Straight Talk Wealth Radio
Straight Talk Wealth Radio
Straight Talk Wealth Radio Episode 83: Can your advisor tell the future? Understanding the Signs of an Impending Recession
What is the single most valuable skill your financial advisor should possess?
It's the ability to foretell the future!
And what do investors want to know today? They're asking, "Where's the recession?"
Follow along with Bruce today, as he pulls from some of the best minds to ask if The Fed got it right or wrong on interest rates hikes. Will we have a soft landing after all, or is the other shoe about to drop?
In this episode of Straight Talk Wealth, Bruce White discusses the signs of an impending recession and the impact on your financial security. Stay ahead of the economic curve with valuable insights and strategies for safeguarding your investments.
- The importance of staying informed about the rapidly changing economic environment
- Key factors to consider for a successful retirement amidst economic shifts
- Exploring the impact of stagflation and high interest rates on the economy
- Insights into predicting future market trends and recession indicators
- Resources and training available to help navigate the current economic climate
Talk to Bruce by visiting https://www.straighttalkwealth.com
Hey, it's Bruce Weide. Hey, how are you guys? We have some new studios for Straight Talk Wealth Radio, which is, I guess this isn't radio anymore. If you know me, you know my history. I did broadcast radio, financial news show, an economic show. We had some great people, had a great run for ten plus years in Southern California and across the country and I've been practicing in retirement planning for Jesus, 1997, whatever that is, 27 years or something. And we kind of backed off doing the show because we got busy with clients and busy just getting things done. But man, things happen so rapidly and there's so much changing all the time in the environment and the economic environment that it's critical to keep these shows going because one thing that I hear, and we are now, by the way, if you don't know, we are in the Tampa Bay area in Florida and still in southern California and Ventura county and of course it's a Zoom meeting world so we work all over the country now. But I listen to Tampa Bay radio a lot currently and I hear a lot of financial shows and they're know a lot of them say the same thing. They are just kind of, oh well there goes our screen. There we go, we're live. I want to thank my show producer Tony Rockliff in the background who's making sure I don't kick cables while I'm talking to you and I'm just making it up. Anyway, in this area there's these shows where everything is sort of like it's the standard pablum that comes from the financial world. And if you ever heard me lecture one of the things I don't buy my own industry's bs,"ten ways to spruce up your Roth 401K" or all these other things, or the stock market. I'll tell you a great story I'm bubbling over to talk to you and get back on the air here, but there's a saying that the stock market is your best long term investment and it beats real estate and all this other stuff. And my dad's stock advisor used to come to the company parties when my dad was still one of her clients and would say all these things. And then my dad retired, actually died about a year after the tech bubble of 2000 and had lost, I don't know, 30% of his money and it never came back and he wasn't there to have it come back. So these things matter. And I guess what I want to tell you is that to not look at the environment, to not be aware of the most, the present things going on in the economic and financial world. And to just continue on that things will always be as they have been is not how we operate. At Straight Talk Wealth Radio, we're acutely aware of what the times are that we're moving into, mostly because most of what we work with are people that are just into or approaching retirement. And that's the most crucial period where if something shifts on you, you're radically having to change plans. If you're 20 years before retirement, there's a stock market crash, you got time to come back. But if you're right up against your timelines and something shifts of which this is continually, it's like one of the things you saw in the opening of the show is because things are going to change when you quickly approach retirement. One, we are going into an economic era where things are going to change, but two, just where you are in life and going from accumulation, accumulation to now, your job is to spend your money. It's not to save your money, it's to spend it. Most people want to have $10 left in their account the day that they die and know that they lived well as well as they could off the, off the funds that they've saved. So these things shift. And so our motto is straight talk wealth, because things are going to change. One of the things that is really important this year and where we are and what today's show is about is there going to be, we're waiting for a sea change. We've had inflation like we've never had before. It's historic. That's affected some things. What are going to be the next repercussions? So what I want to talk to you about is this, getting back to my theme, you'll excuse me if I occasionally digress, but hey, we're just here to talk, aren't we? What I want to present to you today is this. What is the most important skill that you should expect from your financial advisor? Think about that. I'm going to forward that. It's the ability to tell the future. That's what you want your financial advisor to do. So today on Straight Talk Wealth Radio and I guess tv, now we're going to talk about why your advisor needs to be able to predict the future in order to do his job well for you, we're going to look into the future and try to decipher what's coming from today's headlines. We're going to take a hard look. Is there a recession coming or not? What's going on? There's all this talk and every time we're in this mode where like the Fed does something because it looks like maybe we're in trouble and the markets love it and expand. And now we're back to the same awkward, nonsensible economics, which is, I'm going to talk about this more, but we're in this stagflationary period where inflation is high. If you don't keep your money invested, you're going to suffer because inflation is going to eat it up. But what do you invest into when the Federal Reserve's whole chore, its whole intention right now, is to slow the economy, if not push it into a recession? You got to keep your money invested, but you're investing in the things that are likely fighting the Fed to try to grow because the Fed's trying to crash things. So I want to take a deeper look today on is there a recession coming or not? These are usually going to be about 30 minutes shows that we're going to do when we go online and do Straight Talk Wealth Radio. Thanks for joining me today as we're winging our first episode in our new format. Now, I'm also going to give away a recent report of mine that I believe will help you understand how when the world around you is constantly changing when it comes to your future financial security, some things can be stable and predictable and can keep you anchored in the storm. So that's what we're going to do today. And hi, I'm Bruce Weidey. You can reach us at our website, straighttalkwealth.com, where we will have the shows and the back shows primarily featured. You can always email me personally at bruce@straighttalkwealth.com and I'm going to tell you real quick about this report and come back to it later. But right now, let me just show you what we're going to be offering today. This is a report that I did a few years back, and it's still very pertinent. It is called principal spend down a slippery slope. You can have this in print if you want. We'll get a way for you to order this, probably by email right now. I don't even know if I have a landing page for it. Just email me, bruce@straighttalkwealth.com and we will either send you this digital player of the report or we can mail it to you in print. It goes over, like, why the boomers are just not going to retire successfully. What the demographics are different than what our parents demographics are. We're in a totally different situation than our folks. And we're way more challenged than our parents were who had pensions and other things. There is definitely a table of contents in here. Let's see what else we have. Is this the face of our new economy? I talk about the post Covid economy and the crazy stuff that caused Covid. Is stuff like that random? Can that occur again? Here we go into portfolio. You trying to get income. We look at the history of interest rates. Yes, it has changed recently. This is a really good time to get income. If you act while interest rates are high, but this still covers the scene. You need to understand that challenge. We got what principal spend down is when you can't get enough income and you start spending principal. And there's just a bunch of good stuff in this that I do want you to have. All right, let's go back to what I want to talk about. So here's the thing. Here's why I'm worried about recession. As I mentioned earlier, we're in this period of stagflation. There's a training I'm going to make available to you. Actually, we did for our clients, I did about a 45 minutes training video on stagflation for my clients. And we have a landing page for that too, by the way. And this is what it looks like. And they can get $500 of training for free on stagflation that we put together. Now, what's important about that is that is the climate that we are in today. It is the fact that you can't not be invested, you can't be getting one or 2% on your money while inflation is raging at five, six, seven. Yes, it's slowed down right now. We're going to look at some predictions of where it's going from here. But when the Fed is trying to raise interest rates, how long does it take for that to ripple through? Has it yet killed? It has definitely slowed the real estate market. Who cares? There's a lag between what the real estate market is no longer doing and what might happen to Home Depot or Lowe's or to people that work there, people that work in construction. I mean, it takes time for these things to ripple through and see the slowing. And the whole hope and prayer everybody's got is that the Fed didn't do it too much to where it's a soft landing. We're going to listen to some experts on that in just a little minute. So that's the concern. That's the thing I want to look at. I think the first thing we want to look at right now is where is this recession? What's going on? Is it coming? Are we going to see it or. Good. This just came out recently. I think it's from CBC, might be canadian broadcasting System. Oh, CNA. You can look that up. It's right here. It's on the Internet. CNA insider. That's where it is. Subscribe to it. I want to pitch them so that you know that because I'm using their video, they should get a pitch. But I found this story very interesting. Let's dig into it a little bit, see what they have to say. And I'm just going to run it until it sort of gets dense and boring. But I want to get through the main points. I saw this and I was pretty good for about four or five minutes into it. It's a five and a half minute video and it's a good look at is there a recession? Tall Simon re the signs of a looming recession in 2024 are pretty clear. Loans harder to get and more costly, a slowdown in manufacturing and job losses amidst sluggish economic activity. He says they all point to a slowdown by the first half of next year. And all this even as rates remain high. The contraction in credit I think, is a big one. Credit creation is the lifeblood of a credit based economy like the US. We're also seeing signs of recession in Germany. Japan had a much weaker than expected third quarter GDP. It's now in contraction. China, of course, is facing its own economic woes and a slowdown. And I think the US is probably next. That if you've got sort of those four powerhouse economies in the world all contracting, it's going to be very difficult to avoid a global recession. Recession may not be as severe as the global financial crisis, but it could be prolonged. Okay. I think it could go on for several quarters because the fiscal stimulus has already been massive since COVID the US government has spent approximately $5.2 trillion on fiscal stimulus, so they don't have much in the reserve tank to keep spending. The talk this year was of recession, yet it didn't turn out that way. Equities rallied, but it might be a different story in 2024. Our sense is that it's still a central scenario, that the recession has been delayed but not removed from the agenda. So we're still going to see that recession coming through in 2024. As an investor, I guess we'd prefer to get that out of the way earlier rather than later, because then I think people could invest with more confidence. In the second half of the year. Once it's out of the way, as. Economic prospects dim, the US Federal Reserve's next move will be keenly watched. All right, enough said there. So here's the thing that they're saying, and it was interesting how the market took off. The market took off just because he's not going to raise rates anymore. But you're going to hear in a minute about the delay that it takes. I mean, I think he was talking there about several of the major economic countries are coming together now, why this is important. And one of the reasons I want to do this show is people are coming into our office and they just think things are going to go as they have. They don't see the change. And this is what I talked about at the opening here. Your financial advisor needs to be able to tell the future. And what we're looking at is that I don't want to take in a bunch of funds that are going to go down. So we work with a different paradigm on how we operate at my office, and I should have brought up the graphic for this for the show, but I'm just going to kind of describe this with my hands. That'll work. The usual paradigm that people are investing in is I might lose money in order to make money. We'll use our other hands here. I don't know which way you're looking at the screen, but you got to lose money to make money. Got to be willing to do that. We disagree strongly. That is not our paradigm of risk. Our paradigm of risk is you will never lose money. We will never lose client money. We don't create portfolios where the client can go down. The risk is now when the markets are rising, the clients are going to get a good share of that. Sometimes we have strategies in a poorly performing market that we can create a multiple, actually more than the market's doing, but there'll be a limit to that. Might be like ten and ten and a half percent, the most we can get under that circumstance. If the market's going 1520, then we can get into double digits too. And your risk is no longer loss of money. Your risk is I might make a little or I might make a lot. That's the paradigm of risk that we operate. So we're trying to move people into that paradigm. And I'm telling you they don't get it. They're still sitting at an older age in these larger at risk fund and stock portfolios. And because the market this last November went so wild, they're just like, I'll get out before the next crash. You won't. Crashes happen too fast. And it's not even about a crash. It could just be about a slowly sinking recession. Recessions can happen slowly. They can linger. Like this guy said, they can take a few years. So that's a primary risk. That's where we feel it is not fulfilling our responsibility to you to say, just do as you always do. The stock market generally makes 8%, 12% a year. Just all the platitudes we have to be on this year to year to year to figure out. And we're generally going to employ strategies where we are, where we can't lose anybody's money. And the risk goes from, you might make a little in a down year. If the stock market goes down, and we can guarantee 5.5% on a down year in the market, that's a pretty good return, if we can say, and we have strategies, for example, if the market goes up one or 2% and watch it, because interest rates are, rates are changing, they're on the move. So this could be different tomorrow, but we can turn around on a one, two, 3% market and turn it into nine and a half on a trigger method. That's just guaranteed markets up at all. You get nine and a half, maybe 10%. So these are different strategies of, again, you might make a little, you might make a lot. That's your risk, but no loss. So that's why we feel right now, this is urgent. Now people are seeing these and they're saying, great, I like that. Good work. And then they think that they just have an abundance of time. And that's why we're so concerned. Like, no, we know there's been an impact. It just takes time for that impact to come in, that these higher interest rates are creating delayed effects. So I want to go to Jeremy Grantham. Jeremy Grantham is a very well known international investor opinion leader in the area, has a very dower opinion of the Federal Reserve chiefs. Jeremy Powell's ability to actually turn the dial up proper proportion and make things work accordingly. He's one of, what is it? Unexpected consequences, unplanned consequences from the things fed does that the Fed doesn't even know they're doing. So I'd basically look at this a little bit, and then I want to make you an offer of a couple things that I think will help you, and we'll wrap it up. So I want to hear what Jeremy Grantham has to say. Particularly, I like his sort of wise ass attitude about what the Fed thinks. That they can do deflationary forces from the tech stocks breaking in 2021, probably too big. So I just want to say something here. When you hear about the deflationary forces, why is he talking about that when we're having inflation? This is the nature of stagflation. It's a whipsaw. And when you have inflation and the Fed is trying to crush it by raising interest rates, the ultimate result is that the economy slows down. And it's a whipsaw in that when inflation's up and the Fed's trying to stall the economy, the stock market goes down, your home value goes down, food prices are going up, your home value goes down. Stagflation is a whipsaw between the forces of inflation and deflation. Referring to here, and I'm going to give you a reference on this in a minute, and we'll talk a little bit more about that. The power of interest rates rising and depressing the real estate market. Very negative, slow moving influence. I suspect that they will once again dominate and we will have a recession running perhaps deep into next year and an accompanying decline in stock prices. So the recession that you're predicting is probably not going to happen in 2023. But it may start in 2023. The Federal Reserve recently said that they think we've kind of cleared the recession hurdle and they don't really project a recession any longer. Do you disagree with the Fed on that? Yeah, I think the Fed's record on these things is wonderful. It's almost guaranteed to be wrong. They have never called a recession, and particularly not the ones following the great bubbles. They prided themselves in stimulating the bubbles. They took credit for the beneficial effect of higher asset prices on the economy. They have never claimed credit for the deflationary effect of asset prices breaking, and they always do. Now, you said not too long ago that you weren't a big fan of Jay Powell and the way he's been handling inflation. Is that correct? Yes, that's correct. And you think he's done a better job recently in getting inflation under control? I think it's largely out of his hands. The forces work. I suspect inflation will never be as low as it averaged for the last ten years that we have reentered a period of moderately higher inflation and therefore moderately higher interest rates. In the end, life is simple. Low rates push up asset prices. Higher rates push asset prices down. My son is Raxton and he was diagnosed. Cute baby baby videos. Always get people in here. Okay, so here's the thing. I want you to understand there's a particular sector that has really benefited from these high interest rates. So this is what maybe I haven't made clear. High interest rates are terrible for the economy. They're terrible that they cause deflation. They make prices break because when prices are inflated by how easy people can borrow to get a house, so easy, cheap money, housing prices go up. Easy, cheap money, corporations take it all in and use borrowed money to expand and grow with. When that game is over, those prices deflate. The good news. The best thing you need to understand about high interest rates is they're great for savers, people that want to get out of risk, people that want to just make sure they have a guaranteed income, a guaranteed return on their money. They're getting way more than they ever used to get. And we're seeing that left and right in the financial products that we're moving people from risk into safety never looked better than they do right now. That will not be as good. The minute these interest rates start to soften, this is the time to take advantage of it. So what I do want to tell you is let's just real quick, we have a website. Did you know we have a website? Let's see, where's our website? So it's welcome to Straight Talk Wealth Radio because things are going to change. We've got solutions for you. We have all of our past episodes of the podcast here. We got an email. Bruce@straighttalkwealth.com phone number is triple 882-5578 we can do a retirement roadmap. That's probably the easiest way to sort of figure out what you actually need because people ask me all the time, they go, what's good right now? And I'm like, I have no idea. I mean, how to recommend something I don't know anything about. What's your current portfolio look like versus what you should have? So I never know what to recommend until we do a retirement roadmap. And then it gets very clear when we do this, this is a free service that we provide. And again, if you want to write us, bruce@straighttalkwealth.com I would be happy to provide you with this report that we produced a couple of years back called principal spend on the slippery slope. And finally, what I want to tell you about is there's a training that I did for my clients where they were asking me like, what do we do in this environment? So one at a time, I'm trying to explain to them, well, let me tell you how inflation works. And I got to indoctrinate you a little bit on how stagflation works. So you understand my recommendations. And it was too long to do this 45 minutes phone call with every single client. So I put the video together. You can find this at, you go to straighttalkwealth.com, which is our website. Howtowin with stagflation. Howtowin with stagflation. And there is a hyphen between each one of the words how to win with stagflation. We'll put that on a title here. So it's a little bit bigger. But what we're doing on the first video is it's a five minute intro, so you could take five minutes to figure out whether you want to do the training or not. But I had with my clients, they wanted to really dig in. So this was the first place to go talks about where we're going with it. I'm trying to get you understand is we're in inflationary times. You've got to get your money to grow, but you're investing into what will be a recessionary economy, which would be the worst thing to do is to throw your money right at something that's about to deflate. So stackflation will be whipsawing investors at least the next year with a push pull between inflation and deflation. And anyway, you could read on here more about it. You register there to do the training. Let me know that you're starting it. You got a couple of hours to have that for free. Once you watch this first video, you just have to register within a couple of hours and I'll take you right to the screen. And that would be the more complete training. All right. I would like to hear back on whether I bored the heck out of you today or whether this was relevant. And we're going to have some great guests. When I had the show on before, we had the guy who ran Social Security and Medicare, was the trustee of it for five years, was on for an hour talking to us about the security of Social Security, Medicare. We'll get him back. David M. Walker, Harry S. Dent is a best selling New York Times author and economist, used to be out of here at Tampa. Now he's in Puerto Rico. Very good prognosticator of trends, not always on timing so much, but on his basics and how demographics drive economy. We will probably be checking with Harry on a routine basis. We will get some other economists, some bankers talking to us about the banking system. So all of that, we do this because, well, when we meet with you personally, and we look at your specific situation, your details. It is important to keep in mind the overall environment that we are in and how that plays into your planning. And that's where we just have to put the show out and we ask our clients and prospective clients to watch the show. Let's talk about the big economy when it comes to 101. We're happy to help. You can always reach us again at bruce@straighttalkwealth.com and you can always reach us by phone at. If you want the report or you want the training, you can reach out to us. I think I gave you the URL for the training and the report. You can email me or call us and we'll get the report to you for no charge, no obligation. Hey, you've been great. Thanks for putting up with me. Thank you to our new producer, Tony Rockliffe, for making me look good. And we will see you again probably next week sometime for another edition of Straight Talk Wealth Radio.