Closed Captioning:
this meeting is being recorded good
morning good afternoon good evening
folks michael zuber one rental at a time
back with taylor from life goal
investments how you doing buddy doing
great your shirts get better and better
every week and mine always stays the
same you just make me look bad every
week i appreciate it we got to get you
some color man we got to get you some
color i know i know i know
well hey one of the things i want to do
is once again put your feet to the fire
and talk about the future make some
crazy predictions again these are just
wild ass guesses from two crazy guys who
don’t mind
putting guesses out there so uh we have
a huge number coming out tomorrow market
moving
and that will be cpi
uh as you know
uh cpi actually has two numbers in it
it’ll be headline and core
i actually uh actually before i i’m
going to ask you what you think’s coming
and then i’ll tell you what i think is
coming so cpi tomorrow what do you think
happens
yeah it’s funny every one of these is
the most important one yeah exactly
and it really does feel like that that’s
the way the market seems to be you know
a coiled spring ready to react one way
or the other it really does feel that
way so just by way of context we came
from a peak of nine point one percent
inflation that was two months ago and
then it ticked down to eight five and
now it looks like expectations tomorrow
by the market is looking at an eight
percent headline inflation number eight
eight one i’ve seen both but yes okay
yep so eight to eight one so um i have
persistently been admittedly early on
inflation going away and a lot of that
goes back to
um my broad thoughts on technology being
a massive deflationary pressure and that
being persistent but also i’ve been
wrong and thinking it’s too early
because oil did not
abate as quickly as i thought it was
which now oil has rolled over for now
two straight months um i actually a
little bit more than that since i think
81 days in a row
81 days in a row gas prices which is
just just crazy crazy talk right um but
yeah so that’s why you’re not seeing as
many posts on on the high gas prices
anymore yeah exactly exactly yeah but
yeah no so that’s been meaningful so
that’s a big component of the headline
number the other big components of the
headline numbers are housing as well as
food prices those are kind of the big
three if you will yeah good energy you
want it’s food and gas in headline brent
is in core but all three of those
correct yeah yeah so i i’m speaking
headline number here i think the big
driver inclusive
yep the big drivers are going to be you
know housing they call it shelter um
uh now i’ve lost my train of thought so
housing as well as uh food and as well
as energy right or oil prices so i think
what you see is a massive massive
downtick in oil prices which is a big
big win from a headline perspective
correct and so i do think we actually
get a downward print from eight percent
something in the sevens is what i
anticipate from a headline number so so
again let’s say that because what i said
on the daily financial news expectations
is eight one you’re calling something in
the seventh
yeah i i think it’s high sevens i mean
that is to be clear that is a big big
move downwards oh yeah like a month yeah
and and you also have to realize that we
went up at a you know a a parabolic type
shift upwards earlier this year some of
that had to do with the fact that the
numbers that we were looking at relative
last year yeah the basis
the base effect right from a year ago
we’re already so so now we’ve already
gotten that shift upwards a year ago
inflation had already taken hold and
therefore when you’re looking at a year
prior you’re not looking at depressed
numbers like you were earlier this year
because pandemic was still really in
effect at that point so i think that has
a really meaningful effect as we go
forward on what inflationary numbers
look like
so you know what we agree this time
we haven’t agreed the last three months
full disclosure like let me give the
audience and they know all too well
michael’s been right i have been wrong
he has been well on the over over over
over over train and he’s been right and
i will ask you this to put your feet to
the fire a little bit what’s going on in
wages because i know that’s been your
biggest driver of the over well this
this is
this is the most important wrinkle and i
think i know i think wall street’s going
to miss it and again when i say wall
street retail is going to miss it yep
yep
so again i on my daily financial news
sunday morning i made my call i said
expectations were 8-1 i think we come in
at eight and we actually could see seven
nine
so i’m calling for the first time under
but here’s the bugaboo we are about to
learn for the first time since the early
eighties
why the fed has headline in core
headline as we will quickly learn can be
monkeyed with when you start releasing a
million barrels a day from our strategic
reserve gasoline falls
you sure that’s how it works supply
demand i’m guessing that’s what my
degree says yes so again you release an
extra million barrels
a day
prices go down headline goes down
yep
what i think wall street’s gonna miss
tomorrow
is core is going to stay flat or go up
last month core was five nine
expectations for core are six
i am calling for core to be six two so
let’s talk about what this means to me i
believe the worst case scenario tomorrow
his headline comes in lower than
expected
seven nine or eight but clearly peak
inflation peak inflation deflation is
coming
and core goes up because rent is
starting to ripple through and wages we
have had our first two months in a row
this will likely be our third of wade
real wage growth
and i think it gets worse from here so
again
the wall street’s gonna rip if what
happens happens what if what i think
happens happens your take is they’re
going to react on headline exactly
because retail retail that’s certainly
what retail is affected by no doubt the
warning will rip
yeah the morning will rip the adults
will come in later
i would just say that’s a good point the
institutions start to step in you see
immediate reaction then all of a sudden
they get the reigns pulled back in on
them
and the fed’s gonna bang us with 75 on
the 21st because again
the only way the only way conceivable to
get a 50 because right now it’s a 50 or
75 i don’t think anybody’s calling for
instance it’s a 90 chance that i looked
this morning that was gonna be 75 i did
too yeah
the only way you get 50 is if you get
headlined like seven seven and core goes
to five five
could it happen sure i have no idea am
it’s not what i’m calling for but that’s
i just we’re getting banged with 75 and
again i think i think core going up is
the problem the fed will just keep
pointing at that going problem problem
problem problem problem but stock market
rips like we keep saying the same thing
over and over and over don’t fight the
fed and when the fed tells you i look at
core i look at core i look at core i
look cool
core core i
they’re making no bones about what
they’re doing i i do have an interesting
question for you though please going
back to kind of the the oil prices and
the conversation about strategic
reserves et cetera last week on monday i
believe it was opec decides to cut oil
100 000 right so so oil so so by the way
oil market in general is just a big
cartel that is controlled by opec so
everyone understands that opec opec plus
blah blah blah yeah opec plus right
controls the supply and demand of oil
around the world and if prices get too
high they increase supply to try to
bring down prices and if prices fall off
which is what we’re seeing right now
they decrease the production to boost
the price shocking
but no yeah but here we go this is where
it gets a little bit weird and a little
bit tricky last week they cut production
so lower supply on a supply demand
effect drives prices up
oil prices roll over last week yeah so
uh as i remembered oil went up monday
the day it was announced and then rolled
over it’s a closed market in the united
states yeah and declared well oil
doesn’t really close but yes
in a relatively closed market right yeah
then it rolled over wednesday and
actually ended the week lower
correct so in my mind
that screams
again what so i believe 2023 i don’t
think you and i talk because you took
last week off to be with your in-laws
for labor day so that’s okay
but i think 2023
yeah it’s like yeah you got to take a
day off every once in a while i get it
gosh i only asked for one hour a week
that’s okay uh i i kid the market was
closed so you could take a day off um
i actually think 2023
taylor could be the worst economic year
of my adult life
so what does this mean why is why does
oil go down because i think we see the
third worldwide recession
uh in the last i don’t know 70 years i
don’t
asia trouble europe trouble i think
america gets pulled into a recession
because of housing depression
that’s why gas is down it’s just so i
don’t disagree with you whatsoever on
what the result or what the cause of gas
being down is gas being down is a direct
direct direct reflection as to what’s
going on in the economy globally because
that is a global global market not
everything is but gas and i’m sorry oil
is absolutely a global market and i do
agree with you and we’ve belabored this
point maybe a little bit or at least i
have what’s going on in europe right now
is is really a scary thing and and we
are to to come talking a little bit
about video number two russia
next episode but not nonetheless um
what’s going on with russia squeezing
squeezing squeezing the dependence of uh
on
of europe on their oil production is
going to have a massive effect and the
stuff that’s coming out of the
narratives that are coming out of how
they’re going to deal with this as the
cold winter months come around really is
a scary proposition for europe and their
inflation is just i mean we think we
have a bad here their inflation is
rampant it really is well again you know
we should all hope for peace and
prosperity today tomorrow no just hope
it ends and then oil gets or the you
know natural gas it all gets turned back
on
but if it doesn’t if we go through the
winter with this
um
we will see small businesses close shop
we will see
it’s
it’s frightening to think about the
ripple effects because at some point
i mean they’re going to try price
controls and as you know anything about
the 70s in the united states we tried
price controls they don’t work they feel
good for like three seconds
and then they don’t and then your
currency gets hit because you’re issuing
all this debt and it’s just
bad you know
i am very i mean europe
certainly in a recession but if this if
this goes on for through the winter and
they have a harsh winter let’s also pray
for a warm winter or a mild winter or
whatever the right for sure is for sure
it could be
it could be pretty bad
yeah and it’s interesting so like that’s
the economic standpoint from a market
standpoint we also have to realize
what’s going on in the united states
right now and and globally for that
matter but let’s focus on the united
states so globally right now there’s 39
major central banks
25 including the fed hours of those 39
central banks are raising rates so the
fed is telling us we’re going to
continue to take rates higher but i
think the thing that’s going under
appreciated is the fact that we are just
getting on the onset right now of this
quantitative tightening process yeah 95
billion september yep yes so some
numbers on that right now the fed’s
balance sheet contains about one-third
of our entire treasury and
mortgage-backed securities market whoa
that has about one-third of the
mortgage-backed securities and the
treasury market and for contacts that’s
nine trillion dollars of balance sheet
nine trillion with a t
our global i’m sorry our annual gdp
is around 21 to 23 depending on the year
trillion dollars so that’s about 40
percent of our global gdp i’m sorry i
keep saying global our annual gdp of the
united states sits on the fed’s balance
sheet and they are telling us actively
we are going to let that roll into the
market we are going to let that bleed
through and so that has a lot of forego
or a lot of knock on kind of things that
end up taking place in dominoes that
continue to fall because of that on the
other side of it quantitative easing
when the fed was in the market buying
these assets you saw nothing but asset
prices from stocks bonds come on
ripping
ripping so now when that omnipotent
buyer that sits in there and says i’ll
buy anything
takes their hands away and there’s no
floor there to exist
that backstop’s not there and they’re
raising rates at the same time and when
the fed’s not buying mortgages
what do you think happens to mortgage
rates
yeah i came out the other day and said
that uh i could see mortgage rates at
seven percent which again in a housing
market we’re going to go and do a
depression
it’s going to happen because
transactions i mean the 30 years got to
be darn close to six right right now
yeah actually it ticked to six and a
quarter i think on thursday night i was
gonna say i thought it was yeah yeah the
cycle peak was 6.28 in june we got up to
6.25 it’s coming i’m i started calling
for seven percent and taylor i did some
math just using the ratios we have today
we could see an eight
eight
yeah that’s not good
okay that’s not good geez and that
really is a scary thing and and to the
point that we’ve had conversations that
before housing accounts for about 15 of
the overall gross domestic product here
in the united states it’s not just the
housing that changes but it’s the
builder then it’s home depot then it’s
all the bleed through knock on raymore
and flanagan all the furniture
everything that bleeds into that the
labor that builds that i mean it’s all
of those things that get affected by
mortgage rates yeah it’s it’s it’s this
is again why i think 2023 uh could be
the worst economic year of my life i
think 2024 is much better i just i just
think we need time right the everybody
wants the crash tomorrow
they want it tomorrow right this is not
an nft it doesn’t happen that way the
economy uh you know frankly we’re not
even really seeing the impacts yet of
the fed rate increases right those are
six to 18 months lag so that’s correct i
uh you know again macro wise i’m very
concerned for 23 micro i’m excited i’m
ecstatic it’ll probably be the second
best year of my investing career because
i i will look for motivated sellers and
i’m willing to wait to find them here
yeah blood in the street like warren
buffett says you know who’s swimming
naked i’m gonna go i’m gonna have some
bathing suits for people and go hey i’ll
take that i’ll take that so let me ask
you something on that real quick um on
the on the selling side of existing
livers um existing
existing limits existing home owners
right so do you expect a massive tick-up
in that or a need to get people forced
out okay i didn’t think that was your
take but i just didn’t want to confuse
that last comment no i see record supply
destruction
for 40 years the housing market was
generally i move in i live there five
years i move up because the bigger house
costs more but rates generally speaking
we’re down it made the move up easier
with the cycle that we’re on now the
move up buyers dead first-time inventory
doesn’t exist home builders aren’t
building we are going to have a record
crash in housing transactions millions
and millions of transactions crashed
hence a housing depression however
life doesn’t stop death divorce job
transfers
non-perfect properties that aren’t
perfect for fha there will be lots of
people that need to sell that won’t fit
in a market where somebody has to pay
eight percent but because i’m a
well-heeled investor i could buy for
cash i can use private money i got lots
of ways to do deals
yep so i will be looking for those
opportunities specifically to wrap this
up i plan to deploy less cash and buy
more assets via creative financing
that’s what i’ll be doing in the next 18
months
love it love it gotta strike with the
irons hot the opportunity’s there and to
your point when you don’t have a
competition because it’s eight percent
mortgage rates
there aren’t many hands out there
looking to say hey i’ll give you cash
for it right now yeah or you know what
even better
here’s my cash number make it up 200 or
we could do terms and i’ll give you 250.
[Laughter]
there you go there you go there you go
taylor where can people find you
yeah find us at life goal investments on
instagram is the best spot appreciate it
michael as always and folks if you’re
not watching uh life goal investments on
ig you’re missing out he just put out a
video or a post on tax loss harvesting
you have to go check it out it could
save you a lot of money thanks for all
you do bud
appreciate you