Money Life with Chuck Jaffe

Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co., says the economic cycle is now in its last stages, and while there may be a blow-off top before trouble is here, he expects a recession and he will not be surprised if it occurs after the Federa;l Reserve cuts interest rates. While many observers expect cuts to help markets, Schutte says that the Fed has never been able to  take an overheated economy and cool it without triggering a recession. He added that the last four recessions all occurred shortly after rate cuts. In the Market Call, Ira Rothberg, portfolio manager for the Hennessy Focus Fund, discusses buying great companies at modest discounts, with the courage to hold them for years waiting for the payoff.  Plus, Chuck answers a listener's question on deciding whether pet insurance is a good idea for a new puppy.

Sam Stovall, chief market strategist for CFRA Research, says the market needs to "digest its gains," which he expects to turn into a "low teens selloff," but that will be a bull  market correction and not a catastrophic event like the 2008 financial crisis. Stovall expects the Federal Reserve to  make cuts starting in September, but he notes that the central bank is going to wait until it absolutely must make a move rather than making any change simply because the market is anticipating one, and he notes that could portend trouble because the Fed has historically waited too long before acting. Also on the show -- and agreeing with the idea that the market is strong but due for a selloff is Jeffrey Bierman, chief market technician at TheoTrade.com, and the founder of TheQuantGuy.com. He says the market is driven by "the 4 N’s," which involve a market that is numb to all news, neutralized against all volatility, that has normalized inflation and momentum trading and that has "negated all valuation." That has set up a market that can keep going despite an economy that is slowing. Plus, Chip Lupo discusses WalletHub's 2024 Credit Card Debt Survey, which showed that credit-card balances are on the rise and that nearly half of Americans are still paying down the credit card bills they ran up last summer, which does not bode well for how things will look for their credit when Labor Day rolls around.

David Trainer, founder and president of New Constructs, was still in a festive Fourth of July mood, so instead of going to his usual spot in "The Danger Zone," he picked a quality, classic American business as a potential buy, singling out HF Sinclair, the oil company, for "The Attractive Zone." Between consistent growth in its dividend and stock buy-backs, Trainer says HF Sinclair could have a potential yield of 10 percent or more. Mark Hamrick, senior economic analyst and Washington bureau chief at BankRate.com weighs in on Friday's jobs report and what some weakness in those numbers suggests for when the Federal Reserve will decide it's time to cut interest rates. William Vanderbloemen, founder and chief executive officer at Vanderbloemen Search Group, discusses the skills and traits that workers will want to bring to the job in a world where artificial intelligence is expected to take over a lot of tasks. In the Money Life Market Call, Rob Isbitts, co-founder and chief investment strategist at Sungarden Investment Publishing, talks about YARP, his "Yield at a Reasonable Price" strategy.  

Nikolaj Schmidt, chief international economist at T. Rowe Price, says he's expecting a correction soon "but it's not going to be something too deep or too dark or too scary," noting that the economic backdrop remains strong enough that the Federal Reserve can likely finish the year with just one rate cut. Schmid discusses T. Rowe's 2024 Mid-Year Outlook, and notes that he is concerned that with foreign central banks already having cut rates, the Fed's timing is now more critical because it does not want its monetary policy to be too far out of sync with the rest of the world. John Cole Scott of Closed-End Fund Advisors compares two high-yielding offerings from Ares, showing that while both could be viable and attractive options for diversifying a portfolio into the alternative credit space, there's much more to making an investment decision than a big yield. Plus, Karen Brown, a reporter at New England Public Media and the host of "The Secrets We Keep" podcast talks about financial secret-keeping, particularly around the salaries we make and what ending the secrecy might mean for individuals and for society.

David Lubchenco, partner at Chautauqua Capital Management, says that the underperformance of foreign stocks for several years has been so extreme that relative valuations look good and international stocks are poised for a strong run whenever the market's next cycle begins. Lubchenco says that when there is a concentrated market like what investors have seen during the rise of the Magnificent Seven stocks, it portends change ahead, which makes this a good time for investors to make sure they take a diversified approach now. Todd Rosenbluth, head of research at VettaFi, equates quality with greatness so he's celebrating the July 4 holiday by picking a quality-focused fund as his ETF of the Week. In the Market Call, Roger Conrad, editor of Conrad’s Utility Investor and The REIT Sheet talks about income and dividend investing.

Xander Gray, founder and chief executive officer at XG Capital Strategies, says that a bear market is coming, with a number of potential catalysts contributing to trigger the downturn. He says that while he expects a downturn of up to 30 percent, he does not expect it to take long. Further Gray says that for investors who have not been buying now likely want to wait until next year, with the market around record highs but likely to have at least a minor blow-off before the real bear market shows up. Jeff Clark, head of defined contribution research at Vanguard talks about “How America Saves,” the company's annual look at the behaviors of more than five million retirement-plan investors, which showed that savers were setting aside money at a record pace, and that average amounts that workers are putting into savings are on the rise. Plus, Elizabeth MacBride, co-author of "The Little Book of Robo Investing: How to Make Money While You Sleep" discusses the pros and cons of using robo advice platforms as compared to human financial advisers, plus Chuck answers a listener's question comparing the returns on gold to those of the stock market and suggesting that investors should want to hold more of the metal.

Jeff Timlin, head of municipal strategies at Sage Advisory Services, says that potential problems surfacing in the California and New York municipal bond markets  are telegraphing "an economic slowdown nationally," but that investors should not worry about a significant increase in defaults, and should instead find munis becoming increasingly attractive once the Federal Reserve starts cutting rates. David Trainer, president of New  Constructs, puts electric-vehicle maker Nio back into The Danger Zone, noting that while the stock's price has cratered, it can't even justify its current price in the range of five bucks per share. Divya Sangameshwar discusses a ValuePenguin.com study showing that the average American household will spend roughly $1,730 this year on their pets. Plus, Nancy Tengler, chief investment officer at Laffer Tengler Investments, discusses growth at a reasonable prices in the Money Life Market Call.

D.R. Barton Jr., Director of Market Research at the Foundation for the Study of Cycles,  says the longest cycles suggest that the market is topping out now, but 'near-term overbought doesn't bother me right now.' He is expecting more upside into the election and carrying into 2025 before any downturn is more dramatic than a simple buying opportunity. He says that he doesn't expect much downside risk until or unless the Standard & Poor's 500 falls below the 5,300 level; meanwhile the market is telling him that money keeps flowing in and can sustain the rally longer. John Cole Scott, president of Closed-End Fund Advisors, returns from a recent industry conference that was focused on business-development companies and he gives his takeaways from the event, including how BDCs compare to private credits, how the market is changing and how some money managers are using artificial intelligence to get better information on the market trends that should help them pick better investments or to have better timing on the trades they make and more. Plus, Julie Guntrip, head of financial wellness at Jenius Bank, explores 'The Mind-Money Connection,' a study that looks at how managing money can make you happier or more stressed out. In the Market Call, Lance Cannon, portfolio manager at Hood River Capital Management, returns to discuss growth-centered small-cap investing.

Matt Gertken, chief strategist for global and U.S. political strategy at BCA Research, says investors should be factoring in geopolitics and the upcoming U.S. election now, because current uncertainty could cause a downturn "soon, at any time." But once the election is sorted out, whoever wins — and no matter the policies they pursue — is facing the inevitabilities of the economic cycle. Gertken is clear that he doesn't see the kind of economic imbalances that would cause a market cataclysm akin to the Great Financial Crisis of 2008, but troubles in China over politics there — plus deflation and a troubled housing market — could drag the U.S. and other international economies into a bigger tailspin. Todd Rosenbluth, head of research at VettaFi, looks to the infrastructure space with his ETF of the Week, and Indrani De, global head of investment research for FTSE Russell discusses the upcoming Russell Reconstitution — the exercise of changing benchmark indexes to avoid surprises — and what the current effort (which becomes final on Friday) reveals about the stock market and the breadth of growth now.

Emily Roland, co-chief investment strategist at John Hancock Investment Management thinks the current protracted economic cycle "will end the same way that almost every cycle has," with high interest rates triggering trouble before rate cuts and a downturn that resets the market and repositions it for growth. Roland is hopeful the economy can avoid a hard landing — and she notes that heightened government spending that has helped the current economy could keep it going longer — but says she is watching for when initial jobless claims start to rise, because that will be the signal to get defensive, and while she says it could happen soon, it could extend as far out as 2026. Justin Conway, vice president of investment partnerships at Calvert Impact talks about Community Investment Notes — and specifically the new Cut Carbon Notes — as a way of diversifying income while supporting underserved communities. Cassandra Happe discusses WalletHub's 2024 Credit Card Rewards Survey, which showed that more than 60 percent of Americans think that card bonuses encourage overspending, but where nearly 4 in 5 respondents said that higher inflation has made them more interested in earning credit-card rewards. Plus, Chuck answers a listener's question about the impact and benefits of diversifying into a fund that owns popular stocks when you already hold those companies through index funds.