Hello and welcome to our Market Alert video for today, which is August 16, 2024 and we have a lot to get to. We had some very important data coming in, mostly positive. The market loved it best week in this year so far, and we had the consumer retail sales, we had unemployment claims, we had CPI. I want to dive into all of that. We have tons of stuff for you. But first, I want to wish all of you SCWPerS and clients, I hope you are receiving this video, and you are healthy, wealthy and wise, and you SCWPerS, I hope you’re out there squiring your little tails off, right? We want you to enjoy that second childhood without parental supervision and let us worry about all this boring financial stuff for you. So I want to dive into everything, but first, I have some breaking news in the war that has been waged that has been raging between my daughter and my son in law and my grandson, who’s about two and a half years old. And of course, that’s the battle of potty training. And they had a significant breakthrough. They broke through the lines. He actually went into the bathroom by himself, sat on his little potty thing, and he pooped all by himself. He was very proud. And when he got off, my grandson, you know, also being very proud of his son, had him stand next to it like this, and he took a picture, you know, of Nathaniel like this, with the little potty thing, with the water, with the log floating in it. And now, forgive me, I know that this is a financial thing, and we shouldn’t be talking about floating logs. I get it. But anyway, so, you know, I’ve been showing this picture to people. I’m proud. You know, look at this. He’s got the log. He’s doing well! Well, my wife got wind of this, and she’s like, Ken, do not show people pictures of the floating log. So I can’t show it to you. Sorry. I wanted to show it to you. She won’t let me. Anyway. Oh, boy, am I gonna get in trouble for this one. Anyway, let’s talk about what happened this week. So first of all, the CPI came in and it was a 2.9% which is really good because it’s the lowest it’s been since the Fed’s been fighting inflation. So that’s a good thing. The unemployment claims came in lower than expected, meaning that fewer people are filing for unemployment have lost their jobs than was expected. That’s a good thing. And then thirdly, retail sales are higher than expected, which means that the consumer, which is 70% of our economy, not only isn’t losing their jobs as much as people thought they would be, but they’re spending money more than they thought they would. So you take that all as a package, and the market loved it. And we saw the stock market fly through the roof over this last week, and the bond market liked it as well. Because if those things are happening, it’s likely the Fed will lower interest rates. So our bond portfolio has done well also over the last week. So I want to share with you a little bit. I don’t want to rain on the parade or pour cold water or whatever the cliche is that you want to use, but we want to be cautious here and not get overly excited, because we actually think that inflation is going to start heading back up again. And the danger is the Fed will lower interest rates in September, and then right after that, inflation starts going back up again, and that will not be well received. So there could be some some volatility here, and not to mention the 800 pound gorilla, which is the elections coming up soon. And we’ll get into the elections in a future video. But the first thing I want to do is I want to share my screen with you, and I want to show you a bunch of numbers. So stay with me. Don’t be intimidated by this. I’ll explain it all to you. So this column right over here, these are the dates that I want to show you, to show you why we think inflation is going to head back up. And by the way, last year we said the same thing. We said inflation is going to go back up towards 4% it did, and we had a bad reaction in the market. So we think there’s a potential for the same thing happening this year. So this is the date. This is the CPI level, which they announce. And usually when they announce it, like, for example, this week they announced it, they announced it for July, right? So there’s always a one month lag. So this is what they announced. This is the change from the previous month to the current month. So in this case, over here from June, they went from 305 11 to July of 305 69 that was a .2% change. If you multiply that by 12, you get .24. So that’s the monthly annualized and then this is how do we compare this year to last year? So that’s the actual year on year comparison. So let’s go through this and let me explain to you why we think that inflation is going to go back up in the last three months of this year. So when we’re looking at this row right here, so we had a .2% increase from the month before. This year, it went from 314 18 to 314 54, that is a .12% increase. That .12 is less than the .2 up here, therefore inflation is going up by a slower rate, meaning inflation has gone down. And that’s why I went to 2.9 from the previous 3.0 which was very well celebrated and chronicled. Now what we did here is we made an assumption, and we said, what if the Fed, because of their efforts, the inflation rate continues at an annualized rate of 2% for the rest of this year? In other words, they’re getting it down. It’s staying at that 2% annualized rate. If you divide this number by 12, you get this number over here. Now remember, what they do is they compare this number to the one a year ago. Well, .17 is less than .44. That’s good 2.9 therefore the inflation rate goes down to this 2.4 the next month, in September of this year, .17 is less than .25. We go down again. Now this is due to rounding. It looks the same, but this is a smaller number. Now, down here is where we have the challenge we think. So this .17 is going to be more. And notice over here what happened. Inflation turned negative. It actually started going down. It didn’t. It didn’t go up at a slower rate. It went down. So the annualized rate over here, .5, 2.4 1.2 negative compared to the two over here. These are all negative numbers. These are all positive numbers. This is more than that is, and that’s why we think inflation will start to go back up and might be at 3.2% by the end of this year. So what does that mean, well, what’s going to happen if that does happen, we think is the Fed lowers interest rates in September, and then inflation starts to go back up again. What are you guys, fools? What are you doing? You lowered interest rates and inflation is going back up again. You’re going to, you’re going to cause a recession. And you guys, you guys stink. And so if all of that happens, we think there’s the potential for the market experiencing a correction, but that is an uneducated view of what’s happening. If the rate, the monthly rate, stays at that 2% that means they’re succeeding, even though the overall rate, because of the math of how they calculate it shows that it’s going down. So we don’t think it’s something to be worried about, but it is something to watch. So going forward, what do we take from all of that? Well, number one is the consumer seems to be holding their jobs and they seem to be spending. Those are good things. If they continue to do that, the Fed lowers interest rates, the economy slows down, the consumer stays okay. That’s about as good as it gets, folks, and we think the stock market could do very, very well. The other side of the coin is the Fed waits too long. They don’t do it the way they should. We have a very bad recession and a bad bear market. This is the mistake that was made back in the early 80s by Federal Reserve Chairman Paul Volcker. Same thing. He waited too long. Big, bad bear market. Terrible times, if that happens, that’s why we have our Invest and Protect Strategy there to protect against that downside. That’s why we have it. That’s why you’re here, right? And I hope that gives you peace of mind. On the other side, we have our bonds, and our bond portfolio has done very well, in our view, over the last three months. It has outperformed stocks, if you take into account the increase in the price and the interest rating that we’re getting, that’s actually better than stocks, which is what we said. We said in the second half of this year we thought our bonds would do better than our stocks, and in fact, that is what’s happening. So we basically need to stay the course. Nothing to panic about here. Nothing to be overly excited about, either. And giving you a forewarning that we shall see, we think, inflation go back up after the Fed has lowered interest rates, and that will not be taken well, but we think that’s not a problem. So I hope this video finds you healthy, wealthy and wise. I hope all you SCWPerS are out there enjoying your second childhood without parental supervision. I hope you’re SCWPering your little tails off. That’s your job. And for those of you who aren’t SCWPerS yet, we are going to do everything we can to get you to retire and to enjoy that second childhood. Share this video with as many of your friends and family as you possibly can. We want to help as many people as we can. So again, thank you for watching, and we will talk soon.

Please note: transcript has been modified after the time of recording. 

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to Ken Moraif on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of Ken Moraif, CEO and Founder of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023