Latest / Financial Survival Network / Decoding Economic Signals: with James Locke #5940

Transcript

Decoding Economic Signals: with James Locke #5940 · Financial Survival Network

• 0:00
  You know, as crazy as it sounds, the Fed's actually they're not killing
• 0:03
  the patient right now. Right Historically, the FED constantly, you know,
• 0:07
  over medicates the patient and then then the economy dies, and you know,
• 0:11
  the FED causes more recessions than they save. You know, we seem to
• 0:16
  have been slowing down, right, So let's hope that that continues. I
• 0:22
  mean, if we could turn the you curve around without a major vers even
• 0:28
  if you know it was a small recession or something like that, like that
• 0:31
  would be a huge win right right now? Is that gonna happen? You
• 0:35
  were listening to Carrie Let's's Financial Survival Network, where you get valuable information you
• 0:40
  just can't find anywhere else to thrive in today's trying times. You need the
• 0:45
  Financial Survival Network now more than ever. Go to Financial Survivalnetwork dot com and
• 0:52
  get your free newsletter and gift. Financial Survival Network now more than ever.
• 1:02
  And welcome. You are listening to and watching the Financial Survival Network. I'm
• 1:06
  your host, Kerry Lutz. Ay, we got some big numbers out pm
• 1:08
  I numbers. Where's the economy heading and what should you do about it?
• 1:14
  That's really the question. James Locke is with US now from Pool Locke.
• 1:19
  It's great to have you back, James, so hey first, got a
• 1:22
  question or comment for James myself? Shoot us an email KL at Carrie Lutz
• 1:27
  dot com. So, James, pm I number comes out weaker, well,
• 1:34
  weaker than expected in quotes, No surprises here. Are we in a
• 1:40
  recession yet or not? I guess officially not right? We need we need
• 1:45
  two quarters of negative GDP, which, of course, the last time that
• 1:49
  happened, the government lied to us and said we aren't in a recession.
• 1:53
  It's going to be harder to dance around it this year. But you know
• 1:59
  that I that's that's a good indication because that's you know, all the producers
• 2:05
  and what they're what they're doing, so you know they're gonna be a leading
• 2:07
  indicator of what's going to be on the shelves and out there and available and
• 2:10
  what what people are buying right right, And if they're scaling back, it's
• 2:15
  because they know consumers aren't going to be purchasing now. You know, the
• 2:20
  US consumer so far has been unstoppable pretty much, and you know, I
• 2:25
  wonder when that's going to come to a to a head, and it will
• 2:30
  right right, because you know, despite the American belief that we can spend
• 2:36
  our way out of things, and sometimes it works, it does, and
• 2:39
  it's not necessarily a bad thing. But if we're not manufacturing and producing,
• 2:44
  that's that's you know, that's going to ultimately lead to going into recession.
• 2:49
  So when you know, I've been telling and talking with my clients about mid
• 2:53
  twenty twenty four, if the FED raises rates again, I think that might
• 3:01
  accelerate that. I really hoped the FED doesn't, but I do think,
• 3:07
  you know, with this economy slow down, we have less optimism, uh
• 3:12
  for for next year. I think they're predicting GDP to be around one percent,
• 3:15
  yeah in twenty twenty four, which you know one percent can turn into
• 3:21
  negative real quick. Oh yeah, yeah, I mean that's a rounding error,
• 3:24
  right, that's exactly right. Yeah, you know, you know they
• 3:29
  it's funny you say that because they all the time revise numbers down, you
• 3:32
  know, the next month and then you know previous months, and and that
• 3:36
  just kind of gets swept under the rug a lot of times. And you
• 3:39
  know sometimes that the devil's in the details, right when they start revising numbers
• 3:44
  down, you know that it's that it's indicating hey there's there's problems. Yeah,
• 3:49
  And I always see these revisions two months later and boom, you know,
• 3:54
  right, it's it's like, oh, well they bought a headline,
• 3:59
  is what it comes to, right, Yeah, that's exactly right. So
• 4:01
  and so I do think recession is happening, and we're going to see more
• 4:08
  of these or the best way I describe it as you know, lower highs
• 4:14
  and lower lows as we move forward. Right, So where the S and
• 4:16
  P got down to close to forty one hundred and then you know, and
• 4:20
  it's going to raise rates, Okay, great, and we rally we rallied
• 4:25
  back a little. And you know, the question is is that going to
• 4:28
  be enough to push us all the way back to forty eight hundred and five
• 4:31
  thousand? In no way? Right, Yeah, I still think we're going
• 4:35
  to end the year somewhere around forty one hundred on the S and P.
• 4:40
  Yeah, and so that's a little lower than here, you know, in
• 4:43
  that same breath, I don't have any reason to see I mean, economy
• 4:46
  isn't terrible, right, that's the other thing. So I have no reason
• 4:49
  to say we're going to uh slide away into you know serious, you know,
• 4:57
  loss of value in the market. Now, an election year coming up,
• 5:01
  you know, politics aside. Biden is not doing anything to help this
• 5:05
  economy, you know now, isn't that his job or actually the job the
• 5:11
  politicians is not to do anything to hurt it? What kind of really do
• 5:15
  to help it other than dumping money into you know, helicopter money here right
• 5:20
  these? Yes, And you know, I just think that leadership, you
• 5:27
  know, as crazy as it sounds, the Fed's actually they're not killing the
• 5:30
  patient right now. Right Historically, the FED constantly, you know, over
• 5:34
  medicates the patient and then then the economy dies. And you know, the
• 5:38
  FED causes more recessions than they save. You know, we seem to have
• 5:44
  been slowing down, right, So let's let's hope that that continues. I
• 5:49
  mean, if we could turn the yield curve around without a major even if
• 5:56
  you know it's a small recession or something like that, like that would be
• 5:59
  a huge win right right now? Is that going to happen? Well,
• 6:02
  we'll see. Now they're starting to chatter again about the FED raising rates another
• 6:06
  quarter point in December. I think that's a bad idea. Yeah, well,
• 6:11
  so you think they're going to raise him Well, it's the chatter has
• 6:15
  started again. But still if you watch that like fed Rey and the predictions,
• 6:19
  they're still saying no. So I think the FED is going to be
• 6:23
  smart about it. They're probably going to continue to talk tough, but I
• 6:27
  think we're going to see that they're going to leave rates alone and you know,
• 6:32
  continue to be and I think they are data dependent. They're going to
• 6:35
  wait and see and you know, if we do start having negative GDP quarters,
• 6:40
  then they'll probably still leave it alone. I think I don't think we're
• 6:44
  going to get any rate cuts in June of twenty twenty four. I think
• 6:46
  that's optimistic. We may go through the whole year without it, but towards
• 6:50
  the end of the year may start being a reality. Okay, all right,
• 6:55
  I'll buy it. I'll buy it. So what else do you think
• 6:57
  is in store here? You know, at some point they're going to have
• 7:01
  to cut rates when things start really falling apart. What about the banks?
• 7:06
  What's your take on what's going on with the banks? Yeah, so with
• 7:12
  the slowdown of the interest rates, that's easing pressure on the banks, and
• 7:15
  I think they're finally starting to, you know, at least get their footing
• 7:20
  underneath them. They're certainly not out of the woods. I mean, the
• 7:25
  amount of debt banks are carrying and the pressure of you know, interest rates
• 7:31
  being up this high so quickly, you know, means that there's still risk
• 7:35
  out there, right right, there's still risk out there. So I'm not
• 7:42
  you know, some of the bigger banks don't really you know, they can,
• 7:46
  they can weather the storm a little bit easier, But these regional ones,
• 7:49
  I don't. I don't like it all. We definitely stay out of
• 7:53
  them from an investment point of view, you know, we I don't.
• 7:57
  I don't want to. You know, that could pop up at any time,
• 8:01
  you know, if there's some sort of only is you know, warrent
• 8:07
  is real to get out of control in some way and then we start having
• 8:11
  economic repercussions from it, and that puts pressure on the banking system. So
• 8:16
  there's all kinds of you know, holes that can pop up in our in
• 8:22
  our boat, and we already have a weak banking system. So I don't
• 8:28
  do you know, I don't, I don't right now, I'm not.
• 8:33
  I don't want to go and say I'm anti bank stocks and things like that,
• 8:37
  but we're not. We're not adding to any positions or doing anything with
• 8:39
  regional banks, some of the larger ones. We you know, we'll we'll
• 8:43
  hold some positions, all right. So oil one hundred dollars a barrel,
• 8:46
  oiil? It guarantees a recession, doesn't it? Yes, it does.
• 8:54
  I think there's too much chaos in the Middle East. I'd be surprised if
• 8:58
  oil doesn't hit on a barrel you know where it's a little bit of a
• 9:03
  crystal ball kind of look and feel. But you know, I don't think
• 9:09
  it's too risky a speculation at this point right now, and I'm with you.
• 9:16
  I mean, it could hit one hundred of barrel and then this is
• 9:18
  all these fine lines when it gets up there. What kind of recession are
• 9:22
  we talking about? What kind of chaos is going on in the Middle East?
• 9:26
  You know, our oil producers cutting off their nose despite their face a
• 9:31
  little you know, money lust for oil only goes so far. Are we
• 9:37
  doing things internally in the US to you know, produce our own energy?
• 9:43
  And this goes back to you know, government policy and Biden is not the
• 9:50
  best. Actually, there was a great article in Zero Hedge. I don't
• 9:54
  remember where the article came from, but that US oil production is hitting peak
• 9:58
  level thirteen million barrels a day, because try as the ADMIN might to destroy
• 10:05
  the oil industry, the demand is there. The technology keeps advancing. I
• 10:11
  was just in an oil field out in Canada, right out in Saskatchewan,
• 10:20
  and it's heavy, heavy oil, and they taken the fields that were depleted
• 10:28
  by vertical wells because vertical wells are not good for heavy oil. And they're
• 10:35
  drilling new wells there all over the place. They've drilled five of them.
• 10:41
  I mean, this company, if they if it's one hundred dollars barrel oil,
• 10:45
  they're going to cash in. They're just going to be renting money.
• 10:48
  And their costs keep going down to James because they've taken this depleted field with
• 10:52
  a lot of capital investment there and they've done the three D size seismograph seismolot
• 11:00
  on it and you know, like small company, but it's a microcap could
• 11:05
  turn into a medium sized producer in the not too distant future. I'm not
• 11:09
  pushing this. All I'm saying is this is a field that was given up
• 11:13
  for dead, you know, went through bankruptcies and everything else, and now
• 11:18
  it's an extremely profitable field. And that's exactly what's happening in the Permian base,
• 11:22
  and so thirteen million barrels a day, and that's with the admin pushing
• 11:28
  against it. Imagine if it was like the last administration, which was drill,
• 11:33
  baby drill, we'd be fifteen million and OPEK would be a non entity.
• 11:37
  Right, That's see, that's the thing is, this is why I
• 11:41
  don't understand why people can't see that, like making OPEC and non entity or
• 11:46
  not as important as it is, is like that's the best thing we could
• 11:50
  do as a country. Stiff felt like, it's not We're never going to
• 11:54
  be self. We use so much oil energy, right, you know,
• 12:00
  it's not like we're never going to be importing oil, but we're in boarding.
• 12:05
  Yeah. Yeah, Well, I mean that's the whole world needs it
• 12:09
  now. And the more we can do and the more we control that,
• 12:13
  the better. I mean, we're starting to see all of these, you
• 12:15
  know, on a much smaller level person to see all these kind of what
• 12:20
  i'll call you know, private investment into land drilling and all this sort of
• 12:24
  stuff. Now, you know, when I put my fiduciary financial advisor AD
• 12:30
  on, I'm never a big fan about I liquid investments, but when they're
• 12:33
  talking about the natural gas and oil. You know, like you said,
• 12:37
  you mentioned something, you just kind of breezed over it. But technology is
• 12:41
  huge, right, oh my god. Yeah, Like I watched I watched
• 12:46
  them, you know, the roughnecks on the field doing their thing, and
• 12:50
  you know the way they monitor it. And and there's even more innovations coming
• 12:56
  where you can take you can treat this heavy oil with certain chemicals and turn
• 13:01
  it into light sweet oil. Yeah, be huge, Yeah, I mean
• 13:07
  there's so much heavy oil around, a lot of which isn't really desirable the
• 13:11
  scheme of it. So a one hundred dollars barrel oil for sure, certainly
• 13:16
  with the hostility of our government against oil, real possibilities. So hey,
• 13:22
  what about the student loan debt. It doesn't seem to have made a big
• 13:26
  impact, the fact that people now now you have to pay your student loans,
• 13:31
  even though you got away without paying them for nearly three years. I
• 13:35
  mean, hey, talk about a vacation here, a moratorium, right right,
• 13:41
  Yeah, And it's great I have to be a debtor. It's great
• 13:46
  time to be a saver right as well. Yeah, but but you're right
• 13:50
  there, you know, the student loan debt that's gonna be something that's going
• 13:54
  to take a long time to kind of have an effect because people start paying
• 14:00
  and stop spending on anything. It's going to it's going to continue to slow
• 14:03
  down the economy, which is where I was saying, Hey, we hope
• 14:07
  the Fed doesn't push too much because a lot of these things take months,
• 14:11
  six, twelve, eighteen months to really have an effect, you know,
• 14:16
  on us. And when you start talking about you know, these these debt
• 14:22
  repayments being forced, and you know, it's it's a mixed bag, right,
• 14:26
  like, well, you took the loan out, you know, for
• 14:28
  a reason, you should repay it. You know, go out and get
• 14:31
  a job that can allow you to repay it. You know, that makes
• 14:35
  sense. But we don't want to you know, you don't want it to
• 14:39
  be too much so that it's stifling. But but that's definitely going to have
• 14:43
  an effect. We're going to see that, right, continue to affect the
• 14:48
  the thing now again, the administration continues to fight to try to make that
• 14:54
  disappear, and you know that just doesn't make any sense either to make it
• 14:58
  to make a disappear. We need to make you know, education affordable for
• 15:05
  more people. That's the bottom line, I like, because that's how you
• 15:11
  make our future better, right, is when we put educated people back into
• 15:16
  the workforce. Smart people, you know, means that we can turn things
• 15:22
  that were previously garbage frown on the side into usable energy. And that all
• 15:28
  comes from research and development and having the right people doing things, and you
• 15:33
  know, we want smart workers to be out there exactly exactly one or two
• 15:39
  other points. So you mentioned in the pre notes here about pretty much homeowners
• 15:48
  being locked in to their mortgages. I can relate to that. Hey,
• 15:54
  so what what of that? What's what's going to take to get people out
• 16:00
  out of the out of your own to downsize when it costs you more to
• 16:03
  downsize than it does to upsize here, right, it's not it's it's going
• 16:08
  to stay that way. And you even said, you know, look,
• 16:11
  you even commented like you know, you're you're not moving, and I'm not
• 16:15
  suggesting you're moving. But it does more than just lock you into your home,
• 16:19
  which you may not be a bad thing because you're paying this rate,
• 16:25
  so you're not going to sell your home. So it shrinks the available market
• 16:29
  size out there. Own prices are remaining high. So we're now we're stopping
• 16:33
  first time own buyers from coming in to the market as well. And it
• 16:40
  also does things like if I am so, I'm here in Wilmington, Delaware,
• 16:45
  right, If if there's a job in Saint Louis, right, and
• 16:51
  I have to up and move and it's going to cost me a ton to
• 16:56
  sell or move there, I may not take that job. Right. So
• 17:00
  it's again, like as crazy as it sounds, you know, people not
• 17:06
  willing to sell their homes can actually affect the economy down the line as well.
• 17:11
  And you know all these things are are interconnected, right, it's not
• 17:15
  it's not any one piece, right, So we need we need that,
• 17:21
  not that we need it, but at some point we have to get interest
• 17:25
  rate down a little for mortgages to come down a little. And you know
• 17:30
  what we might find is home prices may not drop, but we might find
• 17:33
  home prices remaining flat for a decade. Now, all right, I can
• 17:41
  relate to that, all right, Any other comments you want to make,
• 17:45
  James about the state of things before we call it a call it a day.
• 17:48
  Yeah, Listen, the world isn't coming to an end, right,
• 17:52
  but there are there are concerns out there. There are black swan events out
• 17:56
  there that are possible. You always got to, you know, keep your
• 18:00
  protected. We always you know, we always stay income focused and you know,
• 18:04
  making sure that needs met or met and and you know from from guaranteed
• 18:11
  things and things that are predictable. There's no reason to take risk just for
• 18:15
  risks sake, take risk for rewards sake. Right, just keep focused so
• 18:21
  we'll see what happens by the end of the year. We like that,
• 18:23
  all right, James say, appreciate you coming on. Got a question for
• 18:26
  me or James k l at Carrie LUTs dot com, poolock dot com.
• 18:32
  And hey, while you're at the site Financial Survival Network dot com, make
• 18:36
  sure you sign up for your free newsletter. James, always a pleasure,
• 18:38
  Thanks for stopping by. Thank you, thanks for listening to Carrie Letz's Financial
• 18:44
  Survival Network, your solution to today's trying times. For the latest, go
• 18:48
  to Financial Survival Network dot com. Financial Survival Network now more than ever,