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