EGSI Financial Economist Talks State of Economy in the Wake of Bank Failures

Ed Siddell, CEO and chief economist at EGSI Financial, joined Cheddar News to assess the market in which the S&amp;P 500 is riding a three-week high. Despite the positive trend, Siddell said there is still too much uncertainty in the market. "What we saw, the GDP came out [and] it's a little bit higher than what most people expected but still well below the original estimates," he said. "Consumer confidence is a little bit higher but I think that has more to do with making sure that their deposits were guaranteed."&nbsp;

Closing Bell

EGSI Financial CEO Talks State of Economy in the Wake of Bank Failures

Joining me now is CEO and Chief investment advisor at S Financial Ed. Thanks so much for coming on the show today. It looks like a three week high for the S and P. Even as these financial stocks generally just kind of tend to trend sideways. It still uncertainty, I think in the sector, what do you make of the market? You know, it, it's uh it's still very uncertain right now. Um You know, they're, they're kind of looking for just about any kind of good news that, that they can get and, you know, when I say good news talking about bad uh bad news, right? You know, bad news is good news for the market. Um What we saw the, the GDP came out, it's a little bit higher than um what most people expected, but still, well below the original estimates, they, they kind of reduced those estimates. Uh The, the P CE numbers uh came out uh and they were a little bit higher, you know, consumer confidence is a little bit higher. But I think that has more to do with um the uh making sure that their deposits uh were, were guaranteed So there's still an awful lot of uncertainty in the market. Um, but right now they're, they're kind of pricing in, um, a decrease in interest rates by the end of the year. And I'm not exactly sure that that's what's gonna happen. Interesting. So, walk me through your base case. Of course, the fed chair saying his own base case did not include rate cuts when we heard from him just about a week ago. Yeah. You, you know, I mean, he, they're, they're holding steadfast, um, you know, they continue to say that they're, they're gonna, um, push through and, and raise rates. Um, and until they hit that 2% which I think is gonna be, uh, extremely hard to hit. I think it's actually ridiculous. It's, it's below the 100 year average by almost one and a quarter percent. You know, the, the rumor has been that they're gonna actually have to start lowering rates by the end of the year. Um, but because of the, the, the Feds in action, um, you know, over the last couple of years, they've kind of backed themselves into a corner. So right now, depending on what they do. If they raise rates and they continue to raise rates, they're gonna break the economy and it's gonna put us into a very deep recession. Um, however, if they pause, uh, and, you know, even lower rates towards the end of the year, um, it's gonna create uh, inflation over a much longer period of time. And I think inflation is gonna be here to, to stay for, for years to come. So how should investors prepare for that? I think some people have said we could trade sideways for a while, but, you know, big Blockbuster returns, those also might not necessarily be in the case as growth just kind of stays subdued. What's your take, you know, for us and our clients, um you know, our job really, you know, we don't pick the top, we don't pick the bottom. You know, I think right now it's, it's more important to, you know, not just look for the, the return on your investment, but uh you know, protect the the return of your principal, you know, the return of your investment. So doing short term plays short term treasuries 36 months, even nine month. Um But, you know, we still like uh consumer staples. Uh I, I like uh energy, I like um uh health care, you know, and, and even hedging inflation and, and doing some precious metals, I think it's gonna be really important. But, you know, having a, a high liquidity position in making sure that your money is safe in terms of inflation. The long term impact. Obviously, I know you said that inflation could be here to stay, right. So for consumers, what does that mean for them? And that's overall GDP growth, you know, the GDP, we weren't exporting as much but we didn't import as much either. So, you know, that it offset the trade deficit, you know, when you look at GDP, you know, when, when you have growth in the economy, we really need to make sure that it's actual growth, that manufacturing is up and it's really not um manufacturing is down and it's projected to, to stay down over the next quarter. So, you know, from an inflationary standpoint, what can the consumer expect? You know, again, I think it's gonna be really tough. Um and making sure they, they, you know, watch their, their budget. Um and, and with the bank failures, you know, and the no bailout bailouts that have been happening by the Feds, I think there's gonna be a continued credit crunch for the consumers and a reduction on home loans. He locks as well as a reduction in, in credit cards. Um So, you know, making sure that they keep their spending in check is, is gonna be really hard, but that's something that's going to have to happen. All right back to the basics as C O Chief Investment Officer Advisor at E G I Financial Ed. Thank you so much.