May 14, 2023 • 41 mins
Suze starts off this episode with a brief update on what could happen with the debt ceiling and then shares everything she learned from the economic seminars she recently attended. Suze gives a summary on a possible recession, what’s up with real estate, inflation rates, the stock market and more.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Music (00:00):
Music (In).
Suze (00:28):
May 14th, 2023. Welcome everybody to the Women and Money
Podcast as well as everybody smart enough to listen, Suze O here.
Wishing every single mother a very, very happy mother's day,
especially my two nieces, Alexis Tandy
(00:50):
and Katie Stender Nely, who are two of the most
extraordinary mothers I've ever met in my life. Mothers play
a very, very big role in every one of our lives,
even if we don't know who our mothers are. They
were there at one point in time.
(01:12):
So our love and our respect
and everything we can do today to make today a very,
very special day for every mother out there.
Also, I just have to wish my good friend Karen
happy birthday today. Kay. Just know I love you very,
(01:35):
very much. OK,
Suze School. Now, there are so many things that I
did learn over the past 10 days or so that
I was listening to some of the most extraordinary speakers
of all.
But before I get into that, there seems to be
(01:58):
a big elephant in the room. Is that what you
call it, something like that? And it's about the debt ceiling.
Are we going to raise it? Are we not? What
is going to happen here? Well, I have to say,
I'm just so seriously disappointed.
I'm disappointed because I really believed that by June 1st,
(02:23):
which is really only two weeks away that we would
have settled this by now or at least come close.
But as close as I thought we might have been
a month ago or two months ago, we are so
further away. It's not even funny.
(02:44):
And that is a very serious thing.
And one of the reasons if you happen to look
at the interest rates of T bills right now, you
will have seen the four week T bill absolutely shoot
up
about 5.6, 5.8% interest. Up almost 2% from just a little
(03:10):
bit ago is because many, many
money market funds that invest in treasuries are getting rid
of their short term treasury bills that happen to mature
in the month of June because they don't want to
have anything to do with it. They're going out to
(03:31):
August September, they're going far away from June, so they're
just selling them to put that money elsewhere. There's a
lot of you who don't want your money to mature
in June.
Why? Because you're afraid that if something goes wrong in
the month of June, they're not gonna pay you. And
(03:52):
it's scary. You know, it's funny is that over this
past year or so,
I've been asking all of you at least to look
into the certificates of deposit at Alliant Credit Union.
And what's fascinating is that nobody who purchased a certificate
(04:13):
of deposit at Alliant Credit Union, by the way, you
can now get 5% for a one year, 5.15% for
in 18 months. Fabulous interest rates. If you compare them
to what's happening to treasuries right now. Not one of
you have written me and said, is my money safe?
(04:35):
Am I gonna be ok? But yet thousands of you
have been writing me saying I'm scared about treasury bills.
I don't know what's gonna happen. What do you think
I should do?
So
you might want to think about transferring if you want to,
if your money is maturing to a certificate of deposit
(04:58):
at Alliant Credit union, go to my alliant dot com
slash ultimate. And that's where you open up an account
to get the CDs because certificates of deposits
are absolutely safe and sound. Especially if you're under the
N C U A or in a bank, the FDIC
(05:18):
limits up to 250,000 or more if you know how
to get more insurance, which I've done podcasts before in
the past.
Do you remember me saying to you that the goal
of money is to be secure? If you are not
secure in treasuries for whatever reason, look into, especially the
(05:39):
Alliant Credit Union certificates of deposits, especially the one year
and the 18 months because that's where I think you
might want to go. So, what do I think is
going to happen with the debt ceiling?
Well,
(05:59):
I don't know.
I really don't know because I still find it such
a hard thing to believe that they're going to let
us go into default. But I do think that there
is something that we might see President Biden doing. So
as all of, you know,
(06:20):
the debt ceiling, we have been told that if we
don't raise it by June 1st, that it's very possible
at that point that the US will not be able
to pay principal and interest on treasury securities and therefore
they are in technical default. There will be other things
like Social Security and so forth, they won't pay, but
(06:43):
it is very possible they will not pay the interest
on
treasuries. Now, what's fascinating about that is that they probably
would have enough money to do so since we only
really owe approximately $60 billion a month of interest on
(07:05):
all the treasuries. But let's just say technically
that they won't be able to pay the interest on
treasury securities and therefore they are in technical default. Pay
attention here
because you heard President Biden mention this the other day.
(07:27):
Around the time of the Civil War,
there was the 14th amendment that was passed and that
amendment said that the validity of the US debt shall
not be questioned.
All right. So because we lent the government money, they
(07:52):
issued us treasury bill bonds or notes to pay us
a specific interest rate for that loan.
What that amendment says is that the validity of that
debt because it is the debt of the United States
of America should not be questioned.
(08:13):
Now, for those of you who may be wondering
that, what was the reason that they put the 14th
amendment in there? It happened when they were reintroducing all
of the Southern and the old former confederate senators and
congressmen back into the US. And because their economy was
(08:38):
in such shambles, they were afraid that they were going
to have to pay back the confederate war debt
even if they had to default on the Union war debts.
So they put that into the 14th amendment that they
can't do that. So now here we are in 2023.
(09:01):
So some are saying
since it says that the validity of the US debt
can't be questioned. That means that the president can ignore
the debt ceiling. Are you following me here? And he
could just start raising the debt.
Now, the problem comes with, let's say he does that
(09:27):
and he does that on June 1st and he tells
Janet Yellen you can ignore the debt ceiling because I'm
evoking the 14th amendment. So go out and issue some
more bonds.
I'm telling you everybody, this is a real possibility that
this could happen. So, ok, he does that and she
(09:51):
listens to him and she issues more bonds and they
pay their debts that they owe after June 1st. What's
gonna happen after that?
It is probable that the Supreme Court is gonna come
in just a few days later or maybe some weeks
later and say, no, you can't do that. That's unconstitutional.
(10:15):
You weren't allowed to do that. But here's the problem, everybody,
what happens to all those bonds they issued after June 1st,
if the Supreme Court says that it is possible that
they could be considered invalid, that they never should have
been issued in the first place. So the question then becomes,
(10:38):
do they give the money back and do they just
say sorry? Yeah. What are they gonna do? And what
are they gonna do if the government has spent the money?
They don't have it and they can't issue new debt.
Well, I'm just telling you, it could create such an
enormous mess.
(11:00):
I mean, I don't even know what would happen if
they did that
if we can't get the Congress to simply pass a
law that raises the debt ceiling
and the president signs it and then this is all
over with and if we can't do that and it's
(11:20):
starting to look like we're not going to.
I'm not exactly sure what's gonna happen, but you do not,
I'm just saying to you just in case the president
evokes the 14th amendment and they issue bonds during that time.
I don't care what interest rates they are at, do
(11:41):
not touch them with a 10 ft pole.
So, in the meantime, however, if you do have treasury
bills that are maturing later on or whatever or before June,
in my opinion, I think you will be absolutely OK.
(12:01):
It's just that month of June. That's kind of like, really,
I don't know, I don't like when I see something
jump up 2% approximately almost overnight
Before I even go into Suze School. I know when
I was talking to KT about it last Thursday, KT said,
(12:23):
I don't know, Suze, it might be over their head.
And then a lot of you on the Women and
Money community app got insulted by that. A lot of
you've said, I'm tired of people telling me that it
might be over my head.
Well, one of the reasons that my little precious KT
(12:43):
said that is she listened to a few of the
talks that trust me would be over your head in
most cases because it was definitely over mine.
There was some technical analysis and all kinds of courses
(13:03):
that were like, what was that? What do you do
with that information? So please don't be insulted it's just
because the classes that she chose to listen to with
me really were seriously advanced and a few of them
really were
(13:24):
a challenge even for me to get, I had to
relisten to it and relisten to it and relisten to it.
And why is that? Because at that moment in time
it was above my head and I don't mind thinking
or knowing that there are things that I don't know
and maybe
(13:46):
would not be easy for me to understand. So please
don't take offense to what KT s aid because a
lot of it really was difficult. However, every single one
of you has the capability with some education listening to
it over and over again to absolutely understand it. Do
(14:10):
you have a situation in your life where you would
be able to apply it?
That's a whole another story. But you do have it.
It's do you want to and do you need to?
So I chose to just kind of touch on the
topics that I think you would want to know about
and that's what I'm going to tell you about.
(14:34):
Now, one thing I took away from these days is
that nobody knows for sure.
There are many brilliant minds that totally disagreed with each other,
but really in consensus, the majority of people really did
think that we were currently in a recession.
(14:59):
And if we're not in a recession yet, we're going
to be one in one within this year or within
the next few months. Just that simple. And therefore it's
just something that we should think about.
My favorite man, Felix Zulauf thinks that we should be
(15:21):
in a recession by September, maybe a little bit before
that or a little bit after that. But that's when
we should be in a recession. Many people also felt
that way
because they were looking at certain indicators that were forward
(15:43):
looking indicators, not backward looking indicators. So indicators that didn't
tell them what money you did spend all of those
things in the past,
they were looking at indicators and those are called leading
economic indicators, what they think is to come.
(16:05):
And one of them, in particular, David Rosenberg, they call
him Rosie. He was just brilliant mentioned an indicator from
the University of Michigan that has had a survey that
goes back over six decades and it talks about the
(16:27):
spending intentions that all of you have. So in other words,
how much money do you think you are going to
spend in the future?
And what he noted there is that the data that
came in
was worse than it has been all the way back
(16:51):
to 1982 again when we had that serious recession.
So when that happens and buying intentions for the next
year have collapsed,
not just to normal recession levels, but to the worst
(17:11):
levels they've had, like I said, since
that year and a half recession they had in 1982.
That's what could affect autos and housing.
Let's talk about automobiles, just for a second.
Many people talked about auto inventories have totally come back
(17:36):
and there is no supply issue anymore. So you could
go into any showroom and find now the car that
you want.
However, automobiles though are going nowhere, not because anymore of
supply costs, but because of financing costs. So he said,
(18:00):
what was interesting is that six months ago, if you
had been asked, are you gonna buy a car? You
would say no, because of inflation, inflation is too high.
Now, if you're asked that question, you say no, I'm
not going to buy a car. Why? Because interest rates
(18:23):
are too high.
When you combine that with the fact that banks are
not willing to lend to consumers, like they were quite
a few months ago,
then we have problems and we have problems because banks
(18:44):
don't want to lend money to anybody right now. They
wanna hold on to their money. So when you go
to get a loan for a car rather than it
being at a 3% or a 0% or whatever interest rate,
it very well now could be at 11
15 17% even 20% depending on your FICO score. So
(19:10):
then you look at that and you go, nope, I'm
not going to be buying a car. So it is
very probable that car prices could come down more
and many people absolutely projected that sooner than later, many
car dealerships will be closing.
(19:30):
Also, they all talked about how everybody, when they're on television,
all these pundits, quote, the economy is good. We're not
in trouble because credit card defaults are almost nil.
So why are we worried about recession? The economy is strong,
(19:54):
the consumer is strong, they are paying their bills on time.
What they also talked about was that when you look
at credit cards,
you don't look at those that are in default.
What you do is you look at how many people
(20:17):
are 30 days late in their payments. You don't wait
till they're 90 day late or in delinquency. You look
at how many are 30 days late or more and
what they're finding is that more and more people are
(20:37):
starting to be 30 days late
across every type of credit.
So therefore banks and people who lend are saying, you
know what I don't like this and they are tightening
credit for that reason as well as many, many other reasons.
(20:59):
Let's go a little bit into real estate.
It's very important with real estate and many people talked
about real estate is that you cannot generalize more about
real estate. You can't just say real estate's going up
(21:19):
because you have to differentiate it now by location and
by type of real estate
because you have a migration in the United States from
people in the north moving to the south.
So real estate is relatively safe. It may be a
(21:42):
problem in some northern states because of migration from north
to south. But yet most people agreed that single family
homes or condos were no problem yet on any single level.
And in fact, Barry Habib who is a real estate
(22:03):
genius was talking about that in many, many times, real
estate has actually gone up during a recession rather than down.
He also talked about how the inventory is very, very slim.
And even though it seems like we have a lot
(22:27):
of inventory, we do not. He did talk about how
you should not be afraid because many of you are
saying Suze, do you remember what happened to real estate
in 2007 and 2008? You told all of us to
get out of real estate? What should we do right now?
So, Barry gave a fabulous statistic that I think you
(22:51):
should think about, which is in 2007,
there were four million homes in inventory today. There are
only 980,000 homes in inventory
of which 43% approximately are under contract which leaves only
(23:15):
560,000 active listings. However,
since 2007, everybody, our population has increased by 30 million
people since then that wanna buy homes. So 30 million
(23:36):
more people are fighting for three million fewer homes than
what they had back. In 2007.
Also, you just need to know that today, the average
person has approximately 58% equity in their homes. Back in 2007, 2008,
(24:04):
nobody had equity in their homes because everybody was buying
no money down interest, only
mortgages. So nobody had equity in their home. So it's
a very, very different situation. So again, most people agreed
(24:28):
that real estate is relatively safe.
Again, it could become a little bit of a problem
in some northern states. But overall single family homes and
condos are no problem at this point in time.
What Barry also said about mortgage rates is that they
(24:50):
will come down, but he doesn't see them coming down
to 3% 4% down there anymore. He thinks they will
come down and stabilize at about 5%.
Now, why does that matter? A lot of you are
finding that a lot of people who own a home
(25:14):
right now and they own a home with, let's just
say a mortgage of 2.5 or 3%
they don't want to sell their home because they don't
want to move to another home where they're going to
have a 6.5 or 7% interest rate. However, he made
(25:36):
such a brilliant point.
A lot of these people also are finding themselves in
situations where they now have car loan debt at 11%
or more. They have credit card debt, possibly at 20%
or more. They have home equity lines of credit, even
(25:58):
though their original mortgage is at 3% they may have
taken out a home equity line of credit that's now
at 9% or more.
So they may start to understand, especially at a five
or 5.5% interest rate for a mortgage. It might be
(26:19):
better for them to sell, buy another place, wrap all
of their debt into that mortgage because they have so
much equity in their home right now and maybe they're downsizing.
So wrap all of their credit debt into
a new mortgage on a new downsized home and then
(26:43):
they're not afraid to move. And the truth of the
matter is because it's possible that it may be tax
deductible in many situations that they would be far better
off doing that. And he believes that once people start
to understand that
that will be another reason why real estate will start
(27:05):
to loosen up and more people will start to buy
and sell and real estate should be ok.
Everybody absolutely had a concern about commercial real estate for many,
many reasons, but the biggest reason being the credit crunch,
(27:25):
not only are banks and lenders not wanting to lend
to anybody anymore without a good interest rate there really,
regardless of your FICO score. If you want to know
the truth,
they aren't wanting to take a risk. So there are
people who told stories about, there was a huge developer
(27:47):
in Florida. He had totally gotten pre financing for this big,
huge complex that he was building at a good interest rate,
he was going for it. And the bank called the
loan because they didn't want to loan the money, they
had the ability to do it
and he now can't find any other lender that will
(28:10):
take that. Or if somebody is out there with a
big project and they had financing and possibly they took
longer to complete the project than when that financing was due.
And now they need more money to just finish it.
The banks aren't willing to lend on it. So commercial
(28:34):
real estate
may be in trouble for a while. So for those
of you who are thinking about being a com a
commercial real estate realtor, well, key now just think about that.
Next
many, many people felt like the past, we will never
(28:56):
revisit that it's gone that we may find that the
new normal is a three or 4% inflation rate. And
there were a few people that argued how a three
or 4% inflation rate is actually good for the economy,
(29:17):
but they doubt highly that the inflation rate is ever
going to go back to the 2%. They think it
will stay at the three or 4% and what eventually
will make the feds stop raising even though they are
dead set on not doing anything but raising until inflation
(29:40):
goes down to 2% is how the slowdown of the
economy and the stock market
will affect them. And they will stop. At that point
in time, most people believe that the interest rate that
they just raised, the Feds just raised just a week
or so ago will be the last one. There are
(30:03):
a few people that believe no way he will absolutely
continue to raise in June.
Only time will tell. But they really believe if he raises,
he will. Meaning J Powell, the fed chair, he will
be making the biggest mistake out there in terms of
(30:25):
the overall markets. Almost everybody who is in agreement
that they think the stocks could very well go up
a little bit here. But then they are absolutely going
to decline and go down lower than they were in
the October lows. And then they will probably in 24
(30:48):
25 turn around and go back up higher than they
have been. So they're expecting higher highs in 2024 2025.
But they are expecting a serious problem
in 2026 2027 where it is possible that the markets
(31:13):
could go down over 50% at that point in time.
So we'll just have to watch it and see what happens.
They do think that the dollar
will decline from its September high. But after it does
that when the equity markets start to decline, then they
(31:35):
think that the dollar will go up to again about
one oh eight or 1 10.
Many of the people still suggested
that if you are going to be in the stock market,
that you really look to companies that are defensive in
nature because of where things could go. And also companies
(31:58):
that provide daily necessities to the people where you have
to eat, you have to shower daily necessities. Let's talk
a second about alternative energy
because a lot of people think that alternative energy is
absolutely going to replace oil and therefore oil is done.
(32:23):
There were two people on a panel that were maybe
two of the most brilliant speakers I've ever heard in
terms of their company and what they are doing
and they are making alternative energy one, they're not public.
So it doesn't make any sense to talk about them
yet in terms of their name. But one of them
(32:45):
is making batteries for cars that are really the size
of maybe your cell phone. So these big batteries are
being replaced by these little batteries, but they're made with
lithium and something else. I forget what it was to
tell you the truth
that those two items that they're made with are recyclable.
(33:09):
So eventually we will get to the point where we
don't have to keep looking for energy. It's just recyclable,
the materials that we use to make the batteries. However,
they said that it is an illusion that by 2050
(33:29):
or 2030 whatever the dates are that different people are
throwing out there, that we will be CO2 free. It's impossible.
And the reason is that 80% of all the energy
that we are using comes from fossil fuels.
(33:51):
So one day we will get there but not for many, many,
many years. And because of that belief and the cutback
on doing anything with fossil fuels,
and there will be a shortage in the next few
years because we have banished the production of fossil fuels.
(34:17):
So when that starts to happen, then the oil companies
will want to start to rebuild their investments.
And even though they went to alternative energy, which many
of them are doing right now, by the way, they're
going to go back to fossil fuels and then what
(34:38):
will happen when they do that once the world economy
stabilizes because again, they think it's going to be rocky here.
What we're going to find that later on in '24
to '26. So 2024 to 2026 it's not that far away. Everybody.
This is when many of them felt that oil could
(35:02):
easily jump to 150 to $200 a barrel.
And if that happens, then any company listen closely producing
oil in a safe place for the western world would
be perfect to invest in. Just be careful that it
(35:26):
is United States friendly. All right. So just think about that.
Um they do expect to see energy go down to
$50
right now a barrel and that's why you're seeing, by
the way, Devin and P X D and Chevron and
many other companies go down.
(35:46):
But remember we have said you don't buy those companies
for growth, you buy them for the dividends And even
though the dividend may be coming down a little bit, 8,9, 10%
is still not a bad dividend, even 11%. But again,
it is projected
that very, possibly in one or two years, you could
(36:09):
easily see oil at 150 to $200 a barrel. I
don't know if that will be true or not, but
that's what I have been thinking this entire time as well.
So there you go again. Gold, which I found very fascinating,
right? They think gold will go up for the next
(36:32):
two or three months from here and then it will
have a correction and go down to about 1850
which will be a fantastic opportunity to load up because
then they see gold going to a new historic high
late this year, believe it or not, or next to
(36:55):
$2500 or more. And they really like gold mining stocks
as an attractive alternative as well.
So again, you know, one of my favorite gold stocks
was Barrick symbol G O L D pays a nice
dividend and you know, I'm into dividends right now. So
something that you might consider
(37:19):
again, they did talk about bonds. And what was interesting
is that this is one thing that many people disagreed on.
However, the consensus is that next year, you will see
equities rise and bonds bouncing back a little.
(37:39):
And then from the second half of '24 onward, you're
going to see bond yields begin to rise again.
Equities will continue to rise and will go from growth
stocks to value cyclicals and things like that. And so again,
in '24, '25 we should be relatively ok with everything
(38:05):
and it's more in '26, '27 where things can get
wacky on us, although I think they've been wacky right now.
So overall, what do you do with all of this information?
Truthfully we do what we've been doing. So even though
(38:25):
I learned many, many things to apply for the future
and technically what to look at things and the overall
viewpoints of everybody to just sum it up for you.
And I know we're going long, but it's ok. You
can take it because it's not over your head. Over all.
(38:47):
You may see the markets go down this year. It
might be a good time for your dollar cost average
into it. Then you should see the markets go up
for next year into '25 as well. And they think
they're gonna go up very, very high.
Real estate is relatively just fine. Interest rates on mortgages
(39:12):
are going to go to about 5%. Gold is a
good investment. According to them again, you never invest a
whole lot in gold and gold stocks such as Barrick
would be a good investment,
but you will see gold according to them go down
to about 1850 in the next little bit here, which
(39:35):
is the time to get in and then it will
go up to about 2500 or more. So that's just
something to think about. Many people thought that we are
in recession. And if we're not already in recession, we
will be in recession by when, by September of this year,
(39:55):
only time will tell
they think that very shortly here that the feds will
start to have to lower their fed funds rate or
we're gonna go into a really deep recession. And again,
in doing so, interest rates hopefully will come down, inflation
(40:15):
will come down. However many people will continue to lose
their jobs. I think the advice that we've been doing
over this past year
is pretty much in line.
So that's a summary of everything that I learned.
I hope you found it interesting. All right. So again,
(40:39):
Happy Mother's Day, everybody. And until next Thursday when KT
joins me for Ask KT and Suze Anything.
Remember today, wherever I go I will create... Are you
going to say this every day? Yes, you are. I
will create a more joyful, peaceful and loving world. And
(41:04):
if you do that, you will be unstoppable. See you then.
Bye bye.
Music (41:17):
Music (out)
Music (In).
Suze (00:28):
May 14th, 2023. Welcome everybody to the Women and Money
Podcast as well as everybody smart enough to listen, Suze O here.
Wishing every single mother a very, very happy mother's day,
especially my two nieces, Alexis Tandy
(00:50):
and Katie Stender Nely, who are two of the most
extraordinary mothers I've ever met in my life. Mothers play
a very, very big role in every one of our lives,
even if we don't know who our mothers are. They
were there at one point in time.
(01:12):
So our love and our respect
and everything we can do today to make today a very,
very special day for every mother out there.
Also, I just have to wish my good friend Karen
happy birthday today. Kay. Just know I love you very,
(01:35):
very much. OK,
Suze School. Now, there are so many things that I
did learn over the past 10 days or so that
I was listening to some of the most extraordinary speakers
of all.
But before I get into that, there seems to be
(01:58):
a big elephant in the room. Is that what you
call it, something like that? And it's about the debt ceiling.
Are we going to raise it? Are we not? What
is going to happen here? Well, I have to say,
I'm just so seriously disappointed.
I'm disappointed because I really believed that by June 1st,
(02:23):
which is really only two weeks away that we would
have settled this by now or at least come close.
But as close as I thought we might have been
a month ago or two months ago, we are so
further away. It's not even funny.
(02:44):
And that is a very serious thing.
And one of the reasons if you happen to look
at the interest rates of T bills right now, you
will have seen the four week T bill absolutely shoot
up
about 5.6, 5.8% interest. Up almost 2% from just a little
(03:10):
bit ago is because many, many
money market funds that invest in treasuries are getting rid
of their short term treasury bills that happen to mature
in the month of June because they don't want to
have anything to do with it. They're going out to
(03:31):
August September, they're going far away from June, so they're
just selling them to put that money elsewhere. There's a
lot of you who don't want your money to mature
in June.
Why? Because you're afraid that if something goes wrong in
the month of June, they're not gonna pay you. And
(03:52):
it's scary. You know, it's funny is that over this
past year or so,
I've been asking all of you at least to look
into the certificates of deposit at Alliant Credit Union.
And what's fascinating is that nobody who purchased a certificate
(04:13):
of deposit at Alliant Credit Union, by the way, you
can now get 5% for a one year, 5.15% for
in 18 months. Fabulous interest rates. If you compare them
to what's happening to treasuries right now. Not one of
you have written me and said, is my money safe?
(04:35):
Am I gonna be ok? But yet thousands of you
have been writing me saying I'm scared about treasury bills.
I don't know what's gonna happen. What do you think
I should do?
So
you might want to think about transferring if you want to,
if your money is maturing to a certificate of deposit
(04:58):
at Alliant Credit union, go to my alliant dot com
slash ultimate. And that's where you open up an account
to get the CDs because certificates of deposits
are absolutely safe and sound. Especially if you're under the
N C U A or in a bank, the FDIC
(05:18):
limits up to 250,000 or more if you know how
to get more insurance, which I've done podcasts before in
the past.
Do you remember me saying to you that the goal
of money is to be secure? If you are not
secure in treasuries for whatever reason, look into, especially the
(05:39):
Alliant Credit Union certificates of deposits, especially the one year
and the 18 months because that's where I think you
might want to go. So, what do I think is
going to happen with the debt ceiling?
Well,
(05:59):
I don't know.
I really don't know because I still find it such
a hard thing to believe that they're going to let
us go into default. But I do think that there
is something that we might see President Biden doing. So
as all of, you know,
(06:20):
the debt ceiling, we have been told that if we
don't raise it by June 1st, that it's very possible
at that point that the US will not be able
to pay principal and interest on treasury securities and therefore
they are in technical default. There will be other things
like Social Security and so forth, they won't pay, but
(06:43):
it is very possible they will not pay the interest
on
treasuries. Now, what's fascinating about that is that they probably
would have enough money to do so since we only
really owe approximately $60 billion a month of interest on
(07:05):
all the treasuries. But let's just say technically
that they won't be able to pay the interest on
treasury securities and therefore they are in technical default. Pay
attention here
because you heard President Biden mention this the other day.
(07:27):
Around the time of the Civil War,
there was the 14th amendment that was passed and that
amendment said that the validity of the US debt shall
not be questioned.
All right. So because we lent the government money, they
(07:52):
issued us treasury bill bonds or notes to pay us
a specific interest rate for that loan.
What that amendment says is that the validity of that
debt because it is the debt of the United States
of America should not be questioned.
(08:13):
Now, for those of you who may be wondering
that, what was the reason that they put the 14th
amendment in there? It happened when they were reintroducing all
of the Southern and the old former confederate senators and
congressmen back into the US. And because their economy was
(08:38):
in such shambles, they were afraid that they were going
to have to pay back the confederate war debt
even if they had to default on the Union war debts.
So they put that into the 14th amendment that they
can't do that. So now here we are in 2023.
(09:01):
So some are saying
since it says that the validity of the US debt
can't be questioned. That means that the president can ignore
the debt ceiling. Are you following me here? And he
could just start raising the debt.
Now, the problem comes with, let's say he does that
(09:27):
and he does that on June 1st and he tells
Janet Yellen you can ignore the debt ceiling because I'm
evoking the 14th amendment. So go out and issue some
more bonds.
I'm telling you everybody, this is a real possibility that
this could happen. So, ok, he does that and she
(09:51):
listens to him and she issues more bonds and they
pay their debts that they owe after June 1st. What's
gonna happen after that?
It is probable that the Supreme Court is gonna come
in just a few days later or maybe some weeks
later and say, no, you can't do that. That's unconstitutional.
(10:15):
You weren't allowed to do that. But here's the problem, everybody,
what happens to all those bonds they issued after June 1st,
if the Supreme Court says that it is possible that
they could be considered invalid, that they never should have
been issued in the first place. So the question then becomes,
(10:38):
do they give the money back and do they just
say sorry? Yeah. What are they gonna do? And what
are they gonna do if the government has spent the money?
They don't have it and they can't issue new debt.
Well, I'm just telling you, it could create such an
enormous mess.
(11:00):
I mean, I don't even know what would happen if
they did that
if we can't get the Congress to simply pass a
law that raises the debt ceiling
and the president signs it and then this is all
over with and if we can't do that and it's
(11:20):
starting to look like we're not going to.
I'm not exactly sure what's gonna happen, but you do not,
I'm just saying to you just in case the president
evokes the 14th amendment and they issue bonds during that time.
I don't care what interest rates they are at, do
(11:41):
not touch them with a 10 ft pole.
So, in the meantime, however, if you do have treasury
bills that are maturing later on or whatever or before June,
in my opinion, I think you will be absolutely OK.
(12:01):
It's just that month of June. That's kind of like, really,
I don't know, I don't like when I see something
jump up 2% approximately almost overnight
Before I even go into Suze School. I know when
I was talking to KT about it last Thursday, KT said,
(12:23):
I don't know, Suze, it might be over their head.
And then a lot of you on the Women and
Money community app got insulted by that. A lot of
you've said, I'm tired of people telling me that it
might be over my head.
Well, one of the reasons that my little precious KT
(12:43):
said that is she listened to a few of the
talks that trust me would be over your head in
most cases because it was definitely over mine.
There was some technical analysis and all kinds of courses
(13:03):
that were like, what was that? What do you do
with that information? So please don't be insulted it's just
because the classes that she chose to listen to with
me really were seriously advanced and a few of them
really were
(13:24):
a challenge even for me to get, I had to
relisten to it and relisten to it and relisten to it.
And why is that? Because at that moment in time
it was above my head and I don't mind thinking
or knowing that there are things that I don't know
and maybe
(13:46):
would not be easy for me to understand. So please
don't take offense to what KT s aid because a
lot of it really was difficult. However, every single one
of you has the capability with some education listening to
it over and over again to absolutely understand it. Do
(14:10):
you have a situation in your life where you would
be able to apply it?
That's a whole another story. But you do have it.
It's do you want to and do you need to?
So I chose to just kind of touch on the
topics that I think you would want to know about
and that's what I'm going to tell you about.
(14:34):
Now, one thing I took away from these days is
that nobody knows for sure.
There are many brilliant minds that totally disagreed with each other,
but really in consensus, the majority of people really did
think that we were currently in a recession.
(14:59):
And if we're not in a recession yet, we're going
to be one in one within this year or within
the next few months. Just that simple. And therefore it's
just something that we should think about.
My favorite man, Felix Zulauf thinks that we should be
(15:21):
in a recession by September, maybe a little bit before
that or a little bit after that. But that's when
we should be in a recession. Many people also felt
that way
because they were looking at certain indicators that were forward
(15:43):
looking indicators, not backward looking indicators. So indicators that didn't
tell them what money you did spend all of those
things in the past,
they were looking at indicators and those are called leading
economic indicators, what they think is to come.
(16:05):
And one of them, in particular, David Rosenberg, they call
him Rosie. He was just brilliant mentioned an indicator from
the University of Michigan that has had a survey that
goes back over six decades and it talks about the
(16:27):
spending intentions that all of you have. So in other words,
how much money do you think you are going to
spend in the future?
And what he noted there is that the data that
came in
was worse than it has been all the way back
(16:51):
to 1982 again when we had that serious recession.
So when that happens and buying intentions for the next
year have collapsed,
not just to normal recession levels, but to the worst
(17:11):
levels they've had, like I said, since
that year and a half recession they had in 1982.
That's what could affect autos and housing.
Let's talk about automobiles, just for a second.
Many people talked about auto inventories have totally come back
(17:36):
and there is no supply issue anymore. So you could
go into any showroom and find now the car that
you want.
However, automobiles though are going nowhere, not because anymore of
supply costs, but because of financing costs. So he said,
(18:00):
what was interesting is that six months ago, if you
had been asked, are you gonna buy a car? You
would say no, because of inflation, inflation is too high.
Now, if you're asked that question, you say no, I'm
not going to buy a car. Why? Because interest rates
(18:23):
are too high.
When you combine that with the fact that banks are
not willing to lend to consumers, like they were quite
a few months ago,
then we have problems and we have problems because banks
(18:44):
don't want to lend money to anybody right now. They
wanna hold on to their money. So when you go
to get a loan for a car rather than it
being at a 3% or a 0% or whatever interest rate,
it very well now could be at 11
15 17% even 20% depending on your FICO score. So
(19:10):
then you look at that and you go, nope, I'm
not going to be buying a car. So it is
very probable that car prices could come down more
and many people absolutely projected that sooner than later, many
car dealerships will be closing.
(19:30):
Also, they all talked about how everybody, when they're on television,
all these pundits, quote, the economy is good. We're not
in trouble because credit card defaults are almost nil.
So why are we worried about recession? The economy is strong,
(19:54):
the consumer is strong, they are paying their bills on time.
What they also talked about was that when you look
at credit cards,
you don't look at those that are in default.
What you do is you look at how many people
(20:17):
are 30 days late in their payments. You don't wait
till they're 90 day late or in delinquency. You look
at how many are 30 days late or more and
what they're finding is that more and more people are
(20:37):
starting to be 30 days late
across every type of credit.
So therefore banks and people who lend are saying, you
know what I don't like this and they are tightening
credit for that reason as well as many, many other reasons.
(20:59):
Let's go a little bit into real estate.
It's very important with real estate and many people talked
about real estate is that you cannot generalize more about
real estate. You can't just say real estate's going up
(21:19):
because you have to differentiate it now by location and
by type of real estate
because you have a migration in the United States from
people in the north moving to the south.
So real estate is relatively safe. It may be a
(21:42):
problem in some northern states because of migration from north
to south. But yet most people agreed that single family
homes or condos were no problem yet on any single level.
And in fact, Barry Habib who is a real estate
(22:03):
genius was talking about that in many, many times, real
estate has actually gone up during a recession rather than down.
He also talked about how the inventory is very, very slim.
And even though it seems like we have a lot
(22:27):
of inventory, we do not. He did talk about how
you should not be afraid because many of you are
saying Suze, do you remember what happened to real estate
in 2007 and 2008? You told all of us to
get out of real estate? What should we do right now?
So, Barry gave a fabulous statistic that I think you
(22:51):
should think about, which is in 2007,
there were four million homes in inventory today. There are
only 980,000 homes in inventory
of which 43% approximately are under contract which leaves only
(23:15):
560,000 active listings. However,
since 2007, everybody, our population has increased by 30 million
people since then that wanna buy homes. So 30 million
(23:36):
more people are fighting for three million fewer homes than
what they had back. In 2007.
Also, you just need to know that today, the average
person has approximately 58% equity in their homes. Back in 2007, 2008,
(24:04):
nobody had equity in their homes because everybody was buying
no money down interest, only
mortgages. So nobody had equity in their home. So it's
a very, very different situation. So again, most people agreed
(24:28):
that real estate is relatively safe.
Again, it could become a little bit of a problem
in some northern states. But overall single family homes and
condos are no problem at this point in time.
What Barry also said about mortgage rates is that they
(24:50):
will come down, but he doesn't see them coming down
to 3% 4% down there anymore. He thinks they will
come down and stabilize at about 5%.
Now, why does that matter? A lot of you are
finding that a lot of people who own a home
(25:14):
right now and they own a home with, let's just
say a mortgage of 2.5 or 3%
they don't want to sell their home because they don't
want to move to another home where they're going to
have a 6.5 or 7% interest rate. However, he made
(25:36):
such a brilliant point.
A lot of these people also are finding themselves in
situations where they now have car loan debt at 11%
or more. They have credit card debt, possibly at 20%
or more. They have home equity lines of credit, even
(25:58):
though their original mortgage is at 3% they may have
taken out a home equity line of credit that's now
at 9% or more.
So they may start to understand, especially at a five
or 5.5% interest rate for a mortgage. It might be
(26:19):
better for them to sell, buy another place, wrap all
of their debt into that mortgage because they have so
much equity in their home right now and maybe they're downsizing.
So wrap all of their credit debt into
a new mortgage on a new downsized home and then
(26:43):
they're not afraid to move. And the truth of the
matter is because it's possible that it may be tax
deductible in many situations that they would be far better
off doing that. And he believes that once people start
to understand that
that will be another reason why real estate will start
(27:05):
to loosen up and more people will start to buy
and sell and real estate should be ok.
Everybody absolutely had a concern about commercial real estate for many,
many reasons, but the biggest reason being the credit crunch,
(27:25):
not only are banks and lenders not wanting to lend
to anybody anymore without a good interest rate there really,
regardless of your FICO score. If you want to know
the truth,
they aren't wanting to take a risk. So there are
people who told stories about, there was a huge developer
(27:47):
in Florida. He had totally gotten pre financing for this big,
huge complex that he was building at a good interest rate,
he was going for it. And the bank called the
loan because they didn't want to loan the money, they
had the ability to do it
and he now can't find any other lender that will
(28:10):
take that. Or if somebody is out there with a
big project and they had financing and possibly they took
longer to complete the project than when that financing was due.
And now they need more money to just finish it.
The banks aren't willing to lend on it. So commercial
(28:34):
real estate
may be in trouble for a while. So for those
of you who are thinking about being a com a
commercial real estate realtor, well, key now just think about that.
Next
many, many people felt like the past, we will never
(28:56):
revisit that it's gone that we may find that the
new normal is a three or 4% inflation rate. And
there were a few people that argued how a three
or 4% inflation rate is actually good for the economy,
(29:17):
but they doubt highly that the inflation rate is ever
going to go back to the 2%. They think it
will stay at the three or 4% and what eventually
will make the feds stop raising even though they are
dead set on not doing anything but raising until inflation
(29:40):
goes down to 2% is how the slowdown of the
economy and the stock market
will affect them. And they will stop. At that point
in time, most people believe that the interest rate that
they just raised, the Feds just raised just a week
or so ago will be the last one. There are
(30:03):
a few people that believe no way he will absolutely
continue to raise in June.
Only time will tell. But they really believe if he raises,
he will. Meaning J Powell, the fed chair, he will
be making the biggest mistake out there in terms of
(30:25):
the overall markets. Almost everybody who is in agreement
that they think the stocks could very well go up
a little bit here. But then they are absolutely going
to decline and go down lower than they were in
the October lows. And then they will probably in 24
(30:48):
25 turn around and go back up higher than they
have been. So they're expecting higher highs in 2024 2025.
But they are expecting a serious problem
in 2026 2027 where it is possible that the markets
(31:13):
could go down over 50% at that point in time.
So we'll just have to watch it and see what happens.
They do think that the dollar
will decline from its September high. But after it does
that when the equity markets start to decline, then they
(31:35):
think that the dollar will go up to again about
one oh eight or 1 10.
Many of the people still suggested
that if you are going to be in the stock market,
that you really look to companies that are defensive in
nature because of where things could go. And also companies
(31:58):
that provide daily necessities to the people where you have
to eat, you have to shower daily necessities. Let's talk
a second about alternative energy
because a lot of people think that alternative energy is
absolutely going to replace oil and therefore oil is done.
(32:23):
There were two people on a panel that were maybe
two of the most brilliant speakers I've ever heard in
terms of their company and what they are doing
and they are making alternative energy one, they're not public.
So it doesn't make any sense to talk about them
yet in terms of their name. But one of them
(32:45):
is making batteries for cars that are really the size
of maybe your cell phone. So these big batteries are
being replaced by these little batteries, but they're made with
lithium and something else. I forget what it was to
tell you the truth
that those two items that they're made with are recyclable.
(33:09):
So eventually we will get to the point where we
don't have to keep looking for energy. It's just recyclable,
the materials that we use to make the batteries. However,
they said that it is an illusion that by 2050
(33:29):
or 2030 whatever the dates are that different people are
throwing out there, that we will be CO2 free. It's impossible.
And the reason is that 80% of all the energy
that we are using comes from fossil fuels.
(33:51):
So one day we will get there but not for many, many,
many years. And because of that belief and the cutback
on doing anything with fossil fuels,
and there will be a shortage in the next few
years because we have banished the production of fossil fuels.
(34:17):
So when that starts to happen, then the oil companies
will want to start to rebuild their investments.
And even though they went to alternative energy, which many
of them are doing right now, by the way, they're
going to go back to fossil fuels and then what
(34:38):
will happen when they do that once the world economy
stabilizes because again, they think it's going to be rocky here.
What we're going to find that later on in '24
to '26. So 2024 to 2026 it's not that far away. Everybody.
This is when many of them felt that oil could
(35:02):
easily jump to 150 to $200 a barrel.
And if that happens, then any company listen closely producing
oil in a safe place for the western world would
be perfect to invest in. Just be careful that it
(35:26):
is United States friendly. All right. So just think about that.
Um they do expect to see energy go down to
$50
right now a barrel and that's why you're seeing, by
the way, Devin and P X D and Chevron and
many other companies go down.
(35:46):
But remember we have said you don't buy those companies
for growth, you buy them for the dividends And even
though the dividend may be coming down a little bit, 8,9, 10%
is still not a bad dividend, even 11%. But again,
it is projected
that very, possibly in one or two years, you could
(36:09):
easily see oil at 150 to $200 a barrel. I
don't know if that will be true or not, but
that's what I have been thinking this entire time as well.
So there you go again. Gold, which I found very fascinating,
right? They think gold will go up for the next
(36:32):
two or three months from here and then it will
have a correction and go down to about 1850
which will be a fantastic opportunity to load up because
then they see gold going to a new historic high
late this year, believe it or not, or next to
(36:55):
$2500 or more. And they really like gold mining stocks
as an attractive alternative as well.
So again, you know, one of my favorite gold stocks
was Barrick symbol G O L D pays a nice
dividend and you know, I'm into dividends right now. So
something that you might consider
(37:19):
again, they did talk about bonds. And what was interesting
is that this is one thing that many people disagreed on.
However, the consensus is that next year, you will see
equities rise and bonds bouncing back a little.
(37:39):
And then from the second half of '24 onward, you're
going to see bond yields begin to rise again.
Equities will continue to rise and will go from growth
stocks to value cyclicals and things like that. And so again,
in '24, '25 we should be relatively ok with everything
(38:05):
and it's more in '26, '27 where things can get
wacky on us, although I think they've been wacky right now.
So overall, what do you do with all of this information?
Truthfully we do what we've been doing. So even though
(38:25):
I learned many, many things to apply for the future
and technically what to look at things and the overall
viewpoints of everybody to just sum it up for you.
And I know we're going long, but it's ok. You
can take it because it's not over your head. Over all.
(38:47):
You may see the markets go down this year. It
might be a good time for your dollar cost average
into it. Then you should see the markets go up
for next year into '25 as well. And they think
they're gonna go up very, very high.
Real estate is relatively just fine. Interest rates on mortgages
(39:12):
are going to go to about 5%. Gold is a
good investment. According to them again, you never invest a
whole lot in gold and gold stocks such as Barrick
would be a good investment,
but you will see gold according to them go down
to about 1850 in the next little bit here, which
(39:35):
is the time to get in and then it will
go up to about 2500 or more. So that's just
something to think about. Many people thought that we are
in recession. And if we're not already in recession, we
will be in recession by when, by September of this year,
(39:55):
only time will tell
they think that very shortly here that the feds will
start to have to lower their fed funds rate or
we're gonna go into a really deep recession. And again,
in doing so, interest rates hopefully will come down, inflation
(40:15):
will come down. However many people will continue to lose
their jobs. I think the advice that we've been doing
over this past year
is pretty much in line.
So that's a summary of everything that I learned.
I hope you found it interesting. All right. So again,
(40:39):
Happy Mother's Day, everybody. And until next Thursday when KT
joins me for Ask KT and Suze Anything.
Remember today, wherever I go I will create... Are you
going to say this every day? Yes, you are. I
will create a more joyful, peaceful and loving world. And
(41:04):
if you do that, you will be unstoppable. See you then.
Bye bye.
Music (41:17):
Music (out)
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