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The NASDAC is parabolic now, and
you want to talk about crazy volatility right

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with last year straight down and this
year is straight out. I mean,

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you know, it's hard to maintain
any sense of normalcy. You're listening to

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Kerry Lets's Financial Survival Network, where
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Survival Network now more than ever, And

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welcome. You are listening to watching
the Financial Survival Network. I'm your host,

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00:00:45,799 --> 00:00:51,240
Kerry Lutz. Well, we just
today is June fourteenth, it's just

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after two o'clock. We got word
from the FED. James Locke is with

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us and now from poollock dot com. That's Pool po O l E l

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oc Kee dot com. James,
welcome back. So the FED half spoken.

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They did, and you know it's
it seems that everyone was anticipating this

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pause. And I know we've talked
in the past, and you know I

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agree that it makes sense to pause, And just as you would have imagined,

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they came out with all kinds of
tough talk in the in the kind

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of the menace, saying we want
to see what's going on. We're gonna

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pause here, but hey, stock
market, you should anticipate that we're coming

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back full force with them now.
They're talking about another two interest rate hikes

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for the rest of the year.
You know, I've heard various notes things

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like that, so kind of I
would say, at least from my reading

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and understanding, this was kind of
expected. We saw the CPI come out

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yesterday and that was, you know, better than expected or at least in

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line. So we're talking about four
percent year over year inflation. It's moving

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in the right direction. Producer price
indexis came out today that was definitely better

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than expected. So you know,
it seems that the inflation piece is going

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in the right direction, but the
economy doesn't want to slow down right on.

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Unemployment is at least reasonable, right
and the stock market has had a

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big recovery, We've had housing market
recovery. Now it does seem that today

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is a little bit of the old
adage of you know, by the rumor,

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sell the news. So ED came
out with their tough talk, and

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the market started down and then continued
down. But you know, we had

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a rally yesterday and I think basically
what this leads to is more volatility,

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and that's you know, we're not
out of this is the bottom more right?

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And inflation is not over either,
is it now? And you know,

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I think that while inflation is moving
in the right direction, and uh,

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you know everyone, you know,
we liked it yesterday that kind of

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CPI number. Um, it's it's
one of those things like how you know,

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if if the economy keeps spending right
and unemployment stays low, then you

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know that's that's gonna put pressure on
inflation. And you know we're going to

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see that. And I'm I'm always
a proposed like I'm I'm never so much

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against inflation. You know, it
means things are happening, right, you

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do have to keep it under control, that's for sure. Um. You

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know, I wonder how much of
this too, you know, when I'll

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you know, because we're starting to
see use car prices coming down things like

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that. I wonder when that kind
of supply chain piece that's back in force

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will will kind of affect the economy
in the market as well, and you

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know that may hopefully the fellow Reserve
doesn't overdo it. You know, when

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that piece kind of is back to
let's just call it pre pandemic levels.

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Hmm. All right. So so
look, inflation runs in cycles, and

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it's not unusual to see a big
spike and then it pulled. See it

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pulled back to what's really changed here? Um, yeah, well that's in

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That's what we're saying is is you
know, the volatility at the end of

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the day. And you know what's
still crazy is you know, even if

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we're saying inflation is moving in the
right direction, uh, the ten year,

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thirty year bonds are still lower than
you know, there's still essentially negative

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return on long term yet. So
you know that's not good. No,

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it's not. This crazy inverted yield
curve is going to continue to kind of

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be a problem, all right if
we constantly have all this short term you

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know, uh, you know,
short term fields or so much higher.

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I mean, you know, history
just says it can't continue that way.

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And the longer it stays that way, the more and more chance of their

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not being this so called you know, soft landing. It's just a matter

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of when it happens, and the
trend is your friend until the end right,

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that's right. I never saw a
trader who didn't buy a top tick

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if they're a trend trader. Right, So you know, it's it's one

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of those things you keep going until
it until it stops. But I do

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think the pause was good, right, because you can't keep pounding the interest

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rate up endlessly without turning around and
looking and say, right, you know

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what's happened, you know from what
we've done already, right, I mean

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there's a recession coming, right,
most economists are predicting that. But it's

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just a matter of when. You
know when that recession is going to come,

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whether it's the end of this year, it doesn't look like it right

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now, but into next year,
you know, seems likely. You know,

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you can't sustain this kind of level
of growth. I mean, the

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NASDAK is parabolic now, you know
that, And you want to talk about

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crazy volatility, right with last year
straight down and this year is straight up.

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I mean, you know, it's
it's hard to maintain any sense of

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normalcy with with at least the NASDAC
as a whole. H because now all

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of a sudden, you know,
AI is out of nowhere and is the

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future of the world right, so
true, you know that sort of thing.

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So it's just h you know,
it's hard to certainly it's hard to

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predict. But there's no way that
the FIT is going to stop raising rates.

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And at the end of the day, it's just a matter of time

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for you know, before they're going
to have to look hard at cutting rates.

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You know, if there is a
recession and there's an election coming up,

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let's not forget about that. And
one of the things that FED does

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best is, you know, one
of the things that really go after is

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reelecting their favorite president. Yeah,
and who you know, who's ever who's

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ever working well them or or that
sort of thing. Yeah, exactly,

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which the predecessor not so much,
right the current one. Look, who's

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the head of the treasury, the
former head of the FED, and who

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knows Powell might have a cabinet position
in his future as well. Yeah,

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yeah, And you know you see
that all the time, and this is

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you know, this is nothing new, those sort of like you know,

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pat on the back kind of politic
games. I do the right thing now

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and then, like I said,
I have a cabinet position later. And

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it's hard to blame Powell, you
know, I mean for that sort of

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thing. You know, you'd like
to think that they're doing things very altruistically,

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but you know, life, life
has its own the kind of way

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of working things out. So and
it's clear that the Fed is hell bend

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on this two percent inflation, uh
kind of situation. And so we're gonna

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we're gonna see that, you know. And and you know, until it

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gets there, you know, they're
gonna they're gonna keep poking holes in the

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bottom of the ship until it either
sinks, you know, or or gets

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down to that level. And like
I said, I think at some point

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it's going to sink. That's what
history tells us. Yeah. Well,

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you know, the only thing we
learned from history is that we don't learn

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from history, right, History repeats
itself. That's why there's h you know,

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stock market cycles and in thirty years, each generation has to make the

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same mistakes of their parents, right
kind of see those uh those being circular

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kind of you know, stock marketing
moves. Yeah. So sure, what

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do you make of Yellin's comments on
the reserve status of the dollar? Yeah,

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I mean, I sometimes, you
know, I think there's always a

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big hub about, gosh, what
if we the US dollars not the reserve

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currency anymore. And the way I
look at things is the United States is

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essentially the cleanest dirty shirt in the
hamper. You want to look at it

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that way, right the it's the
mansion in Baltimore. So I don't know,

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and you know, maybe this is
just me. I don't have a

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fear about the US being the reserve
currency. It's going to stay that way.

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There's really no one out there that
can you know, match in the

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US. You know, for its
stability is the bottom line now agree or

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now, but not always. The
great is that you know it is going

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to disappear that you know that,
that's for sure. You know, it's

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just a matter of when. I
mean, eck, you know, all

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sorts of countries were super powerful across
the globe for you know, periods of

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time. And the Dutch, the
Spanish, is the English, them go

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down the list for sure, Rome, Greece. Yeah, yeah, I

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mean bank in history, it keeps
getting longer and longer. So you know,

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you always think, you know,
well China, uh and and you

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know their economy and they can you
know, drive to market that sort of

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thing. You know, from an
investment point of view. You know,

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China is always dangerous, right,
they're communist country. You can't you cannot

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you know, Longe. It's like
predictability, right, China is unpredictable.

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They all tell you otherwise, but
the fact is, you know, until

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their government changes, I don't,
you know, there's not going to be

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enough trust over there, you know, to kind of challenge the reserve currency.

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After that, I don't know,
you know, India, like I

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don't even know how that would play
out. So you know, like,

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at least I'll call it from a
long, short term point of view,

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the US dollar is going to remain
the dominant world. Everything is going to

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be traded in dollars and hedged back
to dollars. Yeah, well until it

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isn't until it isn't. Right,
But is it imminent or is it a

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sustained period of decline? I don't
know the answer to that. I don't

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think anybody does. But hey,
so for the rest of the year,

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how do you invest? How do
you you know, if we get a

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recession, we could conceivably see a
quick rapid decline in stock markets. Yes,

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yeah, so it's all about you
know, the rich get richer because

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they have cash on the sidelines,
right, so you don't need to take

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00:12:01,320 --> 00:12:07,279
risk for the sake of taking risk. Right, There's there's lots of investments

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00:12:07,279 --> 00:12:13,960
out there that you can be in
that you know, provide what's just call

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00:12:13,000 --> 00:12:18,720
it cash light or high high dividends
and high you know, interest and that

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00:12:18,840 --> 00:12:24,320
sort of thing. So that if
we do see you know, let's just

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call it back to those COVID levels, uh, you know, then all

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of a sudden things become much more
sustainable to to reinvest. So, you

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00:12:33,679 --> 00:12:39,360
know, I like having a portion
of the portfolio and what you know,

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what I'll call cash. I mean, interest rates are pretty high in the

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short term right now, it's hard
to argue with that, you know,

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00:12:48,080 --> 00:12:54,360
to say I can get four or
five percent guaranteed against risking. You know,

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at the stock market goes up twenty
percent, I mean I don't know,

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you know, the majority of S
and P stocks are still down,

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00:13:03,519 --> 00:13:07,559
right because it's all those tech stocks
that are pulling it up, the average

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00:13:07,639 --> 00:13:11,720
up, so things I think things
look rosier from an index point of view

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than they actually are, right.
So so I don't mind keeping you know,

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a portion a portfolio in cash.
I would be hesitant to you know,

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start scooping with both hands here.
I mean, I will say,

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you know, it's crazy, it
sounds it's an unusual point in life where

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00:13:33,559 --> 00:13:39,600
fixed think of investments actually have a
potential of being a good, you know,

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00:13:39,799 --> 00:13:43,720
kind of purchase right now, because
if we do see you know,

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a market decline and a and a
recession hit, they're going to cut interest

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00:13:48,600 --> 00:13:52,320
rates and you know, now you're
gonna have all these higher yielding pieces which

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you can now if you wanted to
shift out of into into stocks. So

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you know, it is a it
is a difficult spot. I would say

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a lot of it depends on your
situation too. You know, if you're

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00:14:05,960 --> 00:14:09,480
retired and the only thing that matters
is the income, and that's where a

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00:14:09,480 --> 00:14:15,720
lot of my clients are, well, then you actually want to minimize that

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volatility risk at all, right,
so that hey, if the marrit goes

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down, that's all right, My
income is still secure. The market goes

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00:14:22,759 --> 00:14:26,440
up, you know, great,
ma, income is still secure. Right,

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00:14:26,480 --> 00:14:30,679
all right, makes sense. Well, we appreciate you coming on,

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00:14:30,759 --> 00:14:33,320
James. If you've got a question, James, shoot me an email k

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00:14:33,639 --> 00:14:37,960
l at Kerry Lutz dot com.
There's a link to James's site in the

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00:14:39,000 --> 00:14:43,919
show notes this interview on Financial Survival
Network dot com. Just click it,

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00:14:43,039 --> 00:14:46,639
take your right to a site.
While you're there, sign up for a

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00:14:46,679 --> 00:14:48,919
free newsletter. James appreciate it.
We'll talk to you in a couple of

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00:14:48,960 --> 00:14:54,240
months. Thanks Carry, Thanks for
listening to Carry Lutz's Financial Survival Network,

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00:14:54,440 --> 00:15:00,279
your solution to today's trying times.
For the latest, go to finance Inful

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