David Stryzewski, CEO of Sound Planning Group, joins Cheddar News' Closing Bell, where he says he believes pent-up demand is driving stocks higher and explains how Wednesday's Fed decision continues to impact investor sentiment.

Closing Bell

Stocks Close Higher, Major Indexes Post Best Week Since November 2020

all right, turning back to the major averages joining us now is David Trezeguet, Ski ceo of sound planning group now. David, another strong day for the markets. What has investors feeling so good on this friday? Well, you know, I think that there's a little bit of pent up of demand. We saw record highs here ending 2021. We've obviously seen a pullback. Um, you know, the Fed is, is now, you know, they've, they've stopped the printing press more or less in the buying of their own bonds. We've now seen the first rate increase. I think that the market, which of course is forward looking and trying to be efficient, is trying to metabolize these ideas. And, and so we saw that valuations in stocks and opportunities within specific positions. Um, we're, we're, we're looking like they had some positive outcomes here, at least in the short term. Now, investors hate uncertainty. There's a lot of uncertainty out there with inflation. The conflict in Ukraine. So what we're seeing in the stock market doesn't really make sense. Do you think it was the Fed decision they Fed announcement that kind of made nerves a little more calm. What do you think is driving this this rally right now? Well, there's no question that inflation happens as a result of commodities being worth more than they were before and that typically occurs. Um, when, when we find our our our dollar having some challenges or um, we, we we find ourselves in a, in a place where supply and demand is critical? Well, we need to curb inflation essentially, the Fed has, you know, created this amazing economy that created record markets, I mean, to create a record is a big deal. Um, but we've kind of just taken, you know, our autopilot off if you will. And um, you know, the Feds coming in for a landing on what they've been doing with easy money Since 2008. And um, we're finding ourselves with a lot of different headwinds, uh, you know, facing us. So anytime I think that we're going to see positive outlooks, people are going to be apt to try to jump towards them. Um, it's sort of the, you know, no one's, no one's right, no one's wrong. We have different ways of approaching things. And as we find different ideas, you're gonna find areas I think of the market, they're going to do better than others. But overall we've got a lot of headwind issues that are facing us today in the american consumer that I'm very concerned about. So one thing I want to get to the Fed in a little bit, but you said american consumers, So now my ears have perked up oil energy when it came to those stocks, those sectors, it's been super volatile. How would you recommend going into those sectors. Now, when you have these peace talks that happened earlier in the week, you have the chinese president talking with the american president today, how would you navigate that space now? Well, oil prices have fallen because they were oversold, we kind of had a perfect storm here. Where remember the oil prices didn't just happen as a result of this conflict with Russia a few weeks ago, we've been seeing oil prices as well as inflation now for two years. Those two years have also been the time frames that we've been experiencing Covid. So we've got quite a number of things that are that are going on here. You know, I'll say this, you know, personally, um I'm personally bullish on U. S. Production of oil and I think that that's something that that we really need to uh as a nation have a serious conversation about I think Elon musk has even been bringing that up recently and he's a clean energy guy. Um but you know, we do it better than anybody as far as safety goes and how clean things are and we have more oil than anyone else. So I think that we're going to see commodities uh you know, here to stay. But ultimately that oil prices gonna be dictating everything because you know, we make computers out of the plastics that we produced from oil. In fact even the U. N. Right now is is looking at their green or zero. Um What is it called? They're they're trying to reduce the carbon footprint but they believe by 2050 that we will consume 30% more oil than we even consumed today. So it doesn't look like we're completely going away from it or that that's going to be completely eliminated. So I see this long term as an important sector, an area to be continuing to pay attention on and not just only looking at the green stuff. I think we all want to do that. I think a lot of consumers like the idea of, you know, battery powered cars. I mean, I love the fact that the Hummer I ordered goes 0 to 60 in 2.9 seconds. That's cool. Um, but uh, you know, we've, we've, we've right, and so the technology is incredible, but, but, but there's this, this happy medium place that we're gonna have to figure out because you know, we've got the power of these cars. Uh, you know, I heard that California was even asking, uh, some of their citizens here just a week or two ago to not plug their cars in that week because they were having threatens of brownouts. So these are important questions for us to be thinking about is we're kind of in a new economy here today as so many things are shifting specifically Fed policy inflation. How the average consumer is able to metabolize these ideas. Now, I want to get back to the Fed since that was important. There's a lot of headlines today with a lot of opinions out there. So ST louis Fed President James Bullard said the Fed should raise its benchmark interest rate above 3% Adding the Fed should raise rates, the equipment of 12 times this year. That was one of the headlines that caught me, what are your thoughts on that? So they're probably looking at the Taylor Method, which is how we have evaluated where the Feds should be kind of historically, as our benchmark. The Taylor method from my last calculation uh said that we should be actually at 5%. So we've been targeting too, but we've basically been at the Fed funds rate of zero. So so we're like way behind and that's part of what I was saying is like, so the pilots coming in for landing right now, they just took it off autopilot and there's a lot of headwinds facing them and they haven't really done the flight prep. Right, so are we gonna be offloading balance sheets, Are we going to be, you know, how are these these things ultimately going to be uh, in affecting the average person, uh stocks, bonds, specifically interest rates and in all these environments. So I don't think anyone has the perfect idea. The master plan, in fact, financial advisors that are, that are trying to go so deep into opinions are probably going to find themselves wrong and uh and and so this is where it just really comes down to the average person needs to understand good risk management today. They need to understand also probably a review of their budget And spending plans because just to go back to the American consumer for a second. I'm finding that those that are making $250,000 or less are really the ones that are being impacted by this. And I realize that's probably a high number to say. Um, but think about it. Many people today are living mostly to their means. You know, the prices of housing have been going up. That's really been housing, health care and college have been the three places that we've been seeing, inflation occurred for the last. That's right. That's right. So we know that mortgage rates are, are, are higher the amount that's needed, but actually the applications are lower today. And so we're seeing a little bit of cooling and we actually need to see some cooling in order for inflation to, to to subside a little bit. So it's that demand being so high, that's the problem. So again, if consumers go back to looking at their budget and they might say, hey, I really want a new car, But is this the right time to do it? Can we afford it right now? Is this a must have because we might overspend for some of those areas? Um, because we're, we're, we're trying to live within a similar lifestyle standard that may or may not be conducive under these inflationary environments, you know, two years now at over 7%. That's a big deal. That is David's Tracinski ceo of sound planning Group, sir, enjoy the weekend, enjoy your Hummer. I'll be taking the train in new york city. David thanks a lot, appreciate your time.