Latest / Financial Survival Network / Recession Risk Is Still Present -- James Locke #5865

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Recession Risk Is Still Present -- James Locke #5865 · Financial Survival Network

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  As crazy as it sounds like. I think inflation is going to get under
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  control. My problem is it going to get under control because they pushed it
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  too far and they broke the economy and pushed us into this recession which now
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  people don't believe is going to happen anymore. It's still going to happen.
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  You're listening to Carrie Letz's Financial Survival Network, where you get valuable information.
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  You just can't find anywhere else to thrive in today's trying times. You need
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  the Financial Survival Network now more than ever. Go to Financial Survival Network dot
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  com and get your free newsletter in gift. Financial Survival Network now more than
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  ever, And welcome you are listening to watching the Financial Survival Network. I'm
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  your host, Carrie Letts. Well, is the market getting too complacent?
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  Did in fact the economists blow it and we're not going to have a recession?
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  Imagine if they threw a recession and nobody came. Well, James luck
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  is with us now and James, great to have you back on. So
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  even the bears are throwing in the towel, Now, what are you seeing?
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  Well, uh, you know, just on that kind of point,
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  whether whether this recession is real or not. Um, you know, we'll
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  see. I'm always kind of looking at what you know, the professionals are
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  saying that sort of thing. And like I was saying, the famous Morgan
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  analyst named Mike Wilson, he's a huge bear market analyst, and he was
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  wrong from the SMP thirty five hundred, forty four hundred and finally kind of
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  came out and apologized and said, yeah, I got it wrong. You
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  know, maybe maybe the market isn't as bearish as I had thought. Well,
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  when the most bearish guy in a room turns bullish, does that mean
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  the markets do for a correction? Probably? Right, that means, you
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  know, maybe it's time to get short a little bit, or maybe it's
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  time to you know, no one, no one ever, you know they
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  from the trading enage, right, no one ever goes poor ring in the
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  cash register, right, So if you maybe take some money off the table.
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  But some of the other indications we saw last year, there were a
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  lot of people going into T bills. You saw a lot of that kind
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  of into that safety and now all of a sudden, no one cares about
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  T bills. You're seeing people coming out of T bills going into these tech
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  stocks, you know, as the market's going up into the hires. It's
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  almost like it's it's a Hollywood movie script, right, you can't you can't
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  do this any better. So between strategists saying maybe I was wrong that we're
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  going up and people exiting safe money and going into tech stocks and AI can
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  solve, you know, solve everything. Like I said, it's it's maybe
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  it's a little maybe it's an indication to book some games. That's kind of
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  where I'm getting that. You know, you don't think, James, you
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  don't think that I can solve all our problems. I think AI is going
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  to help our society. I don't know how yet, you know, but
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  you know it's going to help us in ways that we can't imagine yet.
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  Is it going to solve all all problems? I am very confident that it
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  will not do that, you know, and it needs to be integrated into
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  society and figured out how it can help, you know, without without the
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  terminator coming in. Right, That's that's the always fear alight. So what
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  are we going to say? You think that they're they're actually going to be
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  right, but they're just going to be right at the wrong time. Um
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  well, I mean in the short run, no one really knows what AI
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  is going to do right, and in the long run it's it's going to
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  be very profitable for a lot of people. So the thing is, is
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  it going to be profitable for everyone? You know? Who knows? You
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  know, can Nvidia keep this rally going? You know, at some point
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  reality has to set in, an AI has to actually do something right.
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  You know, Like I said, I when I say taking money off the
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  table, Like it's not like I'm sitting here saying there's a crash coming.
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  But you know, you could easily see a ten to fifteen percent correction in
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  the market and it'll take a lot of people by surprise. You know,
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  it always does, it always does. What about what about with rates where
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  they are here? You know, you got mortgage rates over seven percent for
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  a thirty year ye fixed mortgage, and you've got the Fed funds or trading
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  between five and a quarter and five and a half, and it just doesn't
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  seem like anybody cares. Right, And here's the thing, Right, we
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  can sit here and you know, talk about reality until we're blow in the
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  face. Right, rates Fed funds over five war in Europe, by the
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  way, people just forget about that. You know, there's a constant threat
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  of inflation. I mean, you know, we were just talking about how
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  inflation was unbeatable nine months ago, and now we're talking about you start hearing
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  about deflation. You know, we beat everything in nine months and that's it.
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  Um, So you know, we can talk about it. But I
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  don't know that that the everyday investor is really kind of believing that. And
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  that's you know, you hate to say it, but it's one of those
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  things. It's like, you want to know what the market's doing. Don't
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  follow the smart money, follow the dumb money, right right, that's that's
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  going to bounce it in their face kind of thing. But uh, you
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  know, nine months to go from hyperinflation to deflation seems awfully quick, right
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  to me. I don't I don't know that inflation is gone from that point
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  of view, you know, I don't believe it. But yeah, but
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  you know, perception is reality to these people until it's not right, right,
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  That's what I mean. That's why I said I think a lot of
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  a lot of people are going to get get kind of bitten in the cheek
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  meat a little bit here when when there's some sort of bounce back and it's
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  mony. I was, you know a lot of people in trading and in
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  markets like to talk about sports analogies and things like that. I was talking
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  with someone who said, you know, recently, the S and P five
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  hundred is more like the NBA than Major League Baseball. Right. If you
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  think of the NBA, you have you know, one or two stars,
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  and that carries a team to victory. Whereas in baseball, you know,
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  if you have one star, he only comes up to plate four times a
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  game or pitches every five games, right, so you can't rely on one
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  star. But it seems the S and P five hundred is a lot like
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  the NBA. Right. We have these kind of magnificent seven stocks and video
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  Facebook's Tesla, and right now that seems to be working. Right. You
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  hand the ball to your stars and off they go, and they pull everything
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  along with it. You know, but at some point someone's going to get
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  a torn acl or reality is going to comment or some other well balanced they
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  get arrested for drugs, dw lie or some heinous crime. Right, more
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  likely, you know than injuries, it seems these days. That's that's all
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  too true. But you know that's that's what we're saying, is that you
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  know right now, it's it's it's this like superstar and you've got to be
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  in this superstar to make any you know, real money, so to speak.
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  And you know, there's lots of opportunity out there. It doesn't have
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  to be you know, Facebook and Tesla and Nvidia, and don't get me
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  wrong, there's opportunity there. It's just now you're talking about a lot of
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  a lot of volatility. There's just not a lot of diversification, you know
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  anymore that that I'm not really I'm not really seeing that. So now,
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  are we going to get inflation under control? Probably? Um? Is the
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  Fed going to stop hiking rates? Probably not, whether inflation gets in control
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  or not. And you know, you've got international concerns going on. You
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  know, we've got the verted yield curve. I mean that will uninvert at
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  some point, and you know, short term rates are going to come down
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  a lot, right, and long term rates are going to come down too,
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  and then people are going to be you know, wishing they had,
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  you know, locked in better interest rates and you know, higher looking dividend
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  things rather than kind of the Magnificent seven. Now they can't all be in
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  one basket. So you really think inflation is over it's done. It's certainly
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  not done. But my fear is more the other way around. I think
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  it's going to be done because the Fed's going to break everything. I just
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  gosh, I hope I'm wrong, right, But they just have such a
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  track record of you know, pushing it until it's over the limit, or
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  not pushing it enough. Right. Yeah, So as crazy as it sounds
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  like, I think inflation is going to get under control, my problem is
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  is it going to get under control because they pushed it too far and they
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  broke the economy and pushed us into this recession which now people don't believe is
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  going to happen anymore. It's still going to happen. You can't keep you
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  know, this kind of rate up in the market and you know, not
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  have real returns. At some point, like I said, ay, it's
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  going to have to produce something. The economy is going to have to produce
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  something, and then you know, then you'll see which of the stock you're
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  going to hold their own? All right, So can AI pull a rabbit
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  out of the hat? It? Can I wouldn't bet on it, but
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  but it definitely can. You know, some of the AI world is going
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  to be, you know, extremely profitable. And I said, I don't
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  even I don't it's hard for me to even judge what it's going to do,
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  right, what it's going to automate. I mean, there's all kinds
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  of crazy thoughts. You know, everyone always talks about self driving cars and
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  things like that. We're still thinking very classically, well, the car is
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  gonna drive itself and you're sitting behind a steering wheel, Well it might be
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  that. Eventually, a self driving car means it's it's an office, right,
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  and you're sitting there doing work, right, and so there's more productive
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  you know, productivity going on. Ye, So you know, and that's
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  that's even a crazy like that, that's like the Jetsons, you know what
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  I mean, Like we don't really even know what what the opportunities are there.
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  So Kenna pull a rabbit out of the house. Pat Sure, I'm
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  not sure it's going to happen in the next nine months or you know,
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  by the end of twenty twenty four, and you know, and that's when
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  that's why I said, like I there's nothing wrong with with locking in some
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  some gains right up here near the top. You know that doesn't mean you
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  have to unload it back to truck up. But you know, we've had
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  a really good run. It might be an idea to say, you know,
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  do I need to double down? I don't know that. You know
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  that doesn't make sense from its rating point of view either. Now, so
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  yeah, well, like you said, you never go broke taking a profit
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  on Wall Street, right, That's right? Right? So, and you
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  know the other thing is that the numbers that keep coming out, uh,
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  you know, you got the manufacturing uh Purchasing Managers Index that's being that's it
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  every few weeks, it's being released tomorrow. All the indications are always of
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  slowing purchasing all right. Now, granted, some of the numbers recently have
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  been better than expected, but even the better than expected numbers are still on
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  the slowing purchasing side, right, So, you know that's telling us that
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  companies aren't expecting growth in the future. So how we're going to maintain this,
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  you know, market rally from thirty five hundred to forty five hundred,
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  forty five hundred, fifty five hundred with good questions, companies slowing down,
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  Like, all right, does that mean we're going back to thirty five hundred?
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  Well, not necessarily, but I find it hard to believe that,
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  you know, we're gonna be able to, you know, sustain this for
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  that length of time, especially if the FED keeps hammering, you know,
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  with interest rates. It makes everything that's a headwind on everything. How much
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  longer do you think the Fed's gonna keep raising for They're gonna I think they're
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  gonna raise at least another time, and like they even openly said that,
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  it's just we're gonna keep raising until we see inflation and essentially the economy in
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  a spot where it's going to stay that way for a length of time.
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  So you know, I see at least another quarter point raise and we'll see
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  from there. You know, it's it's good. Where are like twenty two
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  year high an interest rates? Like yeah, and it's never they've never been
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  raised this quickly before, either have That's that's the problem. We don't We
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  don't know, you know, if we've already broken our back because of the
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  quickness that we've done it, that's that's the real problem. And you unwinding
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  it just as quickly, which is certainly not good. But that's not going
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  to fix the problem that fast either. You know, these things take time.
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  Okay, I'll buy it all right, So what is Joe six pack
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  supposed to do here in the media. Well, so everything's waiting to melt
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  down on them. Yeah, you know, it kind of depends on where
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  you are in your phase in life, right. A lot of the people
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  that we're dealing with a couple of years away from retirement. The timing is
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  super critical. So you know, focusing on interest and dividends and income is
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  a much more important thing, which means, hey, whether the stock market
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  goes up or down, you don't want to have to worry about it.
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  That's more of our bread and butter. But if you have a little more
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  time in there, then there's nothing wrong with, like I said, taking
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  some off the table and having some ammunition, having some more you know,
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  bullets in the chamber to take advantage of corrections. The rich get richer because
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  they have cash on the sidelines to to grab when things go down, right,
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  right, you know, So from that medium range point of you,
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  if you got the time, that's why I said, lock in some game,
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  ring the catch register, and that doesn't mean, you need to close
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  your positions down and you know, see what happens over the next six eight
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  months. You know, your worst case scenario is you you locked in some
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  gains. Um, right, it may end up being a good trade.
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  All right, I'll buy it. So hey, uh so you know,
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  basically act, act while there's still time, don't wait. You know,
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  Bernard Baruk I'm always reminded, said, uh, you know, basically,
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  uh I got rich letting the other guy make the last ten percent, right,
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  yes, yeah, yeah, you don't need to buy the bottom and
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  you don't need to sell the top. Okay, So we got that out
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  of the way. So what do we do here? I mean, we
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  want to sell and sell sell in July and I hope we don't die.
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  Is that what to do? Is um? Yeah, yeah, well almost
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  August right. Yeah. Like I said, I think there's a lot of
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  complacency right now because of the summer. People aren't really looking at things hedging,
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  you know, like I said, if I'm looking at it, i'd
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  say in the next you know, I don't know, maybe as a few
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  as three months, then maybe a little short, but six to nine months,
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  you know, you could easily see the stock market back down under the
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  SMP five hung back under four thousand, and it wouldn't even you know,
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  it wouldn't even blink an eye to do that. So that's what I was
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  saying, is like, if you can, if you've done some things,
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  things that worked for you throughout the year, right we have you know,
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  big down the last year, If you've you know, move a little bit
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  into cash. You know these money markets are paying four or five percent,
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  there's nothing wrong with collecting some interest, right because then the markets, if
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  the markets do drop, right now, you can get out of those things
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  because interest rates potentially you could either hold steady or maybe drop. We'll see
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  if the Fed's going to break it, right, and then you have a
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  reason to get out and then kind of back in cause now you're buying things
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  at a discount. Is there a trade out there that you could make that's
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  going to cover you if the FIT breaks it or if they don't break it?
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  Um? Yeah, I mean if you really think the Fed's going to
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  break it, then then you know you want to you want to be in
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  as much kind of fixed income and cash as possible, um could. You
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  will be generating all that interest while you know, interest rates are plumbering,
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  and then you know you could you could exit it or keep collecting the income.
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  Like I said, that depends on your phase in life a little bit.
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  But you know, there's nothing wrong at this point in life. There's
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  actually another like you know, it's it's almost sacrilegious to say, right,
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  Like, imagine investing in fixed income as a trade. Uh, there seems
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  to be opportunity there. You know, if you're getting a good interest rate,
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  if things don't fall mart or they just go sideways, it's not a
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  bad trade. And then if that we do have a recession, then you're
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  gonna be glad you had that. You know, all right, I'm willing
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  to buy it, all right, James tell us best place to find you
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  poollock dot com. Poollock dot com. P O L E L O c
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  K E great and the link is in the show notes this interview on Financial
• 17:17
  Survival Network dot com. If you got a question for James myself, email
• 17:21
  is kl at carylots dot com. Make sure when you go to the site
• 17:25
  you sign up for the free newsletter. James. Always enlightening, always thought
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  provoking. We'll catch up with you again soon. Thanks Gary, Thanks for
• 17:33
  listening to Carry Lutz's Financial Survival Network, your solution to today's trying times.
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  For the latest, go to Financial Survival Network dot com. Financial Survival Network
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  now more than ever,