Finance Roundtable Podcast
It is a complicated and tricky world out there. Without a solid understanding of how money works, life can be even more challenging.
We get it, talking about money is uncomfortable but we all can agree that it is an important topic to understand.
The Finance Roundtable Podcast team wants to bring you along as we interview some remarkable professors, professional athletes & financial strategists about money.
If you have ever wondered what is talked about between financial professionals and what goes through our minds when we are off the clock; then you will want to check out the Finance Roundtable Podcast.
Jacob Gold and Michael Cochell are Financial Advisors offering securities and advisory services through Cetera Advisor Networks LLC (doing insurance business in California as CFGAN Insurance Agency LLC), member FINRA/SIPC, a broker dealer and Registered Investment Adviser. Cetera is under separate ownership from any other named entity. Jacob’s California insurance license # 0E55425 Michael’s CA Insurance License # 0K90130. The views depicted in this material are for information purpose only and are not necessarily those of Cetera Advisor Networks. They should not be considered specific advice or recommendations for any individual. Neither Cetera Advisor Networks nor any of its representative may give legal or tax advice. Kelvin Gold is a Marketing Associate. Registered Address is 14850 North Scottsdale Road #255, Scottsdale, Arizona 85254.
Finance Roundtable Podcast
Episode 8: Economic Overview with Gene Goldman
In this episode, the Finance Roundtable team interviews Cetera Investment Management’s Chief Investment Officer Gene Goldman.
Listeners will learn a great deal about the current economic landscape as Gene discusses the possibility of the United States experiencing a rolling recession, why diversification is so important, and where investors may find future opportunities for growth.
Along the way, co-host Kelvin Gold asks Gene about the economic phenomenon of the Taylor Swift concert tour. The tour is slated to earn over a billion dollars in sales and the Philadelphia Federal Reserve noted in recent minutes that they have witnessed a positive impact because of the concert. The tour has even caused an earthquake in Seattle due to the noise.
Lastly, you won’t want to miss co-host Michael Cochell asking Gene several personal questions in what Mike calls Rapid Fire. Did you know that Gene Goldman is a magician, well kind of…
You're listening to Finance Roundtable, a podcast that focuses on demystifying your money. Your hosts, professor Jacob Gold, michael Koshell and Kelvin Gold, will educate and entertain you on all areas related to personal finance. Get back, relax and enjoy the show.
Speaker 2:Coming to you from Scottsdale, arizona. This is the Finance Roundtable podcast. This is the August 2023 episode and, if you were wondering, yes, it is still very hot here in Arizona. As usual, I'm joined by my two best co-hosts in the universe, mr Michael Koshell and Mr Kelvin Gold. Gentlemen, without giving away who our guest is today, are either one of you nervous because he's a pretty big deal in the investment world? Yeah, I love this guy. Oh, go ahead.
Speaker 3:Kelvin Sorry, yep, just a little bit nervous. He's a cool guy.
Speaker 4:You know I would say I'm not nervous, more excited. I've had the opportunity to listen to Gene speak several times, whether it's via Zoom and in person. So I'd say more on the excitement side rather than nervous.
Speaker 2:Absolutely Well, good, well, good, well. Maybe some of our guests have seen maybe some of our audience has seen our guests on a number of shows on CNBC, or perhaps they've read his financial commentary through the Wall Street Journal, the New York Times or Forbes Magazine. But most likely our audience has seen our guest today through the week ahead videos, part of our weekly newsletters. This gentleman has over 26 years in the investment industry, earned an MBA from Northeastern University and is a chartered financial analyst, otherwise known as a CFA. He is currently the chief investment officer for Cetera Investment Management. It's none other than Mr Gene Goldman. Gene, thank you so much for joining us today. We really, really appreciate it.
Speaker 5:Thank you. Thank you so much and I'm nervous. I've been asked a lot of crazy questions, so I'm nervous.
Speaker 2:Yeah, we're going to treat you hard.
Speaker 5:I'm selling bullets here. Oh, that's funny. Well, you're a good boy and thank you for having me on your podcast. I'm really excited and, again, I love talking to you. I love talking to your clients. I mean, this is just a wonderful opportunity. So, thank you.
Speaker 2:Thank you. Well, you've spoken with our clients on different webinars and different newsletters and, of course, as I mentioned earlier, all of our clients see your weekly videos talking about the week ahead, and so today we're just going to continue that on, but on our new podcast. So we really appreciate you making the time.
Speaker 5:So in the week ahead video. It's kind of funny. You know, I get lots of questions when I'm all over traveling presenting on TV lots of questions the economy, the markets but the number one question I get is what's behind me? And obviously behind me we have Jimi Hendrix, star Wars helmet, stafoff Marshmallow and then my two dogs. So I get that. I love it.
Speaker 2:I mean, you got to sprinkle a little pop culture in there and you know, this investment world can be so impersonable and can be so black and white, and it's really nice to be able to see people's personalities, what they're passionate about, and we definitely want to sprinkle in some questions to get to know Gene Goldman a little bit more on a personal level. I think a lot of people know you as the CFA and quite a great strategist, but we want to get to know you personally a little bit today and hopefully we'll be able to pull back some layers of that onion and get to know you a bit more. Thank you, looking forward to it. Well, good, good, well, okay.
Speaker 2:So, talking with the guys, gene, we have a few main questions that we want to make sure that we go over and, if we have time, which I know we will, as I mentioned, we want to dive into some more personal areas. But the first question that we really would love to hear your perspective on is is that, mike Kelly and I, we realized that the last several years have been challenging economically, mentally, physically for everyone, and it seems that the US is not reliving the 1990 or 1970s where we had high inflation and high energy prices. It seems that inflation has come down, energy prices, at least for the most part, has stabilized a bit, but we'd love to hear your current perspective of how the current economic climate is going, as well as some big risks that you see potentially on the horizon.
Speaker 5:Sure, sure If sure, and then we take a step back. Let's. You know I'm a big fan of numeric framing, so if we kind of take a step back, what are our three themes for the rest of this year? Our three investment economic market themes, and number one hits what you said perfectly nail on the head. Our first theme is that the Fed will pause but maintain a higher for longer perspective. Number two is that the markets, the equity markets, have gone a little ahead themselves. You know, if we've had a great run, we've had the S&P 500 had burst best first half since 2019. Huge run in some fundamentals, underneath your kind of worry about which we can talk about later. And our third perspective is that it's just really, it's just around. Once we have a get through this uncertainty, maybe a pullback, maybe some volatility, maybe a correction were lined up for a better late this year or even a even better 2024. So those are a broad themes around the economy, though the economy has been interesting, if you know.
Speaker 5:If you asked me at the beginning of the year and you did are we headed towards a recession? I said it's probably likely headed for recession. The data was there. We had a banking crisis, we had the Fed aggressively raising rates, we had all these different headwinds, but what happened? We haven't had a recession yet. Yes, maybe we'll have one early next year. Maybe, you know, that's still some uncertainty, but all the data right now is saying maybe we skirt a recession.
Speaker 5:I think the more important point is whether a recession and that's economic growth below zero and there's other ways we can look at a recession whether you're, you know, classic what we learned in college and high school to consecutive quarters of negative GDP growth, or you learn from the National Bureau of Economic Research, which lays out six statistics to say here are defines a recession. But if you, if you think about a recession, whether it's above zero or below zero, regardless, I think the important point is that we expect it to be mild. If we have a recession, it will be mild and there's so much data on that. First of all, the labor market is so strong. The labor market you look at, you know. You look at maybe six months ago we had two jobs out there available for every one person looking for a job. Now we're 1.6. We've come down a little bit, but it's still pretty, pretty strong.
Speaker 5:Second of all, we've always laid out the scenario of what we call a rolling recession, where the recession rolls through the economy. I know it sounds scary, rolling, bad, big, but it's not a sharp recession. It's a recession that rolls part by part by part or sector by sector by sector within the economy. So if you look at what's in recession today Housing, manufacturing, autos what's not in recession Consumer spending. Consumers Everyone is spending flying going to hotels, restaurants, bars, like crazy. Spending is so high.
Speaker 5:What we're starting to see now in that rolling recession our rolling recession, our perspective is those areas in recession. They start to stabilize and the area not in recession consumer spending starts to weaken a bit, a little bit, and we're seeing this already. What's come back lately? Housing? Housing has bounced back, especially new home sales. I know part of it is driven because of existing home sales. It's really difficult with low emittories, but new home sales are picking up. Auto sales are picking up back to 2019 levels, but they are starting to pick up pretty quickly.
Speaker 5:And the third area manufacturing Manufacturing is in doldrums right now. Manufacturing is in contraction. It's in clearly a recessionary environment but if you look at some of the data, manufacturing is starting to stabilize, like some of the survey data. But, more importantly, look at construction spending, on manufacturing. It has surged. I wish I had a chart here, but I'd show you. It's just a ginormous jump, and that's because of the CHIPS Act, because of spending on electric vehicle production, on batteries, all that stuff. So those areas are starting to bounce back.
Speaker 5:So back to the question about the economy. Maybe a recession, maybe not, but I don't think we need to worry about that. We just need to know it would likely be mild. What's caused all this, this whole potential concerns? It's the Fed and, as a reminder, we talked about this last time. The Fed, the Federal Reserve, they're in charge of monetary policy and they've got a directive, a mandate, two mandates Number one, make sure we all have jobs and, second of all, make sure inflation stays in check or lower. Ideally, jobs we all have jobs, so the economy is doing well. Inflation coming out of the COVID recession, coming out of supply chain issues, coming out of other issues we can talk about too. Basically, inflation surged dramatically and the Fed has had to address that. That's why they've raised rates aggressively. If you look at the last time they raised rates from 2016 to 2019, they went from zero to 2.5% in three years this time just to show the speed of this zero to 2.5% in six months. Today we're at five and three eighths and that's basically between five and a quarter and a five and a half. This is really slowing down economic growth, slowing down inflation, but the consumer continues to power through all of this.
Speaker 5:One thing we're watching carefully and I think this week a story came out which is really important is borrowing, lending and borrowing. So you look at, there's something called a senior loan officer survey. It's a survey of senior loan officers at banks and this number they're asking the question are you tightening lending standards? And 40, I think it's like 47 or 48% are now tightening lending standards, and this is a big surge, big surge. We haven't seen this in a long time. Why is that so important? Well, you think about.
Speaker 5:We saw the banking crisis in March. We saw what happened there and obviously there's some issues around deposits leaving, looking for higher yield, also some duration mismatch Don't worry about that term. That just really means just some banks are not doing what they learned in banking 101. They were just investing in long-term duration securities, high credit quality, but just long-term securities, all these things together. Now, if you're Jacob Gold's bank and you're doing everything correctly. What the issue is is that you know irregularly is gonna be knocking on your door to say, hey, let me look at your lending, let me look at your deposit, let me look at what you got going on. And now, jacob, as a bank, you're like I'm gonna start to ratchet down my lending, start to increase my lending standards to focus on my best customers. This is creating lending standards are surging, are rising and borrowing is coming down.
Speaker 5:So what came out this week from Moody's? Moody's down created a bunch of banks because of the saying, because it's more expensive for banks to pay for deposits, so they're raising rates that they pay for savings accounts and they're not making as much money. All of this could impact the financial services industry, the banks industry. So I know we went all over the place, but lots of potential headwinds. This is why my job today. Looking at the economy, we have a thesis that we think that the economy is likely gonna skirt a recession near term, but there's some really big headwinds that we have to watch very carefully. Long answer to a short question.
Speaker 2:No, it was so good, gene. So much to unpack there. And you mentioned something that Michael and I talk a lot with clients about right now, and that's the rolling recession idea of the fact that if not all sectors experience a slowdown at once, that really bodes well for the consumers, especially if someone is well diversified and looking long-term, they don't feel pain all at once. It's just kind of sporadic in different parts of their portfolios. And with that, would you say, talking about that rolling recession, would you say that maybe technology had their rolling recession already, let's say, the fourth quarter of last year, the first quarter of this year, cause a lot of tech companies. Since they made these massive layoffs, their earnings have gone up and a lot of the companies that struggled the most last year on the tech space are doing really well this year. Do you feel like tech is coming out of that rolling recession or are they still in it?
Speaker 5:I agree, I agree. So I think tech as the industry has come out, it's rolling recession, like siting around AI around artificial intelligence has really boosted prospects of these companies. But keep in mind, though, when you make an investment, it's not just about fundamentals, it's not just about the long-term prognosis, it's also about valuations, and valuations on a lot of tech companies are pretty high right now because everyone is buying the thought about AI, and I think AI, long-term, is extremely viable. I've been saying AI is like electricity in the 1890s. Basically, it's big, we just don't know how big it's gonna be. Ai is gonna be the same way. Just think about efficiency of jobs. Just think about data. Just think about if you're a lawyer. Instead of having to pour through different case books, ai reads through everything at once, and again, I'm oversimplifying it, but there's opportunities there, especially productivity, efficiency great news there.
Speaker 5:But again, technology last year was one of the worst performing sectors and this year we saw a huge bump. Now, if you look since the second half of this year, it's been one of the worst performing sectors. So you have to it's out of recession. We have to look at both fundamentals and valuations. So yes to your question. Technology was in recession. It's given the layoffs which also contributed to some issues at banks, because a lot of banks leveraged to tech industry really hurt Silicon Valley Bank, for example not a recommendation, just saying Silicon Valley Bank they were very overexposed to technology sector. Then technology could not get, couldn't get more capital out in the markets. So what happens is that these tech companies start tapping in their cash reserves, bringing down deposits. Again a deposit mismatch for that bank. So again, lots of ramifications.
Speaker 2:Oh, that's so good. And another point that I wanted to discuss, based on what you've just said, is we are seeing that new hires are starting to come down relative to the highs that we've seen this last year. Do you feel like that's giving the Fed what they want to see in order to justify not having to raise rates more, or do you feel like they're just in no matter what kind of wait and see for a little while to see how the dust continues to settle?
Speaker 5:Yeah, yeah, and that's a great question Because if you think about our first theme, the Fed pauses but maintains a higher for longer. So June, the Fed paused. July the Fed raised rates by one quarter of 1%. Right now there's a big disconnect in the market. The market is saying the Fed is done, not raising rates any more times this year. The Fed, based on their most recent dot plot and the dot plot is a document that the Fed produces once a quarter that indicates anonymously where each Fed member expects interest rates, inflation and economic growth to be at the end of this year, next year and so on the Fed expects to raise rates one more time before the end of this year. So that's the disconnect. What we can glean from that disconnect is how do we squeeze them together? How do we narrow that spread? And the big key thing is the labor market and the labor market why? Because the labor market, when it's strong, creates wage growth inflation. Also, if you look at inflation today, what's not inflationary? What's where? Have we seen disinflation? Goods prices, but services we haven't seen disinflation. Services inflation is still extremely high and labor is one of the biggest components of services inflation. So Fed is trying to bring down a labor market in order to address services inflation.
Speaker 5:If you think about the job market right now, I think the last report we saw was around 200,000 for jobs created in the month of what month is it In? The month of July, excuse me all these months are a blur In the month of July. So around 200,000 jobs, I think keep in mind get based on household formation, based on people graduating, leaving college. We need to create about 100 to 125,000 jobs a month. So we're still above that number and we're still above the number that we were averaging in 2019. Long story short, labor market is strong, but you're starting to see, as you mentioned, some weakness and weakness weakness is the wrong word. You're starting to see some slowdown in hiring and people switching jobs in listings for jobs. All those are sort of the early precursors of a potential slowdown in the labor market. But for your listeners, don't be worried. I mean we still have so many more jobs out there than people looking for jobs. Yes, there's a little skills mismatch out there maybe, but at the end of the day, it's a very strong labor market.
Speaker 2:And so, gene, for those that are listening to this podcast today, what do you think are some important themes that they should be mindful of and keep a close eye on as we progress down the road of 2023 and start looking at 2024?
Speaker 5:So themes in terms of investment themes, or just think about on a go-for-bases I would say, like investment themes, whether investment themes to avoid or investment themes to start considering. Yeah, I think okay. So that's a great question. I think this year reminds me of like of 1999. And so 1999, if you go back to what happened in that year large cap or growth stocks. Everyone wanted to buy growth stocks because of Y2K. Remember Y2K? We were having the Y2K, so Y2K, the tech bubble. You know Calvin's like what's Y2K?
Speaker 3:I read about it one day. I heard about that, yeah, I heard about that one in school.
Speaker 5:I heard about that. So Y2K tech bubble in 1999, this drove all that tech spending and large cap growth and technology crushed every other part of the market and back then everyone said, wow, all I need to do is buy growth stocks, I don't need to buy anything else. This year is a very, very similar story where we saw, for example, in the first half of the year I might be a little bit off of my numbers, but the perspective is right Large cap growth was up about what? 28%, 29% for the first six months. Large cap value. Large cap value are like these big good companies, like dividend-paying companies, energy companies, healthcare companies, good companies were up about four or 5%. So again this year people were saying, well, I don't really need to buy anything else, I should just buy growth. And that's a huge mistake because you gotta be diversified. So our first theme is be diversified, have exposure to different parts of the market because you don't want the old adage don't put all your eggs in one basket. Be diversified because you want to smooth out those long returns. I think I read some stat that said it was like 34 of the last 41 years, the average entry year loss. So the volatility within a year is negative 13.3%. So the market's been up 34 of the last 41 years. So it's an upper-ly biased market but the average entry year loss is around 13.3%. What this says to me is that markets move generally higher but you have lots of entry year volatility and you guys smooth out that volatility. Diversification helps to mitigate those unexpected consequences. So first theme is be diversified. The second theme is that look at other parts of the market that you really haven't looked at in a while.
Speaker 5:International International looks pretty attractive. Europe is in a recession right now, a mild recession. You see, china may be slowing down pretty quickly and there's lots of concerns and pessimism, but if you think about it, the Fed is almost done but you still have rapid inflation in Europe. If you think about in theory, about a dollar, the US dollar, with the ECB raising rates, the US keeping rates fairly steady, higher rates outside the US pushes more money into the Euro and to non-dollar-based investments. This weakens the dollar. The best thing you want to be in a weakening dollar environment is non-US investments, because those investments get translated back into US dollars with a weaker dollar. That's good for returns. I know I went into a bunch of economics investment 101 for your listeners. But it's important because that's a good opportunity.
Speaker 5:The other area that we're finding huge opportunities small cap, small company. Small cap took it on the chin because everyone feared this big, nasty recession coming. We may still have a recession, but at the end of the day, small caps are extremely cheap. These small companies which are very labor-intensive. Small companies have more labor costs than larger companies. They have difficulty to protect profit margins because they're really labor-focusing. So small caps we would look at and I guess from a sector standpoint I know we all have different perspectives. Some of our favorite sectors include industrials. So I know boring old big industrial companies. We like them because think about this agriculture Agriculture spending is increasing food.
Speaker 5:We talked about the weather in Scottsdale and Arizona. We had a very warm July, but food trends are moving around in the sense of where will food be grown next? Different parts of the world, giving these warming trends Also under industrialist defense spending. You look at defense spending. I think last year Europe and Canada spent about 1% of their budgets on defense spending. This year they're raising that to 8% and that's big for defense spending, for defense stocks and, unfortunately, the unfortunate events in Russia and Ukraine. It really brought to light the fact that the wars that types of wars that were expected and how companies built for that, are not where they're actually happening. Given the fact that planes can be knocked down more easily, warfare has changed a little bit of an older set of sort of like a trench type warfare, and companies, countries, are not prepared, so they're looking to rebuild their armaments.
Speaker 5:Unfortunately, I know it's a touching subject, but industrials, second of all, we like healthcare. A lot of drugs are coming off of patent this year. A lot of big drugs are coming off, so lots of M&A activities and opportunities there. Most healthcare stocks are fairly cheap. The third area I know we talked about financials, but there's some attractive opportunities in financials. Financials especially larger banks. You'll have good M&A activity. You'll have, with the market stabilizing, maybe a mild recession as opposed to a worrisome deep recession. That's good for financials because capital markets from last year, like IPOs and debt issuance was very low, easier comparisons this year. So those are some of the areas that we like from an investment-themed standpoint.
Speaker 2:Wow, fantastic. And I love how you talked about being diversified, because I think there are a lot of investors out there that they don't wanna be diversified. They think they have an edge and they wanna front-load it and they wanna ride that wave. And in reality there are so many moving parts and emotions move markets in the short term and really, if one is serious about investing and creating wealth over time, try not to time the market be diversified. Have some inequities, have some in bonds to create that balance.
Speaker 2:And I would say and I guess I'm asking your question here, jean if someone is well-diversified between different sectors, between stocks and bonds and maybe some real estate, I think that they can allow themselves to follow the data and not get so emotionally charged based on any new news report that comes out. Because I feel a lot of times when people hit that emotional circuit breaker and they get persuaded by something they read or they watched or they saw on social media, many times they end up making an emotional move that comes back to bite them, but through a diversified approach. It's kind of like your own moat around your castle and the fact that you don't have to worry so much about the danger approaching you quite quickly. Would you agree with that?
Speaker 5:I would agree you with a diversified portfolio. The goal is to have some investments at ZIG when the other ones are zagging. That helps to create a smoother type return. And I think the second part about diversification is that you need to make sure your portfolio is diversified enough relative to your long-term investment objective. You don't want to be too aggressive, nor do you want to be too conservative relative to your long goals, long-term goals. And how do you make sure you are? Stay in contact with the team here. Let them go through your portfolio. Let them review any change in your scenario, anything that changes in your life. Make sure they know. Call them. Call their cell phones. They answer their phones two o'clock in the morning. They're there, I'm just kidding about that. But call them because they need to make sure that your portfolio is aligned with your long-term objective. Not too aggressive and not too conservative.
Speaker 2:You nailed it right there and the fact that I think a lot of times people get charged and make decisions for better or worse when they're influenced by external factors, but in reality, what you're saying is, when you reshuffle that deck, it shouldn't be based on something you read or something you heard. It's a forcing event within your own life you get married, you get a divorce, there's a death in the family, you change a job, something that changes your scenario. Then you reevaluate your holdings, but not to reevaluate your holdings just because of something you heard or someone was talking about something, and you do it out of emotion and fear.
Speaker 5:Exactly, exactly, that's perfect.
Speaker 2:That's wonderful, Mike. I've been hogging this. Do you have any questions for our main man, Gene Goldman?
Speaker 4:You know, maybe just a couple of thoughts and comments. And it's interesting, Gene, hearing you talk about and using a comment like having to go too deep in one area to the other and over the years of reading about data information. There's so many variables that are constantly changing and I love the analogy of you think why it's so difficult to be a baseball player hitting a ball is because you got a fast moving ball, and a fast moving it's nonstop moving variable, so it's too difficult to just focus in one area. However, our media tends to do that, which allows clients to maybe put more attention to one or the other, and you made a comment about let's also look at what we're not hearing about as well, which is important, hence the point of diversification. So a comment about the when we're looking at data, or some of your comments about the economy and the markets, is being mindful of all the moving variables when making a decision is critical and very important. I think that's where the diversification comes into play.
Speaker 4:And then I might ask one quick question on our first topic, about the recession, because there's so much discussion about it and please confirm or let me know what it sounds like If we are experiencing this rolling recession. We might view it as multiple little pains for a longer period of time than a big blow up at one period of time. Do you feel like that's more or less what we might experience, based on the data and some of your thoughts over oh, the first part of 2024,? This is gonna happen because it seems like there's been a discussion of, oh, it's around the corner. It's around the corner, but it seems to be more little pains for a longer period of time. So that might be kind of a question or thought.
Speaker 5:Yeah, Mike, that's a great question. So this is the thing about recession. So, if you go back to the big one, the big one that's all on our minds, you know, obviously, the recession we saw in 2020 was a source in the history of our country. It was two months and we really didn't feel it. We were more concerned about COVID, the ramifications, what was gonna happen, plus that recession in 2020, it was a services-led recession. People still went out and not went out bought goods and Peloton, bikes and cars not cars, tvs and stuff like that. We didn't just go to bars or restaurants, we just still spent. And that recession in 2020, it was the first time recession where we saw income actually rose and it hasn't never happened before, because people were saving money and also a lot of fiscal stimulus.
Speaker 5:The recession we wanna point to is a 2008 recession. 2008 was a nasty big recession because of the housing market. How the housing market? You know, we all know what happened lots of issues in terms of housing, how mortgages were refinanced, and we can spend a whole you know 10 hours talking about this. But why we don't see a recession coming like that is the rolling recession, the strength of the consumer, plus housing.
Speaker 5:When you think about the Fed. The Fed is raising rates. The Fed raises rates. They want to attack the most interest rates since the parts of the economy that's housing, in autos and the fear was that the housing would fall dramatically lower. But in our opinion it's not going to because of a few reasons. Inventories are very low.
Speaker 5:Second of all, if you look at homeowners equity, so within a home I think the last time I checked, and this is maybe a month or two months old it's about 73% of a home's value is, on average, homeowners equity. So what that means is that even if home prices pull back, you're not forced to sell. But if you think back and then we haven't seen these levels since the 1980s If you go back, if you look at what happened in 2007, 2008, homeowners equity was around 30% or 40% on average. So now home prices fall, you're forced to sell. You're forced to sell, you lose jobs and all that sort of stuff. So that's why we feel like this even if we have a recession, we're a little bit more insulated in terms of a shallow likely recession. Plus, the big question is stock market was down 19% last year. Maybe that was the market pricing in the recession already.
Speaker 5:But my key point at the beginning is is that, whether the recession is, we have one or we don't have one, don't worry about that level being above zero or below zero. It's going to be slowing down a bit. The economy will slow down a bit, but it will likely be very mild and we may be in the recession. Today we just don't feel it, you don't know, and some of the data started to pick up a little bit slowing. But again, we're watching things like this carefully. Yeah, thank you. Thank you for that Appreciate it.
Speaker 2:Yeah, you're right, Gene. A lot of times when a recession is officially declared, we're already out of it or climbing our way out of it, because it's a trailing indicator. And so, yeah, I think that that's a really good point of if we are experiencing that right now, by the time it actually ends up in the numbers, things might be that much better at that point. Once again, why we want to stay diversified right, Exactly.
Speaker 5:And your question. Your point about recession data is pretty. Oh, that's true. So you think about we get GDP data about a month after quarter end. It's a mobile data and GDP, in theory, people look at GDP two negative quarters is a recession, although there's better measures of it.
Speaker 5:Well, we look at from a data standpoint to see where the economy is going. We look at, first of all, we look at something called the ISM manufacturing PMI and the services PMI. So ISM, if you take a step back, ism stands for Institute of Supply Management. This is an industry group that surveys purchasing managers and purchasing managers are the front lines of different businesses restaurants, hospitals, whatever they are. They're on the front line and they're surveyed once a month and they're asked a bunch of qualitative questions how's hiring, how's firing, how's business, how our supplies, how's competition, how's prices?
Speaker 5:A bunch of great data and ISM squeezes the data together and if it's above 50, it's expansionary. Below 50 is contractionary and this data tends to be very much of a precursor to where the economy is going. So this is why, for example, we saw manufacturing PMIs fall pretty fast and now they're starting to stabilize at a very low level, but they're starting to stabilize. It's good news there. Services has fallen, but now it's stabilizing and above in that expansionary phase. So those are data points we like to watch carefully and the beauty is the first look at the prior month's data, so we like that. Another data point that we look at it's kind of boring and basic, but we love copper, copper prices, copper and I know Mike and Jacob are both. You guys are both like you know copper. Who cares about copper? All I see copper is are those Moscow mules I drink in every night, but copper has more uses Kelvin. I don't know how young you are, so I didn't want to bring alcohol.
Speaker 3:Not quite, not quite there.
Speaker 5:But think about copper. The average American home has about 400 pounds of copper. The average American car has about 50 pounds of copper. It's a great real-time indicator where the economy is going. Plus, china consumes about half the world's copper supply. So we look at copper very carefully in terms of where the economy is going. So those are some data points we like to look at. There's lots of data points, but those are some that we like a lot.
Speaker 2:Fantastic Gene, that is amazing stuff, really wonderful. Now to change gears a little bit. We got kind of a fun question. Kelly, do you want to ask Gene your fun question?
Speaker 3:Yeah, this one is not, as I don't know, thought-provoking, but my mom and sisters are big fans of Taylor Swift and you've mentioned a lot about. People are just going and spending and spending, and spending, and she's on tour right now and there's been some reports out have you heard these that Taylor Swift is actually helping the economy. I'm just curious how is that possible? How much money has to be going through this venue to actually have some impact on the economy.
Speaker 5:Well, first of all, I'm glad we have a fellow Swifty. Here's my Swifty bracelet. Yeah, I'm just kidding, I'm not a Swifty but I do like some of our music. But I wouldn't pay for that amount of money. But so you think of the economy. It shows, first of all, taylor Swift concerts. It shows that consumer spending is still pretty strong, for example.
Speaker 5:So I live here in California and I just happen to look at prices on Stubhub of Taylor Swift. Not that I was going, but I just want to see what the tickets were. The worst seats available, top deck, furthest away. Each one was going for $1,500. And people were paying these prices. So you think about the money involved, the confidence to spend that much money. You think about the hotels. It's driving the economy. Plus, there's what's called the Philly Fed. So the Philly Fed. So each region has a Fed. So there's the New York Fed, the Boston Fed, the Philly Fed, and they produce these indices that come out early in the month and they tend to be the first look at the current month's economy. And what's funny is the Philly Fed survey. If you take a look at the survey and this is probably what you're talking about, kelly is that they know in the Philly Fed survey that Taylor Swift concerts actually increase economic output in the region. It's crazy, so that's crazy.
Speaker 2:And if my memory serves me correct, I believe her concert in Seattle actually created a minor earthquake.
Speaker 5:Heard that too yeah.
Speaker 3:That was crazy.
Speaker 5:Yeah, and it was at March on. Lynch did the same thing too. Yeah, I can't tell, oh man.
Speaker 2:Mike, do you have any additional questions for Jean?
Speaker 4:Well, you know what, if we're tying things up and kind of shift things up, I know we could talk about finance and economic information for hours and I know it's not the most fun for everyone, but I know we enjoy it, yeah. So I'd like to shift things a little bit. Jean, I always appreciate your comments about the markets, the economy, and so a couple of months back, where I always listen to podcasts, various different interviews, and a couple of months back I came across record fire questions I'm sure we've all experienced this from listening either to the radio or various different interviews and I thought it might be kind of fun to do. I kind of shift things from the financial side to somewhat personal. So if you don't mind, jean, I'd love to throw these out there and give you a second to think about it and throw it out there. So let me jump in the first one. So what's a superpower you'd love to have?
Speaker 5:I wasn't expecting this. There's so many superpowers, I guess the superpower is well, I'd say it's easy to be like Superman.
Speaker 4:OK, it's fine. So yeah, fine.
Speaker 5:To be able to move bridges, to save people, to help drive economic output by building things.
Speaker 4:Gotcha I might throw out. I'd probably pick invisibility.
Speaker 3:Oh, there you go.
Speaker 4:Something different. So a second one, a time period you'd like to go back to in time to visit.
Speaker 1:I think, this episode is brought to you by JJ&A, a private wealth management boutique firm located in Scottsdale, arizona. Are you feeling financially overwhelmed? Does the talk of money make you feel uncomfortable? Do you have concerns and questions about this economy, but you don't have a dependable source for answers? Are you trying to prepare for retirement, but not sure how much you need or what would an appropriate asset allocation look like? If you answered yes to any of these questions, then we encourage you to check out wwwjacobgoldcom. At jacobgoldcom, you can have access to videos, articles, podcast episodes and financial software that can help you on your financial journey. Once there, learn how JJ&A works with high net worth individuals and corporations on wealth management and financial wellness. Lastly, if you want to speak with someone from our team, we encourage you to call us at 480-998-4653. Now back to the show.
Speaker 5:That's a great question For me. I went to school for engineering and if I didn't go to school for engineering I would have been a history teacher and I think the history that I really would have focused on was sort of the 20th century European history, because I think so much changed Two major world wars, rebuilding of borders, the mistakes that we learned at the end of World War I relative to World War II. World War I the access nations were severely punished. They couldn't rebuild. World War II we learned from that and helped rebuild. So I think, just the different perspectives of how Europe changed so much. In so far, I think I would love to be a history teacher learning more about that.
Speaker 4:Yeah, that's great. So three would you rather hit a home run or catch a touchdown pass?
Speaker 5:Great question. So I pitched in college, not great? I was in Division III, small engineering school, so clearly not that great. So I pitched. I think hitting a home run would be great because I remember the first I played softball on our company softball team and I hit my first ever in my whole career hit a home run over a fence. It felt good, it felt really good, that's fantastic. I'm weak. I don't have much power.
Speaker 2:I'm very weak Financial power, Gene. Thank you.
Speaker 4:Four any hidden talents that maybe most people might not know about.
Speaker 5:I'm a magician.
Speaker 4:Really.
Speaker 5:Yeah, so I can show you a trick. I would love to see a trick. So watch carefully, see my finger, watch this, watch See that.
Speaker 2:You doubled your fingers. I love it.
Speaker 4:That was great.
Speaker 5:And I'm a comedian too, I guess Two for one. So if I was out this is years ago, I was out at a bar and I did that Some of these fake magic tricks just showing, so on and the person said to me, she said to me I know, those aren't real.
Speaker 2:I'm like oh, ok, very good.
Speaker 4:Entertainment. Oh, that's funny. So number five favorite music genre or the last listen music that you had on your phone, or something like that.
Speaker 5:Sure Favorite music genre is 80s, love 80s music. If you look at my last three concerts I saw, I just saw Brian Adams with my wife last week. I just we saw Duran Duran as a concert before that, and then so who do we see? Depeche Mode? So love 80s bands. So 80s music, because it just that's sort of. When I started listening to music as a kid and just you know, and my first concert was, I hate to say it, a Cymbi Lopper, OK, that's great.
Speaker 4:No, that's fantastic. Number six time travel or space travel, I can't choose.
Speaker 5:I would say time travel, because then I can just figure out which a lot of your ticket to buy get the right numbers. And then, plus, I'm a big fan of you know what the movie?
Speaker 4:acts in the future. Back to the future or something, oh yeah.
Speaker 1:The future too.
Speaker 5:My sports book and every day, every day.
Speaker 4:There you go. That's what I would have picked too. Time travel and back to the future stuck in my head.
Speaker 5:I've seen a lot of space movies. A lot of bad things happen, yeah, yeah.
Speaker 4:Good perspective, yeah Movie alien. You know all this oh yeah, or someone gets stuck in space In Justella.
Speaker 5:Yeah.
Speaker 4:I've seen that. Yeah right, Last one Favorite vacation spot.
Speaker 5:Favorite vacation. So I'm originally from Boston. I know this is lame, but I just love Boston. I mean I live here in California now. I love the food, the people, the attitude, everything in Boston, just like I love that, and so that's my favorite place. But of course, if you say true vacations, but love Hawaii, hawaii is beautiful, like Maui is very nice. Yeah. Don't go there, but I wish Great.
Speaker 4:That's great. Anyone who's been to Hawaii I'm sure that's one of their main places to say a best vacation. I know it's my family and I. We went to Kauai and loved it there. It's fantastic. So great.
Speaker 4:Well, that's all. I have A rapid fire questions. Like I said, I thought it might be something to kind of throw out there. Have some fun, enjoy, get to know you a little bit, and so thanks. Thanks again, I appreciate it. And, jacob, I didn't know if you had any last closing things that you might want to do for the podcast.
Speaker 2:Yeah, you bet, Mike, that was a great little lightning round. I like that Really great. Personalizing Gene a bit. I love that. You know we all see him always in his suit and giving us economic updates. But it's great to be able to get to know you, Gene, as a person and it just makes us respect and appreciate you that much more.
Speaker 4:Thank you.
Speaker 2:I appreciate it. So, in closing, gene, I know that a lot of our audience has been listening. They've been taking some economic pointers from you. They've learned a little bit about you personally. But let's say that there's an audience person listening that is looking to get a little bit more data. Do you feel like there's a certain book out there or certain type of program that you think is a good starting point for people if they're looking to just gain more knowledge about the economy itself?
Speaker 5:Yeah, that's a great question. I would first thing, I would reach out to your financial advisor here anyone here because lots of insight perspectives For me. What I did. Two things I did. I Google everything because I'm still learning. I mean it's lame. I Google every single everything I learned because I'm learning something new every day. I'm a bookstore. One of my favorite books is a book called Liars Poker. It's a Liars Poker written by the guy that did Michael Lewis.
Speaker 5:Yeah, michael Lewis. Thank you, Michael Lewis, he did Blind Side. It's a great book.
Speaker 5:I love this book because it explains not about the demise of the financial of Solomon Brothers a long time ago, but really talks about how something happens across the world and how it affects the financial market Something small. So that's why when you're watching TV, you're watching news and there's a heat wave or there's something happening, there's ramifications on everything in the world and from the financial market standpoint, I love that because it always makes you think about things like that. So I would look at that from a resource standpoint. Keep in mind, our team produces the chart book and the chart book is 20 pages of data where we provide you the data. You can look at that and it shows you the trends of all the data, but at the end of the day, you just want the simple what does it mean? So each of our pages has a simple summary, like a speedometer to say what's the data mean. So I would take a look at that and that was a shameless plug for what we produced.
Speaker 2:No, I love it. It's very helpful and very useful. We look at it all the time. Well, gene, thank you so much. This has been a fantastic episode and, talking with Kelly and Mike, we really would love to have you back on on a regular basis. My dream scenario would be to have you come in in June or January and kind of give us your perspective of what you think the year to come will look like, and then in June or July, of kind of giving us a halftime report. Your perspective of the world, your perspective of the financial industry and human psychology is bar none, something that I think is unique and very valuable to us and especially to our audience. So I won't ask for your commitment there, just think about that. And if we can even just get you once a year on the podcast, that would be a real gift. But we really appreciate you taking the time to spend with us and I'll see if my co-hosts have any last minute questions before we wrap this up.
Speaker 4:I don't. I think I hammered you with enough questions on that. Thanks for being such a great sport with that and hopefully you found it somewhat fun as well.
Speaker 5:I love it.
Speaker 4:Thanks, Mike.
Speaker 3:Any last words. Yeah, I always find what you have to say super interesting. I'm always talking with my dad about oh, gene, this Gene, that. So I always enjoy listening to your spills. So, thank you, thanks, kelly.
Speaker 5:And then learn about what you get. Yeah, right.
Speaker 2:Yeah, no, it's true. I think that you know, with Kelly being my son and kind of seeing what I do professionally, he's introduced to a lot of people and you're kind of one of those guys, gene, that from years ago he kind of picked up on, he follows you, admires you, looks up to you, and so that too is another gift for the podcast to have one of our heroes on here. So, thank you, keep doing what you're doing. You provide so much value to the financial advisors within Cetera as well as the general public, and we enjoy watching you on CNBC. I've seen you on Cheddar News a few times and Fox Business. And just keep doing what you're doing, because we're firm believers that people just don't have, you know, financial aware with all of what to do with their money when and it's so convoluted, to have a voice of reason, break things down to the most fundamental truths is very valuable and we have high regard for you, mr Goldman.
Speaker 5:Thank you. Thank you, I'm glad you saw me on Cheddar. My mom saw me on Cheddar and she's like Gene, you look like you're up to no Gouda. So yeah, exactly, that's good. Thank you for the kind words. Absolutely. I wish I could work with such amazing advisors like you guys. So thank you so much, thank you.
Speaker 3:Thank you.
Speaker 1:Thank you for listening to the Finance Roundtable podcast. Make sure to check out other episodes at wwwfinancetroundtablepodcastcom. We also encourage you to explore wwwjacobgoldcom to find articles, research, videos and more from Jacob Gold and Associates Incorporated. If you have a question that you would like to be answered on air, please call 480-998-4653, extension 12, and leave a message.
Speaker 2:Jacob Gold and Michael Koshell are financial advisors offering securities and advisory services through Cetera Advisor Networks LLC. We mean insurance business in California as CFGAN Insurance Agency LLC, member, finra SIPC, a broker-dealer and registered investment advisor. Cetera is under separate ownership from any other named entity. Jacob's California Insurance License 0E55425. Michael's California Insurance License 0K90130. The views depicted in this material are for information purpose only and are not necessarily those of Cetera Advisor Network. They should not be considered specific advice or recommendations for any individual. Neither Cetera Advisor Networks nor any of its representatives may give legal or tax advice. Calvin Gold is a Marketing Associate. The Gold address is 14850 North Scottsdale Road, suite 255, scottsdale, arizona, 85254.
