Click to hear the Money Matters with Ken Moraif podcast >

Transcript

This is our weekly Market Alert video for the market week ending October 8, 2021. Before we get going, I just want to make a Public Service Announcement. As you probably know, since I’ve made no secret of it, my birthday is coming up on October 22nd. This Public Service Announcement is to make sure you guys get your shopping in done now, okay? Don’t wait, because if you wait too long, you’re going to get stuck in traffic at the malls. Or they’re probably going to be sold out of what you wanted to get me, and you’re just going to have all kinds of stress. My recommendation is just getting it done now. Go get your shopping done or go online to make sure you get what you want to get for me. And if you want a hint, something little and red would work perfectly for me. And that would be a Ferrari—one that fits in my garage would be perfect. Just a little tip.

Anyway, the job numbers came in today, and as you guys know, we don’t look at the unemployment rate. It did go down. We don’t believe that’s really a true number because it considers only the number of people who are looking for a job because they don’t have one. That’s what the unemployment rate is. If I am looking for a job, and then I decide, “You know what, I just give up! I’m not going to get a job.” Or, “I’ve decided I don’t care anymore. I’m just not going to work.” At that time, you’re no longer considered unemployed because you aren’t actually seeking a job—and that skews things.

Right now, the number we prefer to look at is the labor participation rate. The labor participation rate is the percentage of people in our country of working age who are actually working. And that number went up in the numbers that were just reported. It went up a little—from 61.6% to 61.7%. It went up a 10th of a percent of the percentage of people who are of working age but not working.

Now, if you turn that around, it means about 38%, of the people of working age in this country are not working. And that is a drag on the economy because those people are a significant reason why restaurants can’t stay open every day of the week anymore. They’re why all those containers aren’t getting shipped out. The supply is there. It’s just difficult to get that supply chain fixed so the supply can get to the consumer who is demanding it. That a problem, and a lot of that is the result of people just not working to make that happen

That supply chain issue is causing inflation because people are wanting to buy things, but they can’t because all the product or materials to make the product are sitting in a container at a shipyard somewhere with no employees to keep it moving through the supply chain. That disruption in the supply chain is causing prices to go up because the consumer demand is greater the available supply. That causes inflation.

Some people have asked me, “Well, you know, what does inflation really look like—in terms of how bad it could get?”

I want to share with you something with you. I’ve been fortunate. I have been able to travel around the world. I’ll show you this. This is a Zimbabwe Reserve Bank Note. It says $50 trillion. This is inflation, folks. This is what happens when a country borrows itself into massive inflation. That’s what Zimbabwe did. Now this $50 trillion note buys you a cup of coffee. I hope that doesn’t happen here in our country. I hope we never have inflation like that.

There are currently big concerns over our nation’s debt ceiling. This is causing great consternation. We’ve seen this movie before. This is the fourth time I’ve seen this movie now. The cast of characters, the actors that are playing the parts are different, but the plot and the story line is the same. There’s a lot of political posturing about shutting down of the government. There are the extensions, the new deadlines. Then there’s this, there’s that—it’s the same sort of thing. We hope this will have the same ending as the other three times I’ve experienced it, which is that they come to a deal so the government doesn’t actually shut down because we can’t pay for stuff.

If a shutdown were to happen, then Federal Reserve Chairwoman Janet Yellen would have a massive catastrophe on her hands. That could cause incredibly bad economic times for us. We would lose our place in the world. Because of that, we don’t believe it’s going to happen. So, there will likely be more posturing and a lot of more hand wringing. The deadline has been extended to December 3rd, so we have a little respite until they pick it up again.

Now, what does all that mean for us? Well, as we’ve said, coming out of the pandemic continues to be a messy business. Getting people back to work who don’t want to or are getting government subsidies that are more advantageous to them than going back to work—or whatever the reasons are—that, we think, will slowly get better. The supply chain issue will figure itself out, and product will get to market. Companies are finding different ways of doing that. We see these are things that can mend themselves. We don’t believe we’re going to cause the next big bad bear market or the big bad recession.

So, we continue to be optimistic, although the rise that we see will not be as fast as it was in the first part of this year. Overall, the forecast is good. However, we always have our Invest and Protect Strategy™ ready to be implemented should we need to. We hope that gives you peace of mind because we don’t want you to worry about this stuff. We want to worry about it for you, so that you don’t have to. We hope you, your family, and your friends are doing well. And by the way, if you’d like to share this video with your friends or family or business associates or anybody else, feel free to do so. In fact, I encourage you to do so. The more people we get our message out to, the better. Thank you for watching this video. We will talk again soon.

MMWKM Advisors, LLC (d/b/a Retirement Planners of America ) (“Retirement Planners of America”) is an SEC registered investment adviser with a primary business location in Plano, Texas. Past performance may not be indicative of future results. All investment strategies have the potential for profit or loss. References to the “invest and protect strategy” (the “Strategy”) and recommendations made under the Strategy from 2007 through 2009 refer to strategies collectively employed and recommendations collectively made by Retirement Planners of America’s principals while employed at Eagle Strategies, LLC., and also at Cambridge Investment Research Advisors, Inc. Four of the five principals remain as principals today, including the Retirement Planners of America’s founder, Ken Moraif, and Chief Investment Officer, Eli Dragon. Retirement Planners of America has been employing the Strategy since its inception in 2011. Therefore, any references to Retirement Planners of America’s performance or its investment advisory recommendations predating 2011 generally refer to recommendations made by Retirement Planners of America’s principals at the respective other firms described above. Like all investment strategies, the Strategy is not guaranteed. It is possible that it can incorrectly predict a bear market (generally accepted as a 20% drop in a market index), which has, in-fact, happened before at Retirement Planners of America and affected its clients accordingly. When the sell / “protect” portion of the Strategy is implemented, affected investors will incur transaction costs and taxable accounts will incur tax consequences. However, when implementing that portion of the Strategy, Retirement Planners of America generally believes that the benefit of avoiding bear markets outweighs the burden of these transaction costs and tax consequences.