FaceTime or Ask Patrick any questions on
Want to get clear on your next 5 business moves?
In this short clip, Patrick Bet-David, David Rubenstein, Tom Ellsworth and Matt Sapaula talk about the recession.
Watch the full podcast here:
To reach the Valuetainment team you can email:
#valuetainment
I suspect the FED is determined to not Make another mistake on inflation Rubenstein said I think the FED Generally would say that the myth they Misread how much inflation was going to Be caused by the 5 trillion dollar Injected into the economy by Congress to Deal with covet which is what you just Said right and also the current Quantitative easing impact as well Inflation was transitory they said but It turned out it wasn't along with a Recession and the rise of unemployment Rubenstein says tech company valuations Are expected to fall further on harsh Economic conditions into next year I Think some of the tech companies that Have changed our lives for the better Are very good and maybe their valuations Will be coming down a bit but I think a Lot of valuations for fewer tech Companies that don't have revenues let Alone earnings probably are going to Come down more than a bit so the Question about recession next year What's the recession going to be you Know the the phrase everyone's using is It's going to be a soft we're going to Have a soft Landing we're gonna have a Soft Landing what do you think is going To happen next year with recession to Remind everybody a recession is to find Many different ways but the shorthand is Two consecutive quarters where the GDP
Growth rate is negative Um and there are other factors beyond That but let's say it's two consecutive Quarters no one really knows whether We're going to go in a session or not Um everybody when we go into recession If we do we'll come out with their memos Saying see I told you so I have my memo It's in their files now they'll drag it Out and if they if actually go into Recession it's easy to predict a Recession because if you're predicting You're not right people aren't probably Going to call you uh six months later And say you were wrong right now the Federal Reserve is trying to get the the Inflation rate down to two percent I Think that's too low probably three Percent is more realistic but if it can Get it down to three percent on a Consistent basis and we've had three Percent for the last couple months so That they can consistently get down Three percent I think we could avoid a Recession but the FED uh may be more Worried about inflation than it is about Unemployment and therefore they may Increase interest rates a little bit More than maybe necessary and as a Result it could go into a recession Probably a temp temporary or short-term Recession that would be my view not not Nothing like the Great Recession we had In 2008 2009. um nobody really there's
No magic formula to know whether you you Can jack up interest rates a certain Amount and it's going to produce Inflation one of the problems we've had Is typically when you increase interest Rates unemployment goes up as well Because interest rates go up people fire People things uh to change but it's been A it's been a very big mystery to the Federal government and how the Unemployment rate is staying so low and That's in part because we haven't Figured out the post covet impact of Employment for example historically in This country 66 percent of all the adult Males and females are in the workforce 66 percent now it's 62 percent where Those people go well older people Retired after the Great Recession Younger people don't want these Entry-level jobs they're not working Anymore they went back to school and a Lot of people just aren't working they Just figure they don't need to work Anymore they made somebody in covet so When you don't have that many people in The workforce the result is you've got To pay higher prices to get people to Work because you need to get filled fill These places so it's not like you can Lay people off so easily these days it's Not happening and as a result Unemployment is not going up So the participation rate is really what
Was in there that people don't talk Enough about to understand participation Rate goes down Supply goes down price Goes up very simply right I mean to get Employees if you want to get entry-level Employees to work for you how are you Going to get them well you're not going To get them by minimum wage uh minimum Wage in this country legally is like Seven and a half dollars an hour now Nobody's paying that because you can't Get anybody no way right yeah nobody's Paying 720 and I know they're always Talking about raising it's like if Anybody paid 720 right now you wouldn't Have any employees right but you said Something two things you said definition Of recession is back to back quarters Negative right so if if that's the case Were you saying that because you're Trying to say we've you know technically Been in a recession since July 1st is That kind of what you were alluding to Or no no last year or earlier this year In the first and second quarters of this Year yeah we had two consecutive Quarters of natural growth it wasn't Caught a recession by anybody because Other things were happening sales growth Were still going on sales and recession Going down retail sales were going up um Exports were going up so it was was a Technical recession and the reason was Technical is the reason the supply the
Reason GDP went down is we were Basically Um filling up our supplies from the Coveted situation in other words Manufacturers weren't making a lot of Stuff and selling all that stuff because They had a lot of excess supplies left Over from from the recession from from The from the coveted period of time so It wasn't considered a recession but if We go into a recession in the future two Consecutive quarters almost certainly Will be considered a recession but you Know it a recession is um you know it Defined by Economist different ways uh I Would say if we go into a recession It'll almost certainly be very brief Because right now we don't have the Problems we had in 2008 and 2009 where The banks are in financial trouble we Don't have a lot of people in financial Trouble right now I think the biggest Challenge we have is that inflation's Still high now it's coming down because It you know the most recent numbers show They're coming down but if the FED feels It has to increase interest rates Further uh to get inflation down that Could produce a recession we just don't Know and the FED doesn't know is Jerome Powell uh like does he have a board that He calls on like do you guys you Jamie You know Stephen think is there like Does he can't say hey guys what do you
Think about this here's what we're Thinking about because it's it's it's Got to be a very tough place for him to Be if he can't lean on some of the free Market guys to talk to them well he does Talk to them from time to time they go To see him he has to see him he's he Meets with them from time to time sure Um but he also has an incredibly good Economists who work at the fed and they Have pretty good data and they they kind Of know what the economy is doing but Nobody's perfect in this business and Lots of times um you know you make Mistakes at the fed and the FED has Admitted that it made a mistake on Inflation earlier Janet Yellen said that They made a mistake so with all the Craziness taking place I believe future Looks right if you believe future looks Bright get your latest Future looks Bright hat of valuetainment it says Future looks right here future looks Bright here we got them in white we got Them in Black we got them in red are Black on black sold that these are about To sell out if you haven't ordered one Yet we had a person in Michigan but one Then he bought three then when those Three people weren't in the office they Had to order 58 of them because people Wanted the future looks bright hat Especially during times like this Because ain't nobody's saying future
Looks spread toward your future looks Bright hat click over here and to watch The entire podcast click here take care Everybody [Music]
