Transcript

Hello. This is our weekly market alert video for the week ended April 9, 2021, so I’m glad you’re here. Thank you for watching. I have a lot to talk about, but before we jump into anything. I have a very, very nice announcement to make, and that is that we have our first centenarian client, so we’ve had multiple clients make into their late 90s, one, in fact, made it to 98 years old. I was sure she would make 100, but now we have our first 100 year old client, so Francis, happy birthday from all of us in the RPOA Nation. We wish you all the best, and we wish you many, many more years to come, and I bet you have some fantastic stories to tell about what you’ve seen during your lifetime, so congratulations. Wonderful. Great. I hope that I can one day celebrate my 100th birthday as well.

In fact, I look forward to it, so wonderful news, so let’s talk about what’s going on. One of the most important players in the markets in the global economy is the Federal Reserve of the United States, and one of the things that they have done has changed – they changed dramatically how they meet and talk about and determine policy. They used to be for many, many years outlook oriented, meaning that they would forecast. They would look at all their models, and they would say, “This is what we think is going to happen with inflation, and this is what’s going to happen with employment, and therefore, we’re going to now adopt a policy to either mitigate it or encourage it or whatever it may be.” Well, they’ve abandoned that. Now, they’re saying, “We are no longer forecasting. We’re no longer outlook. We’re no longer any of that.

What we are now is outcome oriented, meaning we’re going to let the data guide us. We’re going to want to see actual inflation before we act on anything, and we want to see actual employment before we act on anything,” so they’re not looking at trends. They want to see the real deal. This is important because our economy is a giant tanker. You don’t turn it in a second. You have to start turning it way in advance of where you want to actually turn because it turns slowly, and so by definition, therefore, if they are going to wait until they see actual 2 percent inflation, which is their target, before they start raising interest rates, then what that means is that we’re going to overshoot it, because if we’re sitting at 2 percent, and now they start taking action to do something about it, well, guess what? It’s going to keep going, and they said, “That’s true, and we accept that. We are going to overshoot, and we accept that.” What we want to be sure, though, is that this inflation rate, the 2 percent or whatever, is sustained and that it’s not transitory.

The most important word there is “transitory”. You’re going to hear that word a lot. It’s going to probably be the most used word over the next few couple of years anyway is is this transitory or not, and the reason why this is all so important is because, if they believe that it is sustained, that inflation has reached a point and sustained – so what does “sustained” mean? Nobody knows. They won’t tell us. Our view is, if we have inflation for 6 months, let’s say, or employment that has reached a level that we want for 6 months, then that might be where it is sustained and not transitory, and so – ha, ha, ha, ha – but here’s the point. The point is, therefore, that, if they want to see actual inflation – because right now we don’t have 2 percent inflation. Everybody thinks we’re going to have it, but we don’t have it, and what they said is until we actually have it, and we can prove to ourselves that it is sustained and not transitory, we’re not raising interest rates, so it means that, when we get to 2 percent inflation, they may not raise interest rates even then for maybe another 6 months, which would put us into next year, which is what they’ve been saying all along. We’re not going to raise interest rates this year, so if you want more evidence, it’s that.

The other thing they’re looking, their dual mandate, of course, is unemployment, and there also they’ve said it needs to be sustained. Now, later on this year it is a safe bet that inflation is going to get above 2 percent, and the reason why is because we’re comparing it to last year when we were in the pandemic, and everything was shut down, and the economy was in a really bad place, so therefore, they’re saying we are going to see high inflation, but it’s going to be – what’s the word? Transitory. We don’t believe it’s going to be real. It’s going to settle down again, and therefore, even though we hit it, we’re not going to do anything about it until it is sustained and not transitory, so what does that all mean?

What it means to us is that we believe that we’re going to see new, all time highs in the stock market. Our fearless forecast of Dow 35,000 may even turn out to be conservative this year, and the reason is is because the Fed is going to be on our side. They’re going to keep interest rates low, and if they do, then there’s going to be little reason, with all of this money that we’re dumping into the economy with all the stimulus and everything else, plus interest rates not going anywhere, then it’s very fertile ground in our view for a rising market, and believe that’s going to be the case, so therefore, I’ll do what I did when I was on Yahoo Finance. I’ll say that the future is so bright, I’ve got to wear shades, and I did this on the TV show that I was on, and I suspect they’re never going to have me back. A guy who wears sunglasses on a TV show that’s supposed to be about finance, don’t ever ask that guy back.

Ha, ha, ha, ha, ha, ha, ha, ha, ha…but anyway, now, of course, we could be wrong, and the whole thing could fall out of bed and have a big bad. We could have a huge bear market and a spike in interest rates and all kinds of terrible things could happen, which is why we have our invest-and-protect strategy in place, ready to be used at any time should it be needed, so don’t worry about this. Let us do the worrying for you. You enjoy your second childhood without parental supervision and have peace of mind, and our goal is to have your money last as long as you do, and we’re going to be on it every day for you, okay, so thanks for watching this video, and Francis, once again, happy 100th birthday, and many more to you, and we’ll talk 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.