From the Kitchen Table: The Duffys - Preparing Your Family For A Recession

Episode Date: October 19, 2023

The Biden Administration continues to tout its economic policy achievements, hailing "Bidenomics" as a success for the nation. Director of Research at Hedgeye, Daryl Jones explains how record government spending has accelerated inflation, and what families can do to protect themselves from a potential recession.  Later, Daryl shares his assessment of the housing market and his thoughts on why "stagflation" may be the country's largest issue.  Follow Sean & Rachel on Twitter: @SeanDuffyWI & @RCamposDuffy Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode is brought to you by Mejuri. From November 25th to December 2nd, get 25% off everything on orders over $150 in Mejuri's biggest sale ever. From bold hoops to minimalist stacks, Mejuri has something for everyone. Mejuri makes handcrafted fine jewelry for every day made with responsibly sourced materials.

So you can look and feel good about gifting and wearing them. Shop your wishlist 25% off at Mijeri.com today. Hey everyone, welcome to From the Kitchen Table. I'm Sean Duffy along with my co-host for the podcast, my partner in life, and my wife, Rachel Campos Duffy. Sean, it's great to be back at the kitchen table. And we get a lot of feedback from so many of our listeners and viewers. And one of the things people are really concerned about is the economy and what it means for the bottom line. And it's your favorite topic. Hey, listen, it's- It usually puts me to sleep. But lately, I've been really, really interested in it

because I think something really, I don't know, bad might be on the verge of happening. When I talk about this topic, I usually preface it with anyone I'm speaking to is, I know I'm crazy. I know I've lost my mind. So don't assume that I don't know that I've lost my mind and gone crazy. But I always think it's important to say, you

know, let's bring in some really smart people, people who do this for a living to go, you know, what do you see? And that's why today we have Daryl Jones with us. He is the director of research at Hedgeye Risk Management. He's a Yale chap, graduated from Yale, undergrad. Played hockey for Yale as well. We're a hockey family. We have a nephew in the pros, though. 96 went first round, first pick. Eric Johnson went to St. Louis, got a ring with Colin Hill a couple years ago.

About a year, yeah, two years ago. I played for Buffalo. Daryl, welcome to the Kitchen, Tim. We appreciate you joining us. Yeah, thanks for having me. I'm really excited to be on. I didn't know about the hockey connection, but that makes it even better. Yeah, even better, we have a Mexican-American little boy in hockey.

So, we're adding to the diversity of the sport, which apparently has been something they've been really worried about. We're not. They are. They are, but just so you know, we're adding. So, Darrell, let's talk about kind of the state of the economy to start. And so I look at the sort of nine years in Congress. And so we're thirty three trillion dollars in debt. Now, you know, when we were twenty eight trillion might not have been the biggest deal because interest rates were near zero. So the servicing of the debt was not as big of a deal. But as the Fed has raised rates, the amount we pay to service the debt, I think it's becoming a problem.

And you have a Congress and a president who continue to, you know, not change gears after the pandemic. They've continued on their happy ways, spending lots of money that America doesn't have. There's a lot of unfunded liabilities that aren't even included in the deficit calculations. And so that concerns me. And I'm one who thinks this can't continue forever. This dance will end one day. And you think soon, Sean. And this is why we have Daryl here to go. Is Sean crazy or could something bad happen soon? Daryl here to go. Is Sean crazy or could something bad happen soon? Daryl Jones, go. Well, yeah, Sean could be crazy, but I don't think he's crazy in this regard.

He's sane here. Okay. But, you know, the reality is the government debt is a major problem. Two weekends ago, we added $225 billion to the balance sheet, which is just crazy. I don't know where that money is going. Can you repeat that again? $225 billion over the course of a weekend. Because you can look at this data daily, right?

And when we looked at it, it just blew us away. And to your point on interest expense, I think that's a really important one. We did the math on this and the U.S. government on their debt is paying $10,000 per year per person in the United States. So of all the things we could spend our money on, if we wanted to, to help people in the U.S., $10,000 per person is going to just pay interest on the debt that's outstanding. And that's every man, woman, and child, right, Darrell? That's not just taxpayers. That's every single American.

Yeah, every man, woman, and child. Right. And then the deficit is up 50% year over year. We'll probably hit $2 trillion this year. Yeah. This whole thing is not sustainable. Then you see what happens. The U.S., which is crazy, gets downgraded by Fitch. But they're right. None of these numbers make sense. And it's gotten worse,

unfortunately, with Biden in office because you've had these series of, I guess, Bidenomics legislation that's been pushed through that really just added to the spending, added to the deficit. It hasn't really helped the average American at all. Yeah, I remember Sean doing speeches, by the way, not that long ago, where he was talking about $16 trillion in debt. And here we are. First one was like, we're $8 trillion in debt. Then it was like 16. And it was like, his mind was, you know, exploding. And, you know, he's giving this speech

at the rnc convention and here we are at 33 trillion here's one of the things that i've been thinking about daryl which is that you know there's the financial stuff and then there's the political stuff and i'm afraid that leading up just to this next presidential election that this administration, because they can't afford to let us go into reshift session before, because that will bode very badly for them at the ballot box,

that they might be doing some other stuff that might make things worse, you know, post-election for the situation we're in. Do you understand? I'm probably not speaking. Am I crazy? Are they juicing the numbers? Are they juicing things up printing? I don't know what they might be doing, but they might be doing something to make things look better before the election. And we'll pay for that later. If you sort of look at this objectively,

and we try to be sort of not non-political in all this but please don't be political about it we're talking numbers here yeah you know the fact that you know let's let's just say by and large the economy's been okay this year employment's low inflation has been cut been coming down there are a lot of negative things too which we can get into but if we assume that's the base case right now i think it's going to get worse. But right now the economy is OK. Why are we spending so much? Right. It makes no sense.

You know, we shouldn't be you know, the deficit shouldn't be up 50 percent in a good economy. We shouldn't be adding 225 billion over a weekend to the U.S. federal government balance sheet. So I think you're spot on here. And the concern here is that as we head into the election, you know, to your point, juicing the numbers, trying to keep employment low, that this spending just accelerates. And, you know, this whole debacle of the U.S. federal government's balance sheet income statement just deteriorates. And then, you know, we get get to the election and we're in an even much worse spot. I think you're spot on about thinking about this. So, Daryl, I think so many Americans, I guess in my lifetime, we've only been a global power, right? We are, you know, we've shared it with the old Soviet Union, and then it was just America. The dollar has been king,

you know, since World War II, and we don't know any other world. And I think, you know, if the dollar is the reserve currency, I think we've abused that somewhat. And so, you know, if the dollar is the reserve currency, I think we've abused that somewhat. And so if these changes start to happen, if we see this play out, and by the way, I hope this doesn't happen. I love America. I love the dollar. I love our economy. But if it does play out in a way that's not positive for our economy, how does that happen? If you're looking at crystal ball, what do you see on the horizon for us? Well, so I think in the short run, what will drive currencies and strengthen currencies is interest rates. And again, you know, that's another topic to get into as well. But, you know, as long as we are our Federal Reserve is more hawkish or intent on keeping rates higher, raising rates, all things being equal, the dollar will probably remain strong or even get stronger.

But over the long run, you know, the issue is, you know, this interest, the interest payments the government has to make, the deficit is totally unsustainable. So we're going to fast forward a couple of years and whoever's in power then is going to realize we can't keep spending like this. We can't keep paying this, you know, this interest. Rates are going to have we can't keep spending like this. We can't keep paying this interest. Rates are going to have to come low fast just to sort of maintain the U.S. balance sheet. And the impact on that, I think, has the potential to be a very weak dollar. So you have that component where they just can't keep rates up. They're going to have to drop rates faster than other countries.

It's going to lead to a weak dollar. rates up, they're going to have to drop rates faster than other countries. It's going to lead to a weak dollar. So if we tip into a recession, it starts to get worse, they're going to have to lower rates to try to juice the economy. Is that what we're talking about? Well, yeah, I think there's that as well. But what I'm really saying is, at some point, you know, this idea of paying 10,000 per person in the US on interest payments only on federal debt is unsustainable. So at some point, rates are going to have to come down just to make the numbers work for the federal budget, effectively. But Joe, we can just print money, right? You got a printing press there. If you can print money, you monetize your debt, right?

And then we see inflation continue to rage. Yeah, well, that's, you know, unfortunately what the problem is. That's why we're at, I mean, you know, we just, you know, we went into the pandemic. Obviously we had to do something, but we continued to print, right? And then we entrenched inflation into the economy.

Inflation has come down, but even today, CPI came out. And it's still, aside from the recent peak in the last year, it's still at 32-year highs, right? Is it 5% today? It was 4.2, I think. But if you forget about sort of the last two years, the last time we'd seen a level that high was, I think, 1990. Yeah. That just gives you the historical context.

And the problem was we put too much stimulus, too much money into the system for too long after the pandemic, and now inflation's entrenched. Meanwhile, you know, everybody in D.C. was telling us that inflation was transitory, which, of course, it wasn't. Right. No, it was not. No, it was not. So my concern as well is that I see what's happening geopolitically. I'm sure you look at these things as well. You know, there is a possibility

that we could be drawn into yet another war, which, by the way, would probably encourage China to go into Taiwan, which could be another war. So I don't see a lot of end to the spending. And Sean, I've talked about this before. You know, the USSR, you know, collapsed really under the weight of its own debt. It couldn't keep up. It was spending more than it could and could afford. And we're certainly in that situation as an overexpanded empire. But let's just bring

this right down to like the kitchen table, right? Like the people listening, they don't speak in the kind of jargon that, you know, you and your colleagues speak in. So what we don't, I, I don't see an end to this spending. I certainly don't see an end to the spending, you know, get go leading up into the election, because I think there's a lot of people in charge. We're worried about the economy collapsing or having any problems before then. So what should the average person be thinking about for their family right now? How should they prepare? And I hate adding a second question, but maybe you should answer the second question first. Take me past the election. Do you think there's a like a collapse? I mean, you say short term, long term. What does that mean? Like what and what would happen? Well, I think I'll start with

sort of what families should be thinking about. You know, I think families need to be very conservative right now. You know, we see a real risk of an extended recession. And in a scenario like that, stocks don't do very well. Bonds, which have been a disaster, may actually outperform. But I think as a family, you want to be conservative. The one benefit of higher interest rates now is that you can basically put your money in T-bills and get 5 plus percent. Not a great return, but it's a pretty safe return for now anyway. But, you know, I think the message to any family out there is like,

it's not the time to speculate. It's the time to preserve capital, save, you know, try to hit singles and doubles. You know, that's kind of the environment we're in, especially if we go into the recession that we think is coming, because then, you know, a lot of the returns from the stock market, you know, could be very negative as well. And you see that recession coming after the election? I, you know, it likely happens going into next year. That's sort of what our models are predicting right now. I do think you hit on the wild card, though, and we've seen this throughout this year, which is the government spending component. though and and we've seen this throughout this year which is the government spending component

government spending you know has been a key reason that gdp has been better better than expected this year so to your point if they can continue to juice the g part of gdp you know i i think that you know maybe saves us from going into a recession but then post a lot all it really does is push it out and probably deepen what we'll eventually have. And that's a little more unlikely with the Republican House. Obviously, House Republicans have some problems as we watch play out on our television screens. They don't have a speaker right now, but they're focused on not reducing the number. There are, at least to some extent, trying to decrease the number and how successful they are will be of interest.

So if someone is trying to preserve wealth, if they have a little something, right? And normally the advice is, you know, put it in, if I talk to Larry Cuddle, Larry would be like, put it in the stock market. You're right, you might go down in the next four years. But if your horizon is, you know, 15, 20, 25 years, you're going you might go down in the next four years but if your horizon is you know 15 20 25 years you're going to be fine but if if you have a little further horizon if not the stock market

are you saying bonds um and again just i'm going to be really honest about what we do like we've we're in the market um we try to preserve some cash but i've got rachel to buy into a gold and so we bought gold and silver yeah he's turning into one of those i've got crypto, but I've got Rachel to buy into a gold. And so we bought gold and silver. Yeah. He's turning into one of those. I've got crypto, Carol. I've got my, I've got crypto as well. And like, I'm trying to play all the odds. I think property is important as well, but I'm trying to play all these different odds. I'm not talking about huge, huge numbers, but as a percent for our family, I think, you know, if I don't really trust where the dollar's going, I don't trust the government. What have, what have been historic, you know, if I don't really trust where the dollar is going, I don't trust the government.

What have been historic, you know, preservations of wealth and gold and silver has been one. We don't know how crypto is going to play, but I'm taking a risk on that. What is your thought? Well, I think, you know, crypto, I think just starting with crypto. Crypto, I think, is fine if it's a small percentage of your portfolio. It's a very volatile asset. Thank you for saying that. I've been advocating for that as well.

We're going to edit. Leap him out. Leap Daryl out. Thank you, Daryl. I like this guest. I get that there are people that really believe in sort of the philosophy behind crypto and how it kind of takes the government out of things to totally buy that. But you also have to look at the characteristics of what it is. You know, it's very volatile, prone to drawdowns. I do like that for Bitcoin in particular, there's a limited supply. So that theory has an offset against inflation. But yeah, I mean, I think there are two things.

If you're saying longer term, 20, 30 years, then I do think it's sort of diversity, right? Real estate's a great one. Real estate's probably overvalued right now. If we go into a recession, what will work? If we think we're gonna have a couple years of really subpar growth, then it's high yielding cash. It's probably treasuries, which have been absolutely crushed, right? I think they're gonna be down for three years in a row for the first time ever. But in a recession, rates should come down and treasuries could be one of your best performing assets,

even though everybody hates them right now. And then, you know, we actually do like some commodities like, you know, oil in particular, you know, oil, you know, inventories are very low in the U.S. Part of this is because the Biden administration decided to draw down on the strategic petroleum reserve. And they're also de-incentivizing energy companies to explore and produce more oil. So that dynamic's not great for people that have to pay for gasoline, but it's probably a good dynamic if you want to invest in energy. So are you talking about, you said you send oil companies?

Yeah, right now we like both oil companies and the commodity. Okay. Both. Okay. And again, I think a lot of this is just due to dynamics that have developed from legislation, right? Oil companies are just exploring and producing less. They're less incentivized to do so. But as a result of that, the U.S. is becoming shorter and shorter of oil.

And then the strategic petroleum reserves, I think, at a 40 or 45-year low. So we have no excess supply either. I don't know that you're a real estate expert, but you follow trends in the economy. It's fascinating how home prices, real estate prices have remained incredibly high, all the while interest rates have risen. And normally when rates rise, the price of homes will fall. That hasn't happened. A lot of people have said, well, there's not a good supply on the market right now, because if you have a 3% mortgage on your home, and if you sell your home, you get rid of that 3% mortgage. And the next home you buy, if you have to take a loan out, you're going to be paying 7.5%, 8% on that debt.

And so a lot of people are holding onto their properties. I don't know if you disagree with that assessment. Tell us what your assessment is, one, but two, what do you see happening to real estate? Is this going to break at some point? Are real estate prices coming down? What do you see happening to real estate? Is this going to break at some point? Are real estate prices coming down? Yeah, I think the resilience of home prices has really surprised me. And to your point, it's mostly because supply is so low.

And there are two components to that. One, supply is just low. The other, to your point, is people don't want to sell because where do they move to? Yeah. Right. But I do think it's actually a favorable tailwind for housing that supply is low just on a gross basis. The risk for real estate really is that rates stay higher for a lot longer than we expect. And then we go into a recession, at which point people are going to be forced to sell and that's where you kind of get the correction home prices and because at the moment you know on a you know real estate is basically is for buyers anyways it's expensive as it's ever been in the U.S and you know so you have this really tough dynamic where the supply side is actually very solid unlike in 2008 but the demand side you know uh mortgage uh applications for purchase are

are running it down 22 percent year over year again they're close to 20 30 or low so the demand side is very weak okay i don't. No, no, you go ahead. I've heard some people talk, Daryl, about like rates are too high. They need to get a house. They need, you know, and they have saved up a little bit and they're like, rates are too high. I'm going to wait for rates to come down. I don't know what you think about this, but if you find a house you like, buy it. Yeah, you might be paying seven and a half percent. To your point, rates may go up, but if rates go down, you always have the option to refinance your loan to go get that lower rate. You're going to pay a little bit, but you can get a lower rate in the future. But if you

need the house, you got some kids and you found a place you like that you can afford, don't wait on rates, get it and refinance later if they come down and lock in the rate today, which might appear to be really low three years from now, to your point. Yeah. Yeah. I think with a house, which is a long-term asset, it's really hard to time it. Yeah. Avoiding bubbles, right? Like 2008, that's an obvious one. I wouldn't say that we're in a bubble right now. I would just say the housing market is really expensive because of rates, right? But the supply side, which is maybe more important, you know, we're in a really good spot with that. But if you're somebody who say has a bigger house and really believes that, you know, you have the ability to downsize because you really, you want to conserve. I'm also thinking about, you know,

people who are, you know, retired and go, you know what, I can- They're empty nesters. They're empty nesters. I can sell my house now while it's high and I can downsize. Is this the time to do that? Yeah, I think it is, you know,

it's a good time to sell. Although I think it's becoming, over the last couple of months, less of a good time to sell. You although I think it's becoming over the last couple months less of a good time to sell you know you're you're starting to see um you know cancellations of purchase contracts Spike Etc so you know this summer this spring probably one of the best times to sell ever now a little less so but again you don't have a lot of competition because inventory is low so daryl i mean i i would take that i think that's a good trade though you know if you have a big house you're thinking about retiring and then you downsize can i tell you something that we've

been hearing a lot this sort of like we have our own focus group with you know people we we who watch our show who reach out to us um, and just people we know as well. I'm hearing so many people saying, I want to live on a farm, on a homestead. I want to combine my resources with my family. And we're going to buy a plot of land. But if we put all of our stuff together, it's actually more affordable. And we're all together. They also want to move out of blue areas. And there's a lot of political reasons for that.

Um, and, and move to low tax state and homestead and, you know, or at least have that homestead lifestyle, right. Where you're all together and pooling resources as a, as a family tribe. Are you, I know that's kind of, you're probably at some super macro level. I don't know if you have any comments on that or any thoughts on that or what you're seeing. Well, I do think it sounds pretty idealistic, you know, just kind of retiring, living on a farm and collaborating with people. I don't know that that's really a trend

we've seen or looked at. It makes sense to me because, you know, one big thing is just, you know, the inflation of food, right? So, you know, one big thing is just, you know, the inflation of food, right? So if you can do something and collaborate with people, like I was just looking at the, at this CPI report today, you know, which is the monthly inflation report, year over year bread, white bread's up 8%, steaks are up 9%. Frozen vegetables up 12%. Cookies, which my daughter loves, up 7%. So, you know, to me, it's a trend that makes sense because the basic things you need every day are becoming so expensive that if you can simplify your life, collaborate with people, produce things yourself, you probably really improve your day-to-day a lot.

We'll have more of this conversation after this. This episode is brought to you by Mejuri. From November 25th to December 2nd, get 25% off everything on orders over $150 in Mejuri's biggest sale ever. From bold hoops to minimalist stacks, Mejuri has something for everyone. Mejuri makes handcrafted

fine jewelry for every day made with responsibly sourced materials. So you can look and feel good about gifting and wearing them. Shop your wish list 25% off at Missouri.com today. Keep an eye out for that, Daryl. I know you have a lot of a lot of

data points, but I'm telling you, I wanted something. I'm hearing it everywhere. In fact, Sean is going this weekend for his business show. He's going to a homestead conference. I mean, there's these massive conferences. Fox Business, the bottom line, 6 p.m. to 7 p.m. Eastern. Daryl, we're going to go.

So there's these homestead conferences where it's like all the things your grandmother or your parents would have taught you 80 years ago. Yeah. How do you can't, how do you grow vegetables? How do you slaughter a peg? Like all the crazy stuff that we used to know off the farm, they're actually doing these conferences. People are flooding in and trying to learn these skills that have been for the most part lost, you know, generationally. You know, I, I think it's just, I want to go back lost, you know, generationally. You know, I think it's just, I want to go back to a macro level with you because, and again, I love my country. I love who we are. I love what we represent in the world. I love that we've given freedom and democracy and free enterprise to the world and has lifted people out of poverty. But as I look at the infiltration of these leftist

Marxist ideas in our classrooms that has brought it to the boardrooms, C-suites across America, I'm really concerned. And so I'm not saying I'm not bullish, but I am far less bullish on America because, and again, I serve in Congress, as I told you, I don't see the political will from members of Congress. And they don't have the political will to fix the problems that we face because the American people aren't going to push them to fix the problems. They're going to want easy solutions to the problems that they helped create with this massive spending. I usually, we used to talk about, you know, with a former speaker, Paul Ryan, you can grow your way out of this debt. If you kept spending, you can grow your way, you know, to manage it. Well, this is so damn big, Daryl. I don't know how you, you got to reduce your spending. You got to grow. And I don't see, I don't see that you you got to reduce your spending you got to grow and I don't see

that the politicians and the American people want that and so it's only going to get worse which makes me less bullish on the future just because of that reason alone I'm going to give you an example of how bad it's gotten I don't know if you guys read the

Economist but the the the title page of the economist this week was uh europe should not copy bydnomics so the economist is basically giving advice to you know what i think by and large are a lot of socialist type economies not to follow the economic policies of the u.s good advice because the u.s and the economist is no right wing exactly so i mean that's kind of the state we're in yeah i mean i think it is concerning i mean to me um you you need to put more hand you know more money in the hands of the people of course a big component think a big component of it is tax cuts, forms of tax cuts, incentivizing small businesses. You know, the one survey we look at frequently is small business optimism.

Small business optimism has basically been at a recessionary level for two years. Yeah, of course. So small businesses across America have the worst outlook of almost sort of anybody yeah you know that to me is really discouraging and disheartening but i i think it's intentional by the way i i don't i it never made sense to me daryl why during the pandemic um there was you know allowances for businesses to stay open if they were big box corporates uh you know businesses and the kind of you know allowances for businesses to stay open if they were big box corporates uh you know businesses and the kind of you know oppression seriously that so many small businesses were facing from their own government and i i feel like it was i i there's no explanation for it

other than that it felt really intentional if you talk to small business owners, they feel that way, too. And I think it's just they're the wiliest, easy to control group are people who are independent minded, have their own business. And I think it's intentional. But I don't government thought was the easiest thing to do, just give more money to big companies. But, you know, really, we're now seeing the after effect of that, which is small businesses are not confident. And how can America grow if the small businesses aren't confident in the future? What could happen if we did like give us a worst case scenario for people who don't know what it means to like have describe what is that worst case scenario and then what the effects are. So people kind of understand, you know, Sean said there's not the will, but maybe if they saw through that, you know, you know, through the. Prism. Yeah. So they can see into the future future you know uh what that could look like maybe they would have more of a will i think the worst case scenario um over the next few years is you know stagflation like really deep stagflation where inflation stays high continues to grow

but uh economic activity actually slows and maybe meaningfully, that squeezes, you know, at the average American like nothing you've ever seen, right? They're getting paid less. They lose their jobs. But at the same time, every time they go to the store, the gas station prices are higher and higher. You know, this gets us back to, you know, the kind of 80s when volcker had to raise rates into double digits and you know that's just a really bad scenario for you know almost everybody except for the walls probably the wall street elite you know who are going to win a scenario because they they control the casino yeah but yeah this is this situation where we continue with government

spending to perpetuate inflation but growth doesn't come along with it, you know, is just going to crush the average American. Yeah. You know, Daryl, you mentioned the Consumer Price Index, the CPI number. You said it's not going to go back to what it was, what, two years ago when it was eight, nine percent. two years ago when it was eight, 9%. But if you add up all of the inflation under Joe Biden, I think the number is 18% in total. Wages have gone up. I'm going to tell you, we have nine kids. Seven of them are still in the house.

Two, well, sometimes three are under the house, but in college. But we buy for a lot of kids. And I go to the grocery store and I'm like, 18%? No way. It is nutty. I would love if it was 18% in the grocery store, Daryl. I'm like my, I look at my bills. I get, I spent a hundred bucks and I'm like,

I got two bags of stuff. I'm like, what, what has happened? So I don't know if they're cooking, cooking the numbers. I agree with that. Most Americans like us are like, that is, I wish it was 18%. Um one, on the debt side, I would feel a lot better when you're in a hole of $33 trillion in debt. Stop digging. Stop going deeper in debt. I remember when we were running deficits

of $750,000 a year, $750 billion a year. We were still short of a trillion dollars. And that was like, our minds were blown. To your point, we're going to run potentially a $2 trillion deficit this year. It's completely unsustainable. And so I want to come back to the center, which is the family. And it's your advice to say, you know what, which is the family. And it's your advice to say, you know what, no matter how you look at it, whether it's in the next six months, maybe it's going to be a year depending on how, you know,

Biden tries to juice the economy or the Fed tries to juice the economy, regardless of when it's going to happen, we're going to have a recession. It's probably going to be a little deeper than what we have felt in recent times. And as the advice that you're giving is hunker down, reduce your spending, try to put some cash in the bank, try to get some interest on that cash. So it's you're not losing value because of inflation. But be prepared. Is that is that is that Daryl's advice today to our to our listeners and viewers? And anything else that you think we should be doing? advice today to our listeners and viewers. And add anything else that you think we should be doing. No, I think you nailed it 100%. I mean, obviously, all this is a probability, right? To us, the highest probability is stagflation. So economic recession, high inflation. And I think the average American just needs to be aware that that is a very likely scenario. And you want to

prepare for that. You want to be more that that is a very likely scenario. And you want to prepare for that. You want to be more conservative, you know, control your spending. Did you say a likely scenario for stagflation or that's the least likely scenario? Oh, sorry, most likely scenario. Is stagflation? Yeah.

Ooh, okay. And when do you think that this could happen? What is the time period you suspect that might happen? That's big news. I think, you know, we are potentially sort of getting into it this quarter. The wild card is government spending and whether it can be an offset for the next couple of quarters. But, you know, I think it's very likely we see this play out over the next year. One other question for you too, Daryl. So a lot of people have their money in their pension or, you know, they don't control a lot of how they invest. But for those who are invested and control their money in the stock

market, would you say it's better to be in cash now? Are you, do you, you go like, listen, at 50% in cash where you're sitting in T-bills or where are you at? Yeah. So our biggest allocation is, is cash right now and probably will be there for a while. And part of it is cause is the cash is finally a decent alternative, right? T-bills get you like, to my point, T-bills get you 5%. Yeah. Not the best, but not terrible. Right.

But people realize it's a good alternative to playing what's become a bit of a casino in the U.S. stock market, right? Which feels really risky, especially if you feel working for a company that matches your is they'll match your contribution. Are you better off? Are you better off taking that money and still do that? Don't say yes to that. I want to hear what Daryl has to say. Yeah, I think you're still like it depends on your age. Right. think you're still investing for the longer term right like i i do believe in you know if you're 30 and you're going to work for 35 more years what if you're 50 almost 52 years i know some i'm a fan well yeah i'm 50 in a few months but i do you know, I am optimistic longer term about the U.S., this economy. I just think we have a tough year, two years. But what happens in these scenarios is you get change, too, right?

And I hope that we'll get change and we'll be just more responsible fiscally. And I think, you know, you could see sort of a new America. It's not that this America is bad by any means, but you could see a new sort of. Oh, no, no, no, no. It's bad. I do remember, too, Daryl, that when when in 2000 in in in 16, people were going, oh, if Donald Trump's elected, the economy is going to go so bad and the stock market is going to crash. And then he got elected and everything went up. Could that happen again? I guess I was really impressed when Donald Trump was elected and how quickly our economy got great. I mean, I think people forget about pre-COVID. It was the best economy in my lifetime.

economy in my lifetime. Could that happen again? Or if we dug ourselves so deep into this situation and this debt and so many of these policies that even if he is elected, it will take him, you know, longer than his term, his fourth term or whatever, or his first four years to get us out. What are your thoughts? What I'll say about that is going into Trump being elected, we weren't sure either, right? We were trying to figure out what would happen. What changed our view on economic growth under Trump was small business taxes, right? Small business taxes going down. And that was a huge catalyst, right? And there are different components to that. But, you know, that really, I think, was what drove the initial part of his economy.

And then, of course, COVID happened, which, you know, there's nothing he could do. But, you know, the small business incentives, taxes, all that, you know, was just such an upside surprise in a positive way. You know, that goes back to my earlier point. It's these people that sort of drive America and drive the American economy. And drill, drill, drill, right? Well, drilling helps with inflation. There's no question about it. Yes, it does. And by the way, geopolitically, I mean, we look at this situation that we're in right now. This week, you hear a lot of people talking about war, war, war. I just go drill, drill, drill.

I mean, a lot of this wouldn't happen if we would be more powerful and we'd be able to control a lot of these situations better globally if we were energy independent again. Yeah, I think that's spot on. But we've created a situation where we are still energy dependent on other people. Yeah, you know, I look at this.

Donald Trump was not brilliant. He did the things that have always worked to grow economies. If we could lower some taxes and we could reduce, you know, rules and regulations, reduce the burden on the businesses that create the jobs and opportunities in a society, amazing things will happen. He did think about things differently on trade, which I actually think were great. And then if you actually are a big socialist and you want to have high taxes and all this government control, those economies don't grow. I mean, we've seen this play out through our economy and other economies. No, the socialists are doing it different this time.

They're going to get it right this time, Daryl. The commies are going to get it right this time. This is the one time it's actually going to work, but we've actually seen they've implemented it and it's actually not working. Listen, Daryl Jones, it's been a pleasure to have you on the kitchen table, hedge eye management. Listen, I think that these are trying and troubling times and it's a confusing time for so many Americans. And I think to kind of just simply break it down and give some simple but strong advice on what people can do to prepare for what may be inevitable, which, as you mentioned, stagflation, but also a downturn in the economy is really helpful. That was definitely the Fox News alert for me on stagflation.

But I'm really glad that you're really honest with us. And I think our listeners and our viewers are really grateful for that. Do you have just one last word that you want to leave us with? Yeah, I think it's be optimistic as well. You know, a lot of this stuff when you're talking about what could happen over the next couple of years makes you feel pessimistic, but the U.S. economy will continue to grow. There are a lot of great positives longer term about, you know, about the economy. And, you know, as a voter, hopefully you still have the power to make changes.

And I think that's an important thing, too. And when you see that we're going down the wrong path, you know, I do think we have the potential to make that change in the ballot box.

Hope we still have that power, Daryl. Hope we still have that power. Daryl Jones, thank you so much for joining us. And thank you. We're grateful. Havele Jones, thank you so much for joining us. And we're grateful. Have a good one. We'll have more of this conversation after this. I mean, he's very measured.

And I like that. And that's his personality. But I could see, you know, for those of you who are listening, you know, who are listening audio, we have this on video as well. But, you know, I could see his face. You know, he's a mellow guy. He's a, you know, no fire alarms kind of guy. But you could see if you were watching him,

he has deep concerns. And he's saying, let's be, you know, he doesn't like the doom and gloom, but he's deeply worried. And I think his advice was very sound. And it's something that we can all do. I mean, think about all the places that all of us can cut. And, you know, Sean and I were up last night talking about our gas, talking about what was happening. I have a buffet table that I

really want. I know it's so great. And it just, I know it'll just make my room this room that I'm working on come all together and Sean's just like that's just such a dumb idea Rachel and I have to say usually I override those things he thinks are dumb like that but override means all of a sudden a buffet table

I'm like I thought we were not going to do this I know but you're right it's not it doesn't make sense in this environment. So one of the things. And by the way, that hurts the company that's selling the buffet table. So as we cut back, you know, in order to keep food on our table and make sure we have money saved in case stagflation comes, all these other companies are going to suffer too. Can I talk about another thing we've thought about? So I love coffee and Rachel loves,

our house loves coffee. So my parents live with us and they're big coffee drinkers as well. So I have an espresso machine and I love Nespresso, right? And Nespresso, the ones that you do the milk with, they froth the milk and they're so good. So pricey. But it's like a buck, it's like a buck, and it ends up being a buck, buck 20, a pod. And I'm like,

if you add it all up, it's like, we're spending, I came to that just because I was like, well, a lot of people spend money on a, on a,

on a, going to Starbucks. It's cheaper than a Starbucks. Well, if you cut back on your Starbucks, I mean, that turns into real money.

There are ways to cut back. Small decisions of like, I started, like I made my from the kitchen table coffee this morning. I grind, I ground the beans and I put it in my little filter, my little cone filter. And it's great. And so making. That's how we're going to solve the problem. Coffee? No, no, no.

You're going to cut back and you're going to grind and do drip coffee and I'll keep the Nespresso and we'll cut the bill in half. But I do think little things actually matter. You know one of the things that we did this year? What did we do? We used to have a guy, we used to take our dog to the groomer and we had a great groomer and he retired. He came to us, he said, this is the last time I'm doing the grooming. And the economy started to turn. And this is when we started to see inflation happening.

And I said, you know what? And I went online and I bought all the tools for- Actually, I think I went online and bought the tools. Well, I had the idea. You had the idea. I had the idea, then you did the ordering. And now you and our son do it. And it saves us a lot of money. I think I spent $80 or $100 on the little, what is it?

The electric groomer. I did that. And then I bought the scissors. And I'm saving money hand over fist. It costs less for you to buy what it took to groom the dog than it did to do one grooming session. So the dog does not look as good. I'm just going to tell you, Skippy has,

there's some hairs that are- He's not a show dog though. He's a mutt, so it's okay. And his feet get a little like hard. It's hard to get their feet when you do this. And the professionals are better. Let's do a podcast on grooming Skippy. And then trying to get the face equal is a little challenging.

But I'm like, I don't care. I'm saving money. And I actually enjoy doing it. JP and I do it together. Yeah. Here all over. Actually, it's less traumatic for Skippy to have you guys do it than once, you know, every couple months going to, you know, people he doesn't, may not even remember who they were.

And so anyway, I think that there are real things that we can all... Can I tell you what it was? We can eat twice a day, once in the morning, once at night. In our house, it seems like people are feeding him, like he wants to... Yeah, he hits people, he acts like he's starving. He's starving.

He barks at people who he thinks are going to give him food and so we end up feeding him way more than he should so he's but i think this is good i want just a couple more points on what he said um i think the the idea that if you're downgrading your house like you're an empty nester and you want to downgrade it sounded like he was saying this might be a good time it was at the peak. The peak time was last spring and this past summer. But this might be a good time to to sell that home and then and then downgrade. But then I think your point was good, too. If you need a house, don't wait until like the timing's perfect. Get it now. And when rates are probably only going to go up. So if they ever do come back down, you can refinance.

Well, you're locking into a rate today, right? That seems really high because we're coming off at 3% mortgages. It feels high at 7.5%. Well, if it goes to 10% or 12%, that 7.5% mortgage rate that you have now is going to feel pretty good. And by the way, if rates go back down to, you know, four and a half percent, you can refinance your mortgage and, you know, take advantage of those lower rates. So I think if you need a place, don't let the rate mean the price of the house might be an issue for you. That's that's fair. But don't let the rates, I think, be an impediment to to to get in a place that you can afford that works for your family if the price is right. I spoke to Stu Leonard, who he comes on our show all the time on Fox and Friends. He owns the grocery store, Stu Leonard's, which is here in this area. And he told me that what he sees in the grocery store is, one, people moving to, in the grocery, they're moving to, you know, non-brand, you know, generic items. But also he says they, the economy does bad. You see potato sales go up.

He said egg sales. He said, by the way, eggs have come down because a lot, some of it was inflation, but some of it was this avian flu as well. He said the price had come down a little bit, even when they were high, it was still better, a better, cheaper protein than, say, a steak. So there are lots of things that we can do. You know, garbanzo beans, you know, beans. You talk to the CEO of Goya, Bob Inouye, and he will tell you, you know, beans and rice are like the perfect food.

You know, when people in Latin America have been surviving and thriving on that kind of diet for a long time. So there's a lot of things that we can do to conserve, especially of large families like ours. The food bills have been crazy. And so there are always ways to do that. But this is the time to do it. Conserve, conserve. Think about the pots,

what he says is the likelihood of stagflation. I mean, that really jarred me. And I don't think, well, listen, I have to tell you this the same way. We don't have to live like we're like... Church mice. Right, church mice. That's the phrase we use. Yes, Lord.

But, you know, we can cut back and we can be... Everyone can. And still feel like we're able to go to, you know, we don't go to dinner as much as we should, but we can go to a dinner here and there. We can do some different things, but also if we're smart about how we cut back, that matters. Even, you know, we've done, and I don't even know that you know this, our kids would eat a lot of cereal. Cereal is really expensive, especially when you have all these little kids that are eating cereal like all the time. We cut that out. We cut this.

They said it's just too expensive. One box, $5, I mean. They go through it's just too expensive. One box, $5. I mean, they go through it like no time. Yeah, like in one city. So yeah, I mean, there's- They'll do oatmeal. Guess what's cheaper? Oatmeal. Eggs.

Toast. So they're having different, like breakfast, than having cereal. And probably healthier, by the way. Way healthier than all this. Way healthier than that. Garbage and that processed cereal. And then also, you know, you talked about,

yeah, you can go out to dinner. So, you know, maybe youbage and that processed cereal. And then also, you know, you talked about, yeah, you can go out to dinner. So, you know, maybe you save that dinner, that little bit of time, you know, money that you have to go out to dinner for just you and your husband. And just do more family meals. I mean, we eat, we are home-cooked people. Like, we like to cook at home. But that's the best thing you can do for your family anyway is have home-cooked meals. They're cheaper. They're more nutritious.

home cooked meals. They're cheaper, they're more nutritious, and they actually have effects that you can't get from anywhere else, which is you bring your family together around the table, you create memories, you create bonding, you create really great habits. All of it is so positive. Let's make sure we clear the record. When Rachel says we do a lot of cooking at home, what she really means is Rachel does a lot of cooking at home and I do a lot of eating Rachel's cooking at home. You know what's been great? Since my parents spend big chunks of time living with us and they're here now. And so. Their dad is really good. My mom is amazing too. I mean, we've had some amazing meals. And that goes back to that whole homestead thing, Sean, that we were talking about. Or intergenerational living.

And intergenerational living, which we think there's so much positive. We learn so much from them. They learn from us. Rachel's mom has said she's going to leave sooner. I'm like, no, you're not. You're staying here with me. You know. Your dad can go home, but I'm like, I'm keeping your mom.

She's a great little. It's true. We're going to do a podcast on, you know, the secrets of a big family. I'm going to give one small secret before we do that podcast. The secret to having a lot of kids is when you wake up, the first thing after you get them off to school,

pray with them, get them out the door, is you think, what's for dinner? It's the first thing you have to think about because if you don't get that figured out early, your whole day slips away. And when everyone comes home, everything falls apart. And one of the great things about having my parents here is it's not even like we go,

today is you to Del Mar. It just seems to naturally synergistically happen where they're like making something and I'm like, today I don't have to make dinner. And then I got up this morning and I put the meat to get ready because we're going to do a stew. And now I was doing the podcast. So I just before the podcast set the recipe to my dad, I said, I chopped up everything. All you have to just put it in the pot, you know, for two and a half hours and so that gets a lot easier too but it has been wonderful having them here because that one thing that i have to get done every single day is dinner it's i'm getting a little help with so that's my but we're

getting more i have more tips we're going to do that in another episode that's that that sell meat and so we had this what you're cooking today is a little lamb that we bought. Yeah. I'm doing a Basque lamb stew, which is the simplest ever. But it's also, it's really healthy. We see where it's being raised and it's also less expensive than buying it in the store. And I'm helping out local farmers, which I think is really important. And nobody makes better Spanish rice than my mom to go with that stew. And so, yum, yum, yum. Well, listen, thank you all for joining us on The Kitchen Table. I think this is a really important topic. And I think all of us thinking through and planning about what could come and making sure our families are safe and our finances are strong really matters. We appreciate it.

Yeah, it takes all the anxiety out of what's ahead. It really does. It takes some of it out. Or some of it out. Yeah. If you like our podcast, please rate, review, and subscribe to our podcast. You can find us wherever you get your podcast, but you can always find us at foxnewspodcast.com. You can listen to ad-free with a Fox News podcast plus subscription on Apple Podcasts. And Amazon Prime members can listen to this show ad-free on the Amazon Music app too. So it's all good stuff.

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It just helps. By the way, if you're new to The Kitchen Table, we have great episodes over the last, what, two, three years. Go back. Great podcast. Go back. Evergreen. Check them out. All right, everybody. Until next time, have a good one. Bye-bye. Listen ad-free with a Fox News Podcast Plus subscription on Apple Podcasts. And Amazon Prime members can listen to the show ad-free on the Amazon Music app. The Fox News Rundown. A contrast of perspectives you won't hear anywhere else.

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