So here is the question that we are asking ourselves
and our guests and you
tonight Is the Federal Reserve missing the mark in its
fight against inflation?
For more on what the Fed and it all means
to you and your money,
let's bring in. Peter Malukey is the President and CEO
of Creative Planning where he works with 10s of thousands
of high net worth individuals and Creative Planning.
Frequently ranked as one of,
if not the top ranked wealth management firm in America.
Peter J Pal is a lot smarter than I'll ever
be and they got 400 pH.
DS working at the Federal Reserve.
But I hope my point,
our point was made, which is that it just feels
sometimes like
there is a gigantic Moat
disconnect between what the Federal Reserve is maybe seeing and
saying and what your clients and people living in wide
swaths of America are feeling.
First, great to be back,
one of my favorite, you're one of my absolute favorites.
You're a blast to follow here and online.
But you know, you were talking about some of the
recent mistakes you know,
Powell made and really there was one big grand mistake
that I think is going to be studied in economics
books probably for 100 plus years.
And that was the response to COVID in the 1st
place.
And we we basically, you know,
opened a textbook and said,
oh, no one's working and no one's buying stuff.
So we have to lower rates dramatically.
Well, it was like there was a Blizzard.
Everyone was inside. Everyone thought they were going to die.
And when the Blizzard was gone and the streets were
clear and everyone went back outside,
we we knew we weren't going to die.
So they went back outside and we spent.
We didn't need the Super low rates you were talking
about earlier.
And every single move since then has been trying to
unwind this grand mistake.
And he made a mistake about inflation,
like you just said earlier
passing. But they also made a mistake even this year
saying,
hey, we expect multiple rate cuts this year.
So look, I don't believe anything he says.
I don't think he's malicious.
I don't think he knows.
Nobody knows. Economy is very dynamic.
And I think we're going to see a lot more
missteps.
That's been the rule along the way.
I don't think there's anything malicious about J Pal.
I mean, after all, he likes the Grateful Dead.
How malicious could he be?
And and the point I was making was not that
the response at the beginning of a COVID,
because I don't want to go back and rewrite history
wasn't correct.
The first six months. Absolute pure terror.
I live in New Jersey.
We were the first hit.
Totally get it. But when I went to restaurants in
Houston and Miami and Charleston,
because I never stopped traveling in the fall of 2020
and there was a 2 hour wait and it was
packed and car dealers were selling everything they could.
I get it that a lot of the economy wasn't
like that.
But when I saw this,
my own eyes multiple times that I would post it
to your point,
I'm thinking, what the hell is the Fed talking about?
I'm watching my clients buy second homes and boats and
planes and we're they're keeping rates at record lows.
It made absolutely no sense and and it's really trying
to recover from that has been very tough and I
think we're we've got a really interesting situation here
because you've got the the Americans that are struggling have
credit card debt.
They're now at 25 year highs.
They're they're really suffering there.
They're not going to get a break till there's a
rate cut.
Average American that's in a home wants to move.
If you have a mortgage,
forget it because if you leave your house,
you're going to get rid of your 2 1/2 percent
mortgage.
You're going to go to a 7 or 8%
mortgage. Everyone's paralyzed. If you're a new home buyer,
forget it. You know the homes
are now priced out of your way.
A mortgage is about double what it was just a
couple years ago.
And a lot of wealthier people are invested in real
estate.
And you look at what's happening in commercial real estate,
a lot of people hanging on month to month,
they're upside down. The properties are worth less than what
they paid for.
Hoping for those tax cuts that PAL was talking about
earlier this year.
Not going to happen. It's going to be really interesting
to see how much longer some of these regionals can
hang on to.
We're seeing a lot of mergers and acquisitions in that
space as banks try to get bigger because if this
continues I think three or four more quarters I think
we've we've pushed off the consequences about as far as
we can.
You know Stagflation, I don't I I heard Steve Liesman
today and I totally agree with my friend Steve.
I don't think Stagflation is here.
A lot of people that are sort of you know
out there in the Canary in the coal mine saying
it's here and Powell saying he sees neither the Stag
nor the Flation. I don't think he sees the Stag,
but I I think the the inflation certainly is there.
But when you look at some of the data,
you got ISM manufacturing down seven months in a row,
we're seeing consumer confidence start to fall.
I'm not saying the economy is weak.
The economy is still strong if you're an asset owner
as we have talked about.
But for all the middle class out there that are
paying
$30 per person for like a quick service meal and
their mortgage costs have doubled and car insurance costs have
soared and home insurance costs
have soared, is there anything the Fed could and should
do for them?
I don't think the Fed can do anything.
I don't think so either.
They're desperate to lower rates because of the national debt
and because of commercial real estate and because of regional
banking and probably because of the election.
I mean, they are dying to lower rates.
And you look at those stocks you had at the
top of the hour,
you're going through them normally.
You see when things are are,
when people are struggling, you see people go,
OK, I can't go to McDonald's anymore but then people
move down from Apple to McDonald's.
There's another group we're not seeing that the wealthy are
just fine because like you just said,
inflation. We've got the asset prices are still up,
right? Just had a killer fourth quarter of the stock
markets holding up okay this year all things considered.
But the person just getting a paycheck and trying to
put food on the table,
they're they're really suffering now.
And we've got this problem where what what the Fed
is doing is really going to have more of an
impact on asset prices.
But we have this real problem here where there's a
whole group of people,
the biggest party, United States,
getting squeezed, and I think they're trying to figure that
out.