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Speaker 1: Let's get to our guest, Phil Palumbo, founder CEO and

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Speaker 1: c I O at Palumbo Wealth Management. So we were

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Speaker 1: amusing about a dead cat or or a cat with

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Speaker 1: nine lives. So I think the thinking today and it

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Speaker 1: has been the case of late, is that even if

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Speaker 1: this is a dead cat bounce, um, maybe I'll participate

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Speaker 1: because it could be as much as ten to twelve percent.

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Speaker 1: Is that something that that you like? Is that wise?

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Speaker 1: Does dollar cost averaging kind of smooth that out a

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Speaker 1: bit or just avoid it? Yes? For for me, the

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Speaker 1: key thing is when is the market going to bottom

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Speaker 1: and when is interred's going to go up? Because interest

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Speaker 1: rates are controlling everything. And the answer to that is

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Speaker 1: when the FED pivots. So is the fit Is the

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Speaker 1: FED pivoting or is he about the pivot? The answer

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Speaker 1: is absolutely not, And he's telling us. He's telling us

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Speaker 1: he's not going to pivot until he gets inflation to

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Speaker 1: levels where he wants inflation to be. Let me ask

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Speaker 1: you this, what if bond yields start to move down,

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Speaker 1: is that a precursor to the pivot. And you know

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Speaker 1: we didn't see yields moved down a little bit. It's

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Speaker 1: a potential precursive, but it doesn't mean rates move up

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Speaker 1: and rates moved down day to day. Same thing with

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Speaker 1: the stock market moves up and moves down. But the

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Speaker 1: end of the day, inflation is not controlled yet. Until

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Speaker 1: inflation is controlled, the Fed's not gonna pivot. As long

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Speaker 1: as the Fed's not going to pivot, rates can still

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Speaker 1: move upward unless there's true signs of recession, and then

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Speaker 1: you'll see intermediate turn bonds and long term bonds turned down,

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Speaker 1: but turned down for a bad reason, not a good reason, right,

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Speaker 1: And that's more of a recession, which means stocks have

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Speaker 1: to go lower. So this is a bear market rally,

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Speaker 1: it's nothing more than that. So investors shouldn't get too excited.

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Speaker 1: Phil Why did people still hold on to this whole

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Speaker 1: notion of them being a pivot next year, given even

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Speaker 1: when you get to the inflation data reinforcing the task

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Speaker 1: in hand. It's wishful thinking. And that's why. And that's

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Speaker 1: you're seeing these bear market rallies, and you've seen investors

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Speaker 1: hop on these on these rallies. But because they're expecting

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Speaker 1: the FED to pivot, the market market participants are not

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Speaker 1: taking the FED seriously. But the Fed is serious uh, Phil,

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Speaker 1: you know, in a in an atmosphere that we have

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Speaker 1: at the moment, where do you actually if you have

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Speaker 1: to put your money, where'd you go? Well, we we

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Speaker 1: believe in a balance approach, right, so we use gold,

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Speaker 1: commodities and treasuries and stocks and over to build an

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Speaker 1: overall balanced approach. We are heavy in cash right now

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Speaker 1: coming at we are still holding the cash position with

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Speaker 1: the planet of dollar cost average on the next laid down.

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Speaker 1: Other than that, in terms of road about performance, you're

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Speaker 1: gonna see road about performance in the staples, healthcare areas,

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Speaker 1: and energy relative to some of the more high data

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Speaker 1: type sectors within the overall market. But overall, you know

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Speaker 1: where we are. There's really nowhere to hide except for energy,

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Speaker 1: which is really only because the price of oil where

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Speaker 1: we've seen that going going because of the war with

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Speaker 1: Russian Ukraine. So it's really dip a goal to hide

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Speaker 1: anywhere in this type of a market. I mentioned that

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Speaker 1: it's it's difficult to find recession in the earnings reports. Um,

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Speaker 1: when you look at them, they're all basically saying, yeah, well,

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Speaker 1: you know, things are we're worried about perhaps the future,

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Speaker 1: but they don't look that bad, does that. Does that

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Speaker 1: trouble the bears or does it just mean that, well

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Speaker 1: it's coming, it's just gonna be further out and that

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Speaker 1: makes it even worse. I'm not first of all, I'm

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Speaker 1: not a perma bear, and you know I want this

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Speaker 1: market to be get back into the bullmarket territory more

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Speaker 1: than anybody. The reality is that Nike and FedEx and

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Speaker 1: Walmart and Target, so there are many companies that have

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Speaker 1: a dire outlook and had to dire outlook Gate, So

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Speaker 1: it's not really true that earnings are so great. Number

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Speaker 1: one and number two, what the Fete is embarking on.

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Speaker 1: People have to understand it takes anywhere from nine to

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Speaker 1: twelve months to really start to get entrenched into the economy.

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Speaker 1: We're about six and a half months into it from

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Speaker 1: his first race in March, so this takes time to

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Speaker 1: unfold into an overall economy. Number one and number two,

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Speaker 1: there's a good chance the feed is going to overdo this.

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Speaker 1: This is one of the fast increase in rates that

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Speaker 1: we've seen a very very very long time, and with

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Speaker 1: that you can get you can get quick blow ups

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Speaker 1: in certain situations, whether it's a head fund or a bank,

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Speaker 1: so a lot could still could still happen. That investors

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Speaker 1: have to be cautious to go back to where do

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Speaker 1: you hide? And that's why being defensive here is still

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Speaker 1: the right way to to invest, just to wait and

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Speaker 1: see how this plays out. M Yeah, absolutely, And you know,

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Speaker 1: you wait and see how it plays out, but then

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Speaker 1: you can miss the bus. But I guess there's no

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Speaker 1: point trying to catch a fooling knife, right, yeah, Well

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Speaker 1: this is important. Right, So when you think about from

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Speaker 1: an investment perspective, everybody performed very very well stocks over

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Speaker 1: the past ten years, over the past three years right before,

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Speaker 1: so we've all made a lot of money. And I

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Speaker 1: keep on saying this all the time. So so what

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Speaker 1: if you missed the boat a bit. You've done so well.

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Speaker 1: We took we took risk off the table, we took

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Speaker 1: we we took profits. And now we're just sitting back

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Speaker 1: because we're going through a scenario that we have not

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Speaker 1: seen in multiple, multiple decades. And in that type of situation,

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Speaker 1: I don't see why investors should have any problem with

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Speaker 1: being playing defense here rather than offense. Well, some people

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Speaker 1: who want to get out in front of what they

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Speaker 1: think eventually will happen. That inflation is coming down. In fact,

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Speaker 1: if you look at at CPI, there's a huge chunk

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Speaker 1: of it about a third and owner's equivalent rent, which

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Speaker 1: nobody really pays. It's a sort of theoretical lagging figure

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Speaker 1: because you can see now that housing prices are coming off,

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Speaker 1: yet it takes a while for that to get reflected

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Speaker 1: in those numbers. So you could play that and maybe

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Speaker 1: get out in front of eventually is a FED pause. Yeah,

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Speaker 1: So a couple of things. Right, So the the inflation data,

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Speaker 1: I believe, I believe inflation has peaked, and it's not

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Speaker 1: a question of that call of of making. That call

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Speaker 1: of inflation peaking is not what's important to me. What's

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Speaker 1: important is where are we going to settle in it.

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Speaker 1: We're going to settle in at six five four, and

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Speaker 1: how long will it be until we settle in in that? Right?

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Speaker 1: Because the four percent average inflation, by the way, is

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Speaker 1: still a very high inflation print. And right now our

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Speaker 1: CPI is at eight eight and a half. So you're

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Speaker 1: right about the lagging in terms of private rental markets.

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Speaker 1: That's come down, housings come down, So you're right that

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Speaker 1: is lagging at the CPI and number, But even when

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Speaker 1: you start to factor that into the equation, where do

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Speaker 1: we wear cp A and cp I end up that

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Speaker 1: and what does that look like going forward. So that's

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Speaker 1: a big concern of mind as I think about things. Phil,

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Speaker 1: thank you so much for your time. Phil Polumber they

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Speaker 1: founder and chief executive, as well as CEE i Heed

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Speaker 1: Polumbo Wealth Management