Latest / The Financial Exchange Show / Is inflation actually heading in the right direction?

Transcript

Is inflation actually heading in the right direction? · 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
0:18
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
0:35
Exchange with Chuck Zada and Mike Armstrong, your exclusive look
0:39
at business and financial news affecting your day, your city,
0:43
your world. Stay informed and up to date about economic
0:46
and market trends plus breaking business news every day. The
0:50
Financial Exchange is a pround partner of the Disabled American
0:53
Veterans Department of Massachusetts. Help us support our great American
0:57
heroes by visiting DAV five Boston and making a donation today.
1:02
The DAV five K Boston is presented by Veterans Development Corporation.
1:07
This is the Financial Exchange with Chuck Zada and Mike Armstrong.
1:12
Speaker 2: Chuck, Mike and Tucker with you here, and a lot
1:15
to get to today, So we're going to get right
1:17
into it, starting with some economic data that we got
1:21
earlier this morning at eight thirty am Eastern time, a
1:24
couple different reports. Won a monthly report on inflation, the
1:27
consumer price index data, another one a weekly report for
1:31
initial jobless claims and continuing jobless claims. Mike, what's one
1:35
of these do you want to start with.
1:36
Speaker 3: Let's go at the inflation report, a little bit more
1:38
rare out there, and we did receive it at eight
1:41
thirty this morning, and markets didn't seem to love it,
1:45
although you know, nothing detrimental in here, but headline numbers
1:49
two point four percent year over year in terms of
1:52
price increases, zero point two percent on the month over
1:55
month level. If you strip out that volatile food and energy,
1:58
which has been a draft on overall prices, especially on
2:02
the gasoline and energy side of things. If you strip
2:04
those pieces out, the year over year numbers are coming
2:07
in at three point three percent and zero point three
2:10
percent month over month, which is not the fed's goal.
2:14
It's not where it the FED has targeted and wants
2:17
to be. And so to some degree, questioning again the
2:23
direction of the FED and what this means for the
2:24
next two meetings. What were the highlights in your mind?
2:27
Speaker 2: So I think if you look through this, and again,
2:29
we don't have all of the data yet, just because
2:34
there are some groups like the Cleveland FED, they put
2:36
together what's called median inflation and trimmed mean that usually
2:39
comes out a little bit later in the day. So
2:41
we we don't have everything that I like to look
2:44
through at this point. But when we look at some
2:48
of the key pieces that I think are important here,
2:53
you want to be saying, okay, like where is this
2:56
actually coming from, Like what is causing this? And is
3:00
it just one thing that is spiking or is it
3:02
something that's more broad based. So the first thing that
3:05
I look at is, okay, is this coming from shelter?
3:08
Just because the cost of shelter in CPI has been
3:11
something where even as home prices have leveled off over
3:14
the course of this year, that cost of shelter component
3:17
has continued to move up. So they say, okay, is
3:19
it just this, Well, no shelter printed point two percent
3:22
for the month. It was actually the best number that
3:24
we've seen since June, so that you know, the last
3:26
two months we're a little bit higher. So you sit
3:28
there and you say, look, it's it's not shelter that's
3:31
causing this. What else could it be? Is is it
3:33
gas prices? Well, no, we know it's not because a
3:35
you know, headline is lower than core, which tells you
3:38
it's not gas prices. And the fall of gas prices
3:41
in September was picked up here, with gas prices falling
3:44
four point one percent over the course of the month
3:46
according to the CPI data. So it's it's not some
3:50
of those narrow things where you say, g is is
3:52
this you know, what's what's causing the problem here? Instead,
3:56
it does, at first glance, appear to be you know,
4:00
kind of a broadening out where some of the areas
4:02
that previously had shown a little bit of improvement maybe
4:05
backsliding a little bit, places like transportation services printing one
4:09
point four percent month over month. That is the hottest
4:13
one that we've seen since March of this year, I believe,
4:16
And so you know that's something where if you try
4:19
to figure out, okay, what goes into transportation services. It's
4:24
motor vehicle insurance, which continues to be hot, printing one
4:28
point two percent this month and sixteen point three percent
4:31
year over year. That's something that goes into it. Other
4:35
things motor vehicle maintenance and repair, airline fares bouncing back
4:39
for the last couple months after dropping throughout you know,
4:42
the early part of the summer, those items moving up.
4:45
So again you kind of sort through this, and overall,
4:49
this isn't a report that's it's not bad. It's not
4:52
something where you say, oh gee, like we're going back
4:55
to twenty twenty two. But it is something where you say, hey,
4:59
we the still are seeing inflation floating around, or at
5:02
least core inflation floating around a higher level than is comfortable,
5:06
and it's largely being pushed up by you know, a
5:09
few key areas such as auto insurance. But you can't
5:12
just say, well, if we strip out auto insurance, it'll
5:15
be fine, because auto insurance is going up and everything
5:18
else is still printing where it is. So I think
5:21
overall this is a report where if you're grading it,
5:26
it's a like C plus, it's like okay, this is
5:28
kind of like the minimum threshold that we have now
5:32
for a report being okay, but really you need to
5:37
do better than this. And if you start printing this
5:39
over and over, which look, we got two months now
5:42
where we've had a report like this that starts to
5:45
get into a position where it's not okay because it's
5:47
an it's indicative of an economy that, hey, once fuel
5:51
prices stop falling, which they won't go down fifteen percent
5:54
year over year forever. Once that stops, then you're in
5:58
a position where you're saying, hey, now inflation is you know,
6:00
bottoming out close to three three and a quarter percent
6:03
year over year, and that's not where you want to be.
6:06
It's we've talked about how you're not gonna get down
6:08
to two because inflation basically has never averaged two. But
6:12
you got to get down into that two and a
6:13
half percent range on core and you're just not there.
6:16
And that's the problem here. So yeah, I look at this,
6:19
and I mean I might even downgrade from like a
6:21
C plus to a SEA. It's just this is like
6:23
the bare minimum of what you can do right now
6:25
in my opinion.
6:26
Speaker 3: Chuck put this in the context of a few things
6:28
with me for a moment. So we had the jobs
6:31
report for September that came out hotter than expected. We
6:33
now have this inflation report, which again very slightly hotter
6:38
than expected, but hotter than expected. And then combine that
6:41
with I'm sure you've read through some of the meeting
6:43
minutes in commentary from the FED which seemed to have
6:46
indicated that while most voting members voted for the fifty
6:50
bip cut, they might have been fine with a twenty
6:54
five basis point instead, And there was a fair bit
6:56
more debate about that than I think all of us
6:58
were previously aware. What contextualizing all that, I mean, where
7:04
does it put the FED for these.
7:06
Speaker 4: Next two meetings?
7:07
Speaker 3: Are the twenty five basis point cuts that are almost
7:11
a certainty being priced into markets, actually a certainty in
7:14
reality here.
7:15
Speaker 2: I don't think there's any danger of those cuts not happening,
7:18
just because look, there clearly has been a deceleration in
7:22
the labor market that is concerning to the FED, and
7:25
one jobs report doesn't put that to bed.
7:27
Speaker 5: Sure, that's not something where.
7:29
Speaker 2: You don't just look at that and say, well, everything's fine, now,
7:31
we don't need to deal with this. I think the
7:34
inflation data that we've been getting and even the other
7:36
growth data that we've been getting, it takes off the
7:39
table additional half a percent cuts through the end of
7:43
this year. And the reason I'm confident enough to say
7:46
through the end of this year, which I know there's
7:48
only three months to go, but a lot can change
7:50
in three months. Still, we're not going to be getting
7:52
any any data that tells us anything useful about the
7:57
labor market for at least a couple months. It's going
8:01
to be messy. So if you don't know which way
8:04
the labor market is moving, the best thing that you
8:07
can do is assume it's moving in the fashion similar
8:10
to what it was before the distortion showed up. Because
8:12
the labor market tends it tends to have an awful
8:16
lot of momentum, and so I think that in looking
8:19
at this, I think you're fairly locked in now for
8:22
quarter percent cuts at the November and December meetings, and
8:26
then as you get out to January, maybe you start
8:29
to get a sense of where things are at that
8:31
point in the economy. But it's going to be tough.
8:34
Between the impacts from these two hurricanes, you're just not
8:38
going to have a great understanding of exactly what's going
8:42
on in the labor market because there are such big
8:46
disruptions to normal patterns of how businesses operate throughout much
8:50
of the Southeast.
8:51
Speaker 3: Now, yeah, I think the only thing that could disrupt
8:53
me from that path that the FED seems to be
8:55
on would be really robust hiring that proves out in
9:00
the October and November jobs reports, which we'll see in
9:04
early November and early December. Like that would be surprising
9:07
given the context of these hurricanes, and therefore make you
9:10
really question, Okay, are we about to see some sort
9:14
of wage spike here that might toss me off?
9:17
Speaker 5: Yeah, And.
9:19
Speaker 2: It would be kind of hard to understand where that
9:21
impulse for this massive hiring would come from.
9:24
Speaker 3: Right right in the context of a giant storm that
9:27
has wiped out a good portion of the Southeastern United
9:30
States in terms of the ability to hire. You'd have
9:33
to look at that and really say, wow, this is
9:36
surprising and quite frankly, kind of unlikely.
9:42
Speaker 2: Just glancing through the CPI, I always like to look
9:44
at just individual items just to see any big changes
9:46
for the month, just because it's kind of fun to
9:48
do it. It's not really representative of anything useful, but
9:50
it's it's kind of cool. Mike, did you know what
9:53
the price of lettuce fell three point two percent in September?
9:56
Thank god, I know that the season salads are gonna
10:01
be so affordable now.
10:03
Speaker 5: It's gonna be wonderful.
10:04
Speaker 2: On the other hand, if you are looking at apples,
10:08
apple price is up two point four percent for the month.
10:12
Not ideal heading into Actually, apple picking season is just
10:15
about just about wrapped up right now. Other things that
10:19
we are seeing in terms of again, just big movers
10:21
that are that are out here on a monthly basis.
10:24
Men's suits up two point four percent for the month.
10:26
It costs more to look good now, Mike, Oh, do
10:28
you see eggs? Uh no, what are eggs doing? How
10:32
are the chicken s?
10:33
Speaker 3: I'm looking here, and unless I'm misreading this, I'm seeing
10:37
August to September egg prices up ten percent.
10:41
Speaker 4: That's not good.
10:42
Speaker 5: Interesting.
10:43
Speaker 2: There has been the whole bird flu thing that's been
10:45
floating around. Yeah, okay, seems like every couple of years
10:48
now we go through a bird flu, doesn't it. Yeah,
10:50
it's just fact of life. College textbooks up four point
10:54
two percent. That's not great. Okay, this this is just
10:58
I get what they're doing. There's one of the subsets
11:02
of categories under what's the broad category that this is under. Here,
11:07
let's see they have an alcoholic beverages segment whiskey at home,
11:14
which again I guess they're surveying me. So you're welcome
11:19
down two point four percent for the month. So the
11:22
whiskey is cheaper, so you've got that going for you
11:25
at least.
11:25
Speaker 5: Let's take a quick break here.
11:27
Speaker 2: When we come back, talk a little bit about what
11:30
we saw in weekly jobless claims. A lot of changes
11:33
going on, some hurricane related, some that are a little
11:36
bit more questionable. We'll try to unpack all that when
11:39
we return.
11:41
Speaker 1: Get up to the minute market updates with Wall Street
11:43
Watch Weight Days at ten thirty only here on the
11:47
Financial Exchange Radio Network. Find daily interviews and full shows
11:51
of the Financial Exchange on our YouTube page. Like us
11:55
on YouTube and give can up on anything and everything
11:58
you might have missed. This is the Financial Exchange Radio Network.
12:06
Speaker 6: The Financial Exchange has built an incredible partnership with the
12:09
Disabled American Veterans Department of Massachusetts. We can't wait to
12:13
take part in this year's DAV five K, set for Saturday,
12:16
November ninth at Fort Independence on Castle Island. You can
12:20
help our great American heroes by walking, running, or simply
12:23
making a donation. Your gifts will sports services such as
12:26
the Veteran Advancement Program, which offers permanent and affordable housing
12:30
opportunities for veterans and their dependents. Time is running out.
12:34
If you want to take parts, ahead to DAV FIVEK
12:37
dot Boston and secure your spot today. The DAV five
12:40
K Boston is presented by Veterans Development Corporation.
12:44
Speaker 2: Michaelet's talk a little bit about what we saw from
12:47
this morning's Unemployments claims release eight thirty am. We get
12:52
both initial claims and continuing claims, and on the initial
12:56
side we saw a jump of thirty three thousand claims
13:00
up to two hundred and fifty eight thousand on a
13:02
weekly basis. Continuing claims moving up as well, from about
13:06
one point eight two million to one point eight six million.
13:10
The continuing claims number I'm not really going to address
13:12
right now, just because I don't think it's the most relevant.
13:16
It's been just kind of bouncing around this area for
13:18
a while. But let's talk a little bit about this
13:20
initial claims jump, because normally you see a jump of
13:23
thirty thousand claims in a week. And again, even though
13:27
it's just one week of data, you still say, oh,
13:30
that's that's interesting because if we, you know, continue to
13:32
see those kinds of jumps, it point toward it points
13:36
towards the kind of labor market weakness that we've really
13:38
been nervous about happening, which is more layoffs happening, and
13:42
not you know, just a slowing labor market, but one
13:45
in which layoffs are starting to pick up this week.
13:49
Speaker 4: Though, throw it out.
13:51
Speaker 2: I don't know that you throw it out, because I
13:54
went through the state level data in order to figure out,
13:57
you know, hey, how much of this can you attribute
13:59
to Hurricane Helene coming through and how much of it
14:03
is related to just whatever's going on in the economy.
14:07
Here are the biggest jumps that we saw percentage wise. Okay,
14:12
like California, Yes, thatd four thousand more initial claims than
14:16
the prior week. Sure, but California also has a baseline
14:19
of forty thousand claims, so it's a ten percent jump,
14:22
and those things can revert and change pretty quickly, So
14:26
I'm not looking at this from a number of claims perspective,
14:30
But hey, which states saw the biggest percentage change in claims.
14:35
And here's what we saw. The biggest one that I
14:38
found was North Carolina, which saw its jobless claims go
14:42
up by eight thousand claims, and that is now at
14:46
a level. It ended up in a total of just
14:48
shy of twelve thousand claims, so claims almost quadrupled for
14:51
the week. Like, how much of that is because the
14:54
North Carolina economy is weakening significantly and how much of
14:57
it is because they just got hit with a massive hurricane.
15:00
A bunch of people have finally dug out enough to
15:02
start claiming unemployment.
15:04
Speaker 3: I would guess most of it on the hurricane side
15:07
of things, but I suppose it could be both. But
15:10
I have no evidence that North Carolina's economy's weakening, so
15:12
I'm going.
15:13
Speaker 4: Mostly on the hurricane.
15:15
Speaker 3: And by the way, I don't think that everybody had
15:17
time to file for unemployment.
15:19
Speaker 2: Other ones that I think fall into a similar boat
15:21
Florida four thousand initial claims now at one point eight
15:24
times the prior week. Again, that whole Panhandle Big Bend
15:28
area got hit by the hur by Hurricane Helene as well.
15:31
I think there's a very reasonable story there. Same with Tennessee.
15:34
The eastern part of the state got hit by the
15:37
hurricanes South Carolina in the same boat Kentucky as well.
15:40
So I think that all of those are explainable by saying, hey,
15:45
Hurricane Helene came through a couple of weeks ago. The
15:48
first week people just spent digging out and making sure
15:51
they could have, you know, basic things like water and
15:53
electricity and things like that. And now they're finally filing
15:57
for unemployment. I think that that's an under standable way.
16:01
Speaker 5: To look at it. Is that fair yep.
16:05
Speaker 2: One that didn't make sense to me, and I can't
16:07
really sort out what's going on here. Actually two of them,
16:11
Michigan saw its weekly claims more than double and Ohio
16:17
saw its claims double. Can't either can't make heads or
16:21
tails of that because Michigan and Ohio, even if you
16:25
look at like the very like southeastern part of Ohio,
16:30
they weren't heavily impacted by Helene.
16:33
Speaker 3: How about Washington State where the Boeing strikes have been
16:35
going on.
16:36
Speaker 2: You've gotten uptick there, claims jumping by about thirty percent
16:39
week over week, So you know that that makes sense.
16:41
About seventeen hundred additional initial claims, But I'm trying to
16:48
figure out is there any Michigan, Ohio. I know that
16:52
this is the time of year where occasionally you get
16:54
like some retro fitting of auto plants for the upcoming
16:57
model year and stuff like that. So maybe there was
16:59
some of that that's going on, and this is just
17:01
going to fade back there. But those are data points
17:03
where I say, Okay, let me pay attention to that
17:05
in the next couple of weeks and see if it
17:07
reverts back to prior levels or if this, you know,
17:09
shows some continuation. Other than that, you look at it
17:14
and look claims. I think are certainly on the on
17:17
the unseasoned not seasonally adjusted metrics. They're moving up throughout
17:21
much of the country. Just counting in terms of the
17:23
number of you know, states where you actually had a
17:26
decrease here, it's only a handful, you know, maybe eight
17:29
to ten. But this is also the time of year
17:32
where the non seasonally adjusted numbers start to tick up
17:35
as you head into the end of the year, and
17:37
you get this big rise in non seasonally adjusted claims
17:42
at the end of the year because all of the
17:43
seasonal workers that get hired for the holiday shopping period
17:48
they all start getting laid off as you get into
17:50
late November and early December. Actually, like that's that's the
17:54
period where that starts to pick up.
17:56
Speaker 3: Yeah, the quarter million people hired from Amazon don't need
17:59
to be there in late December.
18:01
Speaker 2: No, we've talked about how the bulk of like Christmas
18:03
shopping now it happens before December tenth, and so you
18:07
see these layoffs that pick up as you head into
18:10
the end.
18:10
Speaker 5: Of the year.
18:11
Speaker 2: So I think that my read on this weekly claims
18:16
number is, hey, you can't take a ton from it,
18:20
but up is still not good regardless, It's still is
18:24
something where hey, the number of claims went up, and
18:27
that still tells you something about where the economy is
18:29
going to be, because if those people aren't working, then
18:32
they're not producing whatever economic activity they did, and so
18:35
it tells you something about where the economy is going.
18:39
And Connorson who we read his Bloomberg stuff and we
18:42
cover it on the air. Sometimes he's got a good
18:44
saying on this, which is, look, doesn't matter what happened,
18:47
up is up. And I know that sounds kind of dumb,
18:50
but it's kind of where I land on this.
18:52
Speaker 4: Yeah, I tend to agree.
18:54
Speaker 3: It's not something we should completely ignore, but it'd be
18:57
more surprising than not. Given the strikes, plus storms, the
19:01
hurricanes that we won't see enough, it'd be more surprising
19:04
if we didn't see an uptick over last week and
19:07
the next few. And like we've talked about before, it's
19:11
not that you should throw it out, but you won't
19:12
really get a good picture until weeks or months after
19:15
the facts.
19:17
Speaker 2: Take a quick break here as we head towards the
19:21
bottom of the hour, But when we come back, talk
19:23
a little bit about the Federal Reserve. It's been a
19:27
couple weeks since their jumbo rate cut, and we'll tell
19:31
you all about what they had to say during the
19:33
Fed meeting minutes right after this.
19:39
Speaker 1: Like us on Facebook and follow us on Twitter. Act
19:42
TFE show breaking business news is always first right here
19:46
on the Financial Exchange Radio Network. Time now for Wall Street.
19:52
Watch a complete look at what's moving market so far
19:55
today right here on the Financial Exchange Radio Network.
20:00
Speaker 6: Well, all three major averages are off by about a
20:03
quarter percent as investors react to the consumer Price index
20:06
posted this morning, where consumer prices climbed zero point two
20:09
percent in September, while the animal rate of inflation came
20:13
in at two point four percent, slightly hotter than expectations.
20:18
Right now, Dow is off by ninety five points s
20:21
and P five hundred down by fifteen points. In the
20:24
NASDAC off by sixty one points, now a third of
20:27
a percent off. Russell two thousand is down nearly three
20:30
quarters of a percent. Ten year treasury yield is up
20:35
by two basis points at four point excuse me, four
20:38
point zero nine percent, and crude oil up over two
20:41
percent this morning, training just below seventy five dollars a barrel.
20:45
Delta Airlines posted third quarter results ahead of the open,
20:49
missing on earnings and revenue expectations, where the airline noted
20:53
the massive crowd strike outage back in July weighing on
20:57
its quarterly results. Delta did say its earnings to start
21:01
growing again on a year over year basis in the
21:04
fourth quarter as airlines scale back growth plans, reducing a
21:07
supply gut and helping bolster fares. Delta shares currently flat.
21:14
Domino's also posted earnings this morning, where the pizza operator
21:17
said US orders continued to grow, but further paired back
21:20
guidance for store openings. Amid economic challenges that stock up
21:25
by two percent. Meanwhile, the Wall Street Journal reported that
21:28
TD Bank is expected to pay around three billion dollars
21:32
in fines and have limits on its US business as
21:35
part of a settlement over a money laundering charge. TD
21:39
shares down by six percent. Tesla currently down by one
21:43
percent ahead of its electric vehicle maker excuse me, ahead
21:47
of its anticipated robo taxi event. Later today and tomorrow morning,
21:51
we'll see third quarter bank earnings from JP Morgan, Chase,
21:55
Wells Fargo, and Blackrock. I'm Tucker Silvan. That's Wallstreet Watch, Mike.
22:00
Speaker 2: Yesterday we received the FED meeting minutes, which are about
22:04
as exciting as you would expect them to be. Did
22:08
we glean anything interesting from them? Despite the lack of excitement?
22:13
Speaker 3: To me, the most interesting thing was more I guess
22:17
diverging opinions than I guess I anticipated. We knew that
22:21
Michelle Bowman, who was one of the voting members, voted
22:23
against the fifty basis point hike. It sounds like had
22:27
Jerome Powell really pushed for the twenty five instead, that
22:30
that's what we would have gotten here. Instead, he really
22:33
led the committee towards that fifty basis points, and you know,
22:37
members who were on the fence went along with it.
22:40
And that's about as interesting as I think I got.
22:44
Did you get anything else additional out of it?
22:47
Speaker 2: No, No, I really didn't. It's something that I don't know.
22:52
For some reason, people look forward to seeing these, but
22:55
I've never found that there's anything shocking, actually been shocking,
23:00
anything actionable within them.
23:03
Speaker 3: They should have a like a soap opera writer, start
23:05
writing the Meeting minutes instead.
23:07
Speaker 2: I thought you were gonna say, like, change the name
23:09
of it from like, you know, the Fed Meeting minutes two.
23:13
Speaker 3: Honestly, you could probably toss the entire text into chat
23:16
GPT and ask it to rewrite it in the context
23:19
of a soap opera and it might be.
23:21
Speaker 4: A little bit funny.
23:23
Speaker 2: I'm gonna do that while we cover our next story,
23:25
which is from MarketWatch, which is this is what it
23:30
seems like they did with the headline here, the federal
23:32
reserves interest rate panic is creating a windfall for retirees.
23:37
So couple things, Mike, what is the federal reserves in
23:41
the federal reserves interest rate panic?
23:45
Speaker 3: What is that there wasn't one. They're claiming that the
23:48
fifty base point cut was some form of panic. And
23:51
the evidence is in the fact that you know, a
23:53
few days later you got it more robust than anticipated
23:56
jobs report. I think actually the Federal Reserve, for doing
24:02
a full fifty basis point cut, conveyed a complete lack
24:06
of panic whatsoever in their commentary and in all of
24:10
their announcements about the fifty basis point cut. And so
24:13
I saw zero panic from Jerme Powell or anyone else
24:18
in regard to the fifty basis point cut that they made.
24:20
But that's what they're calling it is the fifty basis
24:22
point panic instead.
24:24
Speaker 2: So we've got that going on, Mike. I'm looking at
24:27
it now, the FED Meeting minutes. There's sixteen pages the
24:29
full version.
24:30
Speaker 4: Yeah, it'sking me be tough for GPT.
24:32
Speaker 5: It feels like that's just a little long.
24:34
Speaker 2: I'm just gonna take like the first few pages or
24:38
so and see what it spits out here, and we'll
24:42
see what happens.
24:43
Speaker 5: I do want to talk about before we do that.
24:45
Speaker 2: I want to talk about the Hurricane Milton impact, just
24:48
because this is something that I think is far more
24:51
meaningful than anything FED related in the short term.
24:53
Speaker 5: Here.
24:54
Speaker 2: Sure, the first thing I actually want to talk about
24:57
on this is I know that oftentime, basically everyone likes
25:03
to give meteorologists a lot of crap for, you know,
25:05
being inaccurate. They're like, oh, like you said it was
25:07
going to rain today and it didn't, or you know, hey,
25:10
it's you know, we were supposed to get a foot
25:12
of snow and we only got you know, five inches,
25:14
Like what gives I just want to take a second
25:17
here to point out that the the National Hurricane Center,
25:21
the track that they put up for Milton on Saturday,
25:24
the fifth, full four and a half days before it
25:27
actually hit, missed the actual landfall of it by twelve miles.
25:32
Speaker 3: It's incredible, and I just want to say say, I just.
25:37
Speaker 2: Want to say, like, how lucky we are to actually
25:39
have such smart people studying this stuff, because being able
25:43
to project where that hurricane is going to go accurately
25:47
saved hundreds, if not thousands of lives, sure, And so
25:51
I think I just want to acknowledge that before we
25:53
go further on this. Okay, the question now is how
25:58
bad is the over all damage going to be and
26:02
what is the economic recovery going to look like for
26:07
basically all of Central Florida. I don't know if you've
26:11
seen any of the specific statistics on this storm in
26:14
terms of rainfall and winds and stuff like that, Mike.
26:18
Speaker 3: I was seeing some of them live, and I've been
26:21
really hesitant to draw any sorts of conclusions at this stage.
26:24
Speaker 4: It seems far too early.
26:25
Speaker 3: But the general context of what I've been reading has
26:29
been this was devastating, and had winds not slowed down
26:33
to the extent they did, could have been a lot worse.
26:35
But the water damage and everything else, I just genuinely
26:38
have no idea at this point.
26:39
Speaker 2: And the fact that this thing ended up going just
26:42
south of Tampa Bay instead of just north right was
26:44
also a huge, you know, a huge break for the
26:48
most heavily populated area of the West Coast. But I
26:53
don't know if you have you ever been to Dover, Florida, Mike, No,
26:57
I didn't even be honest, I didn't even know it
26:59
existed until this morning. Sure, Dover, Florida is a town
27:03
in Florida that is I don't know, maybe about twenty
27:08
miles thirty miles inland from Tampa. Like directly, you basically had,
27:12
you know, dewe east from Tampa and you get there.
27:16
The precipitation gauge is there recorded thirty nine inches of
27:21
rain god from this. At one point they were getting
27:24
eight inches of rain an hour during the peak. And so,
27:28
like you and I both know Florida, Like anyone who's
27:31
listening probably knows the topography of Florida, it's low and
27:34
basically everything is pretty close to some kind of water,
27:36
whether it is swamp, lake, ocean. There's not far to
27:42
go to get to some kind of water. And so
27:44
the question is ultimately gonna be, look where does all
27:47
of this water go and how quickly does it get
27:48
out of there? Because that whole Tampa through Lakeland, winter Haven,
27:53
that whole area is just you know, basically having to
27:57
act as a sponge now in order to deal with this.
28:00
And so I think as far as you know, how
28:02
big is the economic disruption? Look, you obviously have you know,
28:07
the Tampa area which is most heavily populated, and I
28:09
know we've all probably seen the pictures from Tropicana Field,
28:12
which had its roof ripped off overnight.
28:16
Speaker 5: You've got stuff that you have to worry about there.
28:18
Speaker 2: But the inland stuff, just from a rain perspective, seems
28:22
to have gotten hit harder than anticipated on that front,
28:26
and so I think trying to figure out when this
28:29
is all going to you know, kind of be able
28:33
to not be resolved, but just when you can even start,
28:37
you know, rebuilding operations instead of rescue and recovery operations
28:43
is going to be a real question here because you
28:46
can't do anything if there's you know, three feet of
28:49
water on the ground, there's just not much you can do.
28:53
The thing that Florida does have going for it because
28:55
they deal with these things so much, they are so
29:00
all prepared in terms of the immediate response for you know,
29:03
things like restoring power.
29:04
Speaker 5: You know, there was I was listening to Governor DeSantis.
29:08
Speaker 2: The other day, I think was yesterday, and they had
29:10
fifty thousand linemen basically all hired and ready to go
29:14
for any emergency work that was needed in the area.
29:18
And so it's just something where it's like they've been
29:20
through this before. They know how to get the quick
29:24
response that you need. And so that is something that
29:26
I think potentially votes well for the rescue and recovery
29:31
efforts here as opposed to, you know, some of the
29:34
slowness that we saw in North Carolina, which is not
29:37
a state that is as prepared to deal with these things,
29:39
especially inland in the mountains.
29:41
Speaker 3: Yeah, what I think it's safe to say we don't
29:44
know at this point is what this all means for
29:46
citizens insurance, What it means for you know, eighty percent
29:50
of homeowners in Florida's in Florida.
29:52
Speaker 4: Who do not have flood insurance.
29:54
Speaker 3: What it means for that overall market and the rebuilding effort.
29:58
I don't think anybody has any real genuine sense right now,
30:01
but suffice to say, in terms of dollar damage, based
30:06
on the directory of this thing, it could have been
30:08
significantly worse, but it will take a long time to
30:11
fully understand what the damage was.
30:13
Speaker 2: Take a quick break here when we return Delta giving
30:18
some updated guidance on their earnings, and then we'll talk
30:22
a little bit about why Wall Street seems to be
30:25
kind of paralyzed in terms of what it thinks is
30:28
going to happen with this election that is upcoming now
30:32
less than four weeks to go.
30:33
Speaker 5: We'll talk a little bit about that when we return.
30:37
Speaker 1: Breaking business and financial news first throughout the day, only
30:41
here on the Financial Exchange Radio Network. Thankst us six one, seven, three, six,
30:47
two thirteen eighty five with your comments and questions about
30:51
today's show, and let us know what you think about
30:53
the stories we are covering. This is the Financial Exchange
30:57
Radio Network.
31:02
Speaker 5: All right, Mike, Delta Airlines.
31:05
Speaker 2: They announced some forward guidance for earnings and revenue. Just
31:10
a earning is gonna be a dollar sixty to a
31:12
dollar eighty five a share.
31:13
Speaker 5: In the fourth quarter.
31:14
Speaker 2: The midpoint of that is below the dollars seventy eight
31:17
that was the average of analyst estimates. Delta's revenue growth
31:21
guidance of two to four percent is also below the
31:24
four point four percent year over year guidance that is expected.
31:28
What are we seeing here? Anything unique to Delta or
31:31
is this just Hey, things have been awfully hot in
31:35
the airline space for the last couple of years and
31:39
you know, more signs of maybe just a normalization occurring.
31:41
Speaker 3: Yeah, I don't see anything unique on the forward looking stuff.
31:45
The final tally for the crowd strikeoutage for Delta came
31:50
in at three hundred and eighty five million dollars in
31:53
lost revenue, which that one was a little bit unique
31:55
to Delta. Early trading before markets opened, this stock was
31:58
down over five percent. It's currently only kind of flat
32:02
at the moment and has made up all of its
32:04
lost ground that experience.
32:05
Speaker 4: After that crowd strike outage. Their stocks sold off.
32:09
Speaker 3: Pretty significantly from May through early August and has since
32:13
bounced back a fair bit on again. I think, just
32:16
normalizing expectations.
32:18
Speaker 4: For the year. One question that continues to stand out
32:21
for me.
32:23
Speaker 3: Ed Bashan, the CEO, and several others big and small
32:28
businesses alike. Speaking of a realtor the other day that
32:30
said the same thing is that they're expecting a slow
32:34
down and experiencing a slow down with the upcoming US
32:36
presidential election? Do people actually stop booking flights because of
32:41
an election? I can see not buying a house. I
32:45
don't see putting off a flight booking.
32:49
Speaker 2: I quite honestly, I don't even understand why buying a
32:53
house is something you would change.
32:54
Speaker 3: I don't either, but I can at least I can
32:59
at least understand end it more. But yeah, I keep
33:02
hearing this from CEOs of different companies, like, ah, well,
33:05
you know, we're business slowing down ahead of the election,
33:08
Like is it? Or is business just slowing down?
33:11
Speaker 5: Right?
33:11
Speaker 4: Like?
33:12
Speaker 5: Who makes?
33:13
Speaker 4: Well?
33:13
Speaker 2: You know, I'm thinking about buying a new couch. I've
33:16
really gotta wait for the election to see who wins.
33:18
Speaker 3: I was gonna go to Portugal, but ooh, you know,
33:21
if Harris is president, then I don't think I'm gonna what.
33:24
Speaker 5: Like I I just don't quite h I don't get it,
33:29
but that's me so.
33:31
Speaker 6: Falls in full swing. The leaves are changing, the days
33:34
are getting shorter, and the cold is inching closer. Don't
33:37
let the prospect of darkness at four o'clock get you down,
33:40
because your next incredible vacation is just to click away.
33:44
The US Virgin Islands are Saint Croix, Saint Thomas, and
33:47
Saint John. Enjoy one or all three and experience rich history,
33:51
world class cuisine, a wide variety of watersports, and the
33:54
most pristine beaches anywhere in the world. Go to visit
33:58
USVII dot com and check out the American Caribbean. Well
34:02
you'll find all the information you'll need to book a
34:04
trip that you'll never forget. Upon arrival, you'll fall naturally
34:08
in rhythm with the heartbeat of the islands. Travel to
34:10
and from New England is simple, and your stay will
34:13
be hassle free. Because this is the American Caribbean. There's
34:16
no passport required or money to exchange. Whether it's a
34:20
romantic getaway or family vacation, make your plans now to
34:24
get out of the cold and head to America's Caribbean paradise.
34:28
Go to visit USVII dot com and book your trip
34:31
of a lifetime today. That's visit USVII dot com.
34:36
Speaker 5: Mike, I, I did it.
34:39
Speaker 2: I got the first six pages of the FMC minutes
34:43
into chat GPT, and I asked it to recreate it
34:48
as a snappy, dramatic dialogue between two characters and the
34:52
soap opera. Oh okay, So the scene is a luxurious
34:56
boardroom in the early morning. Veronica, a season FOMC committee
34:59
member with the sharp mind and a taste for drama,
35:01
sits across from Jack, a charming but jaded board governor.
35:05
Veronica sighing, Jack, did you see what the treasury yields did?
35:08
They've dropped faster than your last stock pick. I warned
35:11
you the market's losing faith, and here we are sitting
35:13
on a ticking time bomb.
35:15
Speaker 5: Jack.
35:15
Speaker 2: Oh please, Veronica, those yields didn't plummet on their own blame.
35:18
The disaster of an employment reporter was weaker than a
35:21
paper straw and a hurricane. But look, stocks her up.
35:23
The market's clearly signaling it wants rate cuts, not our
35:26
endless caution. Veronica, raising an eyebrow, stocks her up. But
35:29
don't let that fool you. Credit spreads are still tight,
35:32
almost costrophobic, and we've barely bounced back from that August madness.
35:35
Speaker 5: And you want to roll the dice.
35:37
Speaker 2: We saw what happened with those speculative positions, chaos, and
35:41
now you're ready to gamble again. Gamble The market implied
35:45
rate path is already screaming for a cut, Veronica. A
35:47
hundred bases points by year end. Investors are begging for it.
35:50
They don't want the usual slow dance. They want action, futures, options, surveys.
35:54
They're all telling us the same thing. Even the ECB, BOE,
35:58
and BOC are moving. We can't just you're watching while
36:00
the world moves on without us, Veronica, And what we
36:04
throw a fifty point cut into the mix and hope
36:06
for the best. You're forgetting that the real world isn't
36:08
his eager jack. The unemployment rate might be up, but
36:11
it's steady. Inflation is cooling off in GDP, growth isn't
36:13
falling off a cliff. You'd rather we follow the markets
36:17
into freefall just because they're flashing a few red lights.
36:19
If we don't act, we risk looking like fools in
36:21
the face of a global shift. Canada, the Eurozone, even Japan,
36:25
they're all moving. Meanwhile, the dollars dropping and the repo
36:28
market is straining at the seams, face of Veronica. If
36:31
we don't get ahead of this, we're gonna lose control
36:32
of the narrative.
36:34
Speaker 5: Veronica.
36:35
Speaker 2: I'm saying what we need is a balanced approach, a
36:37
measured cut, just enough to signal support, but not so
36:39
much that we throw the system into chaos. We can't
36:42
just knee jerk our way through policy. We have to
36:44
show where steady, even if the world around us is
36:46
anything but. Jack, You're right, But if we misstep, it
36:51
won't be our names in the headlines.
36:52
Speaker 5: It'll be our legacy.
36:53
Speaker 2: This isn't just a meeting, Veronica, it's the future. So
36:58
all right, Chuck, I think that's probably actually how the
37:02
meeting went.
37:03
Speaker 4: This is okay, this is silly, it's fun.
37:07
Speaker 3: It's also just continues to shock me every time we
37:10
use chat GPT in one way, shape or form. How
37:14
long do you realistically think it would have taken you
37:17
and I to write something like this. We'd have to
37:20
read through six pages of FED meeting minutes and then
37:23
go and write something like this hour maybe an hour
37:25
and a half.
37:26
Speaker 4: It took thirty seconds.
37:28
Speaker 2: It literally was doing this like I hit the enter
37:30
button and it already started writing.
37:33
Speaker 3: It's again, folks that are listening if you missed it.
37:37
We fed the Federal Reserve meeting minutes are part of
37:40
them into chat GPT and asked us to basically write
37:43
a soap opera scene for us to make it a
37:45
little bit more interesting and compelling. This technology is barely
37:52
two years old, and it's the use cases are silly,
37:56
but like, honestly, I am terrified if I write for
38:00
op operas right now.
38:01
Speaker 4: Terrified.
38:03
Speaker 2: We're gonna take a quick break here, but our next
38:06
episode of As the Federal Reserve Turns, we'll be back
38:10
in just a couple of minutes.
38:11
Speaker 4: Right after this