David Stryzewski, CEO of Sound Planning Group, joins Cheddar News' Closing Bell, where he outlines the challenge the Fed faces if it wants a smooth landing, and discusses his views on inflation and recession two days before the Labor Department releases April inflation data. 

Closing Bell

S&P Ends Monday Below 4,000 for First Time in Over a Year

Against stocks ending near their session lows the NASDAQ booking a loss of worse than four And now down about 30% from its own high back in November concerns that more downside is ahead joining me now is David Straczynski, Ceo of Sound Planning Group. David, thanks so much. What do you make of today's market action? Well, my goodness, we picked one to talk about, didn't we? Um so here, here's, here's where we are right now. 2022 were were at the uh the end of what has been the longest bull market that the world has ever witnessed. The Federal Reserve has been a big player uh in in in getting to Uh this place. And now, you know, we've been reducing interest rates meaningfully since September 1981, 40 years. And uh and now we're having to raise them. So, you know, the market is not happy about the raise, at least it was telegraphed and we weren't surprised by it. You know, they've they've told us that that they're not going to crash the market with their uh their their raises. So my expectation is that they're not going to do more than what they're saying. The question is, will they actually get that perfect? You know, splash landing? Because here's the challenge with the Fed right now, the Fed, if they raise rates enough to actually deal with the inflation crisis and cool down the market, which means actually, you know, slowing down what we can purchase. That's what they're that's what's needed to happen here, is is that that we, as consumers need to slow down our purchasing in order for inflation to settle down. But if they raise rates so much, well, guess what they do, They kill business. And right now, what we're seeing is a challenge here with liquidity. So we've got low liquidity right now. We're used to refinancing our debt, uh, you know, all the time here as major corporations. And so a lot of deals that we're even getting put together, you know, we're coming in with billions of debt from, from each company. Those deals may not make sense any longer. And so as our economy is beginning to move and change here with some of the feds adjustments that they need to make. Well now we're seeing interest rates rise and, and that specifically is going to have a yeah, clearly higher rates. I think David, the main factor here driving the market lower, even though there are still so many unknowns out there as well, china, the coronavirus Russia's ongoing invasion of Ukraine, but certainly Wall Street, um, is increasingly volatile. And we all knew volatility was going to be a key theme this year. But so much so picking up that they're starting to be real concern that we could fall even further from here, Is that your expectation. So let's just say that the low liquidity right now and this very volatile environment doesn't make for a great story to say that there should be this, this wonderful rebound coming out of this, Like we saw in March, I think that we're looking at a little it's a little bit different. So I'm personally cautiously optimistic. You know, the market has surprised us, it's possible the Fed can pull this out, people settle down, they'll recognize these are world class companies, nothing changed with them. But you know, uh you know recessions are are normal and they're healthy, frankly, you know, pruning is healthy. Am I expecting downside? Yes I am. And we've been preparing for this for a long time. Um So there's a bond mobile in in in bonds. Uh there's a stock bubble and there's also a real estate bubble happening right now as interest rates rise, the value of real estate is going to have to come down relative to the median income or what one third of someone's buying power can afford. And so we're finding ourselves sort of in this interesting dichotomy where all these things are converging all at one time. And so yeah that makes for a very tumultuous moment. I'm sort of dubbing this the Federal Reserve bubble and we'll see how it plays out and how they can uh kind of navigate their their their way through this. But I think they're late to the party and unfortunately that means that our C. P. I. Is going to be going crazy. And I know that's like your next point and talking about here is we're looking at the C. P. I. Numbers here this next week and here's what I'm going to share. That's super important for us to understand. But why don't we actually look at our own personal CP I numbers? So we've had this high inflation now since 2021. This didn't just begin with the with the Russian Ukraine situation. This has been now for over a year. So we have one year of data to be able to look at our personal expenses to understand where we may be seen inflation higher. So I think good advice for average people is make sure that you're looking at your budget and you're looking at your day to day because we're in a storm, we're gonna have to ride through some things. Are there any signs David that you see inflation is starting to peak? Of course. Many said the Fed was too late to act that it continued to call inflation transitory into the fall and many people anyone shopping right, doing daily shopping at the grocery store elsewhere, Taking an Uber or a lyft. I clearly knew that this did not seem like a transitory environment. But now there are some calls that inflation is starting to peak. Do you agree with that? So it's gonna come down to supply chain? Um I just bought a car here two weeks ago um Pretty amazing. I bought a used car for more than msrp e. It's you know incredible. But but but there's this significant supply chain shortage as well as a lot of disruption taking place in semiconductors that I'm very concerned about right now. And so do we think that inflation is over? I don't think so. I think that we're going to see it in oil. I think we're gonna see it in some of the building materials. We're gonna have challenges in getting the supply chain completely together. Like think of a ford truck and that it might take 50 different, you know, shipments of things coming together in order to make You know, one truck. And so if we have a challenge with two of those things, guess what? That's not all 50. And so we're going to have to figure out how to work through this. And we're gonna have to figure out some different innovations in order to maybe sell cars. David in this market. Is there anywhere to hide? I mean, everything across the board right, is lower. But are there moves that you're recommending to your client base that they make that can be advantageous in a market like this. Absolutely. So right now we are in the middle of, of of of, you know, this really tumultuous times. So it's very important for people to evaluate their risk. Now. The challenge of course is that our risk off assets like bonds actually could be the biggest time bomb that you could be sitting on right now if rates continue to go up like the Fed has said. So where do we go and what do we do? Yes, we are going to need to look into some alternatives. They tend to have lower liquidity and this is why you need to have a balance of liquidity protection and growth, the right and most appropriate balance based upon your age, timeframe. Um, you know, when you need to be getting money, how much money you need to be withdrawing the good news is interest rates are coming up, they're just not matching what inflation is. So it's a guaranteed loss. And so you can either be managing money for risk off and trying to avoid crashes or it could be managing for inflation. They're actually opposite investment strategies. So it's a little bit tricky right now for the average person to be navigating and doing this. This is why they need to sit down and take a math and science approach to their entire situation and understand the preponderance of evidence before they can really make those decisions with clear objectives. Alright. David, Straczynski, Ceo of Sound planning group. David, thanks so much on what's been a complete sell out in the market today.