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Is the Treasury Department trying to slow the economy down? · The Financial Exchange Show

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Speaker 2: Or two of the financial exchange today Chuck, Mike and
1:14
Speaker 2: Tucker here, and market's not really doing a ton today.
1:19
Speaker 2: You got the Dow off thirty points, the S and
1:21
Speaker 2: P's down nine, NASDAC down to most about half percent
1:24
Speaker 2: about eighty points, and again, like you take a look
1:28
Speaker 2: at what's actually driving it today in Nvidia continuing just
1:31
Speaker 2: to really have a hard time getting anywhere. Good, I
1:36
Speaker 2: think is the best way to describe it. This is
1:39
Speaker 2: a stock that quite honestly, has just been in a
1:44
Speaker 2: kind of fairly wide but stagnant trading range since last
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Speaker 2: June when it cleared one hundred dollars a share for
1:51
Speaker 2: the first time. And it's basically, it's kind of wild
1:54
Speaker 2: to say this. It's basically been in a fifty percent
1:57
Speaker 2: trading range since then. Now I know that's a big range,
2:00
Speaker 2: but it's just because this stock has big swings, but
2:03
Speaker 2: ultimately it hasn't really been able to get anywhere. You're
2:07
Speaker 2: sitting here right now, and it's at one hundred and
2:10
Speaker 2: nineteen bucks a share, which is the same place it
2:12
Speaker 2: was at on June fifth of last year, and so
2:16
Speaker 2: it's now been almost nine months and the stock hasn't
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Speaker 2: moved during that time, which is probably disappointing to some
2:25
Speaker 2: people that you know, we're piling into it. And there
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Speaker 2: are some people who I'm sure look back in the
2:30
Speaker 2: you know, the start of January or in late November,
2:33
Speaker 2: might have piled in around one fiftieth share and now
2:35
Speaker 2: you're down thirty percent, you're twenty percent, and you're like,
2:38
Speaker 2: what do I do here? But ultimately, this is a
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Speaker 2: company that's salad just massive explosive growth in you know,
2:46
Speaker 2: twenty twenty three and really again even through twenty twenty four.
2:50
Speaker 2: I mean, you couldn't really say this thing was range
2:53
Speaker 2: bound until the last four months where it's just finally
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Speaker 2: been apparent that that's the case. But when you're a
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Speaker 2: three trillion dollar company making up you know, seven percent
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Speaker 2: of US markets, hey, it's it's gonna have you know,
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Speaker 2: an impact on those markets if you stock struggles, and
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Speaker 2: so I think that's part of what we are seeing
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Speaker 2: right now. Other than in Nvidia, not too much other
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Speaker 2: red on the board. You got you know, a couple
3:15
Speaker 2: of utilities that are getting hit today. Mostly it looks
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Speaker 2: like some renewable energy companies gee Vernova and Constellation Energy
3:23
Speaker 2: is not renewable. I don't know why they fall under
3:25
Speaker 2: that category for the S and P, but whatever. So
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Speaker 2: other than that, you know, it's just kind of a
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Speaker 2: regular day out there. But in Vidia continuing to drag
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Speaker 2: a little bit in recent days. Ten year US Treasury
3:38
Speaker 2: is seeing some money moving in that direction, down two
3:39
Speaker 2: point one basis points to four point twoh eight percent,
3:43
Speaker 2: and we've got oil West Text Intermedia down twenty eight
3:46
Speaker 2: cents a barrel to sixty nine forty eight. The Triple
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Speaker 2: A national average for gas prices down one tenth of
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Speaker 2: a cent over the weekend to three oh nine and
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Speaker 2: seven tents, so we're still trying to get below that
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Speaker 2: three dollars a gallon mark nationally. We're right into the
4:00
Speaker 2: spring season where prices tend to move up because of
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Speaker 2: reformulations for the summer, so I'm not sure we get
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Speaker 2: there unless we see another leg down in oil prices here.
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Speaker 2: But we've pretty much just been chopping in that three
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Speaker 2: h five to three fifteen range for the last few
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Speaker 2: months now. And we've got gold up forty nine dollars
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Speaker 2: and seventy cents an ounce to twenty eight ninety eight
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Speaker 2: and twenty cents, so gold rebounding a little bit here today,
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Speaker 2: and that's the big stuff that we are seeing in markets.
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Speaker 3: Yeah, I don't think this was how they intended on
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Speaker 3: getting there. But in reaction to that ten year treasury move,
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Speaker 3: you are seeing the thirty year fixed rate mortgage down
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Speaker 3: at six and three quarters.
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Speaker 4: Now.
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Speaker 3: I say it that way because Scott Bessant's Treasury secretary
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Speaker 3: has been very public about wanting to try and move
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Speaker 3: that ten year treasury rate down to be able to
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Speaker 3: impact interest rates that Americans actually normally face, such as
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Speaker 3: mortgage rates, car loan rates, and those are moving down.
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Speaker 3: The problem is that they're mainly moving down on concerns
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Speaker 3: about the US economy.
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Speaker 2: I think I want to say something different there, go
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Speaker 2: for it. I think that they are trying to slow
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Speaker 2: the US economy down. And this is so Besson came
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Speaker 2: out last week or maybe it was the week before,
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Speaker 2: and he was talking about, Hey, we want to see
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Speaker 2: a slow down in aggregate demand or we want to
5:18
Speaker 2: see lower demand, which is not something that you normally
5:20
Speaker 2: hear from a politician. Lower demand typically means okay, companies
5:26
Speaker 2: and individuals are spending less, which usually is not a
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Speaker 2: great thing in the economy. I think this is very
5:34
Speaker 2: much something that they are trying to sequence in that
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Speaker 2: And again, I don't know if this is going to
5:40
Speaker 2: work or not. But here's here's where I think they
5:43
Speaker 2: are trying to go with.
5:44
Speaker 1: This is.
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Speaker 2: Rain in deficits as.
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Speaker 4: A means of.
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Speaker 2: Trying to you know, create a little bit of fiscal
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Speaker 2: drag in the US Number one, but also to make
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Speaker 2: the deficit picture more sustainable. Number two is as that happens,
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Speaker 2: you do see rates come down because of you know,
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Speaker 2: the potential fear of recession, and then the idea is okay,
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Speaker 2: as you start to see that building release things on
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Speaker 2: the monetary side, so lower rates in order to stave
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Speaker 2: off recession and also bring down borrowing costs to you know,
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Speaker 2: help the economy avoid it. Potentially. Are they going to
6:28
Speaker 2: be able to pull this off? I have no idea.
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Speaker 2: We're six weeks into this, puppy, so I have no
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Speaker 2: clue if they are going to be able to pull
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Speaker 2: this off. But you have had White House officials say, yes,
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Speaker 2: we are, you know, looking for lower demand in the
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Speaker 2: economy as a way to help manage what we are
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Speaker 2: seeing right now. This could go wrong any one of
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Speaker 2: a number of ways. Number One Hey, you can end
6:56
Speaker 2: up with too deep of an economic downturn and now
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Speaker 2: you have a recession, and now you've got to problem
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Speaker 2: on your hands. Number two, Okay, you could help things
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Speaker 2: on the fiscal side, but then you might end up
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Speaker 2: undoing it all if you end up with you know,
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Speaker 2: larger tax cuts that end up expanding the deficit. Actually,
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Speaker 2: you might not get enough movement on this. As far
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Speaker 2: as rates moving down. There may be kind of this
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Speaker 2: residual inflation premium that's on rates, just because investors now
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Speaker 2: are worried about inflation in a way they weren't for
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Speaker 2: the last forty years, and so maybe they don't want,
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Speaker 2: you know, investors won't let rates go low enough because
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Speaker 2: they have that fear built in after two thousand, after
7:36
Speaker 2: twenty twenty two and twenty three. So there are any
7:40
Speaker 2: number of things that can go wrong. But I do
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Speaker 2: think that the administration is very much targeting lower demand
7:47
Speaker 2: right now. Because I gotta find the actual quote, but
7:51
Speaker 2: they've said so, like they they put it out there,
7:54
Speaker 2: and I was was kind of surprised when I saw that. Actually,
7:56
Speaker 2: let me, let me see if I can find the quote.
7:59
Speaker 2: But there's a piece from Bloomberg opinions titled where the
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Speaker 2: stock market goes to the US economy will follow. What's
8:04
Speaker 2: the premise of that? While I'm digging up this quote.
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Speaker 3: The premise of this is based on one fact that
8:08
Speaker 3: we've covered a few times of the course of the
8:10
Speaker 3: last few weeks, which is, these days, the top ten
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Speaker 3: percent of income earners, those making about a quarter million
8:17
Speaker 3: dollars per year households are accounting for about half of
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Speaker 3: the aggregate spending in this economy. Consumer spending by that
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Speaker 3: top ten percent is accounting for half the spending. There
8:28
Speaker 3: hasn't really slowed down, and you're seeing more and more
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Speaker 3: demand and more and more supply of goods they are
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Speaker 3: specifically catering to that income group, whether it is upgrades
8:37
Speaker 3: on seats, on airlines, luxury cruises, all sorts of different
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Speaker 3: products and services that are really targeted towards that income demographic.
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Speaker 3: Because of such a powerful group they are in terms
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Speaker 3: of spending, and the reason that they are one of
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Speaker 3: the reasons that's been offered in terms of why they're
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Speaker 3: spending continues is not just because they're income levels, but
8:56
Speaker 3: because when you are in that income level, a large
8:59
Speaker 3: portion of your total assets are tied to the stock market,
9:02
Speaker 3: whether it's your four oh one K or other buckets
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Speaker 3: of money. You know, home values are up, stock prices
9:08
Speaker 3: are up, and so that group is likely continuing to
9:11
Speaker 3: spend at a breakneck pace, in part at least because
9:15
Speaker 3: of how well their portfolio has performed, and that wealth
9:18
Speaker 3: effect that that translates to, Hey, I feel wealthier, and
9:22
Speaker 3: therefore I'm comfortable booking that extra trip this year. I'm
9:25
Speaker 3: comfortable spending that extra dollar this year that I might
9:28
Speaker 3: not have otherwise done if I were worried about recession
9:31
Speaker 3: and a stock market downturn.
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Speaker 2: So I think that when we look at this, there's
9:38
Speaker 2: a great charge. I don't know if this is from no,
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Speaker 2: it's not from this piece originally, but it was talking about,
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Speaker 2: you know, the spending in the US and where it
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Speaker 2: comes from. And look, it's it's basically, the top ten
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Speaker 2: percent of people is just half the spending in the US,
9:53
Speaker 2: and they're spending is as you noted, as this piece notes,
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Speaker 2: it's wealth driven. It's not income driven. Maybe the income
10:00
Speaker 2: is generated from wealth, but ultimately it's it's wealth driven.
10:07
Speaker 2: And so if you have a stock market that starts
10:10
Speaker 2: to teeter a little bit, to people say, well, I
10:13
Speaker 2: was gonna take that trip, but now my portfolio is down,
10:16
Speaker 2: and so I'm not gonna pull the money out of
10:18
Speaker 2: it because I'm a little bit nervous about it. And
10:21
Speaker 2: with so much spending tied to those higher earners, that's
10:26
Speaker 2: where you potentially end up with an issue. Now, this
10:31
Speaker 2: is not an entirely new phenomenon, So go there, Yeah,
10:34
Speaker 2: you know right now, And again this is data from
10:36
Speaker 2: Moody's Analytics. The top ten percent of earners account for
10:39
Speaker 2: half of all consumer spending. If you go back to
10:42
Speaker 2: nineteen ninety, and no one was talking about wealth inequality
10:44
Speaker 2: in nineteen ninety at least not the way we talk
10:46
Speaker 2: about it today. That number was still like in the
10:49
Speaker 2: high thirties. I'm just eyeballing it, but it was like
10:51
Speaker 2: thirty seven thirty eight percent, And for you know, basically
10:56
Speaker 2: the last thirty five years, it's moved up pretty consistently.
11:01
Speaker 2: But you never had like this this golden age where
11:05
Speaker 2: it was like, oh, the top ten percent of earners
11:07
Speaker 2: are fifteen percent of spending. No, it's it's always been
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Speaker 2: somewhat skewed there. So this is not an entirely new phenomenon.
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Speaker 2: But the magnitude of it is different and obviously with markets,
11:20
Speaker 2: whether financial markets, housing markets, you know, elevated. It's been
11:24
Speaker 2: a key source of you know, spending ability in the
11:28
Speaker 2: last couple of years. Here to take a quick break.
11:31
Speaker 2: When we come back, we're gonna be joined by Sarah
11:32
Speaker 2: Foster from bank Rate talking about their financial fraud survey.
11:37
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Speaker 3: Join us Now is Sarah Foster from Bancread join us
12:42
Speaker 3: to talk about a subject that we bring up on
12:44
Speaker 3: the show frequently here, which would be financial scams and frauds. Sarah,
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Speaker 3: thanks so much for joining us.
12:50
Speaker 4: Appreciate it, Thanks for having me.
12:52
Speaker 6: Always great to be here.
12:53
Speaker 3: So anybody listening to this program knows that these have
12:57
Speaker 3: been substantially on the rise over the core the last
13:00
Speaker 3: few years. It's also seemingly, at least in my circle,
13:03
Speaker 3: a bit of a taboo subject. When people do fall
13:05
Speaker 3: victim to them, they don't like talking about it. They
13:07
Speaker 3: don't like necessarily filing the police report or just admitting
13:11
Speaker 3: to the fact to family, friends and others that they've
13:13
Speaker 3: fallen victim to some of this because they feel embarrassed
13:17
Speaker 3: about it. What did your survey find when it came
13:20
Speaker 3: to just the power of these financial scams and frauds
13:24
Speaker 3: that are out there these days.
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Speaker 6: It's it's true and a little bit you know about
13:28
Speaker 6: the shame that I think a lot of Americans experience
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Speaker 6: when they fall for this. You know, what we found
13:32
Speaker 6: in our survey is that even those who appear to
13:35
Speaker 6: be doing everything right are still looking like they're falling
13:39
Speaker 6: for financial scams or fraud. We found that sixty eight
13:42
Speaker 6: percent of Americans have experienced at least a scam or
13:45
Speaker 6: financial fraud at some point in their lives, and then
13:48
Speaker 6: thirty four percent has experienced it over the past twelve months.
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Speaker 6: We're seeing across generations, you know, across income spectrums of
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Speaker 6: Americans are still indicating that they're experiencing this, even when
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Speaker 6: they also take steps that look like they'd be the
14:03
Speaker 6: right ways to prevent themselves from falling for it in
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Speaker 6: the future.
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Speaker 4: These are obviously evolving.
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Speaker 2: You know.
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Speaker 4: A few years ago it was all of the UH.
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Speaker 3: I saw a lot of the you know, you're in
14:14
Speaker 3: jail frauds, phone calls to grandparents and things like that,
14:17
Speaker 3: to wire money. More recently, I've seen a lot of
14:19
Speaker 3: crypto related scams, investment Ponzi scheme type things.
14:23
Speaker 4: Where are we seeing this go directionally? What role is
14:26
Speaker 4: AI playing?
14:27
Speaker 3: Have you seen any kind of changes to the trend
14:29
Speaker 3: lines on financial scams and frauds of the course the
14:31
Speaker 3: last five.
14:31
Speaker 6: Years, It's true, you know, the proliferation of new technologies.
14:35
Speaker 6: There's so many different types of scams of fraud out there,
14:40
Speaker 6: you know, there the playground is evolving. Scammers are finding
14:43
Speaker 6: new ways to target Americans faster than they can really
14:46
Speaker 6: come up with ways to protect themselves, you know. We
14:49
Speaker 6: there's so many different types. We looked at it in
14:51
Speaker 6: two buckets. It's first as those classic fraud scams, you know,
14:55
Speaker 6: someone using your personal or financial information, accessing it against
15:00
Speaker 6: your will, and then this kind of new area. And
15:03
Speaker 6: the second bucket that we looked at are Americans who
15:06
Speaker 6: are paying for a phony service, you know, sending money
15:09
Speaker 6: to a scammer. Those might be those classic grandparent scams.
15:13
Speaker 6: The you know, the dreaded phone call that we hear
15:16
Speaker 6: sometimes happens when someone gets picks up the phone it
15:19
Speaker 6: is said that they have to send someone money because
15:22
Speaker 6: they're holding a loved one hostage. That's just one, you know,
15:25
Speaker 6: kind of scary example here, but I think it shows
15:28
Speaker 6: that there's just so many different ways for Americans to
15:31
Speaker 6: fall for a scam, and all it takes is just
15:33
Speaker 6: one mistake that can happen very quickly.
15:37
Speaker 3: I think everyone's experience being targeted by a scam at
15:39
Speaker 3: this point, whether it's a text message, phone call, and
15:42
Speaker 3: hopefully largely ignored. But when it comes to actually falling
15:45
Speaker 3: victim to these scams, what are you finding from a
15:47
Speaker 3: generational difference there?
15:50
Speaker 6: We're seeing here that older generations are most likely to
15:53
Speaker 6: experience fraud or a financial scam, but it's those younger
15:57
Speaker 6: generations who are most likely to send money to a scammer.
16:01
Speaker 6: They're also the ones most likely to lose money overall.
16:05
Speaker 6: So I think what you could really kind of infer
16:07
Speaker 6: here is that there's these more advanced tactics that younger
16:10
Speaker 6: generations are falling for, you know, maybe through social media,
16:13
Speaker 6: through text messages LinkedIn. You know, we also hear about
16:16
Speaker 6: those fake job recruiters who are offering Americans an interview
16:20
Speaker 6: for a fee. I think though, that that's kind of
16:24
Speaker 6: breaking from, you know, the stereotype which is often that
16:26
Speaker 6: it's these older generations who don't have as much technological literacy.
16:30
Speaker 6: They're also the ones getting ready to pass on about
16:32
Speaker 6: eighty four trillion dollars in wealth and this great wealth transfer.
16:36
Speaker 6: So I think a lot of people assume they're the
16:38
Speaker 6: ones who get targeted most.
16:40
Speaker 3: Sarah Foster from Bank Rad joining us today. Talk about
16:42
Speaker 3: financial fraud survey they conducted recently and some surprising data there.
16:46
Speaker 3: I think, Sarah about that younger generation actually falling victim
16:51
Speaker 3: a little bit more frequently than the older ones. Sarah Foster,
16:54
Speaker 3: thanks so much for joining us. Appreciate it. Look forward
16:56
Speaker 3: to chat with you again soon.
16:58
Speaker 6: Thanks for having me always great to be here all right.
17:00
Speaker 5: Time for trivia here on the Financial Exchange And in
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Speaker 5: case you missed it, Domino's just announced that it will
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Speaker 5: be adding stuff Crust Pizza to their menus. Thirty years ago,
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Speaker 5: with huge success. Trivia question today, which pizza chain originally
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17:20
Speaker 4: Once again?
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Speaker 5: Which pizza chain originally released stuff Crust Pizza? Be the
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Speaker 2: You ever do a stuff cruft stuffed crust pizza.
17:48
Speaker 4: I think I've at least once had one, Yeah, at.
17:50
Speaker 2: Lunch at a school that was a very popular Oh yeah, yeah,
17:55
Speaker 2: sure fifteen ye I agree with you there mediocre cheese.
18:00
Speaker 2: Have you ever seen one stuffed with anything other than
18:04
Speaker 2: just cheese? Wasn't there like a pepperoni one? He makes
18:07
Speaker 2: like a little pepperoni or some sausage in there or something.
18:11
Speaker 3: Now you're innovating, Chuck, I think it'd be nice. Yeah,
18:14
Speaker 3: now you're innovating.
18:15
Speaker 2: Our home value is about to fall. It depends on
18:18
Speaker 2: the location. And what this is getting at is that
18:22
Speaker 2: there is a the technical term is ginormous variance throughout
18:28
Speaker 2: the United States in terms of housing inventory relative to
18:33
Speaker 2: pre pandemic. So I found some data. Hear this is
18:36
Speaker 2: from Rezi Club, good old Resi Club. Sure, here's what
18:41
Speaker 2: we're seeing right now. There are four states in the
18:44
Speaker 2: United States right now that have higher inventory levels than
18:47
Speaker 2: at the same time in twenty nineteen.
18:49
Speaker 3: Florida yep, Texas yep, Arizona nope, Utah, nope, the one
18:56
Speaker 3: next to it, Rhode Island, Nevada, Colorado, Colorado, and one more.
19:03
Speaker 4: Give me Tennessee.
19:05
Speaker 2: Yeah, Tennessee, Okay, not bad. So other than that, every
19:11
Speaker 2: other state is below Arizona just as an example, only
19:14
Speaker 2: down four percent, Okay, Utah down two percent, So some
19:17
Speaker 2: of them are pretty close. The northeast, you're screwed. Maine
19:21
Speaker 2: still sixty one percent fewer less inventory, New Hampshire sixty
19:25
Speaker 2: one percent, Massachusetts fifty four percent less inventory. So you've
19:29
Speaker 2: got this huge dispersion in inventory levels. We'll talk about
19:33
Speaker 2: what it means when we return.
19:40
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19:45
Speaker 7: It's the Financial Exchange on the Financial Exchange Radio Network.
19:51
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20:05
Speaker 1: All right.
20:05
Speaker 5: Trivia question today was which pizza chain originally released Stuff
20:09
Speaker 5: Cruss Pizza. I'll be Pizza Back on March twenty fifth
20:13
Speaker 5: and nineteen ninety five, they debuted stuff Cruss Pizza. The
20:17
Speaker 5: commercial Pizza Hut released to advertise the pizza starring Donald Trump.
20:22
Speaker 5: Sean from Munson, mass who was our winner today taking
20:26
Speaker 5: on my Financial Exshane.
20:27
Speaker 2: Show t shirt.
20:28
Speaker 5: Congrats to Sean and we play trivia every day here
20:30
Speaker 5: on the Financials Shane see complete contest rules at Financial
20:34
Speaker 5: Exchange Show dot com.
20:36
Speaker 2: No one out Pizza's the Hut. That's right, I've tried,
20:41
Speaker 2: I've tried. Let's see.
20:44
Speaker 3: So we would say arguably that Dominos is dramatically out
20:47
Speaker 3: Pizza in the Hut.
20:49
Speaker 2: Yes, pretty significantly. Yes, yeah, I would say that. Even
20:53
Speaker 2: though if you look for if you're ever on eBay
20:55
Speaker 2: and trying to find you remember the old red cups
20:57
Speaker 2: that they used to have at pizza huts, not really
21:00
Speaker 2: where they plastic. They're like collector's items on eBay. They
21:02
Speaker 2: go for like thirty dollars each. Really, yeah, I mean
21:07
Speaker 2: as much as a collector's item can be thirty dollars,
21:09
Speaker 2: but they probably cost two cents to make back in
21:11
Speaker 2: the day. Oh yeah, I know these. Yeah, yeah, of
21:14
Speaker 2: course you do. Yeah, everyone everyone does anyways. Housing So
21:19
Speaker 2: you got this piece in the Wall Street Journal. Our
21:21
Speaker 2: home value is about to fault. Depends on the location
21:23
Speaker 2: in the northeast. The answer is probably not fall but
21:27
Speaker 2: it's hard to see how they get too much more expensive.
21:31
Speaker 2: It's just a situation where inventories are generally anywhere between
21:35
Speaker 2: like sixty and forty percent below pre pandemic levels, and
21:40
Speaker 2: so there's still is very restricted inventory, and prices can
21:44
Speaker 2: stay up even with fewer buyers just because there's not
21:47
Speaker 2: much on the market.
21:48
Speaker 4: Right.
21:48
Speaker 2: On the other hand, Florida and Texas with nine and
21:52
Speaker 2: fifteen percent more inventory than pre pandemic, and these prices
21:57
Speaker 2: and these insurance premiums, this presents a problem where prices
22:02
Speaker 2: are already falling in a number of metro areas within
22:05
Speaker 2: those states, and you're very likely to see statewide price
22:08
Speaker 2: drops in those states over the course of twenty twenty five.
22:12
Speaker 3: Now I'm gonna spell out for here why I think
22:13
Speaker 3: you should care, even if you live in Connecticut, which
22:17
Speaker 3: has one of the worst inventory situations out there.
22:19
Speaker 2: About connect now, is it's still down like eighty percent.
22:22
Speaker 3: Yeah, something like that. It's like thirty percent of available,
22:24
Speaker 3: the worst in the country. Nineteen I'm not I'm living
22:29
Speaker 3: in Connecticut. I'm never considering moving to Florida buying a
22:31
Speaker 3: second home in any of these states.
22:33
Speaker 4: Why do I care? You care? Because Florida, Texas, What
22:37
Speaker 4: were the other states?
22:38
Speaker 3: Nevada, Arizona, Arizonorgia, These areas where inventory levels have either
22:44
Speaker 3: exceeded or or come close to where they were pre pandemic.
22:48
Speaker 4: These are the areas where all the new building has occurred.
22:50
Speaker 3: Yes, these are the areas where home developers are saying,
22:54
Speaker 3: why am I going to go bother with that next
22:57
Speaker 3: fifty home development right now?
22:59
Speaker 2: Not fifty five five hundred per home development. A big
23:02
Speaker 2: development in the Northeast is like, hey, we built eighty
23:04
Speaker 2: five single family homes. A big one in Florida is
23:07
Speaker 2: it's going to be four thousand homes over eight years
23:11
Speaker 2: and in five phases.
23:13
Speaker 3: And so if you are one of those homebuilders who's
23:15
Speaker 3: facing this down, thinking about tariffs and looking at hey,
23:20
Speaker 3: you know, I have no experience building homes in Connecticut.
23:23
Speaker 3: I don't have any people in Connecticut. My pleable are
23:26
Speaker 3: in Florida. You're probably not all that eager to go
23:30
Speaker 3: borrow a whole bunch of money and spend millions of
23:33
Speaker 3: dollars on a home development right now.
23:36
Speaker 2: And why this matters is that housing Even though so
23:40
Speaker 2: when you look at the overall impact of housing, it's
23:43
Speaker 2: not like housing is like eighty percent of the US economy.
23:46
Speaker 2: I think if you do like the actual numbers for construction,
23:48
Speaker 2: it's like seven or eight and the ancillary things get
23:50
Speaker 2: up to like fifteen percent of the US economy. Why
23:54
Speaker 2: it matters is that it's a huge marginal driver of
23:57
Speaker 2: economic activity. And because it's so cyclical, you see big
24:01
Speaker 2: swings in construction. So if construction pulls back by twenty
24:04
Speaker 2: percent and contractors start laying people off, it's something where Okay,
24:09
Speaker 2: now you're talking about a couple percentage points coming out
24:12
Speaker 2: of GDP, and that's a big swing that you end
24:15
Speaker 2: up getting. At the same time that AI is starting
24:18
Speaker 2: to show signs of, you know, fatigue and maybe that
24:21
Speaker 2: investment starting to wear out its welcome as far as
24:24
Speaker 2: you know, infinitely expanding data centers and things like that.
24:28
Speaker 2: So if AI's slowing down, housings slowing down, and you've
24:32
Speaker 2: got the federal government trying to be more fiscally responsible,
24:37
Speaker 2: where does the growth impulse come from?
24:39
Speaker 1: Right?
24:39
Speaker 2: That's the question that you have out there as you
24:42
Speaker 2: look at it, and that's the one that I think
24:44
Speaker 2: you have the potential to be concerned about over the
24:46
Speaker 2: next six to twelve months. Is, Hey, where is the
24:50
Speaker 2: growth going to come from? If the areas that typically
24:53
Speaker 2: lead it or that have let it recently are pulling back.
24:58
Speaker 3: When it comes to housing, there are really few assets
25:01
Speaker 3: out there that play as key a role in people's
25:06
Speaker 3: financial plans. As their home it's oftentimes the biggest single
25:10
Speaker 3: asset that they own. If they didn't own it, it's
25:13
Speaker 3: usually the single biggest budget item that they would need
25:16
Speaker 3: to replace in terms of cost. And frankly, a lot
25:19
Speaker 3: of the old rules that were in place when it
25:22
Speaker 3: came to things like mortgages and debt have kind of
25:26
Speaker 3: reversed themselves over the course of the last decade. What
25:28
Speaker 3: I mean by that is that there's a whole slew
25:30
Speaker 3: of Americans with mortgage rates below four percent, and as
25:34
Speaker 3: we all know, I just mentioned the new thirty year
25:37
Speaker 3: fixed rate mortgage coming in at six and three quarters percent.
25:40
Speaker 3: It raises a whole bunch of questions like, Hey, you know,
25:43
Speaker 3: my parents always told me if I made an extra
25:46
Speaker 3: payment on my mortgage every year, I could pay that
25:48
Speaker 3: thing off five years early.
25:51
Speaker 4: What should I be.
25:52
Speaker 3: Doing in this new normal interest rate environment, whether I
25:55
Speaker 3: am in my existing home and considering a downsize, if
25:58
Speaker 3: I'm looking to retire without debt. What is the appropriate
26:02
Speaker 3: way to play these games? Given how dramatically mortgage rates
26:06
Speaker 3: have shifted over the course of the last five years.
26:09
Speaker 3: It is a question that I think gets raised all
26:11
Speaker 3: the time, and people sometimes just blindly continue what they
26:15
Speaker 3: have built up as habit over the course of their lifetime.
26:18
Speaker 3: Right when you got a mortgage in nineteen eighty, it
26:20
Speaker 3: made all the sense in the world to be throwing
26:22
Speaker 3: extra money at that thing because the raid on it
26:24
Speaker 3: was eighteen percent. But what do I do now when
26:27
Speaker 3: I can earn more on a CD than I pay
26:29
Speaker 3: in mortgage debt interest. If you have questions along these lines,
26:32
Speaker 3: you're trying to figure out where housing fits into your
26:35
Speaker 3: overall financial future, please give the folks at Armstrong Advisory
26:38
Speaker 3: Group a call. This is what we mean when we
26:40
Speaker 3: talk about financial planning. It is not just your investment
26:44
Speaker 3: portfolio and how to best utilize it. You can oftentimes
26:47
Speaker 3: get a lot more long term return by being intelligent
26:51
Speaker 3: about how you address different debt items. If you have
26:53
Speaker 3: questions like that, give the folks at Armstrong Advisory Group
26:56
Speaker 3: a call. The phone numbers eight hundred three nine three
26:59
Speaker 3: four zero is zero one. Again that number for the
27:02
Speaker 3: Armstrong Advisory Group, eight hundred three nine three four zero
27:06
Speaker 3: zero one.
27:07
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
27:09
Speaker 1: registered investment advisor. Nothing in the ad or in any
27:12
Speaker 1: Armstrong guide to specific financial, legal or tax advice. Consult
27:15
Speaker 1: your own financial tax into state planning advisors before making
27:18
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
27:21
Speaker 1: advisory services.
27:23
Speaker 2: Mike, you got any chickens?
27:24
Speaker 4: I do not.
27:25
Speaker 3: I saw pretty good. I think it was like a
27:28
Speaker 3: I don't have TikTok, so it couldn't have been that.
27:30
Speaker 3: But maybe a Facebook reels about there's a woman walking
27:33
Speaker 3: down the street and there's a guy sitting in front
27:34
Speaker 3: of a Corvette, and then, you know, just down the
27:37
Speaker 3: street there's another guy sitting outside of Lamborghini and she
27:40
Speaker 3: you know, kind of looks at him. And then finally
27:42
Speaker 3: a guy walks by holding a chicken and a basket
27:45
Speaker 3: full of eggs and falls for, you know, falls for
27:48
Speaker 3: the truly wealthy guy. Out of the three, the one
27:50
Speaker 3: with a chicken, you know, yeah, egg laying hen and
27:53
Speaker 3: that is the new normal.
27:54
Speaker 4: That is the new world we live.
27:55
Speaker 2: There's also the one. It's you know, a picture of
27:57
Speaker 2: like an egg aisle in a grocery store with like
28:00
Speaker 2: a table set up in front of the eggs, and
28:02
Speaker 2: it says, take me somewhere expensive. I like it. So
28:05
Speaker 2: you've got egg prices going up, and the reason why
28:08
Speaker 2: is bird flew. More than one hundred and sixty six
28:12
Speaker 2: million birds have been slaughtered to contain the virus.
28:17
Speaker 4: Just nineteen last month, Chuck.
28:19
Speaker 3: Nineteen birds last month were euthanized to contain this thing.
28:24
Speaker 2: Now, here's the thing before we go further. I know
28:28
Speaker 2: that sounds like a lot of birds. Well, let's be clear,
28:32
Speaker 2: it is a lot of birds. But I'm sure you're
28:33
Speaker 2: going to contextualize it for us. Next, I am Mike,
28:38
Speaker 2: how many chickens do you think the United States goes
28:41
Speaker 2: through in a year for eating half a Bill Tucker?
28:47
Speaker 2: And he guess?
28:48
Speaker 7: Sorry?
28:48
Speaker 2: How many chickens do we eat a year? How many
28:50
Speaker 2: chickens do you think?
28:53
Speaker 6: I don't know.
28:55
Speaker 2: It's about eight billion? Oh my god, the planet? No
29:00
Speaker 2: United States?
29:00
Speaker 1: Jeez?
29:01
Speaker 2: Well you think about it. Yeah, like how many times?
29:05
Speaker 2: How many times a week does your family have some
29:07
Speaker 2: part of a chicken? At least once?
29:09
Speaker 4: Yeah? Pretty much once?
29:11
Speaker 2: Right, or probably twice. Your family is going through three
29:16
Speaker 2: to four birds a month. Now, you might not all
29:18
Speaker 2: do like the same parts. Remember, like you might be
29:21
Speaker 2: a thigh guy, maybe you're a breast guy, maybe you're
29:23
Speaker 2: a wing guy. But again, like the day where you
29:25
Speaker 2: go into you know, buffalo wild wings and you get
29:28
Speaker 2: a dozen wings for yourself. That's six chickens that died
29:32
Speaker 2: just to feed you. So ultimately, like you do the math,
29:36
Speaker 2: and it's about eight billion chickens a year that we
29:38
Speaker 2: kill to eat. Now, that doesn't mean that it's good
29:39
Speaker 2: that you know, we're having to kill, you know, one
29:42
Speaker 2: hundred and sixty million that would not normally be killed
29:44
Speaker 2: because they're just egg laying chickens. Do you eventually eat
29:49
Speaker 2: the egg laying chicken? Don't know, I mean, I don't
29:52
Speaker 2: see why not. Well, I don't know if so. Interesting
29:56
Speaker 2: thing about American chickens, so, American chickens are bread for
30:01
Speaker 2: one characteristic more than anything else, the breasts, because that's
30:06
Speaker 2: the kind of meat that Americans like. The interesting thing
30:10
Speaker 2: is that because of that, they had to be bred
30:13
Speaker 2: with larger feet so they wouldn't tip over literally a thing.
30:19
Speaker 2: The feet from American chickens often end up being sent
30:23
Speaker 2: to Southeast Asia because chickens feet are a thing there,
30:28
Speaker 2: and American chickens have the biggest feet in order to
30:32
Speaker 2: support the chicken from toppling over because it's top heavy.
30:35
Speaker 4: According to my AI overview.
30:37
Speaker 3: Here you can eat egg laying chickens, but their meats
30:39
Speaker 3: typically tougher and less abundant compared to.
30:41
Speaker 2: You something like a bress meat, So what you end
30:44
Speaker 2: up with is that chicken breast. The number of egg
30:46
Speaker 2: laying chickens is down twelve percent, from about three hundred
30:50
Speaker 2: and thirty million down to two hundred and ninety million.
30:52
Speaker 2: Now you might say, look, what, what does twelve percent matter? Like,
30:55
Speaker 2: why would egg prices go up that much? The answer
30:57
Speaker 2: is it's that marginal egg that you are buying. Think
31:01
Speaker 2: of it this way. If you are driving to work
31:05
Speaker 2: normally and your commute has you know, traffic the entire way.
31:09
Speaker 2: How nice does it feel when it's school vacation week
31:12
Speaker 2: and you say, wow, like this is so much better.
31:15
Speaker 2: It's not that seventy five percent of people have taken
31:17
Speaker 2: that week off. It's usually maybe like an eight to
31:20
Speaker 2: ten percent reduction in the number of cars, but it
31:23
Speaker 2: has a huge impact on traffic because of how it
31:25
Speaker 2: compounds and so on and so forth. The marginal car
31:28
Speaker 2: is what causes the traffic. It's the same thing with
31:31
Speaker 2: egg prices. So it raises the question, hey, is there
31:35
Speaker 2: you know something the farious going on, like, is this
31:38
Speaker 2: you know, some kind of egg expiracy? Is this you
31:43
Speaker 2: know exflation that we're seeing our corporate profits being you know,
31:47
Speaker 2: primed by high egg prices. Maybe a little bit, but
31:51
Speaker 2: it's not the probably somewhere here and there. But the
31:53
Speaker 2: root cause is just not enough eggs to go around
31:56
Speaker 2: because our demand is not that elastic.
31:58
Speaker 4: The other way, all.
31:59
Speaker 3: Experts saying that this situation is getting worse before it
32:01
Speaker 3: gets better in order to contain this.
32:03
Speaker 2: The other thing that's interesting, eggs seem to be one
32:07
Speaker 2: of the only items, not only they're in the category
32:12
Speaker 2: of toilet paper now where when the price goes up,
32:16
Speaker 2: Americans want to buy more of them. And I don't
32:19
Speaker 2: know why. Like you talk to Americans normally and you're like, hey,
32:22
Speaker 2: how many eggs are you? They're like, I don't know,
32:24
Speaker 2: maybe on a Sunday, I have a couple. And now
32:27
Speaker 2: it's what I gotta buy two dozen every week? You know,
32:30
Speaker 2: I well why they're more expect I gotta buy them.
32:35
Speaker 4: Any news is good news, Chuck.
32:37
Speaker 3: People are just awakening to the power of eggs in
32:39
Speaker 3: their diet now that the prices are through the roof.
32:41
Speaker 2: What was the substitute that someone was trying to make.
32:44
Speaker 4: Lass mung bean. Mung bean.
32:46
Speaker 3: Yeah, it's a I think it's a product called just
32:51
Speaker 3: egg which I have tried.
32:52
Speaker 2: And is are you promng or anti mun not doing
32:55
Speaker 2: the job? Let me tell you that I've never had
32:57
Speaker 2: mung bean. Well you're not missing anything. Let just take
33:00
Speaker 2: a quick break. When we come back, we'll do a
33:03
Speaker 2: little bit of stack roulette.
33:05
Speaker 1: Text us six one seven three six two one three
33:08
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34:12
Speaker 2: Mike, what do you got from me for stack roulette?
34:15
Speaker 3: I've got a piece here from bloomy Berg. Apple's artificial
34:20
Speaker 3: intelligence efforts reach a make or break point, and they
34:23
Speaker 3: lay out an argument that Apple is falling behind in
34:26
Speaker 3: the AI race to the likes of Amazon, Microsoft and
34:30
Speaker 3: others Google as well. And I don't disagree that they
34:37
Speaker 3: are falling behind in the AI arms race. I am
34:40
Speaker 3: also unconvinced that it matters. Apple and Microsoft do not
34:45
Speaker 3: serve the same customers by and large, nor does Apple
34:48
Speaker 3: and Google buy and large. Google makes a massive portion
34:51
Speaker 3: of their revenue from advertising, and in fact, you know,
34:54
Speaker 3: all of their revenue from advertising to businesses. Apple sells U, you, Me,
35:00
Speaker 3: and everybody else stuff And tell me Chuck Where do
35:04
Speaker 3: you see the most artificial intelligence usage today?
35:09
Speaker 2: Nowhere? Quite honestly, yeah.
35:11
Speaker 3: I mean to me, it's mainly in business settings. It
35:13
Speaker 3: might be some business to business stuff, it may be
35:16
Speaker 3: an employees using it for work related purposes. Apple doesn't
35:21
Speaker 3: need to be here yet. I continue to say that
35:24
Speaker 3: where Apple succeeds over and over again is taking a
35:27
Speaker 3: product that nobody knows what to do with and can't sell,
35:31
Speaker 3: making it more user friendly for the individual, and then
35:35
Speaker 3: charging a massive markup for the Apple logo to be
35:38
Speaker 3: on it and making it fashionable, usable and profiting on it.
35:42
Speaker 4: I don't think they need to be here.
35:43
Speaker 2: And I also think there's just no there's no killer
35:49
Speaker 2: app for AI. There's no need for the average person
35:55
Speaker 2: to use it. You know, there's certain use cases where
35:57
Speaker 2: you're like, oh, like it's helpful for this and that,
35:59
Speaker 2: and like it it can be. I'm not saying it
36:02
Speaker 2: has no use, but look, let's talk about a few
36:06
Speaker 2: of the different uses. So asking it a question in
36:10
Speaker 2: order to get an answer can be accurate, but can
36:14
Speaker 2: also produce some results that are shockingly inaccurate, like should
36:18
Speaker 2: you eat rocks to a day? Google set?
36:22
Speaker 1: I think.
36:24
Speaker 2: Other things if I have to see one more AI
36:29
Speaker 2: generated picture of something that's not really possible.
36:36
Speaker 4: Or frankly the number.
36:38
Speaker 2: Honestly, I click away from pieces that I'm reading when
36:40
Speaker 2: I see that stuff just because it's like, Okay, I'm
36:43
Speaker 2: done with this, Like this is useless. Yeah, so there's
36:47
Speaker 2: no killer app for it. And and you know, when
36:50
Speaker 2: when the iPhone first came out, it was okay, here's
36:54
Speaker 2: what it does. It's your iPod plus an I plus
36:57
Speaker 2: like you can call people. And then you started getting
36:59
Speaker 2: like the weather app, like there was all this stuff
37:01
Speaker 2: you could do on it. What does the average person
37:04
Speaker 2: need AI for? The most answered that the most.
37:08
Speaker 3: Memorable thing that I can think of was when my
37:11
Speaker 3: daughters were teasing each other about boys, and I used
37:15
Speaker 3: AI to generate a poem to embarrass them.
37:19
Speaker 4: The single like funniest.
37:20
Speaker 2: You wouldn't pay for that?
37:21
Speaker 4: Most absolutely not.
37:23
Speaker 2: No, not a chance you wouldn't pay for that.
37:25
Speaker 4: Of course not.
37:26
Speaker 3: And so the average person, for their personal lives has
37:29
Speaker 3: no need for AI. Therefore, Apple has no need to
37:32
Speaker 3: develop anything special.
37:33
Speaker 4: Right now, I keep seeing.
37:35
Speaker 2: These things like, oh well, AI is gonna be your
37:37
Speaker 2: personal assistant. It'll know your schedule and know what you want.
37:40
Speaker 2: To do when it'll help make dinner reservations for you.
37:44
Speaker 4: Nobody's gonna pay for that.
37:46
Speaker 2: How long does it take to make dinner reservations? I
37:49
Speaker 2: go to the freaking website, I type it. If it's there, okay,
37:52
Speaker 2: If it's not great, I go to the next like whatever, Like,
37:57
Speaker 2: unless it's going to clean my house, mow my lawn,
38:01
Speaker 2: do my lawn, like fine, do all the actual like
38:04
Speaker 2: stuff that I don't really want to do. Sometimes cool,
38:08
Speaker 2: but if it's gonna be like, hey, you might be hot,
38:12
Speaker 2: should you turn down your heat? No, I'm comfortable, Thank
38:16
Speaker 2: you very much. Quick break here. We're back here tomorrow
38:20
Speaker 2: in about twenty four hours on the Financial Exchange