Have we reached the bottom of the market?

so most of the questions we received were about your investments how to navigate the market which of course has already cost much damage to financial goals in many people's dreams i'm lucky enough though to have two of the best investment strategists to help us kick off the show joining me now advisor group chief market strategist phil blancato and lafleur tangler ceo and cio nancy tingler and i want to just jump straight into the questions i think the first question is from susan suzanne howard yes my question is if you can tell us if you think we've hit the bottom of the market yet all right tell you what i'll start with you phil and then you nancy okay yes okay you're wishful thinking yeah yeah sure we're done we're on our way up you know traditionally markets need to really wash out completely for socio lift off this time it's a little different the key thing that has to change is inflation in order for that injection the key thing that has to stop is the federal reserve raising rates in order for them to stop we need oil prices to come back down below 80 hours a barrel until you see your oil correct and come back down the fed won't put on the brakes and for that reason we're not quite there yet however i don't think we're far away i think we're at the mid september early october is a chance for the market really to lift off i actually think the fed's going to pause in that september october time period or lower their forecast and that's for your opportunity to go much higher in the market assuming oil comes back down below 80 about nancy i i think um i think you're right [Laughter] i don't think however that oil is going to come back back down below 80 a barrel um but i do think now is a great time to be adding risk back into your portfolio and we've seen the nasdaq come back i don't think it's over yet but these do take time these corrections take time as phil describes but we are in a midterm election year and as independent and non-political as the fed is they're very political and so i think you'll see a pause and i think that will be a chance to to add more but i'd be adding now yeah something that the the fed cost bush senior uh his job at least that that's what he one of the entities that he blamed it on i'm gonna go to david next because he sent us in his question quote are we now rotating away from consumer discretionary because of inflation fears this is a very timely question because the market got hit a little bit today it's actually saw some resolve many might know walmart warned for the second time and essentially it's an interesting warning it's not that people don't have money to spend it's just that the things their essentials that they need cost so much that they can't buy anything else so maybe that's why we're not free falling that's a surprise i honestly when i when i saw the news initially i wouldn't have been surprised to see the markets down one and a half two percent they're actually showing a lot of resolve today yeah i think that's because we've seen a lot of warnings and and for the reason you described we've been adding back to consumer discretionary names in the past uh six weeks so i think this is a fair time you're never going to hit the bottom be an investor is like being in a perpetual state of dissatisfaction you buy it and it goes down you bought too much and you buy it is up you didn't buy enough so you just want to be disciplined and dollar cost average your way in i think there's a lot of consumer discretionary stocks that um are going to look really good coming out the other day i was checking out lulu before i came down we just bought it it really looks like a screaming by to me although i will warn if a company says we ain't going to make money for a long time i wouldn't necessarily rush in to buy the stock all right let's go to sandra with an email question so people that are already retired move their iri ras into cash until this roller coaster ride is over how can the people that are still working protecting the 401ks can they move some of their money into cash and then continue to contribute along the way uh with their employers contributing it's sort of a complicated question but phil do you think people should get that cute with their retirement recovery they should not first off your best vehicle you can save in is your 401k when your company's supplementing your income by giving you that match you always take advantage of second off it doesn't matter a degree to how long you have to retirement if your retirement time frame is one or two years you can get more conservative in your investments but assuming you're still working have a lengthier period of time more so than five years and stocks are the best ingredient in a portfolio when you're in inflationary period when things inflate generally the stock market does too and finally stocks are cheaper to your point prices are now really better than they've been in quite a while so for that reason you should be a buyer or stock in your 401k cash is never a winning investment it doesn't work think of it this way charles bear markets last around 11 months bull markets lasted on average of four years right average return after a bear market is 24 if we're at the end of a bear market then it's your chance to buy stuff folks put yourself out there if you can go in the future 10 20 years out and then look backwards do you think you'll be saying gosh i wish i bought i wish i held the answer probably is 99.9 yes you wish you bought and held all right i want to go to elvira in the audience uh with a question elvira hi charles hi thank you you picked the right color you had the simpawtico thank you we have good taste based on the current economic situation where do you think a good place would be to invest a hundred thousand dollars for the next year post tax nancy let me start with you on that are you selling it in a year uh no it's for future educational purposes for children um i i think you want to be exposed to the dividend growers uh this is a good time because most in our portfolio for example dividend gross about nine percent that used to be way ahead of inflation uh not so much now uh but that that's a great way to get paid to wait for the stock the underlying stock to um outperform so there's plenty of ways you can do that there's great etfs dividend aristocrats all sorts of places or individual securities pick 10 of your favorite names and and and that's another way to do it you know one thing i love about nancy and phil and and the reason i ask them to do this is they always come on every show with specific strategies right it's just not sort of the you know plain vanilla kind of stuff that doesn't help you and phil always has something elaborate so what would you what would your answer be to elvira on that one what's your favorite toothpaste ben i bet it's made by procter and gamble procter and gamble traditionally plays a wonderful dividend buy the stock set it forget it be paid to wait around that stems volatility because you're earning a big dividend and then on the other side of this maybe six nine months from now when growth comes back in favor we start to grow as an economy again you can think about a different allocation but for now own a procter gamble own names that you go to what's your favorite hotel chain that pays a nice dividend buy those dividend payers go out and own them be paid to wait around and you'll have great success all right i want to go to robert m he actually sent us in a question what is the best long-term dividend stock uh well phil just gave us an answer you have a favorite dividend stock here i i do but i'm a portfolio manager so i have two okay she's diversified we always have to hedge um i think this is an interesting time to buy target they grew the div they just grew it 20 percent and i think you want to use weakness to add to apple not a huge dividend but a huge dividend grower so those are two names are you a fan of the dividend aristocrats and folks those are these are companies that have hiked their dividend yield every single year for at least 25 years i think it's a wonderful list to begin with i would find if i would go through them with a fine cone because sometimes they'll hike it by penny right just to stay on the list so i'm like okay technically you're in aristocrat but you know that's more like a pauper move but does it does it means something when a company's not committed to sharing cash with their absolutely my partner and i wrote a book on this in the 1980s called relative dividend yield don't buy it um i think it's probably out of print but what we said was and it's true that management set the dividend policy based on long-term sustainable earnings power so they don't want to cut the dividend and if they have the conviction to raise it they're better at that than wall street um wall street tends to be wrong about two-thirds of the time on earnings well let's just say smarts and wisdom never go out out of date all right i want to go to a video question from louise i think we have it here hi charles it's louise from indiana i have a couple questions one is i wanted to build passive income using stocks that pay monthly dividends also i would like to invest in i bonds and wondering if that would be a short term or a long term since they are paying a high rate of return right now all right we hit dividends hard so let me go to you phil on ibots everyone's asking about them i think they're amazing i think there's one drawback it's not a drawback but the limit the amount that you can buy yeah you can only buy ten thousand bucks something and there's some limitations around okay explain to the audience who've never who may not have heard of what it's all about so basically you're lending the federal government money in an investment that's priced the rate of inflation and because of the way they were built they're paying an excessive dividend right now because the high price of inflation so you can spend ten thousand dollars go to the federal government and they'll give you a ten percent dividend well nine plus right now and they can have a duration i believe as much as three years up to five years if i'm not mistaken in some cases even 10 years so you look at those bonds and you look and you say wow this is a chance for me to commit some capital but to your point it's a limited amount you can only do 10 000 i think it's a great way for her to supplement her income but she touched on something i think if you're in a dividend portfolio you could take your dividends out and use them as income don't affect your principals you're getting some income from your portfolio fund this supplement with an eye bond it's just not a lot of money and then you're getting additional supplement to income at a time of high inflation all right you want something want to add something to that no i agree i think you're very smart i appreciate that i'm following someone who's great on tv all the time let's give them a round of applause folks they're absolutely phenomenal brilliant brilliant folks all right so we're gonna of course stay on the markets where they go from here and really largely near term is gonna depend on the federal reserve i know everyone's groaning when they hear that unfortunately that's the question a lot of people are sending in questions about pallet company in fact uh we're going to start off with one right now from frank frank he emails actually his question and says how high will interest rates rise you remember that old commercial with the owl and the lollipop how many licks to the center of a tootsie roll i think i think you get the answer to that before we get to the answer this although although i couldn't have gotten two better people to help us with this really when i say brilliant i mean brilliant welcome in our two next guests two superstars on the federal reserve also economic thanking quill intelligence ceo chief strategist danielle dimartino booth along with bianco research president phil bianco danielle did you hear the question i heard the question you want to tell me how many likes of the center for lollypopper answered a question um you know i i actually think that we're going to see a three handle before this is all over believe it or not a lot of market participants right now are betting that that jay powell's going to get scared and he's going to hit the panic button and that he's going to stop i think he really wants to to the extent that he can he wants to be as tough as paul volcker was on inflation and i actually think that unlike prior midterm cycles or any political cycle i think he's going to press forward into the midterms to not appear as if he's trying to curry favor with one party or another which is actually not how the federal reserve usually operates right right phil you've been writing though jim that that you think he's has no choice but to go strong go hard on this yeah i agree with danielle he's he's got a credibility problem they used the word transitory last year that turned out to be terribly wrong they have to reign in inflation the only tool they have is to raise interest rates now i agree with you that we could see three percent maybe even the high threes within about six months but on longer term interest rates they might be closer to peaking out so we'll get this situation where we have short rates higher than long rates which is an inverted yield curve which unfortunately so that changes the conversation from inflation to recession right exactly an inverted yield curve has a very good track record at predicting a recession we're there with some of the yield curves there's the one they like is what the five and thirty or something some combinations three three months three months three months all right yeah okay and that should be inverted by tomorrow let's get to some questions from the audience okay first one's sent to us by dell if interest rates usually have to exceed the rate of inflation how high do you see interest rates going and do you believe that the fed will be able to orchestrate a soft landing i guess no one sees it getting that high i mean you know it's it's it's almost an impossibility it is at this juncture and i would venture to say that any idea any notion of a soft landing is is being refuted every day by one company after another announcing layoffs that they'd over hired and now they're not seeing adequate demand whether it's walmart or at t or verizon um general electric today came and said you know what we've got a billion less in cash flow than we had expected so i think i think a soft landing is is kind of fantastical at this point but what about this jim what about the notion that the markets are actually doing the work for the fed and the reason i say that we got new home sales in folks i don't know if you were gonna sell a new home or you're looking to buy one if you're looking to buy one it was good news in one month down 40 thousand dollars one month the median price that's kind of crazy i mean we knew it was exponential we knew it would blow up like a roman candle but golly yeah the market's doing the the work of the fed uh for the fed that's a nice way of saying that it's making everybody miserable because it's making the economy go in reverse we hope the whole idea was we were never supposed to have the markets do that in the first place but you know as far as uh interest rates go to the original question yeah inflation's nine percent we don't need them to go to nine percent there is a broad belief that inflation will come down is it gonna go all the way to two probably not but it might go to three or four which means that that's where interest rates are probably selling let me ask you something philosophical people are not necessarily uh in the markets right you're sitting at home last year and all of a sudden every time you open up the mailbox you got to check right it's like okay you took it you cast it you went to the mall right what the hell are you gonna do that's right that's why they sent it to you and you're having a great time your neighbors are having a great time and then you hear about a year later that the government between the federal government and the federal reserve deliberately want to hurt you deliberately want to make your house worth less deliberately want fewer people to have a job is there something wrong with the system that does that to the american public look there was something very wrong with all of the people who were surprised at the money that they didn't necessarily need i can't tell you how many american families were like i feel like we should be giving money to the people who really need it i don't need this child tax credit in cash and then they spent it and in many ways they did but now we're seeing auto repossessions go up we're seeing loads of rv repossessions boats will be next banks don't know where to put them but the the backlash is though that this created the inflation that is the most regressive of all taxes because the federal government authorized the spending and the and the federal reserve monetized every last penny of it which is that's a huge no no never monetize the national debt they tell you that on the first day when you're inside the federal reserve trust me i remember and yet we did a lot of it let's get some more questions i'm going to go to bill who sent us a video question hi charles bill bagner from red bank new jersey why does the fed talk about raising rates expeditiously when energy food and daily essential costs make up a bulk of that inflation which the fed can't fix with higher rates and i guess a secondary question would be is core inflation moving lower because that headline energy-based inflation remains stubbornly high thanks for taking my question have a great day fantastic question what do you think yeah as far as the the second half of the question about core inflation moving lower there is some argument to be made that what you're trying to do with core inflation is remove energy prices remove food prices but you can never remove them from everything transportation costs and everything else that that might be impacting those prices as far as the first part of the question the the the wall street acronym for that is well the fed can't print ships the fed can't print oil so what are they trying to do i'll just point out to everybody the us has the highest inflation rate in the developed world well portugal just recently took us out but we've got a very high inflation rate well the rest of the world has a supply chain problem the rest of the world has a ukraine war problem the rest of the world has high energy prices why are we number one it gets back to what we were talking about a minute ago we mailed out more money than anybody else and that's why we have higher inflation the fed can do something about that so raising rates to try and rein in that excess demand i think is where they're going again it's so such a tough thing to know that hey i just did my part as an american you know i helped spend the money that you gave me i thought there were no strings attached boy did these strings hurt all right let's go to michael in the audience with a question michael is there's any uh anyone all right so we'll get we'll get back then okay i got an email question uh sent to us from brian he says the idea that jay powell can fix the economy with only monetary tools seems like a pipe dream remember uh paul volcker and ronald reagan on the fiscal side doing all he could for the business community it's a dumbbell with monetary on one side fiscal policy on the other jay pal cannot do it uh with fiscal components alone why is there so little conversation about this danielle i mean ironically you know i mean if if the white house had their way we'd be printing more money i mean if it wasn't for senator joe manchin could you i mean if bill back better have gone through with the more i don't know how much it was i forgot the price tag but how much exponentially what inflation be i mean it would be even more we would be staring down the barrel of double-digit inflation and in double-digit inflation that continued to rise right and the same type of speculation that has fed people who buy homes to rent out speculation everywhere that would have continued and actually increased because again the fed is the the fed is the other hand they're monetizing all of this and i think that jay powell and i'm rarely rarely defend this man you know that charles but i think that jay powell is actually relieved right now that he's not being pressed upon to print more money that right now fiscal policy is on hold so that he can try and get this inflation under control he might not be pressed to print more money and i agree with that but he was pressed by the president last month when he was at the oval office and he pointed at him and says the president said the job of bringing inflation down is to the federal reserve so jay go make it go away so you could argue the question was right does he have the tools that he can do something about it maybe maybe not but he can't say i can't do anything about it the president just ordered him too right well yeah jay cannot create a pipeline and if you're paying attention on sunday elizabeth warren wrote an op-ed in the journal essentially saying she's going to blame jay powell when everyone has to feel this pain that he's been ordered to inflict upon us we've got time to squeeze in one more it's from bob who sent us this question which type of inflation cannot be put down by the fed won't we have stagflation no matter what pal does because we need more energy uh what do you think about that the the let me start with you jim uh stagflation is that still a possibility i almost felt like we should have bingo cards right we've been inflation deflation disinflation stagnation you know already in the show someone would have been a bingo would i win 10 bucks stagflation unfortunately is a reality it's not even a possibility when you've got 9 inflation now which is the highest in 40 years and if you believe a lot of wall street and there's no reason not to at this point thursday's gdp will probably be the second consecutive negative quarter and you've already got the white house trying to spin that as not being a recession right that's stagflation now the good news about stagflation the bad news is nobody wants it the good news is historically it doesn't last very long maybe a quarter or two or several months it doesn't go didn't it last a whole decade in the 70s from 65 to 82. it came and it went all the old folks i remember that yeah i was there for that golly it was a hell of a time i was my push my volkswagen up the block i was in a gas line for seven days i remember that come on now jim there was still job creation going on at the time we were still creating jobs as a country we were still growing as a country over that decade even though it was punctuated with stagflation we have to leave it there danielle jim you are two of the very best we're lucky to have you thank you very much

2022-07-29 07:13

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