In this episode of the podcast we tackle the three biggest conversations in financial media today. We dive into the debt ceiling, why we have one and what is going to happen with it now? Personal debt has hit all time highs, what does that mean? And the word recession is thrown around a lot, what is the data saying?
Thanks for listening!
In this episode of the podcast we tackle the three biggest conversations in financial media today. We dive into the debt ceiling, why we have one and what is going to happen with it now? Personal debt has hit all time highs, what does that mean? And the word recession is thrown around a lot, what is the data saying?
Thanks for listening!
Hey guys, welcome to another episode of the modern outlook podcast. And here we go. It's an episode of What's the latest W ETL. Or we talk about what's been going on. And just news, just whether it's economy related market related life related, modern pop culture doesn't matter. We talked about it. But today we're gonna stick to the economy and the market. Reason being is haven't done one of these in a little bit, couple months. And there's just a lot. I mean, there's always a lot of headlines. But there's a lot of headlines going around right now trying to stoke fear. And I just want to talk about them. And I figured grouping them together. And what's the latest is the easiest way to do it. Keep it concentrated, I could put out a couple of different views on these topics, but maybe in the future, but for right now I just want to talk about I just want to get this out there and quell any fears that people have. So the three topics we're going to talk about today, the three biggest headlines, you'll see day to day no matter what maybe, is debt ceiling is one of them, of course right now. Second is consumer debt. And then the third one is recession fears. We see this stuff every single day. And I'm starting to get kind of tired of it. So I wanted to talk about it. Because what else is there to talk about at the moment, this is all anyone writes about? So let's just jump right into it the debt ceiling. There's not a world in my opinion, where the debt ceiling doesn't get raised. However, you're going to continuously have people, right? Wow, what happens if it doesn't, that's going to be so horrible. You'll have people come out and talk about how terrible is going to be if it doesn't get raised and how the US going to default on its debt for the first time in history. That's the thing, this will not be, this will not be happening. It'll be the first time in history that this ever happened. We've had this conversation, it feels like all the time in history, we have had this conversation all the time. Do some research on when the last time this conversation was because it wasn't that long ago, that debt ceiling fears come into play, because of us going to default on a dead oh my god, it's going to be catastrophic, it's going to be terrible. We're never going to recover, blah, blah, yadda yadda. Nothing happens. But that our goal got clicks, and that video got views. So our company made money. And you see it a lot with mainstream media and the big, big corporations behind those. Again, I know they have to make money they got to do they have to do and the debt ceiling is a conversation I have. But let's just keep it realistic in the fact that there's no way it doesn't get raised. What we're in right now. And I'm I'm recording this, going into the week of May 22. And you'll hear this during this week. What we're going into right now is the fact that this is a huge political piece coming off of the midterm elections, where we have a new speaker in the house, the Republicans took the house, and you're going into an election year next year, that is pretty much guaranteed to be the most volatile in history, probably, because that's the way it's trending. So when you have such a big kind of headline that you can continuously make if you're on the Republican side of the Democrat side and saying, hey, they don't want to work with us. We're trying to get this done for everybody. And they're just not responding and they don't know what they're doing. And both sides are saying the same thing. How is it that both sides go in and neither of them know what they're doing? According to the other one, or neither of them are communicating? And I don't I don't care. I'm sure this will anytime we talk about politics, it makes people frustrated. And everyone has their own personal views. But I think we can all agree. The fact that there's some times where both sides get so entrenched that for anybody outside of that direct political world, it's just so annoying. Just get it done. Just go in there, agree to something, stop making everyone worry about it, stop making the public in the markets fear it. Stop writing these huge pieces on how it's going to be catastrophic, because we know it's not going to happen. We've had this conversation before, we'll have it again. Well, the debt ceiling will be raised. And the other question I have and what I want to talk about is why do we even have a debt ceiling? If it's just going to continuously get raised? Can you imagine if on anyone's bank account or credit card account? If you got to whatever spending limit you're allowed. And instead of having any sort of repercussion, you just met with somebody and said, Hey, let's just give myself some more money. And that person just said, okay, cool. Here's another couple, whatever, X amount of money, there you go spend that and we'll come back when we spend it and we'll do it again. It's insane. So why even have a debt ceiling? There's only one other democracy in the world that does, and it's Denmark and Denmark, that ceiling so high, they'll never reach it. And it's almost like for them if they ever reach it. It's like okay, we got to really tell was back. So what's like a like a gauge for them if they ever actually got to that point, but then the only other than the one every other democracy and well doesn't even have a debt ceiling, because why would you, I guess you kind of keep spending in check and you have both parties come together and agree on some things and disagree on others you meet somewhere in the middle has to do with a two party system. But again, if you're going to use it as a tool to keep spending in check, that's perfectly fine. But then don't use it as a political tool to make people mad at other people, or pit the parties against each other. Just don't do it that way, just make it actually constructive, make it a positive force, if it's to have the ability to limit spending on things that we don't need to spend on. I like that idea of making the government more efficient. But actually treat it as that tool, actually go into a meeting and be constructive, and stop finger pointing and blaming and trying to get the biggest the best quip towards the other person that has Zinger on them where it's like, hey, got you, like, people are gonna read that and you're in trouble. Just don't do that. Just go in a meeting, raise the debt ceiling, agree on a budget, agree on how to take it forward. And then we'll see you guys next year during the midterm during the presidential election. And that's ultimately how this is gonna go. But we're sitting here last week in May. And they're gonna continuously talk about this, and then it'll be raised. And people think, wow, oh, wow, we're so happy that happened. And the whole time it was always going to, but they just keep talking about it. And they'll continue to keep talking about it. And honestly, before this comes out, they might announce that a deal has been reached. And if that's the case, I'm still posting this, because the idea remains the same and I'm ranting, but the idea remains the same. That it's just so ridiculous that we have these huge media articles that are saying how catastrophic it's going to be. And these talking heads come out and try to scare people, when we're always going to be here. And we're going to be here again. So Oh, my gosh, it's just one of those things. It'll be raised. There's nothing to be worried about. That's why I went into the fact of how silly the entire thing is. But the biggest fear is that we're going to be fine. On my opinion, we'll be fine on that piece of it. Let's jump into the second one. Before I keep ranting on consumer debt. There was an article that I saw on the past week from CNBC that says consumer debt for the first time ever has crossed over $17 trillion. And without any sort of context, that is scary for people to read, because you think, oh, what does that do? First of all, what does that even mean? Second, what's it going to mean going forward? This isn't surprising to me. And it doesn't really scare me all that much. Reason being is because in the past two years, we just had one of the biggest housing bull runs that we've seen in history, driven by incredibly, incredibly low interest rates. And you saw houses that were on the market for 30 minutes before getting sold for 100,000 over asking for 200,000 over asking. So I'm not very surprised that we're in a in a spot where our consumer debt per person is, is higher than it's ever been, and that we're reaching points that we've never been, because we haven't really seen that low of an interest rate environment where everyone has money because unemployment so low, and mortgage rates are like 2.5% for a 30 year. We haven't seen that. Really ever, so I'm not super surprised. So that piece of it just kind of shows where we've been the last couple years. The reason I'm not concerned is one because like I said it was all driven by low interest rates, you get locked into lows and low interest rates and all you have to do is cashflow it if your consumers what comes in per month, what are we at the spend on our debts, what goes out per month, taken care of. And as long as unemployment stays low, and people have jobs and wage growth continues, like we've seen it on inflation is coming down. I think we'll be in a pretty good spot. I don't really see consumer debt coming into play in a bad bad way. Due to those things due to low unemployment due to wage growth due to inflation coming down. I think people will be able to cashflow what they're doing. You do see more credit card spending when inflation is high. You do see that? And it's not something you'd like to see. But it's just the nature of how things go. And when things cost more when things jump up like they did last year, you tend to see more credit card usage. And it's that doesn't always mean a bad thing. It just means that people need to be able to cashflow that. And we have seen that but again as long as unemployment stays low and people are earning money and spending money. I think we'll be in a comfortable spot with that as well. But again, I saw the headline consumer debt reached over 17,000,000,000,001st time ever. I'm not surprised. We had our biggest housing boom Market, people are buying cars like crazy, because he had such low interest rates, it was just a lot of buying all of really big things all at once that people are getting really good monthly payments on because interest rates are so low. Now you keep those monthly payments going forward, you continue to have wage growth and other areas of your life prices come down due to inflation coming down, and you'll be in an OK, spot. So that's number two, I think we'll be fine. And number three, the last one is just the overall fear that you see headlines about recession fears, and how 2023 is going to be the year we have a recession. And that's what everyone's predicting. And it's funny because you saw this same exact headlines and 2022. And then it didn't happen in 2022. And then everyone's like, well, it's gonna happen. Now it has to happen in 2023. And if it doesn't happen in 23, may well it has to happen in 2024. And I'm not, it's hard to take a stance one way or the other. What I will say is that a low unemployment, we've never had a recession, when you have unemployment at 3.4%. Doesn't happen. There's too many people with too many jobs with too much money, that are spending too much and pushing the economy forward, you'll have pockets like Like I've said this in prior podcasts, Tech was in a recession, they were laying off a ton of people, they were cutting, they were cutting employees laying off cutting expenses. And they were down, like overall 30% as an average of a sector. That's a recession, Tech was in a recession last year, housing won't see the same growth. I'm not saying we'll go into a recession there, but you're not gonna see the same growth. I think the main thing you have is that when people think recession, I think that the last time you had this conversation last time you had this conversation was 2008. And that was night and day from what we're in right now. But people just don't think about it that way, because it scares you. And that's totally understandable. But we're not nearly in the same boat. We're in a much healthier spot from the economy wise. And housing is also in a much healthier spot, again, driven by the fact that there's low interest rates and low unemployment right now. So a lot of the fear and conversation we would have had or have been having around this is due to the fact that interest rates continuously were being raised by the Fed, even when it seemed like we didn't need to anymore. And now we're in a spot where it looks like they're done raising interest rates. So we'll kind of see where that takes us, which is good. Because now there's the bar set, and we know where we're at. And then we'll go into 2024 2025. And we'll start lowering those interest rates, because we'll start to spark up the economy a little bit again, in spending in that. So if unemployment stays low, until then, we're gonna be in a pretty good spot. I don't see a recession happening, if that's the case. And companies are still showing on the earnings side that they're showing strength, or at least are showing resiliency, you're not always going to have earnings come out and be beat, you're not always going to see them have the best news ever. You're not always gonna see the worst news ever. And I think right now, people expected earnings to look a lot worse than they actually do. And I think companies are actually changing their metrics and kind of lowering the bar for themselves going forward. And that's not a bad thing. Because the bars were set so high the past couple years that companies just can't get to them sometimes. And companies are now seeing that if we don't get to this lofty goal that we want to set, we get crushed in the market. So let's undersell over, deliver going forward, and people will be happy. That's true. I mean, that's just the psychology behind investing. So I think you'll start to see and continue to see companies performing pretty well, again, in sectors, there's not always going to be the case, that's not a blanket statement. So in the last reason I think we're seeing so much talk about recession fears, is because if you're a talking head, a big talking head in the media, it's really, really hard to go against the grain. So when you have eight or nine out of 10 people saying we're going into a recession, because that's been the conversation for two years now. Well, 18 months, it's tough to be the person that says you're not because the if you're wrong, you look so much worse. If you said no recession and a recession happens, then if you said a recession is going to happen and no recession happens. The person that predicts no recession, and then a recession comes into play looks really bad on TV, looks really bad on TV, versus the person that takes the safe route and says, Hey, there's going to be a recession. And then there isn't, and then they can either move the goalposts and say, See you next year, like they just did, and 22 coming into 23. Or they can say, well, I'm so happy I was wrong. How about that? These things happen that were really positive, things are great. And so, again, it seems weird that you're going to have that type of dichotomy on national television on big media. But again, these people are just trying to protect the reputation too. So they're in a spot, that it's almost like you can't win unless you say a recession is going to happen. And then you just hope it doesn't. And that's kind of what I think a lot of these people are doing. And you always have the doom and gloom people. And you always have the people that say things are amazing. It's just the people that you find in the middle, that tend to be a little bit safer with their predictions. And that because they want a job, at the end of the day, you don't want to get fired, you want to be brought back. And if you miss on a big one like that, you potentially get fired. So the recession fears where I stand with it, if unemployment stays low, and spending remains the same, or continues. And we have a place where earnings and companies are showing resiliency, that is not a spot where you have recession fears, you will see decrease in the housing market, not like 2008 is just natural, because of the housing bull market that we just had the last two years. And you will see tech slowly come out of the little bit of a rut that they were in last year. And then you'll see the banking sector continue to kind of shuffle its way through the issues that it's had in the past couple months. But on the overall idea is that things are pretty strong. Again, you won't see that in the news. And again, we will continue to monitor something like this. But everything we're seeing right now is confident going forward. And the resilience we're showing is amazing. So as far as the recessions are concerned, if we do dip into one, like I it's going to be a slight recession and won't be anything crazy, at least I don't think so. That's my opinion. And it's just one of those things that people hear the word and get scared. And it's really not something that you need to get like overly fearful about. Again, make sure you have a plan for it, make sure you're prepared for it. Make sure all your ducks are in a row. But they've been in a row since 2022. Because we were supposed to have one then. And we're still talking about an hour and 23. So just one of those things. Take everything you see with a grain of salt, do your own research for me on opinion. And I'll keep doing my best to kind of inform you on this piece of it too. So that's what I want to talk about though, there's just been the three headlines that I continuously see the last couple of weeks here and it gets tiring and old but there's just a lot of fear out there. And I just wanted to get my take on and give you guys an idea of what I'm looking at. So thanks for listening. And until next time, guys, stay happy, stay healthy, and I'll see you