Video Closed Captioning:

good morning good afternoon good evening

folks michael zuber one rental at a time

back with his monday guest and expert mr

greg dickerson how you doing sir doing

fantastic michael how are you today uh

i’m doing okay personally but i’m a

little bit concerned about the u.s

economy i don’t know if you saw it but

there was a horrible ugly atrocious

print on friday for consumer sentiment

61.7 lowest since august of 2011 of

memory service did you see that

yeah yeah it’s it’s real it’s front page

and it’s inflation it’s all about

inflation and inflation is only the

first step

in what’s to come a lot of areas when

you look at like real estate taxes

things like that sales tax occupancy tax

to cover the deficits that cities and

states have you know due to the pandemic

you know and values of real estate

rising they’re going to get hit with

that which is going to be a whole

another inflationary tax that people

aren’t expecting and we’re seeing in our

area it’s all over the news how real

estate taxes are going up and uh you

know everybody loves the value of their

property going up until the tax bill

hits yeah exactly well i i’ve uh i’ve

been following consumer for 30 years

that’s you know every economist or

everybody study you’ve got to find your

thing and for me it’s always been the

consumer so i dug into this consumer

sentiment number over the weekend

and it was horrible and atrocious i want

to tell you right now it’s even worse

than the headline

this is why

uh so i want to make sure i have the

numbers here where am i here we go uh

the households that make over 100k right

so more than the median right the median

household is about 70k this these days

so but the indian household over 100k

was the largest drop

the drop was 26.6 points

uh it was the largest drop ever the only

drop that was close to this was 21.7

points and that was august of 2011. you

remember august 2 or at least 2011 that

was a horrible time in our economy

and we just had a drop that was bigger

than that and this concerns me because

if you have i’ll call them the rich

retreating and being that negative

they are going to stop shopping stop

spending and we are going to have a

recession because we already have a

producer problem suppliers

were i don’t know five percent of q4 gdp

i talked about a small business this

morning who usually carries 94 000 in

inventory now they’re carrying 327 grand

because the supply chain’s all whack

they’re not buying anything in q1 so if

we have small businesses not buying and

now we have the rich not spending i have

no idea why we don’t have a recession

starting in q1

well and you know the fed has to create

one to slow to slow inflation down so

you need to reflect you need a recession

you need

the economy to slow down a little bit so

that inflation can come back down and we

can reset and start this start this all

over again i mean we’ve been on qe since

2009 interest rates were set to zero

they didn’t raise rates until 2015

they raised them for a couple of years

and then backtracked back to zero so you

know at some point all this has to

unwind and what’s happening with you

know consumer sentiment you know that’s

how people feel about the economy feel

about their spending power and when

you’re you know when you’re at the

median income levels of the hundred

thousand you know in those areas and

then the lower income levels you know

inflation is huge i mean it’s huge it

affects their ability to survive at some

levels and you know all that

discretionary income and spending’s gone

it’s been wiped out by inflation most

people at the end of the day if they

have 10 percent leftover after all

expenses to spend on discretionary

expenses like movies and entertainment

going out to eat and things like that

that’s gone now with inflation where

it’s at uh people at the end of the day

that are paycheck to paycheck

they’re probably negative in building

you know and you know living on credit

right now to get through and i think you

know the reports will show that credit

household credit is up savings is down

so it’s it’s a serious problem

yeah and again when i look at this is

and again sentiment and actual spending

are very different that’s why

wednesday’s retail sales numbers are so

important expectations are for two

percent i’m right yeah two percent yeah

but that’s a little skewed too because

prices are so high it can affect that

you know because they’re looking at

sales they’re not looking at real you


numbers is there real growth adjusted

for inflation yeah and that’s exactly

where i’m going folks on my channel i’ve

been talking to you for a month or six

weeks about real versus nominal right

the numbers that are going to come out

of wednesday will be nominal growth and

if we have two percent growth in retail

sales but seven percent inflation

it’s a negative five percent

this this this economy is not as healthy

as it looks in my opinion

yeah yeah it’s it’s trickling along

right now and i think um

you know i think the fed’s finally

waking up and recognizing we got to do


but you know they’re they’re in that

trap right now where i think they’re

stuck and i think unfortunately you know

there needs to be an unwinding and a

reset in order for

growth to happen and continue again so

it’s it’s pretty interesting times

yeah i i i gotta tell you i mean the fed

needs to do three things first they need

to stop digging they’re still but i

can’t believe they’re still buying

mortgage-backed securities in treasuries

i can’t believe they’re still doing that

thankfully it’ll be over next month i

think march 10th but damn stop digging

the first rule of hole digging is you

stop digging then they know they’re

supposed to but

you know the interesting thing is is

that they can’t if they quit buying

treasuries well then they’re no longer

the whale in the market so arguably you

know yields should get bid up exactly


you know that affects the debt that the

government has in order you know in

issuing new

um you know new t bills so yeah you know

again they’re kind of painted into a box

here and i think

very interesting to see if they can

you know sustain well if they can work

their way out of this corner i mean it’s

it’s a very very tricky

delicate environment that they’re in and

you know it’s going to be interesting to

see how the child shakes out well i mean

they’ve got to stop digging you’re right

they’re going to stop being well not

only they’re going to stop being the

whale number three they got to start


just imagine them selling their or

reducing their 9 trillion that’s the one

that freaks me out right so how do you

do that yeah how do you i mean the only

answer is you got to sell them for less

and that means higher rates i mean

that’s the only answer i mean it’s right

and then what what’s the direct you know

uh reflection of that the direct result

of that mortgage rates you know they’re

all based off treasuries exactly it’s uh

and then you have the risk premium right

because this is what people need to

realize this 30-year mortgage rate could

go up from here right because again if

you have you a you have the whale stop

buying that means rates could tick up a

little bit uh you have the whale

or then you have the fed actually raise

rate so the base rate which is zero goes

to a half bullard’s talking about one

percent that’ll impact it then you’ve

got the big mother

of all things that could screw things up

they’re gonna sell

and then you have a recession where

banks get nervous people don’t realize

that all four of these things could go

the wrong way and we could be over 5 30

year inside six months i’m not calling

for that but if all of these things

happen it it could happen

yeah and the fed’s choices right now are

double-digit inflation or wrecked

financial markets that’s their choices i

agree i i agree one thousand percent and

last time i checked the fed has two

mandates stable prices

and you know full employment

nowhere in there does it say it’s got to

keep wall street rich but yeah it’s um

yeah ten percent i can’t believe it ten

percent inflation crazy

yeah so uh what do you think what do you


again i’m so nervous i saw that consumer

sentiment that the 100k families are are

scared and why i was talking about

retail sales because we’re going to see

if they back off because there’s

sentiments one of those leading


that sometimes

doesn’t prove out right because i feel

this way but i still charge my credit

card we’re going to find out i think on

wednesday if if the rich are really

backing off well the interesting thing


we’ve been on this path since 2009. yeah

i keep saying that but we’ve been on qe

and zero interest rate policy basically

since 2009 the only time you know

interest rates increased was 2015 to

2018 he backed off and completely

reversed in 2018 i think that was when

rates hit two and a quarter two and a

half something like that the federal

funds rate yep and

we didn’t see any kind of serious

inflation you know if you look at the

history of inflation and employment 72

yeah we never we never saw any serious

consequences and even before you know

the pandemic we still were not

uh having any negative effects and

remember our conversations were based

around man at some point you’ve got to

see some inflation other than assets

that’s the only

inflation that we saw was in asset

prices yeah in asset valuations


you know once you come through the

pandemic supply chain is open back up

you get

you know you get the world functioning

again and caught back up which is going

to take a while this is going to happen


some of this might be temporary some of

the stuff that we’re seeing you know

will be temporary eventually the

automobile industry will catch up and

inventories will build again and prices

will come down unless

they realize wait a minute we’re really

profitable yes supply limited exact it’s

a choice right exactly you know so they

could you know that’s kind of what comes

out of these things a lot of times

business and companies realize wait a

minute you know if we limit supply we

could keep our prices up and make a lot

more money so

you know it’ll be interesting to see how

it shakes out and what the real result

is but you know it’s uh it’s fascinating

times it’s just unbelievable

unprecedented times that we’re in

yeah 2022 is gonna go down as a year

like no other it’s it’s

and it’s right in front of us right it’s

right in front of us it’s gonna be fun

to watch i look forward to talking to

you about it every week on mondays where

can people find you greg yeah

greggdickerson.com all my info is there

youtube channel podcast go check it out

thanks buddy

Leave a comment

Your email address will not be published.