planning for retirement<\/a> with your fingers crossed!\u00a0 Read \u2018Return on Principle, Seven Core Values help protect your money in good times and bad……..Available now!<\/p>\nDavid Scranton:<\/strong> A little earlier this year we did a whole show focusing on interest rates and at that time the potential threat for rising interest rates have been blamed for most of the marketing volatility that we were seeing then. In fact, it was one of the main issues blamed for the 10% market correction in early February that ushered in volatility that exists today. Of course the direction of interest rates remain concern , and as I pointed out earlier ,the effects of a full blown trade war could dramatically affect interest rates going forward.<\/p>\nDavid Scranton:<\/strong> As mentioned China has suggested, it could scale back its purchases of U.S treasuries as a retaliatory move in the trade war. The decreased demand could lower values and send long term rates higher. On the other hand, there is a pretty good reason to believe China would never actually follow through on that threat? Why? Because by doing so, they would hurt their own balance sheet by driving down the price of these bonds. At the end of the day, they were trying to collect interest on their money. With so many European countries, who would theoretically less stable than others and paying less interest on their bonds than ours, China doesn\u2019t have many good options.<\/p>\nDavid Scranton:<\/strong> So, I believe it doesn’t seem likely for instance, that they are going to go out and buy Italy\u2019s bonds instead or Spain\u2019s bonds take more default risk to earn less interest just to spite us. But, even if that were to happen, it\u2019s also a chance that\u2019s domestic investors fleeing the stock market could rush to bonds, and offset the impact of China\u2019s move. This thing we call affiliate equality, could keep long term interest rate stable or even drive them back downward. To some extent it appears that\u2019s already what\u2019s been happening as trade war worries have escalated.<\/p>\nDavid Scranton:<\/strong>\u00a0 Now as you might recall, the interest rates on most bonds and the 10- year treasury for example, trended down or at least remain stable, keeping bond prices stable for most of 2017. Then in January bond market seemed to come out of a coma and finally realized that the rate on the 10 year treasury yield should be higher.<\/p>\nDavid Scranton:<\/strong> That was due to the unwinding of quantitative easing.\u00a0 With that the Federal Reserve was selling some $30 billion worth of treasuries per month back into the open market, increasing the supply of bonds in order to drive prices down, drive interest rates up. That\u2019s why the rate on the 10 year treasury yields jumped from 2.4 to 2.7% in January. And as I mentioned, the spike was largely blamed for the initial 10 percent market corruption in early February and then over the next several weeks to rate on the 10 year treasury yield started to yield and edge itself higher seemly to confirm Wall Street’s fears. Here’s where it gets interesting, the 10 years yield peaked\u00a0 at 2.94% on February 21st<\/sup> and has dropped and has not passed that number ever since. In fact, throughout March and throughout April it remains lower than it was on Groundhog Day when that first sell off begin. That suggests that many investors jumping from the stock market has trade war fears increase have been jumping to the bond market, offsetting the Federal Reserve\u2019s efforts to drive up interest rates.<\/p>\nDavid Scranton:<\/strong> And if you’ve watched our show on bonds and interest rates. You might recall me saying that I believe that the rate on the 10 year treasury may possibly manage to make it 2-3% or, maybe just a little bit over it in the near future. But, I predicted that\u2019s going to hit a strong resistance level at that point. And today I still believe that\u2019s true regardless of whether the stock market goes into a major sustained corruption, or it manages to temporarily rebound and probably add another15 or 20 % growth this year. The main reason as I pointed out then is because of people like us, everyday investors over the age of 50; that is The Income Generation.<\/p>\nDavid Scranton:<\/strong> \u00a0We are the nation’s largest demographic. And, as more and more of us shift towards secure income based investment options such as, bonds and bonds like instruments, as we neared retirement, the demand in the bond market strong must remain and that should keep prices up and hold long term interest rates in shack around or below that 3% sealing. And,\u00a0 if\u00a0 it apparent affiliate equality\u00a0 we have been seeing the past two months continues with investors jumping from stocks to bonds as trade war fears mount, that will only add to the increase demand and potentially even push rates even lower. And again, even if the market does manage to rebound and temporarily start growing again, I don\u2019t believe it will do so at the expense of the bond market. That’s because so many of us during retirement or already retired will stay committed to those secure income based investment options, regardless of market conditions, and all of this including China\u2019s financial incentive to keep buying our bonds regardless of a trade war, is important to remember, anytime you hear an analyst or an advisor suggesting that a so- called bond bubble about to burst in my expert opinion, that’s simply not true.<\/p>\n\u00a0David Scranton:<\/strong> It’s now time to welcome my next guest, Jeffery Small. I am happy to welcome Jeff back to the show. He has over 30 years of experience as a Financial Advisor, he is highly sought after speaker and analyst who can be seen and heard regularly on shows like Fox Business and Bloomberg radio. He is also the author of the best selling book \u201cTurning Financial Planning Right Side Up\u201d<\/p>\nDavid Scranton:<\/strong> Jeff, welcome back to the show.<\/p>\nJeffery Small:<\/strong> Hey, David, it\u2019s great to be here. Thanks for having me again.<\/p>\nDavid Scranton:<\/strong> What…. you have been on the show now about four or five times and you still haven\u2019t gotten the memo that you don’t need to dress up and wear a necktie on our show here. What’s going on? He’s making me look bad.<\/p>\nJeffery Small:<\/strong> This is a patriotic tie. You know it’s red, white and blue. I kind of was feeling spirited today so I wanted to be patriotic, David.<\/p>\nDavid Scranton:<\/strong>\u00a0 So about China’s….<\/p>\nJeffery Small: That\u2019s right<\/p>\n
David Scranton:<\/strong> Prefect time, so what\u2019s your take on all this China stuff. It has been affecting the markets; you\u2019ve been following the market, gosh as closely as I do and these 500 points, 700 point swings, I mean it’s crazy. Do you think it’s warranted or a lot of the media? What’s your best take on this?<\/p>\nJeffery Small:<\/strong> Well, David, at the end of a18 year bull market here, bear market, I\u2019m sorry, bearish secular pattern would be in this for 18 years at the peak. And, so at some point the market is going to pull back to things in the market that\u2019s causing these dyration, whether it\u2019s rising rates, unsettled political issues, nationally or geopolitically as well as the trade issues really came to the forefront. But the good news is the street or Wall Street’s really focusing on earnings right now. It seems to be taking a back seat, the trade issue seems to be taking the back seat a little bit to what\u2019s happening in the market hit and we \u00a0breakeven today for the year,<\/p>\nDavid Scranton:<\/strong>\u00a0 Right, breakeven. You know, we’re never happy about breakeven but when you think about what happened after February 2nd<\/sup> in the markets, its Ground Hog day when the financial Groundhog saw a shadow and the market started to drop. All things considered breakeven isn\u2019t too bad.<\/p>\nJeffery Small:<\/strong> Not too bad so far but the volatility was to be expected. In January the market when up a little bit to 7%, we hit that peak January 26 and then the wheels came off \u00a0and so at some point, you know the market’s going to have some kind of gravity to it. They just don’t keep going up.<\/p>\nDavid Scranton:<\/strong> Ok, now you heard Gordon Chang. You know, as all of you heard Gordon Chang, what are your thoughts? Do you think that we’ve got the upper hand here, is that we’re eventually going to improve our situation with this? Or do you think this \u2018tit for tat\u2019 is just going to end up being break even every time we raise ours they raise theirs and nobody wins.<\/p>\nJeffery Small:<\/strong> Well, the trades\u2019 balances are so imbalanced right now with what’s going on. We have been the door mat of trade for the last 50 years in this country and finally somebody who’s raising to the top, to come out and say, look, we’ve got to fix this and it takes a deal makers, somebody who is business minded like President Trump to turn around and fix this. So yeah, I agree with Mr Chang. I think we\u2019ve got complete leverage to be able to turn this around and this would be the first President in 50 years that\u2019s on a trade deal to that benefits America and denuclearizes the North Korean and South Korean Peninsula.<\/p>\nDavid Scranton:<\/strong> So, you think it’s the art of the deal? Basically the principles in the art of the deal are going to get him to make this negotiation successful for our country. Um, if that happened then, we’ve talked before about the secular cycles in the market and that probably means that the market is going to go up and this could very well be the first time we recover from a secular bear market in 2013. Because, do you feel that way? Because the reality is, is that we can get this trade deficit you\u2019ll score away imbalanced again it good for the stock market.<\/p>\nJeffery Small:<\/strong> There’s no doubt it will be good domestically. So there’s a good chance that that could happen if we can fix the trader issues, but it will take time for that to ripple through the economy to see the benefits of the bottom line of course our Multinational Corporations like the S& P 500 with the Dow Jones.<\/p>\nDavid Scranton: <\/strong>And, quickly in 20 seconds or so that we have left with, what do you think about this risk of they are stopping to buy our bonds and what that does to interest rates? Is that a concern of yours bottom line or you think it\u2019s just rhetoric?<\/p>\nJeffery Small:<\/strong>\u00a0 It’s really all rhetoric. China really forced to buy our bonds if they want to buy their goods and services it\u2019s a symbiotic relationship, so that will stay play that won\u2019t change at all.<\/p>\nDavid Scranton:<\/strong> That will stay in play for a long time. Well, I know you drove down here, I knew you plan to spend some more time with us, so stay with us. You stay with us also; we have a lot more from my good friend, Jeffrey Small. We come back after the commercial break. Stay with us, we’ll be right back with the Income Generation.<\/p>\nDavid Scranton:<\/strong> Most persons have heard the environmental slogan…..\u2019Think globally …but Act locally.\u2019 It’s a great slogan, not only be good practical piece of advice, it\u2019s also good psychologically and it applies to more than just the environment. In thinking about things on a global scale, it\u2019s easy to feel overwhelmed, that can lead to a sentence of helplessness, which leads to inaction. We think what can one person do? So the result, we do nothing, that same mind-set can be dangerous when something like the threat of something like the threat of a global trade war come along.<\/p>\nDavid Scranton:<\/strong> And this is an enormous issue with huge implications for the world economy. It’s only natural to feel a bit overwhelmed by it and to think what\u2019s going to happen is going to happen. What can I do? Well, that\u2019s where \u2018Think globally… Act locally,\u2019 is once again, great advice. Look at the issue from global perspective than a personal one. That’s how you’ll find an answer to the question, what can I do, as well as the motivation to do it, if you feel as though it’s in your best interest.<\/p>\nDavid Scranton:<\/strong> Here’s a good way to approach it. Step by step by step. First, sit down with a qualified financial advisor and review your portfolio. If you are retired or within 10 years of retirement, make sure your asset allocation right for retirement, meaning its set up to generate income through\u00a0 interest in dividends range of 4- 6 % interest. Second, review your level of stock market risk in the light of all the drama and volatility we’ve experienced since early February. This as a trade war escalates and becomes a tipping point for the next major market correction, Could you end up getting caught in the downdraft? If the market falls between 40-70 percent has market history how suggest it would that impact your retirement goals? Third, if you determine your retirement is in jeopardy, take action, work with your advisor, to reduce your risk to better designed to help you meet your financial goals regardless of market conditions. And as I stress on last week\u2019s show, I am not ready to say definitively that the next market correction is already on the way or even close at hand. In fact, I am willing to admit that the trade war or no trade war, the market could find its legs and again and regain its January peak even add another 10 or 20 % from there.<\/p>\nDavid Scranton:<\/strong> Remember that my forecast for 2018 was that this will be another double digit year for the stock market; either double digits on the upside or double digits on the down side, with really nothing in between, and I still stand by that production. That said, I also believe that there are technical fundamental as well has historical evidence available right now, in support of a major market correction. That investor over the age of 50, need to consider the risk reward trade off, very carefully before investing.<\/p>\nDavid Scranton:<\/strong> Remember the casino analogy, I shared with you before, if you went to the casino and discovered a game, where it paid you $15 if you won, but cost you $70 if the lost, would you play that game? Probably not! So now, think about how the analogy applies to the current stock market. If you decide not to reduce your risk in the best case scenario occurs, that trade war can get resolved then maybe the market rises in another 15 %, that you win, if you stay invested in the market rises. But the trade war becomes a tipping point in the market falls by 40- 70%, well then that\u2019s what you lose. That\u2019s why thinking \u2018globally but acting locally or personally in this issue is so incredibly important. In fact the worst thing that you could do potentially is to allow yourself to feel overwhelmed and ended up doing absolutely nothing.\u00a0 If you do that, then it will end up being too late.<\/p>\nDavid Scranton:<\/strong> Let\u2019s welcome back Jeffery Small, bestselling author and President of Harper Financial Group in Melbourne Florida.<\/p>\nDavid Scranton:<\/strong> Let’s say we are wrong. Let\u2019s say we are wrong in this to trade war, you and I are wrong, Gordon Chan is wrong and the trade war works against us, it\u2019s a net negative. What does that do for us as a country? What does it do for the economy? What does that do for the stock market?<\/p>\nJeffery Small:<\/strong> Well, definitely we\u2019ll undermine the market its part of the reasons why we pulled back 9\/10 % here from the January 2016 promotion forward in the market, so it will rattle investor confidence, rattle investor sentiment and will change the stock market dynamic.<\/p>\nDavid Scranton:<\/strong> Interesting rates, what do you think in that case again? If all of a sudden we’re importing Chinese goods or spending a lot more money doing so, just because of the tariffs and so on that caused inflation right, so what can that do to interest rates, you think that can caused interest rate to accelerate upwards?<\/p>\nJeffery Small:<\/strong> Well, if there’s no demand in for our bonds, absolutely we could be stuck. I mean if the United States falls out of favour, and they stop buying our bonds, internationally what happens? Rates have to go up. That perfectly makes sense, and so the Feds are already on a tractor raised rate. And now, we can reprieved on rates and so rates have actually fallen but not as much as they raised them couple weeks ago, and so reality is when rates starts to move back up, regardless of what happens with our international favouritism on bonds or not, trying to buy them or not. We will see start to take heed as protects starts squeezing as that goes up.<\/p>\nDavid Scranton:<\/strong> And we have to come up with $1.1 trillion just to finance the year\u2019s deficit. So $1.1 trillion does it ever ends? In the thirty seconds we have left in this segment, do you think that we can actually grow ourselves out of the deficit or do you think it\u2019s going to be…?<\/p>\nJeffery Small:<\/strong> It\u2019s going to be really hard day, because we\u2019ve got 600-800 billion of treasuries they were trying to sell out through quantitative tightening. As the Feds decides what deescalate the purchases they made to get us out of the mess in the first place we lose in 2008.<\/p>\nDavid Scranton:<\/strong> You make a lot of sense and of course that’s why he’s a very good friend of mine and that\u2019s he’s also an author of the bestselling book. We’ll be right back with more from Jeff Small. We’re talking geopolitical things that you talked about a minute ago. You stay with us and we\u2019ll be right back after the break.<\/p>\nDavid Scranton:<\/strong> Welcome back. We’ll be talking again with Jeff Small, the bestselling author of \u2018Turning Financial Planning Right- Side Up\u2019, President of Harper Financial Group in Melbourne, Florida.<\/p>\nDavid Scranton:<\/strong> Now, you have this patriotic tie on, and all that. You see, I am so patriotic; really I worry about our financial markets here in the U.S. I don\u2019t think too too much about China in this because we really don\u2019t invest in China.<\/p>\nDavid Scranton:<\/strong> Were you surprised when you heard Gordon Chang talk about the debt of GDP ratio in China of 400% or the GDP growth rate of less than 2%?<\/p>\nJeffery Small:<\/strong> I really wasn’t shocked by that at all. It\u2019s not the first time I have heard of in China\u2019s books are really cooked. It\u2019s over engineered their economy. They have leveraged out, they are maxed out, and they really need to go through severe financial restructuring if they want to really be considered growing their economy going forward. At some point they are going to have a bigger financial crisis than we will in the near future.<\/p>\nDavid Scranton:<\/strong> With all these people sitting here, a lot of the liberals and those that aren\u2019t watching the show would say communism works, look they are getting steady growth of 7- 8 % growth percent over there in China, and communism is great! So I guess it comes right down to it, communism isn\u2019t really that great, is it Jeff?<\/p>\nJeffery Small:<\/strong> No, not even when you combine it with free market economics.<\/p>\nDavid Scranton:<\/strong> Yeah, that right, that right….<\/p>\nDavid Scranton:<\/strong> Hey, speaking of that, you know you\u00a0 heard me allude\u00a0 with Mr. Chang too, a good friend, the rocket man over there in North Korea and he was not quite optimistic about a positive outcome there in terms of disarmament. You know if, what if that escalates? It\u2019s one of those geopolitical concerns you talked about couple segments ago. If that escalates, you think that could be a tipping point to cause that third major stock market drop that we\u2019ve have been talking now for a long time on this show; of course you and I have been talking about it.<\/p>\nJeffery Small:<\/strong> I don\u2019t know if we would cause a stock market correction day, but it certainly will because the market to get jittery the same way it did with Trump’s tweet about launching missiles and they are coming right away. And so, I think what we\u2019ve got to look at its lots of posturing going on from our country’s perspective and leveraging out Russia and leveraging out China to get what you want from North Korea to denuclearize the entire Peninsula, because we really can’t allow him to have nukes. He is a wildcard.<\/p>\nDavid Scranton:<\/strong> \u00a0Right, that’s right<\/p>\nDavid Scranton:<\/strong> Thirty seconds or so we have left. Hmmm, going in your area of expertise, right all income generation members age 50 and over, to hear all this rhetoric on TV, market response, around 700 points, 15 over. What would you tell them? What’s the best advice to them and of how they react to that and this news?<\/p>\nJeffery Small:<\/strong> Well the best advice to them really is to make sure that they are going to avoid the next down turn, because zero becomes your hero. Make sure you find a way or a financial advisor that you can work with that’s going to show you to be market bullet proof this point in time.\u00a0 The next 20 %, 25% upside is not going to help you if you go through the down turn, when it happens and it will happen at some point. Nobody knows then, not even the brightest minds on Wall Street.<\/p>\nDavid Scranton:<\/strong> Sound like you are saying that \u2018cash is king,\u2019 which I like. With that in mind I need to stop and get dinner on my way home but I forgot my wallet. Can you lend me a couple bucks since cash is king?<\/p>\nJeffery Small: <\/strong>I will take you out and buy you dinner.<\/p>\nDavid Scranton:<\/strong> There you go, that even better, I love it! Dinner with my good friend Jeff Small and bestselling author.<\/p>\nDavid Scranton:<\/strong> Alright, stay with us and we\u2019ll be right back. Thank you Jeff and thank you also and we\u2019ll be right back for a segment here on The Income Generations.<\/p>\nDavid Scranton:<\/strong>\u00a0 As you could probably imagine ridding contents for this show is someone somewhat challenging or the last two months giving how quickly things are changing in the financial markets. Naturally, the markets always fluctuate to some degree, but dramatically level of volatility that we are experiencing now definitely are not typical. As technical analyst has pointed out, they’re actually similar patterns of volatility we saw in the last two major market corrections. So, does that automatically mean the next correction is eminent? Of course not, no one can say for sure, that the threat of a trade war doing to be a tipping point for that third major market drops that we\u2019ve been discussing for a long time.<\/p>\nDavid Scranton:<\/strong> As we saw on today show, there is actually the scenario in which this whole situation can be good for the United States, and we can end up reigning in our trade deficit, boosting our importing industry and adding to the GDP. All of which would probably help get the stock market back on track. At the same time a trade war can force interest rates up or if a correction takes hold of in-flight equality continues actually drives them further down. The point is that no one has a crystal ball, and all these different scenarios and potential outcomes can seem absolutely overwhelming<\/p>\nDavid Scranton:<\/strong> So just remember to \u2018Think globally, but act locally.\u2019 Consider the potential impact both good and bad, from your own house hold, your own family and your own life. Decide if you need to take out action, and if you so, then take it!<\/p>\nDavid Scranton:<\/strong> Thanks for watching if you are close to retirement and you really want to know how to protect and maximize your money, it\u2019s absolutely essential that you stay informed and up to date and right here is where you can do it on The Income Generation. I am David Scranton, Thanks again; we\u2019ll see you next week.<\/p>\nRecording during break:<\/strong> Read David J. Scranton ground breaking new book, \u2018Return on Principles- & Core Values to help Protect your Money in Good times and Bad.\u2019 Discover practical solution to the financial challenges facing today\u2019s generation of retirees and near retirees. Learn the truth about Wall Street, the financial media and the secrets they tried to hide every day investors. This isn\u2019t just another book about investing working Americans will live through, two major stock market crashes and the worst financial crisis, since the great depression past sixteen years. Don\u2019t need another book about investing, David Scranton approach to financial planning is a holistic system designed for maximum protection, strategic growth and reliable income regardless of market conditions. Stop planning for retirement with your fingers crossed!\u00a0 Read \u2018Return on Principle, Seven Core Values help protect your money in good times and bad……..Available now!<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":"