Latest / The Financial Exchange Show / Economic data is pointing to US economy slowing

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Economic data is pointing to US economy slowing · The Financial Exchange Show

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  Speaker 1: Zada and Paul.
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  Speaker 2: Lane, Chuck, Paul and Tucker with you today and kicking
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  Speaker 2: things off on a week that, quite honestly, not as
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  Speaker 2: busy as last week. It's just not You're not gonna
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  Speaker 2: have a week like last week All the time. We
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  Speaker 2: get one of those, maybe every five to six months,
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  Speaker 2: where it all comes together in this great I don't
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  Speaker 2: want to say tsunami, because the tsunami is a destructive
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  Speaker 2: for us, but this this great celebration of of of
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  Speaker 2: of numbers that we had last week and so this week,
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  Speaker 2: quite honestly, the data that we're getting there, there's not
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  Speaker 2: much out there that's that interesting. We get ism services
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  Speaker 2: coming out tomorrow, so that'll be fine, Like that'll be
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  Speaker 2: fun to look at. Okay, great now we get jobbles
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  Speaker 2: claims on Thursday, but that's pretty much it. All the
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  Speaker 2: other stuff is put to next week, where we have inflation,
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  Speaker 2: a couple different reports, retail sales, consumer sentiments, so that'll
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  Speaker 2: be next week. This week, we do still get some
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  Speaker 2: earnings that are going to be coming out. That'll be
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  Speaker 2: kind of interesting to look at. A few big names,
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  Speaker 2: not the same kind that we had last year. But
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  Speaker 2: we got Pallenteer today, which obviously major driver of US
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  Speaker 2: stocks this year is it now is up to a
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  Speaker 2: nearly three hundred billion dollar market cap, which is kind
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  Speaker 2: of wild when you think about it. We've also got
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  Speaker 2: on Tuesday Caterpillar, AMD, Pfizer, amjen Duke Energy, So you
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  Speaker 2: got some big names there Wednesday, McDonald's, Disney, Uber, Airbnb,
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  Speaker 2: Door Dash, a lot of information about what households and
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  Speaker 2: consumers are doing on Wednesday, and then on Thursday we
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  Speaker 2: got Eli Lilly and honestly a bunch of companies that
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  Speaker 2: are nice, they're fine, but they don't drive markets. I mean,
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  Speaker 2: no one wakes up and is like, hey, what's data
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  Speaker 2: Dog doing today. It's just not how it is. I'm sorry,
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  Speaker 2: Data Dog Like you guys are great, your fifty two
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  Speaker 2: billion dollar company and that's you know, bigger than anyone
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  Speaker 2: I've ever worked for, But you don't drive the markets yourself.
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  Speaker 2: Eli Lilly can in some cases. And I think what's
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  Speaker 2: what's important here is, you know, kind of looking back
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  Speaker 2: at last week because there was so much that went on,
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  Speaker 2: and ultimately I think there are two things that are
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  Speaker 2: worth watching that that came out of last week. Uh.
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  Speaker 2: The first is the economic data is now starting to
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  Speaker 2: build a more convincing case that the US economy is slowing. Now,
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  Speaker 2: it didn't show up in terms of you know, people
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  Speaker 2: will point to Q two GDP and say, well, Q
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  Speaker 2: two GDP was three percent, and I'll say, yeah, that's
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  Speaker 2: because everyone imported a bunch of stuff in Q one,
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  Speaker 2: and then that flow reversed in Q two, and so
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  Speaker 2: in the aggregate, you know, you ended up with you know,
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  Speaker 2: one and a quarter percent first half GDP growth. I'll
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  Speaker 2: look at it in the aggregate, and one and a
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  Speaker 2: half is, you know, slower than you'd like to see
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  Speaker 2: in a perfect world. But we now have between the
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  Speaker 2: jobs report that we got Friday, the ADP data, the
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  Speaker 2: data from paychecks, indeed the Joltz report, it's all pointing
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  Speaker 2: towards a continued slowing of the labor market, and ultimately,
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  Speaker 2: in an economy that is built on consumer spending, if
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  Speaker 2: the labor market slows, it starts to throw into question
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  Speaker 2: can that consumer spending engine drive things forward? And that's
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  Speaker 2: going to be a question that needs to be answered
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  Speaker 2: in the next few months. Now. Much like we've seen
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  Speaker 2: over the last couple falls, like we've entering the fall
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  Speaker 2: of twenty three and twenty four, we had the same question, Hey,
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  Speaker 2: is there going to be a problem in the labor market?
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  Speaker 2: It responded, no, there is not in both of those cases.
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  Speaker 2: Can we go three for three here heading into the fall.
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  Speaker 3: Yeah, there's so many things in flux. This year has
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  Speaker 3: been every year, there's new challenges that present themselves. But
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  Speaker 3: it's been really difficult to try and gauge the impact
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  Speaker 3: of tariffs and the changes in economic policy. And I
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  Speaker 3: feel as if, really from call it March through you know,
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  Speaker 3: the last month or last couple of weeks or so,
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  Speaker 3: what was so confounding was that, you know, the data
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  Speaker 3: did show that there was some resiliency on the US
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  Speaker 3: consumer spending side of things, and there was debate as
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  Speaker 3: to whether this was a case of companies that had
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  Speaker 3: built excess inventory just kind of letting those drain down,
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  Speaker 3: or hesitancy from companies to increased prices. It now seems
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  Speaker 3: as if there is a little bit more data building
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  Speaker 3: the case that there are some weak spots within the economy.
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  Speaker 3: But from a stock market perspective, what has made this
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  Speaker 3: year so challenging to kind of wrap your head around
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  Speaker 3: is the market has performed quite well your data and
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  Speaker 3: it's it's notable that you have to mention that there
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  Speaker 3: is on the technology side of things, which like it
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  Speaker 3: or not, it's a huge part, a huge weighting of
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  Speaker 3: the S and P five hundred and what we talk
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  Speaker 3: about on a daily basis more than thirty percent. There's
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  Speaker 3: still this tremendous amount of tailwinds there on the spending side,
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  Speaker 3: whether you look at the big tech companies out there
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  Speaker 3: and what they're willing to spend. So it seems as
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  Speaker 3: if that has been a huge of motivating growth factor
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  Speaker 3: for the market. But you do have on the hard
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  Speaker 3: economic data side of things, some areas that need to
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  Speaker 3: just be monitored. But it is worth noting that we
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  Speaker 3: do have to go into this and see if the
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  Speaker 3: data is going to continue this way. And I think
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  Speaker 3: that's what you were mentioning, is that, Hey, we're just
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  Speaker 3: mentioning that this is what we're seeing right now. If
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  Speaker 3: you had asked me three weeks ago, I would have
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  Speaker 3: told you, gee, there's nothing I can really point to
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  Speaker 3: in terms of significant economic slowdown. There are now things
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  Speaker 3: that you could point to. The question is whether or
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  Speaker 3: not this will continue to be a trend or these
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  Speaker 3: are just things that are going to be more anomalies
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  Speaker 3: here over the next couple of.
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  Speaker 2: Months, and Paul and I don't know, by the way,
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  Speaker 2: we don't know what we're going to end up seeing
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  Speaker 2: over the second half of the year. It could be
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  Speaker 2: that these things all resolve positively and Okay, now that
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  Speaker 2: there's a little bit more tariff certainty, maybe companies feel
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  Speaker 2: a little bit more comfortable hiring. Maybe they decide, you know, what,
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  Speaker 2: we're going to pick up our pace of capex because
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  Speaker 2: we have a better idea of what some of these
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  Speaker 2: costs are going to be. And you've got a nice
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  Speaker 2: tailwind heading into next year, especially you've got some provisions
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  Speaker 2: from the big beautiful Bill that allow for immediate expensing
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  Speaker 2: of capex and you know R and D can be
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  Speaker 2: fully expensive in this and that there's a lot of
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  Speaker 2: stuff in there where you could say, okay, like here's
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  Speaker 2: the plausible path to things rebounding a bit in the
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  Speaker 2: second half and kicking off a really strong twenty twenty six.
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  Speaker 2: There's a path where we just kind of continue to
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  Speaker 2: see what we saw in the first half, which is
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  Speaker 2: thinks they're slowing a little bit, but ultimately there's not
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  Speaker 2: a huge shift. And yeah, companies are hesitant to higher people,
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  Speaker 2: but they're also not really laying people off, and tech
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  Speaker 2: continues to power things through, and Okay, the second half
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  Speaker 2: looks a lot like the first, and maybe we have
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  Speaker 2: you know, one to one and a half percent GDP,
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  Speaker 2: no recession, and then we get back to you know,
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  Speaker 2: some good but not great growth next year. Like that's
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  Speaker 2: that's a path you could follow as well. And the
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  Speaker 2: last one is, hey, now that you have these higher
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  Speaker 2: tariff rates coming in, finally companies are like, okay, this
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  Speaker 2: is too much cost to pile on us, and we've
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  Speaker 2: got to maintain margins, so we're gonna start laying people off,
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  Speaker 2: and that depresses consumer spending. And now you've got things,
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  Speaker 2: you know, falling a little bit, and you have some
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  Speaker 2: kind of recession in the second half of this year
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  Speaker 2: before things bottom out and you get ready to rock
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  Speaker 2: and roll again, because no recession ever lasts forever, and
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  Speaker 2: then you you know, resume growth sometime in twenty six
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  Speaker 2: and you're off to the races. So again, these are
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  Speaker 2: just all paths that we have to consider, and I
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  Speaker 2: don't know exactly which one we are going to follow.
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  Speaker 2: It's you always have to be careful saying that recession
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  Speaker 2: is definite or that like it's never gonna happen, because
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  Speaker 2: I can't tell you how many people the last couple
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  Speaker 2: of years they're like, oh, like recessions are like guaranteed.
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  Speaker 2: Look at that and didn't happen. You know, we had
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  Speaker 2: the Sam rule last year that triggered where everyone's like, well,
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  Speaker 2: in each of the eleven recessions since World War Two,
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  Speaker 2: the Sam rule triggered right as the US entered recession,
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  Speaker 2: and it triggered last and the US did not enter recession.
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  Speaker 2: And we've had you know, ism manufacturing, which has been
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  Speaker 2: in the toilet for four years now, and it just
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  Speaker 2: hasn't mattered because the US economy has been strong enough
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  Speaker 2: to overcome that. And so I think there's some humility
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  Speaker 2: that's needed when you look at this and you say, hey,
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  Speaker 2: there are some real questions facing the US economy. Here,
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  Speaker 2: here's the ways that they can be answered positively, here's
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  Speaker 2: the way they can be answered negatively. And we're gonna
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  Speaker 2: have to see which of those show up in the
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  Speaker 2: next couple months.
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  Speaker 3: So much of what many people that we follow are
• 9:33
  Speaker 3: just in this space for financial news media, there is
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  Speaker 3: sort of a huge focus on trying to make a
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  Speaker 3: call one way or another, bowl case, bear case, but
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  Speaker 3: oftentimes it's not sexy or appealing to say potentially the
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  Speaker 3: middle case, right, Chuck, which is just you kind of
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  Speaker 3: muddle long through things like you were mentioning before, where
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  Speaker 3: maybe there's more muted impacts from some of these things
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  Speaker 3: and there isn't a significant uptick in unemployment. And last
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  Speaker 3: year is just a great example of that, where heading
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  Speaker 3: into the fall, there was concerns, but you look back
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  Speaker 3: and there really was no issue. So it's important to
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  Speaker 3: just keep yourself informed if it's something that you know,
• 10:09
  Speaker 3: you fall on the markets, and our job here is
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  Speaker 3: really just to try and educate and just provide the
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  Speaker 3: information that's out there, and right now the information is, hey,
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  Speaker 3: there are some things that you could point to that
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  Speaker 3: perhaps would lead to a weekend of commune in the fall,
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  Speaker 3: but there's been many instances in the past where you
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  Speaker 3: know that hasn't come to fruition.
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  Speaker 2: To take a quick break when we return Friday afternoon,
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  Speaker 2: the President fired the head of the Bureau of Labor Statistics.
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  Speaker 2: We'll talk about what that means for data coming out
• 10:35
  Speaker 2: of the agency.
• 10:36
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  Speaker 2: Midafternoon. On Friday, President Trump fired the head of the
• 11:35
  Speaker 2: Bureau of Labor Statistics. This was announced through a couple
• 11:39
  Speaker 2: different social media platforms. I know there have been some
• 11:41
  Speaker 2: other quotes that have been put out as well, but
• 11:43
  Speaker 2: the long story short is, according to the President, she
• 11:48
  Speaker 2: was fired because he believes that the numbers are incorrect
• 11:52
  Speaker 2: and the job growth is stronger, and that the BLS
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  Speaker 2: was effectively leading a campaign to suppress the jobs to
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  Speaker 2: make the administration look bad. We don't have any evidence
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  Speaker 2: to this effect, but I do want to talk about
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  Speaker 2: exactly what it is that we are seeing and what
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  Speaker 2: is happening and what isn't happening. So the first thing
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  Speaker 2: is that the revision for the previous two months payrolls
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  Speaker 2: that we saw is the second largest on record. It's
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  Speaker 2: not unprecedented that these happen, but it is the second
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  Speaker 2: largest on record, and these typically happen at turning points.
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  Speaker 2: If you look at the other large negative revisions that
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  Speaker 2: we've seen here are like kind of the dates that
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  Speaker 2: you've seen that the previous largest ones right in early
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  Speaker 2: nineteen eighty just before the US went into recession. These
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  Speaker 2: are the downward ones in nineteen eighty two as the
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  Speaker 2: US was in recession, in two thousand and eight, two
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  Speaker 2: thousand and nine as the US was going into recession,
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  Speaker 2: and in twenty twenty as a result of the pandemic.
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  Speaker 2: On the other hand, the largest upward revisions that we've seen,
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  Speaker 2: and in some cases these have been north of two
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  Speaker 2: hundred and fifty thousand on three different occasions, coming out
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  Speaker 2: of the nineteen eighty recession, coming out of the eighty
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  Speaker 2: one eighty two recession coming out of the pandemic.
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  Speaker 3: So figure the pandemic.
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  Speaker 2: And basically it's all because if you look at how
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  Speaker 2: the BLS models the unemployment rate, not the endpointent right,
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  Speaker 2: but job growth over the course of any period of time,
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  Speaker 2: The general assumption and how their models work is, Hey,
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  Speaker 2: what the US economy was doing previously is what it's
• 13:35
  Speaker 2: going to continue doing, because that's usually the case. And
• 13:39
  Speaker 2: the reason why they miss turning points where the economy
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  Speaker 2: suddenly moves either up or down in any particular fashion
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  Speaker 2: is because if you're assuming that something is moving in
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  Speaker 2: one way and then you find out after the fact, oh,
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  Speaker 2: things changed a little bit, you revise things in that fashion.
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  Speaker 2: I'm not saying that the BLS is perfect. They're not.
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  Speaker 2: We ultimately don't know exactly how many Americans are employed
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  Speaker 2: because we don't ask every American how many of you
• 14:05
  Speaker 2: are employed? And most of us probably wouldn't respond anyways,
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  Speaker 2: because we don't pick up the phone from telemarketers. We don't,
• 14:12
  Speaker 2: you know, answer random surveys that the internet sends us.
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  Speaker 2: We generally say, no, I can't be bothered with this,
• 14:18
  Speaker 2: so we do the best that we can. And the
• 14:20
  Speaker 2: BLS is not perfect. They have all kinds of problems
• 14:23
  Speaker 2: with their methodology that we can sit and discuss, but ultimately,
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  Speaker 2: the reason why they are revising their data is because
• 14:33
  Speaker 2: they are trying to improve the accuracy of it. If
• 14:36
  Speaker 2: you didn't care about accuracy, you do what China does.
• 14:39
  Speaker 2: You either stop publishing it or you just make it
• 14:42
  Speaker 2: up and never revise it. That's you know what you
• 14:45
  Speaker 2: do if you are trying to fudge the numbers, which is,
• 14:48
  Speaker 2: you know what China tends to do. And so it's
• 14:51
  Speaker 2: not to say that the BLS is without you know,
• 14:54
  Speaker 2: any problems. They have them. But when the reason given
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  Speaker 2: for the firing is why didn't like these revisions and
• 15:04
  Speaker 2: it seems like they're trying to make me look bad,
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  Speaker 2: it doesn't mesh, especially since the BLS is responsible for
• 15:12
  Speaker 2: two major data sets. I mean, they have a whole
• 15:14
  Speaker 2: bunch that they do, but the major data sets that
• 15:16
  Speaker 2: the BLS does jobs and CPI, and the administration all
• 15:20
  Speaker 2: year has been touting CPI saying, hey, there's no problem
• 15:23
  Speaker 2: with inflation, see how tariffs aren't eating into you know, prices.
• 15:28
  Speaker 2: It's tough for me to see something where you say, okay,
• 15:32
  Speaker 2: we're gonna believe the data from one report but not
• 15:34
  Speaker 2: from the other, and it's not a good precedent to set.
• 15:41
  Speaker 2: In my opinion. Here the other piece that I will
• 15:44
  Speaker 2: say on this that's interesting when it comes to these revisions,
• 15:47
  Speaker 2: and this is the other piece that I think is important. Ultimately,
• 15:52
  Speaker 2: what the BLS is measuring is not the change in
• 15:56
  Speaker 2: the number of jobs from month to month. You know,
• 15:58
  Speaker 2: people say, oh, they were it by two hundred and
• 16:00
  Speaker 2: fifty eight thousand, it took away all the job growth.
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  Speaker 2: They're not revising it based on the job growth. The
• 16:05
  Speaker 2: BLS is trying to estimate the total number of jobs held,
• 16:10
  Speaker 2: and when you look at it statistically, over the last
• 16:13
  Speaker 2: sixty years, the average size of revisions has gone from
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  Speaker 2: almost one percent from the initial to final estimate down
• 16:22
  Speaker 2: to about a quarter percent, meaning that the revisions have
• 16:24
  Speaker 2: generally been getting small. You do have big ones that
• 16:26
  Speaker 2: happen sometimes, like it's not to say it never happens,
• 16:29
  Speaker 2: but they've been getting smaller, which means that generally the
• 16:32
  Speaker 2: BLS has been getting better at estimating these things because
• 16:36
  Speaker 2: they've spent a lot of time and effort trying to
• 16:38
  Speaker 2: do so. So we're going to have a new head
• 16:41
  Speaker 2: of the BLS at some point. There's an acting head
• 16:44
  Speaker 2: who's in place right now, but it sounds like the
• 16:47
  Speaker 2: President is going to try to name someone new to
• 16:51
  Speaker 2: run the BLS. That is a position that needs to
• 16:54
  Speaker 2: be confirmed by the Senate. The previous head, the one
• 16:57
  Speaker 2: who was just fired on Friday, was confirmed by an
• 17:02
  Speaker 2: eighty four to eight vote back in twenty twenty four,
• 17:05
  Speaker 2: I believe it was, And so obviously there's pretty broad
• 17:08
  Speaker 2: bipartisan consensus that she was qualified for the job. So
• 17:11
  Speaker 2: she spent twenty years at the Census Bureau in the BLS.
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  Speaker 3: Just in general, if you look at historical context, it
• 17:19
  Speaker 3: is really important for that nonpartisan piece to be a
• 17:23
  Speaker 3: significant part of the BLS or any of these ministrations
• 17:27
  Speaker 3: out there. Getting the accuracy of the economic data is
• 17:30
  Speaker 3: so critical for all private and public sector companies to
• 17:35
  Speaker 3: make evaluations on how they invest capital. It is really
• 17:39
  Speaker 3: just the lynchpin of sort of the way the economy moves.
• 17:42
  Speaker 3: So it really is significant that there is this continued
• 17:47
  Speaker 3: focus on making sure we can get the most accurate
• 17:49
  Speaker 3: data possible out there. Because you have other historical examples
• 17:53
  Speaker 3: out there where you want to look at Greece or Argentina,
• 17:56
  Speaker 3: where they allowed for misreporting and inactees regarding inflation data
• 18:01
  Speaker 3: and deficits and things of that nature, and you can
• 18:04
  Speaker 3: see what happened to those countries. I'm not making the
• 18:06
  Speaker 3: same comparison. I'm just saying that as the historical context
• 18:09
  Speaker 3: for some of the worst examples of that is really
• 18:12
  Speaker 3: critical to make sure whatever data you're coming out with
• 18:15
  Speaker 3: as most accurate as possible. There's a lot of steps
• 18:18
  Speaker 3: that are taken to make sure that it is as
• 18:20
  Speaker 3: good as it can be. There's certainly flaws that come
• 18:22
  Speaker 3: through with the methodology, but that is it's critical for
• 18:26
  Speaker 3: the way our economy works and how interest rate policy
• 18:28
  Speaker 3: is dictated.
• 18:29
  Speaker 1: Yeah.
• 18:29
  Speaker 2: The other piece that I look at on this is
• 18:32
  Speaker 2: ultimately we can look at different data sets to compare
• 18:35
  Speaker 2: them and see what's going on. Because these are all surveys, like,
• 18:38
  Speaker 2: none of them are you know, the one only authoritative
• 18:41
  Speaker 2: you know book on any subject. We want to compare
• 18:44
  Speaker 2: across different methodologies and different sources. So if you take
• 18:48
  Speaker 2: a look at what you know, private data is saying
• 18:50
  Speaker 2: just as an example, we get ADP jobs data that
• 18:53
  Speaker 2: comes out each month as well. The average job growth
• 18:57
  Speaker 2: over the last three months from ADP is almost identical
• 19:00
  Speaker 2: to what the BLS is showing us. We get job
• 19:03
  Speaker 2: openings data from indeed, one of the biggest job boards
• 19:05
  Speaker 2: out there in the country, and the data that's coming
• 19:10
  Speaker 2: from indeed pretty much matches what we're getting from the
• 19:12
  Speaker 2: Jolts report from the BLS. And so again, it's not
• 19:16
  Speaker 2: to say that any of these are right or wrong,
• 19:19
  Speaker 2: because ultimately we don't know. I mean, the whole point
• 19:22
  Speaker 2: of all this is, hey, how can you prove that
• 19:24
  Speaker 2: what you think you know is true? But when you
• 19:26
  Speaker 2: have multiple things pointing in the same direction, it gives
• 19:28
  Speaker 2: you a little bit more confidence that maybe that's what's
• 19:31
  Speaker 2: actually happening. We're going to take a quick break. When
• 19:33
  Speaker 2: we come back. What's Wall Street Watch next?
• 19:40
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:43
  Speaker 1: TFE show. Breaking business news is always first right here
• 19:47
  Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
• 19:53
  Speaker 1: Street Watch a complete look and what's moving market so
• 19:56
  Speaker 1: far today right here on the Financial Exchange Radio Network.
• 20:04
  Speaker 4: Well after a wild week that resulted in a selloff
• 20:07
  Speaker 4: on Friday as a result of a weaker than expected
• 20:09
  Speaker 4: July jobs report, markets are rebounding strongly today well into
• 20:14
  Speaker 4: positive territory. Right now the Dow is up by nearly
• 20:17
  Speaker 4: one percent, or four hundred and fifteen points, SMP five
• 20:21
  Speaker 4: hundred up one point one percent or seventy two points
• 20:25
  Speaker 4: in the Nasdaq up one point six percent or three
• 20:28
  Speaker 4: hundred and thirty seven points, or Russe of two thousand
• 20:30
  Speaker 4: is up one percent as well. Ten year Treasure real
• 20:33
  Speaker 4: that four point two two percent, and crude oil is
• 20:37
  Speaker 4: retreating nearly two percent lower, trading just above sixty six
• 20:41
  Speaker 4: dollars a barrel after earlier paid deals were shot down
• 20:44
  Speaker 4: by a judge. Tesla's board approved a compensation package for
• 20:48
  Speaker 4: his CEO, Elon Musk, valued at twenty four billion dollars.
• 20:53
  Speaker 4: Tesla stock is up by two percent today. Meanwhile, Boeing
• 20:56
  Speaker 4: shares a down over one percent after the company's defense
• 20:59
  Speaker 4: workers are rating a strike at midnight after rejecting the
• 21:02
  Speaker 4: aerospace maker's latest contract offer. Elsewhere, on Semiconductor met earnings
• 21:08
  Speaker 4: expectations for the second quarter, while it's revenue beat forecasts. However,
• 21:12
  Speaker 4: its third quarter guidance disappointed, sending shares down by ten percent.
• 21:17
  Speaker 4: Wayfair up by eight percent. After the furniture retailer handily
• 21:21
  Speaker 4: beat street forecast for the second quarter. Tyson Foods also
• 21:25
  Speaker 4: beat quarterly expectations, sending shares in the meat producer up
• 21:29
  Speaker 4: four percent. Connecticut based and interconnect systems producer Infanol agreed
• 21:34
  Speaker 4: to a ten and a half billion dollars deal to
• 21:37
  Speaker 4: buy Comscopes broadband connectivity and cable unit am False stock
• 21:42
  Speaker 4: is climbing three percent, while Comscope shares are surging sixty
• 21:46
  Speaker 4: six percent. And after today's closing bell, we'll see more
• 21:50
  Speaker 4: second quarter earnings from Plantier. Tomorrow morning, we'll see results
• 21:53
  Speaker 4: from Caterpillar and Pfizer. I'm Tucker Silva and that is Wolfree.
• 21:57
  Speaker 2: Watch you ever sit there and say Caterpillar. I wonder
• 22:02
  Speaker 2: when it's going to become a butterfly all the time? Yeah, yeah,
• 22:06
  Speaker 2: just staring at it. Oh yeah, just looking at it.
• 22:09
  Speaker 3: I thought you were gone with the industrial company.
• 22:12
  Speaker 2: I was okay, all right, Yeah. When are they going
• 22:14
  Speaker 2: to change their name? Like you know, Facebook became Meta?
• 22:17
  Speaker 2: When's Caterpillar going to be butterfly? H So on Friday,
• 22:21
  Speaker 2: the other piece of news that we got is that
• 22:24
  Speaker 2: Fed Governor Adriana Kogler is going to be stepping down
• 22:30
  Speaker 2: a little bit in advance of when she was scheduled
• 22:33
  Speaker 2: to depart. She was scheduled to finish up her term
• 22:35
  Speaker 2: in January, and she has a new position that she
• 22:39
  Speaker 2: is taking. I think it's a Georgetown I can't remember
• 22:42
  Speaker 2: exactly where it is. I think it's Georgetown, and so
• 22:46
  Speaker 2: she's stepping down early in order to be able to
• 22:48
  Speaker 2: be there full time for the upcoming false mess got it.
• 22:51
  Speaker 2: And the big thing is this leaves an earlier vacancy
• 22:55
  Speaker 2: at the FED than otherwise expected, and so so I
• 23:01
  Speaker 2: think where I've landed on this is I think it's
• 23:04
  Speaker 2: increasingly likely that the person name to this position is
• 23:10
  Speaker 2: very likely going to be the President's choice for FED
• 23:14
  Speaker 2: chair as well, but just basically like getting them into
• 23:18
  Speaker 2: the position such that they're just kind of moving into
• 23:22
  Speaker 2: the big chair when j. Powell ends up leaving. That's
• 23:26
  Speaker 2: kind of where I'm at. It sounds like the President's
• 23:29
  Speaker 2: going to be indicating in the next week or two
• 23:31
  Speaker 2: who he's going to be nominating in order to fill
• 23:33
  Speaker 2: that seat, and so we'll see who it is within
• 23:37
  Speaker 2: pretty short order.
• 23:38
  Speaker 3: It seems would that negate the likelihood, I mean, what
• 23:42
  Speaker 3: would be the impact for the current FED governors out there,
• 23:45
  Speaker 3: like Waller and others who have been mentioned as potential
• 23:49
  Speaker 3: candidates for that role. Does that sort of take them
• 23:53
  Speaker 3: It's not like they can slide from governor to governor's seat, right,
• 23:56
  Speaker 3: does that take them out of the race. And this
• 23:59
  Speaker 3: idea that they would just bring someone outside in like
• 24:02
  Speaker 3: a Kevin Warst type.
• 24:03
  Speaker 2: You know, it's because I don't disagree with the notion.
• 24:08
  Speaker 2: I think that was so like it's like, here's how
• 24:12
  Speaker 2: you you kind of look at it. You go, Okay,
• 24:14
  Speaker 2: if it's Worsh, Hassett or Bessen being named to that post,
• 24:21
  Speaker 2: that's a new FED chair.
• 24:22
  Speaker 4: Right.
• 24:23
  Speaker 2: If it's anyone.
• 24:24
  Speaker 3: Else, it's probably Waller because he's already there.
• 24:29
  Speaker 1: Right.
• 24:29
  Speaker 2: That's that's kind of where you land on it. So
• 24:32
  Speaker 2: I think you'll be able to get some read through
• 24:33
  Speaker 2: on this and and figure it out. But we'll know
• 24:36
  Speaker 2: in the next couple of weeks exactly where this goes.
• 24:38
  Speaker 2: And I think it'd be really interesting to see who's
• 24:42
  Speaker 2: nominated for this spot, just because again, if if it's
• 24:46
  Speaker 2: one of those three, you don't put them on the
• 24:50
  Speaker 2: FED board and not end up making them the FED
• 24:52
  Speaker 2: chair is kind of where I land. I mean, it's
• 24:55
  Speaker 2: it's like, why would you take the job otherwise?
• 24:58
  Speaker 3: Sure, we now take a look at the FED Funds
• 25:01
  Speaker 3: rates for the upcoming meetings. We won't have another one
• 25:04
  Speaker 3: until mid September. September seventeenth, there is now an eighty
• 25:08
  Speaker 3: five percent probability according to the CME futures tracking of this,
• 25:13
  Speaker 3: that there will be a twenty five basis point cut,
• 25:16
  Speaker 3: and then if we look out to the next meeting
• 25:18
  Speaker 3: in October, in October, end of October October twenty ninth,
• 25:23
  Speaker 3: we'd have another a subsequent twenty five basis point cut
• 25:27
  Speaker 3: sixty two percent probability there. So the pricing in of
• 25:29
  Speaker 3: the two cuts, which has largely been what has been
• 25:32
  Speaker 3: projected for the most first half of this year, is
• 25:36
  Speaker 3: where we sit, though it does appear for that later
• 25:38
  Speaker 3: meeting again going out to December on FED Funds projections
• 25:41
  Speaker 3: a little far out, but perhaps you'd see another cut
• 25:44
  Speaker 3: at that point in time.
• 25:45
  Speaker 2: If you're looking for, uh, the current horse race for
• 25:49
  Speaker 2: FED chair this is from Calsey. They're one of these
• 25:54
  Speaker 2: betting markets that allows people to bet on the stuff.
• 25:56
  Speaker 2: It's sometimes they're right, a lot of times they're wrong,
• 25:59
  Speaker 2: but you know, it's always it's just interesting to see
• 26:01
  Speaker 2: what the current thinking is amongst people who are willing
• 26:04
  Speaker 2: to put their money where their mouth is. Kevin worsh
• 26:07
  Speaker 2: leader in the club house at forty four percent chance,
• 26:10
  Speaker 2: Kevin Hassett second at twenty six percent, Waller third at seventeen,
• 26:15
  Speaker 2: Scott Bessentt fourth at eleven, and David Malpass is fifth
• 26:20
  Speaker 2: at four percent. Uh. And then you get a bunch
• 26:23
  Speaker 2: of other ones that people are still for some reason
• 26:26
  Speaker 2: betting on just slightly, like Jay Powell still has you know,
• 26:29
  Speaker 2: less than one percent, Like, yeah, Jay's really gonna get another.
• 26:33
  Speaker 3: Saying that's a chance.
• 26:35
  Speaker 2: Old friend Larry Kudlow is also on the board at
• 26:37
  Speaker 2: just under one percent. Ron Paul is on the board
• 26:41
  Speaker 2: at just under one percent. Art Laugher, who is Art
• 26:45
  Speaker 2: Laugher still alive? I don't mean that, you know, disrespectfully. Well, no,
• 26:52
  Speaker 2: he's eighty four now, so he is, like again, he's
• 26:54
  Speaker 2: getting up there a little bit. I mean Art Laugher
• 26:56
  Speaker 2: was big in the nineteen eighties, so I was just,
• 26:58
  Speaker 2: you know, wondering, but yeah, he's eighty four. And also
• 27:02
  Speaker 2: on the board Howard Lutnik and Bill Poulti also at
• 27:06
  Speaker 2: less than one percent. Judy Shelton clocking in at two
• 27:10
  Speaker 2: percent as well.
• 27:11
  Speaker 3: Eighties the new sixty for government roles.
• 27:14
  Speaker 2: Yeah, why not, you know, just let's let's do it up.
• 27:17
  Speaker 2: Piece from Connor Sen in Bloomberg Opinion. The stock market
• 27:20
  Speaker 2: just got a sobering reality check. And you know, talking
• 27:23
  Speaker 2: about again kind of the economic data that we've gotten
• 27:26
  Speaker 2: recently and whether they're you know, whether there's meat to
• 27:29
  Speaker 2: that being a problem. And the answer is where where
• 27:33
  Speaker 2: island is. Look, it's the same as the last two years.
• 27:35
  Speaker 2: The jobs market is flashing some warning signs right now,
• 27:39
  Speaker 2: just like it did in twenty twenty three and twenty
• 27:41
  Speaker 2: twenty four. And in both of those cases it responded, hey,
• 27:47
  Speaker 2: we're gonna you know, well, the job market didn't respond
• 27:49
  Speaker 2: because it's not essentially it being it wasn't like I'm
• 27:51
  Speaker 2: doing anything. But ultimately the labor market responded by, you know, rebounding,
• 27:57
  Speaker 2: and we had no recession in each of those two years.
• 28:00
  Speaker 2: There's a convincing case that you could see the same
• 28:03
  Speaker 2: thing this year. There's also a case that things are
• 28:05
  Speaker 2: different because of the tariff situation and how things have
• 28:08
  Speaker 2: moved there. And we're once again sitting here heading into
• 28:13
  Speaker 2: September saying, well, the next few months of data are
• 28:16
  Speaker 2: going to be really important. So if it feels like
• 28:18
  Speaker 2: groundhogs dates because we've been here each of the last
• 28:20
  Speaker 2: two years.
• 28:21
  Speaker 3: The same applies on the inflation front too. I mean
• 28:23
  Speaker 3: we've sat here for the last time or three years
• 28:25
  Speaker 3: saying that inflation is going to come back and rear
• 28:27
  Speaker 3: its head again, and that has not happened. I mean
• 28:30
  Speaker 3: to a substantial degree. Yeah, you know, in some periods
• 28:33
  Speaker 3: of time, maybe more than others. But again we sit
• 28:36
  Speaker 3: on the precipice of a fall period where we're sitting
• 28:39
  Speaker 3: back thinking, hey, is inflation going to creep in to
• 28:42
  Speaker 3: the economic data.
• 28:43
  Speaker 2: But we will see what this piece does make the
• 28:47
  Speaker 2: case of. In terms of what it outlines, it's a
• 28:50
  Speaker 2: really narrow section of the economy that's driving things forward
• 28:53
  Speaker 2: with yes, and specifically it's everything related to tech and
• 28:57
  Speaker 2: AI capex. Because consumer spending it's not bad. It's just
• 29:02
  Speaker 2: kind of flatish, is the best way to describe it.
• 29:04
  Speaker 2: It's it's just a knemic at this point. It's people
• 29:07
  Speaker 2: have spent a lot of money the last few years.
• 29:09
  Speaker 2: Prices are still up, and so there's just not a
• 29:11
  Speaker 2: huge impulse there. Housing is very much a drag on
• 29:16
  Speaker 2: the US economy right now. You are seeing all kinds
• 29:19
  Speaker 2: of pricing pressures in most parts of the country, largely
• 29:23
  Speaker 2: due to the combination of interest rates still you know,
• 29:27
  Speaker 2: six and three quarters percent, dish insurance premiums continuing to rise,
• 29:34
  Speaker 2: property taxes continuing to rise, and now because of this
• 29:37
  Speaker 2: AI boom, utilities prices beginning to rise rapidly as well.
• 29:42
  Speaker 2: And so housing is under some real pressure in I
• 29:46
  Speaker 2: would say fifty percent of the country at this point
• 29:50
  Speaker 2: and expanding outward. And I mean that like fifty percent
• 29:53
  Speaker 2: based on the population. Like, yeah, housing is not being
• 29:57
  Speaker 2: pressured a ton in North Dakota. But apologies to our
• 30:00
  Speaker 2: North Dakota listeners, not many of you live in North Dakota.
• 30:03
  Speaker 2: You know, likes It's just what it is. On the
• 30:06
  Speaker 2: other hand, Florida's under pressure, Texas is California, is Colorado,
• 30:12
  Speaker 2: is Washington State is it's that there's a lot of
• 30:15
  Speaker 2: pressure building now where housing is starting to drag. It's
• 30:20
  Speaker 2: it's dragging in the places where the construction happens. You know.
• 30:23
  Speaker 2: It's our show is based in the Northeast. How much
• 30:27
  Speaker 2: construction that happens in the Northeast, Like a big development
• 30:29
  Speaker 2: is like, oh, they're putting in eighty units, like how
• 30:31
  Speaker 2: are we going to deal with the traffic? Meanwhile, in Florida, Yeah,
• 30:35
  Speaker 2: we approved ten thousand units, ten thousand new units in
• 30:38
  Speaker 2: the villages, you know, like fill it up again like that.
• 30:41
  Speaker 2: That's where the building matters is in places like that,
• 30:44
  Speaker 2: and that's where housing is really struggling. So the point
• 30:47
  Speaker 2: that this piece makes is, hey, if housing and consumer
• 30:51
  Speaker 2: spending are both you know, showing some some trouble right now,
• 30:57
  Speaker 2: if that AI leg goes what else is out there
• 30:59
  Speaker 2: that's gonna really pick things up? Because other than that,
• 31:03
  Speaker 2: there's no huge growth impulse right now. And so you
• 31:06
  Speaker 2: kind of sit there and you wonder, Okay, what happens
• 31:07
  Speaker 2: if this goes down? Now, it's not like that all
• 31:11
  Speaker 2: the signs are, you know, towards increasing capex there. It's
• 31:14
  Speaker 2: just a a monster. But the piece that is interesting
• 31:18
  Speaker 2: to me the last few days, Paul and I've mentioned
• 31:20
  Speaker 2: this to to Mike. Even with all that, like we
• 31:23
  Speaker 2: had all these earnings reports last week where Meta was like, yeah,
• 31:27
  Speaker 2: we're gonna raise our capex guide you know, to one
• 31:30
  Speaker 2: hundred dollars next year. This year's seventy Microsoft And despite that,
• 31:36
  Speaker 2: semiconductors as a whole have just been getting beaten up
• 31:39
  Speaker 2: for the last week. Now, you know, like the companies
• 31:42
  Speaker 2: that should benefit from that are just not moving anywhere,
• 31:45
  Speaker 2: and so you're kind of like, okay, like what gives
• 31:47
  Speaker 2: on this? And granted, the one that really matters to
• 31:49
  Speaker 2: AI is obviously in video, but the rest of that
• 31:52
  Speaker 2: semiconductor space is just kind of rolling over and you
• 31:56
  Speaker 2: kind of look at and you're like, Eh, what's what's
• 31:58
  Speaker 2: that telling us about the demands? And for the rest
• 32:00
  Speaker 2: of these products outside of AI, because you know, in
• 32:03
  Speaker 2: video is still floating I think four or five percent off,
• 32:06
  Speaker 2: it's all time high. But another one that's out there
• 32:09
  Speaker 2: on semiconductor, who again if they focus on a lot
• 32:14
  Speaker 2: of stuff in automotive and industrial that's not AI related.
• 32:18
  Speaker 2: They reported earnings. They're down eleven percent today. And this
• 32:21
  Speaker 2: is after ASML got beaten up last week. H Intel
• 32:26
  Speaker 2: until it's beginning up for decades, so it's not like
• 32:28
  Speaker 2: a thing with them, but qualcomm ended up getting beaten
• 32:32
  Speaker 2: up after a good report that they just couldn't hold
• 32:34
  Speaker 2: their gains. Texas Instruments got pounded a couple of weeks
• 32:37
  Speaker 2: ago when they reported earnings. So I kind of look
• 32:41
  Speaker 2: at that semi space and I'm like, anything that's not
• 32:44
  Speaker 2: right in AI is telling us that there's problems out
• 32:47
  Speaker 2: there in the global economy. Not not just us, but
• 32:50
  Speaker 2: there's there's something happening out there. Because semi's are getting
• 32:53
  Speaker 2: beaten up the last week or so after surging for
• 32:55
  Speaker 2: the last three months.
• 32:56
  Speaker 3: I think some of that, to be fair, is yeah,
• 32:58
  Speaker 3: it's there was a tremendous serve in. Perhaps some of
• 33:01
  Speaker 3: the sell off is due to what.
• 33:02
  Speaker 2: Was a huge out of whack with expectations. Now. Yeah,
• 33:05
  Speaker 2: so let's take a quick break here and when we
• 33:07
  Speaker 2: come back, we'll talk about Berkshire Hathaway. They reported their
• 33:11
  Speaker 2: earnings and will tell you what they earned.
• 33:15
  Speaker 1: After this, find daily interviews and full shows of the
• 33:19
  Speaker 1: Financial Exchange on our YouTube page. Like us on YouTube
• 33:22
  Speaker 1: and get caught up on anything and everything you might
• 33:25
  Speaker 1: have missed. This is the Financial Exchange Radio Network, business
• 33:30
  Speaker 1: and financial news affecting the markets and your wallet. We've
• 33:34
  Speaker 1: got it all straight from Wall Street right here on
• 33:37
  Speaker 1: the Financial Exchange Radio Network.
• 33:47
  Speaker 2: All right, So, because Berkshire Hathaway is unconventional, they report
• 33:53
  Speaker 2: earnings on Saturdays. It's just like to keep you know,
• 33:58
  Speaker 2: It's like, oh, I can't wait to get up for this,
• 34:01
  Speaker 2: and so what we saw is that they're operating earnings
• 34:04
  Speaker 2: dipped by four percent, and so I think that we
• 34:08
  Speaker 2: can basically sum this up as Warren Buffett retires, Berkshire
• 34:14
  Speaker 2: earnings decline.
• 34:18
  Speaker 3: I don't think that hell is the end.
• 34:20
  Speaker 2: He's still technically he's on.
• 34:22
  Speaker 3: Until the end L five and greg Abel will take over. Yeah,
• 34:26
  Speaker 3: you mentioned the four percent decline. They also take took
• 34:29
  Speaker 3: a write down loss on their investment in craft Hines,
• 34:32
  Speaker 3: which was just an unmitigated disaster that that merger just
• 34:36
  Speaker 3: did not go well. And now they're looking at craft
• 34:39
  Speaker 3: Hines specifically trying to spin out the two companies.
• 34:41
  Speaker 2: It'll be great when they spin them out into Kraft
• 34:43
  Speaker 2: and Hines again. Back you know. Berkshire also, by the way,
• 34:46
  Speaker 2: sitting on three hundred and forty four billion dollars in
• 34:49
  Speaker 2: United States dollars.
• 34:53
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• 34:56
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  Speaker 4: eight six six eight four eight five six nine nine.
• 35:47
  Speaker 4: That's eight sixty six eight four eight five six nine nine,
• 35:51
  Speaker 4: or you can request it from their website legal exchange
• 35:54
  Speaker 4: show dot com.
• 35:56
  Speaker 1: The proceeding was paid for and the views expressed are
• 35:58
  Speaker 1: solely those of Cushing and Dolan in Dolan and or
• 36:00
  Speaker 1: Armstrong Advisory may contact you offering legal or investment services.
• 36:03
  Speaker 1: Cushing and Armstrong did not endorse each other and are
• 36:05
  Speaker 1: not affiliated.
• 36:06
  Speaker 4: Wanted to relay a text we were received during the
• 36:09
  Speaker 4: break there about the semiconductor conversation.
• 36:12
  Speaker 2: Yes, oh yeah, this is out of the eight.
• 36:14
  Speaker 4: O four which is Virginia. I believe Qualcomm sounds like
• 36:18
  Speaker 4: the position Creed in the office came up with when
• 36:21
  Speaker 4: he wasn't sure what he did there, Like it.
• 36:24
  Speaker 2: Does what Creed? What do you do? Qualcom? Oh? Nice?
• 36:29
  Speaker 2: By the way, Qualcomm founded forty years ago. Now did
• 36:32
  Speaker 2: you guys know that, Yeah, nineteen eighty five. The comms
• 36:35
  Speaker 2: go back a long way. Yeah, obviously it's they named
• 36:38
  Speaker 2: the company for quality communication since they make, you know,
• 36:41
  Speaker 2: a whole bunch of telecom equipment. The interesting thing, do
• 36:45
  Speaker 2: you guys remember back in the late nineties early two thousands,
• 36:48
  Speaker 2: they used to have the naming rates to the San
• 36:49
  Speaker 2: Diego Padres Stadium. Yes, and also the chargers. And I
• 36:54
  Speaker 2: always find it interesting that this is not my own creation,
• 36:57
  Speaker 2: but there's often a peak in speculative excess about a
• 37:02
  Speaker 2: certain sector of the economy when they start naming stadiums
• 37:05
  Speaker 2: after the companies, like Crypto for l A Crypto for LA.
• 37:09
  Speaker 2: You guys remember, well, I guess you could argue it's
• 37:11
  Speaker 2: rally bout. Jillette Stadium was originally going to be c
• 37:13
  Speaker 2: mg I Field, sure, and Miami was ft X right correct,
• 37:17
  Speaker 2: So yeah, it's qual Comm. Just as an example, the
• 37:21
  Speaker 2: stock peaked in two thousand and about seventy five bucks
• 37:24
  Speaker 2: a share. It didn't get back there until twenty fourteen.
• 37:27
  Speaker 3: Wow, so Broadcoms had a tremendous run. Another comm, another comm?
• 37:33
  Speaker 2: Are there more?
• 37:35
  Speaker 3: There was three Comba, that's that's there became four comm.
• 37:40
  Speaker 3: We have to get it and then I'm not sure
• 37:42
  Speaker 3: if they bankrupt whatever.
• 37:44
  Speaker 2: So we got five G communication, five G you know, yeah,
• 37:50
  Speaker 2: Internet now right stuff? When are we getting six G?
• 37:53
  Speaker 2: I can't tell when do we add another G?
• 37:56
  Speaker 4: I just got the five G phone like months ago,
• 37:58
  Speaker 4: and I can't tell the difference whatsoever?
• 38:00
  Speaker 2: Interesting I can. I can tell the difference. I feel
• 38:04
  Speaker 2: the difference between four g's and five g's.
• 38:06
  Speaker 3: Three com acquired by Hewett Packer fifteen years ago. Glad
• 38:09
  Speaker 3: I cleared that up.
• 38:10
  Speaker 2: There you go, another great acquisition by Hewlett Packard. Let's
• 38:13
  Speaker 2: take a quick break. When we return. We got hour
• 38:16
  Speaker 2: two in a bit