From Downtown Milwaukee, welcome to Money talk with Bob. Each week, professional advisors from Land and company investments. Discuss the latest financial developments offering timely insight and long term perspective. This is Money talk for 06/28/2024. Checking the calendar, the cubs are in town for the weekend, and the city will be knee keep with cup fans coming to w North. It's also a middle weekend of Summer fest.
Keith Urban is at the main state Saturday, And have you heard vinyl records are coming back. If you'd like to add to your collection, the Milwaukee records show was happening Sunday at 4 points Sheridan at the airport. Alright. Michigan Republican State representative Neil F was arrested after he reportedly chased the stripper from his home with a gun. Just to be clear it was the stay representative way the gun not the stripper. And the police plot read they had a disagreement.
I'm gonna go out on the limb here and think that the disagreement was about money. And I'm not thinking non disclosure agreement is in the works. Florida governor Ron santa signed a bill making it illegal to kill crack bears, but only in self defense. I got a question. How do you know the bears on crack? Is there so much in so much crack in Florida that the bears are that the bears is on crack all the time? Is there such a thing? And 1 more question. I know why bears live in Florida, free crack.
Oh, why do people get moving there? And finally, it was a classic case of going from the out house to the penthouse. At the olympic trials in Oregon, less than an hour before her semi file 400 meters Sprint Kendall Ellis was trapped in a porta potty. She was banging out the door and screaming for someone to let her out. Thankfully someone did and she won the race and and she's going to Paris. On the podcast today, we have our roth child, Steve Gil. Joel Dr, and with a
recap of the week, here's Kyle teddy. Well, thanks, Max. A bit of a mixed week overall Nasdaq. Hey look. Put in a positive return for the week up 2 tenths of a percent 43 points on the week. But the S and P and dow both negative down a tenth of a percent each, the s p down 4 points in the dow down 27 after a 41 point decline on Friday for the Dow. For the year, Nasdaq up 18.6 percent, the S and P of 15.3 and the dow up 4.8, all including dividends.
You know, Art, We've got a first quarter in the books here or rather a second quarter in the books here now? How quickly the year's getting away from us. Another solid, mostly smooth quarter. Yeah. The occasional bump the occasional bruise along the way, but it really has been a good stretch of just positive returns for stocks broadly, but even more importantly for some of the high flyers, some of the bigger growth names.
I just did a quick back of the the Napkin calculation, the S and P up, a little more than 3.9 percent in the quarter, not including dividends. Nasdaq a little more dow a little less, but what are your takeaways from a first quarter that seems to have been mostly positive? Yeah. This quarter, half a year to date, whole year, has nice... I'm gonna use this term texture to it. We've been making money now for really all it seems like weeks on end, very little volatility.
That's that's really a hallmark of of this expansion that we're we're in. The economy, you know, Joel will get into some numbers later, but not much to be concerned about, the Fed and interest rates you know, he'll get into this as well. I'm sure, decent numbers on inflation, you know, year to date. But when you look at figures. I mean, you're showing 15 percent over 15 percent up in the S and P. We could close
the books right now. You sell everything you've got, which we're not recommending, by the way, and and buy a Cd paying, you know, 5 percent for the next 6 months, 5 percent plus. And then the year close to 20 percent. And again, we don't time the markets. It... There's the possibility that anything could go higher, you know, for the rest of the year. Anything could go lower. But regardless of what's happening at any point in time where we're always was looking further
out. And over a long periods of time, the money we have in stock market, we expect to do well, and it as it has now for years, months, you know, weeks really. And anything can fall at any point in time. But so this not changing anything we're doing, but it's been a... Just a tremendous year so far. You know, I think normally, I count on Steve to give the balance
a part of the take. I think you did a pretty good job covering it, but Steve, maybe something to touch on here is that Despite the fact that stocks look a little expensive, I don't think it takes away from the role that they play in our portfolio. And conversely, just because bonds looked maybe a little bit cheaper now than they haven't in a long time. I don't think it means you go too far the other direction. Maybe just give us a minute on kind of the role at each play.
Yeah. And and, you know, times like this as an as we look at the market, and what it's done so far this year, S and p up over 15 percent. There is that inclination to wanna put more money into stocks but to your point here, Kyle about balance, don't discount your other asset classes, on a relative valuation basis moving forward, I actually think that bonds provide the most possible up upside in relative terms over the
next 12 to 24 months. And this has everything to do with, 1, how well the stock market is done up to now, 2, how poorly bonds have done up to now, 3, the expectation that the Fed is going to be coming more do as the year progresses. And I and I hate to say that the Fed is going to lower rates once
twice 3 times. I I don't think that that's fair to to paint them into a corner, but if the Fed does enter into a period of more ness, you're going to see bonds continue to have price appreciation, and that's going to be on top of, they're already much higher yields than they were a couple of years ago. And I think that for those investors who are who are kind of ignoring what they're getting in fixed income, are missing the point of a well balanced portfolio. It's really about everything
working together. And while most of our our returns this year Kyle have come from the stock side, over longer periods of time. 5 08:10 years. It's a combination of how stocks and bonds
work together. And maybe aren't 1 of the challenges we have right now them is that because bond returns have been fairly weak for a long time and because cash looks like such an attractive alternative to that, you've convinced not you but you know, those rates have convinced a lot of investors that maybe they just wanna hang out in cash for a while longer. There's a comfort there certainly, but also with where yields are.
It's been a pretty positive trade to to do away with some of the risk we saw in bonds, some of the volatility that we weren't used to. And just take cash and there's maybe now a risk that we might hang out there too long. Yeah. A great lead into the fact that was a a really good article in the Wall street journal this week talking about a cash crap. Too many people putting too much money you
know, in cash. And then when interest rates decline, that be forced to find something that's going to do better for them. And they will have missed an opportunity, for example, to bought bonds, you know, paying more in an earlier time, when they were cheaper. I see that article a couple different ways, and See that point a couple different ways. As 1 of the older, members in the room today, I have to say I love cash. Totally
love cash. And and the fact that I can get 5 percent on cash today and Cds or money markets. I'm just loving it. And I don't feel personally that I'm gonna be trapped when interest rates go down because I expect them to go down. And furthermore having cash, and I'm I'm speaking as an adviser and as an investor, it makes me more willing perhaps to take more risk.
So if you look at stocks like Nvidia, that we've talked about before in the show or the others of the magnificent 7 that did well last year, maybe Amazon, you know, more so this year. Having that cash, maybe even enables older investors to take more risk and isn't necessarily a trap. Now, The other side of that is bonds over time, you know, as Steve just, you know, pointed out are an important part part of a portfolio. So when the... You know, cash is only paying 3.
Well, you want those bonds those still to be paying 4 because you're taking risk when you buy those bonds? So a real question long term is, where's the federal deficit going or federal debt, and what's gonna happen in the future? Once again, spread around. Have cash, you know, and at 6000000000000 in in in money market so far. I'm not sure how far down that's gonna go. In in in the near future. So I don't came and
everything. You know what I I have found, I think psychologically that investor savers, retirees like knowing they've got 567 months worth of cash set aside for their withdrawals, whether it's to meet their R, whether it's to meet their just monthly expenses for cash flow, knowing that the money's not sitting idle. I mean, 5 percent is a pretty juicy yield
on on a money market yield. And when you compare that with what bonds are currently paying somewhere in the 4 and a half cent range, cash looks like the winner. The the important takeaway here for our listeners is that bent 9 months from now, 18 months from
now. In a falling rate environment, you're going to miss out on the upside in the cash, the yield will fall as the fed lowers rates, but you're going to get the benefit of the upside re appreciation on your bonds, because values of bonds always move in the inverse of rate changes. So the point here Art, I think and and to just sort of tie this 1 up with a nice bow is cash is absolutely important for your short term needs. Venture out into bonds for something that is
certainly safer than a stock. But you wanna do a little bit better than your cash and then stocks are for the money that you know you don't need for for 7 08:19 years. No. I think that's a great point and, you know, just a step further beyond the idea of cash trap. If instead you think of cash as optional reality, the the potential to do something later on, Not all of your money needs to be in the market, not all of your money
needs to be invested in bonds. I think for most investors, it makes sense to have most of it. Invested. You wanna participate in those opportunities. The upside of bonds when rates fall as Steve points out. But there is a role for savers and retirees alike. Right? For those that are spending in those that are adding to their portfolios for a portion of their portfolio that they can access when they wanna buy deals. When the stock market goes down a little bit, and they go, you know what?
I didn't have a a place to get that from in my bank account, but I like the fact that I've got that short term bond or that cash position that I can get access to. And so I think, you know, it's it's all a function of how you navigate the opportunity set, factoring in that there's always an opportunity cost. If I don't invest that cash, what am I missing out on, if it was money at destined for stocks, you've missed out on a lot right now,
and so you gotta be careful. But if it was money you wanted to keep safe, Well, okay. You could have done short term bonds. You would have gotten a similar return. Long term, you're gonna be a little better off in those bonds and you are in cash, but there is that optional mentality. And that's part of what you're paying for. You know, Joel art set up earlier with a bunch of things that we need you to talk about on the economic front, I think more more critical than just about anything.
We had some data on personal spending out this week that gave us a little more insight into that Pc number, that the Fed so heavily relies on. That's the personal consumption expenditure number. And, yeah, That's the the Fed's favorite. Measure of inflation, and we had numbers today that showed that the the year to year Pc index went up 2.6 percent. So that's closer to the 2 percent target that the Fed has long range. It's 2 years away from when it was 7.1
percent. So, which was the highest in about 4 decades. So the the things that the Fed has been doing to to raise the interest rates to try to slow down the economy. Seem to be having that effect. It's probably not going fast enough for some people, but but, you know, and and and, you know, the... Remember last year, they brought it down a lot. And and now we're... We've been sort of surprised.
This year so far because it went up a little actually, and now it's back to that 2.6 level, which is closer to 2 then to 7.1. The other number is is the core Pc and that takes the the the index and eliminates volatile costs for energy, and food, and that actually got down to also 2.6 percent. That's the lowest that has been since March of 20 21, So so those are good signs. But again, it's showing that the economy is slowing. So a lot of the data we're looking at
are are signs that... Of the economy is slowing and sometimes you think, oh, well, that's not good to have the economy slow, but that's what we want. And then on the housing front, some... New records again for housing prices even as maybe the turnover in housing and new home sales, the kinda of measures of quantity versus price not pointing to a market that's moving all that quickly. Right. Yeah. That's and that's 1 of the the houses that's the housing is 1 of the the conundrum.
It's 1 of the the price indicators that that has been keeping inflation overall, at a higher level, and it's 1 that a lot of people feel and then feel strongly about, and we had numbers from the S and P Court logic, case Sc, home price index. We had numbers from the commerce department on new home sales, we had numbers of pending home sales prices from the the national association of realtors. They're all showing that the housing market. Is weaker,
but the prices are still high. Can which is again, kind of confusing because, we're seeing that demand is is waning because of the the high interest rates, which is what the Fed wanted, but the demand is still pretty strong. It's strong enough that, because of of those the the the low inventory of houses, that the the prices are still going up, the the national Association, realtors, was spitting it forward a little and saying that we're actually seeing more houses in the pipeline
and that we're not expecting. They're not expecting interest rates to be going up as much anymore And in fact, maybe coming down a little. So that's all going to help the the the be affordability of housing. You know, you use the word confusing and kinda talk about the housing market. I think we can look at consumers and whether it's sentiment or confidence or any measure of how consumers feel. There's quite a bit of confusing information out
there as well. You know, I think Broadly speaking, we've said the economy is still strong enough and yet, we often are here that, people don't always feel it. We got some news on consumers this week and kinda what they're thinking. And again, mixed data. Right. We've got the consumer confidence numbers from the the conference board, and then the University of Michigan has a
study on consumer sentiment. Both of those are, again showing that, compared to a couple of years ago, that confidence and outlook and expectations are a lot stronger, but but 2 years ago was for, like a record low a a low point for how consumers felt, and and and we're still historically pretty low. People aren't feeling all that confident, even though the the job market is strong even though, you know, wages are are are moving faster
than inflation, which you know, we want. But but people still have the feeling that prices are too high. And, yeah, I'm I'm feeling pretty confident in my job, but I'm hearing of other people losing their jobs, and I don't know at 1 point, you know, I'll be able to afford these prices. I think the feedback loop there is just absolutely incredible, Joel. And and this j position between people complaining about inflation yet. Tsa announced that they they set a record
that the 10... 7 of the 10 busiest travel days in the history of Tsa happened in the last month. Yep. So we're back not only to pre pandemic levels, but we're setting records for people traveling. That means they're out there spending money. And and even in the face of what is. Higher prices even though inflation has come down. Consumers are spending because they can't. They have
jobs. They're working. People are spending money, And I think that's a lot of why this economy is probably going to pull off the soft landing that the fed is hoping for. And in if the consumer stays engaged, I think that Powell can keep rates where they are for a while, Even in the face of some of these more pessimistic consumers... Sentiment number. Yeah. And and it's the sort of thing where, you know, people are... They speak more pessimistic.
I mean, their their arms are filled with with, you know, sentiment shopping bags and and yet they're saying that the, you know and how much all good above the economy. But it's exactly why as you suggest the Fed is keeping rates higher. Soon as they lower rates people are gonna think, okay. It's time to party. And maybe they'll spend more. So you want this. There's a negativity bias already in the media. People that keeps people thinking that things are worse than they are.
But once the Fed starts lowering rates, it could be, you know, party like it's... You know, 19 99 which could lock in inflation at a higher level. That's right. That's where they wanted want, very hesitant, Yep. You know, to do that. We should be clear also that we are still not that far out from a global pandemic. And there were all kinds of unintended consequences of shutting down, travel for the better part of the year, or
18 months. All kinds of consequences of pumping in, whether it was 2000000000000 from the federal government or maybe 4000000000000 from the Fed of pumping that money into the system often with nowhere for it to go because the things you normally spent it on restaurants go into the movies, taking that trip to Europe, you just weren't doing for the better part of 2 years.
And so for you know, I look at Tsa travel numbers, 3000000 travelers going through today, probably the first time they'll hit 3000000 ever and go. Well, yeah, But all of those were trips that were supposed to happen are not all of them, but a lot of them were trips that were supposed to happen 2 years ago. And people finally feeling confident about getting back. Out It's no wonder that, you know, maybe some of that services based
inflation spiked and has stuck around. It's no wonder that gout things that we were spending money on when we could 2 years ago. Yeah. Now we're not spending quite as much because we've transitioned some of that spending. Maybe the hold over of all that stimulus money finally starting to wear its way off of consumer balance sheets. And so I think you look at this environment and go, well, something's not right here. Well, no. You better
believe something's not right. We came through a period in time in which the whole world was turned upside down, and we're still trying to sort out which way is the right way up. And so, you know, I think if you really boil down what what are the problems out there right now? Yeah. There's cracks here and there. Consumer spending from a credit card perspective has picked up a little bit. Auto loan auto loan deli,
have picked up a little bit. There's little signs that, yeah, things aren't perfect. But when you look big picture at the news Joel reports every week. When you look at kind of the way we're viewing the world. I think, strong enough is probably the way I would
put it for the economy right now. You know, those of those of you listening right now coming through the website, probably seeing some new colors, a new logo, some new things on the website that, you know, we're pretty proud of, getting, getting crossed off the list here, Joel, it's been, 9 months in the works now, I'd say, on a new website, but really, the better part of a decade plus since we had gone through the process,
it was time. Yeah. We we last revised had a big revision of the website in 2010. So it's it's been a while. And, yeah. The... You know, we we worked with a local firm called Light Burn of their experts and this sort of thing. We liked them because they're very customer focused, our customers not just seeing us as customers, but seeing the clients and the the the people who follow us as customers.
And you know, III think that they helped do a very good job of of, helping us be who we are, but but also making us a little more dynamic and and, more easily to navigate for our our listeners, our customers, our followers.
Yeah. And I think know, I highlighted in the newsletter that's going out this afternoon, but 1 of the things that was clear back in 2010, you or maybe not clear but clear now is that so many folks have transitioned from traditional laptop or Pc computers to an ipad or a phone for the vast majority of their Internet browsing, including checking statements, including, hey, let me just get that stuck quote quick. They're not sitting
at a desk anymore. They're sitting on their couch, and so we needed a website that was more responsive to that. They're waiting in the Tsa check line. There you go. They're looking at their watches too. They and they absolutely are. We needed a website, not only that was more responsive to those types of situations, but that was more responsive to just accessibility broadly and making it available to to everyone in whatever format it is that they wanna
browse. Right. Yeah. The the the 1 thing that I like about it is that the the contrasts of the colors are a lot better and and so for people, visually impaired or have having challenges. I think it's easier to to bring it in. Well, we welcome feedback, especially positive feedback. If you have Criticisms Joel your guy. But if you if you don't get our newsletter, if you haven't been to the website recently, I encourage you to check it out. As I said, we'll have a newsletter coming
out this afternoon. I think highlighting some of, the importance of, this this website update for us. Beyond that, we enjoy doing the program for you We'll talk to you again next week. Thank you for listening to money talk with Bob Land. If you have a financial question you want answered on next week's show, email it to money talk at dot com. To keep informed throughout the week, biz at our money talk page at dot com. At