Latest / Financial Survival Network / Analyzing the Federal Reserve's Interest Rate Pivot -- Ted Thatcher #5982

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Analyzing the Federal Reserve's Interest Rate Pivot -- Ted Thatcher #5982 · Financial Survival Network

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  With where they're at with inflation, it's still much above the two percent number
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  that they target. It's much above are a little above, i should say,
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  the rate of inflation we would have expected for this year. And so
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  I think the market has gotten off to well. It started to kind of
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  go off to the races, but I think it's at this point probably fall
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  started as we're starting to see those games being given back, and it's hard
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  to think that Jerome Powell is going to be able to do as many interest
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  rate decreases as the market seems to be pricing in. Right now, you
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  are listening to Carrie Lutz's Financial Survival Network, where you get valuable information you
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  Financial Survival Network now more than ever. Go to Financial Survivalnetwork dot com and
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  get your free newsletter in gift Financial Survival Network now more than ever, and
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  welcome. You are listening to and watching the Financial Survival Network. I'm your
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  host, Carrie Lutz. Hey, so fed has pivoted all his reversed course,
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  so it would appear, at least that's what they've announced. They haven't
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  done it yet, but the markets have reacted in such a way. Rates
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  are down, Mortgage rates are down substantially and probably heading lower. They got
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  somebody here that you're definitely going to want to pay attention to, financial expert
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  head thatcher Ted. It's great to have you on the show, and Hey,
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  great to be with you. Yeah, Ayan, I should mention that
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  you find Ted at Einbrook financial dot com. If you got a question for
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  Ted or myself, shoot me an email kl at Carrie LUTs dot com.
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  So we had a fad that up until the last month was staying the course.
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  They weren't going to you know, rates were going to stay high.
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  The banking industry be damned. The regional banks, we don't need them anyway,
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  and they're seeing a global implosion, much due in part to the FIDS
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  so called aggressive hawkish stance towards rates. All of a sudden, one day,
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  it's like Jerome Powell's Ripper Van Winkle. He wakes up and finds out
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  that the world is like crumbling around him and the global financial system is headed
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  for the skids, and it says, uh, time to change course.
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  How can you be to the brink of the edge. Yeah, how can
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  you be confident in a person like that, well, it's to be candid.
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  I don't know if you can be extremely confident in a person like that.
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  Carry I think, you know, looking at the CPI numbers that just
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  came out, you know, Jerome Powell changing course. Now it's interesting to
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  me. I think you know this sea so just everybody knows out there.
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  The CPI data came out this morning. We're at three tenths of a percent,
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  zero point three percent for December. You know, on the year.
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  That puts set three point four percent measured by the CPI, which you and
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  I know we could have a long conversation about whether that's a reasonable measure of
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  inflation or not. And yeah, you know, of course with that,
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  where Jerome Powell goes from here is kind of what I'm thinking about, because
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  to your point, he started to change his tune last time in the FED
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  and BET and of course they meet again here at the end of January.
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  And what I am going to guess here is that he is going to keep
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  that tone of complete optionality. We remember the word transitory that they kept throwing
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  at us so often. Oh yeah, in the early part of twenty twenty
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  two. And you know, we've heard higher rates for longer than we'd like.
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  We got the Fed meeting last month, and of course Jerome Powell started
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  hinting at a couple interest rate decreases, but with where they're at with inflation,
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  it's still much above the two percent number that they target. It's much
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  above are a little above, i should say, the rate of inflation we
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  would have expected for this year. And so I think the market has gotten
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  off to well, it started to kind of go off to the races,
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  but I think it's at this point probably fall started as we're starting to see
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  those games being given back, and it's hard to think that Jerome Powell is
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  going to be able to do as many interest rate decreases as the market seems
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  to be pricing in right now with inflation higher than well we expect, in
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  higher than they target. He said three cuts the market immediately up to to
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  six. But hey, as long as the rates aren't going higher, I
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  think that makes a bullish argument perhaps, But you know, transitory thing.
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  Going back to that, you know we have a saying here the best things
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  in life are transitory, right, so you know that was just a focus
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  group driven or a narrative. Then I think you were skeptical, skeptical of
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  from the very start, as were we as we're thinking people. But Wall
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  Street doesn't really care about logic or reason or logical outcomes. All it cares
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  about is getting on the right side of the trade, right Well, sure,
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  yeah, if of course the Wall Street's known for that word, the
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  starter is with the g right greed, and so they want to be on
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  the right side of the trade at all times. And you know, as
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  far as sort of where we go from here and where we look for opportunities.
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  Even in you know, our discussions with clients on a you know,
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  a daily basis, we're talking about where to find opportunity right now. I'm
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  sure a lot of those listening and watching are doing the exact same. And
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  we start to think about harder assets, you know, real estate comes to
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  mind immediately. We've talked a lot with folks in the past, you know,
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  even a couple of weeks about where commodities are sitting today. A lot
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  of cash, as you would well know, of course, with rates higher,
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  has been sitting on the sidelines. And so as rates come down,
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  as that cash starts paying less of a premium, I think that looking at
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  commodities as well. Starts to make a whole lot of sense. I couldn't
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  agree with you more. It's just it seems obvious to me. And yet
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  Wall Street can never see the forest through the trees kind of. And there's
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  no real money for wall Street and commodities unless you're buying ETFs or futures contracts
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  or options. But if you're investing in say physical gold or silver or you
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  know, copper, then Wall Street's left out. And they don't like that
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  at all, do they. No, they don't want to be left out.
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  They don't want to be They want to make their you know, every
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  single one of their financial goals and so be it. You know, I
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  don't think that that is something that you can argue with or really I wish
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  we could say we could affect it quite easily, but you know, I
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  don't think that that's practical. I think we have to play that, you
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  know, you have to play the cars the way they're dealt, and so
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  we have to say, okay, well, how do we we make the
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  best of the handle have? If that makes sense, totally makes sense.
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  And that so when we have this conversation in January twenty twenty five, the
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  market, the higher interest rates where they're going to be at, and will
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  you have helped your clients achieve their with their goals? Well? Sure,
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  so. I mean a lot of the clients we work with are in that
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  retirement phase carry and so they're starting to say, hey, how can I
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  actually live on what I've you know, built up over my entire life.
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  And so the strategy that has to be employed for somebody in that place,
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  you know, is a very strategic one, one that's focused on generating income.
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  You know, maybe that looks like income of furo rental property, potentially
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  dividends. I've even looked at some structured notes with clients lately. What I
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  think, though, we need to be careful of is the environment that we're
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  walking into. So presuming that Jerome Powell does do these three rate decreases and
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  presuming inflation actually you know, stays kind of well, i'll say under wraps
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  or in this middling threes as measured by the CPI. You know, that
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  puts us in a place not too dissimilar from where we were last spring when
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  we had all these big bank busts. So everybody will remember Silicon Valley Banks
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  name signature, Bank's name, and ultimately the antidote to that problem, at
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  least as far as the FED prescribed it was the bank term funding program.
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  That's really important, and it's still going up every week, right absolutely so,
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  just for everyone listening out there. Of course, what that was is
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  the Fed's way of giving regional banks, specifically all that liquidity so that they
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  didn't end up like Silicon Valley Bank, having to sell down their depreciated you
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  know, treasury assets and things that they had bought in twenty twenty and twenty
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  twenty one when interest rates were so low and so basically though those were meant
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  to be one year term loans, and so if rates are in that you
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  know, similar range as they were at the time, that puts the banks
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  back right where they were. Of course, this was a kick the can
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  down the line solution, as you would imagine, and I think that I'm
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  going to very much be looking for the FED to extend or revamp that program
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  in some way or another. Otherwise I think that they're basically putting the nail
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  on the coffin that we're going to be going into, well, a big
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  banking crisis. You could potentially look at a recession even in those scenarios,
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  because if without that liquidity, the regional banking system is going to be right
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  back where it was, you know, a little less than twelve months ago.
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  Right, So they bought a little bit of time. Maybe they'll merge
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  out some of these bargining, right, isn't that it? Well, I
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  don't know the exact solution they will decide to use, I think, but
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  I think that they're going to have to do something one way or the other
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  or otherwise you know, there's going to be sort of some hell to pay
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  for it. Unfortunately. Yeah, So so they haven't solved anything, have
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  they? No? Well, well, so I think everybody has been assuming,
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  and I think the market's pricing in that. They unfortunately, I think,
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  perhaps wrongly, have aced this quote unquote soft landing. But the hardest
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  thing in gymnastics to do is stick the landing, and I think that we
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  have not stuck the landing yet. I think a little bit far from it.
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  Without seeing some real change at least on the banking side, until that
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  yield curve can get back to you know, a normal I'll say, and
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  not be inverted, this problem is going to end up perpetuating. Yeah,
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  all right, Well, I think we will leave it at that. I
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  think that come next year, this time probably going to have more of the
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  same, but a lot of it depends what's happening overseas. We'd even begin
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  to talk about the sure financial implosion of China, financial, moral, ethical,
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  and infrastructure. The infrastructure is crumbling before very eyes, all the glorious
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  infrastructure that they spend trillions of dollars on. And that's a big problem.
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  Population, Yeah, another thing crumbling. Hey, A lot of things,
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  a lot of factors. So next time we'll kind of glance on that.
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  Appreciate you coming on again. Just tell us again where we find you,
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  how we connect with you on the web. Sure, absolutely, you can
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  find us at Pinebroke Financial dot com. Kerry. I appreciate your time.
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  Thanks for having me. All right, Hey, and you got a question
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  comment for Ted or myself. If you're wondering about interest rates, whatever it
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  might be, shoot me an email kl at carrielets dot com. We'll get
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  you an answered quickly and you'll find a link to Ted's site in the show
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  that say this interview on Financial Survival Network dot com. Sign up for your
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  free newsletter. Ted. Been a pleasure really appreciate your com coming on and
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  we will talk to you again. Thank you sir. How A go one,
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  Thanks for listening to Carrie Letz's Financial Survival Network, your solution to today's
• 12:09
  trying times. For the latest, go to Financial Survivalnetwork dot com. Financial
• 12:15
  Survival Network now more than ever,