Commonwealth's McMillan: Heightened inflation's not going away for three to five years

Ben Ashby, head of investments at Rayliant Global Advisors, says he's not particularly worried about what two current wars and other issues are doing to the economy ad stock market now, but that his real worry is federal policies in terms of fiscal expenditures. "To me, that doesn't look sustainable, and that looks more like an emerging market than, basically, the leader of the free world." He says most of the conditions are in place in the U.S. for an inflationary medium-term outlook, though he does think that the U.S. market should be able to avoid a depression after the current concerns get sorted out, but that conditions will feel like the 1970s, a period of high inflation and economic difficulty. Also on the show, Nick Young, chief experience officer at Money Pickle, talks about the question that savers should be asking their advisers regularly that most ignore, Ted Rossman of Bankrate.com discusses the troubles that consumers have encountered as they have increasingly gravitated towards using "Buy Now, Pay Later" programs. In the Market Call, Joe Rinaldi, president/chief financial officer of Quantum Financial Advisors, covers both stocks and exchange-traded funds.

Dan Zanger, founder and chief technical analyst at ChartPattern.com, says that he has followed the leaders out of the market, noting that the artificial-intelligence companies that had led the market's rally to new highs have now gone into consolidations and he's content to accept money-market returns until the market changes its tune and the charts stop suggesting that they want to go lower. Also on the show, Herb Greenberg -- longtime journalist and financial analyst -- talks about his new firm, WallStreetBeats.com and the twist it is putting on traditional institutional research, as well as why he's not just starting a new business in his 70s but never planning to retire, and why others might want to plan a "retirement" that includes some work. Plus, Craig Martin discusses the 2024 U.S. Full-Service Investor Satisfaction Study from J.D. Power, which showed that people using financial advisers are happier than ever with their results but they're not loyal to their advisers, which may mean that when the market moves away from recent highs they could move on from their counselors.

Edward Yardeni, president and chief investment strategist at Yardeni Research, says the economy is resilient enough to handle current levels of interest rates, and that better economic growth will allow earnings to drive the stock market higher even as anticipated rate cuts from the Federal Reserve are put off until 2025. Yardeni says he expects the rest of this decade to resemble the Roaring 20s, without irrational exuberance but also without the Great Depression to follow as it did a hundred years ago. In The Danger Zone, David Trainer at New Constructs calls shenanigans on Root Inc., noting that price targets on the stock have been raised by over 500 percent, but profitability forecasts have not been going up, suggesting the stock is due for a hard fall after its recent big bounce up. In the Market Call, James Abate of Centre Asset Management -- manager of the Centre American Select Equity fund -- talks 

Robert Frick, corporate economist at Navy Federal Credit Union, says that the current issues keeping inflation high are about supply-side economics and are the kinds of problems that the Federal Reserve can't just fix by cutting interest rates. So while he sees the Fed as having pulled off the soft landing earlier this year, it can't "save us" this time, although he says the strong economy should ensure that the cycle should play out without a crash or catastrophe. Ann Somers Hogg, director for health care research for the Clayton Christensen Institute, discusses her work showing that caregivers -- particularly working mothers -- are suffering through mental health issues impacted largely by society not understanding the issues they are facing. As a result, she notes that if health is wealth, working moms are living in extreme poverty. Plus Bryce Doty, senior portfolio manager at Sit Investment Associates, says the uptick in inflation is not enough to overwhelm the yields investors are earning, noting that real returns may be better than ever. He says investors should enjoy collecting the high yields while interest rates remain high, but total returns should improve once cuts start. Doty is not expecting meaningful rate cuts this year -- he anticipates two reductions, one after the election -- but says that the long-term average gap between the Fed funds rate and inflation is well above its typical zero, so the central bank can cut rates and have a positive gap, meaning it can claim to be tough even as reductions start. Doty anticipates the important cuts -- the ones which narrow that gap back to near zero -- will occur in 2025.

With Wednesday's release of the latest Consumer Price Index numbers shaking the market's confidence that the Federal Reserve will cut rates soon, Chuck gets the latest take from Christian Chan, chief investment officer at AssetMark, and Gargi Chaudhuri, chief investment and portfolio strategist at BlackRock. Both see the Fed as acting, though Chan expects the central bankers to wait longer until conditions almost force a move; Chaudhuri still sees cuts later in the year, though she says a June cut may now be off the table. One area where they disagree is that Chan doesn't like the value investors are getting in intermediate-term fixed income, while Chaudhuri says that investors should be looking for intermediate-term fixed income and lengthen maturities now ahead of rate cuts later. Also on the show, Todd Rosenbluth, head of research at VettaFi, looks to a senior bank loan fund as his ETF of the Week and, in the Market Call, Chuck Carlson, chief executive officer at Horizon Investment Services -- editor at The DRIP Investor newsletter -- brings his firm's Quadrix system to the fore, noting the sectors that score particularly well now and the areas where the system struggles to find buys.

George Milling-Stanley, chief gold strategist at State Street Global Advisors, says that inflation staying stubbornly above the target of the Federal Reserve -- despite the central bank's moves that have raised interest rates to 20-year highs -- has created the kind of market conditions in which gold, historically, has thrived. He does not think gold's success is necessarily due to its traditional role as a hedge against inflation, because that requires inflation sustained at levels above 5 percent, but it is other dynamics like geopolitical risk and two ongoing wars that are combining with inflation to drive gold now. Also on the show, Cam Miller of Money Pickle talks about how market highs have shown that consumers are happy with their financial advisers, but how consumers haven't developed loyalty to advisers, a sign that they might bail out and reduce the effectiveness of financial planning if/when market conditions turn. Matt Brannon discusses the "True Cost of Homeownership" study from Clever Real Estate, which showed that a surprising number of Americans find themse3lves house poor and having regrets about the properties they own, and Emerson Ham III, senior partner at Sound View Wealth Advisors, makes his debut in the Market Call talking stocks, traditional mutual funds and ETFs.

Willie Delwiche, investment strategist at Hi Mount Research, says the bullish sentiment and investor optimism should lift the commodities market and help the market rally keep rolling, though he says investors should be worried that conditions are taking a turn for the worse when more stocks are making new lows rather than new highs or the Standard & Poor's 500 falls below its long-term average. He says the Federal Reserve may decide not to cut rates until those conditions appear, noting that the central bank won't want to act earlier than conditions force it to. Also on the show, Howard Dvorkin, chief executive  at Debt.com, goes Off The News discussing how Fed data showing higher delinquency rates and rising charge-off data are supported at the grass-roots consumer level, noting his site's most recent credit-card survey, which showed that more than one-third of Americans have maxed out their credit cards in recent years as inflation and interest rates were rising. Cassandra Happe, analyst at WalletHub.com, on the site's survey showing that consumers say they are fed up paying credit-card transaction fees, though they are not taking many steps to actually avoid them. Plus Chuck answers two listener questions on subjects that the writers think are political but where Chuck thinks the answers should be focused on process and math.

Bill Adams, chief economist at Comerica Bank says 2024 will end up as "a pretty good year for the economy," with the soft nearly in place as the Fed starts to cut rates in the summer. He notes that worries about an interest-rate shock or an energy-price shock -- the big two drivers of recession -- are not exceptionally high right now and any raised concerns in those areas have enough offsets for the U.S. economy to remain the world's best while global turmoil and economic uncertainty plays out. Nick Pisano discusses a Clever Real Estate survey showing that nearly three-quarters of all Americans report having an overspending problem. David Trainer of New Constructs puts SNAP Inc. back into The Danger Zone, noting the stock probably won't be out of trouble until the stock reaches zero, and Jay Hatfield, chief executive officer at Infrastructure Capital Advisors forecasts that the Standard & Poor's 500 will hit 5,750 or higher as part of the macro outlook he uses to inform his stock picking in the Market Call.

John Kosar, chief market strategist at Asbury Research, turned positive on the market back in November and he's not ready to ring the register and close out the current rally just yet, though there are some metrics showing that "the market is about as overextended as it's been historically before you get a correction." That doesn't make him nervous or worried, but he says that's a symptom rather than a sell signal. Meanwhile, he sees a bull market running in commodities and he intends to ride that until the market corrects.  In the Big Interview, Steve Scruggs, manager of the FPA Queens Road funds, says that he would expect small caps to be helped along by interest rate cuts so long as the consumer does not run out of steam when it comes to spending. He favors a mix of long-term compounders and special situations, but notes that quality is expensive right now and the best opportunities are among some stocks that have been beaten down or punished due to operating anomalies that have the chance to revert to the mean and tick up from here. Harin de Silva, manager of the Allspring Global Dividend Opportunity fund says in The NAVigator segment that the US has remained one of the best places to be in terms of yields generated relative to the risks being taken. While he favors a global allocation, he noted that the fund has a surprising tilt toward the United States, helped along by the low volatility levels due to the strength of the U.S. economy. De Silva says that the big surprise in recent markets has been how the bad news from Ukraine and Israel -- along with troubles at both the Suez and Panama Canal -- hasn't created uncertainty in the market and convinced investors to stop taking on risk. Plus, Loren Hsaio discusses the latest information from Northwestern Mutual's 2024 Planning & Progress Study, which shows that Americans are coping with record levels of financial insecurity right now.

Todd Rosenbluth, head of research at VettaFi, says that American investors who have some $6 trillion in cash are in danger of missing out as the Federal Reserve begins to cut interest rates in coming months, meaning they should focus on what they are doing with their cash-like investments. That's why he made Fidelity Limited Term Bond his "ETF of the Week," noting that unexciting -- but in line with expectations -- is something investors should be striving for right now, so that they are protected when the rate picture changes. In The big Interview, Ben McMillan, chief investment officer at IDX Advisors, talks about how flexible bond-fund investors should be preparing for rate cuts and focusing in on duration plays -- where they are extending maturities right now to lock in current high rates -- while recognizing that credit quality will be a big factor in what happens when the cuts start happening. Plus, Miles Tullo discusses recent research from J.D. Power on how convenience is driving Americans to digital wallets and how satisfied consumers are making the change from greenbacks to digital use of money. Plus, Sandy Villere, co-manager of Villere Balanced and Villere Equity funds, talks stocks in the Market Call.