Hey, it's Dean barber founder and CEO of
Barber Financial Group. Welcome to the
monthly economic update. It's a doozy!
Lots of records being broken and things
that we've never seen before. Bud
Kasper's gonna join me here while
we're doing our social distancing to give
you as much information as we can about
what we're seeing, what we're doing, what
we're hearing, and what we think is ahead.
Enjoy.
Thanks for taking a few minutes to join
Bud Kasper and myself for this month's
monthly economic update. As everyone
knows we're on lockdown and so Bud and I
are attempting to do this virtually and
we've got our good engineer doing the
recording and setting it all up, but
we're gonna give some data here. So
Bud, thanks for taking a few minutes to
share your thoughts on the economy and
this economic update with me. Let's start
with what I'm showing here on the screen
and what I've got up here is the twelve
different sectors of the markets and a
chart of those on a year-to-date basis.
And you know if I start adding in energy,
technology, industrials,
materials,
real estate-- virtually there has not been
a safe haven in any sector in this bear
market and this thing came at us at
lightning speed. The fastest decline from
30% ever. Even greater than the
speed of the decline in the Great
Depression and Bud, just as you and I are
doing this recordingc we're doing this on
March 25th, negative interest rates
appeared in the United States for the
first time ever on the one and the
three-month Treasury. Now negative
interest rates have been a reality
around the globe for several years, but
never in my wildest dreams and I don't
think your's either, Bud, did we ever
think we would see negative interest
rates on our treasury bills here in the United States.
BUD: No you're exactly right,
you know and the Federal Reserve had
backed up our thoughts by the way
because earlier and last year there when
the negative interest rates in Europe
were becoming more pronounced they were
saying, "no we don't see negative interest
rates ever coming to the United States."
and yet here it is today and now we have
negative interest rates on what is
it? The one month of three month I believe?
--DEAN: Yes, so but what is that telling us?
is this telling us that people are
willing to get paid less than what they
put into these Treasuries just for the
safety of knowing that they've got the
full faith and credit of the United
States government behind it so that
they're that fearful of everything else
out there that they're willing to accept
a small loss on their money just to know
that they're gonna get at least most of it back?
--BUD: I think that's what the normal
definition is you know, that I'd rather
pay a little bit of money and have it
backed by the United States government,
rather than being in any other type of a
a position that is out there. But at the
same token, when we examine exactly what
we're seeing with this --remember that
this is just another one of what we call
a Black Swan event, something that is
totally unpredictable totally
unexplainable that is happening at at
the speed of light. Remember Superman?
Faster than a speeding bullet? Well
that's exactly what this is felt like
because when the high-water mark of the
market ended on February 19th I think it
was up somewhere around 4.8% at that
time put that on top of the approximate
30 percent gain that we had in the total
year of 2019 and it's in 30 days giving
up all that return that we experienced.
It is unprecedented Dean. --DEAN: well and before the
biggest gain that we've ever seen since
1933 that occurred on Tuesday we you had
to go all the way but back to January of
2017. So essentially, in a 30 day
period this market wiped out all of the
market gains and I'm speaking on the Dow
Jones Industrial Average. For all of 2017,
all of 2019, and the first couple of
months of 2020. All gone in a matter of
30 days and I think that
obviously, there were some adjustments
and some things that we've made in the
different portfolios that we have, some
more tactical, some more asset allocation
driven, each one of those different types
of portfolios that we're managing for
yo all-- there's been attention to
those. There's been things that have been
done. The important thing here is to
understand that we've never
been here in this type of an environment
before where we have a virtual shutdown
of the global economy.
The impact by some people or it says
it's gonna be you know it's gonna be
pretty sharp, but it'll be short and then
we'll see a rapid recovery. So but you
were referencing something as you and I
were talking earlier this morning about
some quotes from our former Fed Chairman, Ben Bernanke.
BUD: Yes, Bernanke came out on
Wednesday and he said that he thought
that we'd have a sharp recession but a
quick recovery. I think I can
get behind that because of the amount of
stimulus that is being put in front of
this issue that we have at this time.
You know, this is like praying to put the
genie back in the bottle though isn't it Dean?
Because you know there's so many
negative effects that have occurred
because of this-- people that have lost
their jobs, they've lost their insurance,
that it's very hard to reverse those
issues and employers have been faced
with decisions that they never wanted to
have to deal with before and most
certainly never had any concept that
this was going to happen or they would
have to take this type of action. Who
would believe that the restaurants
entirely around the city that
people live in are closed and that the
only way that they can get any type of
revenue is to do curbside delivery of
food that you might be able to order
from them? I mean this is apocalyptic
in the sense that we've never seen this
kind of stuff. This has happened in third
world countries perhaps, but not in the
United States.
DEAN: I think that I've seen
we have either a "fight or flight" or
freeze and that's kind of what people
will do and I what I'm seeing is both
the flight and a freezing, right? So some
people are just "I'm not doing anything."
I don't know what's gonna
happen, so I'm not gonna make any changes.
I'm not gonna do anything." Well maybe
that could be right, maybe it can be
wrong. There's no crystal ball here.
I think the worst thing that a person
could do at this point in time is the
flight. To just run scared
because look we have great companies,
we've got a Congress, and a president who
are committed to putting the entire
power of the United States government,
we've got the Treasury officials, central
banks all providing liquidity
into the bond markets. You know this
is a this is something that I think that
it's gonna last for a while and I think
it's gonna take from a governmental and
fiscal perspective years in order to
unwind the stimulus packages and what
the Treasuries are doing, but the
Treasury Department was really forced to
come in and central bank's and say
"We've got to provide liquidity to the
bond market," because last week we saw the
biggest panic in the bond market that
we've seen since 2008 and so what
normally would be your your safe haven
type of investments also got taken
down last week. Not nearly to the degree
that stocks have, but still those are the
things that you expect when the markets
are doing poorly would do well but the
the bond market is acting like but we're
gonna have massive defaults and massive
bankruptcies and the real estate market
is acting the same way on the traded
REITs.  So you know that's I
think the part that's spooking everybody,
but markets have a tendency to overreact.
They have a tendency to overreact to the
downside and to the upside.
BUD: And that's why you know in Trump's plan they are
providing two trillion dollars I think a
little bit more than that, Dean, for them
to keep the window open for Fed
borrowing so that there is a
backstop to this, which is necessary.
You know, if you want to think about this
in comparison because right now what I
want to do is to go to the happiest
place on earth which of course is Disney
where-- oh it's closed!
I guess we won't be going to the happiest place. So we'll just stay in our houses and
shelter in, right? But what I was going to
get at was back in February of 2008,
President George W Bush signed into law
the economic stimulus Act. Now, that was a
Black Swan event, which we really haven't
gone into the details of that Dean quite
yet, but my point is we had legislation
that provided taxpayers rebates from
$600 to $1,200 which was put there to
encourage citizens to spend to reduce
taxes to increase loans on homes from
Fannie and Freddie. The so-called
stimulus package package also provided
businesses with financial incentives
just like we're talking about right now
because of
vailable capital for them to be able to
borrow inexpensively from the government
in this particular case. Dean you and i
remember vividly in 2008 that my memory
was right, I think it was somewhere
around September of that year that
Congress came up with what was called
TARP,
T-A-R-P:
 Troubled Asset Relief Program
It was a seven hundred billion dollar
package to do what? To loan to the banks
with interest to be able to recapitalize
these banks, which they should have been
in the first place but we're not because
we didn't regulate them enough..
But how did that turn out? Did
taxpayers just cough up more money that
the government saw fit to give away to
the banking system? No, the reality is all
that money was paid back to Us
taxpayers with interest I might add as well.
I think this allows us to see a
blueprint from '08 and we can take part
of that blueprint into what we have now,
even though we have offshoots of this
that are quite different. But there is
the fundamental rebuilding, if you will
Dean, the foundation to get solid. So we
can then expand from here.
DEAN: Bud you're right on! And you know
nobody's got a crystal ball,  we don't
know exactly how this whole thing is
gonna unwind. But I think that what
you're talking about is the very reason
why we saw such a surge in the market on
Tuesday. With the hopes of this new
stimulus package of being passed and
as word got around as that got closer and
closer --okay we're getting there. Then
there's gonna be some relief, but look-- 
I think that we would both be remiss Bud
if we were to assume that the volatility
is behind us and just because Congress
passes the stimulus package that there's
not going to be any more volatility.
There's not going to be any more
uncertainty because we're we're in the
early stages of this and I think there
will be more volatility I think there
will be more uncertainty and I think the
thing that we got a impart out here to
our clients and people that are not yet
clients but maybe want to become clients
is that in our financial planning
process we can identify what I'll
call the "Goldilocks portfolio." 
what's the right thing for you, right?
And if you're having trouble sleeping, if there's a little bit too much uncertainty.
You need to speak with us. You need to let us
know what you're feeling.
What you're thinking. We can make some small adjustments.
what we don't want to do is
make wholesale changes and get
caught on the wrong side of this super
volatile time, bud.
BUD: I agree with that,
going back to the '08 time frame since
we have somewhat of a blueprint of what
happened at that particular point in
time-- and just to put people's minds at
ease that this time at this present day
we said some things have vastly improved
over what they were in 2008-- the point
I'm making is that everybody remembers
that Bear Stearns went out of business. A
venerable hundred plus year old company
at that time.
Lehman Brothers, the largest
bankruptcy we had in US history happened
at that time as they went out of business
and then 85 billion dollars was
provided as a line of credit to AIG who
was deemed to be too big to fail. Well
I'm telling you that that isn't the case
today. Because what came out of that was
Dodd-Frank which was a congressional act
that came up that forced the banks to do
what Glass-Steagall did back after the
Great Recession, and that is you got to
have certain amount of capital in your
bank at all time would be a bank. They enforced that and they regulated it and
they tested it and tested it and our
banking system is more solid today than
it's ever been. So I don't have those particular
types of issues and I want people to put
that aside because that isn't where we
are at at present time.
DEAN: Right, I think
what we have to do Bud, is
make sure that we're keeping an eye on
every single thing, every single day.
Staying on top of this and have some
faith in the fact that you know the
Great Recession is not too far in a
distant memory and there were a lot of
lessons that were learned from that and
I think that a lot of the lessons that
were learned from that that have caused some
very quick and swift action we already.
We know that the Fed is stepping in, doing
more today than they ever did during the
Great Recession, and so I have some
comfort of thinking that you know we're
gonna get through this and the shutdown
of the economy will be a short-lived
shutdown of the economy. With
the support of the government and the
feds that we won't have massive
bankruptcies. We won't have to have
massive layoffs, and we can come out of
this on the other side looking great.
Only time is really gonna tell Bud, but we
got to wrap this up. Thanks for taking
time to share. You have anything else you want to share before we go?
BUD: NO, I don't think so Dean,
You know let's face it--
America is at its best when it's in
troubled times. People pull together and
even though we have a very split party
system here in the United States
presently, I think that too will mend
itself somewhat so that we can get on
the same page and find ourselves out of
this problem and back into prosperity.
perhaps just a couple of months from now.
DEAN: Awesome, Bud. Thanks for taking some time
Ladies and gentlemen, thank you for
taking time to join us for our Monthly Economic Update. I'm Dean Barber along
with Bud Kasper, look for us again in a
month. For all of our viewers on YouTube,
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