Latest / Financial Survival Network / When Will the Fed Cut? Matthew Johnson #5906

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When Will the Fed Cut? Matthew Johnson #5906 · Financial Survival Network

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  And I think that there's a lot of cash they're sitting on the sidelines right
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  now. I think that there's a lot of projects that are being held off.
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  And I think what they're afraid of is as soon as they show signals
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  of cutting interest rates, all of a sudden, there's going to be an
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  outpouring of money and it's going to hit the economy. And that's what they're
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  afraid of. That's the reason that you're trying so delicate. But whether or
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  not they're going to actually drive us into a recession first, that's the thing
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  that I think is scarier because every time they raise the rates, remember that
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  the FEDS might be the catalyst, they might trigger the recession, but it's
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  EU and I, it's human beings, it's corporations that actually proceed on with
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  that recession. You're listening to Carrie Let's Financial Survival Network, where you get
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  You need the Financial Survival Network now more than ever. Go to Financial
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  Survival and Network dot com and get your free newsletter in gift. Financial Survival
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  Network now more than ever, and welcome. You aren't listening to watching the
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  Financial Survival Network. I'm your host, Carry Lutz. Well, rate hikes.
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  Are they here to stay? Or will a FED pivot? There are
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  two schools of thought on the topic. Maybe there's three, there's one in
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  the middle. Things they'll do both. Those are the people that don't want
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  to take a position on anything. But hey, you got an opinion on
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  it. I want to hear from you. They're going to raise to infinity
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  or are they going to cut to zero again? I want to know what
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  you think. Send me an email k l at Kerry Lutz dot com.
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  And Matthew Johnson is with us here to discuss this very topic. Matthew,
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  welcome back. So do we keep seeing rate increases in spite of the world
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  economy imploding? Well, boy, I tell you what, it's a giant
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  game of cat and mouse, isn't it? Carry Its what we're having me
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  back. It's it's so very confusing to the average person because right now we
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  are just involved in this proverbial, gray, vague type of verbiage that they're
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  using where they're they're trying to, you know, not give any signal to
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  the market. They would justify them running saying oh, they're using a very
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  devish tone, so they're they're wanting to kind of give us this very gray
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  speed to allow us to think, well, they're they're probably going to pause.
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  But then again, we really don't know they might do it in the
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  future, and right now the only real sort of day that we have is
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  well, we just don't know until they have the meeting and then they come
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  on and they tell us what their decision is. But at some point,
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  don't they have to absolutely have to cut rates. Well, I most definitely
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  agree. When you consider the national debt, you consider what has happened to
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  the economy and the shrinkage of the economy. There is also the dynamic where
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  Carrie, I think you would agree, and many of your listeners would agree.
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  Our country. Corporations in our country just normal everyday citizens of this country
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  have grown very much accustomed to low interest rates and low interest rates. Let's
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  face it, that stimulates growth, right People buy cars, people build their
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  homes, people do all sorts of things when interest rates are well. Corporations
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  do the exact same thing. And right now we're seeing many corporations that are
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  sitting on the sidelines. They're not borrowing. Buddy, they're not doing new
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  issues because let's face it, interest rates you too high, and if we
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  sit on the sidelines long enough, number one, that is going to definitely
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  further the inflation coming down. But we know that in the future the Feds
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  are going to have to relet, They're going to have to start bringing interest
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  rates back down to get this economy moving again. All right, So it's
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  kind of a game at shooken here, But at some point they've got to
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  do it. And the damage from these higher rates bring down inflation, but
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  at the cost of what our rates really going to bring inflation down? Or
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  is it the induced recession that's going to cause that? Yeah, in many
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  respects, I think that there's a lot of theories out there that their goal
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  is indeed to create a mild recession at the very least, you know.
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  I just think of the malarkey that we heard eighteen nineteen months ago from the
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  Federal Reserve saying that they were, you know, very optimistic that they were
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  going to be able to do a soft landing, that they were going to
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  quote unquote thread the needle, all of these various things, and yet we
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  see that they just seemed absolutely adamant to continue pounding the nails into the coffin.
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  And I think that in all honesty, where I believe that they should
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  have not raised interest rates back in July like they did, they did it
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  anyway, and now I think that they're feeling some back clash. But I
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  think it goes further than that. You know, when inflation really became obviously
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  out of control, and we put that in air quotes because you and I
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  both know inflation, what real inflation was back in the eighties and nineties.
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  But when inflation really became the number one headline, that's when all of a
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  sudden, the Federal Reserve became the whipping boy for not acting stuff. And
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  now I think that they're taking this tenure where they want to keep policy extremely
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  tight because no matter what, they don't want to be blamed for having another
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  repeated in nineteen seventies. They don't want to stop too early and then all
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  of a sudden have inflation reserves that would be just a disaster for them.
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  So I think that that's the reason that they're taking the tenor that they are
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  all right, So at what point does this thing end? That? I
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  mean, I know you said when it basically when it's done, it's done.
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  But how will you know, how can you tell that they're actually going
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  to pivot? Cool? You know when they're going to start cutting interest rates?
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  My best guess, And I'm not a fortune teller, I'm not carmack
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  off from Johnny Carson, but you know, not at all. I just
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  I don't have that at your turving. I think that's Turt in your office.
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  There that in the index card, right, yea, my whole my
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  best My best guess is that early on in the year, I was thinking,
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  Okay, well, maybe there's a possibility by the end of the first
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  quarter twenty twenty four, we're going to start to see the pivot. And
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  now I believe that all they're doing is kicking the can down the road.
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  They're furthering that time in which they can pivot and start cutting interest rates closer
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  to the end of the second quarter of twenty twenty four. And I think
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  that there's a lot of cash that's sitting on the sidelines right now. I
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  think that there's a lot of projects that are being held off. And I
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  think what they're afraid of is as soon as they show signals of cutting interest
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  rates, all of a sudden, there's going to be an outpouring of money
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  and it's going to hit the economy, and that's what they're afraid of.
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  That's the reason that you're train is delicate. But whether or not they're going
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  to actually drive us into a recession first, that's the thing that I think
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  is scarier because every time they raise the rates, remember that the Feds might
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  be the catalyst, they might trigger the recession, but it's you and I,
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  it's human beings, it's corporations that actually proceed on with that recession.
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  We start to tighten up, just clam up, and all of a sudden,
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  that's what creates that knee jerk reaction that we're all so afraid of.
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  All right, well, I guess we'll know it's happening when it happens.
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  Then then we'll be playing that good old song from the thirties, happy Days,
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  or here again. Right, let's all yeah, will. But you
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  know, every recession starts sets the stage for the next expansion, and every
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  expansion sets the stage for the next contraction or recession. It's kind of like
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  peace leads to war, war leads to peace, But there are always telltale
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  signals that they give out to the big boys, right, because that's why
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  they exist, to guarantee the sanctity of the banking system. Agreed. So
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  the next question, is the banking crisis over or every time they raise rates
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  it goes up another notch. I think that that's a really worthwhile question.
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  Carry I'm not cumfortable with saying that we're out of the woodchet. I think
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  that there's quite a bit of distress that still exists within the banking industry,
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  and especially within some of the larger banks. I know that just recently,
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  you know, the Federal Reserve has gotten together with the banking sector and they've
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  tried to calm the fears. But yet we know that every single time rates
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  go up, it creates greater distress and pressure on the banking system. And
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  so is this something where we have to be alarmed when we see a few
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  banks fail. I don't believe so, because historically, when we go back
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  from say two thousand and eight until now, and we look at the average
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  number of banks across the United States that have failed, it's actually pretty alarming
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  when you see the average number. But we know that the number has gotten
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  smaller and smaller. But now these banks are dealing with manipulation, right,
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  they're dealing with the government manipulating the monetary system raising the interest rates. That
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  means that they're losing money on the bonds. We know that there is a
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  tremendous number of institutional investors as well as just average joes that are walking in.
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  They're pulling their money out of one institution and moving in across the street
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  to another institution that's going to give them ten basis points more for interest,
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  and so this is creating quite a bit of distress. So we want to
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  be extremely careful to not only manage how much money we have in the banks,
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  but we want to make certain that we're doing our due dilig in the
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  bank that we actually have our money in. Are they small and private or
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  are they part of a conglomerate. Is there, you know, any opportunity
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  of research that we can look and see how distressed they may be, or
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  what percentage of their book the assets is distressed. That these are important things
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  that we have to take responsibility for our belief. Yeah, but you know,
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  the financial statements of these mega banks, giga banks, terror banks are
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  so opaque that I challenge anyone even if you have an advanced degree in auditing
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  to be able to understand what's in there because you don't know. And then
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  you've got all these single purpose vehicles SPVs that they created to avoid all the
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  regulation. You know, banks are masters at obfuscation and deception, so you
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  really can't know whether your bank is solving or not, can you. It
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  is very, very challenging today to be able to know exactly where things are.
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  We know that banks have very clever ways and being able to hide distressed
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  instruments and distressed assets. We know most every corporation has very unique and very
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  clever ways of being able to hide distressed instruments and assets. Nevertheless, I
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  still believe that it's our responsibility to do our due diligence to make certain that
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  we have our money diversified. You know, one of the things that human
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  beings I think are very susceptible to carry, and I know you believe in
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  diversification as a fiduciary, I do is with us is we have to be
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  diversified with our money. We cannot find one single source of instrumentation for ourselves
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  and say this is it, this is the perfect one. You know,
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  we can look and observe goal, for instance, and gold is down slightly
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  over the last six months, and yet we could something like a commodity like
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  crude oil and it's up thirty five percent in the last six months. Well,
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  someone could argue, well, oil is the best investment that there is
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  out there, and yet you can go back and you can see where oil
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  was decimated in twenty twenty. Right. So this is where we want to
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  make certain we don't have too much of our money in the bank, We
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  don't have too much of our money in any one particular area, but rather
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  we are diversified not only by name, but we are diversified by asset class
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  as well, newor diligence, because no one's going to be here. The
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  government's certainly not going to be here. We can't even believe half of the
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  numbers that we receive, in my opinion, only half, only half.
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  And you're being an optimist here. I don't want to be a devy doner,
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  right, but we have to do our own due diligence and make certain
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  that we have that money diversified. And we've looked at where we're putting our
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  money, and we first feel don't take a person's word for it and say,
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  yeah, we're safe because we've been down that road. We've either got
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  personal experiences or we've got our friends that have had that experience and we don't
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  want to replicate that. Yeah, just look what's happening in China. Now.
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  You know, if Chinese read American history, they would have been prepared
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  for all this. We forget going back that how many millions of people lost
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  their life savings entrusted to the banking sector. And I know, like my
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  grandparents generation didn't trust banks for the rest of their lives. And even my
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  parents had issues, but they managed to put them aside. The you know,
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  winds of time kind of wear everything down. But you know, I
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  guess a government, some government guarantee is better than no guarantee at all.
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  And push comes to show they will print money to stop a banking sector collapse.
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  They're doing it right now out with the emergency facility at the discount window
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  to keep all these mid sized banks afloat right. M agree, we have
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  never had a problem in the last two decades of taking in financially manipulating what
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  we need to in the monetary system to keep things looking good. And that's
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  part of the reason that so many people today have distrust for the for the
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  government, they have distrust in the banking sector, they have distrust in the
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  in the in the stock market, and in many respects. I want to
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  just kind of speak of this. There's there's many places that we can deposit
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  money and we can feel relative safety in doing so. We want to remember
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  that the bank is simply one place. Granted it may be the most popular
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  and the most common, but there's many places that we can put money that
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  is relatively safe. Are these things going to be absolutely one percentage? And
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  the answer is, I don't care. If you look at insurance companies,
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  I don't look. I don't care if you look at new factories or intrude
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  municipals. All of those things are going to have good times, are going
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  to have bad times. But diversification is the call of the day for it
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  today. Okay, So we will leave it at that. Diversify it or
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  die potentially. I mean, you have to do it, because they've left
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  you no other choice anyway, Matthew, just tell us best place to find
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  you these days? Absolutely, you can go to our website. Johnson wim
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  dot com stands for Wealth Income Management They can also tune into my radio show.
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  They can go to my YouTube channel, The Capitalized Life, all sorts
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  of webinars every single month to educate people on things that are financially relevant to
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  them. I appreciate all of the feedbacks from your listeners. It's always so
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  very gratifying. Hey, well, thank you for that, and we appreciate
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  it as well. Hey, if you've got a question from Matthew myself kl
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  at carluts dot com, please send your emails let us know how you are
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  maximizing your cash flow. Are you putting safety or perceived safety above all other
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  factors in your decision where to put your money? Like to know kl at
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  caryluts dot com and you'll find a link to Matthew's site at Financial Survival Network
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  dot com in the show notes in this interview. While you're there, sign
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  up for a free newsletter. Matthew, thanks for coming by. Always a
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  pleasure. Thanks for having me carry here, Thanks for listening to carry Letts's
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  Financial Survival Network, your solution to today's trying times. For the latest,
• 16:44
  go to Financial Survival Network dot com. Financial Survival Network now more than ever