David Stryzewski, CEO of Sound Planning Group, joins Cheddar News' Closing Bell, where he says that rate hikes are driving the market right now and outlines what must be in place for a stock rally. 

Closing Bell

Stocks Close Higher as Fed Points to Further Rate Hikes

But let's turn back to the major indexes. Pretty decent day of gains on the major indexes. And we do see actually some decent gains piling up for this week again after eight straight weeks of losses on the doubt. So joining me now is David Straczynski Ceo of sound planning group that's an insurance firm building client retirement strategies. Thanks so much for coming on the show another day, another rollercoaster on Wall Street. We have dipped into the red a few times, but they were short lived our losses. What do you make of today's activity? Well, you know, today's activity is is kind of interesting always when we see these big declines, we're gonna see bounces back. I think if we track or chart anything going back to 2008, year 2000, we see positive timeframes. Now, what's interesting today though is that I was checking the federal reserves monitoring Of what they believe rate hikes are gonna look like. And so rate hikes are really the things that are driving our market right now. They're really the thing that are there of course driving the price of our stocks are real estate and even our bonds. But look at what they just did in September, they went from 50 basis points and as an expectation back to 25. And so that's the type of accommodations that we're looking for. If we're going to see a stock rally. And so of course if they begin to have more of a does this type of position that's going to be incredibly valuable and changing pe ratios. And I would say get poised for a massive growth opportunity if analysts expectations are correct, Given that 95% of the S. & P. has been in and 75% of them have beat expectations. And the video would be my expectation they're going to do the same as well. So certainly things seem to be very positive. David has certainly that staff catching a bid today outperforming the broader market. So I think the investor sentiment is there as well and we should know really. It does seem as if investors are buying the dip today if they do have a long term view because retailers were a mixed bag. I mean, urban outfitters had a bad report yet the stock of double digits today. So people clearly coming into this market amid the recent pullback. So much so that based on your rate comment, it is surprising to me that the Fed indicated in these meeting minutes that it could hike interest rates even more than originally projected. Yet the stock market ending with solid gains. Does it seem like a buy the dip kind of day? And do you think the rally can last? Great question? I think that's the million dollar question. Right? And so as we're in the middle of things, it's difficult to predict in general. But now we're in the middle of many different headwinds coming at us. So the Feds saying that it's willing to do whatever is necessary. Um That's a good sign, right? Because because we want to see them being willing, if they say that they're not willing, that would be of course very negative. So I'd say that that was a positive. The uh the next part here with the Fed is just to note that, you know, hey, they actually did just make that adjustment in september so for the fact that they would come out with a strong statement to say, hey, don't look at that as weakness. They're just, I think looking at inflation and saying, we think that there's some easing taking place in inflation. So is it a by, well, I guess what if supply comes back that's been one of the biggest drivers for inflation, you know, over the last two years and that would be really important. So let's get some ports moving, something's going. But uh yeah, there's some, there's some great opportunities here today. Yes, Analyst estimates are correct, but you asked the question, can they continue for the long term? So, I mean, I could make the case today for at least a 20% upside to the S&P um and then in certain areas better than 50%. But I can also make the case to say that there's a lot of negative headwind in that analyst estimates and consistent estimates need to look at a recession in the future and they probably need to pull down what their estimates are. And so if they do that means that they way overestimated that would be really bad. So I guess we're gonna see what happens as the time of this thing plays out. Well, the Federal Reserve Dua slash this landing is just gonna be a belly flop. I hope it's not, you know, it's probably neither one. It's probably something in between. Let's hope for the best cross our fingers. But we're in the middle of that inflationary environment and the middle class families are really feeling it right now. I think a lot of groups are really feeling it certainly probably the middle class and those looking at their retirement accounts as the stock market has created. David from recent highs at the start of the year. And that's my next question. Your firm helping put a retirement planning process in place. What are you advising your soon to be retired clients right now? Well, it's all about understanding your personal situation from and understand risk management liquidity. We've got to have time horizons different targets that we're looking at meeting. And so we do income planning and obviously it's very difficult right now for retirees or baby boomers in general to be looking at retiring today when the markets at record highs and it's really kind of waffle. E right now we've got inflation at a rate that how do we even project that over the length of a retirement plan, 30 years or so. Uh and then we look at uh you know, interest rates on things like bonds that are yielding historically a third of what they've done with the potential of those increases uh from the Federal Reserve, which of course would again take those those bonds. So yes, we do see better yields today, but still those yields are far below what we're seeing for real inflation. And so what we do is we help people to come together understand true Roth conversion plants. True. So security maximization those two things right there, blending your income together with a combination of ordinary income, your capital gains, tax free dollars. And uh and ultimately some of these things like Social Security and pensions, you can minimize the yield that you need to gain in order for your plan to work out because you can minimize taxes as an example or do things more efficiently. So we have a really unique niche. We're growing massively and helping a lot of families to do it. But more importantly, this type of planning seems to be very rare in this world right now, but in a time when people need real answers, I don't know how you'd want to go forward in the future without it. So, another question that I have is it is you're right, I think scary for some people to retire At this very moment, not just because the stock market is down 20% on the S&P 30% on the NASDAQ and people may see right their retirement savings, their life's savings cut by a third. That's not easy to see. But there's still so many uncertainties out there. Will we have a recession? How long will it last? How long is China's zero covid tolerance policy going to last? How long we'll supply chain issues persist. Right? The list goes on and on and on. And so for your clients, are you advising them if they can to hold off simply on retiring because of the current state of the market? Well, that's certainly an option. I think though, that as we look at the landscape of America and the baby boomers right now we have the great resignation happened last year. So there's many people that are there there there in retirement, they're doing this thing. Uh, so about 50% of boomers today have have, approximately retired. But true story. So security and Medicare today are approximately 60% of all federal spending. That's a very big number. Uh, So, so there's some, there's some challenges to that as well. Are there gonna be some reforms Covid actually, even uh shortened the years of when Social Security is supposed to be insolvent and Medicare part a as well. We'll get more on that. Uh july the first when their board meeting notes come out, but, but where people are today. Yeah, What do we advise? So we've built refined the process of, of how we manage risk and we, and we look at things and so one of the areas that we want to have specific attention to today are protected assets. Where do we go? Right so C. D. S yield nothing. We're gonna lose to inflation significantly, bonds are losing to inflation right now. And if you own bonds you're down significantly this year, we do not have a significant allocation to bonds in our firm. Um In fact what we use is a lot of alternatives. And so there are alternative asset classes that give you the ability to have reasonable rates of return. Um great protection on the downside superior to what bonds would provide because there's not guarantees and bonds bonds can lose money, you know, five different ways. And so the point is is that people need to be aware of what their options are and from that standpoint then they evaluate risk tolerance timeframe, hey, buy low sell high. I feel like a lot of people right now we're looking at this and saying we're a little bit, you know, may be optimistic but cautious for sure. As the rest of our life depends on this thing. So buy low, sell high with caution. I like that. David Kaczynski ceo sound planning group that's an insurance firm building client retirement strategies. Thank you. David stay with us because we're going to have in video earnings out any moment here. Of course. I want to get your take in the wake of those