Geoff: We're going to take a
look now at the financial
markets.
The third quarter has come to an
end and many investors are
wishing it good riddance.
The Dow Jones industrial average
saw its worst September since
2002 and its worst monthly drop
since March 2020.
And the S&P 500 and NASDAQ are
on track to experience their
first three quarter losing
streaks since 2009.
Here to help us make sense of
the markets is robin farzad,
host of public radio's full
disclosure podcast.
Roben, it's great to have you
with us.
Around the world, you've got
markets reeling.
The values of currencies are
plunging.
Oil and other commodities are
getting hammered.
What is happening?
Roben: Everything, geoff, is
ultimately hard wired to the
United States' main interest
rate that the federal reserve
controls.
And we've gotten use over
decades that just really low
interest rate policy in times of
crisis.
In times of crisis we take
interest rates to zero and it's
a free for all for real estate
and risk asset holders and
stocks and nft's and crypto.
The problem this time is there's
this broadening idea that the
fed doesn't have a handle on
inflation and it could be so out
of its control that it has to
keep hiking rate.
And so no one knows.
They're kind of selling first
and asking questions later,
whether you talk about the
Brits, asset markets across the
world, emerging markets,
corporate debt, junk bonds in
the United States, it's really
such an overdue reckoning.
And people for years have been
saying the 40 year bull market
in bonds is over, the 30 year
bull market bonds is over.
And there's this idea right now
that it's finally caught up to
us.
Geoff: And there have been few
places for investors to hide
because as you mentioned,
there's so much volatility.
And in the bond market, I mean,
what are some of the best
practices?
What are what are people
supposed to do?
-- Time was you could look at
Campbell soup or things that
were staid.
But I've looked all across.
I mean, grocery companies are
getting hit because, again, we
don't have an institutional
memory of of pernicious,
persistent inflation.
It's something that I often say
my dad talks to me about when I
was a little kid and he'd showed
me the passbook savings accounts
and he'd tell me about the price
of milk.
But in our adulthood, geoff, you
know, in my investing lifetime,
I haven't had to we really
haven't had to deal with
inflation.
Geoff: Roben, for people who
don't study the markets as
closely as you do, but who
really only see their retirement
accounts plummeting, is a bear
market the same as being on the
precipice of a recession, or are
those two sort of different
things?
Roben: They don't necessarily go
into lockstep.
We've had so many bear markets
just even since the crash of
1987 or the early eighties as a
part of a broader kind of broad
increase in the S&P 500 and the
Dow.
But bear markets hurt.
You don't want to log into the p401(k) Orthe Roth iraand se
that it's taken a 25% haircut.
But to answer another question,
there is a silver lining.
You can finally get yield.
You know, let's not
underestimate this.
With inflation up there, it's
keeping the fixed income markets
and the dividend markets a
little more honest.
You could get something like a
3.5% yield on a shorter term
treasury or a ten year treasury.
Certificates of deposits, the
banks finally have to pay up
after a long period of not
giving you anything.
So there is real yield out
there, but it's coldly
comforting at a time when we
don't know if the fed's going to
have to stop at 5%, at 6%, at
7%.
What is the cry uncle point?
And so again, everyone is
selling first and asking
questions later.
Geoff: Roben farzad, host of the
full disclosure podcast, thanks
as always for your insights,
friend.
Roben: My pleasure.
Thank you, geoff.
♪♪