While the Federal Reserve is in focus this week as central bank officials head to Jackson Hole, Wyoming for their annual economic policy symposium.
Now the gap between short and long-term US borrowing costs is getting wider, a sign that investors believe the Fed will cut interest rates even as inflation shows signs of picking up.
And in the bond market, that's called a steepening yield curve where longer term bond yields rise compared to shorter term.
And meanwhile investors are betting on a 2 in 3 chance that the Fed cuts rates at least 1 full percentage point by July 2026.
Well joining me here at the New York Stock Exchange this morning is Gordon Stein, financial wellness speaker and author of the cash flow Cookbook.
Gordon, great to have you here.
Thank you so much for joining me.
Great to see you.
Thank you so much.
Well, here we are about to head into the autumn months.
We got a slew of economic data releases.
There are expectations of rate cuts on the horizon.
So what does this mean for investors who are watching out there?
You know, it depends on the swing, I think, a lot.
I think they're all expecting about 25 beats in terms of the lowering of interest rates, but I think the tone of the Fed is probably going to make a lot more difference.
What are those forward looking comments?
Is this the start of a losing curve, or is there a one-off cut?
Yes, and Gordon, many people out there may be familiar with the 6040 portfolio, but given everything that's happened, how should investors be thinking about risk in the long term?
I think the biggest swinger in terms of the markets is really going to be AI.
I think they need to be looking at stocks that are either pick and shovel AI plays that are going to drive that kind of tremendous change that we're going to be seeing, or companies.
Can take advantage of those efficiencies and improve the EIA as a result of using AI.
Those are the things that I think are going to make a pretty big difference.
Yeah, artificial intelligence is something that we're all paying attention to, whether we're talking about investing in AI or tangential investments here, but I do want to get your take on mortgage rates because that's something that we're paying attention to as Americans.
We know housing shelter costs are rising, but how does all of that play in, especially given the central banks' rate outlook?
Well, they've been a little bit of a decoupling more recently in terms of, you know, what happens to the Fed and what's happening in the market with interest rates.
So it's hard to say what the change in the Fed is going to do in terms of actually driving changes in the mortgage rates.
There's been some surprising moves of that kind of independence lately.
Yeah, and you're here on Wall Street at the New York Stock Exchange, and this is a symbol of capitalism as well as well, and we've all heard about budgeting, but what are some fallacies out there?
And if we do buy that cup of coffee or just say treat ourselves to avocado toast, will that really hurt our retirement?
I think traditional personal finance thinking is just, it's just wrong.
It doesn't align with the way we think.
People don't want to give up things.
That they love, they don't want to do detailed budgeting.
They can't find a way to save 10%.
So what I talk about in cash flow Cookbook, it's a lot about going after some of those other expenses, you know, I slashed my electric bill in half.
Did that change my lifestyle?
Not one bit.
Can I still have my avocado toast?
Sure.
So I think in the mass affluent world there's typically between $1500 and $2500 a month that people can prune down at other budgets while giving up nothing.
Yeah, and we're living in a time where we're seeing prices creep up.
So your average uh shopping cart for groceries, we've seen that climb post pandemic.
So you're talking about a cookbook here, so what's the secret sauce?
Well, I think it's going after these routine recurring monthly expenses.
Those are the ones that make a difference, and there's so much room for the average person to drive those down, you know.
One of the examples that I talk about from the stage is I was on a prescription drug $107 a month at some of the big chains.
I get it for $6 a month delivered to the door.
So whenever I'm in one of the big drugstore chains, I see all the people lining up to get their prescriptions.
I'm saying to myself, stop.
I want to go.
Handle copies of my book to everybody.
There's so many opportunities for people, even in the world of groceries, all kinds of things that they can do to drive down those expenses so that they're less concerned about inflation.
They're freeing up more cash flow, they're paying off debt, and they're able to increase their investments.
Yeah, and this week all eyes are on the Federal Reserve, not just for Powell's speech at the end of this week, but we also are going to be hearing from some of the big box retailers.
We got results out from Home Depot.
We're going to hear from Target, TJX, Ross Stores, and of course Walmart, right?
Those are names that we're all familiar with.
But when it comes to the actual data out there, where should we be saving and what can we really cut back on?
What is the data telling you?
Well, I think again the biggest ones are some of these things like mundane things like utilities, you know, companies like Spectrum, you know, cable.
Internet, home phone, if you're still using a home phone, these kinds of things have huge opportunity for people.
It's maybe an hour phone call.
They're freeing up $200 a month, $300 a month on cell phone plans.
So all of these things have big opportunities and people are missing them, but more and more people are now using AI tools as a way to reprice all of those ongoing monthly bills.
So that's another big opportunity.
It's risk for companies they're going to be seeing that kind of reprice and revenue melt.
And Gordon, finally, before I let you go, we know that there are companies out there that claim to help everyday Americans out there, cut their subscription plans or figure out how to rend the fat.
But in reality, should you be reaching out to professionals? this something that you can do on your own with your family?
What's the reality?
I mean, most of those companies, you know, they have a.
Ability to do that, but often they're looking for a percentage of your first year savings, which is crazy to give that up.
So in cash flow Cookbook I talked about $13,000 of monthly savings ideas that anyone can follow and it's as easy as following a recipe.
Wow, that seems like a pretty penny there.
So what does that mean in terms of someone whose, say, annual income is 500 or 100k?
Yeah, I think there's, you know, an opportunity pretty much across the board.
I think if your income is below $50,000.
It's harder, you know, but the first people who sign up to hear me speak are high net worth individuals because they feel that's how they got there.
So there's an opportunity, I would say. from $50,000 of income to $300,000 and that's sort of let's call it broadly mass affluent space, big opportunity to free up cash flow, pay down debt, and I think that's important to do.
We're now facing $1.4 trillion of credit card debt.
At 25% this is a 5 alarm blaze on your finances.
It's a big opportunity to free up cash and get that paid down.
Well, Gordon, we will have to leave it there, but thank you so much for joining me and thank you so much for breaking all of this down for us.
Oh, a real pleasure.
Thanks so much for you.
