Latest / The Financial Exchange Show / How will the next President manage a cooling labor sector?

Transcript

How will the next President manage a cooling labor sector? · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:03
is hosted by employees of the Armstrong Advisory Group, a
0:05
registered investment advisor. All opinions expressed are solely those of
0:09
the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
or anyone else. Investments can lose money. This program does
0:14
not offer any specific financial or investment advice. Please consult
0:17
your own financial, tax, and estate planning advisors before making
0:20
any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
this program do not endorse each other or their services.
0:26
Armstrong and Money Matters Radio do not compensate each other
0:28
for referrals and are not affiliated. This is The Financial Exchange,
0:35
with Mike Armstrong and Mark Vandetti, your exclusive look at
0:39
business and financial news affecting your day, your city, your world.
0:44
Stay informed and up to date about economic and market
0:47
trends plus breaking business news every day. The Financial Exchange
0:51
is a proud partner of the Disabled American Veterans Department
0:55
of Massachusetts. Help us support our great American heroes by
0:58
visiting DAV five K dot Boston and making a donation today.
1:02
The DAV five K Boston is presented by Veterans Development Corporation.
1:07
Face is the Financial Exchange with Mike Armstrong and Mark Vandetti.
1:15
Speaker 2: Happy Tuesday, Good Morrian, Welcome back to the Financial Exchange.
1:18
On election Day, We've got equity markets broadly in positive territory.
1:23
Dow up two hundred ninety points seven tens of percent,
1:26
SMP up forty four, closing in on eight tenths of
1:29
a percent in the Nasdaq up almost a full percentage
1:31
point one hundred and seventy four points, the smaller size
1:35
Russell two thousand. By that I mean smaller cap companies
1:39
up about eight tenths of a percent as well. Yield
1:42
on the ten year Treasury up slightly to four point
1:45
three nearly four point three six percent in early trading here,
1:49
and price with barrel of oil up another nine ninety
1:53
cents one to a quarter percent, sitting at seventy two
1:56
dollars per barrel on that West Texas CRUED don't usually
1:59
quote crypto prices, but given the attention to the cryptocurrency
2:04
markets and bitcoin specifically has gotten from Canada Donald Trump,
2:08
i'll mention that Bitcoin also up three and a quarter
2:11
percent in early trading so far. Today. We'll come back
2:16
to polling data and just where things stand. Again. We
2:19
won't have fortunately any significant results coming out during the
2:23
broadcast of today's Financial Exchange, but obviously full coverage for
2:26
you tomorrow. One election that we did get data on
2:30
though last night, was out in Seattle, which was the
2:34
Boeing Union vote. Mark you wanted to say something, you go.
2:37
Speaker 3: Yeah, Trump, Trump just declared victory.
2:38
Speaker 2: Mike at eleven oh seven, mark the tape. Okay Boeing
2:43
union votes to end their strike. This is the third
2:47
consecutive vote on a labor deal from the Boeing Machinist Union.
2:53
Thirty three thousand workers have been on strike now for
2:56
I think what has been seven or eight nearly eight weeks,
2:59
and finally clearing the way for Boeing to restart their factories.
3:03
As you can imagine, with a manufacturing process as complex
3:07
as airplanes not going to happen overnight, it's assumed that
3:10
it's going to take a few weeks to restart things.
3:12
But finally getting this thing done by a margin of
3:16
I think fifty nine percent voting in favor of the
3:19
twenty some odd twenty six thousand members cast votes, fifty
3:23
nine percent voted in favor of that new deal.
3:27
Speaker 3: Mark, Yeah, this halted production of the seven thirty seven Max,
3:33
so gave the grim Reaper a little break there for
3:36
eight weeks. But he can get back to work as
3:38
soon as that suckers back up.
3:39
Speaker 2: In the air.
3:40
Speaker 3: I guess sorry, I had nothing substantive, Michael, No, it's
3:44
a good joe, little goofy.
3:46
Speaker 2: As part of this deal, workers will see a thirty
3:49
eight percent wage increase over the life of this four
3:52
year deal for those thirty three thousand machinists. Separately, Kelly Orberg,
3:57
the new CEO over there, is cutting seventeen one thousand jobs,
4:01
raising more than twenty four billion dollars in equity in
4:03
order to keep the company just afloat. They will also
4:07
be getting a twelve thousand dollars ratification bonus and a
4:10
pledge to build their next plane in the Pacific Northwest.
4:14
That promise, to me is completely irrelevant because this deal
4:18
is a four year deal and they are not going
4:20
to be building any new planes anywhere in the next
4:23
four years, but I guess is a indication of where
4:27
they intend to keep focusing their investment. The final piece
4:32
on this is this deal did not come with any
4:34
sort of commitment on reinstating pensions which were killed back
4:37
in twenty fourteen. If I am not mistaken, increase four
4:41
toh one K contributions as part of this, but not
4:44
going to be looking at any sort of pension contribution
4:47
or retake on that pension. And really, I think drove
4:51
this deal home was the leadership at the union finally
4:54
turning and saying this might be the best we're going
4:56
to get out of Boeing. So line up and come vote.
4:59
Speaker 3: Eight percent year before the increased four to one k.
5:02
I think it's a match. There may be some profit
5:04
sharing in there, which would actually be encouraging a wine
5:07
incentives increase your profit share. I wonder how telling it
5:11
is that they didn't budge on pension.
5:14
Speaker 2: It's also interesting because if you were going to have
5:18
to restart a pension plan and start funding it again,
5:22
not the worst time over the last couple decades to
5:24
go do so. You've got rates in a pretty solid place.
5:26
You can, you know, go out and buy a ten
5:28
year treasury at what did I just say? One was
5:31
going for four point three percent yield, you know, compared
5:34
to where you were in twenty fourteen when they canceled
5:36
this thing. You don't have to fund it quite as
5:37
much as you previously needed to.
5:39
Speaker 3: That can, of course change, of course, and their balance
5:42
sheet is in rickety enough shape as it is. Four
5:44
to one K doesn't go on it, pension liabilities do.
5:48
Speaker 2: It's understandable not that most workers get this choice mark,
5:51
but no, how do you evaluate, Like when you look
5:55
back at, you know, whether the Boeing workers would have
5:59
been better served their pension or their four to one K.
6:02
Let's look at this case specifically over the last ten years.
6:05
You know, you look at Boeing and we don't know
6:07
the specifics off the top of our head of four
6:09
oh one K contributions versus pension guarantees. But what's what's
6:13
you know, how do you evaluate what's actually better for
6:16
that person? Because being invested in a four to one
6:19
K over the last decade been pretty darn good for you. Yeah,
6:23
pretty darn good.
6:24
Speaker 3: Say, it depends on the individual and how risk averse
6:26
they are. Like you're taking the chance that at your
6:28
retirement date you will or won't have enough when you annuitize.
6:33
Most people don't actually buy an annuity, But the right
6:35
way to think about it is annuitization. What could I
6:37
government insurance company. If I gave them my five hundred
6:40
thousand dollars. Four to one k is a lump side.
6:42
What would they pay me a month for the rest
6:43
of my life? What would they pay my wife if
6:45
she survives me? And is there inflation? There are a
6:48
little levers you can pull there that affect the premium,
6:51
the cost up front of the annuity. So I think
6:53
it depends on how risk averse or risk accepting you are.
6:58
Thank you better way to put you are, because you're right,
7:01
it's been a spectacular there's been a spectacular advantage lately
7:06
for equities. There have been other periods though, when the
7:09
security of a pension looked really good.
7:11
Speaker 2: Yeah, the the pitfalls for the four to one k
7:14
are pretty obvious. You know, you screw up investing because
7:16
you don't know what you're doing, You don't funded enough,
7:19
because it's your choice, the markets don't perform the way
7:22
you want. The ones with pensions they're a bit less obvious.
7:25
But the risks exist, right, I mean generally with a
7:27
pension you're not getting a cost of living adjustment like
7:30
Social Security. Most pensions don't offer that. So hasn't really
7:34
been a problem for the last five decades. But imagine
7:36
that you retire with a pension and we see higher
7:39
than average inflation for your retirement. That could be you know,
7:43
that could put you in a bad situation. There's the
7:46
obvious risk of the company that offers the pension going
7:48
belly up. But even there you have the Pension Benefit
7:51
Guarantee Corporation, which steps into a point in short, to
7:55
a point that you're still paid something, albeit usually not
7:58
the full benefit of your pension, but it is I
8:03
think on the balance for most people, I would say
8:06
the pension is the better. You know, it is ultimately, as.
8:09
Speaker 3: You say, not that you have a choice, not that
8:11
you can't into one or the other.
8:12
Speaker 2: Unfortunately, Yeah, I mean very few people are looking at
8:15
jobs out there and saying, oh, well, this one offers
8:18
a pension and this one doesn't, And so that's how
8:20
I'm going to base my decision. No, most of us
8:22
are either in a career that offers a pension, which
8:24
is maybe twenty percent of us, and then even that high, no,
8:28
probably not five, five or ten.
8:30
Speaker 3: Well, unions are less than ten of the private sector
8:33
workforce ten percent. Then not everybody in a union has
8:36
a traditional defined benefit which is a fancy way of
8:39
referring to a pension.
8:40
Speaker 2: Play public sector workforce. Almost everybody has them, but yeah, yeah,
8:44
it's tough to say exactly what portion are covered by
8:46
a pension these days, but yeah, it's just an interesting
8:49
thought exercise. If you were given the option to choose
8:53
one versus the other, how you would do So it's
8:55
it's in one area we actually might see that choice
8:58
coming into play. Is insurance companies starting to play a
9:03
bigger role in four one K plans, right, you've seen it.
9:06
Speaker 3: Yeah, they've They've tried over the last ten to twenty
9:09
years to give participants is what this is what we're
9:12
called in one K world participants instead of account owners,
9:15
but you can use them synonymously to give them the
9:18
opportunity to pensionize your distribution by buying an annuity within
9:23
the plan. Yeah, it was an iffy area for so
9:25
called plant sponsors for a while. It's more accepted now.
9:29
Speaker 2: I e. Les so don't see a lot of it,
9:31
but it is one of those areas where you actually
9:34
might be able to choose. Ye, are people are choosing.
9:37
Speaker 3: It that The innovation has been slow because it's not
9:42
a popular option and you could do it yourself. You
9:44
can roll over to an ir right and annuitize.
9:47
Speaker 2: You hypothetically could do So, let's take a quick break
9:50
when we come back, going to have a bit of
9:51
trivia for you coming up, and then we'll talk a
9:53
little bit more about the upcoming election today or the
9:57
ongoing election today and what the most recent pulling data
10:00
seems to be. Saying quick break, that's next on the
10:02
Financial Exchange.
10:03
Speaker 1: Tune in for trivia brought to you by Applebee's every
10:06
day at eleven twenty for your chance to win cool prizes.
10:09
Text us at six one seven three six two one
10:12
three eighty five and use keyword Applebee's. Complete rules are
10:16
available at Financial Exchange show dot com. This is the
10:19
Financial Exchange Radio Network. The Ultimate Boston Sports Option to
10:23
benefit the Disabled American Veterans Department of Massachusetts is underway.
10:28
You could win two tickets to see the Patriots take
10:30
on the La Rams on November seventeenth, two tickets to
10:33
see the world champion Celtics against the Cleveland Chevaliers on
10:36
Tuesday November nineteenth, two tickets to see the Bruins against
10:39
the Edmonton Oilers on Tuesday, January seventh, and four tickets
10:43
to a twenty twenty five Red Sox home game. All
10:45
that plus autographed merch from all four teams. To place
10:49
your bid, call eight eight eight two oh five two
10:51
two sixty three. That's eight eight eight two oh five
10:55
two two six three.
11:01
Speaker 4: Trivia brought to you by Applebee's. Take your friends or
11:04
family to any area Applebee's and enjoy half price Lenette
11:07
appetizers after nine pm, including bonus wing spinach and ark
11:11
choke dip and warm pretzels dipped in beer cheese. And
11:14
don't forget to join Club Applebee's to enjoy exclusive deals
11:18
and specials. You'll get a free appetizer just for signing up.
11:22
Now that's even good. In the neighborhood void, we're prohibited
11:25
dine in only last day of Presidential trivia here on
11:28
the Financial Exchange. Four US presidents have been awarded the
11:32
Nobel Peace Prize. Three of those presidents were in office
11:37
when they won the award, Jimmy Carter being the exception,
11:41
as he won it twenty years after he left office.
11:45
Trivia question today, who was the first president to win
11:49
the Nobel Peace Prize?
11:50
Speaker 1: Once again?
11:51
Speaker 4: Who was the first president to win the Nobel Peace Prize.
11:55
Be the fifth person today to text us at six
11:58
one seven three six two three thirteen eighty five. With
12:01
the correct answer, you win a Financial Exchange Show T
12:04
shirt and be registered to win a one hundred dollars
12:06
gift card to Applebee's. Be sure to include the keyword
12:10
Applebee's in your text, and we'll give away that Applebe's
12:13
gift card on Friday show six one seven three six
12:16
two thirteen eighty five, and the fifth correct response will
12:19
be our winner. See complete contest rules at Financial Exchange
12:23
Show dot com.
12:24
Speaker 2: Well, it is a election day in America, and as such,
12:28
we kind of want to talk about statistics. And it's
12:30
particularly interesting with polling because unlike the statistics that we
12:35
review here on the Financial Exchange, you ultimately get an
12:38
answer on how close your measurements were, and you get
12:42
an answer pretty darn quickly. Like you know, we eventually
12:44
do two you know, eventually they do a census and
12:46
we get some answers to certain questions about the state
12:49
of the labor market toward this, that or the other,
12:52
but it often takes years before that data actually comes in. Here,
12:56
we've had polling going on for the last I don't
12:59
know two years on presidential politics, and we should know
13:02
late tonight tomorrow, Thursday at the latest. According to the
13:07
most polls, which is just kind of crazy, they seem
13:12
incredibly close. According to one source five thirty eight, which
13:16
has a model where they take averages of different polls
13:19
wait them differently depending on historical accuracy, they have run
13:23
simulations that show basically a coin toss. They ran a
13:26
thousand different simulations for the electoral college. Five hundred and
13:30
three of those thousand came out in favor of Harris,
13:33
four hundred and ninety five of them came out in
13:34
favor of Trump. Two of them came out with no
13:36
electoral college winner, in which case would be tossed I
13:39
believe to the house, in which case Trump would likely
13:41
win in that scenario, but incredibly close.
13:46
Speaker 1: Now.
13:47
Speaker 2: There has been some criticism of that closeness, some claiming that, hey,
13:52
maybe statistically it's somewhat improbable for the race to be
13:57
as close it is as it is right now, and
13:59
they're could be a number of different reasons behind that.
14:02
But can we talk about that statistical improbability and why
14:06
some people are suspect of this data market?
14:08
Speaker 3: The problem at its core is that of getting a
14:12
random sample. We talk about the unemployment rate every month,
14:16
the number of new jobs created. For example, last month
14:19
it was a disappointing probably whether related, but a disappointing Nevertheless,
14:23
twelve thousand that comes from a sample of employers, and
14:27
that sample has an error because we don't know the
14:29
real number. We don't go out and ask sure everybody,
14:32
much like in these poles. So all samples, all estimates
14:36
that come from a sample, have an error. That's why
14:38
they say plus or minus two or three percentage points,
14:41
and that's why they say. That's why they use the
14:43
phrase statistically tied, because the difference is bigger as big
14:49
or bigger than the gap between the two. So when
14:51
you say a poll has a margin of error plus
14:54
or minus three, if it's candidate X at forty seven,
14:57
candidate why at forty nine, the margin of error is
15:00
bigger than the difference between the two. So statistically they
15:03
are the same. The issue is getting the right size sample.
15:07
That's addressed in the margin of error that we always
15:11
hear a lot about. That's easy enough to do if
15:13
you have the resources. Tougher thing to do is getting
15:15
a random sample. We don't think about this a lot.
15:18
But if you went, for example, into a church. I
15:21
used this in the last hour, I'll use it again
15:23
and ask people your pro life, your pro choice, everybody's
15:25
going to pretty much everybody's going to raise their hand.
15:27
I wouldn't just to be a jerk, but pretty much
15:29
everybod's gonna raise their hand and say I on pro life.
15:31
You can't do an abortion poll in a church. That
15:34
sample's biased. You can't pull just people on say cell
15:39
phones or on social media about who they like for president.
15:43
That sample would be biased towards say, younger people or
15:45
wealthier people who can afford the mechanism you're using to
15:49
gather the data. So in addition to the size of
15:52
the sample, there's randomness issues. And this is what Silver
15:55
I think is getting in part at some polsters are
16:00
looking at their sample and saying, oh, it wasn't really random.
16:03
In the last two election cycles, we missed a bunch of.
16:06
Speaker 2: Yeah, in twenty sixteen, that was the big one. They
16:08
missed a whole bunch of Trump supporters because they missed
16:11
I think the general conclusion there is that they missed
16:15
defined the pool of likely voters. They did not capture
16:18
those people. That typically weren't voting in elections in presidential politics,
16:23
they didn't usually register. They didn't even if they were registered,
16:27
they didn't usually show up. They didn't show up at
16:29
the last mid term, and so they said that person
16:32
favors Trump that, but they might not show up. And
16:35
this time around the accusation seemed to go on the
16:38
other way, which is polsters, again, according to some of
16:43
the accusations, seem so concerned about being wrong that they're
16:48
just calling it a coin toss.
16:49
Speaker 3: You might wonder, how can he come to that conclusion.
16:51
He didn't ask every polster how they conducted their poll,
16:54
He didn't dig into every polster's methodology.
16:57
Speaker 2: I did not.
16:57
Speaker 3: And the answer no, not you silver in this exams,
17:00
Yeah no, And we most certainly didn't want to waste
17:01
the time. It most certainly did not. The answer is
17:05
they don't vary as much as random chance would suggest.
17:08
If I flipped a coin, I said this in the
17:10
last hour. I'll use the analogy again. I'm just trying
17:12
to generalize here and take something away from this. If
17:14
I flipped a coin ten times and it came up
17:16
heads ten times, you wouldn't have to have seen me
17:19
do it. You wouldn't need to inspect the coin. You
17:22
wouldn't need to know any of the other variables. You
17:24
would say on its face that suspicious chance. The mathematics
17:29
of a coin flip tell me it's going to be
17:31
fifty to fifty and in a big enough sample ten
17:34
times isn't a good example. If I did it a
17:36
thousand times and it came up ninety percent heads, you'd
17:38
say that coin's loaded. I don't have to inspect the coin.
17:41
I don't have to look at you. I don't have
17:43
to know anything about the process. That's what Silver's doing here.
17:45
He's saying these pulls are suspiciously well aligned. Yep, they
17:50
should be. There should be more diverg.
17:51
Speaker 2: Is shit, and there isn't. So again, conclude what you
17:54
will about that this does indicate, even with some sampling
18:00
and hurting, that this seems to be a pretty close race.
18:03
That does not mean that the results will be close.
18:05
By the way, you know, you could have a blowout
18:06
in the popular vote. You could have a blowout in
18:08
the electoral college. You could have Trump win all seven
18:10
swing states. You could have all sorts of things happen
18:13
that don't get really properly defined in polling data like this.
18:19
Just because polling data indicates a close race, I will
18:22
repeat this again, does not mean that you will get
18:24
a close result. It just means that they're having a
18:27
tough time predicting what the outcome will be. Yeah, well put,
18:30
So I think that's where I would leave it in
18:33
terms of, you know, good and bad uses of reading
18:37
up on polls. Obviously, betting market's quite different. We talked
18:40
about that at the beginning of the show as well.
18:42
But betty markets strongly favoring a Donald Trump outcome in
18:46
the high fifty percent range. Again, don't I don't really
18:51
know what to do about that. And by the way,
18:52
betty markets haven't been reliably correct. Betty markets were heavily
18:55
favoring Clinton in twenty sixteen because that seemed like the
18:58
obvious outcomere all wrong. So I wouldn't say they're any
19:01
better than polls at predicting outcomes, Mike.
19:04
Speaker 3: They're not. That's not a biased, unbiased excuse me sample.
19:07
These are people who are inclined to go online, they're
19:09
inclined to gamble, they've got some bucks. They're more likely
19:12
to be men said differently than women. So on its face,
19:16
you can almost reject that approach in a statistical sense.
19:18
It's not a random sample.
19:20
Speaker 2: Let's take a quick break. But when we come back,
19:22
we are going to have the trivia winner for you,
19:24
and then we'll talk a little bit about just the
19:26
overall state of labor market. We've got our Boeing workers
19:29
back to work, but what does the rest of the
19:30
market look like as we head into the next presidential cycle.
19:40
Speaker 1: Bringing the latest financial news straight to your radio every day,
19:45
it's the Financial Exchange on the Financial Exchange Radio Network.
19:50
Now it's your chance to support the Disabled American Veterans
19:53
Department of Massachusetts by bidding in our ultimate Boston Sports auction.
19:57
You could win two tickets to see the Patriots take
19:59
on the l Rams on November seventeenth, two tickets to
20:02
see the world champion Celtics against the Cleveland Cavaliers on
20:05
Tuesday November nineteenth, two tickets to see the Bruins against
20:08
the Edmonton Oilers on Tuesday, January seventh, and four tickets
20:12
to a twenty twenty five Red Sox home game. All
20:15
that plus autographed merch from all four teams. Bitning ends
20:18
this Friday, So call now eight eight eight two oh
20:21
five two two sixty three. That's eight eight eight two
20:24
oh five two two six three.
20:30
Speaker 4: Trivia question today was who was the first president to
20:33
win the Nobel Peace Prize. It'll be Teddy Roosevelt. He
20:37
won the Nobel Peace Prize in nineteen oh six for
20:39
his role in mediating the Russo Japanese War. Winner today
20:43
of the Financial show t shirts Chad from havel Mass
20:46
and Chad's also registered to win a one hundred dollars
20:49
gift guard to Applebee's, which will give away on Friday.
20:52
Show and Trivia is brought to you by Applebe's. Enjoy
20:55
half price lene Ad appetizers after nine pm and join
20:58
Club Applebee's to enjoy exclusive deals and specials. You'll get
21:02
a free appetizer just for signing up. Now, that's eating
21:04
good in the neighborhood. Void work prohibited, dine in only Mark.
21:09
Speaker 2: Whoever is next president, is going to be inheriting a
21:12
labor market that, whatever you want to say about it,
21:15
is distinctly weaker than it was eighteen months ago. I
21:19
think we can all agree that.
21:20
Speaker 3: They're more normal.
21:20
Speaker 2: I don't know, yeah, I mean, however you want to
21:23
describe it, it's not as tight as it was eighteen
21:26
months ago. If that's normalization, if that's weakness, fair, whatever
21:30
you want to call it. But you know, it's always
21:32
easier to compare something to something else than describe it.
21:36
If you were to look at only and I know
21:38
you hate doing this, but if I were to look
21:40
at one data point that you think best sums up
21:43
the state of labor market and like evaluated of the
21:46
last eighteen months, what do you think is easiest to
21:48
look at it in unemployment?
21:50
Speaker 1: Right?
21:50
Speaker 2: I was going to go there too, right, the old
21:53
standby I think as actually doing a pretty good job
21:56
of summarizing what's been happening with the labor market over
22:00
the last eighteen months. And let's go ahead, And I
22:03
didn't have this pulled up, but I will pull up
22:06
the unemployment rate over the last couple of years to
22:08
just help people understand where we are right now and
22:11
what it might indicate about where we're going. So obviously,
22:16
March of April of twenty twenty, when we read the
22:18
unemployment rate, it wasn't looking so good. Came in at
22:20
fourteen point eight percent. I don't know the last time
22:22
we got that high.
22:23
Speaker 3: We might not have ever gotten nineteen mid nineteen thirties probably.
22:26
Speaker 2: Yeah. By you know, late twenty twenty two and early
22:31
twenty twenty three, we were getting to crazy low rates
22:34
of unemployment. So when I take a look at this,
22:37
I think the low that I saw in twenty twenty three. Yeah,
22:40
April of twenty twenty three we hit a three point
22:43
four percent unemployment rate. That is also pretty unheard of.
22:47
We have very few instances where things have gotten that low.
22:50
Speaker 3: The lowest since the nineteen sixties, only incidents prior to that.
22:54
The State of said only goes back in nineteen forty seven.
22:56
You're looking at it was the nineteen forties.
22:58
Speaker 2: Slowly, over the of about a year, you saw that
23:01
start ticking up, and by July of this year we
23:04
got to four point three percent. It's now ticked back down.
23:07
We're sitting at four point one percent. But I think
23:09
that does a pretty good job if I'm just looking
23:12
at like a five year trend of explaining where we've
23:15
come and gone. We were in late twenty nineteen at
23:17
a really low rate of unemployment rate again back in
23:20
the mid threes, we shot up to fifteen, we got
23:24
back down to the mid threes, and now we're back
23:26
in this kind of normalization period, and it just begs
23:31
a question that I don't have an answer to, is
23:33
does that trend continue And I'm talking about the longer
23:37
one year trend of rising unemployment slowing job gains or
23:42
have we met some temporary equilibrium here, because again, like
23:47
we talked about, in spite of the slowing job gains,
23:50
last couple of months has been defined by lower unemployment.
23:53
Speaker 3: Yeah, and just take it at face value. It's low
23:56
relative to its historical average. The average by decade kind
24:02
of goes I'll go through this very quickly, Mike. You
24:04
gave a lot of data. I think this is the
24:06
only way to interpret the number. The average in the
24:08
nineteen fifties, which was quite go go economically speaking, it
24:12
was a it was a frenetic growth decade. Four point
24:15
five percent was the average, Then four point eight percent
24:17
was the average in the nineteen sixties. It then went
24:19
up slowly, as we all know, in the seventies until
24:22
the late eighties when it started to come down. In
24:24
the nineties, which we all remember quite fondly, the average
24:27
unemployment rate was five point eight percent, so much higher
24:30
than it is today. In the twenty tens, six point
24:32
two percent because of the aftermath of the Great Recession
24:34
and so forth. So no matter how you slice it
24:36
in historical terms, for what it is worth, the unemployment
24:38
rate is very low. I'll tell you a second statistical
24:42
if you like fact about unemployment. It's changes unemployment or persistent.
24:46
Speaker 2: I didn't say whether or not i'd like.
24:48
Speaker 3: I'm not giving you the choice I would like, So
24:50
go okay, changes unemployment of persistent. It's got a momentum
24:53
if you like. When it starts to go up, it
24:55
continues to go up. This is why the FED cut
24:57
by a half a percentage point when it last met
25:00
six weeks ago, and it's likely to cut again in
25:01
a couple of days. They know that unemployment changes are persistent.
25:05
They're worried about more labor market slackening and what that
25:09
might bode for the economy. Not something good if our
25:14
historical experience is any guide.
25:16
Speaker 2: Bringing it back to presidential politics, is this a tough
25:20
economy to inherit or is it theirs to screw up?
25:24
Speaker 3: It's I don't know, Mike, we won't know until after
25:26
the facts. You could make the case that things are
25:28
and you did kind of make this case. Things might
25:30
be deteriorating not the word you used.
25:33
Speaker 2: My choice is good interpretation.
25:35
Speaker 3: Yeah, so things might be deteriorating, deteriorating, we don't know,
25:40
or they may have just normalized in plateaued. I don't
25:43
really buy the plateau explanation because the change in unemployment
25:46
never really sits still, but economic growth is healthy.
25:51
Speaker 4: Legacy planning is incredibly important, but if it isn't done properly,
25:55
you can create significant problems for your estate. Cushing and
25:59
Dolan or Experts and elder Law, and their new guide
26:02
out this month is called Making the Most of Gifting Assets.
26:06
In it, you'll learn that while some gifts to your
26:09
children can be beneficial, others may not be, especially if
26:13
there are financial difficulties or divorce proceeding. Learn how to
26:17
protect yourself and your family by calling Cushing and Dolan
26:20
right now at eight sixty six, eight four, eight five,
26:23
six nine nine and ask for their brand new guide
26:25
called Making the Most of Gifting Assets. It contains a
26:28
wealth of information about the gifting process, including important details
26:33
about what tax issues may arise from a major gift
26:37
like a home or a vacation property, and what happens
26:40
to the asset if the child has credit or issues,
26:43
call eight six six eight four eight five six nine nine.
26:47
That's eight six six eight four eight five six nine nine,
26:50
or you can request the guide from their website legal
26:53
exchange show dot com.
26:55
Speaker 1: The proceeding was paid for and the views expressed are
26:57
solely those of Cushing and Dolan. Cushing and Dolan and
27:00
or Armstrong Advisory may contact you offering legal or investment services.
27:03
Cushing and Armstrong did not endorse each other and are
27:05
not affiliated.
27:06
Speaker 2: Piece from the Boston Globe Today, housing construction around Boston
27:09
has been sluggish. Here's why that could change soon. They
27:14
then go on for three four pages here to describe
27:18
a bunch of things. But the only real argument that
27:21
I could find in this entire piece as to why
27:24
Boston home construction would pick up again would be lower
27:28
interest rates. And I'm not saying that that won't be
27:32
a factor. But if the only thing that you can
27:36
look at to say that housing construction is going to
27:39
pick up is lower interest rates, then don't hold your breath.
27:44
We had this same type of article published six months
27:48
ago when the FED was about to cut rates, or
27:51
not six months ago, six weeks ago, when they were
27:53
about to cut rates feels like what's happened with mortgage
27:55
rates since the FED did so? I know what you got.
27:58
Speaker 3: They've gone off micro thank you.
28:00
Speaker 2: Substantially, they've gone up, and so look, I hope that
28:04
rates come down. I think it'll lead to more housing activity.
28:07
It would be nice. I feel for the first time
28:09
home buyers out there who can't buy a home. But
28:11
if all we're going to say about housing is, hey,
28:13
hopefully home rates interest rates come down so builders can
28:16
start building again, I don't know that we're going to
28:19
get the outcome we're looking for.
28:20
Speaker 3: Can we expand on that point about rates going up?
28:22
Because we talked about this internally this morning at a
28:24
storming advisor group, or at least I did. People politely
28:27
listened and probably played with their smartphones.
28:29
Speaker 2: So far as you know, Yeah, that's what it is said.
28:31
Speaker 3: But it's really unusual for longer term rates to go
28:34
up after the FED cuts rates. The average response, and
28:37
by longer term rates, i'll dis arbitrari really say anything
28:40
longer than say, five years, using the US Treasury bill
28:46
or bond if you want to go out even further
28:48
as a reference point. Normally, when the FED cuts short
28:52
term interest rates, long term interest rates kind of follow suit,
28:56
at least in the very short term. The immediate reaction
28:59
is consist across the so called yield curve. But over
29:02
the past several weeks, the FED, as we all know,
29:05
lowered its short term interest rate target, the only tool
29:08
that it really controls in an almost direct sense. In
29:12
point of fact, it targets rates. It doesn't control them.
29:15
But let's just pretend it controls. Normally, longer term bond
29:18
rates follow suit. They haven't this time. We all know this.
29:21
Interest rates on the ten year and up in terms
29:25
of the treasury bond long end of the curve have
29:27
gone up by over a half a percent. Mortgage rates,
29:30
which are tied to longer term treasury rates, have followed suit.
29:35
This has never happened before to the extent that it's
29:37
happened this time around. Normally, longer term rates and thus
29:40
mortgage rates fall after the FED cuts. Sometimes they've gone
29:44
up by a little bit, but the incidents are very
29:46
few and far between. You can count them on fewer
29:50
than fewer than five fingers. But in this case, they've
29:53
gone up by a lot this cycle, if you like.
29:57
So far, the behavior of long term interest rates during
29:59
the cycle has been unusual.
30:01
Speaker 2: Weird, yeah, weird. Hopefully it'll maybe it'll flip back. Maybe
30:04
it won't. Maybe we're in a different cycle. Maybe it
30:06
means something else. Maybe the Fed is going to need
30:08
to reverse course because of what bond markets are reading
30:11
in terms of uh the rates going up. See, like
30:14
we talked.
30:15
Speaker 3: About earlier, this is why the election will have consequences
30:19
if the outcome is decisive and say uniform across the
30:22
branches of government.
30:24
Speaker 2: Let's take a quick break here on the Financial Exchange
30:27
when we come back, a little bit of stack roulette.
30:30
Speaker 1: Thanks to US six one seven, three six two thirteen
30:33
eighty five with your comments and questions about today's show,
30:37
and let us know what you think about the stories
30:39
we are covering. This is the Financial Exchange Radio Network.
30:43
The Ultimate Boston Sports Option to benefit the disabled American
30:46
Veterans Department of Massachusetts is underway. You could win two
30:50
tickets to see the Patriots take on the La Rams
30:52
on November seventeenth, two tickets to see the world champion
30:56
Celtics against the Cleveland Kevaliers on Tuesday, November nineteenth. Gets
31:00
to see the Bruins against the Edmonton Oilers on Tuesday,
31:02
January seventh, and four tickets to a twenty twenty five
31:05
Red Sox hem game. All that plus autographs merch from
31:09
all four teams. To place your bid call eight eight
31:12
eight two oh five two two six three. That's eight
31:15
eight eight two oh five two two six three.
31:24
Speaker 2: That's right.
31:25
Speaker 4: The Ultimate Boston Sports Auction to benefit the Disabled American
31:28
Veterans Department of Massachusetts is officially now open.
31:33
Speaker 2: The bidline for this is eight.
31:35
Speaker 4: Eight eight two zero five two two six three. We
31:38
have four incredible items to bid on. In all the
31:40
proceeds will benefit the Disabled American Veterans Department of Massachusetts.
31:45
The high bidder between now and Friday will take home
31:48
all four of these items, which are a pair of
31:51
tickets to see the Patriots play the Rams on November seventeenth,
31:55
as well as a autographed team jersey of Drake May,
31:58
two tickets to see the Celtics play the undefeated Cavaliers
32:02
on November nineteenth, two tickets to see the Bruins play
32:05
the Edmonton Oiler is coming up on January seventh, and finally,
32:08
four tickets to see a twenty twenty five Red Sox
32:11
home game, in addition to a Pedro Martinez Autograph Baseball.
32:15
The current high bid for all of these prizes is
32:19
twenty five hundred dollars, and if you'd like to increase
32:22
that amount and take home these four incredible auction items,
32:26
call the bidline right now eight eight A two zero
32:29
five two two six three. All proceeds will benefit the
32:33
disabled American Veterans Department of Massachusetts. Now's your chance to
32:37
support our great American heroes. Call nout a bid at
32:41
eight eight eight two zero five two two six three.
32:43
The auction is open through this Friday at eleven forty five.
32:47
Again bidline eight eight eight two zero five two two
32:52
six three.
32:53
Speaker 2: Well, markets, finally happened. Artificial intelligence has come from my
32:57
job too, and uh, I guess just hang up the
33:02
skates and retire at this stage. But according to a
33:06
recent poll by Experience, sixty seven percent of Gen z
33:10
ers and sixty two percent of surveyed millennials are using
33:13
artificial intelligence to help with personal finance tasks. This changes
33:19
obviously by generation, but quite frankly, people of a certain
33:24
age are using artificial intelligence for darn near everything. And
33:28
I'm not there myself, but I do frequently use it
33:31
for especially general search tasks in terms of returning information
33:37
to me. I would say that financial advice and investment
33:41
advice fall into this same category of There have been
33:43
several threats of change to that entire area for decades,
33:48
and I think some of those threats have been positive
33:50
on the industry, such as more transparency and lower fees.
33:54
Others haven't really made much of a dent. Remember a
33:58
decade and a half ago when robo advice was going
34:00
to change the universe of the investing world. Can you
34:05
point to anything that's significantly changed on that front.
34:08
Speaker 3: I think people who make that claim don't know what
34:11
a financial advisor does, which is, if I had to
34:15
sum it up, Mike, it's provide peace of mind. Sometimes
34:18
you're a psychologist, sometimes you're a numbers guy. Sometimes you're
34:22
a family counselor. And in my experience and from watching
34:25
you and others here at Armstrong Advisory Group, anybody can
34:29
allocate their assets among so called asset classes. Major investment
34:33
ingredients have target date funds and for Wing Kate Blands
34:35
do that for you, and you can put it on autopilot.
34:38
You don't have to look at it in theory until
34:39
you retire. That's one approach anyway.
34:42
Speaker 2: So I did test it this morning, just like kind
34:44
of curious, like, and I do think, you know, chat,
34:47
GPT or any other artificial intelligence tool can probably help
34:51
you solve some basic questions, like, Hey, give me five
34:53
steps to help improve my improve my credit score based
34:55
on based on what I have going on.
34:58
Speaker 3: Number one, get off your computer and get the work.
35:00
Speaker 2: You know, give me give me some tips about how
35:03
to budget properly, and maybe there'll be some useful stuff
35:06
in there. When I asked it more complex questions like hey,
35:09
I've got this company stock within my retirement plan. What
35:12
am I going to do about it? It lacked some
35:14
of that nuance that you might need in order to
35:17
take action. And so fortunately for those in you know,
35:23
professionals like financial advice and investment management, I don't think
35:28
this is on the cusp of replacing you yet, what.
35:31
Speaker 1: Do you have?
35:32
Speaker 3: Isn't there always a judgment called there? Well, okay, we
35:33
can talk about that anytime. So a reminder over the
35:36
last four years that what irks people more. We know this,
35:39
but what irks people more than anything, Mike, is inflation,
35:42
Because if you take that out of the picture, the
35:45
incumbent parties economic record looks really strong compared to the
35:50
previous party's economic record. So if you look at Trump
35:53
versus Biden, unemployment went up under Trump, it's come down
35:57
under Biden. I am not, by the way, make it
35:58
a value judgment here. I'm just giving the numbers. Is
36:00
reported by the Federal Reserve, which takes it from various
36:03
statistical agencies. Is reported by the federal government. GDP per
36:06
capita under Trump up about six point six percent under Biden.
36:10
This is after inflation under Biden up nine point three percent.
36:13
Manufacturing jobs under Trump negative one hundred and eighty k
36:16
under Biden plus six hundred eighty k. So huge differences
36:20
in what an economist might think at first, plush are
36:22
the most meaningful series. Then you look at inflation. Inflation
36:26
up twenty percent cumulatively under Biden versus seven percent under Trump.
36:32
And that's why we are where we are today. People
36:35
hate it more than they like economic growth and other
36:39
on the surface anyway, measures of economic activity and labor
36:44
market health. This should be a lesson to the Fed
36:46
and topolicy makers. Inflation above all, get it under control,
36:50
Keep it under control.
36:51
Speaker 2: I have a personal story related to one of the
36:54
pieces that we're covering for stack Roulette. Hear about retailers
36:58
offering returnless refunds. All that means is the cost for
37:01
them to accept the return is more than just giving
37:05
you a refund on it. I ordered some my wife
37:09
really ordered them from Wayfair, some pretty heavy coffee tables
37:12
for our living room when we were decorating a few
37:15
years ago. And two of these things came chipped, called them.
37:20
One of them wasn't so bad, and it was not
37:22
really the centerpiece for the room, so we said, and
37:24
they told us, hey, would you like us to return
37:26
it and send you a new one, or do you
37:29
just want a discount on it. We'll send you thirty percent.
37:32
And we said, you know, on that one, we'll take
37:34
the thirty percent, but on the other one, it's pretty bad.
37:37
I'd like you to send us a new one. He said, okay,
37:41
sounds good. Dispose of it yourself where you'll have a
37:43
new one at your door in a few days. That
37:46
was an interesting way of doing it to me. I mean,
37:48
again speaks to the fact that it's expensive to return
37:51
these things, but specifically the order in which he offered
37:54
those things was particularly interesting because hey, I'm not going
37:58
to tell you that I'll take this thing back and
38:00
offer you a full refund. But first I'm gonna go
38:02
with the thirty percent discount and see what happens. So
38:04
buyer beware. Out there, you can work the system a
38:07
little bit. Markets remain open and strongly in positive territory
38:10
now with the S and P up over a one percent,
38:12
we'll have a full election and market recap for you tomorrow. Tomorrow, folks,
38:17
have a great rest of your afternoon.