Donald Trump<\/a> when he was talking about tax cuts and spending increases. The 10-year Treasury bond backed up a full point in yield…<\/p>\nDavid Scranton: <\/strong>I remember that.<\/p>\nChristopher Whelan: <\/strong>And stocks rallied, deregulation you know all sorts of good things for business a change in the narrative just different people compared to the eight years of punishment and recriminations we had with Obama. So I think just the whole atmosphere changed and that drove a lot of it. I mean banks for example, went up 30 percent between October and the end of the year and there was no change in their earnings.<\/p>\nDavid Scranton: <\/strong>But again is that…? Do you think most of that optimism that bounce is institutionally led because Wall Street loves the concept of less regulation and so on and so forth? Or do you think its investors led ultimately?<\/p>\nChristopher Whelan:<\/strong> Yes. I think primarily institutional for this cycle. The sell side analysts got on board and a lot of managers for example, again and financials were underweight financials. So as soon as they thought that there’d be less capital regulation, in other words, banks could raise dividends, do more share repurchases, less regulation that sort of thing. You know the floodgates opened and that you probably saw at least a 50-75 percent increase in the allocation by institutional investors in banks for example. This quarter we’re going to give it back.<\/p>\nDavid Scranton:<\/strong> I was just going to say that in the minute or so we have left in this segment. You know you said recently in an interview you expect a 10 to 15 percent pullback on financials.<\/p>\nChristopher Whelan:<\/strong> Yes.<\/p>\nDavid Scranton<\/strong>: You think it’s going to happen later this year or you think it’s going to happen sooner rather than later.\u00a0 What’s your best guess? I know it’s hard to tell.<\/p>\nChristopher Whelan: <\/strong>It’s going to be a grudging process over the next few weeks because when we see earnings next week you know starting with the bigger banks Thursday. I think people are going to realize that there isn’t a whole lot of change yet. For example, everybody thinks rising interest rates will be good for banks. I put a post-up this morning on the institutional risk analyst kind of try and explain that to people, it takes a long time. It’ll take years for that effect to be really evident in earnings.<\/p>\nDavid Scranton:<\/strong> Yeah, I guess the best hope financials have right now is a repeal of Dodd Frank. That might help them stay high but otherwise I tend to agree with you I think they’re a little over baked. But listen we need to take a quick commercial break. Chris if you can please stick with us, I’d like to come back and ask you a lot more, pick your brains, your words of wisdom and for our viewers stay with us. We’ll be right back with a lot more from Christopher Whelan.<\/p>\nMiranda Khan<\/strong>:\u00a0 Welcome back to the Income Generation, I’m Miranda Khan and here is your Newsmax finance update. A quick recap of the stories that move the markets this week, economist Peter Morici warns that the stock market could tumble if investors honeymoon with Donald Trump’s campaign policies comes to an end.<\/p>\nPeter Morici:<\/strong> Investors could easily become disappointed and skeptical about today’s valuations. The market could take a dive and that in turn could create an environment to pessimism that ripples through the economy.<\/p>\nMiranda Khan:<\/strong>\u00a0 Morici warns that consumers are already not spending their money pointing to a decline in car and retail sales. If you’re worried about a high yield junk bond meltdown don’t, this according to Jeffrey Gundlock the leader of Doubleline capital says there’s no cause for concern because the risk of recession is low. Gundlock also says that he does not think financial markets will see 3 percent on the 10 year Treasury this year. And here is something to chew on JAB holdings plans to gobble up another chain, this time Panera Bread the more than 7 billion dollar deal includes a side order of 340 million dollars\u2019 worth of debt. JAB already owns Caribou Coffee and Peet’s Coffee and tea. The company has been looking to expand its tea and breakfast empire. Panera Bread has 2000 bakery cafes throughout the U.S. The office supply chain Staples may also be up for grabs soon. It’s reportedly in talks with private equity firms. The potential sell off sent shares of the retailer up more than 10 percent. The sale could provide relief to Staples following a failed merger and increasing online competition. And Amazon.com now live stream NFL games starting this year. Right now, it streams 10 of Thursday night games online but it’s only for Prime members, the same games will also be broadcasted live on TV. For more on these stories visit Newsmax.com\/finance. I’m Miranda Khan back to David Scranton and the Income Generation.<\/p>\nDavid Scranton:<\/strong>\u00a0 Thanks Miranda. Now let’s bring back in Chris Whelan. Chris, thanks so much for sticking around and allowing us to pick your brains.<\/p>\nChristopher Whelan:<\/strong> My pleasure.<\/p>\nDavid Scranton:<\/strong> You know we’re talking about interest rates and we just did an entire show recently devoted to interest rates and I’d like to know what your take is on that. Do you believe like many that low interest rates overall are going to be what’s called… what they call the new norm? Or do you think we’ll get back to maybe 5 percent on the 10 year eventually?<\/p>\nChristopher Whelan: <\/strong>Janet Yellen thinks she’s raising interest rates and investors have another idea. I personally and I’ve been saying this for a while, I think 10 year could go back to 2 percent yield. So it’s going to take quite a lot to re-balance the markets away from this enormous emphasis on bonds and the hunger that investors have for bonds right now. Like give you an example I mean you know the Fed has been sitting on 4 trillion dollars for the Treasury bonds and mortgage banks and they’re fretting about whether to sell them. Fannie Mae and Freddie Mac are going to issued 30 percent less securities this year because of the movement and interest rates since the election. You would think the Fed would take notice of that and start dribbling some of their portfolio back out into the market. I think it’s going to be very hard to get long-term interest rates to rise just for the obvious reasons. The Fed has forced investors away from equities into fixed income products and there’s not enough product out there. That’s the amazing thing and I don’t think they understand that.<\/p>\nDavid Scranton:<\/strong>\u00a0 No, and I think your perspective is so good. I talk about this all the time but most people think that when Janet Yellen raises short-term rates, long term rates are going to react and move upward. And it doesn’t work that way, the reality is that the long-term rates act as a governor that keeps short-term rates down. But you know I agree with you it\u2019s going to be tougher…<\/p>\nChristopher Whelan: <\/strong>Banks control long-term rates you know. But banks and investors control long-term rates.<\/p>\n <\/p>\n
David Scranton:<\/strong> Banks and investors exactly and you know my concern right now is when you look at the demographics and the baby boomers aging and looking for income you know. I agree we might just be in a low and straight environment where the so-called bond bubble everybody’s talking about could make… could remain a bubble for years to come so… What do you see?<\/p>\n\u00a0Christopher Whelan:<\/strong> Definitely and you know meanwhile yeah, go ahead.<\/p>\nDavid Scranton:<\/strong> No, no. Go ahead finish what you were saying on interest rates. I was going to ask you…I was going to change the subject and ask about the stock market.<\/p>\nChristopher Whelan:<\/strong>\u00a0 We have bubbles, you know David we have bubbles all over the place. Commercial, real estate, the auto sector. Janet Yellen’s low interest rate policy is what drove the growth in auto sales up to 18 million units last year. We’re not going to do 18 this year. In fact, we’ll be lucky to do 16 based on my assessment of the recent earnings. You know Ford and GM just put out their report on sales. It was dismal, passenger car sales were down by 27 percent and this is all because Janet Yellen and the social engineering of the Federal Open Market Committee. They don’t want to accept the fact that they really don’t have a way to goose income, goose consumption so they manipulate asset prices and the aftermath is always bad.<\/p>\nDavid Scranton<\/strong>: I think they do realize it they just don’t want to admit it would be too politically unpopular is my interpretation but… So let’s talk about the equity markets for a minute. If you were to handicap the equity markets almost as in a collar type fashion what do you think would be the best case for this year? And what do you think is the worst case for equity markets this year moving forward?<\/p>\nChristopher Whelan:<\/strong> Well, I don’t expect equity markets to sell off very much because there’s a lack of supply. If you look at share repurchases by large cap and medium cap companies the lack of IPO activity began because companies can issue debt at very low rates. It’s kind of the same situation we see in residential real estate there’s no supply. You know my friends in that business have 20 qualified applicants for every house they can show them so there’s a constraint on supply and stocks in housing and other asset classes. And I think for that reason you’re probably going to see it stay more or less where it is but that doesn’t mean you won’t see some volatility. It’s just there’s not enough new companies coming to market to satisfy the demand.<\/p>\n <\/p>\n
David Scranton<\/strong>: Wow, so Chris it sounds like you’re saying then that there’s bubbles all over the place. These bubbles could remain for a while so don’t worry too much about it. So what would you’re… in the last minute or so we have left tell what would be your best advice today for everyday investors. People, aged 50 and over members of the Income Generation for the year 2017?<\/p>\nChristopher Whelan:<\/strong> Well, I always tell people to invest in what they know. Invest in their own businesses number one but I think in terms of the security’s market, there is still a lot of values there. It’s just a question of doing your homework and finding stocks and bonds that represent a disruption if you will in the norm. I love Fintech that’s a sector I’m spending a lot of time on as an analyst because there’s a lot of company whose in that space that are basically just doing what banks and other financial Institutions do better. Banks are big and dumb and they don’t move very quickly so when you see a company that can get in there and provide service it’s meaningful for the customers. They can create a lot of value and I think that’s where I like to focus people on things that are relatively new and have a disruptive component to them.<\/p>\nDavid Scranton<\/strong>: Well, I love what you’re saying. It is always good advice to invest in what you know. You basically just described Warren Buffett so Chris thanks so much for joining us today. We have to go but we appreciate you being here. Chris Whelan.<\/p>\nChristopher Whelan:<\/strong> No, my pleasure. Let’s do it again.<\/p>\nDavid Scranton<\/strong>:\u00a0 Alright, thank you sir. Now, let’s introduce our financial advisor\u2019s roundtable to get their thoughts and insights on today’s topic, the overvalued market. Yes, it’s time for another financial advisor\u2019s roundtable and joining me today are Brad Williams. Brad Williams is owner and president of Brad Williams\u2019s financial services at Huntsville Alabama. His extensive knowledge of investments and insurance comes from 25 years of experience. Most of that focused on particular financial challenges of retirees and people approaching retirement as well as business owners. Al Caicedo is owner and president of CKS Summit Group in Clinton Township Michigan. He spent well over 20 years working to help clients protect and preserve their assets. His practice also focuses on addressing the specific needs of people nearing retirement or already retired. So gentlemen, we have to take commercial break but as soon as we come back we’re going to talk about more about paradigm and perspective. And I want to get your feedback is to how your clients… How your perspective has changed throughout your career? But also how has your client\u2019s perspective changed from the late 1990s through the mid-2000s to today? And including the change of perspective that’s most recent right after the election of President Trump. So stay with us Income Generation members. We’ll be right back with lots of words of wisdom from both Brad and Al, we’ll be right back. <\/strong>If you’re near or in retirement head over to the Income Generation dot come and download your special report written specifically for the needs of the income generation. Again those born before nineteen sixty-six. I’m David Scranton and you’ve been watching the Income Generation. We’ll see you all next Sunday. Okay, let’s jump right into it then. Brad, now thanks for sticking around. Brad, let’s go to you first has all ya’lls perspective… See the reason why I do that is because you’re Alabama. I have to say all ya’ll. How is all ya’lls perspective on the financial markets changed from the late 1990s to present times?<\/p>\nBrad Williams:<\/strong> Well, I think my perspective is you know after being in the industry as long as I have and watching the ups and downs. Is that you know when we get to the top like we are now that’s a time to be defensive, looking for income instead of growth and protecting my clients hard earned assets. Because I’ve always had the philosophy you know they can lose their money on their own, they don’t need me so I need to protect it.<\/p>\nDavid Scranton<\/strong>: Good advice. Very good advice Al, (speaking Spanish 34:22). Oh, I’m sorry I forgot most of our viewers don’t know Spanish. AL, how has your perspective changed over the many years that you’ve been in the financial industry when it comes to financial markets?<\/p>\nAl Caicedo:<\/strong> Well you know back in the… You know I came into this business back in the 1990s and one of the reasons I came into this business was because I thought that you know I was pretty darn good. I thought that you know I was doing so well with my own personal portfolio with everything else I thought hey I can help other people do the same thing. But little did I know that it was just a wave that we were riding and as our practice grew and everything else that we did become more focused on pre- retirees and retirees only. And we started seeing that writing on the Wall in early 2000 where we said hey if we continue going down this path then what’s going to happen is that most of our clients are going to be in trouble when it comes to income. If we ride that coaster of ups and downs it does not bother us too much when we’re accumulating asset but we knew that our clients were going to be de-cumulating assets, so we had to change our focus. And that focus was to really start preserving assets and driving income.<\/p>\nDavid Scranton<\/strong>: But let me ask you when you started doing this first in the early 2000s you know you saw the writing on the wall, you made a change but how about other people’s perspectives how about your clients? Did you get some push back then because people were used to the 1990 stock market that went in only one direction and that’s straight up or did people tend to follow you pretty easily?<\/p>\nAl Caicedo:<\/strong>\u00a0 No, absolutely not. As a matter of fact, I remember when my father first retired back in the late 1990s he…you know we sat down together and I said dad you know the writings on the wall and…<\/p>\n\u00a0<\/strong>David Scranton<\/strong>: Dad didn’t want to hear it, did he?<\/p>\nAl Caicedo:<\/strong>\u00a0 He didn’t want to hear it. He said no you’re doing a good job and I said I well don’t think we can continue this, he says well you’re going to, so think about this my own father said this. So I was managing a lot of my own clients and things like that, people were coming around kicking and screaming because again, we were so addicted to the 80s and 90s and we have that mentality of the 80s and 90s that the markets can only go one way and that’s up.<\/p>\nDavid Scranton:<\/strong> Yeah, of course. Brad how about your experience did you have the same experience when you first started talking to people and giving them the conservative message and concerns about the market after the year 2000? Or did you find that people in Alabama were maybe a little bit smarter than people in the Michigan area?<\/p>\nBrad Williams:<\/strong> Well, you know it really took some educating Dave and I did get pushback because as you both had said we went through about 20 years of some really good markets with you know a few ups and downs but really good markets. So you know getting people to realize you know look you need an exit strategy, you need an entrance or not entrance but exit strategy and an income strategy. Because you know when you…I use a casino analogy a lot and there’s a reason those casinos are beautiful, have cheap food and free drinks. Is because most people that go there don’t have an exit strategy, they keep thinking it’s going to keep going up, up, up and when the bottom falls out they don’t know what to do.<\/p>\nDavid Scranton:<\/strong> That’s right and if the bottom falls out first they still don’t know what to do they stay there?\u00a0 So that brings me Brad to 2007 when the market was at its peak. How do you see people’s paradigms or perspectives being different in 2007 and through the drop in 2008? You felt like that changed it at all from when the top bubble had initially burst?<\/p>\nBrad Williams:<\/strong> Oh, I most definitely. Because after being through two major drops in that short period of time I think my clients especially were more attuned to the fact that you know this is not a one-way market it can go either way. And the fundamental shifts in the economy you know commercial real estate, financing that type of thing you know all that cheap money that was flowing so freely you know after 2000. You know it dried up and that caused for example, rates they got killed in the commercial rates never really ever recovered after that and in a blood that’s a paradigm shift in how people are consuming. You know people are buying online and not mortar, brick and mortar.<\/p>\nDavid Scranton:<\/strong>\u00a0 So Al, in the 30 seconds we have left in this segment. Tell me about how you saw your clients and prospective clients change their philosophies and perspectives right around 2007-2008?<\/p>\nAl Caicedo:<\/strong> Well with our clients being the fact that we were in the distribution phase I think it really impacted them really hard. I think they finally saw that the fact that if the changes that were made in that portfolio it was what kept them afloat. Understanding that if we had kept going and wishing for growth and hoping and crossing our hands and fingers for growth. We knew that we wouldn’t be able to replenish that portfolio so…<\/p>\nDavid Scranton: <\/strong>So people became more amenable to that message as time went on which makes sense. Guys, stay with us please if you can. We need to take a quick commercial break when we come back we’re going to talk about the most recent prospective change right after the election of Donald Trump. Stay with us.\u00a0Welcome back to the Income Generation we’re here today with two highly regarded financial advisers Al Caicedo from Michigan and Brad Williams from Alabama. Al, I had to cut you off there right before the break but I’d like to go to you first and have you tell us what did you see as the most recent paradigm in people’s thinking in Michigan from the day before Donald Trump got elected to what’s transpired over the last five months or so?<\/p>\nAl Caicedo:<\/strong> Well, I think here in Michigan we’re seeing a lot of what I call the Trump enthusiasm. Thinking that they\u2019re you know putting a lot of confidence in the fact that Donald Trump especially because we are (inaudible\u00a040:17) auto markets and everything. And you heard that we’re bringing back a lot of manufacturing, the jobs are going to keep kicking, that plants are going to be built, that a lot of investments are going to be made in the state. And so what we’re seeing is that a lot of people around here are thinking that if he comes through with this then the current market conditions that we currently have right now will only continue to grow at the rate they’re going. And what they’re not seeing is that you know what we’re having an issue here and challenges is helping our clients see that there’s a… If things don’t go the way they should go for example, like with Obamacare where he got an issue with that. He’s got a few issues with a lot of other things that he’s wanted to put forward and he could get it on his agenda yet that things can quickly change on them. So right now I think we’re still riding the waves especially here in Michigan riding that wave of enthusiasm.<\/p>\nDavid Scranton: <\/strong>You’re worried that in essence, optimism about Trump having successful outcome with his economic policies already priced in the market and your concern that if that does not come through as well as the market hopes we could turn the other way. Brad, you know I know in Alabama people are extremely, extremely politically liberal so they must be really, really concerned in Alabama about what they’re seeing right here. Tell me about the paradigm shift you have seen from right before the election to today.<\/p>\nBrad Williams:<\/strong> Well, you know fortunately, what I’m seeing with a lot of my clients most of my clients and the people down here is a cautious optimism. They understand the markets overvalued you know interest rates are going to have to go up and they’re looking at… well maybe there is a short-term opportunity here but what I’m hearing from people is there’s a lot of problems in Washington that you know it’s going to take a lot for one man to fix. And so why not take advantage of some short term opportunities as the markets going up but be cautious because that can turn at any time.<\/p>\nDavid Scranton: <\/strong>I see well it is good. It’s always good to take a conservative approach like that because you’re right you don’t know you’re… You’ve talked about the casino and I would say just like imagine walking into a casino where if there’s a gaming table there where if you win, you win 10 dollars. And you lose, you lose 50 dollars that’s in some ways where the stock market sits today at least in my opinion. So gentlemen stay with us, we’re going to be back one more time. We’re going to talk a little bit more about the markets and for our Income Generation members we’re going to put these two guys on the spot. And we’re going to ask them what they think is going to happen through the rest of 2017 with the financial markets? So don’t go anywhere we’ll be right back.<\/strong> Welcome back to the Income Generation. I’m David Scranton and joining me today is Brad Williams from Alabama and AL Caicedo from Michigan. AL, 30 seconds tell me what’s your best prognosis for the stock market at the end of this year? Do you think it’s going to be slightly higher, the momentum’s going to carry or do you think a correction is going to start before the end of 2017, best guess?<\/p>\nAL Caicedo:<\/strong> I always say don’t let realism…don’t let optimism not realism. There’s a lot of issues going on right now in our financial markets, a lot of things that are not determined. I feel that there’s going to be more volatility going down towards the end of the year and I think that the correction is really right around the corner for everyone.<\/p>\nDavid Scranton:<\/strong> Alright, so you’re thinking we’re not going to make it through the rest of the year. Brad, I’ve always known you to be kind of sort of an optimistic sort. What are your thoughts about stock market performance over the next few months?<\/p>\n\u00a0<\/strong>Brad Williams:<\/strong> Well, I think if the Trump programs continue to progress forward we could see some modest gains. You know the talk about draining the swamp, we’ve got to also remember there is a lot of nasty creatures in that swamp that don’t want it drained. So they’re going to try to derail that agenda and we also have you know in North Korea we’ve got a lot of geopolitical issues that can cause the markets to act pretty funny. So you know I’m cautiously optimistic for moderate gains but I think a correction can happen at any time.<\/p>\nDavid Scranton:<\/strong>\u00a0 Alright, and for our Income Generation members, our Income Generation viewers that is what makes this decision so difficult, opposing views. Al, Brad thanks so much for being here today.<\/p>\nAl Caicedo:<\/strong> Thanks for having us.<\/p>\nBrad Williams: <\/strong>Thank you.<\/p>\nDavid Scranton:<\/strong> Before we go I’d like to thank all my guest as well as you our new and returning viewers. Now, I’ve talked a bit about my own perspective on today’s show but in the end, the perspectives that matters most when it comes to making financial decisions is yours. Pay attention to the experts yes, but don’t ever adopt an opinion or blindly follow advice or recommendations without knowing whether it’s based upon\u00a0 a perspective that’s compatible with your own. And in fact, that’s how you know that you have the right financial advisor what he or she is willing to work with you on a personal level. When he or she helps you tailor an individual plan to make decisions based upon and agreed upon perspective that suits you as the client. Because again, yes, perspectives do change and the one you had towards saving and investing in your 30’s and 40’s is probably not the same one that’s still right for you in your 50’s, 60’s or 70’s. Thanks for watching. I’d also like to remind you of the special report entitled the Income Generation. This is available free to you our loyal viewers online. If you haven’t downloaded your report pick it up after the show. I’m David Scranton and you’ve been watching the Income Generation. We’ll see you all next Sunday.<\/p>\n","protected":false},"excerpt":{"rendered":"