Hey guys, welcome to Money Talks News, the podcast. This episode, we're talking about the economic outlook for the rest of 2023. It has been a really odd year. Lots of pundits myself included were predicting a bad stock market for the first part of this year as inflation and high interest rates pushed the economy into recession. But guess what? That's not what happened. As of late July, the S and P 500 is up nearly 20% and the tech heavy NASDAQ is up over 30%

Hey guys, welcome to Money Talks News, the podcast. This episode, we're talking about the economic outlook for the rest of 2023. It has been a really odd year. Lots of pundits myself included were predicting a bad stock market for the first part of this year as inflation and high interest rates pushed the economy into recession. But guess what? That's not what happened. As of late July, the S and P 500 is up nearly 20% and the tech heavy NASDAQ is up over 30%

still rates. Keep rising just yesterday. As a matter of fact, we got another boost in interest rates. They are now higher than they've been in a generation. So is there a recession on the horizon or will we have that soft landing when the economy slows enough to defeat inflation? But avoids a recession? That's what we're going to talk about today. I'm Stacy Johnson. As usual, my co host will be financial journalist Miranda Mark. But hello, Miranda. Hello, Stacey. Do I sound excited because I am excited. Let's do

still rates. Keep rising just yesterday. As a matter of fact, we got another boost in interest rates. They are now higher than they've been in a generation. So is there a recession on the horizon or will we have that soft landing when the economy slows enough to defeat inflation? But avoids a recession? That's what we're going to talk about today. I'm Stacy Johnson. As usual, my co host will be financial journalist Miranda Mark. But hello, Miranda. Hello, Stacey. Do I sound excited because I am excited. Let's do

listening in and sometimes contributing as our producer and novice investor, Aaron Freeman. Hello, Erin has there ever been a soft landing? Yes. There, there actually has been, but they're very rare. And this week we've got a very special guest with us. It is Stash Graham, managing director and Cio of Graham Capital Wealth Management. Hello, Stash. Good afternoon, Stacey. Thanks so much for being here and it's nice to know that we have somebody on our podcast who can accurately predict the future 100% of the time. Yeah,

listening in and sometimes contributing as our producer and novice investor, Aaron Freeman. Hello, Erin has there ever been a soft landing? Yes. There, there actually has been, but they're very rare. And this week we've got a very special guest with us. It is Stash Graham, managing director and Cio of Graham Capital Wealth Management. Hello, Stash. Good afternoon, Stacey. Thanks so much for being here and it's nice to know that we have somebody on our podcast who can accurately predict the future 100% of the time. Yeah,

that that would be you stash not me, obviously.

that that would be you stash not me, obviously.

Ok. Before we start our podcast, folks, remember this is not financial investment advice. So no matter what we may suggest or talk about on this show, don't run and buy it. Ok? Make sure to do your own research, consult your own experts before acting on anything that you may hear on this podcast.

Ok. Before we start our podcast, folks, remember this is not financial investment advice. So no matter what we may suggest or talk about on this show, don't run and buy it. Ok? Make sure to do your own research, consult your own experts before acting on anything that you may hear on this podcast.

Ok. That means you can't sue us. That's all that was about. Ok. Now let's dive right in stash. Tell me what you think. What, what do you, what do you think the general economic outlook is gonna be for the remainder of 2023 Stacey?

Ok. That means you can't sue us. That's all that was about. Ok. Now let's dive right in stash. Tell me what you think. What, what do you, what do you think the general economic outlook is gonna be for the remainder of 2023 Stacey?

It's gonna be slower. The question is, as you mentioned in the introduction,

It's gonna be slower. The question is, as you mentioned in the introduction,

uh are we gonna get a soft landing? Are we going to get a recession? Maybe we get no landing at all. Uh Certainly the developments in the last 24 to 48 hours, as you mentioned, we got a 25 basis point rate hike, I think when you look at the notes in the commentary from the meeting, the dynamic that I thought was interesting was how the Federal Reserve staff has taken a recession off the table for the rest of the year. And not only did the Federal Reserve do it,

uh are we gonna get a soft landing? Are we going to get a recession? Maybe we get no landing at all. Uh Certainly the developments in the last 24 to 48 hours, as you mentioned, we got a 25 basis point rate hike, I think when you look at the notes in the commentary from the meeting, the dynamic that I thought was interesting was how the Federal Reserve staff has taken a recession off the table for the rest of the year. And not only did the Federal Reserve do it,

but the CBO also did it uh about 15 minutes before fed chair Jerome Powell was going to speak. So you have two major economic uh uh monetary policy, fiscal policy entities

but the CBO also did it uh about 15 minutes before fed chair Jerome Powell was going to speak. So you have two major economic uh uh monetary policy, fiscal policy entities

providing us a updated guidance that we are not going to see a recession in 2023.

providing us a updated guidance that we are not going to see a recession in 2023.

Cool. Now, Aaron, do you know what the CBO is? Uh I do not. Ok. That's why I asked that question because you're a novice investor and I'm assuming if you don't, maybe some of our listeners don't either. That's a congressional budget office, am I right? That's absolutely

Cool. Now, Aaron, do you know what the CBO is? Uh I do not. Ok. That's why I asked that question because you're a novice investor and I'm assuming if you don't, maybe some of our listeners don't either. That's a congressional budget office, am I right? That's absolutely

right, Stacey.

right, Stacey.

Ok. And let, let's, let's also uh back up a step here and talk about soft landings again. I did kind of define it in my introduction but I was, I talk really fast. What does soft landing mean in simple terms?

Ok. And let, let's, let's also uh back up a step here and talk about soft landings again. I did kind of define it in my introduction but I was, I talk really fast. What does soft landing mean in simple terms?

Sh uh uh soft landing means a very mild recession. It's guided by the Federal Reserve. The Federal Reserve makes the correct monetary policies. They get assistance and I know this sounds,

Sh uh uh soft landing means a very mild recession. It's guided by the Federal Reserve. The Federal Reserve makes the correct monetary policies. They get assistance and I know this sounds,

this sounds crazy. They get assistance from Capitol Hill where fiscal policy is measured and we execute a mild recession where there's minimal job loss. Corporate earnings do not be, they're not impaired and the household while it might take a couple to steal a boxing analogy, a couple of body shots they don't get knocked down.

this sounds crazy. They get assistance from Capitol Hill where fiscal policy is measured and we execute a mild recession where there's minimal job loss. Corporate earnings do not be, they're not impaired and the household while it might take a couple to steal a boxing analogy, a couple of body shots they don't get knocked down.

WW, why, why are we trying to, to slow the economy? What's the, what's the point of that? Why do we, why are we trying to produce any kind of slowdown?

WW, why, why are we trying to, to slow the economy? What's the, what's the point of that? Why do we, why are we trying to produce any kind of slowdown?

Stacey, the, the big monster, uh, hiding in the closet or under the bed has been inflation. And I thought, you know, when we talk about the Federal Reserve, we talk about fed Chair Jerome Powell and again, their most recent decision to raise interest rates another 25 basis points. He talked about inflation, but it was interesting how he talked about it.

Stacey, the, the big monster, uh, hiding in the closet or under the bed has been inflation. And I thought, you know, when we talk about the Federal Reserve, we talk about fed Chair Jerome Powell and again, their most recent decision to raise interest rates another 25 basis points. He talked about inflation, but it was interesting how he talked about it.

When we listen to him speak, he was talking about future concerns of inflation. He did not mention that headline inflation has fallen from 9 to 3%. And really that depends on the actual inflation metric that you follow. But we have seen a

When we listen to him speak, he was talking about future concerns of inflation. He did not mention that headline inflation has fallen from 9 to 3%. And really that depends on the actual inflation metric that you follow. But we have seen a

month over month decline consistently throughout the year in 2023 of inflation coming down. Yet, he did not want to talk about that. He wanted to talk about risks that he sees in the future of which why he needs to maintain uh interest rates for higher, for longer.

month over month decline consistently throughout the year in 2023 of inflation coming down. Yet, he did not want to talk about that. He wanted to talk about risks that he sees in the future of which why he needs to maintain uh interest rates for higher, for longer.

What, what risk does he see in the future?

What, what risk does he see in the future?

Well, I think the the risk that he is petrified about is being called Arthur Burns 2.0 where he loses control of inflation. Now, Stacey, we can get into the weeds on this. But one of the fascinating dynamics of the inflation uh or the the direction of inflation which has been lower this year. But what have been the variables as to why inflation has come down?

Well, I think the the risk that he is petrified about is being called Arthur Burns 2.0 where he loses control of inflation. Now, Stacey, we can get into the weeds on this. But one of the fascinating dynamics of the inflation uh or the the direction of inflation which has been lower this year. But what have been the variables as to why inflation has come down?

Now, the San Francisco Federal Reserve every 90 days comes out with a report and it decomposes the variables that affect inflation. And the most fascinating part about this decline in inflation measures over this year is that the components that would be most sensitive to the Federal Reserve and their interest rate policy or their interest rate decisions. Those dynamics

Now, the San Francisco Federal Reserve every 90 days comes out with a report and it decomposes the variables that affect inflation. And the most fascinating part about this decline in inflation measures over this year is that the components that would be most sensitive to the Federal Reserve and their interest rate policy or their interest rate decisions. Those dynamics

have seen no harm or have not been negatively affected by interest rate policy.

have seen no harm or have not been negatively affected by interest rate policy.

The reason why we've seen inflation come down are for cyclical variables or measures that are not sensitive to interest rate policy. And so when we're looking at in the future and every person when they're making an investment decision, you know, we could talk about GDP growth, we could talk about inflation and what it's done, but the market moves on the future and what you believe is going to happen in the future. And so for inflation to fall as much as it has,

The reason why we've seen inflation come down are for cyclical variables or measures that are not sensitive to interest rate policy. And so when we're looking at in the future and every person when they're making an investment decision, you know, we could talk about GDP growth, we could talk about inflation and what it's done, but the market moves on the future and what you believe is going to happen in the future. And so for inflation to fall as much as it has,

but it is inflation has not fallen due to the steepest increase in uh fed funds rate uh history or at least modern history. Uh again, we haven't seen this type of steep climb in uh the fed funds rate again in, in modern history and yet that has not impacted uh inflation.

but it is inflation has not fallen due to the steepest increase in uh fed funds rate uh history or at least modern history. Uh again, we haven't seen this type of steep climb in uh the fed funds rate again in, in modern history and yet that has not impacted uh inflation.

Yeah. So you're, you're suggesting that the ra raising rates which is done specifically to try to bring down inflation? I mean, essentially let's, let's back up a stuff and make it even more fundamental. The reason the fed raises interest rates is because that's going to stop people from spending money. Uh if you can't buy a car because the rates are too high. You know, that this, this type of thing, credit card rates, any number of things like that, higher rates tend to make people spend less because things cost more when you have to finance them. And so that's why the fed is raising rates. And what I'm hearing you say stash is that

Yeah. So you're, you're suggesting that the ra raising rates which is done specifically to try to bring down inflation? I mean, essentially let's, let's back up a stuff and make it even more fundamental. The reason the fed raises interest rates is because that's going to stop people from spending money. Uh if you can't buy a car because the rates are too high. You know, that this, this type of thing, credit card rates, any number of things like that, higher rates tend to make people spend less because things cost more when you have to finance them. And so that's why the fed is raising rates. And what I'm hearing you say stash is that

the, even though the fed has raised rates, that alone hasn't, hasn't really caused a decline in inflation. And I, I assume the reason why uh and, and correct me if I'm wrong is, is because the causes of inflation weren't tied to interest rates as much as they were to things like bottlenecks in um in distribution of goods. Is that right? Jay,

the, even though the fed has raised rates, that alone hasn't, hasn't really caused a decline in inflation. And I, I assume the reason why uh and, and correct me if I'm wrong is, is because the causes of inflation weren't tied to interest rates as much as they were to things like bottlenecks in um in distribution of goods. Is that right? Jay,

you nailed it perfectly. So I the one of the major reasons why

you nailed it perfectly. So I the one of the major reasons why

we have seen inflation come down, uh really it comes down to China and that's certainly the elephant in the room in this respective cycle. We know how much manufacturing China does we know about the supply constraints and the bottleneck and as you just alluded to. But the elephant in this respective room for this cycle has been the absence of global growth.

we have seen inflation come down, uh really it comes down to China and that's certainly the elephant in the room in this respective cycle. We know how much manufacturing China does we know about the supply constraints and the bottleneck and as you just alluded to. But the elephant in this respective room for this cycle has been the absence of global growth.

Both again, therefore, being a driver of inflation around the world, China is the only country to have experienced net consumer deflation since a few years ago, since COVID. Uh And again, that, that deflation has now started to impact other parts of the economy and especially the global parts of the economy of which China does business with.

Both again, therefore, being a driver of inflation around the world, China is the only country to have experienced net consumer deflation since a few years ago, since COVID. Uh And again, that, that deflation has now started to impact other parts of the economy and especially the global parts of the economy of which China does business with.

Now. II I

Now. II I

um JP Morgan's mid mid year, 2023 outlook, which is now about two weeks old. And I'm I'm gonna quote from it because we're talking about. Some people are thinking inflation is, has dropped precipitously which it has and yet the Federal Reserve continues to raise interest rates. And some people are wondering why the hell would that? Would they do that? And I just want to read one sentence from this report. Core goods inflation has dropped from 12%. Now this is goods, inflation

um JP Morgan's mid mid year, 2023 outlook, which is now about two weeks old. And I'm I'm gonna quote from it because we're talking about. Some people are thinking inflation is, has dropped precipitously which it has and yet the Federal Reserve continues to raise interest rates. And some people are wondering why the hell would that? Would they do that? And I just want to read one sentence from this report. Core goods inflation has dropped from 12%. Now this is goods, inflation

has dropped from 12% to 2% over the past year and 2% by the way, is the Fed's target for inflation. But core services inflation

has dropped from 12% to 2% over the past year and 2% by the way, is the Fed's target for inflation. But core services inflation

has only slowed to 6.6% from its peak of 7.3% in February. So goods inflation is, is, is coming down, prices on goods are coming down prices on services, not so much. And this, these types of statistics are what the FED might look at when they decide and maybe we shouldn't cut rates yet. Maybe we should even raise them a little bit because there is still some inflation out there in certain sectors. Does that coincide with, with your thoughts too,

has only slowed to 6.6% from its peak of 7.3% in February. So goods inflation is, is, is coming down, prices on goods are coming down prices on services, not so much. And this, these types of statistics are what the FED might look at when they decide and maybe we shouldn't cut rates yet. Maybe we should even raise them a little bit because there is still some inflation out there in certain sectors. Does that coincide with, with your thoughts too,

Stacey? And when it comes down to services, I think what the listeners should know is services for the US economy services is roughly 6 to 7 times the size of manufacturing and the manufacturing of goods, there has been a significant decoupling. Now. I would certainly want to point to the purchasers manager or purchasing managers index PM I which breaks down the difference between consumer goods and services. And what you have noticed, Stacey in the last three months

Stacey? And when it comes down to services, I think what the listeners should know is services for the US economy services is roughly 6 to 7 times the size of manufacturing and the manufacturing of goods, there has been a significant decoupling. Now. I would certainly want to point to the purchasers manager or purchasing managers index PM I which breaks down the difference between consumer goods and services. And what you have noticed, Stacey in the last three months

is that while services is growing, it's not growing nearly at the same rate, it was a year ago or even six months ago. So I think as you mentioned, you want to keep a very close eye on the services portion of the US economy. One because it's 60 to 70% of our economy while manufacturing is only 10%. But you have

is that while services is growing, it's not growing nearly at the same rate, it was a year ago or even six months ago. So I think as you mentioned, you want to keep a very close eye on the services portion of the US economy. One because it's 60 to 70% of our economy while manufacturing is only 10%. But you have

while cons or while manufacturing of goods has been in contraction for the better part of last calendar year. Services has been in growth, but those growth levels have come down materially again over the last say 6 to 12 months. And

while cons or while manufacturing of goods has been in contraction for the better part of last calendar year. Services has been in growth, but those growth levels have come down materially again over the last say 6 to 12 months. And

the reason for this is pretty simple and I'm sure but a lot of people listening can understand it. Why is service? Why services growing so much because we were stuck in our houses for so long during COVID.

the reason for this is pretty simple and I'm sure but a lot of people listening can understand it. Why is service? Why services growing so much because we were stuck in our houses for so long during COVID.

So during COVID, we were buying stuff and the, the supply chain had kinks in it. So that made the price of stuff go up because everybody wanted to buy stuff. Then COVID ended. And now all we want to do is go somewhere and hang out on the beach, you know, so and go to restaurants because we couldn't go. And so now the services is, is, is being overwhelmed and the prices of that are going up and now and what, what stash is saying, I don't want to put words in his mouth. But what, what I'm hearing

So during COVID, we were buying stuff and the, the supply chain had kinks in it. So that made the price of stuff go up because everybody wanted to buy stuff. Then COVID ended. And now all we want to do is go somewhere and hang out on the beach, you know, so and go to restaurants because we couldn't go. And so now the services is, is, is being overwhelmed and the prices of that are going up and now and what, what stash is saying, I don't want to put words in his mouth. But what, what I'm hearing

say is that and, and now, hey, now we've been to the beach, ok, now we've gone to restaurants. So now we're gonna start mellowing out a little bit and maybe that services inflation will start, will start dropping back. Is, is that the message?

say is that and, and now, hey, now we've been to the beach, ok, now we've gone to restaurants. So now we're gonna start mellowing out a little bit and maybe that services inflation will start, will start dropping back. Is, is that the message?

Absolutely Stacy and look, we don't even have to make assumptions. We could use words from companies who are parts of the services industry you mentioned about flying and traveling to a beach. Let's think about transport

Absolutely Stacy and look, we don't even have to make assumptions. We could use words from companies who are parts of the services industry you mentioned about flying and traveling to a beach. Let's think about transport

in some of the major airlines. Now, you're certainly seeing a decoupling between airlines, the airlines that cater to the top, say 10 to 20% of income and wealth earners. They're doing fine right now. But say the the transportation or airline company that focuses on the average American, they have been giving warnings the last month,

in some of the major airlines. Now, you're certainly seeing a decoupling between airlines, the airlines that cater to the top, say 10 to 20% of income and wealth earners. They're doing fine right now. But say the the transportation or airline company that focuses on the average American, they have been giving warnings the last month,

Alaska Airlines has issued a warning that while they're able to fill planes, they're not able to get the same fares that they were getting. Say three and six months ago, you saw a similar dynamic with jetblue. So again, you are seeing certain parts of the services industry that are starting to flash yellow lights. Let's just, we'll use, we'll use a traffic light, they're starting to give yellow lights

Alaska Airlines has issued a warning that while they're able to fill planes, they're not able to get the same fares that they were getting. Say three and six months ago, you saw a similar dynamic with jetblue. So again, you are seeing certain parts of the services industry that are starting to flash yellow lights. Let's just, we'll use, we'll use a traffic light, they're starting to give yellow lights

and it's something we should probably take notice of. Again, especially because why are we here? We're talking about investing. Uh and, and again, assets investing in assets is always a forward looking exercise.

and it's something we should probably take notice of. Again, especially because why are we here? We're talking about investing. Uh and, and again, assets investing in assets is always a forward looking exercise.

Uh Speaking of assets, uh I got a question, the US is proposing that, you know, banks, they, they raise capital to 19% to offset, you know, loan deficiencies. So is that

Uh Speaking of assets, uh I got a question, the US is proposing that, you know, banks, they, they raise capital to 19% to offset, you know, loan deficiencies. So is that

an indication that the fed has got things under control? Because it's a thing that they normally do, it's standard practice, but since 2008 collapse or is it an indication that they're worried? I'd say

an indication that the fed has got things under control? Because it's a thing that they normally do, it's standard practice, but since 2008 collapse or is it an indication that they're worried? I'd say

B

B

Erin, I would say they are worried but for the systematically important banks or the globally systematic important banks, the G I uh the G SI BS, their capital ratios are very strong. And again, you could point back to the great financial crisis and some people might say there are opinion measures that they were punishing banks, that type of asset they could own uh the the relationship between liabilities and assets, loan deposit ratios,

Erin, I would say they are worried but for the systematically important banks or the globally systematic important banks, the G I uh the G SI BS, their capital ratios are very strong. And again, you could point back to the great financial crisis and some people might say there are opinion measures that they were punishing banks, that type of asset they could own uh the the relationship between liabilities and assets, loan deposit ratios,

all those metrics for your globally systematic import of banks. Your JP Morgan Bank of America Wells Fargo's, they are good. And I think if you had a degree of hesitation about that, you look back at the events in March, where did deposits flow to, they flowed away from your regional banks to your community banks and they flow towards the globally systematic i important of banks. People

all those metrics for your globally systematic import of banks. Your JP Morgan Bank of America Wells Fargo's, they are good. And I think if you had a degree of hesitation about that, you look back at the events in March, where did deposits flow to, they flowed away from your regional banks to your community banks and they flow towards the globally systematic i important of banks. People

know they have the implicit support of the government, whether people want to admit it or not. There's a degree of exactly there, there's a degree of recency bias from what we saw 15 years ago. Now, we certainly have seen those deposits flow back to regional and community banks and away from those globally systematic reported banks. But that period of stress, Erin I think gives you a degree of color of which banks

know they have the implicit support of the government, whether people want to admit it or not. There's a degree of exactly there, there's a degree of recency bias from what we saw 15 years ago. Now, we certainly have seen those deposits flow back to regional and community banks and away from those globally systematic reported banks. But that period of stress, Erin I think gives you a degree of color of which banks

are, are the are the fed is the fed worried about. Uh and again, uh the banking industry is an extremely fascinating place to invest right now. We have exposure across the board from

are, are the are the fed is the fed worried about. Uh and again, uh the banking industry is an extremely fascinating place to invest right now. We have exposure across the board from

micro cap uh uh community banks to some of these systematically important banks. And there is a very different story for the banks that are what we would informally call a money gatherer.

micro cap uh uh community banks to some of these systematically important banks. And there is a very different story for the banks that are what we would informally call a money gatherer.

We are gonna take a really quick break here. But when we come back, let's talk about what really matters, what people should be doing with their money. In light of, of, of what we think is going to occur in the economy in the next few months. Ok?

We are gonna take a really quick break here. But when we come back, let's talk about what really matters, what people should be doing with their money. In light of, of, of what we think is going to occur in the economy in the next few months. Ok?

Um So we are going to take a quick break right here. We're gonna be right back and we're gonna talk about specific things you should be doing with your money because of what's happening in the world. OK? Be right back.

Um So we are going to take a quick break right here. We're gonna be right back and we're gonna talk about specific things you should be doing with your money because of what's happening in the world. OK? Be right back.

OK? We are back but before we get back, before we start again, if you appreciate what we're doing here, folks do something for us, share the show with your friends and family on your favorite social platforms and subscribe to our podcast. It only takes you two seconds, but it really helps us out. So please subscribe and tell everybody but wait till after the podcast is over, then tell everybody. Ok, so we're back now and now let's talk, let's let's let's talk about specifics here.

OK? We are back but before we get back, before we start again, if you appreciate what we're doing here, folks do something for us, share the show with your friends and family on your favorite social platforms and subscribe to our podcast. It only takes you two seconds, but it really helps us out. So please subscribe and tell everybody but wait till after the podcast is over, then tell everybody. Ok, so we're back now and now let's talk, let's let's let's talk about specifics here.

Uh One thing we didn't talk about um stash is we kind of, we kind of alluded to it. We were talking about regional banks. The regional bank system is still in some potential peril. Um because they, they basically invested log and, and uh people taking money out anyway, it doesn't matter why, but the commercial real state

Uh One thing we didn't talk about um stash is we kind of, we kind of alluded to it. We were talking about regional banks. The regional bank system is still in some potential peril. Um because they, they basically invested log and, and uh people taking money out anyway, it doesn't matter why, but the commercial real state

it, it could be a problem. Office buildings specifically can be a problem and that could, that could drag down the economy somewhat and spec it could also drag down regional banks. Now, the the reason that commercial property is having so much trouble is twofold one because, uh, so many people are working from home now, a lot of office buildings, especially if they're not the highest quality office buildings are, are going vacant.

it, it could be a problem. Office buildings specifically can be a problem and that could, that could drag down the economy somewhat and spec it could also drag down regional banks. Now, the the reason that commercial property is having so much trouble is twofold one because, uh, so many people are working from home now, a lot of office buildings, especially if they're not the highest quality office buildings are, are going vacant.

And so these guys are having trouble, two interest rates have gone up and they have to refinance their mortgages. It's not like it's not like you and I, when we get a 30 year mortgage on our house, these guys might have to refinance hundreds of millions of dollars at, at rates three times higher than they were. Uh and, and this could be a problem and their, and their primary lender is regional banks. So, first of all, stash, do you agree with what I said,

And so these guys are having trouble, two interest rates have gone up and they have to refinance their mortgages. It's not like it's not like you and I, when we get a 30 year mortgage on our house, these guys might have to refinance hundreds of millions of dollars at, at rates three times higher than they were. Uh and, and this could be a problem and their, and their primary lender is regional banks. So, first of all, stash, do you agree with what I said,

the only dynamic or variable I would add Stacey, which everything you said was correct

the only dynamic or variable I would add Stacey, which everything you said was correct

is the exposure to commercial real estate lending and er to tie back a previous point in regards to what was, what was some of the fallout of the great financial crisis is you saw banks again, especially the large banks act less like banks and you saw private equity come in and basically take the role of banks to a, to a significant degree and that's what you would informally call shadow banking.

is the exposure to commercial real estate lending and er to tie back a previous point in regards to what was, what was some of the fallout of the great financial crisis is you saw banks again, especially the large banks act less like banks and you saw private equity come in and basically take the role of banks to a, to a significant degree and that's what you would informally call shadow banking.

So not only do you have banks that are exposed to commercial real estate lending, especially in office, you also have private equity funds and you have mortgage real estate investment trust who have significant exposure to commercial real estate and that particular part of the lending ecosystem has exploded since the great financial crisis.

So not only do you have banks that are exposed to commercial real estate lending, especially in office, you also have private equity funds and you have mortgage real estate investment trust who have significant exposure to commercial real estate and that particular part of the lending ecosystem has exploded since the great financial crisis.

Now, because I'm gonna ask you a specific question. I own both JP Morgan and Huntington Bank shares. JP Morgan obviously is one of the biggest banks in the world. Huntington bank shares is a regional bank.

Now, because I'm gonna ask you a specific question. I own both JP Morgan and Huntington Bank shares. JP Morgan obviously is one of the biggest banks in the world. Huntington bank shares is a regional bank.

So

So

I bought them both in 2009,

I bought them both in 2009,

um during the great financial crisis. Uh and now I am up 100% on Huntington Bank shares, but up 460% on JP Morgan, I bought it for $28 a share. It's now 100 and 57. Um Now, so my gain on JP Morgan. Big Money Center Bank has been way way better than my return on Huntington Bank shares. Uh Regional Bank. So here's my question for you stash. I'm thinking about selling

um during the great financial crisis. Uh and now I am up 100% on Huntington Bank shares, but up 460% on JP Morgan, I bought it for $28 a share. It's now 100 and 57. Um Now, so my gain on JP Morgan. Big Money Center Bank has been way way better than my return on Huntington Bank shares. Uh Regional Bank. So here's my question for you stash. I'm thinking about selling

my Huntington Bank. Why? Because what we just said there, it's gonna be more difficult to make money. The, the I don't know if this specific bank is losing depositors but many regionals are and they're going to the big money center banks like JP Morgan. So, and I've got a gain in it, although I've owned it for a really long time and it pays a decent dividend. Would you be a seller of Huntington or, or other regional banks in general or, uh, and put that money maybe reinvested in something big like a, like a JP Morgan or Wells Fargo.

my Huntington Bank. Why? Because what we just said there, it's gonna be more difficult to make money. The, the I don't know if this specific bank is losing depositors but many regionals are and they're going to the big money center banks like JP Morgan. So, and I've got a gain in it, although I've owned it for a really long time and it pays a decent dividend. Would you be a seller of Huntington or, or other regional banks in general or, uh, and put that money maybe reinvested in something big like a, like a JP Morgan or Wells Fargo.

So, Stacy. This is the part of the conversation where I would appease my compliance, overlords and say anything I say is not investment advice. Please do your own due diligence or talk to a financial advisor. Now to answer your question, Stacey uh the regional bank space. So one of the reasons why I believe this is a very intriguing place to invest

So, Stacy. This is the part of the conversation where I would appease my compliance, overlords and say anything I say is not investment advice. Please do your own due diligence or talk to a financial advisor. Now to answer your question, Stacey uh the regional bank space. So one of the reasons why I believe this is a very intriguing place to invest

and maybe a little less. So considering the significant appreciation that we've seen in regional banks over the last 90 days, uh, or really in the aftermath of the uh the March banking contagion crisis, liquidity crisis, whatever term you want to call it. Uh

and maybe a little less. So considering the significant appreciation that we've seen in regional banks over the last 90 days, uh, or really in the aftermath of the uh the March banking contagion crisis, liquidity crisis, whatever term you want to call it. Uh

Now you've seen again a significant appreciation. Uh The ticker symbol is Kre that is the regional bank ETF that a lot of people use as the tracker for the entire regional banking space,

Now you've seen again a significant appreciation. Uh The ticker symbol is Kre that is the regional bank ETF that a lot of people use as the tracker for the entire regional banking space,

the dynamic that we have to figure out Stacey. And in regards to answering your question about what do you do with whether it's the money gather or JP Morgan Chase or if it's a regional bank like Huntington is again, we look forward 6, 12 months. But the question, there are certain questions you need to ask yourself

the dynamic that we have to figure out Stacey. And in regards to answering your question about what do you do with whether it's the money gather or JP Morgan Chase or if it's a regional bank like Huntington is again, we look forward 6, 12 months. But the question, there are certain questions you need to ask yourself

about any respected bank one. What is their liquidity profile? Now, there are a couple ways to look at that. I would say the first thing you could look at is compare their total loans outstanding to their deposit. Optimally, you want a ratio around 70%. You get a ratio above 100% where meaning they have more loans than they do deposits. That's, that's a concern.

about any respected bank one. What is their liquidity profile? Now, there are a couple ways to look at that. I would say the first thing you could look at is compare their total loans outstanding to their deposit. Optimally, you want a ratio around 70%. You get a ratio above 100% where meaning they have more loans than they do deposits. That's, that's a concern.

But Aaron again alluded to something before about the Federal Reserve stepping in or the US Treasury stepping in or the FDIC stepping in. They gene they in March, they came in with a bunch of liquidity programs where banks could turn assets over to a new facility. Now it's not cheap but it's a facility where they can get immediate liquidity. We have moved, the banking industry has moved from having a liquidity crisis where if they did see a run on the bank, they didn't have the assets to fulfill those requests

But Aaron again alluded to something before about the Federal Reserve stepping in or the US Treasury stepping in or the FDIC stepping in. They gene they in March, they came in with a bunch of liquidity programs where banks could turn assets over to a new facility. Now it's not cheap but it's a facility where they can get immediate liquidity. We have moved, the banking industry has moved from having a liquidity crisis where if they did see a run on the bank, they didn't have the assets to fulfill those requests

to now a credit quality slash earnings uh issue and over the next 6 to 12 months and look as I mentioned before, we have invested across the ecosystem in regards to the banking sector. But the universal concern

to now a credit quality slash earnings uh issue and over the next 6 to 12 months and look as I mentioned before, we have invested across the ecosystem in regards to the banking sector. But the universal concern

of banking executives over the next 6 to 12 months is exactly what happened just yesterday with the Federal Reserve raising interest rates 25 basis points. It makes their deposits more expensive. Their funding costs are going up at a time when the underlying assets they own are not necessarily appreciating at the same interest rate. So that means their earnings are under pressure. Now, there are a handful of banks

of banking executives over the next 6 to 12 months is exactly what happened just yesterday with the Federal Reserve raising interest rates 25 basis points. It makes their deposits more expensive. Their funding costs are going up at a time when the underlying assets they own are not necessarily appreciating at the same interest rate. So that means their earnings are under pressure. Now, there are a handful of banks

that are going to be able to get through this without a problem. They are probably encouraging the Federal Reserve to continue raising interest rates. And maybe are acting as a cheerleader for the fed to raise interest rates at the September meeting. And that's because they have variable rate loans. But we know the vast majority of banks do not have variable rate loans, they have fixed rate loans. And again, those fixed rates are

that are going to be able to get through this without a problem. They are probably encouraging the Federal Reserve to continue raising interest rates. And maybe are acting as a cheerleader for the fed to raise interest rates at the September meeting. And that's because they have variable rate loans. But we know the vast majority of banks do not have variable rate loans, they have fixed rate loans. And again, those fixed rates are

not going up when the Federal Reserve raises interest rates to 25 basis points. But their deposits are definitely going up and again, that's net interest margin. That is, you would say maybe the cumulative yield, which would be the difference between their asset and their borrowing their funding costs. Those spreads are narrowing and they're narrowing fast

not going up when the Federal Reserve raises interest rates to 25 basis points. But their deposits are definitely going up and again, that's net interest margin. That is, you would say maybe the cumulative yield, which would be the difference between their asset and their borrowing their funding costs. Those spreads are narrowing and they're narrowing fast

with every fed funds rate hike, even if it is as small as 25 basis points that is gonna impair earnings power over the next couple of quarters. And I think it's reasonable to expect that earnings power, uh, for, or earnings growth for regional banks for the next, at least for the remainder of this year they're gonna move lower.

with every fed funds rate hike, even if it is as small as 25 basis points that is gonna impair earnings power over the next couple of quarters. And I think it's reasonable to expect that earnings power, uh, for, or earnings growth for regional banks for the next, at least for the remainder of this year they're gonna move lower.

Yeah. So it wouldn't be stupid to get out of if I was in a regional bank, um,

Yeah. So it wouldn't be stupid to get out of if I was in a regional bank, um,

mu Mutual Fund or in a mutual bank stock like I am, it wouldn't be stupid to get out of it. I mean, if, if, if you, you have a six month time rise and obviously I've held this for 10 years. So, I mean, I've seen it go up and down before.

mu Mutual Fund or in a mutual bank stock like I am, it wouldn't be stupid to get out of it. I mean, if, if, if you, you have a six month time rise and obviously I've held this for 10 years. So, I mean, I've seen it go up and down before.

Well,

Well,

specific to Huntington Bank, we have no exposure. We tried to buy some of their paper, uh, their bonds, uh, 60 to 90 days ago because we were being offered 8 to 7 to 8% which we thought was a fantastic value. But Huntington Bank itself has been operating with a much more defensive mindset with capital builds and they're improving their capital

specific to Huntington Bank, we have no exposure. We tried to buy some of their paper, uh, their bonds, uh, 60 to 90 days ago because we were being offered 8 to 7 to 8% which we thought was a fantastic value. But Huntington Bank itself has been operating with a much more defensive mindset with capital builds and they're improving their capital

ratios. Their loan growth has slowed. And I know again, intuitively you would say to yourself, well, I want a bank that's increasing their loan growth and yes you do. But in a very measured approach right now, it's better actually not to grow your loan book, especially if the Federal Reserve is going to continue raising interest rates because with every interest rate increased

ratios. Their loan growth has slowed. And I know again, intuitively you would say to yourself, well, I want a bank that's increasing their loan growth and yes you do. But in a very measured approach right now, it's better actually not to grow your loan book, especially if the Federal Reserve is going to continue raising interest rates because with every interest rate increased

on the fed funds rate, that loan is gonna lose value. Uh But look, I think with regional banks it's a name by name basis. You have a lot of banks that were thrown out, their stocks fell 40 to 50% when it really wasn't necessarily justified. Uh But again, I think in regards to regional banks, again, it's on a, it's on a specific big basis

on the fed funds rate, that loan is gonna lose value. Uh But look, I think with regional banks it's a name by name basis. You have a lot of banks that were thrown out, their stocks fell 40 to 50% when it really wasn't necessarily justified. Uh But again, I think in regards to regional banks, again, it's on a, it's on a specific big basis

and, and, and you know what, I have to stop here and apologize to our listeners because we're way in the weeds here and, and running out of time. So let, let's get that was a 10 ft view. Let's look at 10,000 ft view. Let's, and let's, let's everybody chime in for that matter. Uh, the stock market, it's almost August, it's late July.

and, and, and you know what, I have to stop here and apologize to our listeners because we're way in the weeds here and, and running out of time. So let, let's get that was a 10 ft view. Let's look at 10,000 ft view. Let's, and let's, let's everybody chime in for that matter. Uh, the stock market, it's almost August, it's late July.

The stock market is gonna be higher, lower or about the same at the end of the year. Um, you, you go first, Josh, what do you think?

The stock market is gonna be higher, lower or about the same at the end of the year. Um, you, you go first, Josh, what do you think?

Well, look, momentum is, is your friend when it comes down to risk assets?

Well, look, momentum is, is your friend when it comes down to risk assets?

I think moving higher makes a lot of sense. Unless there's some type of development. Look, I have a bearish tilt on financial asset prices and I'm sure we could talk about it at our remaining moments. But right now the market is taking good news as good news for the stock market

I think moving higher makes a lot of sense. Unless there's some type of development. Look, I have a bearish tilt on financial asset prices and I'm sure we could talk about it at our remaining moments. But right now the market is taking good news as good news for the stock market

and it's taking bad news, say an increase in layoffs or an increase or a negative revision in non farm payrolls, which is what we also saw yesterday and taking that as good news. So it's one of those dangerous situations where good news and bad news means good news for the stock market.

and it's taking bad news, say an increase in layoffs or an increase or a negative revision in non farm payrolls, which is what we also saw yesterday and taking that as good news. So it's one of those dangerous situations where good news and bad news means good news for the stock market.

So higher, lower or the same.

So higher, lower or the same.

I'm gonna lean higher.

I'm gonna lean higher.

What about you, Miranda?

What about you, Miranda?

Um, I mean, who knows? Nothing? Nothing makes sense anymore. But I think, but I think by the end of the year, the stock market is probably gonna go a little higher. I mean, you know, like stash says, like every, everybody's just taking everything is good news for the stock market. And as a in general, a lot of our monetary policy, a lot of what we do,

Um, I mean, who knows? Nothing? Nothing makes sense anymore. But I think, but I think by the end of the year, the stock market is probably gonna go a little higher. I mean, you know, like stash says, like every, everybody's just taking everything is good news for the stock market. And as a in general, a lot of our monetary policy, a lot of what we do,

um, as a country from the top down is designed to help the stock market and prop the stock market up. So I, you know, so I'm kind of in the same camp. You're such a communist,

um, as a country from the top down is designed to help the stock market and prop the stock market up. So I, you know, so I'm kind of in the same camp. You're such a communist,

but am I wrong? You don't have to be a communist to say like us monetary policy, you're not a communist, us monetary policy is decided to prop up the stock market. What do you think?

but am I wrong? You don't have to be a communist to say like us monetary policy, you're not a communist, us monetary policy is decided to prop up the stock market. What do you think?

Um, well, you know, we all want the stock market to go up. I want it to go up. I want, you know, everything to be wonderful. But I wonder how much of the stock market is now FOMO and how much of it is wishful thinking on A I and will that level out? Is that a bubble? And then I read this other thing from business insider that got me concerned is that Americans personal savings have collapsed by an eye watering 5.5 trillion since April 2020. Thanks to soaring inflation.

Um, well, you know, we all want the stock market to go up. I want it to go up. I want, you know, everything to be wonderful. But I wonder how much of the stock market is now FOMO and how much of it is wishful thinking on A I and will that level out? Is that a bubble? And then I read this other thing from business insider that got me concerned is that Americans personal savings have collapsed by an eye watering 5.5 trillion since April 2020. Thanks to soaring inflation.

Uh that could spell trouble for the economy. That's a lot of money that, that savings is out. I don't know how many, how much of that has been put into housing, how much does it put into travel? How much has that been blown on cars or put into stocks? Uh We don't know that's a lot of money that's missing. I don't know. I'm thinking lower. I'm thinking a little lower. I, I tend to be pessimistic though I must say. But II, I think the stock market is, it's it's at a historically high pe

Uh that could spell trouble for the economy. That's a lot of money that, that savings is out. I don't know how many, how much of that has been put into housing, how much does it put into travel? How much has that been blown on cars or put into stocks? Uh We don't know that's a lot of money that's missing. I don't know. I'm thinking lower. I'm thinking a little lower. I, I tend to be pessimistic though I must say. But II, I think the stock market is, it's it's at a historically high pe

uh, now, if interest rates come down, then, you know, then that justifies higher multiples. But I, I would, I would not be a big buyer of stocks right here. I've been saying that though, but I've been wrong. I mean, I, I always have money in the market. I never take it out because I'm often wrong, you know, and, and so, you know, I, I've been Barriss on the market this year and I could not have been more wrong. Fortunately, like I said, I've kept a lot of money in the market, but I think the market's overpriced and I think it's probably gonna go a little slow and I think the economy is gonna slow.

uh, now, if interest rates come down, then, you know, then that justifies higher multiples. But I, I would, I would not be a big buyer of stocks right here. I've been saying that though, but I've been wrong. I mean, I, I always have money in the market. I never take it out because I'm often wrong, you know, and, and so, you know, I, I've been Barriss on the market this year and I could not have been more wrong. Fortunately, like I said, I've kept a lot of money in the market, but I think the market's overpriced and I think it's probably gonna go a little slow and I think the economy is gonna slow.

Yeah. And I, I agree completely. But that doesn't mean because, you know, we've been talking about like, we need a major, like, the stock market is due for a major crash. We've been talking about this since like 2017. It's due for a major crash and, and the major crash as it happened, we've had some fast crashes, some quick ones, but then it recovers fairly quickly. So, so I don't know, like, do I think we should be having a crash probably. Are we going to?

Yeah. And I, I agree completely. But that doesn't mean because, you know, we've been talking about like, we need a major, like, the stock market is due for a major crash. We've been talking about this since like 2017. It's due for a major crash and, and the major crash as it happened, we've had some fast crashes, some quick ones, but then it recovers fairly quickly. So, so I don't know, like, do I think we should be having a crash probably. Are we going to?

Well, like I said, I, I thought we would do. I, I, I'm not in any way suggesting that I, I think we're gonna have a crash. I think, I think the market, if I had, if I had to bet I would bet the market's gonna be about the same that the S and P 500 is about 45 7. It's not about, it's 45 73 as I speak. I, I bet you it's going to end the year about there,

Well, like I said, I, I thought we would do. I, I, I'm not in any way suggesting that I, I think we're gonna have a crash. I think, I think the market, if I had, if I had to bet I would bet the market's gonna be about the same that the S and P 500 is about 45 7. It's not about, it's 45 73 as I speak. I, I bet you it's going to end the year about there,

but we'll, we'll see who, who the hell knows now. Ok. Same question. Housing is. Housing. Housing has gone up. We live, I live in South Florida. Stash. I don't know where you are. Where do you live? Washington DC. Ok. But real estate prices 50% up in a year and a half. I mean, it seems like 20 minutes ago, my house is worth half what it's worth. Now. Is this gonna continue

but we'll, we'll see who, who the hell knows now. Ok. Same question. Housing is. Housing. Housing has gone up. We live, I live in South Florida. Stash. I don't know where you are. Where do you live? Washington DC. Ok. But real estate prices 50% up in a year and a half. I mean, it seems like 20 minutes ago, my house is worth half what it's worth. Now. Is this gonna continue

uh higher prices? And, and, and also we, we must immediately recognize that real estate is local. Uh So all markets are not the same, but in general, let's say nationwide housing prices stabilizing about the same going up, continuing to go up or due to higher interest rates and slowing economy, maybe they're gonna fall. What do you think,

uh higher prices? And, and, and also we, we must immediately recognize that real estate is local. Uh So all markets are not the same, but in general, let's say nationwide housing prices stabilizing about the same going up, continuing to go up or due to higher interest rates and slowing economy, maybe they're gonna fall. What do you think,

Stacey? So I'll steal someone who's smarter than I am in this, in this respect of context. You talk to the chief economist of the major housing entities, they're seeing higher and the reason why is, and I agree with you, you cannot deny the numbers you are seeing pending home sales that are just extremely ugly. Why? Because no one wants to pay a 7% mortgage. It makes profitability very difficult. But what are you also seeing in that same context?

Stacey? So I'll steal someone who's smarter than I am in this, in this respect of context. You talk to the chief economist of the major housing entities, they're seeing higher and the reason why is, and I agree with you, you cannot deny the numbers you are seeing pending home sales that are just extremely ugly. Why? Because no one wants to pay a 7% mortgage. It makes profitability very difficult. But what are you also seeing in that same context?

You are still seeing multiple bidders on the average property that speaks to a supply issue. Demand is certainly down, make no mistake. Demand for real estate is down interest rates. And how expensive a mortgage is, is the primary culprit? But supply is even a bigger issue right now and it's outweighing the decrease in demand, which is why real estate prices will continue to inch higher.

You are still seeing multiple bidders on the average property that speaks to a supply issue. Demand is certainly down, make no mistake. Demand for real estate is down interest rates. And how expensive a mortgage is, is the primary culprit? But supply is even a bigger issue right now and it's outweighing the decrease in demand, which is why real estate prices will continue to inch higher.

Ok. So, so you would say if, let, let me rephrase the question for everybody. If I'm a buyer, I want to buy a home.

Ok. So, so you would say if, let, let me rephrase the question for everybody. If I'm a buyer, I want to buy a home.

Would I be waiting here or would I be buying here? What you just said is I'd be buying here,

Would I be waiting here or would I be buying here? What you just said is I'd be buying here,

I would be buying here. But if you have a large cash cash nest egg, I don't think it would hurt you that much to wait a year to see if we do get that economic contraction.

I would be buying here. But if you have a large cash cash nest egg, I don't think it would hurt you that much to wait a year to see if we do get that economic contraction.

Ok. That makes that's good advice. What about you, Miranda? What do you think?

Ok. That makes that's good advice. What about you, Miranda? What do you think?

I mean,

I mean,

I'm not a real estate person

I'm not a real estate person

but no, I mean, we're actually where I live in Idaho Falls where the market was very overheated for a long time. Um We are seeing like housing home prices are coming down. Um give it a couple more months and you know, if you're, if, if buying makes sense for your personal situation and it's something that you're interested in then, you know, you might, depending on where you live, like you might be seeing better deals coming up soon.

but no, I mean, we're actually where I live in Idaho Falls where the market was very overheated for a long time. Um We are seeing like housing home prices are coming down. Um give it a couple more months and you know, if you're, if, if buying makes sense for your personal situation and it's something that you're interested in then, you know, you might, depending on where you live, like you might be seeing better deals coming up soon.

Ok. So you might not be a buyer here. What about you? Aaron? Aaron is a real estate person. He owns rental property. What, what do you think? Aaron? It, it's, yeah, it's highly regional here in Florida they're going up. Um, I would invest in, in stocks actually in Dr Horton and Lenard because apparently from Redfin, people are not leaving their homes and that's causing the prices to kind of be sticky a little bit. And then people that can't find homes are actually buying brand new ones. Would you be a buyer?

Ok. So you might not be a buyer here. What about you? Aaron? Aaron is a real estate person. He owns rental property. What, what do you think? Aaron? It, it's, yeah, it's highly regional here in Florida they're going up. Um, I would invest in, in stocks actually in Dr Horton and Lenard because apparently from Redfin, people are not leaving their homes and that's causing the prices to kind of be sticky a little bit. And then people that can't find homes are actually buying brand new ones. Would you be a buyer?

Um, buying a home? I don't think so. Ok. So we all pretty much agreed on that. Uh, we're not expecting prices to continue to accelerate. Uh, and, and then depending on where you live, they might come down a little bit. Uh, but obviously I think as Miranda was saying too, if you're going to live somewhere the rest of your life, what difference does it make by now? Don't worry about it.

Um, buying a home? I don't think so. Ok. So we all pretty much agreed on that. Uh, we're not expecting prices to continue to accelerate. Uh, and, and then depending on where you live, they might come down a little bit. Uh, but obviously I think as Miranda was saying too, if you're going to live somewhere the rest of your life, what difference does it make by now? Don't worry about it.

Um, just in case they do keep going up. Right. Is that, is that true, Miranda? I don't want to put words in your mouth either. Yeah, I mean, well, yeah, I mean, it's like, but buying the home that you live in, right? If it's not like if buying the home that you live in is not the same thing as investing in real estate or investing in rental property or anything else. So, buying the home that you live in, um should be a decision that you make based on your lifestyle and personal finance situation and not necessarily what you think the housing market is going to do in the future

Um, just in case they do keep going up. Right. Is that, is that true, Miranda? I don't want to put words in your mouth either. Yeah, I mean, well, yeah, I mean, it's like, but buying the home that you live in, right? If it's not like if buying the home that you live in is not the same thing as investing in real estate or investing in rental property or anything else. So, buying the home that you live in, um should be a decision that you make based on your lifestyle and personal finance situation and not necessarily what you think the housing market is going to do in the future

now. And let's finally conclude by talking about something really important to many of our listeners, interest rates. Where are they going? Are they gonna go? I mean, obviously we just had a little increase in the, in the fed funds rate yesterday. Um, and now, do you think there's gonna be any more increases in fed funds rate? Yes or no stash.

now. And let's finally conclude by talking about something really important to many of our listeners, interest rates. Where are they going? Are they gonna go? I mean, obviously we just had a little increase in the, in the fed funds rate yesterday. Um, and now, do you think there's gonna be any more increases in fed funds rate? Yes or no stash.

No,

No,

I don't think so either. And neither has Goldman Sachs either. Um, so if you are a saver

I don't think so either. And neither has Goldman Sachs either. Um, so if you are a saver

and I've got a lot of money in t bills, um, is this the time to lock in higher rates? Because if the economy does slow down, well, just put it this way. If they're not raising them anymore, sooner or later, they're probably gonna be dropping them. And I think that will be later. I don't think it'll be sooner. Uh, but should, should you be locking in longer term

and I've got a lot of money in t bills, um, is this the time to lock in higher rates? Because if the economy does slow down, well, just put it this way. If they're not raising them anymore, sooner or later, they're probably gonna be dropping them. And I think that will be later. I don't think it'll be sooner. Uh, but should, should you be locking in longer term

like a five year CD or a, or a five year treasury bill or bond rather than keeping your money in a money market fund where rates are gonna start dropping as, you know, where those, those rates will go down as soon as interest rates start dropping. So would you be a person, would you advise your clients uh in general stash to, to try to lock in some higher rates here?

like a five year CD or a, or a five year treasury bill or bond rather than keeping your money in a money market fund where rates are gonna start dropping as, you know, where those, those rates will go down as soon as interest rates start dropping. So would you be a person, would you advise your clients uh in general stash to, to try to lock in some higher rates here?

So, Stacy, uh we have been a huge buyer of short data paper and when I say short, I mean, 24 months and end, uh I know that brings reinvestment risk. But for everything that we're talking about, you say 15 minutes ago, about inflation, one of the reasons why I'm hesitant and we had a pretty large position in the 10 year us Treasury and we started unloading that position 3 to 4 months ago. And some of the dynamics

So, Stacy, uh we have been a huge buyer of short data paper and when I say short, I mean, 24 months and end, uh I know that brings reinvestment risk. But for everything that we're talking about, you say 15 minutes ago, about inflation, one of the reasons why I'm hesitant and we had a pretty large position in the 10 year us Treasury and we started unloading that position 3 to 4 months ago. And some of the dynamics

of why or some of the reasons why we did, it happened with the dynamics that we just witnessed in the last 30 or 45 days where if we do get a increase in inflation because there is starting to be growing concern that the Federal Reserve maybe has lost inflation. And again, we, we opened talking about uh ay go versus cyclical variables about inflation. But if the Federal Reserve has lost control of inflation

of why or some of the reasons why we did, it happened with the dynamics that we just witnessed in the last 30 or 45 days where if we do get a increase in inflation because there is starting to be growing concern that the Federal Reserve maybe has lost inflation. And again, we, we opened talking about uh ay go versus cyclical variables about inflation. But if the Federal Reserve has lost control of inflation

and the Federal Reserve has raised interest rates without necessarily negative negatively impacting inflation. Well, what happens if geopolitical conflicts say Russia bombs Poland and energy prices really start to increase again. Energy prices declining certainly has been a major reason why inflation has come down year over year. But say if we get an increase in inflation, a surprise in inflation,

and the Federal Reserve has raised interest rates without necessarily negative negatively impacting inflation. Well, what happens if geopolitical conflicts say Russia bombs Poland and energy prices really start to increase again. Energy prices declining certainly has been a major reason why inflation has come down year over year. But say if we get an increase in inflation, a surprise in inflation,

those 5, 10 year, 20 year, 30 year us treasuries, those interest rates are going to go higher. And so if you buy, you have to be willing to take that risk. That's why I like 24 months. And in Stacey, you can lock in over 5%. Not have to worry about the Federal Reserve is going to cut interest rates due to economic weakness. I think the relative value and I think that is the very important question

those 5, 10 year, 20 year, 30 year us treasuries, those interest rates are going to go higher. And so if you buy, you have to be willing to take that risk. That's why I like 24 months. And in Stacey, you can lock in over 5%. Not have to worry about the Federal Reserve is going to cut interest rates due to economic weakness. I think the relative value and I think that is the very important question

that the listeners should, should really focus in on when they're making an investment decision. Is the relative value of investment a better than investment B and C. Uh Because right now, I do question and as much as I think the stock market might limp higher for the remainder of the year, there's better relative value in other asset classes in my opinion, say like the two year us treasury that you can collect 5% and forget about it.

that the listeners should, should really focus in on when they're making an investment decision. Is the relative value of investment a better than investment B and C. Uh Because right now, I do question and as much as I think the stock market might limp higher for the remainder of the year, there's better relative value in other asset classes in my opinion, say like the two year us treasury that you can collect 5% and forget about it.

Uh You're not taking the same type of market risk that someone else is when they're buying into the stock market.

Uh You're not taking the same type of market risk that someone else is when they're buying into the stock market.

What percentage of your portfolio should you put in that?

What percentage of your portfolio should you put in that?

That depends on someone's investment objectives and goals. Uh I would say if you're in retirement, you probably want to have a larger portion. Uh If you're approaching retirement, maybe a little less than that. But again, I think in regards to the question of relative value, do I want to buy Stacy? Alluded to it before we're about a standard

That depends on someone's investment objectives and goals. Uh I would say if you're in retirement, you probably want to have a larger portion. Uh If you're approaching retirement, maybe a little less than that. But again, I think in regards to the question of relative value, do I want to buy Stacy? Alluded to it before we're about a standard

deviation, forward looking price to earnings or pe ratio is about a standard deviation above historical norms. Right now, we're at about 19.5. Uh almost 20 times forward looking earnings. If you take the inverse of 20 times forward looking earnings, you get something called an earnings yield. So we take the inverse of 20 times forward earnings, you get 5%.

deviation, forward looking price to earnings or pe ratio is about a standard deviation above historical norms. Right now, we're at about 19.5. Uh almost 20 times forward looking earnings. If you take the inverse of 20 times forward looking earnings, you get something called an earnings yield. So we take the inverse of 20 times forward earnings, you get 5%.

So right now, for every dollar that you invest broadly in the S and P 500 you can expect that dollar to generate 5% for the next 12 months, which is

So right now, for every dollar that you invest broadly in the S and P 500 you can expect that dollar to generate 5% for the next 12 months, which is

exactly what you can get risk

exactly what you can get risk

free. Exactly, Stacey.

free. Exactly, Stacey.

Yeah. So, and now to me now, fortunately, folks, you don't have to make a decision about where, whether you want to be in short term, C DS or treasuries or long term because you could do both.

Yeah. So, and now to me now, fortunately, folks, you don't have to make a decision about where, whether you want to be in short term, C DS or treasuries or long term because you could do both.

Uh now and what I would do, I, I'm and stash, you're undoubtedly smarter than me. But what I would do is I, I would, I, I'm gonna put some money a little longer. I I'm gonna have and if you're, if you're a mutual fund investor, an ETF investor, you know, you can have short term bond funds, medium term bond funds, long term bond funds, I I would put some in medium uh and some, and some in short.

Uh now and what I would do, I, I'm and stash, you're undoubtedly smarter than me. But what I would do is I, I would, I, I'm gonna put some money a little longer. I I'm gonna have and if you're, if you're a mutual fund investor, an ETF investor, you know, you can have short term bond funds, medium term bond funds, long term bond funds, I I would put some in medium uh and some, and some in short.

Uh and if you're buying individual bonds, you can ladder, you know, which I do also. Uh you buy bonds that are gonna be due in three months and then, you know, six months a year or two years, whatever. So you can, you put a little bit of money everywhere. And that way if interest rates go up, your short term money is gonna be due and you can lock it in at a higher rate if interest rates go down. Well, then you've locked in some, at a higher rate.

Uh and if you're buying individual bonds, you can ladder, you know, which I do also. Uh you buy bonds that are gonna be due in three months and then, you know, six months a year or two years, whatever. So you can, you put a little bit of money everywhere. And that way if interest rates go up, your short term money is gonna be due and you can lock it in at a higher rate if interest rates go down. Well, then you've locked in some, at a higher rate.

So that, that's what I would do.

So that, that's what I would do.

But again, you know, I I'm surprised to hear you say stuff that you wouldn't be going long here, going into longer term. But

But again, you know, I I'm surprised to hear you say stuff that you wouldn't be going long here, going into longer term. But

yeah, Stacey, I think the relative value uh of focusing in on the shorter term period and look if, if my thesis is correct. And again, while I think the stock market will continue to limp higher for the

yeah, Stacey, I think the relative value uh of focusing in on the shorter term period and look if, if my thesis is correct. And again, while I think the stock market will continue to limp higher for the

remaining five months, if that happens, that means I think we're going to be in for a world of hurt in 2024. Look, leading economic indicators are negative and they've been consistently negative all year. I like you. Stacy, am surprised to see the resiliency in the stock market. But with that,