With inflation being sticky, I think that the rate hikes that the Feds have
instituted for the past you know, fourteen months or so aren't really being reflected
yet in what you know, people are feeling. I think that things are
going to get much worse when we get to the summertime, when we start
looking at small businesses and renegotiating their loans, etc. I think that the
market's going to have, you know, some challenges ahead. Even though these
numbers are coming down with the CPI, I think that there's gonna have to
be some more pain in the economy before we feel, you know, that
things are under control and we can have a robust recovery. You're listening to
Carrie Let's Financial Survival Network, where you get valuable information you just can't find
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your free newsletter in gift Financial Survival Network now more than ever, And welcome
you are listening to watching the Financial Survival Network. I'm your host, Jerry
Luttz. Well, we got a CPI number out today that it has led
to markets going higher, but also gold and silver taking off a bit.
Bitcoin kind of shrugging it all off, what does it mean? Well,
we have got for you eight thirty five years veteran of the financial wars here
it's been advising, helping you retire or quite some time. And his name
is David m Right. David, it's great to have you on the show.
And so we got a CPI number out point two percent, So is
that worthy of celebration? Actually, Carry, thank you for having me on
the show. It's a pleasure to be here with you. Actually, the
CPI number came out today at three percent. That was the headline CPI number.
The core CPI which is excluding a food and energy, was still at
a sticky kind of a four point eight percent. The Fed mandate they want
to get core PCI and CPI actually down to about two percent, So we're
a little bit away from that right now. We're at four point eight percent
on that core CPI number, But frankly, I think they're waiting for Feds
are waiting for the end of the month when the personal consumption expenditure the PC
index comes out. That's a little bit better reading. Carry, that's what
they look at a little more carefully to see what those numbers are going to
show. So I'm going to be one of those people that's a little more
cautious and bearish than maybe some of your other guests. Right so, point
two percent month over month, but an annualized rate of three percent, as
long as you don't eat and as long as you don't put gas in your
car, right absolutely, I'll tell you what. Living on the boots down
here and in Ohio, we certainly see a lot of people walking out of
the stores with a lot less groceries under their under their arms just because of
that. And in what I'm seeing here is that with inflation being sticky,
I think that the rate hikes that the Feds have instituted for the past you
know, fourteen months or so aren't really being reflected yet in in what you
know, people are feeling. I think that things are going to get much
worse when we get to the summertime, when we start looking at small businesses
and renegotiating their loans, etc. I think that the market's going to have,
you know, some challenges ahead. Even though these numbers are coming down
with the CPI, I think that there's gonna have to be some more pain
in the economy before we feel, you know, that things are under control
and we can have a robust recovery more so than just fueled by AI,
which is kind of leading the charge right now with a lot of different stocks
in the SNPN, the NASTAC. Well, it's probably AI stocks that are
being recommended by AI. There's probably no human intervention in it, all right.
I love it absolutely absolutely, and why not. It's in about every
sector, about every area of the economy you can find it, So why
wouldn't it recommend itself with AI? You and I won't even need need to
be here and probably twelve to twenty four months, right right, Well,
it'll just buy itself too, It'll put out the recommendation and then it'll just
trade it and talk about trading your own book here. Huh yeah, no
kidding. I mean that that's a concern all of us. Ad where does
this lean to? It certainly can be used for good, It's certainly an
intuitive thing. But at what point does it create more harm than good.
It's been estimated that AI could end up replacing far more jobs than robotics could
have ever replaced. Back when you know the auto industry instituted all that stuff.
Well, I can think of what is it five hundred and thirty five
jobs that I would like to see it replace, because it's sure can't be
worse than the people we send up to the capitol. Ken it, amen,
I tell you what this, this spend spend spend has got to end
ai at Ai government. What a what a wonderful thought that would be.
Let's work our way through that one. If we have an election. Yeah,
if AI was running things, we probably wouldn't be spending all this money
in the first place. There'd be a lot more people alive and taxes would
be a fraction of what they are now. Who knows, Maybe a I
would have gotten rid of the Central Reserve too while they were at it,
but b you never know. But in the meantime, we've got a PPI
number coming up to what's the whisper number there? The whisper number is that
it's going to be a little bit under the est of it, that the
producer price index is probably going to be running a little bit lower than it
was the previous month. Things are, you know, prices are coming down.
A shelter, obviously, is a major component of the Producer Price Index
and of the CPI, and those numbers are coming down. But I know
that in our area a lot of people are just kind of staying put in
their homes. They're not a lot of new house activity other than these young
bucks that are building these houses at six and seven percent mortgage rates, or
if you've got somebody older that's trading their homen for all cash deal on something
else. But the PPI probably a whisper number is it's going to be a
little bit lower estimate than what they expected. Okay, So there's two indexes
that I pay attention to when it comes to what stuff really costs. Two
numbers. Number one is the cost of a Thanksgiving dinner because that's always the
same year and year out. The grand sauce goes up, the mushrooms or
the stuffing goes down, but it's always the same basket. There's no hoodonic
adjustment, there's no nothing. And then Fourth of July barbecue, which this
year said the bill was down three percent from twenty twenty two, but it's
still fourteen percent higher than prices two years ago. I don't know where they
had this barbecue at. They must have been given away free hamburgers wherever it
was, because mine went up absolutely same here. Maybe they went to the
Nathan's Hotdog competition and got some free ones there. Who knows. Oh,
I don't want to think about that. That's a bad visual. Seriously,
Yeah, that's true. These numbers are just off the wall that seemed to
have no relationship to reality. They just don't, you know. Carry you
look at what our country produces in gross domestic product actually at one point three
percent finalized number for the first quarter. But you compare that to our debt
national deficit, which is currently at thirty two nearly thirty two trillion dollars.
We're out of whack, you know, in that front. And you can't
possibly measure what the effect of a zero at a five hundred basis point hike
means to the rest of this year. I've seen estimates that AI could take
us up another year fifty percent before the end of the year, or could
reduce us down negative ten or twenty percent before the end of the year.
There's just too much of a disparity here. I think that the Feds could
very possibly hike again at the end of this month. If they do,
they may hike again in September. Those things are going to create more pain.
I think that the whole mandate was that they were supposed to get unemployment
I thought up to about five percent. But unemployment in our country is still
around three point six, right, three point six three point seven percent.
So to me, I don't see that the Feds have created enough demand destruction
yet. Although inflation is coming somewhat lower, it seems to me that we're
gonna you know, there's some work to do yet. So what's an investor
supposed to do when you got this silent, stealthy tax that effectively devalues the
value of your by killing your purchasing power. What are you telling your people
after all your experience? I think what's good is you and I both remember
the inflationary sixties and seventies and early eighties. You would, I know,
these things go in cycles. They don't just go away because the FED decided
to raise rates one day and they've happened to follow through on their threat.
Right, These things can go on for a decade or more. They really
can carry they. I think that the reality of the situation is people have
to come back to basics and understand what their money is for. If if
if I'm working with someone, I'm just just this warning. Had somebody come
in who you know, has a couple of million dollars part of the money
they want to buy a lay cone with it. So if that's the case,
then we ride the wave of AI We ride the wave of growth stocks.
We watch it diligently and make sure that we don't get caught in a
whipsaw effect. But by a large the majority of our my clientele, they
rely on their four o one ks, their IRA accounts for income. So
I know that a lot of growth advisors promote growth as an inflation hedge,
right, but to me, getting caught in a down draft unexpectedly is the
worst inflation hedge that you could have. So the reality of the situation that
I see is creating income streams from the investments that you have. Having both
you know, high dividend paying stocks that create some growth in years where growth
can be made, and at the same time finding those companies that can be
sustained beyond that with income dividends of five to seven percent. Knowing what your
money's for and making sure that your pensions and so also security have that additional
amount of cash flow that's reliable and repeatable from your investments is I think the
way to go for the future. Okay, so, oh, can you
give us some examples, not necessarily recommendations, because everybody's situations different, but
what are some good dividend payers out there? Now, we've got quite a
few. I'm not going to get in any names and stock picking here.
They can go to write Financial Group dot com and get some of those names
and recommendations, but you know, buy and large most of the AI stocks
that are out there aren't paying much in the way of dividends, and we
certainly want to stick with those companies that are, you know, consumer staples.
We know that so far this year, consumer discretionaries still leading the way,
but to me, that's going to be short lived. I know there's
a lot of people at the airports, still a lot of people that are
going on cruises and staying in hotels. But I think at some point we
look at the debt consumer debt, what's going on there, people are are
going to realize that they got to slow down the spending. So those companies
that favor you know, repeat steady staples. Yeah, so you got your
P and G type. You know, right, you got to have your
razor blade. Women got to have their cosmetics. No matter what the economy
is doing, they're going to be buying him. Right. Yeah, there
you go. Exactly defensive names, basically absolutely, I know. So the
defensive name is still the same. I mean, at one time Coca Cola
was really a defensive stock, and now like less people with the sugar and
all that. Cigarettes used to be defensive because you were addicted to the stuff.
But less and less people smoking cigarettes, and so what are some defensive
sectors let's put it that way. Well, I think the like you had
mentioned already, consumer staples like like toiletries, like some of the comfort stocks
like like Coca cola, like things that are you know, normal day to
day items that people enjoy. People are still going to spend on themselves in
that manner, and I think long term that's what people are going to have
to get back to. What about healthcare that the administration, the current occupant
in the White House is making all sorts of extravagant claims going to bring the
price of healthcare down. If he can manage that, that would be the
first time in my life and probably your life that that ever occurred, that
place to be. Certainly one of the area is to be healthcare with with
the itonomics plan, looking into negotiating drug prices with Medicare, I think is
an excellent thing. I mean, just the cost of prescription drugs has just
gone out, way out of control. So definitely if that can happen,
that's certainly a good thing for the health sector. Hey, when when I
come back in my next life, I am going to be a prescription drug
benefit management company because they could just pick numbers out of the air and that's
what you pay. You have no possibility to less. You go to Canada
or Mexico, and that's got problems there too. I mean, a person
purchased drugs, prescription drugs in Canada that were a third price of what they
were in the US. In Mexico, I have my reservations about it.
We'll just leave it at that. But other countries, like in Western Europe,
you can do it. So obviously we're getting shafted here big time.
But the taxpayer pays for everything in the end, regardless what they get back.
Very very true. And while we're on that topic, Kerry, why
don't we make a list of all your prescription meds for the month and then
we can go out there and see if we can get get that lowered for
you. I'll do it like I'll let them bid on me, like they
do for like home improvement sites. I'll put I'll put it out there.
I say, if you want my business, how cheap, you're gonna make
it for me? Right right, exactly exactly. So how much do you
think the twenty twenty four election cycle is gonna play in on the markets and
all this crazy stuff that we're going on. I mean, you've been around
the block is many years as me, maybe maybe a couple more, maybe
a couple less. But you know there's always one big loser in every election
in my lifetime, and that's the American people. So we're gonna have volatility
because hey, people love traders love volatility. You want olatle markets if you're
a trader, that's how you make money. Yeah, and nobody knows what's
going on anyway, so volatility rules, and then afterwards we'll still have volatility,
right, Yeah, that's it's an ever ending stream. And I guess
there's a sucker born every minute too, to catch im, don't forgive absolutely
all right, Well, hey, David, really appreciate you coming on sharing
for decades of wisdom with us, because you got to put this stuff in
perspective. Election cycles. We've both been through an inordinate number and hopefully we've
got a bunch more ahead of us. And how much really changes after an
election not very many of them, that's very, very true. And the
Feds have more work to do. They've got quantitative tightening. They stopped that,
by the way, during COVID, right they were they were reducing their
allan sheet with all the money that was lent to the economy, but they
stopped doing that. You know, you even if they pause on rdikes this
year and start qt start quantity fighting, you know, there's more pain that's
going to be inflicted on the economy. I think in the in the next
year. We may not see this drop until till next year. But you
know, just as sure as you're born, I think it's going to happen
at some point. Yeah, it's got to play itself out. And we
don't even talk about the banking crisis and the fact that they've basically it's QE.
They're just calling it a different name. It's the Emergency Discount Window Bank
Fund to bail out banks, right, and it's all their own fault.
But next time we have you on, assuming that not much has changed,
probably a couple more banks will have failed by the next time you come on,
I would imagine, or will be merged in quotes. Yeah, which
isn't a great thing. Yeah, you've got four now it's up to forty
regional banks. Every time they rate ike or even leave things the way they
are. Yeah, you're decreasing the net interest margin that these banks can make.
They're they're they're squeezed, they're pinched with three percent loans on the books,
and they got to pay out their customers four and five percent, so
they're robbing Peter to pay Paul. That's just not going to be good long
term for regional banks. And I think that the FEDS, I think,
before they do anything else, and it remains to be seen what they'll do
this month later, I think they're gonna have to really, really really look
at the banking situation because if they if they if they're saying the FDIC is
going to cover everybody's deposit, I think they're smoking dope on that. I
mean, I really believe that they've got to shore up the banking industry because
of people whose faith in that, I think we're all screwed. Hey,
well, you know, fractional reserve banks is all about confidence, and the
root word of confidence is con. You know that's true. So eventually the
con game comes to an end, as all Ponzi's must. But they've been
pretty good at keeping it to running here for one hundred, one hundred ten
years now, David, You know, yeah, ten years, so obviously
it's deteriorated over time, but at some point you get to the end of
the road where they can can't be kicked down any further. Anyway, Hey,
tell us again where we find you. Best way to connect with you
on the internet, David, got a right financial group that's w r IGHD
Financial Group dot com. You can log in there and see all about us,
who we are, some of our my other appearances, what our philosophies
are, what we think is going to happen, because you know, we
have this big crystal ball there. But no, not really. But if
you come to our website you'll see a little bit more about us and what
makes us tick. Well, experience many times is better than a crystal ball
or as good as you know, especially when you have decades of it and
you're not tied up in the emotions of the time. Hey, don't forget.
There's a link in the show notes to this interview right to David's site
on Financial Survival Network dot com and just click it. While you're there,
sign up for your free newsletter David. Always a pleasure. Thank you so
much for joining us. Thank you Carrie for having me, Thanks for listening
to Carrie Let's Financial Survival Network, your solution to today's trying times. For
the latest, go to Financial Survival Network dot com. Financial Survival Network now
more than ever,