1 00:00:00,120 --> 00:00:04,679 Today's generation doesn't even know what inflation is compared to what we know inflation to 2 00:00:04,719 --> 00:00:07,200 be from the eighties and nineties, and we don't want to have repeat of 3 00:00:07,240 --> 00:00:11,640 that, of course. But the reality is is that I am very pleased 4 00:00:11,679 --> 00:00:15,880 to see what they're doing with these rate pauses because I think that the job 5 00:00:15,960 --> 00:00:18,879 is over. I don't think that they need to continue to raise rates on 6 00:00:19,000 --> 00:00:23,480 us. You are listening to Carrie Lutz's Financial Survival Network, where you get 7 00:00:23,559 --> 00:00:29,199 valuable information you just can't find anywhere else to thrive in today's trying times. 8 00:00:29,399 --> 00:00:35,920 You need the Financial Survival Network now more than ever. Go to Financial Survivalnetwork 9 00:00:35,960 --> 00:00:42,719 dot com and get your free newsletter and gift. Financial Survival Network now more 10 00:00:42,799 --> 00:00:50,439 than ever, and welcome. You are listening to and watching the Financial Survival 11 00:00:50,439 --> 00:00:54,399 Network. I'm your host, Carrie Letz. It's twelve thirteen, twenty three, 12 00:00:54,640 --> 00:01:00,520 so we get the PPI numbers out, inflation is out, everything looking 13 00:01:00,600 --> 00:01:04,599 good. What's the FED gonna do? Matthew Johnson with us now from Johnson 14 00:01:04,719 --> 00:01:14,560 Wealth and Income Management, and well you find him at Johnson WIM dot com 15 00:01:14,719 --> 00:01:19,239 if you got any questions for him or myself kl at Carrie lets dot com 16 00:01:19,359 --> 00:01:22,719 is the email address. So, Matthews, great to have you back on. 17 00:01:23,359 --> 00:01:26,760 What are you making here of the latest numbers, CPI, PPI, 18 00:01:27,560 --> 00:01:34,280 personal consumption expenditures, all of that good stuff. What do you think. 19 00:01:34,719 --> 00:01:36,959 Well, it's great to be back on the program. Thanks for having me 20 00:01:37,000 --> 00:01:41,079 again, Carrie. There is just a lot of information to kind of unpack 21 00:01:41,159 --> 00:01:45,159 over the course the last couple of weeks. So I guess we'll begin with 22 00:01:45,519 --> 00:01:49,680 the latest piece of information, which is the Feds have decided not to go 23 00:01:49,719 --> 00:01:53,640 ahead and raise interest rates in the month of December. Now, this is 24 00:01:53,200 --> 00:01:57,680 this is good news. This is good news for us because the reality is 25 00:01:57,680 --> 00:02:05,280 is we've gone through twenty four months worth roller coaster rides up and down, 26 00:02:05,400 --> 00:02:10,159 watching the economy kind of go back and forth, shrink and then grow maybe 27 00:02:10,159 --> 00:02:14,680 a little bit, and then back again. And we know that as the 28 00:02:14,719 --> 00:02:19,080 Federal Reserve raises interest rates. Yeah, the main motivation is to bring inflation 29 00:02:19,159 --> 00:02:23,319 down, which it's definitely worked. But the reality is is that it makes 30 00:02:23,520 --> 00:02:28,280 growth really really hard for corporations, and it makes it hard just to grow 31 00:02:28,319 --> 00:02:31,800 the economy in general. So the fact that they have taken and not paused 32 00:02:32,199 --> 00:02:38,520 and raised interest rates not twice, but now three times. The general consensus 33 00:02:38,599 --> 00:02:43,719 carry is really that this is now signaling the official pause, though I don't 34 00:02:43,719 --> 00:02:46,120 think we're ever going to hear them say that for a very long time. 35 00:02:46,400 --> 00:02:51,680 Their goal and their expectation is to try to keep a psychological lid on this 36 00:02:51,800 --> 00:02:53,560 economy, and so they're not going to come out. They're not going to 37 00:02:53,560 --> 00:02:58,039 be talking about rate cuts, not yet anyway, that's going to be a 38 00:02:58,039 --> 00:03:00,280 while. That's probably going to be in the middle of next year, I'm 39 00:03:00,280 --> 00:03:06,199 guessing. But good news is those interest rates aren't coming up. The second 40 00:03:06,280 --> 00:03:09,879 thing that I think we can look at that is a good indicator that is 41 00:03:10,280 --> 00:03:15,960 kind of reinforcing the decision of the Feds not to raise interest rate is the 42 00:03:15,960 --> 00:03:21,919 personal consumption. What we're seeing is what we all really already know, and 43 00:03:21,960 --> 00:03:27,439 that is that American families are not going out and buying big ticket items like 44 00:03:27,439 --> 00:03:31,080 they used to. What they're doing is the majority of their household income is 45 00:03:31,159 --> 00:03:36,759 really going to pay the utility bills. It's to buy the groceries and the 46 00:03:36,800 --> 00:03:43,960 gasoline. And so we see that if the person consumption is kind of starting 47 00:03:44,000 --> 00:03:49,319 to kind of dim just a little bit on those big ticket items. We 48 00:03:49,400 --> 00:03:53,319 know that the Federal Reserve knows that what they've been doing raising interest rates is 49 00:03:53,360 --> 00:04:00,080 actually helping CPI. CPI came down that was pretty broadly expected. Core inflation 50 00:04:00,240 --> 00:04:04,599 at four cpis and three point one percent going in the right direction. Here's 51 00:04:04,639 --> 00:04:09,599 a big question. Are they going to get down to the two percent like 52 00:04:09,639 --> 00:04:14,199 they want? And the reality is I don't think so. And as I've 53 00:04:14,199 --> 00:04:18,519 contended with many of my clients across many different platforms, I don't think that 54 00:04:18,560 --> 00:04:24,120 they need to hit two percent for us to be comfortable at the rate of 55 00:04:24,120 --> 00:04:27,879 inflation as Americans. You and I have discussed this in the past. You 56 00:04:27,879 --> 00:04:30,879 know, today's generation doesn't even know what inflation is compared to what we know 57 00:04:31,319 --> 00:04:33,959 inflation to be from the eighties and nineties, and we don't want to have 58 00:04:34,040 --> 00:04:39,560 repeated that, of course. But the reality is is that I am very 59 00:04:39,560 --> 00:04:43,639 pleased to see what they're doing with these rate lauses because I think that the 60 00:04:43,879 --> 00:04:46,279 job is over. I don't think that they need to continue to raise rates 61 00:04:46,279 --> 00:04:50,759 on us. So you think the rate raising is over? So happy days 62 00:04:50,759 --> 00:04:55,639 are here again? Huh? Well again, They're going to keep a very 63 00:04:55,759 --> 00:05:00,680 stern set of language that's hopefully keeping that psychological it. As I said, 64 00:05:00,839 --> 00:05:03,639 on the market. You know, the thing that I think is going to 65 00:05:03,680 --> 00:05:09,319 be a bit of a moving target for them is if we see how the 66 00:05:09,360 --> 00:05:13,240 stock market is behaving right now. In fact, you know, September was 67 00:05:13,240 --> 00:05:16,399 a bad month for the stock market. October was a dumpster fire, and 68 00:05:16,439 --> 00:05:20,439 then all of a sudden you look at November and November things have completely changed. 69 00:05:20,519 --> 00:05:25,279 Right. It's like the market chain to life. And today the stock 70 00:05:25,319 --> 00:05:29,839 market is up and yet again on the news of no rate increase. So 71 00:05:30,160 --> 00:05:31,920 now the Feds are going to be dealing with a different kind of psychology. 72 00:05:31,959 --> 00:05:36,040 And this is what we call the wealth effect. So even though the majority 73 00:05:36,439 --> 00:05:42,920 of household income in America today is now being focused more so on the actual 74 00:05:43,040 --> 00:05:46,959 necessities of life, when individuals are starting to see their four to one k's 75 00:05:47,000 --> 00:05:51,199 come back, they're starting to see their I ra's and their post tax investments 76 00:05:51,680 --> 00:05:56,800 starting to come back, this is going to create a bit of a psychological 77 00:05:56,879 --> 00:06:00,439 permission slip for Americans to say, Okay, well maybe we are out of 78 00:06:00,480 --> 00:06:03,079 the woods, maybe we're getting back into growth, and I can feel good 79 00:06:03,120 --> 00:06:06,519 about maybe taking some of my money out of my account and spending it, 80 00:06:06,920 --> 00:06:11,759 and so that's obviously not what the Feds want. They want to continue to 81 00:06:11,800 --> 00:06:15,639 see things shrink. But they're going to be contending with that wealth effect. 82 00:06:15,720 --> 00:06:18,399 So I think in many respects, they're also going to be watching the market 83 00:06:18,519 --> 00:06:24,519 very very closely because they know how emotionally connected as Americans we are to our 84 00:06:24,519 --> 00:06:28,480 investments and do how much we've saved. Okay, so what do you do 85 00:06:28,600 --> 00:06:30,480 now? Do you hop back in the market now that it's had this big 86 00:06:30,519 --> 00:06:34,319 advance or do you play it safe? Well, it's interesting that you say 87 00:06:34,319 --> 00:06:38,920 that because I've never been as a fiduciar area. I've never been a big 88 00:06:38,959 --> 00:06:44,879 advocate of making wholesale moves in and out of the market. I'm really more 89 00:06:45,000 --> 00:06:49,519 or less an advocate of being well diversified and making certain that you can take 90 00:06:49,519 --> 00:06:56,360 advantage of the down times. And we do that by keeping very very close 91 00:06:56,439 --> 00:06:59,680 eye on the fundamentals, which is Okay, I want to be diversified, 92 00:07:00,199 --> 00:07:04,040 cross to various different asset classes. I want to make certain first in foremost 93 00:07:04,279 --> 00:07:08,759 that I've got some safe money. I've got some money that's in fixed income, 94 00:07:09,000 --> 00:07:11,480 I've got some money that's in some equities, and some real estate, 95 00:07:11,600 --> 00:07:15,160 some precious metals. I want to have that diversification because I don't know from 96 00:07:15,240 --> 00:07:17,160 day to day, month to month, a year to year which asset class 97 00:07:17,199 --> 00:07:23,160 is going to be the best performer. But I really strongly encourage people to 98 00:07:23,199 --> 00:07:27,439 take a look at their investments and make certain at the end of the day 99 00:07:27,800 --> 00:07:32,639 that they are producing at least a good four percent or better in dividends. 100 00:07:32,759 --> 00:07:36,319 And the reason they say that is, this is foolhardy to believe that if 101 00:07:36,399 --> 00:07:40,360 let's say you've got money in the stock market, the stock market's always going 102 00:07:40,399 --> 00:07:43,519 to perform. We know better than that. So there's going to be times 103 00:07:43,519 --> 00:07:46,839 where the market isn't performing. So what if you're retired, Well, if 104 00:07:46,839 --> 00:07:49,759 you're retired, you need income. You want to be selling those shares at 105 00:07:49,800 --> 00:07:53,680 a loss to get that income. And the answer is obviously know, Well, 106 00:07:53,680 --> 00:07:57,079 what if your portfolio is producing say four percent, five percent, six 107 00:07:57,079 --> 00:08:01,360 percent dividends, which by the way, is doable. Now you've got income 108 00:08:01,399 --> 00:08:03,319 to spend. But what if you're on the opposite end of that teeter totter. 109 00:08:03,360 --> 00:08:07,240 What if you're not yet retired, You're not even closer retirement, You're 110 00:08:07,240 --> 00:08:09,480 still in the accumulation stage. Well, the reality is is that you know, 111 00:08:09,839 --> 00:08:15,800 many workers today they have access to retirement programs like four one ks four 112 00:08:15,879 --> 00:08:18,240 or three b's and that sort of thing. But what if what if the 113 00:08:18,279 --> 00:08:22,240 personal learning that you've invested is producing that four percent, five percent, six 114 00:08:22,279 --> 00:08:28,959 percent, and you're using those dividend dollars to help continue the dollar cost averaging 115 00:08:28,040 --> 00:08:33,480 story while the market is down, and here's a physical we all know, 116 00:08:33,559 --> 00:08:35,320 it's almost as if we pop out of the wound we've been told, we've 117 00:08:35,440 --> 00:08:39,480 already had it installed in our minds. We buy low, we sell high 118 00:08:39,840 --> 00:08:46,600 right, And the reality is is that if we're not producing income off from 119 00:08:46,600 --> 00:08:48,399 the assets that we own or not, doesn't mean we have to be taking 120 00:08:48,440 --> 00:08:52,159 it. But if we're not producing the income, then we're not able to 121 00:08:52,559 --> 00:08:58,519 only take advantage of the beautiful gifts that things like this situation with the FEDS 122 00:08:58,600 --> 00:09:03,120 raising in restraints awards us. And so we want to be able to continue 123 00:09:03,120 --> 00:09:07,919 to buy and stay diversified. We want to be able to make certain we're 124 00:09:07,919 --> 00:09:11,080 getting income. We want to make certain we're paying attention to the distribution stage 125 00:09:11,080 --> 00:09:15,559 of our life if we're in that and purposefully investing for that, if we're 126 00:09:15,679 --> 00:09:18,240 not if you're still in the accumulation stage of your life. Let's say you're 127 00:09:18,279 --> 00:09:22,000 forty five or fifty to fifty five years of age, and you still have 128 00:09:22,440 --> 00:09:26,360 five, ten, fifteen years before you get to retirement. Stop playing it's 129 00:09:26,399 --> 00:09:30,480 safe. Stop playing it safe, play it smart, and be aggressive because 130 00:09:30,759 --> 00:09:33,879 the market always tends to come back. We know that, we just don't 131 00:09:33,919 --> 00:09:37,200 know how long it'll take, and so we need to be absolutely sure to 132 00:09:37,279 --> 00:09:41,679 be managing our investments. Things like this is going to happen in the future. 133 00:09:41,720 --> 00:09:43,480 The Feds are going to make decisions in the future. We know that 134 00:09:43,559 --> 00:09:48,519 it's going to affect us. Congress is going to be a bunch of boneheads 135 00:09:48,559 --> 00:09:52,240 to continue to make really bad decisions from time to time, and it's going 136 00:09:52,360 --> 00:09:54,759 to affect the market. So we've got to be prepared for that and be 137 00:09:54,879 --> 00:10:00,240 agile enough within our portfolio to take advantage of it. All right, I 138 00:10:00,240 --> 00:10:05,759 guess I guess that'll have to do. So you're better off being prepared than 139 00:10:05,240 --> 00:10:11,200 being scared, That's correct. All right? Hey, well, thanks for 140 00:10:11,279 --> 00:10:16,200 clearing that. Is clearing us up for that when we have this discussion next 141 00:10:16,200 --> 00:10:18,240 December, where do you think things are going to be here? Matthew. 142 00:10:18,759 --> 00:10:22,360 I think things that are things are really going to be elevated by December of 143 00:10:22,360 --> 00:10:26,879 twenty twenty four. That's my expectation. We've gone through the Ringer in the 144 00:10:26,919 --> 00:10:31,120 last three years, and I do expect good things. I think that we 145 00:10:31,240 --> 00:10:37,159 just have to make certain that our optimism isn't clouding our judgment and we're making 146 00:10:37,519 --> 00:10:43,799 rash decisions when we're supposed to just be taking a very moderate approach and doing 147 00:10:43,960 --> 00:10:48,279 what we are supposed to do and not being swayed with the winds of Wall 148 00:10:48,320 --> 00:10:52,799 Street or with the verious different headlines we see. We just continue to keep 149 00:10:52,799 --> 00:10:56,759 our hands to that flow, be steady, be investing smartly, and making 150 00:10:56,840 --> 00:11:01,960 certain that you've always got base is covered. So what kind of returns you 151 00:11:03,000 --> 00:11:07,360 think we should be shooting for in this type of market. Well, that's 152 00:11:07,399 --> 00:11:11,799 a great question, because really when you when you read the headlines, you 153 00:11:11,799 --> 00:11:15,320 know everyone is pointing towards Look at the S and P. It's up twenty 154 00:11:15,399 --> 00:11:20,320 percent. Well, don't mistake in that is twenty percent growth, because that's 155 00:11:20,320 --> 00:11:24,039 not twenty percent growth, that's recovery. We look at where the S and 156 00:11:24,080 --> 00:11:26,879 P is today compared to where it was at the end of twenty twenty, 157 00:11:28,159 --> 00:11:31,759 we know that we're actually still below that high. By the end of twenty 158 00:11:31,799 --> 00:11:35,159 twenty four, I would like to see that we're going to be anywhere between 159 00:11:35,200 --> 00:11:39,759 eight to ten percent, maybe even twelve percent higher as an average in the 160 00:11:39,840 --> 00:11:43,399 S and P. I think that that's very possible if the FEDS don't throw 161 00:11:43,480 --> 00:11:48,159 us into a recession. Is that possible, Well, it is very possible, 162 00:11:48,200 --> 00:11:50,960 but it really depends upon how long they choose to keep these interest rates 163 00:11:52,000 --> 00:11:56,080 elevated. Carrot, Do you think we're in a recession now or we're kind 164 00:11:56,080 --> 00:11:58,879 of on the cusp or on the edge? I believe we're on the ed. 165 00:12:00,399 --> 00:12:03,799 I believe we're on the edge. I know that back in July I 166 00:12:03,919 --> 00:12:09,279 was extremely nervous that they were being so very dogmatic that they were going to 167 00:12:09,279 --> 00:12:11,639 push us to the edge of the cliff, and man, I could look 168 00:12:11,639 --> 00:12:15,600 over the edge and see the bottom from where I was standing. But I 169 00:12:15,600 --> 00:12:18,240 don't think that we're there yet. I know, depending upon the data that 170 00:12:18,279 --> 00:12:22,080 you look at, some could argue that we already are in a recession, 171 00:12:22,600 --> 00:12:26,440 and in some sectors of the economy, Carrie, we really are. But 172 00:12:26,600 --> 00:12:31,039 as a general whole, I don't believe that we are all right. Well, 173 00:12:31,320 --> 00:12:35,600 we won't get into China and it's effect on the world, what's happening 174 00:12:35,639 --> 00:12:39,879 there. I think we'll just leave it here as an upbeat end of the 175 00:12:39,960 --> 00:12:46,120 year message from Johnson Wealth and Income to all of you out there. Matthew, 176 00:12:46,200 --> 00:12:48,480 just tell us where do we find you again? Where's the best? 177 00:12:48,480 --> 00:12:52,720 Absolutely they can go to the website johnsonwim dot com, where they can go 178 00:12:52,759 --> 00:12:58,480 to my YouTube channel, The Capitalized Life, and either which way reach out 179 00:12:58,519 --> 00:13:01,759 to me. I'll be more than happy to excellent. Hey, got a 180 00:13:01,840 --> 00:13:05,480 question for Matthew or myself, you can only send me an email kl at 181 00:13:05,559 --> 00:13:11,480 Carrie LUTs dot com. Link is in the show notes to this interview on 182 00:13:11,799 --> 00:13:15,600 our site Financial Survival Network dot com. While you're there, sign up for 183 00:13:15,639 --> 00:13:20,399 your free newsletter. Matthew. Hey, best wishes to you and yours for 184 00:13:20,440 --> 00:13:24,000 the holiday season and for the coming year, and we'll talk to you in 185 00:13:24,120 --> 00:13:30,559 twenty twenty four. Sounds great. Thanks for listening to Carrie Letz's Financial Survival 186 00:13:30,600 --> 00:13:35,039 Network your solution to today's trying times. For the latest, go to Financial 187 00:13:35,159 --> 00:13:41,960 Survivalnetwork dot com. Financial Survival Network now more than ever