Yeah, absolutely. And you look at the VIX. The VIX is down
dramatically as well too. There's no fear trade indicated there, and with the
jobs as high as they are, kind of goes back to that. I
think at the lunchpin of the economy is the jobs. The fact that there
are tons of jobs available for every worker that's out there. As long as
there are jobs or as long as there are jobs available, what it's doing
is it's causing workers to that you know, to still make their money and
to still spend money. You're listening to Carrie Letts's Financial Survival Network where you
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I'm your host, Kerry lets Well. Good news today. Consumer confidence
is rising and levels are high. Even the consumer expectation index is up a
bit. What does it mean? What does it mean? Are we going
to avoid a recession? Our good friend Anthony Sakara is with us now,
Anthony, great to have you back on So consumer confidence, I don't know
if it's a lagging indicator or a leading indicator, or if it's a meaningless
indicator. What's your take on it? Yeah, Kerrie, thank you for
having me back. Always great to be here. Yeah. I tend to
look at consumer confidence as more of a lagging indicator because consumers tend to think
about what's happened, not necessarily about what's going to happen. When it comes
to just general consumers, there's a lot of reasons to be optimistic about what's
going on with the economy. You know. The question that everyone wants to
know is are we going to have a recession? Is it going to be
a soft landing hard landing if we do have a recession. I think it
was just a month about and a half ago or so that the odds of
a recession were like forty percent, and I think now they've come down to
something like twenty percent or maybe twenty five percent, but they've dropped dramatically.
And you know, I think it was just six months ago or so that
the question was not whether we were going to have a recession, but how
you short and shallow or how deep and long? And now it's come to
a point where the recession ers have been talking about recession for so long that
it's it's entirely possible we avoid one completely. And I, you know,
hope that that's the case. And I think that is what consumers are focused
on, and you know, in the fact that we may not have a
recession, and that's based on what's happened so far in the past. Right,
So the europe is obviously in a recession. Now, they've got the
Ukraine War going on, We've got Putin's almost to almost coup, and so
much going on. But I don't know what's your take. I mean that
that's gotta have a lot to do with consumer expectations and consumer confidence, right
what does I also think it's gonna be short lived. I mean, you
have to remember that when this whole Russian war started, you know, it
was all the media all the time about that, and I last at about
a week, and after about a week, it kind of all went away,
and then consumers forgot and it hasn't been reflected in the stock market.
Right. The stock market, you know, has now officially out of bear
market territory, which I think that's even important to know that that doesn't need
We're back at the record highs, so I think a lot of consumers don't
know that. You know, we dropped twenty percent and then getting out of
a bear market means we increased twenty percent, but that doesn't bring us back
to where we were. That brings us only to, you know, sixteen
percent back of where we were. But the stock market is recovered or is
in the process of recovering, and that's despite everything that's going on Europe.
I think what is the reason that the stock market has on in there is
because even though the economy is kind of weakening around the edges, the labor
market is still strong. And it really boils down to the labor market.
It boils down to the fact that even though again that's the weakening it is,
I think there's still seven jobs. I'm sorry, I think there's still
one point seven jobs available for every worker. That's come down a little bit
in the last six months, but there's still a lot of jobs available.
And as long as there's jobs available, as long as people are working,
that's going to keep demand high. And as long as the demand is high,
people are still going to keep you know, the people are still going
to keep spending money, and that's going to keep inflation elevated. So there's
a lot of people that think that the unemployment market has to come down dramatically,
or I should say, the employed have to come down the unemployment the
unemployment rate has to go up dramatically in order for a recession to occur.
And we're just not seeing that. And I don't really see the ampatus for
that happening. Yeah, it will, it's so rates they paused, the
fen paused, but they aggressively paused. Whatever the heck that me in Santhony.
But you know, today we found out also US new home sales uh
exploded higher in May. They were up twenty percent year over year. Uh.
Is that like another little piece of evidence that says maybe the recession you
know, imagine if they threw a recession and nobody came. Yeah, it's
it's not just a little piece of the puzzle. Home prices are a major
piece of the puzzle. And if you'd have asked me a year and a
half ago, uh, you know, when when the Fed funds rate was
at you know, twenty five basis points you know that. You know,
if you'd have told me that over the next year, the Federal fund rates
is gonna, you know, raise from a quarter twenty five basis points up
to five, you know, five point two five, and that home sales
are going to go up and prices are going to increase twenty percent, I
would have thought you were nuts. That's just the opposite reaction of what really
should be happening. And I'm going to suggest that that's probably the number one
fear of the FEDS is home sales continuing. If we have another home sale
explosion, that's going to cost the FED to apt to raise rates more aggressively,
and who knows what the end result of that is going to be.
That's that's probably that's a critical factor and looking at whether we're gonna have a
recession or not. Okay, So I will point you to Lenar. I
don't know if they're the largest out there, but certainly among the largest home
builders out there, and you know, as of today, they're at a
five year high. It's pretty darn remarkable, you think, with everything that's
gone on to one five twenty one, and when we go back to twenty
nineteen, it was at fifty. It peaked back in December of the twenty
twenty one over at one hundred and sixteen. Now it's at one hundred and
fifty. You know, just really came up in the past couple of months.
So if any stocks are going to be sensitive to interest rates and the
economy is going to be these home builders, isn't it. Yeah. And
the fact the other statistics that you just quoted in one of the big company,
you know, largest home builders in the world. Uh, you know,
the fact is that that's just more proof that the housing market is strong,
and high interest rates and strong housing markets don't go together. Um.
But that's that's kind of the way it's been over the last few years too.
When you think about even other asset classes that normally correlate opposite each other.
Think about stocks and bonds, right, Stocks and bonds usually correlate opposite
each other, but for the last few years they've kind of been acting in
lockstep. Um. And you know, anything with housing interest rates, interest
rates go up, housing goes down, demand goes down, bill prices go
down. But that's not what's happening right now. So we're in a pretty
weird environment. And that's leaving a lot of people wondering what do we do.
Do we, you know, go into the stock market now if all
of a sudden we think that, you know, there's only twenty percent chance
that we're gonna have a recession, do we do we overload the boat and
get into the stock market now, go overweight? Do we wait for a
better time, knowing that we've been waiting already for a year for a better
time and it hasn't come, You know, what do we do? That's
the question that a lot of people are are asking themselves at this point.
Yeah, and that's a good question. I mean, all the major home
builders are at five year highs now, and like who would think? And
then we're looking at gold. Gold, you know, was hit an all
time record and now it just basically it's fading. It probably going to go
below nineteen hundred again. So the fear trade seems to be abating, doesn't
it. Yeah. Absolutely, And you look at the VIX The VIX is
down dramatically as well too. There's no fear trade indicated there, and with
the jobs as high as they are, kind of goes back to that,
I think at the lynchpin of the economy, is the jobs, the fact
that there are tons of jobs available for every worker that's out there. As
long as there are jobs or as long as there are jobs available, what
it's doing is it's causing workers to you know, to still make their money
and this still spend money. And if you're an employer like I am,
not only you know, does a job market make it harder to get employees,
but it also makes it harder to keep employees. Got my payroll has
gone up dramatically over the last year and a half because I understand as a
lot of business owners do that. I would, you know, rather pay
someone more than lose them to another opportunity and then have to go hire someone.
That's a more expensive proposition. And you know, but what that does
is that becomes a permanent part of inflation. You know, early on with
the inflation battle, the question was is this inflation transitory or you know,
is it going to be permanent? And of course the Fed got that wrong
a long time ago. I mean, now we're talking about a couple of
years ago. But the answer is both. You know, even if inflation
comes down back down to two percent, which you know, that's that's a
struggle that's a battle. But even if that happens, the inflation it's already
built in, that's not going anywhere. The races I've given my employees that
have to get passed onto our consumers, that's not going anywhere. Inflation may
come down to two percent and this and the job market over the next couple
of years may loosen up. But I'm curious, you know, I would
I'm not curious. I know how the conversation would go if I went to
one of my employees and go, hey, remember all those big races you
got, Well, you know, inflation is now, Lord, we gotta
we gotta take it back, so it's work to work. Great, Yeah,
it's just not going to go all show up on Monday when you pull
that sense on Fridays, say, have a good look at this paycheck.
It's the biggest one you're going to get for the next year. Right,
That's exactly right. And so so that part of inflation, it's permanent.
I will never get that back, will never recover from that. You know,
and I'm a small firm, But think about the grocery stores, think
about you know, the service industries out there. You know that that you
know have higher level management and so on. The reality is inflation is here.
What what's happened is already baked in. And maybe we slow down the
rate of inflation going forward, but we're not going to take back the inflation
that's already occurred for a couple of years. Agreed, agreed. So it's
built into the base, and so is the debt for that matter, and
debt is going nowhere. But uh so, these are the things I guess
you really need to think about. So you've got to remain defensive as far
as more interest rates go. But you can't throw out the baby with the
bathwater as it is, right, Yeah, one percent. And you know,
the question that I'm asked a lot when I'm doing TV interviews and my
own clients is what do we do at this point? And I like,
you know, to focus on what you can count on, and that is,
if you have an income portfolio, income in the form of interest and
dividends that's a high quality portfolio, then we know that over the next decade
you can count on your interests and dividends, and that might be the only
thing you could count on. But if you're getting three to four percent interest
and dividends over the next decade. You know, right now that sounds like
well three to four percent, what's that? I mean? I could get
a you know, I get a one or two year treasury for you know
from four percent, or you know, a CD for five percent for one
year. But at some point in time, the economy is going to stop
in the Federal Reserve is going to lower interest rates. Interest rates are not
going to go up forever. Inflation is not going to stay high forever.
There's always these epps and flows, and I don't know whether it's six months,
whether it's two years, but at some point they're going to lower interest
rates. And if you're stuck in a one year treasury bill at five percent
and that matures, you're now going to be hurting yourself. So the reality
is is that is that you know, I think if you set yourself up
for long term income, long term interest and dividends, it's a great time
to capitalize on the fact that you can get ten plus years at five percent
maybe six percent on you All right, I see your point. You know,
there are people among us. I felt the same that the company,
the country in the world is just calling the drain. But maybe it's all
just part of the cycles. We're in a nasty one right now that hopefully
we're gonna snap out of. But does the dollars stay the reserve currency and
what effect does that hand on the whole scheme? Yeah, um, you
know, you're absolutely right. The dollar, of course has been strong,
that's weakened a little bit. I'm not concerned that it's gonna be uh dethroned
as the world's reserve currency anytime soon. Now that doesn't mean that you know
that that that decades down the road, that can happen. It's possible and
no one knows for sure. But now you start to get into worst case
scenarios up you know, and people will ask me the question as well too
as a financial advisors. You know what happens if the dollar becomes worthless?
Um? And you know then then at some point in time it becomes a
silly conversation where you're gonna have to deal with it. I don't have the
answer for what happens if the dollar goes away, the dollar becomes worthless,
uh. And so that's that's like asking a police officer, what are you
going to do to protect me if Russia decides to nuke me, you know,
nuke the city. I mean, there's there's just no answer at some
point. But it's not something I'm concerned with that. There's so many countries
that um that own government bonds at this point. Uh, you know,
oil is traded in US dollars. The simple fact is that it's so intertwined
that if the US dollar went away, um, it would be it would
be massive upheople. And I don't think there's one person that has the answer
to you know, what the what the solution would be. I think if
there was any one answer at all, it'd probably be real estate because if
everything went where then you know what do you need? You need roof over
your house and food? Right, Yeah, that would help, That would
help? All right? Well, Anthony, always enlightening speaking with you.
Can you just tell us where we find you and how we connect with you
on the web and where we find your podcast? Yeah? Absolutely so.
My website is Anthony Sekharo dot com Anthony Sekharo dot com and it's s acc
A R O two CS one R Anthony Sacar dot com. That leads you
to all my other websites that we have, so all right, and the
link is in the show notes This interview on Financial Survival Network dot com.
While you're there, why don't you click subscribe so you can be among the
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Really appreciate you coming on. I've got a question for Anthony or myself.
Shoot me an email k l at Karry Lutz dot com. Anthony,
we'll talk to you again soon. Gary. Thank you for having me,
Thanks for listening to carry Lutz's Financial Survival Network, your solution to today's trying
times. For the latest, go to Financial Survival Network dot com. Financial
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