Latest / The Financial Exchange Show / The bull market reaches its second year, how much longer can it last?

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The bull market reaches its second year, how much longer can it last? · The Financial Exchange Show

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Speaker 2: Chuck, Mike and Tucker with you here. We're broadcasting live
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from the MGM Springfield in well Spring, Springfield. Yeah, and
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that's why you call it that, Actually it is. If
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you happen to be in the Springfield area today, you
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are more than welcome to pop by for a little
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bit in order to come and hang out with us.
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There are refreshments, there's lovely conversation. But feel free to
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join us. If you're again in the Springfield area, just
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head to the casino, take the escalator up to the
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second floor and you can pop in and give us
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a wave. But we do have quite a bit going
1:46
on in markets today, so we're gonna kind of get
1:48
right to it. A volatile day on markets yesterday with
1:52
a couple of indices down more than one percent, a
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little bit of a bounce back today despite not really
1:57
being a ton of news out there, and so as
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we start to you know, look at what is coming
2:04
over the next month or so, Mike, did you know
2:07
that we are now just four weeks away from a
2:11
presidential election.
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Speaker 3: Yes, I had been reminded of that once or twice
2:16
from every billboard advertisement and everything else that I can see.
2:19
Speaker 2: Yeah, I was aware of that one, and and something
2:21
interesting happened yesterday. I don't know that if you were
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paying attention to this in terms of it's it's a
2:26
little it's a little nerdy, it's a little kind of
2:30
you know, detail oriented. But there's there's a number in markets.
2:33
It's called the VIX. You've probably heard of it. It's
2:36
it's the fear gauge of the stock market. And basically,
2:39
what the VIX tells you is how much volatility is
2:42
expected in markets over the next thirty days, over the
2:46
next month, yep. And yesterday, coming on a Monday, and
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you see, hey, the VIX is spiking even before markets
2:54
were falling significantly. You look at and you're like, why
2:57
is the VIX moving up even though markets aren't really
2:59
moving at in the morning yesterday, And the answer is,
3:03
it's one of these just weird little market anomablies. Where Hey,
3:07
that thirty day VIX calculation, you know what it included
3:10
as of yesterday the election election day. Yeah, and there's
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a lot of people that are betting at volatility around
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the election and so the reason the VIX went up
3:19
yesterday wasn't because there was some huge drop in the morning.
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It wasn't because of, you know, something going on with
3:25
tensions in the Middle East. It was because, hey, when
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the market opened yesterday, we are now within that thirty
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day window, and there's a lot of volatility that is
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projected in that window now that election day falls within it.
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But this takes us too. I think a really good
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story here from market Watch, and it's titled the bull
3:46
market is nearing its second birthday. Here's why it will
3:48
likely why it will likely continue.
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Speaker 3: Sounds like a story that's written days before the market
3:53
comes crashing down.
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Speaker 2: It does. And generally I hate the title, if I'm
3:56
being completely honest. Yeah, but the article itself is fine.
3:59
I'm with you. It's got some good stuff in it
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in terms of, you know, there's an old Flemish saying, Michael,
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an old bull market does not a young bear make okay,
4:10
it's you have to translate it from the original Flemish,
4:13
but you can get there. And what it talks about is, look,
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this is going to be a two year old bull
4:19
market in late October of this year, and some people think, hey,
4:24
you know, this market's been going up for a while.
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I'm really nervous. You know, doesn't that mean that it
4:28
has to fall? And in fact, statistically, it's no more
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likely to fall after two or three years of a
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bull market than after one five. Like, how long a
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bull market lasts does not have any impact on whether
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or not you're closer to the end of it or not.
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Speaker 3: We recently came out of, if not the longest, than
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one of the longest market ever. Right, the period of
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time from twenty and nine through twenty twenty was the
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single longest bull market the US has ever seen. Now,
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I think there's some unique things about this one. We've
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seen a sixty percent total return on the S and
5:03
P five hundred since October of twenty twenty two.
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Speaker 2: That's a bit irregular. Well it's only a bit, though.
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And there's some research here that was done by ned
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Davis Research, and they looked at all of the two
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year old bull markets since World War Two, twelve of them,
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and what they found was that the median two year
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change in those bull markets, how much did the market
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go up during that time period. It's fifty four point
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four percent, So we're up sixty point seven. Yeah, not
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a huge outlier, a little hot. But just as a
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point of comparison, the bullmarket that started in nineteen fifty
5:37
three went up ninety eight percent in the first two years. Now,
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it didn't survive the third year. In fact, there was
5:42
a brief recession that happened in nineteen fifty three. But
5:46
again you had this huge game there.
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Speaker 3: Again, how about that recent one in March of I
5:51
say recent, it's well over a decade, more like a
5:54
decade and a half ago. But March of two thousand
5:57
and nine, two years in, you started a ninety five
5:59
percent that to bull market.
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Speaker 2: And so this is something where when we talk about,
6:04
you know, where a bull market goes, how it's performed
6:07
before doesn't necessarily have a whole lot of relevance as
6:11
to how it's going to perform in the near future.
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You know, I've been in this business for fifteen years now,
6:17
and I still remember people in twenty eleven and twelve
6:20
and thirteen saying, gee, I can't believe the dows where
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it is. You know, the Dows at thirteen thousand, the
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Dows at fourteen thousand, it's at fifteen thousand. How much
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higher can it go? Well, the dows at forty two thousand. Now,
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so the answer was a lot higher. And just because
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something has rallied and done well, it doesn't mean it's
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either going to fall apart or continue. So you have
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to kind of take away what a market has done
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before and say, look, that doesn't impact where it's going
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to go in the future. It's the classic, you know,
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past performance is not indicative of future results.
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Speaker 3: Past results, past performance is not whatever. It's one of
6:58
those yeah, you got it, And.
6:59
Speaker 2: So I think I think that ultimately the point that
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this piece makes, and the point that it makes rather well,
7:05
is hey, it's okay to be nervous because of things
7:08
that might be going on in the world or potential
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concerns that you have about you know, stocks being overvalued.
7:16
But those things can exist and markets can still go up.
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In fact, sometimes they provide the fuel for markets to
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go up at Yeah, bull.
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Speaker 3: Markets don't die of old age. That's I think that's
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a reasonable saying. As you started with, it's also true
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that oftentimes the Fed kills them, and so that could
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be another perspective of all of this is the likelihood
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of Jerome Powell and the Federal Reserve killing this bull
7:38
market at some point in the future, like they kind
7:40
of needed to in twenty twenty two.
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Speaker 2: But that doesn't seem the path, seem to be the
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path that they are on.
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Speaker 3: In fact, they are talking about more accommodation, and we'll
7:48
get into that because there's been a number of FED
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speeches over the last few days calling for, you know,
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perhaps a more balanced approach than markets would ideally love
7:57
at this point in time. But yeah, don't die of
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old age. There's plenty of other things to be concerned
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about with this market forward, price to earnings ratios, tensions
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in the Middle East, everything that's been going on in
8:10
the Southeastern United States for the last few weeks here,
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and what is to come later this week in the
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Southeastern United States, specifically Florida. You know, big, real things
8:19
to be concerned about when it comes to the US economy.
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But the length of time that a market spends in
8:25
bowl stage not not not a worry of mine.
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Speaker 2: Not something that's particularly relevant, and not something that presents
8:32
any kind of investible thesis. You know, it's you don't
8:36
sit there and say, well, this will market's two years old. Now,
8:40
I guess that means it's time to you know, close
8:42
up and you know, call it let's go home, just
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not how it works. So again, I think there are
8:47
things that it's perfectly fine to be worried about what's
8:49
going on in markets. But the other thing that you
8:51
have to remember and this is not my quote, I
8:54
forget who said it. Originally it was some fund manager somewhere,
8:58
like you know, like most things, but ultimately you can
9:02
let the market do the worrying for you. You know, you
9:04
don't have to worry about what's going on. The market
9:07
will take into account what's happening, and it'll price things
9:10
in as it goes. So I think that it's just
9:13
something where hey, don't spend too much time worrying about
9:16
how much a market has got up, because otherwise, if
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all you're looking at is the potential for things to
9:23
go wrong, you tend to miss it when things actually
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end up going right. And for the last few years
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they certainly have. Take a quick break here. When we
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come back, we will talk a little bit about the
9:32
FED and some guidance from them. Over the last day
9:35
or two right here on the Financial Exchange.
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Speaker 2: Mike, we got a little bit of FED chattery yesterday
10:48
on Now the FED is through their September meeting and
10:50
they can chat there. Happy to toss some different information
10:54
out there. And so you got Adriana Koogler, who is
10:57
a Federal Reserve governor, saying nothing particularly crazy, but just
11:03
kind of reiterating what I think is the standard stance
11:06
from the FED. Quote. While I believe the focus should
11:09
remain on continuing to bring inflation to two percent, I
11:12
support shifting attention to the maximum employment side of the
11:15
fomc's dual mandate as well.
11:18
Speaker 3: Here would be again, Yeah, that's a nothing statement, and
11:21
she among, I mean, how many FED speeches do we
11:25
have this week?
11:25
Speaker 2: A dozen? Again, I think let's see one, two, three, four, five,
11:32
six and seven, eight, nine, ten. That's only through twelve
11:35
thirty tomorrow. Yeah, eleven, twelve, thirteen, fourteen, fifteen, fifteen FED speakers,
11:44
and they're all gonna say, other than Michelle Bowman, they're
11:47
pretty much all going to say the same thing here,
11:49
which is, we need a balanced approach to all this.
11:51
Speaker 3: Here's what I'm wondering what that means, So Chuck, my
11:56
feeling is we are not going to know a whole
11:59
lot about the actual state of the labor market due
12:02
to Hurricane Helene, plus now Hurricane Milton, Milton that is
12:07
bearing down on Florida. I don't know, maybe till January
12:12
will start to get a better read on what's actually
12:15
occurring with the labor market. And so if you are
12:18
a board member of the Federal Reserve, a voting member
12:20
of the Federal Reserve, and trying to determine, okay, what
12:24
does this balanced approach look like when we have no
12:28
reliable information.
12:29
Speaker 2: For the next month and a half, what does that mean?
12:31
Speaker 3: Does that mean continuing the pace of cuts based on
12:33
the information we had previously the trend was just for
12:36
a hotter than expected jobs report. Does that mean pausing
12:40
rate cuts? It certainly means no more fifty bases points
12:43
would be my guess. But you know, where do you
12:48
go when you can't really rely on the data that
12:51
they so heavily not only rely on, but tell the
12:54
general public that they that they rely heavily on.
12:58
Speaker 2: Let's just do a little bit of a thought experiment here.
13:02
If a hurricane comes through any area anywhere in the world,
13:08
is there going to be more or less economic activity
13:11
in that area afterwards? Now, the long term impact, you know,
13:15
you talk about three to five years and all the
13:16
rebuilding and everything. You could argue, Okay, maybe there's more
13:20
because of that, sure, but in the short term, at
13:22
least you know, the two to five month timeframe window. Yeah,
13:26
there's absolutely going to be less. So there's no conceivable
13:29
world where you can look at these two hurricanes, one
13:33
of which is already hit and another which is about
13:36
to hit in the next two days, and say, hey,
13:39
they're going to result in a larger growth impulse in
13:42
the short term, like they're going to cause a significant
13:46
reduction in overall economic activity. And so if I'm someone,
13:52
if I'm sitting there on the Federal Reserve and I say, hey,
13:57
I was planning on making you know, two twenty five
14:00
basis point cuts at the next two meetings before the
14:02
end of the year. I don't think there's anything that
14:05
can sway me from that as my base standpoint as
14:09
kind of where I am from, you know, a base level.
14:11
But what could certainly sway me to be more aggressive
14:14
in cutting rates is if some of the supplemental comes
14:17
in and just looks really bad. Because look, just as
14:21
an example, like you look at the Tampa Bay Saint
14:23
Pete area, and if the population of about three point
14:27
two million people, you're talking over three million people that
14:31
are there, and look, as someone I've spent a lot
14:35
of time down in that area. I got married down there,
14:38
so like, I know the area really well. If you
14:44
actually have this hurricane come through, I'm not sure what
14:48
is going to be left of the immediate coastal vicinity.
14:51
Like it's something that really bothers me in terms of
14:54
where this is going. But those three million people, they
14:57
don't just come back a week later and say, oh,
15:00
we're just buying all of our regular stuff in this
15:02
and that. It's a whole process to try to get
15:06
back to normal, and it can take years in some cases.
15:10
And so I think if the FED was coming into
15:14
this fall saying, hey, we're worried about you know, economic
15:16
activity and not enough growth, there's no way that you
15:20
can look at these two hurricanes hitting and say that
15:22
they're going to have, you know, in any way skew
15:24
you towards being more concerned about inflation than growth like that,
15:29
certainly not in the short term. So I think any
15:31
variation on policy is not happening in the next two meetings.
15:35
I think there's are basically baked in for twenty five
15:37
each unless you get some really bad data, not just
15:40
in the labor market, but supplemental stuff in what companies
15:43
are guiding, you know, here's one thing that is nice
15:46
about this time period. We're gonna get all kinds of
15:48
earnings reports over the next month, so we'll be hearing
15:52
right from companies about how their operations and their sales
15:55
are impacted by these and so that will help to
15:58
give us more clarity as opposed to, you know, if
16:01
this were happening in November, if it happened in September,
16:04
then you're really kind of flying blind in terms of
16:07
what the impact is because you don't have any earnings
16:10
coming out. You don't know. So I think I think ultimately, yeah,
16:16
we might not know where the labor market's going for
16:18
several months. It might be like the end of the
16:21
first quarter before we start to get an accurate read
16:23
on it. But we're gonna have all this other data
16:26
that is coming in because remember, the FED is concerned
16:30
about the factors that lead to rising unemployment, and the
16:34
single biggest factor that leads to rising unemployment is a
16:37
lack of economic activity. Are you making sales? Are you
16:40
not making sales? And so from my perspective, all that
16:43
supplemental stuff can fill in the picture a little bit,
16:46
but we're not gonna know for certain on the employment
16:48
front probably till January February at the earliest.
16:52
Speaker 3: In terms of scheduled meetings, the Federal Reserve is scheduled
16:54
to meet November seventh day after the election, week of
16:58
the election for their next interest rates a policy. Following
17:01
that the meeting, they'll be meeting the eighteenth of December.
17:04
Just a week ago, there was still about a one
17:07
in three chance that the Fed would cut by half
17:09
a percentage point at that next meeting. After all this commentary,
17:12
as well as the Job's report that we receive Friday,
17:14
that's been pretty much wiped off the table. We're looking
17:17
at probabilities from the Chicago Mercantile Exchange here, and as
17:21
of today, there's approaching an eighty seven percent chance that
17:24
there will be a twenty five basis point to cut
17:26
at that next meeting. If you take a look after
17:29
that and look then to the December meeting, there's about
17:32
a three quarters likelihood that rates will have been cut
17:34
twice by that by the end of that December meeting. Here,
17:38
as we head into the end of the year, practically speaking,
17:42
we've seen what that has meant. It does mean that
17:45
home equity line rates CD rates for deposits credit cards
17:50
have come down slightly in interest.
17:53
Speaker 2: The interesting piece here.
17:55
Speaker 3: That you know would probably take us more than a
17:57
minute to explore is the fact that mortgage have gone
18:00
up since the FED cut rates. Yeah, so the Fed
18:03
has cut rates.
18:04
Speaker 2: I think we could do it in a minute. Points
18:05
all right, hit me. Fed has cut rates by fifty
18:07
base points.
18:08
Speaker 3: Mortgage rates have gone up by or the ten year
18:10
has gone up by about a thirty percent.
18:12
Speaker 2: The FED controls short term rates and long term rates.
18:15
All they are is they're an extrapolation of short term rates.
18:17
So it's take what you think the Fed's going to
18:19
do in the future, and that's how you get to
18:21
your long term rates. The FED cut in mid September.
18:24
Since then, we've got good economic data that has priced
18:27
out some FED cuts that were previously expected. And so
18:30
even though the FED has begun a cutting cycle, the
18:33
additional growth that is now expected has pushed up long
18:37
term interest rates, including mortgage rates, which, by the way,
18:40
take a look at Mortgage News Daily right now, which
18:42
is again they published Mortgage News Daily. Oh yah, and
18:48
the thirty year fixed rate mortgage nationally averaging six point
18:51
six two percent. Now we had six one to two
18:54
a week and a half ago. So you're up half
18:56
a percent now on that thirty year fixed rate mortgage.
18:59
That something where if that continues to float back towards
19:02
that seven percent mark, Hey, the spring housing season looks
19:06
a lot different with rates near seven as opposed to
19:08
near six.
19:09
Speaker 3: We're still a long ways away from that. Generally doesn't
19:12
heat up till the end of February beginning of March.
19:14
But yeah, if we're back at seven percent mortgages, then
19:18
I don't know, good luck, that is not going to
19:20
be a very attractive home market once again in terms
19:23
of volume.
19:24
Speaker 2: Quick break here, we've got Wall Street Watch next, and
19:27
then we're talking social security after this.
19:40
Speaker 1: Like us on Facebook and follow us on Twitter at
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TFE show. Breaking business news is always first right here
19:47
on the Financial Exchange Radio Network. Time now for Wall
19:52
Street Watch. A complete look at what's moving market so
19:55
far today right here on the Financial Exchange Radio Network.
20:00
Speaker 4: Volatility out there as Wall Street keeps a close eye
20:02
on the ten year treasury yield still hovering above four percent.
20:06
Oil prices also continue to garner attention on the heels
20:09
of escalated tensions in the Middle East. In addition to
20:11
yet another significant hurricane looming right now, the Dow is
20:15
down by thirty eight points. S and P five hundred
20:18
is up nearly two thirds of a percent, or thirty
20:21
three points, and the Nasdaq is up nearly one percent
20:24
or one hundred and seventy six points. Russell two thousand
20:27
is flat, dipping into negative territory. A ten year treasure yield,
20:32
as I mentioned up above four percent, up one basis
20:35
points today a four point zero four percent, and crude
20:38
oil off over four percent now trading a seventy three
20:42
dollars in eighty three cents a barrel. Pepsi posted fiscal
20:46
third quarter results ahead of the open, beating earnings expectations,
20:49
but its revenue came in below forecast for its second
20:52
straight quarter. The food and beverage giants said sales were
20:55
impacted from its quicker food recalls, weakening demand in the US,
20:59
and business disruptions in some international markets. The company also
21:03
lowered its full year outlook for organic revenue. Pepsi up
21:07
by four percent. Meanwhile, several Chinese stocks, including JD dot
21:11
Com and Ali Baba down over six percent after China
21:14
failed to announce any economic stimulus plans, resulting in a
21:17
market selloff elsewhere a super Microcomputers said have recently deployed
21:22
more than one hundred thousand graphics processing units with its
21:25
liquid cooling solution for some of its largest AI factories,
21:30
as well as other cloud service providers that stock down
21:34
by five percent. Docu signed up by eight percent, falling
21:38
news at the Electronic Signature Company will replace MDU Resources
21:42
in the S and P five hundred MidCap four hundred
21:45
index on Friday, and the Wall Street Journal is reporting
21:48
that Honeywell is expected to unveil plans to spin off
21:51
its advanced materials division. Honeywell shares up by about one percent.
21:57
I'm Tucker Silva and that's Wallstreet Watch.
21:59
Speaker 3: Mike, you fan a cola, the Social Security part or
22:04
the sugary beverage that Doug here is drinking social Security obviously, Yeah, yeah,
22:10
I think it would be not a great program without
22:12
cost of living adjustments on it. So the cola or
22:15
the cost of living adjustment is something that happens each
22:17
year on Social Security, and the projection this year, according
22:22
to Mary Johnson, who is an independent social security and
22:25
medicare analyst, is for a two and a half percent
22:28
bump in Social Security payments for twenty twenty five. That'll
22:33
be less than the three point two percent bump.
22:35
Speaker 2: That retirees received this year, and far less than the
22:39
eight point seven percent jump from two years ago. But
22:42
remember that eight point seven percent jump was also because
22:44
inflation was running nine percent, and so we'd all prefer
22:49
to avoid that situation. Again, I think, all else being.
22:52
Speaker 3: Equal, doing a little bit of math on that chuck,
22:55
So the average Social Security benefit from what I saw
22:58
from bank rad is around seventeen eight month, seven.
23:02
Speaker 2: Hundred and eighty three dollars.
23:03
Speaker 3: Specifically, two and a half percent increase on that gets
23:05
you a little bit more than forty four dollars per month.
23:09
We're back into this territory though, of what we were
23:11
dealing with pre COVID, where Medicare is going to end
23:14
up eating a fair bit of that. So estimates that
23:16
I have seen, and I think they need to publish
23:18
this in the next week for Medicare premiums for twenty
23:22
twenty five, estimates that I've been seeing are for a
23:24
ten dollars increase on those Medicare costs. So you know, again,
23:29
if you are the average Social Security recipient at seventeen
23:32
eighty three per month, you're getting a forty four dollars increase,
23:37
but ten dollars of that is going away because of
23:39
medicare going up, and so you know, really you're not
23:41
left with a whole lot more in your pocket, as
23:44
the two and a half percent would insinuate here. And
23:48
market Watch makes the point here that you know, this
23:50
isn't going to solve what has been a crisis for
23:53
many retirees, and I would say, yeah, I agree. Nor
23:57
has it really been designed to be the only income
24:01
source for retirees?
24:02
Speaker 2: No, And look, the problem is simple. We were talking
24:05
about Florida earlier in the show, and hey, if you're
24:08
one of these retirees who lives in Florida and your
24:12
homeowner's insurance premium is going from it's already gone up
24:16
from twenty five hundred to eight thousand, sure, and now
24:19
it goes from eight thousand to ninety five hundred. Okay,
24:22
Well that's you know, twice what you're getting from a
24:25
cola from Social Security and so you're like, hey, how
24:27
am I going to afford this? And this is ultimately
24:30
how it impacts families and their decision making in the
24:34
real world, and this is part of the reason that
24:36
I think that we're going to see some real potential
24:39
for some migrations away from these states that are seeing
24:43
the biggest insurance premium hikes. Is because those are things
24:45
that affect retirees more than the average person. You look
24:50
at retirees and they might say, Yep, my mortgage is
24:52
paid off, so I thought my housing costs were fixed.
24:55
But now my insurance costs in Florida or California are
24:58
going through the roof. And how can I pay those?
25:02
I have to move because I can't afford to live
25:05
here anymore.
25:06
Speaker 3: I hear you, but I guess I would ask you this, Jeff, like,
25:10
how many retirees have you spoken to over the last
25:13
few years who have said, you know, Florida, I have
25:18
other family and friends that went there, It's not for me,
25:20
or it's gotten too expensive, or I'm worried about the
25:23
hurricanes or the insurance. I'm going to the Carolinas. I'm
25:27
going to you know, one of these other places that
25:30
you know. By the way, guess what's going to happen
25:32
to your insurance premiums if you live in the mountain
25:34
regions of the Carolinas or Tennessee over the next few years.
25:37
I would imagine you are not going to see any
25:41
modest increases in those insurance and so.
25:44
Speaker 2: I'm with you.
25:45
Speaker 3: I think that Florida has enough problems that they are
25:48
going to most certainly have a tough time maintaining the
25:51
pace of growth that they've seen over the last decade,
25:53
and probably worse than that. But it does, you know,
25:57
bring up an interesting question, where do I go? Where
26:00
do where do I go to avoid this type of
26:03
cost increase?
26:04
Speaker 2: What what do you think insurance premiums look like on
26:06
bars that where you need to go there's no water?
26:10
I guess no water?
26:11
Speaker 3: Yeah, no hurricanes, yeah, probably earthquakes.
26:15
Speaker 2: Yeah.
26:15
Speaker 3: So look, this is a this is a challenge. And
26:18
what I know, we've talked about this before, but two
26:21
big states that we talk about with natural disasters all
26:24
the time, California Florida. Uh, California's more what wildfires, Florida
26:28
more hurricanes. They have both come up and obviously two
26:33
states with rather different political views on average between them
26:37
and their leadership of those states, I.
26:39
Speaker 2: Would say rather different. I'd say there you could be yeah,
26:42
polar opposites.
26:44
Speaker 3: They both come up with the same policy solution for
26:46
how they deal with the insurance crisis.
26:48
Speaker 2: We're not going to underwrite like that. That's what insurers do.
26:51
They've been pulling out of both states. They've been saying,
26:53
we're not going to cover.
26:54
Speaker 3: Insurers have been doing that, and California and Florida have
26:57
both responded in the same way, which is well will
27:01
come fill that gap. Both both states have developed their
27:05
own insurance programs that ensure a large portion of that
27:10
general public. And the question that I'm continuously asking myself
27:14
is how long is it before the federal government and
27:17
all of us, you know, all across the country need
27:20
to bail out one of those state run insurers, Because,
27:23
as we've talked about, you get hit with a few
27:25
wildfires in a row, or you get hit with a
27:27
few hurricanes in a row like we are seeing right now,
27:30
those state run insurance companies are not well funded enough
27:34
to actually pay for that.
27:36
Speaker 2: They are not a position to be able to do so.
27:38
Speaker 3: And we have one bearing down on the second most
27:40
populous area in the state of Florida right now.
27:43
Speaker 2: Do is that a perfect segue to go talk about
27:46
this or have we already talked about Florida enough? I mean,
27:48
this is kind of a kind of this is a
27:51
really big deal on it.
27:52
Speaker 3: And it's aside from you know, the the the economics
27:59
piece that we've been talking about. This is going to
28:01
be probably big loss of life later this week unfortunately.
28:04
Speaker 2: Well you hope that there's enough evacuation that happens, but
28:07
so her, Hurricane Milton has just been again kind of
28:10
building in the Gulf of Mexico over the last two days. Yesterday,
28:15
at one point we went from this being a category
28:19
one storm to a Category five in a span of
28:21
six hours, which I don't have any official confirmation that
28:25
that's the fastest on record, but it certainly is up there.
28:29
What we did see, the major way that meteorologists measure
28:33
the strength of a hurricane is through barometric pressure, basically
28:37
what's happening to the air pressure, because that measures how
28:39
much stuff the hurricane is sucking up, how much energy
28:43
it's taking in, and in general, when you see hurricanes,
28:50
most hurricanes end up somewhere between. And I know this
28:53
number will mean like nothing to anyone who doesn't follow meteorology,
28:56
but anywhere between like nine hundred and twenty and nine
28:59
hundred and fifty mill of bars is where you typically
29:02
end up. This was only the fourth hurricane ever to
29:06
see the pressure drop below nine hundred. So you're talking
29:09
about one of the four strongest storms ever measured in
29:12
history that develop Now it subsequently as weakened simply because
29:17
hurricanes can't stay at that force forever. They go through
29:21
something called an eyewall replacement cycle, where the eye basically
29:24
collapses and then reforms. And what this does it actually
29:27
makes the storm weaker near the center, but it allows
29:30
it to grow exponentially also, so it spreads the damage
29:33
over a larger area. Why this matters for the Tampa
29:37
and Saint Pete and Bradenton and Sarasota area is that
29:43
it is one of the lowest areas in Florida, which
29:48
is again a low state. I think the highest point
29:50
on it is like literally two hundred and sixty feet
29:52
in change.
29:53
Speaker 3: I mean, based on the fact that it's one of
29:54
the lowest areas in Florida, it means that it is
29:57
quite genuinely one of the most vulnerable areas to flooding
29:59
in the entire United States.
30:00
Speaker 2: There are three point two million people that live in
30:03
the Tampa metro area. The area has not been hit
30:06
by a major hurricane since nineteen twenty one. It's been
30:09
over one hundred years. And part of the reason for
30:11
this is that when hurricanes develop in the Atlantic Ocean,
30:14
the shape of Florida makes it really hard for them
30:17
to just loop around the bottom of it and come
30:20
right back into Tampa. This one, having developed in the
30:22
Gulf of Mexico, obviously has a clearer path over there.
30:27
And so the potential impact here is Tampa really stretching
30:31
inland through Orlando. Again, we haven't even talked about, you know,
30:35
the Orlando area in this which is probably gonna get
30:37
between twelve and eighteen inches of rain according to the
30:40
latest projections, and so you could just have the entire
30:43
western and central part of the state kind of cut
30:47
off there about halfway through the state, and you've got
30:51
you know, fifteen foot storm surges that are projected one
30:54
of the models. There's seven or eight major hurricane models
30:57
that are out there, and one of them, the European one,
31:01
is also projecting waves of anywhere between twenty and forty
31:04
feet on top of that storm surge, So you're talking potentially,
31:08
you know, forty to fifty feet that water is getting
31:12
where it previously didn't reach. And if anyone's ever been
31:17
to like Saint Pete Beach or that area. The houses
31:22
there will literally be underwell, I mean the highest you
31:25
get there is like five to ten feet. It's just
31:27
there's it has the potential to be really, really bad.
31:32
And from an economic perspective, it's been an area that's
31:36
been a huge, huge growth engine for the US also
31:39
because the population over the last two decades is increased
31:42
by over fifteen percent in each decade. And so now
31:46
you've got you know, that potentially stopping just from an
31:49
economic perspective at least pausing and you say, hey, you know,
31:53
this has some major impacts that it's going to be
31:56
having here. So from just about every perspective, this is
32:00
something that really needs to be watched as far as
32:05
the potential impacts. And I you hope the one thing
32:09
that you hope for, the one thing that actually like
32:12
destroys hurricanes is what we call winds shear, which is
32:14
basically winds moving in opposite directions that cause it to
32:17
break up. And you do have a moderate amount of
32:20
that developing in the central Florida area right now. Then
32:24
hopefully is able to you know, move a little bit
32:28
further south and weaken this thing. But otherwise, the next
32:32
two days have the potential to to see things develop
32:35
pretty scarily as far as how this goes here, So
32:39
we're watching it pretty darn closely. Let's take a quick
32:43
break here when we come back, talk about oil price
32:46
has been up over ten percent in the last week
32:48
and a half but down over four percent today. What's
32:51
continuing to drive these swings and oil prices? Will fill
32:54
you in when we return.
32:57
Speaker 1: Thanks to us six one, seven, three, six two thirteen
33:00
with your comments and questions about today's show, and let
33:03
us know what you think about the stories we are covering.
33:06
This is the Financial Exchange Radio Network, breaking business and
33:11
financial news first throughout the day, only here on the
33:15
Financial Exchange Radio Network.
33:23
Speaker 2: All right, Mike, So, we had seen a pretty significant
33:26
rise in oil prices over the last week and a
33:29
half on combination of increased Middle East tensions and everyone
33:33
getting all bulled up for China, you know, throwing you
33:38
want everywhere, And today we have China saying yeah, we're
33:44
gonna continue to do some stimulus, but we have nothing
33:46
new for you. I guess like the expectation is just
33:49
new stimulus every day is what markets are looking for.
33:52
Speaker 3: That's what you get when you say you control every
33:54
aspect of the society, is you control every aspect of
33:57
the society if you're she it is.
33:59
Speaker 2: And then also you've had a week of relative calm
34:04
in the Middle East since Iran's missile attack on Israel.
34:08
Still waiting for an Israeli response at this point. And
34:12
so after continuing to rise yesterday, oil prices down four
34:17
and a half percent so far in trading today on
34:19
West Texas Intermediate to seventy three sixty three. And we've
34:23
got Brent crew down four and a half percent as well,
34:26
down three dollars and sixty cents to seventy seven thirty three.
34:30
So the lack of something happening immediately really creating some
34:37
volatility in oil prices at the moment. Yeah, a little
34:40
bit of a burnoff.
34:41
Speaker 3: I think, like you said, you got through the anniversary
34:43
of the terrorist attacks on Israel from last fall. You
34:48
also have we'll get to this, but you know, Chinese
34:53
markets reopening and no real new news from that government,
34:58
and so yeah, this some of this is just burning
35:00
off what we've seen of the last week and a half.
35:01
Speaker 2: When it comes to oil prices.
35:03
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Speaker 2: Mike in Massachusetts this November, there is a ballot question
36:10
uh that is on well, I guess some bowls ballots obviously,
36:15
and it specifically is about the minimum tipped wage and
36:20
whether that minimum tipped wage should remain at six seventy
36:23
five an hour or be moving up to the minimum
36:27
wage for other workers at fifteen dollars an hour. And
36:31
basically it would you know, allow this to happen over
36:33
a few years, and also would allow restaurants to pool
36:36
tips with back of house staff who right now can't
36:40
receive those tips. And Buzz and Globe pulled a bunch
36:44
of people you know who work in the restaurant industry
36:46
and said, hey, you know, do you think this, you know,
36:49
makes sense? Is this something that you want to see?
36:53
And what kind of responses did they end up getting? Well,
36:57
it depends.
36:58
Speaker 3: If you're speaking to a lot of the owners, it's
37:01
been hey, this is going to be worse for workers.
37:04
They also speak to some you know, bartenders and such
37:07
from eastern Massachusetts are saying, look, wages have been approaching
37:11
this fifteen dollars an hour just to get people in
37:14
the door anyway, But I think that kind of ignores
37:17
the point. I mean we're broadcasting today from Springfield. You
37:20
look at wages in different parts of the state, and
37:23
they are not as competitive here. I think that there
37:26
is a bit of a misunderstanding of this as well.
37:29
I mean, tipped workers can be paid six to seventy
37:32
five an hour, but they must still make the minimum
37:34
wage with their combined tips to get it over to
37:37
that point, and employers are supposed to make them whole
37:40
if they work shifts that that doesn't happen with. But
37:45
this is being voted on in kind of a vacuum,
37:47
and I do wonder the impact on what restaurants actually
37:51
do in terms of tipping if this goes forward.
37:55
Speaker 2: I always struggle with ballot questions just because what I
38:00
vote on a ballot question has a big impact on
38:04
someone else, very directly in their life, and so it
38:07
makes it very hard just for me to wrap my
38:09
head around why should I do that, because I don't
38:14
know what the IMPACT's going to be. Quick break here,
38:17
We've got more financial exchange coming up in our number
38:20
two