David Fisher, Alan Greenspan, Mark Cabana discussed on Kevin McCullough Radio
Your money Monday at Kevin McCullough radio. Well, once again, I hope you had a great father's day and thank you for being with us. I always look forward to talking to this father, who I hope had a good father's day as well. David Fisher, head of the landmark capital. He's the CEO in fact, and has helped so many people understand what's going on in this economy. He's really broken it down for us week by week over the last number of years, and I've grown to be dependent upon his advice and his analysis of what's going on in the market. Just for my own understanding, David Always good to have you hope you did have a belated happy Father's Day. Yeah, I did. Thank you so much Happy, belated Father's Day to you, my friend. You got it. Hey, last week Big historic Fed meeting and, you know, I talked to people all along the spectrum. I spoke with you on Monday. I talked with a a gal who's really into stocks. I talked to some real estate people. I was, like all across the spectrum talking to different people, and they all had different views of what they thought was going to happen with the Federal Reserve last week. Um, it was supposed to be historical, Was it what they do? And what are we to take away from it? So the tooling topics for interest rates and bond purchases And will those be changed? You know, and why is because the Federal Reserve has been stepping into the economy. As early as 2000 and eight when we had the crisis to expand the economy about flooding money into the the economy, and they've gone from back in 2000 and 82 800,000,000,008 trillion, so 10 times bigger from then till now, and for that trillion came in last 14 months, so that tells you how much money they've been buying our debt they've been buying. Where's what they did. They didn't change the interest rate. They left it unchanged At a quarter of a point. They still reaffirmed their purchases of $120 billion a month in debt, which is $40 billion and thing called mortgage backed securities to support the real estate market and $80 billion in U. S. Treasuries. So, in essence, nothing change. The reason it was historical is because, um, The Federal Reserve by their yardstick, Kevin I've been I said this on your program last week in a couple weeks ago that the the consumer Price index is their yardstick that says, if we have inflation or not, And it's been screaming inflation and last two weeks ago, the number came in at 5%, which says they should be raising interest rates. I said they weren't going to. But in reference to that about tapering the court from Fed, Powell said. You can think of this as a meeting that that we had as talking about the meeting. If you like, end quote, in other words, they're thinking about now. Raising rates and they're thinking about and talking about going to talk more in the future about this whole thing called tapering, which is no longer buying debt and selling it going the other direction. You mentioned a word in that answer, Dave. That, uh, put put a lot of scare into people's hearts A few just a couple of years ago, mortgage backed securities. They're back. They're going to walk up on that again. Fool me once you know, but Yeah, they've been buying $40 billion a month for 10 years. They took a little big pot more than 10 years. They took a little bit of pause from 2000 and eight till now, because that's more than 10 years. So a couple years of pauses of not buying every month, But the real estate market is red hot. And so you know, the whole idea is why is the Fed Buying $40 billion of mortgage backed securities when the market is red hot. In fact, that's it's in a bubble in many areas of our country, and the Fed should not be doing that. So that was one of the questions and the concern by many economists. Sure. Now I dwell for good cause. All right, so the Fed also said something about inflation being transitory, and I'm not even sure I understood what they were talking about what they mean. Well, they've been seeing this 1st 34 months. That you know, it's just a blip. It's going to go. Yes, we have some inflation, but it's short term. It's really not embedded into the economy, but PAL came out. And said something a little bit more, He said this inflation could end up higher and more persistent than expected. So the Federal Reserve kind of, you know, scaled back or give us a little more insight on this this time. The market didn't like it soon as he said that the market start dropping. The Federal Reserve, though, indicated There's going to be two rate hikes happening by 2023, they said. Previously is going to be after that. So Mark Cabana, he's the head of the Bank of America is the short term rates strategist. He said that this was a notable change in the stance for the Fed and appears that they're being there's a shift now and how the Fed sees risk in inflation. That's how he reads it, So that's where we're headed eventually. Well, it's interesting because you know Friday, the markets took a bath, and I think a lot of people were wondering why. And I am curious about the polls. Currently what what should we be reading from what they're telling us in terms of what the markets are saying? Whether they're kind of talking about both sides of them out there wanted to admit that there is no wonder I'm confused. They wanted. Yeah, they want to limit there's some sensation, but we're not going to do anything about it because we don't need to do anything about it. So it's kind of like, you know, Fed talks that speech like Alan Greenspan two point again, but a little bit better. English. So what came out on Friday as Bullard? He's the guy. From the ST Louis Fed chairman. He came out and said, extremely, uh, insights that said, We have inflation. We should be raising rates we should be. We're going to be tapering. We're going to have meetings about that and papering and we shouldn't be buying mortgage backed securities because that's just creating another bubble of the real estate market in 2000 and and the markets. Paint on Friday. Today the and they call it the Bullard bomb is what it was called. But today there is this almost like everything is completely erased. But you know, you have to be aware that there's inflationary headwinds and Mark Zandi, He's an economist, came out this morning and said there's going to be a 10 to 20% market correction followed by a long term significant flat, maybe in a bear market. And so there's this question is, what is the Fed going to do when we get to that, and they may not be forced to raise rates sooner rather than later and they might be forced to taper. So the bottom line is the Fed is still going to continue to what they're doing, even though they shouldn't be in the markets are saying, I'm not soul,.