SPEAKER

 
Harvey Clark introduced our speaker Wayne Stutzer, Senior Vice-President and Financial Consultant for RBC Wealth Management.  Wayne has over 27 years of experience educating investors on current events and their potential impact on the financial markets.  He hosts a radio talk show every Sunday from 8:00 to 10:00 am on Newsradio 92.3 FM.  He also can be seen daily at 5:20 AM on Fox 10 news.  Wayne is a member of the Scottsdale North Rotary Club.
Wayne says we have been recovering from a "balance sheet recession" since 2008.  He believes Ben Bernanke and the Federal Reserve saved capitalism by keeping interest rates at essentially zero to give banks time to dig out of their debt problems. Printing money did not lead to hyperinflation. The recovery is working but it has been slow. He says the Fed is going to raise interest rates and that will make money a little more expensive, but it will also make it a little more available. Bank borrowing rates will rise from essentially zero to 2 %. This will shake up the stock market for a while but it will not be enough to damage the economic recovery. Stock market growth is now being fueled by companies making money, not by the Fed printing money.  Lots of people and companies are sitting on cash that will come into the market.
 
Wayne described some terms for us:
 
Pull Back = loss of 5-10% of stock values.  Recovery typical in 6 months. We have had 60 of these pull backs since the end of WW II.
 
Correction = loss of 10 to 20 % of stock values.  Recovery time is around a year.  We have had 19 of these events since the end of WW II.
 
Recession = greater than 20% loss of stock values.  Recovery is typically 2-3 years.  We have had 9 of these since WW II ended. 
 
Crash - one in the '30s and 2 in the 70s.
 
Wayne doesn't think we are going to have another recession any time soon.  One sign of coming trouble will be an inverted interest curve in which short term bonds pay more than long term bonds.