Video Closed Captioning:
good morning good afternoon
good evening folks michael zuber one
rental at a time back with taylor from
life goals investments and if you
watched episode one we closed with a
cliffhanger
uh why don’t you go ahead taylor and
tease him with how we’re gonna start
episode two
this is my question to you so i’m going
to throw it back at you i’ll take a
swing if you want but i’ll let you
answer first so i said what happens we
just came off of q1
showing a negative gdp print which is
the economic report card if you get two
negative gdp prints in a row that’s a
recession
the fed is obviously raising rates right
now to curb these ridiculously obnoxious
inflation that we’re in yeah so
inflation’s still here what happens what
does the fed do if next quarter the gdp
print shows negative
uh so a couple of things so i’ve dug
into the number because it was so
shocking it was very much an accounting
101 issue i see
less than a five percent chance we get a
repeat of a shocking negative number so
a recession by the classic metric will
be
uh not occurred but i think the question
is worth talking about because it was
such a shock
it is uh well first off the fed’s not
going to slow down especially if the
internals say the consumer is still
spending we had record imports in q1
that stuff goes somewhere and it means
the consumer is spending i as you know
believe the consumer is not nearly as
weak and i actually think the consumer
is getting weaker week by week
consumers are now saying can i live
without it
they’re not sacrificing to save money
they’re deciding do i buy this or do i
buy that because i’ve only got one
dollar or a hundred or whatever so i
think we are in for a bad mix i think
this i think again i go back to my
whiteboard discussion of 2022 and 2023
nothing has maybe changed my mind this
year will go down to stagflation
high inflation below trend growth and
historically speaking below trade growth
has been you know sub two percent sub
one
i’m going to call it stagflation even if
we have two negative gdps and we still
have
five six seven eight percent inflation
we are in stagflation we have
too much money chasing too few goods
and
it needs to stop i think the fed
i think i think powell said it thursday
or was it two thursdays ago
i don’t care about the stock market
he didn’t say that exactly but he
basically said no he did you you’re
right yeah he said i don’t care
i don’t care that not my he’s basically
like not my problem i’ve got to fix gas
in food and you know rent and all these
other things because we’re losing the
bottom tier of our sus you know our
economy and um correct i think he’s
right i i it’s crazy taylor
so i’m a landlord i got lots of units
and i’ve had more tenants ask for help
in the last 60 days
than i had during the depth of the
pandemic
that’s not a good sign
that’s not a good sign that’s telling
wow i i that’s the first you mentioned
that that’s shocking to me yeah it is
not good what is going on at that rung
and again
it’s
it’s a problem it’s happening everywhere
i talk to landlords i communicate with
landlords on my channel a lot of people
right another guy on the east coast uh
nearly 200 units he’s like
i don’t know what happened in the last
30 days but i had five requests for help
and he had five requests
the whole year of 2020 right ouch so
inflation is really binding so the the
short answer is let’s assume it’s
another negative print it does not give
the permission for the fed to stop it
doesn’t i know everybody wants it but it
ain’t coming
yeah yeah i i i so i’ll say this i don’t
so i’m actually thinking that we’ve hit
peak inflation so i do think sure
inflation has been touched and it’s
going to roll back over but i saw some
shocking stats this weekend
as to how much
um well let me just walk you through
them so the case-shiller index is the
way that
you know obviously the housing market is
is measured so the case-shiller index
was up 20.2 which means the average
house in the us is up 20.2
year-over-year for the month of february
that’s higher than the 19.2
that they saw in january so it doesn’t
seem that the housing market is slowing
down and the scary part about that is
is that rents and you might be able to
speak to this firsthand but the article
read that rents generally trail housing
prices by 12 to 18 months
so if home prices are still going up
that’s going to trickle down a year
later into rentals and shelter
is one-third one-third of cpi and yeah
or cpi when they strip out two other
pieces it becomes 40 percent yeah and so
inflation and shelter is a big piece of
that inflation that’s going to drive
numbers here so go ahead i want to hear
your take on that yeah so a couple of
things so first off cpi that’s the
number we’re talking about rolling over
i think you’re right 8.5 will be the
high print of this cycle
uh but that’s only because of how the
math works right our base effect right
we’re basically rolling off the last low
month
inserting a higher month so it’s it’s
it’s not right we’re gonna go from eight
and a half to seven eight seven nine
eight
it still sucks
it still sucks it still still it still
sucks we still feel for everybody
including ourselves we don’t like oh
yeah
dude when my wife olivia actually
comments on a receipt that’s like that
costs what let me just tell you
hold on inflation is real that’s a
problem
she hasn’t looked at a price tag in a
decade
jesus yeah so anyways uh so the other
thing is i have corrected cpi
uh the last six months or so because
uh it’s just
it’s an error in judgment right they use
owner’s equivalent rent as you know
and cpi which is a stupid survey of a
hundred owners on what you would rent
for so again it’s a really easy fix
i’ve stripped because again it’s a it’s
a formula right you strip out the 33
which they say i think last reading uh
owner’s equivalent rent was like five
percent so you strip that out and then
you go back to case shiller or you go
back to property radar or any of these
others and you hear rents 14.1 you
insert that our last cpi reading wasn’t
eight and a half it was eleven two
ouch don’t do it to us michael eleven
two just tell us the facts that’s brutal
eleven two so
yeah have fun with that so inflation is
a problem
um so
so so i’ll say this too so when when
talking about just going back to that
original question of what does the fed
do
i actually have a different take on that
because i think that if you have
gdp go negative again which again we’re
putting low probability yeah i have a
higher probability than you do you have
five percent i have more like 10 to 12
somewhere in that ballpark but if that
takes place i don’t think the fed can
move
the fed’s stuck totally disagree
so so what i’m saying is that and what
i’ve been saying this entire time is
that the fed is not going to be able to
be as aggressive as you think they are
because i think they’re going to break
the economy quicker and now granted
don’t anticipate yeah so
where in the
fed’s charter
does gdp show up
isn’t it
stable prices in full employment
i don’t i don’t remember where gdp was
in there
yes but but draw a line that isn’t a
straight line between full employment
and gdp i think that’s a tough i think
that’s a tough thing to not draw a
direct line between we’re at 3.6
and i’m gonna guess go lower on friday
not happening
yeah i i okay then productivity is
really really really good if
unemployment continues to come down and
gdp continues to be negative people are
incredibly incredibly productive more
productive than they have ever been in
the history of the country which could
be but but i get where you’re what
you’re saying there it’s a second
derivative of it yes but it’s right
there yeah i i i would i would yeah i
would i mean it would certainly not be a
fun i mean i would not i don’t want to
be in the fed today being a being a fed
member in an environment where you’ve
had two statistical quarters of negative
gdp and you have seven percent cpi i
wouldn’t want that job it wouldn’t be an
easy call it cannot happen right it
seems like it can’t happen with with
unemployment where it is with but this
so what happened with that caused the
imports to be so high that won’t happen
again likely is the fact that
inventory needed to be built out so
inventory and bottlenecks are what
caused the uh the the the the um
import number to be so high because
companies had to build out their
inventory which had been depleted due to
all the bottlenecks of covet now that’s
been chewed through so that accounting
error or not accounting error counting
whatever you want to call it is not
going to be an excuse to be around next
time and it won’t be the same so we’ll
see how it plays out but the export side
of things is concerning as well because
that’s showing slowing global growth
well dude we’re gonna have a worldwide
recession we’re gonna have a world the
imf just just caught
their gdp projections for the year they
cut it by more than half a percent and
it’s like
okay
we’ll see this this economic stew is is
churning right now yeah so to wrap up
episode two i don’t think again i gave
it a one in 20 which is five percent
chance that we have a negative because
again
i think the oddities the one-off
oddities that made up the negative
number wow legit is not isn’t likely not
going to repeat
um fair
and uh even if it did happen i don’t
think the fed has a choice when i when
they look at 1a and 1b
i don’t think it really says negative
gdp is a problem right and again dude
they’re at a quarter
by next week you know they’ll be at 75
basis points what the hell are you gonna
do you know they’re yeah
yeah they’re they’re at what are they at
now they’re at f so zero to 25 now it’s
25 to 50 right so yeah next week they’ll
be at you know another 50 basis points
higher yeah it’s just it’s just not
going to happen well this is a lot of
fun but
let me let me just say one thing in my
defense of of you
of that thought is that sure we have two
to three meetings between now and when
that next well that’s very true we’ll be
out so it’ll be 150 basis points higher
because it’ll be likely 350 basis point
moves from there so then all of a sudden
you’re at 175 to 2. that’s fair but
but and and if you remember actually now
we cycle back to our original
conversations that’s about where i said
they would be at the end of the year
yeah i thought it would be multiple more
25 basis point moves and they would get
on their horse a little sooner than they
did but they waited and now it’s got to
be 50s to get us there 50s yeah yeah you
called for two i called for three
so yeah and
you look to be you look to be actually
smack dab directly in the middle of what
the market expectations are at this
point yeah and i called it weeks ago
just i’m just yeah you called it way
before that that bounce you’re right
full credit you you called it when it
was probably more like you know two and
a half something like that yeah yeah so
this is a lot of fun
yes well i’ll take the win now because
it may go away soon
oh taylor how could people find you
yep
follow us um
life goal on instagram again i’m sorry
at life goal investments on instagram
life goal investments thanks buddy i
appreciate it thanks michael uh-huh