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Has the 401(k) become Americans rainy-day fund? · The Financial Exchange Show

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Speaker 2: Kicking kicking off the second hour of the Financial Exchange
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Speaker 2: here taking a look at markets all in negative territory,
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Speaker 2: with the Dow Jones off one hundred points or a
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Speaker 2: quarter of a percent. S and P five hundred is
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Speaker 2: off about forty points or three quarters of a percent,
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Speaker 2: and the Nasdaq is off a little less than one percent.
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Speaker 2: That is a little bit less than what we had
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Speaker 2: saw at the beginning of the market open at nine
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Speaker 2: point thirty this morning, where losses were a little bit
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Speaker 2: more significant. Taking a look around at some of the
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Speaker 2: other economic indicators out there, the US Tenure Treasury is
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Speaker 2: ticking up a little bit higher, about six or seven
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Speaker 2: basis points higher to four point three to three percent,
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Speaker 2: and West Texas Intermediate continues to drop oil now at
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Speaker 2: close to sixty six dollars a barrel. Summarize some of
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Speaker 2: the major points that we just us in the first
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Speaker 2: hour of the show. Is the most recent update on
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Speaker 2: the United States tariff tariffs that are all over the
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Speaker 2: place and changing contents.
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Speaker 3: Is going to summarize it that I.
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Speaker 2: Can't even keep track of, but we had on the
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Speaker 2: auto manufacturer side of things, and an exemption rolled out
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Speaker 2: for about a month where they would not be impacted
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Speaker 2: by the twenty five percent tariffs on Canada and Mexico,
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Speaker 2: assuming that they are compliant with the US Mexico Canada
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Speaker 2: Trade Agreement signed into effect four or five years ago.
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Speaker 2: And then we also had some recent updates from Commerce
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Speaker 2: Secretary Lutnik where he also mentioned that there would likely
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Speaker 2: be a one month tariff exemption that expanded more broadly
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Speaker 2: to other goods and services such as agricultural goods, apparel,
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Speaker 2: and other items like that. So that's kind of where
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Speaker 2: we stand at this point on the tariff front. Those
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Speaker 2: are the two major updates that you need to be
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Speaker 2: concerned with at the moment. We kick off the second
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Speaker 2: hour of the show with a little bit of a
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Speaker 2: preview from an important economic report that we're going to
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Speaker 2: get at a thirty tomorrow, which will be the February
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Speaker 2: Jobs Report. And it's important to note ahead of this
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Speaker 2: report that certainly a lot of the major headlines on
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Speaker 2: the job side of things have been relative regarding, you know,
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Speaker 2: tied to the efforts of the Doge Committee to get
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Speaker 2: rid of some of the federal government employees. This report
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Speaker 2: that we are going to get tomorrow is only going
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Speaker 2: to be through February twelfth, the data that we'll be
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Speaker 2: diving into, so it's likely that the impact from any
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Speaker 2: of the federal government layoffs won't be fully evident in
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Speaker 2: the report that we will see tomorrow. However, it still
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Speaker 2: will be important to give us contacts as to where
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Speaker 2: the US labor market sits at this point. Certainly, we've
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Speaker 2: talked about sentiment dropping from a consumer perspective through multiple
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Speaker 2: different reports, whether it be the University of Michigan Consumer
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Speaker 2: sent Report or just some of the feedback that we've
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Speaker 2: heard both from manufacturers and home builders. There is a
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Speaker 2: bit of uncertainty at the moment, and any hiring data
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Speaker 2: that we can get and glean from this report will
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Speaker 2: be important going forward. Here mark any particular arms that
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Speaker 2: you'll be particularly scrutinizing when this report is released tomorrow morning.
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Speaker 3: No, I mean, I'm not a labor economist, so I
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Speaker 3: don't dig in. I know we have to on the
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Speaker 3: show because it's a big release and you got to
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Speaker 3: talk about something. You know, we'll know how effective or detrimental.
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Speaker 3: I guess the cuts to government employment are double edged.
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Speaker 3: They'll cut spending by a little bit, but they could
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Speaker 3: have an outsized impact on employment. We don't really know. Well,
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Speaker 3: I have a better sense for how effective all of
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Speaker 3: these initiatives are in about a year. I don't want
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Speaker 3: to prejudge whether or not these guys can cut the deficit.
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Speaker 3: I tend to think unless Congress acts, they probably can.
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Speaker 3: And I don't want to prejudge whether or not this
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Speaker 3: is going to create an employment emergency, because whether or
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Speaker 3: not cuts to federal government employment is going to create
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Speaker 3: is going to ripple through the economy and create higher unemployment. Generally,
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Speaker 3: it depends on what's happening elsewhere, So it'll be hard
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Speaker 3: to judge the effectiveness of this stuff, Paul for some time.
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Speaker 3: But with respect to interest rates, can I come back
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Speaker 3: to interest rates for spect that you reported on? So
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Speaker 3: yields are rising, rates on long term government bonds arising
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Speaker 3: all over the developed world today, a lot more in
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Speaker 3: Europe than they are here, and I think that's a
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Speaker 3: good example of how the new policies that we are following,
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Speaker 3: the new foreign policies that the administration is adopted, which
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Speaker 3: are forcing Europe to re arm Germany, in particular, removing
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Speaker 3: the deficit its historic debt as a percentage or deficit
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Speaker 3: as a percentage of GDP. GDP shackles. Germany said differently,
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Speaker 3: is going to be spending a lot more on defense,
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Speaker 3: and that's a good thing, but that also competes with
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Speaker 3: the deficits that will be required to finance that. We'll
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Speaker 3: compete for capital globally and will push interest rates up.
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Speaker 3: So an interesting, possibly unintended, but very real side effect
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Speaker 3: of what's going on geopolitically is increased defense and other
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Speaker 3: types of spending in Europe and the pressure that will
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Speaker 3: put on interest rates all over the world, including here.
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Speaker 2: I also had read that China was going to increase
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Speaker 2: some of their spending as a percentage of GDP. Also,
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Speaker 2: I thought in the last couple of days here.
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Speaker 3: So they've got so much excess savings they will not
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Speaker 3: suck in capital to do it. When countries, when developed
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Speaker 3: countries with liquid bond markets run bigger deficits, one way
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Speaker 3: to think about it is their deficits going to compete.
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Speaker 3: This will give God, I'll give the administration something else
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Speaker 3: to complain about, saying saying we're getting the shaft. But
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Speaker 3: their deficits compete with our deficits for capital, we compete
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Speaker 3: with other governments for capital, and this pushes up interest rates.
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Speaker 3: We do not want interest rates rising longer term interest rates.
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Speaker 3: The administration has said one objective is to get them down. Interestingly,
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Speaker 3: and somewhat ironically, their foreign policy is going to make
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Speaker 3: that harder. Something I hadn't thought about, but it's clearly
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Speaker 3: playing out today and it's going to be a long
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Speaker 3: term theme.
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Speaker 2: Yeah, it'll be interested to see where interest rates move.
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Speaker 2: Circling back to the jobs report, like I said, in
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Speaker 2: the month of January, we had added about one hundred
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Speaker 2: and forty three thousand jobs. However, for this February's report
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Speaker 2: that we're proving for tomorrow morning, it's not anticipated that
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Speaker 2: a tremendous amount of jobs will be added really for
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Speaker 2: this February data, and we'll be interested to see where
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Speaker 2: unemployment settles. Right now, we're sitting at about a four
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Speaker 2: percent unemployment rate. There is some estimates out there that
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Speaker 2: could perhaps tick up to four point one or four
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Speaker 2: point two percent. We did get some independent data from Challenger,
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Speaker 2: Gray and Christmas where they reported that US employers announced
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Speaker 2: one hundred and seventy two thousand layoffs for the month
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Speaker 2: of February. That was up two hundred and forty five
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Speaker 2: percent from the month of January sixty two thousand of
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Speaker 2: those one hundred and seventy two thousand were, according to
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Speaker 2: Challenger because of the total of announced federal job cuts.
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Speaker 2: So that was something that I'm not as familiar with
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Speaker 2: this firm mark in terms of it's reporting. From a
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Speaker 2: statistical perspective, I don't really question the numbers. I'm sure
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Speaker 2: that there has been an uptick in layoffs, but not
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Speaker 2: something that I track as widely as some of the
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Speaker 2: other job reports that come out.
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Speaker 3: No, and they don't attempt to be representative. The ADP Report,
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Speaker 3: for example, is a survey of people who use ADP.
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Speaker 3: That's not a random sample. You can't generalize from that
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Speaker 3: the way you could the Bureau of Labor Statistics, which
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Speaker 3: gives us the unemployment rate, which gives us non farm
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Speaker 3: payrolls or new jobs. More familiarly, I added three syllables
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Speaker 3: there than are't supposed to be there. But you know,
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Speaker 3: we could just cut that out. They're not supposed to
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Speaker 3: be used to gauge the health of the broad economy.
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Speaker 3: They're not random samples. I'll just sort of leave it
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Speaker 3: at that. The challenge your Gray Christmas the ADP numbers.
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Speaker 3: It's my understanding that they survey people with whom they
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Speaker 3: have relationships.
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Speaker 2: We're going to take a quick break here on the
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Speaker 2: Financial Exchange. When we come back, we'reen were talking about
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Speaker 2: how tariffs on Canada might impact the housing era, the
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Speaker 2: housing market around the New England area, and also some
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Speaker 2: commentary from Jack Daniels saying that Canada pulling Jack Daniels
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Speaker 2: off their shelves is more detrimental than any kind of tariff.
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Speaker 2: That's right. After this break, we'll be covering those two
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Speaker 2: stories and much more.
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9:49
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Speaker 4: All right time for sure you here on the Financial Exchange.
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Speaker 4: And on this day in nineteen eighty one, Walter Cronkite
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Speaker 4: signed off as host of the CBS Evening News for
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Speaker 4: the final time. Kronkite hosted the CBS Evening News from
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Speaker 4: nineteen sixty two to nineteen eighty one. Tribue question today
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Speaker 4: relatively easy one. Which news anchor succeeded Walter Cronkite as
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Speaker 4: the host of CBS Evening News?
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Speaker 5: Once again?
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Speaker 4: Which news anchor succeeded Walter Cronkite as host of the
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Speaker 4: CBS Evening News. Be the sixth person today to text
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Speaker 4: us at six one seven three six two, thirteen eighty
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11:08
Speaker 3: Speaking of cron Kite, can you imagine if we only
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Speaker 3: had one newscast today, one morning edition newspaper, then there
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Speaker 3: was an afternoon edition, and other than that it was radio.
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Speaker 2: Yeah.
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Speaker 3: How would the modern a modern presidential administration? This one
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Speaker 3: seems intent on changing policy, economic policy solid in other areas.
11:28
Speaker 3: I'm just talking about economic policy here minute by minute.
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Speaker 3: How would that function or would it be different? Would
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Speaker 3: it temper some of the worst instincts or whimsical impulses?
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Speaker 3: In other words, are we demanding that that that that
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Speaker 3: the president or whomever make news minute by minute by
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Speaker 3: consuming social media, by consuming cable media, or I get
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Speaker 3: what you're saying, but yeah, no, no, okay, I don't.
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Speaker 2: I don't think that aspect of it.
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Speaker 3: What is it helping or hurting? I would argue situation.
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Speaker 2: The I would just twenty four hour news. I would
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Speaker 2: argue that twenty four news cycle is would hurt. It
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Speaker 2: hurts the overall United States population, regardless of the political
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Speaker 2: administration piece. There is probably too much news and too
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Speaker 2: much attachment that we all have to devices, whether it
12:19
Speaker 2: be our phones or our TV or otherwise, because there
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Speaker 2: is constantly non stop information. Yeah, but being put.
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Speaker 3: Taraff turmoil, I think makes it really conspicuous, like this
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Speaker 3: is a we wouldn't be We wouldn't have this were
12:33
Speaker 3: it not for modern media. Maybe I'm not even making
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Speaker 3: a valid point. I'm thinking simply that forty years ago,
12:41
Speaker 3: none of this would have mattered. There would not have
12:44
Speaker 3: been hour by hour updates to policy. You would have
12:48
Speaker 3: had to wait until the evening. Even politicians would not
12:51
Speaker 3: have gotten the latest on administration policy unless they were
12:54
Speaker 3: in the room.
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Speaker 2: You have more access to information all of us we
12:59
Speaker 2: tally those types the things could have.
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Speaker 3: It was this inevitable, this kind of turmoil, this kind
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Speaker 3: of policy turmoil because of because of social digital and
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Speaker 3: I guess modern cable media.
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Speaker 2: I wouldn't link the two together. I just think that
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Speaker 2: ultimately you have a media landscape where you can get
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Speaker 2: information really quickly and through multiple different sources, and everyone's
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Speaker 2: fighting for eyeballs, so you're going to be up to
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Speaker 2: date and in data with information. And sometimes it's good
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Speaker 2: the access to information that we have, and sometimes you
13:33
Speaker 2: can argue it's too much. And the same thing for
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Speaker 2: social media as well, for just everyone's health. You know,
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Speaker 2: in terms of younger generations, the access that they have
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Speaker 2: to it is probably too much. There's something to be
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Speaker 2: said about probably some less lesser access would be beneficial,
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Speaker 2: but the cat's already out of the bag on that one,
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Speaker 2: and I'm sure as heck not going to tell you
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Speaker 2: how we're able to fix that. Tariffs on Canada will
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Speaker 2: make housing more expensive in New England. We've talked a
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Speaker 2: lot about the tariff impact from a countrywide standpoint, but
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Speaker 2: more specifically here in the New England region, there is
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Speaker 2: a lot of outsourcing that's done to import lumber, steel,
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Speaker 2: and aluminum. For Massachusetts construction projects as well as some others.
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Speaker 2: In the New England area, fifteen to eighteen percent for
14:22
Speaker 2: a cost for a new home is tied to lumber.
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Speaker 2: You have some feedback here that forty to fifty percent
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Speaker 2: of construction budgets in general are tied to materials, which
14:33
Speaker 2: could include lumber and steel and aluminum. And so you
14:36
Speaker 2: have feedback from Mike Currents, who's the COO of the
14:40
Speaker 2: New England region Shama Design Construction Firms, saying that of
14:44
Speaker 2: those forty to fifty percent that the budget for construction
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Speaker 2: goes towards materials, about you know, six to twelve percent
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Speaker 2: of those goods are imported. And so with some of
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Speaker 2: these terraffs, you could see higher construction costs for housing
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Speaker 2: because of that gets imported from Canada. For a region
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Speaker 2: that already struggles to you know, construct a lot of
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Speaker 2: new homes, this is just a further impediment. But it
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Speaker 2: is a little too soon to know fully the impact
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Speaker 2: of these tariffs, but I do believe that it has
15:17
Speaker 2: led to some hecency out there from homebuilders, that's for sure.
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Speaker 3: Yeah, people seem remarkably well informed about the impact of
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Speaker 3: these tariffs. I'm surprised and impressed by how people are reacting.
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Speaker 3: I was gonna say rationally, that almost sounds condescending because
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Speaker 3: I'm in the same boat as everybody else. People seem
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Speaker 3: to understand maybe economists have done a good job communicating
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Speaker 3: on this tariffs our tax increases. Essentially, they will push
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Speaker 3: prices up, they will reduce choice. People seem to get
15:48
Speaker 3: that to a degree I would not have expected it
15:52
Speaker 3: would help. I think we'd all be willing to make
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Speaker 3: the sacrifice if we knew what they were for, if
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Speaker 3: we knew that there was a national security rationale, for example,
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Speaker 3: behind imposing tariffs on I don't know, it's not the
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Speaker 3: example we're talking about here, but on China. I would
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Speaker 3: suck it up and pay more for the cheap stuff
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Speaker 3: that I get at big box stores and other places
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Speaker 3: that's typically manufactured in China. But I don't politicians. I
16:18
Speaker 3: don't think politicians have explained the rationale for them. So
16:20
Speaker 3: people might start to ask, what are we sacrificing for?
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Speaker 3: What is all this uncertainty and inconveniences. That's an understatement.
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Speaker 2: We also talked about it on Yesterdays Show that there
16:29
Speaker 2: is an energy impact as well. A lot of the
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Speaker 2: New England region relies on Canada for the energy resources
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Speaker 2: that we consume on a daily basis, so there is
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Speaker 2: potential that, granted is a lesser tariff that's being assessed
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Speaker 2: on energy imports, only a ten percent one, but we
16:47
Speaker 2: could still see a hit on the pump from anywhere
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Speaker 2: from twenty cents to forty cents a gallon, depending you
16:53
Speaker 2: know how long these actually it would be really relatively
16:56
Speaker 2: quick on the energy front where we would see that
16:58
Speaker 2: potential increase. Chuck and Eye had talked about that on
17:01
Speaker 2: yesterday's show.
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Speaker 3: Oh yeah, those prices change almost immediately exactly.
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Speaker 2: Jack Daniels maker says Canada pulling US alcohol off the
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Speaker 2: shells is worse than an actual teriff. Canada accounts for
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Speaker 2: about one percent of the company's total sales. This is
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Speaker 2: Brown Foreman is the company that is behind Jack Daniels,
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Speaker 2: and several provinces throughout Canada have reported pulling Jack Daniels
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Speaker 2: and US liquor off the shelves as a retaliatory measure
17:28
Speaker 2: to some of these tariffs that have been put into place.
17:32
Speaker 2: Canadians in general are steering away from US goods and
17:36
Speaker 2: there's also been some backlash at sporting events too, that's
17:39
Speaker 2: been documented on the hockey side of things.
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Speaker 3: And it's geopolitical too. We're taunting Canada, we're taunting their sovereignty,
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Speaker 3: threatening to make them the fifty first state and so forth.
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Speaker 3: I can't imagine how I would feel if a much
17:54
Speaker 3: bigger power were kind of bullying me. The reactions of
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Speaker 3: Canadians been pretty fierce so far. You got to wonder
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Speaker 3: how much damage we're doing, and how long it's going
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Speaker 3: to take to fix it, and what is it for.
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Speaker 3: What are we trying to accomplish with respect to tariffs
18:11
Speaker 3: or any of this other stuff. That's where I need clarity.
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Speaker 3: Maybe it's worthwhile the.
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Speaker 2: Liquor market in general, you know, just to look at
18:18
Speaker 2: Brown Forman, their net sales had been down three percent
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Speaker 2: from a year ago. It just seems like they've had trouble.
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Speaker 2: As we've talked about in the show, just alcohol consumption
18:26
Speaker 2: has been declining and this doesn't help it any further.
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Speaker 2: Where we've seen these tariffs and potentially just limited amount
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Speaker 2: of demand in Canada that would hit the top line
18:39
Speaker 2: as well. From a sales perspective. They also do about
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Speaker 2: seven percent of their sales in Mexico, So no idea
18:45
Speaker 2: as to what the impact could be there for Brown Foreman,
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Speaker 2: but Jack Dannels Whiskey not on the shelves of some
18:53
Speaker 2: of the Canadian provinces out there. Taking a look at markets,
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Speaker 2: we've got the S and P five hundred off about
19:00
Speaker 2: fifty four points or one point nine percent, the Dow
19:02
Speaker 2: Jones off about two hundred points, Nasdaq strigling quite a bit.
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Speaker 2: It's been a rough go for the nasdak off about
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Speaker 2: seven and a half percent from its highs in February,
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Speaker 2: down now another percent in a quarter today in early trading,
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Speaker 2: and we have the US tenure Treasury spiking up a
19:19
Speaker 2: bit at four point three three percent. We're going to
19:22
Speaker 2: take a quick break here on the Financial Exchange, but
19:24
Speaker 2: when we come back, we're gonna have the answer to
19:27
Speaker 2: trivia and talking about four oh one k's being America's
19:31
Speaker 2: Rainy day Fund. That's right after this break.
19:41
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Speaker 3: All right, cheer good.
20:13
Speaker 4: Question today was which news anchor succeeded Walter Cronkite as
20:18
Speaker 4: host of the CBS Evening News. That'll be Dan Rather.
20:22
Speaker 4: He took over in nineteen eighty one, went on to
20:25
Speaker 4: anchor the CBS Evening News until two thousand and five.
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Speaker 4: Winner today of the Financial Exchange Show T shirt was
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Speaker 4: Mike from Marston Mills. Congrats to Mike, and we played
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Speaker 4: contest rules at Financial Exchange Show dot com.
20:43
Speaker 2: The four on and K has become America's Rainy Day Fund,
20:46
Speaker 2: a piece out of the Wall Street Journal here where
20:49
Speaker 2: the Vanguard Group, which is one of the biggest four
20:51
Speaker 2: one K providers throughout the country, report that four point
20:54
Speaker 2: eight percent of four on K holders took early withdrawals
20:58
Speaker 2: in twenty twenty four due to financial emergencies. So typically,
21:02
Speaker 2: if you are to pull from your four one K
21:04
Speaker 2: prior to age fifty nine and a half, you have
21:07
Speaker 2: to pay income tax as well as a ten percent penalty. Now,
21:11
Speaker 2: some of the statistics here quoted in this piece are
21:15
Speaker 2: aided a little bit by some of the changes that
21:18
Speaker 2: have been made to four oh one k withdrawals. So,
21:20
Speaker 2: as I mentioned that four point eight percent figure is
21:23
Speaker 2: a record high that took emergency withdrawals from their four
21:27
Speaker 2: one ks, it was three point six percent in twenty
21:30
Speaker 2: twenty three, and then prior to the pandemic, the average
21:33
Speaker 2: was about two percent of people taking from their four
21:36
Speaker 2: one k's. What happened was in twenty twenty two the
21:40
Speaker 2: Secure Act two point zero was passed and it allowed
21:43
Speaker 2: for a little bit more flexibility for those people to
21:46
Speaker 2: pull from their four to one k's penalty free to
21:50
Speaker 2: take out one thousand bucks without having to pay that
21:53
Speaker 2: ten percent tax penalty that I spoke about previously. So
21:56
Speaker 2: I think that is aiding some of the numbers that
21:58
Speaker 2: we're seeing here. There's no question that with the impacts
22:01
Speaker 2: of inflation that we've seen over the course of the
22:03
Speaker 2: last couple of years, particularly for lower income earners, I
22:06
Speaker 2: could see it being the case that they would need
22:08
Speaker 2: to pull out from their four on k. But some
22:11
Speaker 2: of these numbers hitting record highs are more a product
22:15
Speaker 2: of adjustments to the system for withdrawals, which used to
22:19
Speaker 2: be a lot more stringent. You had to prove a
22:22
Speaker 2: lot more certainty that it was a hardship withdrawal or
22:26
Speaker 2: had to take a loan from your four one k first.
22:28
Speaker 2: Twenty eighteen Congress eliminate the provision to have to take
22:32
Speaker 2: your loan from your four one k first before taking
22:35
Speaker 2: a hardship withrawal. So I think that's more systematic what
22:38
Speaker 2: we're seeing changes to it, rather than a change of behavior. Necessarily.
22:43
Speaker 3: Yeah, I mean, the economy hasn't turned yet, so it'd
22:46
Speaker 3: be it's hard to square this with strong income and
22:49
Speaker 3: overall economic growth. If someone is looking to infer from
22:54
Speaker 3: this that it's a sign of growing economic distress, I
23:00
Speaker 3: don't know that you can. For reasons you pointed out.
23:02
Speaker 3: It could just mean more people need to tap their
23:04
Speaker 3: form we care to buy a home. There's an exception,
23:06
Speaker 3: there's a one of these so called safe harbors for
23:09
Speaker 3: a hardship withdrawal is to buy a principal residence first
23:13
Speaker 3: time purchase. I think of a principal residence. Could just
23:15
Speaker 3: be that higher ed's getting more expensive, could just be
23:17
Speaker 3: that plus this is Vanguard's population that they have on
23:22
Speaker 3: their so called record keeping platform. Maybe other record keepers, Fidelity,
23:26
Speaker 3: tro Price, you know, the usual suspects. Maybe they didn't
23:29
Speaker 3: have similar experiences with their population. So can we generalize
23:33
Speaker 3: from this? Possibly, but maybe not.
23:36
Speaker 2: Yeah, the medium withdrawal was about twenty two hundred bucks.
23:39
Speaker 3: So interesting for a home purchase per No.
23:42
Speaker 2: Interesting to note, but not something that I would point
23:46
Speaker 2: to as economic hardship that is widespread at this point
23:50
Speaker 2: due to some of those changes we spoke about.
23:52
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23:56
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25:01
Speaker 1: The proceeding was paid for and the views expressed are
25:03
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25:05
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Speaker 1: Cushing and Armstrong did not endorse each other and are
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Speaker 1: not affiliated.
25:12
Speaker 2: As many of us know, I'm sure all listeners know
25:15
Speaker 2: at this point. Egg prices have been on a dramatic
25:18
Speaker 2: rise over the course of the last six months or so.
25:21
Speaker 2: There's a piece here out of Guardian which makes the
25:23
Speaker 2: case that perhaps they are pointing to the fact that
25:28
Speaker 2: the idea of price gouging was something that was mentioned
25:30
Speaker 2: about when inflation really became prevalent in twenty twenty two,
25:35
Speaker 2: that because of the consolidation in the egg production market,
25:39
Speaker 2: where you have a small amount of companies producing a
25:42
Speaker 2: significant amount of eggs in the United States, that they
25:45
Speaker 2: could be taking advantage of the fact that consumers are
25:48
Speaker 2: getting a little bit more accustomed to paying a higher
25:51
Speaker 2: price for a dozen eggs. For example, the country's large
25:56
Speaker 2: the country's largest egg producer, Calmaine, boasted a set then
26:00
Speaker 2: fold increase in their growth profits in their fiscal year
26:03
Speaker 2: twenty twenty three compared to twenty twenty one. They make
26:07
Speaker 2: about one of every five eggs eating in the United
26:11
Speaker 2: States and had returned a significant amount of dividends to
26:14
Speaker 2: shareholders during the span of time.
26:17
Speaker 3: To the extent that they're publicly traded, you can get
26:19
Speaker 3: a sense for whether their margins are rising that might
26:21
Speaker 3: be evidence of so called gouging. I'm never sympathetic to
26:24
Speaker 3: those reflexive cast blame on those who set the prices
26:30
Speaker 3: on manufacturers in response to an obviously outside shock av
26:35
Speaker 3: and flu. When prices go up, it's a signal, whether
26:39
Speaker 3: it's home prices or egg prices, the signal that more
26:45
Speaker 3: supply needs to be brought online. So if the prescription
26:50
Speaker 3: for so called price gouging, which I don't know that
26:53
Speaker 3: there's any evidence that this is, but inevitably left wing
26:56
Speaker 3: politicians will call for ceilings on prices, that's exactly what
27:00
Speaker 3: you don't want. You want prices to go way up,
27:03
Speaker 3: bring more supply online, either from existing producers or if
27:06
Speaker 3: they refuse to new producers. Even if that takes a
27:09
Speaker 3: little bit, it fixes the problem. Said differently, high prices
27:12
Speaker 3: are the best solution to high prices, they call forth
27:17
Speaker 3: I should say, their own solution. You would let markets work, Paul.
27:21
Speaker 2: You would think that with the amount of competition and
27:25
Speaker 2: just the availability to buy eggs everywhere and anywhere you
27:29
Speaker 2: want that you know other people would come in, or
27:31
Speaker 2: other producers would come in and try and undercut any
27:33
Speaker 2: of that alleged price gausing part of its.
27:37
Speaker 3: Regulatory too much like what the housing crisis. The problem
27:39
Speaker 3: is we don't have enough supply. I shouldn't. I don't
27:43
Speaker 3: mean to buy into the hysteria. I don't like calling
27:46
Speaker 3: things a crisis, but that's how it's commonly referred to.
27:48
Speaker 3: You know what I mean, the current egg crisis. If
27:51
Speaker 3: it were easier to start a farm, and I imagine
27:53
Speaker 3: that's really really hard to do to sell to make
27:56
Speaker 3: yourself available as a public egg retailer, or you would
28:02
Speaker 3: just sell eggs brazoo of you at a supermarket, you'd
28:04
Speaker 3: probably sell other things. But you know what I mean,
28:06
Speaker 3: it's probably a hard market to crack. Definitely, to crack Paul,
28:11
Speaker 3: to crack the egg market. There were are you okay,
28:15
Speaker 3: never mind, screw it.
28:16
Speaker 2: Buy an egg.
28:17
Speaker 3: I don't have no tough market to crack. It's the
28:20
Speaker 3: only pun I've ever made on that in three years.
28:23
Speaker 2: And I get not.
28:24
Speaker 3: This is why I.
28:24
Speaker 2: Don't tell jokes in the morning meeting.
28:27
Speaker 3: Or try to be yeah, oh well yeah that too.
28:30
Speaker 2: You've got the wrong audience here, man, Chuck is your
28:32
Speaker 2: guy for the puns and jokes. It's it's all. It's
28:35
Speaker 2: all business here in the finishing stage. We're gonna take
28:38
Speaker 2: a quick break, but when we come back, we're gonna
28:40
Speaker 2: be doing a little bit of stack Roulette and comedy
28:43
Speaker 2: hour with Mark Fondetti.
28:46
Speaker 1: The Financial Exchange Show podcast drops every day on Apple, Spotify,
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28:53
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29:02
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29:05
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Speaker 4: This segment of the Financial Exchange is brought to you
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30:06
Speaker 2: All right, we're doing a little bit of stack roulette, Mark.
30:09
Speaker 2: I'll let you beat lead off.
30:10
Speaker 3: Sure, Normally stack roulette is we cover lighter topics.
30:14
Speaker 2: You never do.
30:16
Speaker 3: I'm a contrarian though, you allow.
30:18
Speaker 5: Me to lead with just missing the point of the segment.
30:22
Speaker 4: But it's okay, We're good.
30:24
Speaker 2: I don't know, give me I was reporting on I
30:26
Speaker 2: was reporting on previous crimes of my youth yesterday, and
30:29
Speaker 2: Mark's gonna, oh god, what did what did? What did?
30:32
Speaker 2: What did?
30:32
Speaker 3: What did Paulane do Forrystal Light?
30:35
Speaker 2: Credit? Crystal Light?
30:36
Speaker 3: Uh, Paul Lane, Jay walk once or something? What did
30:39
Speaker 3: you do accidentally open somebody else's mailbox? We're talking about
30:42
Speaker 3: cheap federal crime. We're talking about sheep walka mixing it.
30:44
Speaker 5: You've just even.
30:45
Speaker 3: Returned a library book like Paul, be honest, nice.
30:49
Speaker 2: You don't know enough about me, Mark, I'm a real
30:51
Speaker 2: wild man. Oh yeah, all right, what do you got?
30:56
Speaker 3: ECB European Central Bank, the counterpart of our Federal Reserve,
30:59
Speaker 3: has cut rates pretty aggressively, as has the FED. Obviously,
31:03
Speaker 3: though the FED is stopped our policy rate, the so
31:07
Speaker 3: called federal funds rate is at four point two five percent,
31:09
Speaker 3: theirs is a two and a half percent. They had
31:11
Speaker 3: arguably a worse inflation problem than we had, but growth
31:14
Speaker 3: there has been slower. The reason I bring this up
31:18
Speaker 3: is that despite the cut in rates today again on
31:22
Speaker 3: the part of the European Central Bank, the equivalent of
31:25
Speaker 3: our FED, longer term rates are up by a lot
31:29
Speaker 3: in Europe today and consequently here as well. I'm using
31:33
Speaker 3: the ten year treasury and equivalent overseas rates as my
31:37
Speaker 3: reference point here, And it's a good reminder that the
31:40
Speaker 3: FED and central banks, which is the generic name for
31:44
Speaker 3: what the FED is for obvious reasons, they have very
31:49
Speaker 3: little control unless they try to exert it directly, and
31:51
Speaker 3: even then it may not be successful over the rates
31:53
Speaker 3: that matter for most of US. So ECB European Central
31:57
Speaker 3: Bank lowering short term rates today low ring its equivalent
32:00
Speaker 3: of the federal funds rate, yet long term rates are
32:03
Speaker 3: up by a lot, and that's having ripple effects all
32:07
Speaker 3: over the globe, including here. So only so much that
32:10
Speaker 3: central banks, including our FED, can do to reduce the
32:13
Speaker 3: pain of higher interest rates, and with governments, particularly those
32:17
Speaker 3: in Europe, having to spend more to defend themselves, that's
32:21
Speaker 3: going to soak up capital and push up rates, or
32:23
Speaker 3: put upward pressure on rates, perhaps push them up at
32:27
Speaker 3: sense equal proposition.
32:30
Speaker 2: It's always fascinating to follow just how there are so
32:35
Speaker 2: many factors that influence the longer end of the curve
32:37
Speaker 2: of the US ten year treasury that is not specific
32:40
Speaker 2: to policy decisions, though they can have an impact. But
32:44
Speaker 2: there's just a variety of factors that go into global
32:48
Speaker 2: forces that go into and the reason that we talk
32:51
Speaker 2: about it on the show and why it's of interest
32:54
Speaker 2: to anyone who's a borrower out there, is that the
32:57
Speaker 2: US Tenure Treasury is that bell weather indicator that is
33:00
Speaker 2: almost directly tied or very closely tied to how mortgage
33:04
Speaker 2: rates behave. And for a housing market that has lagged significantly,
33:08
Speaker 2: a lot of enthusiasm went into this year that those
33:12
Speaker 2: longer term rates would come down. Just the activity that
33:16
Speaker 2: we've seen for the first three months of the year
33:18
Speaker 2: to and change is that very clear indicator. Like you mentioned,
33:21
Speaker 2: it's global forces at hand, that there is an administration
33:25
Speaker 2: cannot do anything to change the direction of where longer
33:29
Speaker 2: term rates will trend. I'll qualify that.
33:31
Speaker 3: A little bit in the nineteen nineties or one the
33:33
Speaker 3: nineteen eighties and then the nineteen nineties. In the eighties,
33:35
Speaker 3: government borrowing, increased, economic activity was strong that put upward
33:39
Speaker 3: pressure on real interest rates. Nominal rates real plus inflation
33:43
Speaker 3: came down because inflation came down, but real rates were
33:45
Speaker 3: relatively high throughout the nineteen eighties because of government borrowing
33:49
Speaker 3: and strong economic activity that requires capital in the nineteen nineties,
33:53
Speaker 3: government borrowing needs decreased. We had two big tax increases
33:57
Speaker 3: ninety and ninety three that allow out the FED to
34:01
Speaker 3: take its foot off the break throughout the decade, which
34:04
Speaker 3: helped fuel the economic boom. So it's a tale of
34:07
Speaker 3: two approaches, the eighties and the nineties. Both decades were
34:10
Speaker 3: successful economically, but arguably with very different interest rate, inflation
34:16
Speaker 3: and policy overall characteristics. The next five to ten years
34:20
Speaker 3: is going to be really fascinating. It is fold you know,
34:24
Speaker 3: post god willing post eight.
34:25
Speaker 2: We've been in such a low interest rate environment that
34:28
Speaker 2: it's really reset expectations to probably unfairly be lower than
34:32
Speaker 2: they should have been based on a historical ball.
34:34
Speaker 3: Wild and wacky story to you, do you have two
34:39
Speaker 3: immuse to amuse us little people. In the final two
34:42
Speaker 3: minutes here.
34:43
Speaker 2: I've got it. I've got a couple here. One of
34:46
Speaker 2: them is home Depot is turning to AI to answer
34:49
Speaker 2: online shopper questions. And I love this because I have
34:54
Speaker 2: been on record on this show that when it comes
34:57
Speaker 2: to doing anything around the house, any do yourself project,
35:00
Speaker 2: I am an abject disaster. Basically, have a very baseline
35:05
Speaker 2: of any type of handyman skills. Demolition is pretty much
35:09
Speaker 2: the only thing that I can do successfully. So the
35:11
Speaker 2: idea that I could go to home Depot where I
35:13
Speaker 2: feel extremely lost, consistently and potentially be able to ask
35:19
Speaker 2: a question, whether through the app or through the website,
35:21
Speaker 2: as to where I could locate certain products or certain
35:24
Speaker 2: features that I should be aware of, to me is
35:27
Speaker 2: a huge relief, coupled with the fact that it's extremely
35:30
Speaker 2: hard to find help in home depots, or I should say,
35:33
Speaker 2: there may be employees, but some of them are not
35:36
Speaker 2: the most knowledgeable.
35:37
Speaker 5: It's in the same bucket too.
35:39
Speaker 2: They are both the both of them. They just you
35:42
Speaker 2: look for the grizzled vet who is you know, worked
35:44
Speaker 2: there for a long time and skews older. I would
35:47
Speaker 2: say that's kind of what I tend to go. But
35:48
Speaker 2: there's some younger guys in there. You just know they
35:51
Speaker 2: don't know what they're talking.
35:51
Speaker 3: Next time you're at home Depot, you come out and
35:53
Speaker 3: there's nails in every one of your tires. It's not
35:55
Speaker 3: a coincidence.
35:57
Speaker 2: Nothing.
35:57
Speaker 3: I find the help at home Depot and lows to
35:59
Speaker 3: be outstanding for maybe it's location.
36:02
Speaker 4: Yes, but there have been times where I'm going up
36:05
Speaker 4: and down aisles looking for somebody for like ten plus minutes.
36:08
Speaker 2: That's what I'm That's what I'm saying you also, Yeah,
36:13
Speaker 2: I would agree that specific departments have people typically working
36:16
Speaker 2: there that are helpful, but the general servicing people are
36:20
Speaker 2: difficult to locate, like Tucker mentioned, and sometimes are not
36:25
Speaker 2: fully well versed on the store.
36:27
Speaker 3: And with the AI tool. You're the online AI tool,
36:31
Speaker 3: I mean, you're you're you're typing agent within two interactions.
36:35
Speaker 3: In my experience, they they're very limited. Okay, what do
36:40
Speaker 3: you go online for? I need to return an order?
36:42
Speaker 3: In my case, I've been using something for three months
36:44
Speaker 3: and I need to return an order because now I've
36:46
Speaker 3: got you check on.
36:47
Speaker 5: An inventory at a given store.
36:49
Speaker 3: Yeah, I wouldn't expect that to be some of the
36:52
Speaker 3: more complicated questions you're you're gonna need an agent.
36:55
Speaker 2: The simple ones hopefully will be covered there. But I'll
36:59
Speaker 2: have to let everyone know when I tried out, hackers
37:01
Speaker 2: stole six hundred and thirty five thousand dollars in Taylor's
37:05
Speaker 2: swift tickets scheme. According to a Queen's District Attorney office,
37:10
Speaker 2: two people were accused of stealing and reselling more than
37:13
Speaker 2: nine hundred tickets for the Taylor Swift Era's tour. This
37:18
Speaker 2: was from the ticket sales platform Subhub. It appears as
37:21
Speaker 2: if these two particular people had access to sub hub
37:25
Speaker 2: system through a contracting relationship for another company called Southern
37:31
Speaker 2: Global Services, who was contracted by stub hub, and that's
37:34
Speaker 2: what led to this alleged theft.
37:37
Speaker 3: But just wileload that magnitude, I mean, doesn't that immediately
37:44
Speaker 3: get somebody's eye. Doesn't that immediately trigger very excited just
37:48
Speaker 3: to happen to have these five thousand Tailor Swift tickets.
37:50
Speaker 2: I'm very surprised need that. Well, the demand certainly was
37:53
Speaker 2: there from there's no question about that. They wouldn't have
37:55
Speaker 2: any trouble unloading. But how it was not tracked that
37:59
Speaker 2: the group intercepted did three hundred and fifty stub Hub
38:01
Speaker 2: orders from June of twenty twenty two to July twenty
38:04
Speaker 2: twenty three for those nine hundred ninety three tickets, That's
38:07
Speaker 2: beyond me. That's all the time that we have for
38:09
Speaker 2: this edition of the Financial Exchange. We're gonna take a break,
38:12
Speaker 2: but we'll be right back at it tomorrow at ten
38:15
Speaker 2: am to go over that job support. Thanks so much
38:16
Speaker 2: for joining us,