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I don't think the bets can really
raise a lot more. I mean,

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the thought is that they're going to
reverse, and I believe that one of

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the things that's going to force their
hand other than just demand destruction more Middle

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Americans getting brushed by debt by an
inflation that you and I talked about this

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on your previous sure shows that that
inflation is held at about twenty percent increase

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over what it was three years ago. You were listening to Carrie Let's's Financial

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Survival Network where you get valuable information. You just can't find anywhere else to

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00:00:40,640 --> 00:00:46,000
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Financial Survival Network now more than ever. Ed. Welcome, you are

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

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Well, hey, we're in the
third week of January. Here we got

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good news on the consumer sentiment front. Consumer sentiment has got up last couple

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of months, is not enough to
combat the rising credit card to higher foreclosures,

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weaker earnings by banks. David Wright
is with us now financial expert and

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David's great to have you back on
the show. So what are you making

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of all these rosy numbers here on
consumer sentiment and spending and such? Is

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it too little, too late?
Kerry? Thanks for having me back,

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appreciate it, toys great to talk
with you. I think that the numbers

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are indicative of consumer habits. Did
they like to spend money? And I

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think people as long as they have
room in their credit card balances to continue

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to use their credit to feel happy
about the fact fact that they've that the

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inflation picture, at least on paper, looks like it's coming down in the

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right direction. The stock market has
certainly exhibited those behaviors of the belief that

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they think the Feds are going to
start reducing higher interest rates, which is

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going to reduce strain on banks,
reduce credit card debt down the road,

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perhaps open up the housing market.
So from the last report Herey University of

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Michigan consider where sentiment increase was thirteen
percent. People viewing their own personal situation

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an improvement of thirteen percent, going
from sixty nine point seven on the index

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up to seventy eight point eight percent
on the index. People's opinion of outlook

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on near term business conditions up thirteen
percent on that as well. They're reading

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however, on people's outlook on longer
term business conditions was a point below that

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well, plus twelve percent. So
not quite as bullish on the longer term

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outlook, because let's get real,
this is an election year and there's still

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a lot of variables out there with
what's going on in our world, all

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right, So where does that leave
us? Here? Is the economy expanding

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lower registrates, is it going to
make any difference or we kind of locked

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in here? I think for right
now, the economy is basically going to

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stay at a stalemate right now,
as long as the Feds stay higher for

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longer, which they of course have
given different signals. The problem is with

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this federal reserve system. With every
Fed president having their day to talk to

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the press, they each have their
own opinions on how they believe they're going

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to vote as far as increases,
decreases, or staying the satine throughout the

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rest of the year. I believe
personally with the data that I've read,

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we've gone from a first it was
three rate reductions, then the market started

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baking in five to six rate reductions
by the end of the year, and

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now Carrie, just in the last
few days, I'm starting to read news

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about perhaps a hold, if not
wait till June or even third quarter before

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they would even begin to reduce rates. I even't heard somebody bostic, I

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think it was the FED President Bostick
mentioned that there might even be a rate

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hike this year. There's so many
mixed signals out there, and I think

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the reality is we just have the
things that the FEDS look for. Low

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unemployment. We have very low unemployment
right now that continues at three point seven

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percent. We certainly have stabilized inflation. It's gone down from nine point one

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all the way back down to I
think the core CPI carried he was in

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the mid threes three one to three
five ish, three point five ish.

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And I know the Fed their target
mandate is two percent, so they're not

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quite there yet. My guess is, with still six trillion dollars of cash

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sitting out there waiting to be spent, either by consumers or by corporations and

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pension funds, that there's still going
to be some chance of a robust market.

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But where will the Where's the Fed
going to go? Are they going

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to devote political like they have in
the past. Are they going to help

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the stock market out by lowering rates, which we believe would definitely help the

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market continue to show a rise in
the new year. Or do they basically

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say, hey, if we'ren't five
and a quarter to five and a half

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percent on the federal funds rate and
the stock market had a record year last

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year, now, yes, it
was propped up by these mag seven stocks,

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why would we reduce rates right now? If everything's looking of better,

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lower unemployment, stock market's doing well, Maybe the Fed just says, you

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know what, if it ain't broke, don't fix it. We're going to

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hold higher for longer, and we're
going to wait and see if we can

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create more demand destruction of the middle
class. And the reality is there is

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demand destruction going on right now with
middle class as far as credit card borrowing

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amounts spiking in the last order revolving
credit up nineteen point five billion last order.

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Foreclosure activity on houses increases From twenty
twenty two we had three hundred and

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twenty four thousand forclosures in twenty two. In twenty twenty three we had three

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hundred and fifty seven thousand so that
number has increased more people for closing going

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out of their mortgages. So I
don't know. You tell me, well,

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if I knew that, I would
give up my computer, here,

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my keyboard for a crystal ball.
But certainly it looks like well, I

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remember the late great Alan Abelson,
editor in chief of Barons, used to

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say, the Federal Reserve is doing
what it does best, and that's elect

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thing a president. Right for the
more aesthetical on you, Yet there you

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go. I never quote, but
yeah, yeah, I don't think the

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bets can really raise a lot more. I mean, the talk is that

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they're going to reverse, and I
believe that one of the things that's going

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to force their hand other than just
demand destruction more middle Americans getting brushed by

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debt by an inflation that you and
I talked about this on your previous Sure

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shows that that inflation is held at
about twenty percent increase over what it was

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three years ago. The rate of
acceleration has declined, but certainly inflation has

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held the twenty percent. So the
question that I think the Feds are going

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to have to ask themselves is staying
higher for longer is going to rear its

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uplove the head with banking in our
country. I think the larger banks,

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all their eargenings were public last week. I believe a lot of the ease

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the biggest kneing Jpmorium Chase, and
the Bank of America a lot of their

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earnings. But that's understandable because they
all had to pay this fbiic settlement check

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for the bailout last year, so
they all got hit with that syrtax.

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But still, even despite that,
these larger banks that are kind of too

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big to fail banks not as worried
about them, but their earnings were kind

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of lackluster. Most of them were
a little lower. I think the FEDS

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are going to think about it.
The four thousand loss regional banks that are

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out there that can't really take a
lot more squeeze on their net interest margins,

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the difference between what they pay their
depositors and what they make on their

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own loans. I don't think the
Feds can squeeze a lot more on interest

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rate heights or holding higher for a
lot longer. I think at some point

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they want the American consumers belief in
the financial system to remain there long term,

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so I think I think we'll get
our array reductions, but I think

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it's going to be more towards the
middle to late later part of the year.

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But depending upon political pressures. You
you just pointed one out, I

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think we'll see. So they're just
going to put it off for as long

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as they possibly can hunt I think
so. I think that's what they'll do.

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Personally, there's too much I don't
have my dot plot up here to

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take a look at it, but
there's enough difference of opinions from one side

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to the other side of the FED
that it's tough to to really decide which

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way they're going to go with it. At this point, it's hard to

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read owls which way he's going to
go with it. But for one thing

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for sure, Carrie, it's definitely
a tightrope walk between making the right and

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the wrong move. And I don't
even know if they're is a right or

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wrong move. You create artificial money
and stimulus, it's tough to walk that

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stuff back without having consequences. Yeah, once you released the inflation genie from

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the bottle, it's yes, it's
hard to get it back in and clearly

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they've done that. So what about
the thirty five trillion in debt that we've

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accumulated with no end in sight.
Yeah, you tell me. I mean,

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we just keep kicking that can down
the road. I think the estimates

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are a trillion per year of interest
just to service that debt. And you

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know you can't. You can't continually
spend six point five trillion and only bring

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in four point four four point five
trillion in revenues. Now, I will

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say this obviously in their assessment of
the Trump presidency and the debt that was

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created during his administration, when you
look closer at the numbers, I think

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recently I've been hearing a lot about
the trillion he created during his time in

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office. But when you really keep
behind those numbers, carry four trillion of

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that was COVID relief, and you
know, his hand was forced in that

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we needed help. Money was printed. The other half of that came from

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his tax cut corporate America from thirty
five percent down to twenty one percent,

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which you know generated a lot less
tax revenue for the federal government. They

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were already spending that money, so
that created part of the deficit during the

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Trump administration. The question is moving
forward, Well, you know, I

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guess I'll interview you. What do
you think they're going to do? Yeah,

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well, way that data. My
gut feel is they'll put off the

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cut for longer than the markets expecting
because they got big basically rates, the

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hot long term rates have come down. They've got enough leeway between the two

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year treasury and the Fed funds rate, so there's no impetus there. So

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I think they'll just let it go
maybe another month or two, who knows,

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but they'll let it go another month
or two then expected, but eventually

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they'll cut if they see the market
weakening. I think they'll just start cutting.

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And they could say, well,
we haven't changed anything. We told

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you we were going to cut.
And their initial forecast is for three cuts.

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I've seen people say six cuts.
Like you said, who knows what

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it's going to be. You're dealing
with the Federal Reserve, and even though

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they try to tell you what they're
going to do, it never quite works

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out the way they say it's going
to right right, I think if you

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look at this, if you look
at the notes after each of the Federal

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Reserve meetings, you wonder where the
market bakes in these future rate cuts from

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reading the notes, because it Powell
uses language like it's likely we will do

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this. However, we're not going
to, you know, reduce rates unless

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blah blah blah blah. So it's
all in interpretation. And I think if

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the market it's sense that there's any
chance of something, they're already bacon in

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the stimulus and roll in the dice, knowing that it's an all eleuction year,

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like you said, and rolling with
the fact that the studs will fall

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right in line. And then the
root in the fear of that is we

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might be right back where we were
ten to twelve months out. Maybe not,

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00:14:45,240 --> 00:14:50,000
but it could reignite inflation if they
do that. Now, I'm not

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00:14:50,080 --> 00:14:52,399
trying to be Debbie Downer. It
boys sounds like I am, but yeah,

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I'm just trying to say that,
you know, if they they reduce

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rates, yes, it'll help fuel
the market even further, but it may

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00:15:00,639 --> 00:15:05,039
also fuel the consumer consumer who spends
money they don't have on things they don't

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00:15:05,039 --> 00:15:09,840
need, and that might reignite inflation
again. So if you do, damned

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if you don't. I think that's
what it comes down to, no matter

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how you cut it. But at
some point I think it's inevitable. I

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guess we're going to see what happens
next. Take David, just tell us

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00:15:24,000 --> 00:15:26,240
where we find you, how we
connect with you on the web. You

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00:15:26,279 --> 00:15:33,720
can find me a right financial group
that's spelled with a W wrighd Financialgroup dot

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00:15:33,759 --> 00:15:39,200
com. If you'd like access to
more information and resources, you can reach

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00:15:39,240 --> 00:15:46,440
us that way. My book Bonfire
the Sanities now out since December the thirteenth,

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00:15:46,799 --> 00:15:54,559
Bonfirevisanities dot com, having some good
information in there about how to make

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00:15:54,600 --> 00:16:00,840
sure you're protecting yourself, your purpose
for your money, moving into your bread

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00:16:00,919 --> 00:16:03,960
in post retirement. Hears, all
right, excellent, Well, we always

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00:16:03,000 --> 00:16:07,759
appreciate you coming on. I've got
a question for David myself. Shoot me

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00:16:07,799 --> 00:16:12,519
an email kl at Carrie LUTs dot
com. The link to david site is

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00:16:12,759 --> 00:16:18,480
in the show notes of this interview
on Financial Survival Network dot com. While

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00:16:18,480 --> 00:16:21,919
you're there, sign up for your
free newsletter David. Always a pleasure.

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00:16:22,000 --> 00:16:23,960
Thanks for coming on, Harry,
it's a pleasure. Thanks so much.

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00:16:25,519 --> 00:16:30,639
Thanks for listening to Carrie Letz's Financial
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184
00:16:30,759 --> 00:16:37,519
times. For the latest, go
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185
00:16:37,559 --> 00:16:40,000
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