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The other thing, I thought that
was pretty interesting that Larry said after the

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last month's reading in the inflation and
PPI numbers for the month of April.

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Was it the way he saw another
hike was as likely as a decrease.

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Now, he was certainly in the
minority opinion there, But I think in

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its truest sense, if the Fed
was doing its job just by the analytical

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data, just by the numbers themselves. You are listening to Carrie Lutz's Financial

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Survival Network, where you get valuable
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thrive in today's trying times. You
need the Financial Survival Network now more than

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00:00:38,840 --> 00:00:44,240
ever. Go to Financial Survivalnetwork dot
com and get your free newsletter and gift.

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Financial Survival Network now more than ever. Ed, Welcome, you are

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watching and listening to the Financial Survival
Network. I'm your host, Carrie Letz.

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Well, Hey, got PPI numbers
out? Inflation is lessening? Perhaps?

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What does it all mean? What
does it mean to rate cuts?

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What does it mean to Jerome Powell? Ted Thatcher is with us now,

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and Ted, it's great to have
you back on the show. And Ted's

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site is a brightlinkwealth dot com.
Hey, you got a question for Ted

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or myself, shoot me at email
kl at Carrie LUTs dot com. So

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happy days are here again, Ted. I think Jerome Powell was smiling I

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think maybe behind the press meeting yesterday, coming away from the said meeting,

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because I think he got the air
cover that he wanted. The CPI came

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in at break even, which was
welcomed I think by the said after the

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real spike that was seen the previous
month in April, and then of course

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this morning we had the PPI numbers
come out. There was a large spike

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in that last month, that being
the April print as well, up half

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a percent. Actually, of course
this morning's reading was down negative two tenths

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of a percent. And so ultimately
those things are going hand in hand.

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They're kind of singing the same tune. And as we've talked about Jerome Powell,

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I think despite his desire to be
in the driver's seat, hasn't been

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because of the inflation rate very much. I think the inflation rate has been

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the informant carry on FED policy in
the last eighteen months, not the other

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way around that like of course Jerome
Powell would prefer, and going into election

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season, these are the kind of
numbers he's looking for to give him.

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I think the air cover they're looking
for. Who have an excuse to consider

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a rate reduction sometime later this year. Well, you know, the late

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great Alan Abelson, chief editor of
Barons many years ago, once said,

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the Fed is doing what it does
best, which is re electing a president.

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That's their intent here. They got
to cut sooner rather than later,

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right, Yeah. So, and
the late great Charlie Munger would say,

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if you show me your incentives,
I'll show you your results. And I

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think from a president's seat, if
he can prop up the value of the

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financial markets and financial assets, that
creates an incentive. And I think that

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Jerome Powell, i mean, for
better or worse, does feel the political

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pressure from DC to see some rate
cut this year. I think a lot

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of the smart money right now is
betting on that happening sometime in September.

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But I think the other side of
this carry too, is just ultimately how

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it affects the average American. Because
we can see an inflation print that says,

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hey, you know, we're not
seeing additional price in reachys, But

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that says nothing about the strain that
we all feel, you know, in

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our pocketbooks on a daily, weekly
and monthly basis. Yeah, exactly,

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So they couldn't be more detached from
the average person's existence, the average person's

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reality, right, absolutely, and
they don't really care to find out,

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do they. Well, the way
I see it is, there's really been

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this huge discrepancy between what's happening on
Wall Street and what's happening on Main Street,

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and in my belief, those two
things can only be so far apart

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for so long. You know.
I think we have often thought about the

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changes in the trends of the financial
markets, and it's almost like nothing happens,

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nothing happens, then everything happens all
at once, and so we'll see,

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you know, when those start to
come back to earth together. But

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at the end of the day,
you know, costs aren't going down,

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maybe they're not going up as much
exactly, or maybe they're just lying and

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nothing has changed, right Ted.
Isn't that a possibility? I think that

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there is. And maybe we talked
about this the last time we were together,

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but I've found it very interesting,
and that is, you know what

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Larry Summers has come out now a
little bit virally or famously and said Larry,

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of course, being the previous Perisury
Secretary, published a really fascinating thread

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on Twitter outlining the way he has
tracked the way the CPI used to be

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measured. As we know, the
CPI and the way it has been calculated

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has changed drastically over time. Now
it allows for proxies. You know,

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if the price of steak went up
too much, we'll replace it with burger

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meat, and price of burger meat
went up too much, we'll replace it

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with chicken. And I think now
if the price of chicken goes up too

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much, they might even be replace
it with tofu or but spam, yeah,

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yeah, spam, bam le will
they to do? You know,

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it's all right, you'd like eggs
and milk, right, you can live

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off of the spam. That's what
they say, right. But the problem

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is, of course, is you
know that's not what we have sound out

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how I would measure infleetion if I
went to the grocery store as certainly not

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if you would. And so it
comes back to not only these proxies being

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allowed, but also the way they
have changed what even goes into this CPI.

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Now the CPI does not even include
the cost of borrowing, which,

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as we both know, because of
the amount of the average American has,

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is a tremendous player in you know, what we experience on a month's month

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basis, just in our standard of
living. And so at least the way

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Larry Summer has calculated it, he
anticipated the peak CPI rate not at that

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still notably high nine percent number,
but by his measure, it was closer

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to twenty percent, if not even
potentially a little higher. And so you

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know, when I see that,
I just see, well, that squares

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a lot more with the conversations I
have with folks on a day to day

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basis. Hey, h see,
you know, like there's a lies,

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damn lies, and then there's statistics, right, So well, I was

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actually going to say that next,
which was at the end of the day.

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I think that a lot of these
statistics, they can measure them in

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a way where they can tell whatever
story ultimately that they want. And I

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think some of that has happened.
You know. Obviously, I think it

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is simply the case that prices didn't
go up so much in the month of

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May, but that doesn't mean that
the average American is in a very different

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situation than they were in April,
and you know, we started to see

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the cooling in the jobs market,
but then we got another roaring jobs report,

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and so again we could come back
to another statistic that they use a

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lot of different ways of calculating now, of course than they used to.

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But I still come back to that
tale of two cities. What's happening on

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Wall Street versus what happening what's happening
on Main Street? And how far and

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how long those two can be actually
stretched apart before we see something happen.

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That's a good question. And because
of this, if you talk to people

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on the coastal areas, people in
the financial sector, they think everything's fine.

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And you talk to people in Florida, the economy is booming, they

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think everything is fine. I don't
think many of them really have a glimpse

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of how precarious things really are here. It's ed. Yeah, it's almost

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like there's at times that turn it
up nose toward what they call the flyover

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states. Right. I grew up
in Indiana. There's nothing but cornfields for

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miles and miles, and you know, those are the average hardworking American,

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which I think too often has been
overlooked. The last really couple decades,

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and they're in a tough spot.
And just to come back to that point,

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do statistics the other thing, I
thought that was pretty interesting that Larry

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said after the last month's reading and
the inflation and PPI numbers for the month

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of April, was it the way
he saw another hike was as likely as

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a decrease. Now, he was
certainly in the minority opinion there, But

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I think in its truest sense,
if the Fed was doing its job just

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by the analytical data, just by
the numbers themselves, that would really be

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the conversation talking point, not the
I think conversation that is a little bit

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being driven by the political environment,
like we discussed right, and you can

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never discount the political when you're dealing
with government policies. Of course, Hey,

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so where does this lead us to? What can you do once you

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realize what they're really up to here? Ted? I think it's a really

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good question. Ultimately. I think
when I look at the financial markets,

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what I'm thinking is, Okay,
well, how much risk can I afford

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to take right now? My cash
is paying me a very reasonable rate of

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return now. And I say that
simply to say when I think about,

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you know, positions wise, I'm
thinking, hey, I want to have

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a good amount of safe money,
mammally cash money market, maybe short term

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seeds, just because the rates are
really good right now. Now. I

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will say, at the end of
the day, the reason we've talked to

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time and time again about Jerome Powell
is because the lever that he has,

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the sort of weight that he can
put on the financial markets, is just

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so heavy that it's impossible to ignore. And so because I think it is

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quite likely that the battle in DC
will win out as it typically does,

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it gets what it wants, and
I think that for better or worse,

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it is reasonably likely we'll get some
kind of decrease later this year. And

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I'd be surprised if we didn't see
a little bit more of a discrepancy even

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between what's happening on Molla Street and
Main Street. And so if there's a

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chance to capitalize on that, and
you see this some equities go up,

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00:11:01,519 --> 00:11:05,519
maybe specifically even small cap equities,
there could be an opportunity there too,

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all right, So basically your advice
is keep your powder dry. Huh.

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I think that you know there is
a good measure to be taken where some

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powder and some dry powder on the
side makes some sense, Yes, sir,

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00:11:22,039 --> 00:11:26,480
okay, Hey, appreciate you coming
on and sharing your insights with us.

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00:11:26,519 --> 00:11:31,080
Ted, I tend to agree with
you greatly here. I think the

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00:11:31,159 --> 00:11:37,039
situation is much more precarious than anyone
cares to think about. All the attention

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is on, you know, criminal
prosecutions of various public figures, the election,

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the you know war is taking place. Really it's a distraction away from

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what the real real world is happening. In the word real world tear ted.

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Hey. So in any event,
well, we'll touch base with you

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00:12:01,080 --> 00:12:05,960
probably in another month or so and
see what the world is is showing us

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00:12:07,159 --> 00:12:13,399
and when the political situation onlines,
which it will keep in November, then

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we're going to know what's really happening. Everything is sugarcoated and everything is you

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00:12:20,039 --> 00:12:22,320
know raw rah. Well, the
cheerleaders are out. So in any of

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00:12:22,320 --> 00:12:28,120
that, we find Ted at Brightlinkwealth
dot com. Link is in the show

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00:12:28,120 --> 00:12:31,879
notes, questions comments kl at Carrie
LUTs dot com. When you're at the

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00:12:31,879 --> 00:12:35,600
site Financial Survival Network dot com,
make sure you sign up for your free

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00:12:35,600 --> 00:12:39,720
newsletter. Ted always a pleasure.
Thanks for stopping by. Thank you sir,

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00:12:39,840 --> 00:12:45,639
look forward to next time. Thanks
for listening to Carrie Letz's Financial Survival

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00:12:45,679 --> 00:12:50,440
Network, your solution to today's trying
times. For the latest, go to

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00:12:50,600 --> 00:13:01,840
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