The NASDAC is parabolic now, and you want to talk about crazy volatility right
with last year straight down and this year is straight out. I mean,
you know, it's hard to maintain any sense of normalcy. You're listening to
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Kerry Lutz. Well, we just today is June fourteenth, it's just
after two o'clock. We got word from the FED. James Locke is with
us and now from poollock dot com. That's Pool po O l E l
oc Kee dot com. James, welcome back. So the FED half spoken.
They did, and you know it's it seems that everyone was anticipating this
pause. And I know we've talked in the past, and you know I
agree that it makes sense to pause, And just as you would have imagined,
they came out with all kinds of tough talk in the in the kind
of the menace, saying we want to see what's going on. We're gonna
pause here, but hey, stock market, you should anticipate that we're coming
back full force with them now. They're talking about another two interest rate hikes
for the rest of the year. You know, I've heard various notes things
like that, so kind of I would say, at least from my reading
and understanding, this was kind of expected. We saw the CPI come out
yesterday and that was, you know, better than expected or at least in
line. So we're talking about four percent year over year inflation. It's moving
in the right direction. Producer price indexis came out today that was definitely better
than expected. So you know, it seems that the inflation piece is going
in the right direction, but the economy doesn't want to slow down right on.
Unemployment is at least reasonable, right and the stock market has had a
big recovery, We've had housing market recovery. Now it does seem that today
is a little bit of the old adage of you know, by the rumor,
sell the news. So ED came out with their tough talk, and
the market started down and then continued down. But you know, we had
a rally yesterday and I think basically what this leads to is more volatility,
and that's you know, we're not out of this is the bottom more right?
And inflation is not over either, is it now? And you know,
I think that while inflation is moving in the right direction, and uh,
you know everyone, you know, we liked it yesterday that kind of
CPI number. Um, it's it's one of those things like how you know,
if if the economy keeps spending right and unemployment stays low, then you
know that's that's gonna put pressure on inflation. And you know we're going to
see that. And I'm I'm always a proposed like I'm I'm never so much
against inflation. You know, it means things are happening, right, you
do have to keep it under control, that's for sure. Um. You
know, I wonder how much of this too, you know, when I'll
you know, because we're starting to see use car prices coming down things like
that. I wonder when that kind of supply chain piece that's back in force
will will kind of affect the economy in the market as well, and you
know that may hopefully the fellow Reserve doesn't overdo it. You know, when
that piece kind of is back to let's just call it pre pandemic levels.
Hmm. All right. So so look, inflation runs in cycles, and
it's not unusual to see a big spike and then it pulled. See it
pulled back to what's really changed here? Um, yeah, well that's in
That's what we're saying is is you know, the volatility at the end of
the day. And you know what's still crazy is you know, even if
we're saying inflation is moving in the right direction, uh, the ten year,
thirty year bonds are still lower than you know, there's still essentially negative
return on long term yet. So you know that's not good. No,
it's not. This crazy inverted yield curve is going to continue to kind of
be a problem, all right if we constantly have all this short term you
know, uh, you know, short term fields or so much higher.
I mean, you know, history just says it can't continue that way.
And the longer it stays that way, the more and more chance of their
not being this so called you know, soft landing. It's just a matter
of when it happens, and the trend is your friend until the end right,
that's right. I never saw a trader who didn't buy a top tick
if they're a trend trader. Right, So you know, it's it's one
of those things you keep going until it until it stops. But I do
think the pause was good, right, because you can't keep pounding the interest
rate up endlessly without turning around and looking and say, right, you know
what's happened, you know from what we've done already, right, I mean
there's a recession coming, right, most economists are predicting that. But it's
just a matter of when. You know when that recession is going to come,
whether it's the end of this year, it doesn't look like it right
now, but into next year, you know, seems likely. You know,
you can't sustain this kind of level of growth. I mean, the
NASDAK is parabolic now, you know that, And you want to talk about
crazy volatility, right with last year straight down and this year is straight up.
I mean, you know, it's it's hard to maintain any sense of
normalcy with with at least the NASDAC as a whole. H because now all
of a sudden, you know, AI is out of nowhere and is the
future of the world right, so true, you know that sort of thing.
So it's just h you know, it's hard to certainly it's hard to
predict. But there's no way that the FIT is going to stop raising rates.
And at the end of the day, it's just a matter of time
for you know, before they're going to have to look hard at cutting rates.
You know, if there is a recession and there's an election coming up,
let's not forget about that. And one of the things that FED does
best is, you know, one of the things that really go after is
reelecting their favorite president. Yeah, and who you know, who's ever who's
ever working well them or or that sort of thing. Yeah, exactly,
which the predecessor not so much, right the current one. Look, who's
the head of the treasury, the former head of the FED, and who
knows Powell might have a cabinet position in his future as well. Yeah,
yeah, And you know you see that all the time, and this is
you know, this is nothing new, those sort of like you know,
pat on the back kind of politic games. I do the right thing now
and then, like I said, I have a cabinet position later. And
it's hard to blame Powell, you know, I mean for that sort of
thing. You know, you'd like to think that they're doing things very altruistically,
but you know, life, life has its own the kind of way
of working things out. So and it's clear that the Fed is hell bend
on this two percent inflation, uh kind of situation. And so we're gonna
we're gonna see that, you know. And and you know, until it
gets there, you know, they're gonna they're gonna keep poking holes in the
bottom of the ship until it either sinks, you know, or or gets
down to that level. And like I said, I think at some point
it's going to sink. That's what history tells us. Yeah. Well,
you know, the only thing we learned from history is that we don't learn
from history, right, History repeats itself. That's why there's h you know,
stock market cycles and in thirty years, each generation has to make the
same mistakes of their parents, right kind of see those uh those being circular
kind of you know, stock marketing moves. Yeah. So sure, what
do you make of Yellin's comments on the reserve status of the dollar? Yeah,
I mean, I sometimes, you know, I think there's always a
big hub about, gosh, what if we the US dollars not the reserve
currency anymore. And the way I look at things is the United States is
essentially the cleanest dirty shirt in the hamper. You want to look at it
that way, right the it's the mansion in Baltimore. So I don't know,
and you know, maybe this is just me. I don't have a
fear about the US being the reserve currency. It's going to stay that way.
There's really no one out there that can you know, match in the
US. You know, for its stability is the bottom line now agree or
now, but not always. The great is that you know it is going
to disappear that you know that, that's for sure. You know, it's
just a matter of when. I mean, eck, you know, all
sorts of countries were super powerful across the globe for you know, periods of
time. And the Dutch, the Spanish, is the English, them go
down the list for sure, Rome, Greece. Yeah, yeah, I
mean bank in history, it keeps getting longer and longer. So you know,
you always think, you know, well China, uh and and you
know their economy and they can you know, drive to market that sort of
thing. You know, from an investment point of view. You know,
China is always dangerous, right, they're communist country. You can't you cannot
you know, Longe. It's like predictability, right, China is unpredictable.
They all tell you otherwise, but the fact is, you know, until
their government changes, I don't, you know, there's not going to be
enough trust over there, you know, to kind of challenge the reserve currency.
After that, I don't know, you know, India, like I
don't even know how that would play out. So you know, like,
at least I'll call it from a long, short term point of view,
the US dollar is going to remain the dominant world. Everything is going to
be traded in dollars and hedged back to dollars. Yeah, well until it
isn't until it isn't. Right, But is it imminent or is it a
sustained period of decline? I don't know the answer to that. I don't
think anybody does. But hey, so for the rest of the year,
how do you invest? How do you you know, if we get a
recession, we could conceivably see a quick rapid decline in stock markets. Yes,
yeah, so it's all about you know, the rich get richer because
they have cash on the sidelines, right, so you don't need to take
risk for the sake of taking risk. Right, There's there's lots of investments
out there that you can be in that you know, provide what's just call
it cash light or high high dividends and high you know, interest and that
sort of thing. So that if we do see you know, let's just
call it back to those COVID levels, uh, you know, then all
of a sudden things become much more sustainable to to reinvest. So, you
know, I like having a portion of the portfolio and what you know,
what I'll call cash. I mean, interest rates are pretty high in the
short term right now, it's hard to argue with that, you know,
to say I can get four or five percent guaranteed against risking. You know,
at the stock market goes up twenty percent, I mean I don't know,
you know, the majority of S and P stocks are still down,
right because it's all those tech stocks that are pulling it up, the average
up, so things I think things look rosier from an index point of view
than they actually are, right. So so I don't mind keeping you know,
a portion a portfolio in cash. I would be hesitant to you know,
start scooping with both hands here. I mean, I will say,
you know, it's crazy, it sounds it's an unusual point in life where
fixed think of investments actually have a potential of being a good, you know,
kind of purchase right now, because if we do see you know,
a market decline and a and a recession hit, they're going to cut interest
rates and you know, now you're gonna have all these higher yielding pieces which
you can now if you wanted to shift out of into into stocks. So
you know, it is a it is a difficult spot. I would say
a lot of it depends on your situation too. You know, if you're
retired and the only thing that matters is the income, and that's where a
lot of my clients are, well, then you actually want to minimize that
volatility risk at all, right, so that hey, if the marrit goes
down, that's all right, My income is still secure. The market goes
up, you know, great, ma, income is still secure. Right,
all right, makes sense. Well, we appreciate you coming on,
James. If you've got a question, James, shoot me an email k
l at Kerry Lutz dot com. There's a link to James's site in the
show notes this interview on Financial Survival Network dot com. Just click it,
take your right to a site. While you're there, sign up for a
free newsletter. James appreciate it. We'll talk to you in a couple of
months. Thanks Carry, Thanks for listening to Carry Lutz's Financial Survival Network,
your solution to today's trying times. For the latest, go to finance Inful
Survival Network dot com. Financial Survival Network now more than ever,