Money Life with Chuck Jaffe

Ryan Myers, portfolio manager at Causeway Capital Management -- manager of the Causeway International Small Cap fund -- says that current valuations "are on par with some historical extremes where small caps go on to outperform fairly significantly." He likes opportunities in Japan, particularly after market troubles there earlier in August made valuations even more appealing, but he also says there are bargains to be had in European financials and AI-adjacent companies in Taiwan and Korea and elsewhere. Financial adviser Mark Matson discusses his new book, "Experiencing the American Dream: How to Invest Your Time, Energy, and Money to Create an Extraordinary Life," and Ron Lieber, money columnist at The New York Times, digs into merit aid -- the focus of his new course aimed at parents trying to find ways to navigate college funding -- and how students can tap into it.

Jeff Weniger, head of equity strategy at WisdomTree Asset Management, says that while rate cuts tend to be good for the market, there is an unusual circumstance now where the cuts upend the Japanese yen carry trade. That  created the market's short-lived August drawdown, but that circumstance could resurface; while the market has moved past that problem, Weniger notes that the Fed's expected actions in cutting rates are happening during a bull market run, which tends to be unusual, but which has to be taken as a bullish sign this time. Weniger notes that he particularly likes small caps and regional banks right now. In the "talking technicals" segment, Michael Sincere of Michael Sincere’s Long-Term Trader says investors should "be bullish, but be cautious," and talks about maintaining higher cash balances and using options strategies to protect against heightened volatility now. In the Market Call, Hank Smith, head of investment strategy at The Haverford Trust Co., discusses investing in blue-chips, big, brand-name companies that are paying a growing dividend.

Steve Rick, chief economist at TruStage, expects a unique occurrence in Federal Reserve actions between now and election date, with inflation dropping down to its target rate of 2 percent while the labor market reaches equilibrium, with the unemployment rate hitting 4.5 percent. Rick says that good news -- which will be accompanied by rate cuts from the central bank -- will push any potential recession back into 2025 and possibly '26, with economic growth falling below 2 percent, under long-term norms but not so bad that the economy craters. David Trainer, founder and president, New Constructs, pulls a shocker in the "Danger Zone," saying that a member of the Magnificent Seven -- a stock with one of the largest market capitalizations in the world -- has run so far, so fast that it is overdue for a reset that could bring the stock down by more than 60 percent. Plus economist and author Rob Larson, discusses his new book, "Mastering the Universe: The Obscene Wealth of the Ruling Class, What They Do with Their Money, and Why You Should Hate Them Even More."

Craig Johnson, senior research analyst at Piper Sandler, says that he expects the economy to avoid a hard landing, and notes that some indicators would suggest that the economy is already in recession which means it will be over by late spring 2025, which should allow the earnings to start to pick up and fuel more growth next year. Johnson notes, further, that stock markets historically tend to perform well in the first six months after the start of a rate-cutting cycle; if the Federal Reserve starts rate cuts in September, which he expects, that means the market is well positioned to avoid any sort of hard landing as it rides through transitions in interest rates, the election and the economy. In The NAVigator segment, Chris Oberbeck, chairman and chief executive officer at Saratoga Investment Corp., says that private credit — which has been on the rise for several years — is being challenged by a cooling market for mergers and acquisition activity, but he expects a pickup as rates ease, making deals easier to do. Maury Fertig, chief investment officer at Relative Value Partners, talks closed-end funds — and surprises Chuck by discussing a fund that Chuck talked about on Thursday's show — in the Money Life Market Call.

Tim Crawmer, chief global credit strategist at Payden & Rygel, says that the rise in the  unemployment has not been driven by layoffs but rather by more people looking for work, which is a positive sign for the economy. Coupled with other good looks -- like the continued strength of the consumer pushing robust GDP expectations -- it should convince individual investors to position their portfolio "with the expectation that they will see a soft landing." Still, Crawmer, notes that high valuations may limit the potential upside, putting just a bit of caution on the optimism. Todd Rosenbluth, head of research at VettaFi, also is focused on the strength of the consumer as he takes a consumer-spending fund as his ETF of the Week. Plus, Chuck answers a listener's question about dealing with a tender offer on a closed-end fund, and Raymond Bridges, portfolio manager for the Bridges Capital Tactical ETF, brings his "aggressively cautious" approach to the Market Call.

Elliot Rosenberg, founder of Hack My Honeymoon, talks about strategies consumers can take to use miles, points and more to get free trips, accommodations and more, and while the savings is real, some of the advice -- involving opening multiple credit-card accounts to capture bonuses -- is not standard for consumers. Marci Stewart, director of client education for Schwab Workplace Financial Services discusses the firm's annual 401(k) Participant Study, which showed that more than 40 percent of workers say they are very likely to achieve their retirement savings goals, up dramatically from a year ago, and a surprise given consumers' concerns over inflation and high interest rates. Plus, Chuck answers a listener's question about a perceived dislike of cryptocurrency, and we revisit a recent conversation with Jeanette Garretty, chief economist at Robertson Stephens Wealth Management.

Michael Kelly, global head of multi-asset at PineBridge Investments, says that the stock market had priced in a soft landing before the recent, temporary spike in volatility, but that action made investors realize that the potential for a hard landing is on the rise, even with Federal Reserve rate cuts on the way. Either way, Kelly says the long-term trend for the market will be positive, but he cautions that where markets go up during soft landings, investors get punished by hard landings until the bottom is reached, so he suggested caution while watching the Fed try to pull off a perfect landing. Also cautious -- but based on the market's technicals, was Lawrence McMillan, president of McMillan Analysis, who said the early August blip was nothing more than a temporary move, what will ultimately be a forgettable day and he thinks the market is more likely to test resistance at roughly 5,700 on the Standard & Poor's 500 before it tests support, which he figures is roughly 5,380. Jonathan Lansner, financial columnist for the Orange County Register turns to the ways that Wall Street resolved and evolved after the ruling that allowed discount brokers as a possible guide for how real estate firms will adapt to rule changes aimed at re-shaping the landscape and process for home sales.

Rob Haworth, senior investment strategist at U.S. Bank Asset Management, says the economic data has lined up so that the economy "can cruise through this soft landing, and not land." In the Big Interview, Haworth says that recessions have been held off for longer than expected up to now, but while he could see heightened volatility for the market for the rest of the year or beyond, the glass-half-full economy means that recession is not likely in the next year and a half. Economists -- as measured by the August 2024 Economic Policy Survey released today by the National Association for Business Economics -- seem to agree, though Lester Jones, chief economist, National Wholesale Beer Association  and a member of NABE's survey committee, notes that the imbalance between loose fiscal policy and tight monetary policy has economists worried about how things might turn after the election. David Trainer, president of New Constructs, puts Lyft back into The Danger Zone -- for the fourth time since 2019 --  noting that the stock still isn't worth $1 per share despite currently trading for more than 10 times that amount. Plus Steve Nicastro, managing editor at Clever Real Estate, discusses how changes in rules governing real estate commissions -- which went into effect over the weekend -- will play out for consumers.

Brij Khurana, fixed income portfolio manager at Wellington Management, says that if either political party sweeps the election in November -- winning the presidency and control of Congress and the Senate -- the result will be higher bond yields, because the market will price in greater financing of deficits, but he notes that a divided government, the market will price in a bigger fiscal contraction regardless of who the president is, bringing yields down. Khurana says the Federal Reserve should already have been cutting interest rates but will start next month, although he is expecting a slow, methodical cutting process rather than knee-jerk cuts in response to any data changes. On the stock side of the investment world, Matt Harris, chief investment officer at The Hausberg Group says that the volatility that surfaced early in August hasn't given him any reason to distrust the trend, which remains intact on a long-term basis and which he does not think will be broken despite heightened volatility between now and election day. Aaron Filbeck, managing director of the CAIA Association, discusses interval funds, their fee structure and potential and responds to a recent Wall Street Journal article on how their fees "will leave you high and dry." Plus, in the Market Call, Conrad Doenges, chief investment officer at Ranger Investment Management discusses small- and micro-cap investing.

Ted Rossman, senior industry analyst at Bankrate.com, digs into the site's latest credit-card debt survey, which says that half of American credit cardholders are now carrying debt month-to-month, up six percentage points from the start of the year and the higher level since the beginning of the pandemic in 2020. 50% carry debt month to month. This figure is up 6 percentage points from January and is the highest figure seen since March 2020. Rossman discusses the current numbers for credit-card debt nationally, noting that while candidates have focused on the total of more than $1.4 trillion, the way the Federal Reserve calculates credit-card debt clearly includes a lot of consumers who are not financially challenged. With the likelihood of interest rate cuts coming as soon as next month, Todd Rosenbluth, the head of research at VettaFi, turns to the municipal bond space to pick his ETF of the Week; Burns McKinney, senior portfolio manager at NFJ Investment Group, brings his style of "modern value investing" to the Market Call, and Chuck answers two questions from a listener who is primarily interested in how to take advantage of the start of the rate-cut cycle and recent declines in the price of most Magnificent Seven stocks.