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Speaker 1: Let's get to our guest, Terry Spath ce io at

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Speaker 1: zooma wealth. So, Terry, the schizophrenic nature of the FED

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Speaker 1: statement and the Powell commentary suggests too many an issue

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Speaker 1: here of some sort either Mr Powell went too far

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Speaker 1: or they are a divided house. How does that play

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Speaker 1: out for you? Right? Yeah, I don't think they're divided

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Speaker 1: house because the dot plots were pretty consistent. But and

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Speaker 1: the FED continues to be data dependent. The issue is

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Speaker 1: that that's all backwards looking data, and they seem in

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Speaker 1: recent years to be picking one mandate rather than both

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Speaker 1: of their mandate. The FED as a dual mandate. It's

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Speaker 1: low inflation and low unemployment. And for years the message

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Speaker 1: that was that they would let inflation get hot in

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Speaker 1: order to lower unemployment. Cap rates at zero, dumped money

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Speaker 1: into the economy, and that's textbook textbook for inflation. So

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Speaker 1: now here we are on the flip side with red

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Speaker 1: hot inflation and very low unemployment, and they seem to

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Speaker 1: be saying, well, we're just going to keep you know,

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Speaker 1: We're gonna keep slamming on the brakes. I was going

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Speaker 1: to say pedal to the metal, but I think it's

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Speaker 1: really Yeah, I mean that the statement suggested that a

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Speaker 1: pause to assess could be coming, and then Pal comes

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Speaker 1: out with a sledge hammer. Yeah, it was. I think

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Speaker 1: he really wanted to make it clear, like, hey, don't

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Speaker 1: get too excited about this. Um. It was interesting because

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Speaker 1: that's exactly what happened. Is the statement was very much

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Speaker 1: UM benign in terms of how aggressive they might be

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Speaker 1: with UM with raising rates. And I do think that

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Speaker 1: we can trust to some extent that they'll they'll continue

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Speaker 1: to keep a close eye on everything. But the reality

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Speaker 1: is is that the FET is a blunt instrument. They're

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Speaker 1: not a laser scalp scalpel and uh and there and

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Speaker 1: I think you know, when you we're talking about fifty

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Speaker 1: basis points versus seventy five basis points, we're making the

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Speaker 1: mistake of thinking that this is a laser scalpel and

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Speaker 1: it's not. Well, Terry it also you say in another

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Speaker 1: it's a sledge hammer. Well, well they're doing I mean

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Speaker 1: it was me. I'm not forgot my trade of thought

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Speaker 1: at what I'm saying. I was I was saying was

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Speaker 1: that that you know the thing is that they aren't

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Speaker 1: driving so hard at dealing with not just of course inflation,

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Speaker 1: but dealing with their incredibility that they could in turn

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Speaker 1: by doing that, it's inflict greater pain that's needed, in fact,

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Speaker 1: monumental pain on the US economy, really resulting in them

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Speaker 1: not even being a stage to have being a steam roller. Yeah.

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Speaker 1: I mean, we've got a lot of great analogies going on,

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Speaker 1: and I love that because and maybe I'll throw another

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Speaker 1: one in. It's you know, they're going a hundred miles

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Speaker 1: an hour on a slick road and slamming on the

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Speaker 1: brakes is just um, I think there's a lot of question,

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Speaker 1: at least personally I am as well as um. This

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Speaker 1: is how we're guiding investors, is like, this could be

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Speaker 1: too blunt you when you've raised rates essentially twelve times

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Speaker 1: in this year and now they haven't raised it twelve

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Speaker 1: separate times, but they've done twelve basis point hikes. Sorry,

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Speaker 1: we were using all sorts of analogies before. I'm just

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Speaker 1: going to go up with one more about the Federal Reserve.

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Speaker 1: And it was the point that I made last, and

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Speaker 1: that was essentially speeding on a slick road, and the

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Speaker 1: reason why they're speeding is because they were late and

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Speaker 1: late to the party, so they have to speed in

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Speaker 1: order to try and make commends. So what I'm saying is,

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Speaker 1: what are the dangers of massive policy era? Well, I

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Speaker 1: think I I really do like that analogy. If you're

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Speaker 1: going a hundred miles an hour and you slam on

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Speaker 1: the brakes, there's going to be damage. And and that's

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Speaker 1: I think what's going to happen in the economy. And

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Speaker 1: I think you're bringing up a really good point, which is,

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Speaker 1: you know, is it going to throw us into a

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Speaker 1: recession not just in the US, but but globally. And

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Speaker 1: I think that there's a very good risk of that.

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Speaker 1: You know, when you've got um, when you've got a

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Speaker 1: laser focus on inflation and you're kind of putting unemployment

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Speaker 1: on the back burner, you know, there's those are trade offs,

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Speaker 1: and I don't see the FED focusing on both at

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Speaker 1: the same time when they're raising as drastically as they have,

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Speaker 1: because they have to at this point. So we took

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Speaker 1: note of inflation working in Starbucks favors. So it got

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Speaker 1: me to thinking, okay, so let me set up a

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Speaker 1: screen here. Um companies that are recession proof, that have

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Speaker 1: pricing power and are trading under a fourteen multiple and

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Speaker 1: let's see what comes out. Oh, it says, go fish.

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Speaker 1: So the question is what this is a silly just

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Speaker 1: silly me asking you the question what do we do

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Speaker 1: from here? Well? Yeah, I mean it's such a challenging

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Speaker 1: environment as it has been all year. When you've got

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Speaker 1: stocks down more and you've got bonds not you know,

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Speaker 1: making up, not not standing up and doing what they're

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Speaker 1: supposed to do in stocks collapse, which which is to

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Speaker 1: be some ballast in your portfolio. You've got investors that

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Speaker 1: are just um, they're they're upset and they don't know

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Speaker 1: really what to do. But there are some opportunities I

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Speaker 1: think that are that are coming out of this. I

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Speaker 1: mean what we're doing with our clients right now is

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Speaker 1: a bit of a Barbell strategy. I mean, when you've

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Speaker 1: got three to six months treasuries that are guaranteeing you

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Speaker 1: fo turn that's not something that used to be interesting.

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Speaker 1: Well it wasn't even something you could do six twelve

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Speaker 1: months ago. But that's something you know, kind of up

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Speaker 1: a couple few percentage points. Is the new um? Flat

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Speaker 1: is the new up in this market, I guess, is

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Speaker 1: what I'm trying to say. So owning some treasuries for

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Speaker 1: the short term in this volatility, I think is something

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Speaker 1: that makes sense for a lot of clients right now. Well,

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Speaker 1: and let's just also just take a look at you

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Speaker 1: it's not just treasuries, but I mean, if you're gonna

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Speaker 1: be looking in fixed income, you go to some of

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Speaker 1: the decent high yields, I mean some of those investment

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Speaker 1: investment grade products which are just slipped below the line,

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Speaker 1: if you will, solid business is arguably and you look

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Speaker 1: at double digit virtually returns, yeah, we're shot. I mean

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Speaker 1: I think that I think that's a great point. I mean,

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Speaker 1: for for individual clients, were not buying individual high yield bonds,

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Speaker 1: but there are certainly mutual funds that are out there

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Speaker 1: that makes sense. I think h y G can actually

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Speaker 1: make some sense. What we're really doing is a Barbell strategy.

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Speaker 1: So on the one end is that three to six

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Speaker 1: month treasury for a guaranteed four percent, and then on

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Speaker 1: the other end of the Barbell is buying value stocks.

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Speaker 1: You don't have to love value, you just have to

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Speaker 1: buy it. So there's a lot of uh, you know,

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Speaker 1: you're joking. I think at the start of this Brian

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Speaker 1: about you know, doing some screens on, you know, what

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Speaker 1: are some cheap stocks out there? And if you can

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Speaker 1: hold your news and recognize that this isn't a thirty

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Speaker 1: day play, a ninety day play, this is a twelve

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Speaker 1: twenty four month play, there's plenty of interesting stocks out

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Speaker 1: there with terrific dividend yield um with low valuations that

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Speaker 1: make sense to put kind of on the other end

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Speaker 1: of your risk spectrum of your portfolio. One of the

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Speaker 1: big questions I have is that if we take that

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Speaker 1: the inversion of the yield curve and the two tents

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Speaker 1: spread suggests recession is coming. So the question then becomes,

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Speaker 1: you don't have stocks already discounted it because we know

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Speaker 1: that sometimes by the time we know we're in recession,

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Speaker 1: we're already the stock market is already moving, you know

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Speaker 1: the direction. How do you gauge that? Right? Yeah, I

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Speaker 1: think that um. I think that the inversion of the

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Speaker 1: yield her is one of the four horsemen of the

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Speaker 1: apocalypse that say there's a recession coming. There's no question

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Speaker 1: about that. When the three months treasury is higher than

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Speaker 1: a tenure yield, you've got a recession in the next

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Speaker 1: six month. So the question is is this going to

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Speaker 1: be a hard landing or a soft landing. Is this

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Speaker 1: going to be a soft landing where your next door

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Speaker 1: neighbor loses your job or is this going to be

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Speaker 1: a hard landing where where you lose your job? Well, absolutely,

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Speaker 1: thank you so much for joining us, Terry Terry Spatha.

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Speaker 1: She is the chief investment officer at a Zoom of Wealth,

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Speaker 1: getting her take on the market