  bubble. It feels like a bubble, and you know, but how much
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  further can inflate? Your guess is good as mine. But when it pops
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  can to be ugly. Hey, when it pops, it's gonna pop puff.
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  So so you're sticking to the thesis gold, you know, silver bitcollin.
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  What about other commodities here? Yeah, I mean we're sticking to the
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  adage of rules based quantitative type strategies and making sure that your your portfolio is
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  truly diversified. So everyone has like one hundred stocks, they think they're diversified,
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  you're not. Every single stocks moves in the same direction. Everything is
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  correlated. Like everyone thinks that, oh, we have stops and bonds.
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  Well, except for inflationary times, bonds correlate with equities, and so you've
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  got to have something that maybe has some type of ruleset, rules base that
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  helps you lean in or lean out of a trend, depending on what the
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  trend is. And you got to have this stuff like the commodities and the
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  precious metals and even the cryptocurrencies now as they've offered, you know, a
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  uncorrelated return. You know, we don't necessarily want inversely correlated, because all
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  that means is that one side goes up by ten percent, the other side
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  goes down by ken percent. Well, we just earned zero, right,
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  we went unincorrelated. We want everything to make money over a long term cycle,
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  but we wanted to make money at different times. And that's what that's
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  what a real portfolio looks like. And unfortunately I don't see many portfolios that
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  look like that nowadays. As somebody once told me, the trend is your
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  friend until the end. Yes, it's one of those things where the market's
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  going to do what it's going to do until it doesn't, and you have
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  to have a rule or some type of exit in place, because especially if
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  you're near retirement, Like, yeah, a lot of people I've been meeting
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  with recently like they've won the game, and yet there's still risk one and
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  they're skipping over the preservation part of their timeline prior to the distribution stage of
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  their retirement plan. And you know, it's one of those things where you
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  got to you got to pay attention to what your own plan is and you've
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  got to make adjustments is necessary. If you only need a six percent rate
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  to return to retire based on the uturient asset level, why are you taking
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  ten percent risk? All it takes is one moment, and if that portfolio
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  gets cut in half, you're working for another ten years. Now that portfolio
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  goes up by another twenty percent, it probably doesn't change your plane at all.
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  You're still going to live the way you're going to live. But if
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  that port realily goes down like fifty percent, your plan just got blown up.
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  And it's interesting to see that people don't think like that or even just
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  understand or realize the risk that's associated with the sequence of returns is they're looking
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  to, you know, transition into the next days of their life. So
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  how do you measure risk by the way? What's the accepted way and do
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  you have any different approach to it? Well, of course Wall Street will
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  tell you at standard deviation, but all set of deviation is is volatility and
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  just because something is more volatile, it could be volatile and moving downward,
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  and something that's more that's that's more volatile, could actually be more conservative if
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  the drawdowns are less. So we pay, we pay very very close attention
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  to portfolio max draw down. And then you know, we're looking more at
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  Sortino than Sharp because I've never had a client mad at me for volatility to
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  the m side. You know, volatility, it's it's so crazy. It
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  accidentally made like they're not mad at me about that. You know, obviously,
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  volatility to this downside, that's the thing that people are concerned about.
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  And so max draw down in s Chertino helps us identify, hey, is
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  this a good portfolio and can this work to our advantage? Shrap is nice,
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  but the sharp stuff takes into account that downside volatility, and I'm sorry,
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  it takes into account that upside volatility. And we like upside volatility.
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  I don't know anyone who doesn't like upside lolatility. We don't like the down
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  next. Sometimes you got to take the good with the bad, though,
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  right well, I mean that just depends on your role set and whether or
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  not you have an actual diversified portfolio. You know, wallst you would tell
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  you, yes, if you want to get above average returns, you got
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  to take above average risk. I would say, the trend is your friend.
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  Lean in when it's good and have access in place, and when the
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  trend is down, don't ride the roller coaster down to the bottom. There's
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  other stuff that does well in that scenario, and your rule should be able
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  to find, or your quant should be able to find where the opportunities are
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  in that situation. All right, So when we talk again next month thirty
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  you think we'll be looking at a rate cut. It was surprising me if
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  we'll see a rate cut in July. I was. I mean, I
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  would have said that a rate cut today is justify. I don't think they
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  do anything in September, mainly just because they don't want to mess anything up
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  from an election standpoint. If it were me, you know, based on
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  what the data I'm seeing so far, if it continues in the same trajectory,
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  I would probably recommend cuts like at every meeting for the rest of the
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  year. But the Fed's not me, and then they're looking at what they're
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  looking at, and I think that they're too late to the party. I
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  just hope that the bubble's not so big that when it bursts, there's there's
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  you know, too much blood in the streets. Too much, too much
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  is you would basically need boots to pretty much way through it, all right,
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  boots? I mean I don't know like that as much. We've had
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  fifteen years of zero percent interest rates. I might even argue you might need
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  a boat with a paddle because it could get real bad. They made a
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  bigger boat. Huh, yes, yes, little scary. I hope I'm
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  wrong. I hope I'm wrong. Carry, But there was al stuff there.
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  You know, the bigger the bubble get, the worst it is when
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  it pops. So there are ways to make moneys off those scenarios. But
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  it's not buy and hold, that's for sure. All right. Well,
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  Eddie, appreciate you coming on. Just tell us how we connect with you
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  these days. The best place to find you in all Yeah, the easiest
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  thing to do. I go to Eddie or sorry, go to Detectivewealth dot
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  com backslash Eddie dash Gifford that's Eddie with a Y G I F F R
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  D, or going to that old friendly Google type of Eddie Gifford. Eddie
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  was a y Gifford and they'll probably see this interview on there tomorrow, all
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  right, a bunch of other stuff too, so you know, we're here
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  to help. It's a training time and there's a lot of people concerned and
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  that's what we're here for. That's what we'd like to hear. Eddie.
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  Appreciate you coming on. He got question. I'm for Eddie myself. Shoot
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  me an email kl at Carrie LUTs dot com. A link to Eddie's site
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  will be found in the show outs to this interview on Financial Survival Network dot
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  com. While you're there, please subscribe to our newsletter. Eddie. Always
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  a pleasure. We'll talk to you again real soon. Thanks again, Carrie,
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  Thanks for listening to Carrie Letz's Financial Survival Network, your solution to today's
• 12:26
  trying times. For the latest, go to Financial Survivalnetwork dot com. Financial
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