With where they're at with inflation, it's still much above the two percent number
that they target. It's much above are a little above, i should say,
the rate of inflation we would have expected for this year. And so
I think the market has gotten off to well. It started to kind of
go off to the races, but I think it's at this point probably fall
started as we're starting to see those games being given back, and it's hard
to think that Jerome Powell is going to be able to do as many interest
rate decreases as the market seems to be pricing in. Right now, you
are listening to Carrie Lutz's Financial Survival Network, where you get valuable information you
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get your free newsletter in gift Financial Survival Network now more than ever, and
welcome. You are listening to and watching the Financial Survival Network. I'm your
host, Carrie Lutz. Hey, so fed has pivoted all his reversed course,
so it would appear, at least that's what they've announced. They haven't
done it yet, but the markets have reacted in such a way. Rates
are down, Mortgage rates are down substantially and probably heading lower. They got
somebody here that you're definitely going to want to pay attention to, financial expert
head thatcher Ted. It's great to have you on the show, and Hey,
great to be with you. Yeah, Ayan, I should mention that
you find Ted at Einbrook financial dot com. If you got a question for
Ted or myself, shoot me an email kl at Carrie LUTs dot com.
So we had a fad that up until the last month was staying the course.
They weren't going to you know, rates were going to stay high.
The banking industry be damned. The regional banks, we don't need them anyway,
and they're seeing a global implosion, much due in part to the FIDS
so called aggressive hawkish stance towards rates. All of a sudden, one day,
it's like Jerome Powell's Ripper Van Winkle. He wakes up and finds out
that the world is like crumbling around him and the global financial system is headed
for the skids, and it says, uh, time to change course.
How can you be to the brink of the edge. Yeah, how can
you be confident in a person like that, well, it's to be candid.
I don't know if you can be extremely confident in a person like that.
Carry I think, you know, looking at the CPI numbers that just
came out, you know, Jerome Powell changing course. Now it's interesting to
me. I think you know this sea so just everybody knows out there.
The CPI data came out this morning. We're at three tenths of a percent,
zero point three percent for December. You know, on the year.
That puts set three point four percent measured by the CPI, which you and
I know we could have a long conversation about whether that's a reasonable measure of
inflation or not. And yeah, you know, of course with that,
where Jerome Powell goes from here is kind of what I'm thinking about, because
to your point, he started to change his tune last time in the FED
and BET and of course they meet again here at the end of January.
And what I am going to guess here is that he is going to keep
that tone of complete optionality. We remember the word transitory that they kept throwing
at us so often. Oh yeah, in the early part of twenty twenty
two. And you know, we've heard higher rates for longer than we'd like.
We got the Fed meeting last month, and of course Jerome Powell started
hinting at a couple interest rate decreases, but with where they're at with inflation,
it's still much above the two percent number that they target. It's much
above are a little above, i should say, the rate of inflation we
would have expected for this year. And so I think the market has gotten
off to well, it started to kind of go off to the races,
but I think it's at this point probably fall started as we're starting to see
those games being given back, and it's hard to think that Jerome Powell is
going to be able to do as many interest rate decreases as the market seems
to be pricing in right now with inflation higher than well we expect, in
higher than they target. He said three cuts the market immediately up to to
six. But hey, as long as the rates aren't going higher, I
think that makes a bullish argument perhaps, But you know, transitory thing.
Going back to that, you know we have a saying here the best things
in life are transitory, right, so you know that was just a focus
group driven or a narrative. Then I think you were skeptical, skeptical of
from the very start, as were we as we're thinking people. But Wall
Street doesn't really care about logic or reason or logical outcomes. All it cares
about is getting on the right side of the trade, right Well, sure,
yeah, if of course the Wall Street's known for that word, the
starter is with the g right greed, and so they want to be on
the right side of the trade at all times. And you know, as
far as sort of where we go from here and where we look for opportunities.
Even in you know, our discussions with clients on a you know,
a daily basis, we're talking about where to find opportunity right now. I'm
sure a lot of those listening and watching are doing the exact same. And
we start to think about harder assets, you know, real estate comes to
mind immediately. We've talked a lot with folks in the past, you know,
even a couple of weeks about where commodities are sitting today. A lot
of cash, as you would well know, of course, with rates higher,
has been sitting on the sidelines. And so as rates come down,
as that cash starts paying less of a premium, I think that looking at
commodities as well. Starts to make a whole lot of sense. I couldn't
agree with you more. It's just it seems obvious to me. And yet
Wall Street can never see the forest through the trees kind of. And there's
no real money for wall Street and commodities unless you're buying ETFs or futures contracts
or options. But if you're investing in say physical gold or silver or you
know, copper, then Wall Street's left out. And they don't like that
at all, do they. No, they don't want to be left out.
They don't want to be They want to make their you know, every
single one of their financial goals and so be it. You know, I
don't think that that is something that you can argue with or really I wish
we could say we could affect it quite easily, but you know, I
don't think that that's practical. I think we have to play that, you
know, you have to play the cars the way they're dealt, and so
we have to say, okay, well, how do we we make the
best of the handle have? If that makes sense, totally makes sense.
And that so when we have this conversation in January twenty twenty five, the
market, the higher interest rates where they're going to be at, and will
you have helped your clients achieve their with their goals? Well? Sure,
so. I mean a lot of the clients we work with are in that
retirement phase carry and so they're starting to say, hey, how can I
actually live on what I've you know, built up over my entire life.
And so the strategy that has to be employed for somebody in that place,
you know, is a very strategic one, one that's focused on generating income.
You know, maybe that looks like income of furo rental property, potentially
dividends. I've even looked at some structured notes with clients lately. What I
think, though, we need to be careful of is the environment that we're
walking into. So presuming that Jerome Powell does do these three rate decreases and
presuming inflation actually you know, stays kind of well, i'll say under wraps
or in this middling threes as measured by the CPI. You know, that
puts us in a place not too dissimilar from where we were last spring when
we had all these big bank busts. So everybody will remember Silicon Valley Banks
name signature, Bank's name, and ultimately the antidote to that problem, at
least as far as the FED prescribed it was the bank term funding program.
That's really important, and it's still going up every week, right absolutely so,
just for everyone listening out there. Of course, what that was is
the Fed's way of giving regional banks, specifically all that liquidity so that they
didn't end up like Silicon Valley Bank, having to sell down their depreciated you
know, treasury assets and things that they had bought in twenty twenty and twenty
twenty one when interest rates were so low and so basically though those were meant
to be one year term loans, and so if rates are in that you
know, similar range as they were at the time, that puts the banks
back right where they were. Of course, this was a kick the can
down the line solution, as you would imagine, and I think that I'm
going to very much be looking for the FED to extend or revamp that program
in some way or another. Otherwise I think that they're basically putting the nail
on the coffin that we're going to be going into, well, a big
banking crisis. You could potentially look at a recession even in those scenarios,
because if without that liquidity, the regional banking system is going to be right
back where it was, you know, a little less than twelve months ago.
Right, So they bought a little bit of time. Maybe they'll merge
out some of these bargining, right, isn't that it? Well, I
don't know the exact solution they will decide to use, I think, but
I think that they're going to have to do something one way or the other
or otherwise you know, there's going to be sort of some hell to pay
for it. Unfortunately. Yeah, So so they haven't solved anything, have
they? No? Well, well, so I think everybody has been assuming,
and I think the market's pricing in that. They unfortunately, I think,
perhaps wrongly, have aced this quote unquote soft landing. But the hardest
thing in gymnastics to do is stick the landing, and I think that we
have not stuck the landing yet. I think a little bit far from it.
Without seeing some real change at least on the banking side, until that
yield curve can get back to you know, a normal I'll say, and
not be inverted, this problem is going to end up perpetuating. Yeah,
all right, Well, I think we will leave it at that. I
think that come next year, this time probably going to have more of the
same, but a lot of it depends what's happening overseas. We'd even begin
to talk about the sure financial implosion of China, financial, moral, ethical,
and infrastructure. The infrastructure is crumbling before very eyes, all the glorious
infrastructure that they spend trillions of dollars on. And that's a big problem.
Population, Yeah, another thing crumbling. Hey, A lot of things,
a lot of factors. So next time we'll kind of glance on that.
Appreciate you coming on again. Just tell us again where we find you,
how we connect with you on the web. Sure, absolutely, you can
find us at Pinebroke Financial dot com. Kerry. I appreciate your time.
Thanks for having me. All right, Hey, and you got a question
comment for Ted or myself. If you're wondering about interest rates, whatever it
might be, shoot me an email kl at carrielets dot com. We'll get
you an answered quickly and you'll find a link to Ted's site in the show
that say this interview on Financial Survival Network dot com. Sign up for your
free newsletter. Ted. Been a pleasure really appreciate your com coming on and
we will talk to you again. Thank you sir. How A go one,
Thanks for listening to Carrie Letz's Financial Survival Network, your solution to today's
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