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Home Insurance Nightmare is Getting Worse · The Financial Exchange Show

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Speaker 2: Chuck Mark Tucker with you here, and we've got the
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Speaker 2: stock market in the midst of a good sized rally today.
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Speaker 2: The DAW's up six hundred and fifty six points, SMP's
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Speaker 2: up ninety six, NAZEK up four to sixteen, so anywhere
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Speaker 2: from like a one and a half to two and
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Speaker 2: a quarter percent rally taking place in equity markets today.
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Speaker 2: Bond's also rallying. Tenure yield down twelve point five basis
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Speaker 2: points to four point sixty six three percent, so that
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Speaker 2: is always fun to see if you are shopping around
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Speaker 2: for a mortgage that'll help out as soon as today.
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Speaker 2: Oil West Text Intermediate up a dollar twenty four to
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Speaker 2: seventy eight seventy four a barrel. The TRIPAA national average
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Speaker 2: for gas prices also now starting to pick up on
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Speaker 2: higher oil prices coming through up one point eight cents
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Speaker 2: overnight to three dollars and eight point nine cents nationally,
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Speaker 2: so you are again moving up on that front. And
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Speaker 2: you've got gold up eighteen seventy ouns to twenty seven
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Speaker 2: oh one even this all on the back of a
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Speaker 2: CPI report that came out at eight thirty mark. What
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Speaker 2: did that report show.
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Speaker 3: Yeah, the government reported today, Chuck that headline CPI inflation
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Speaker 3: rose point four percent, that's month over month November to December.
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Speaker 3: This is higher than November's point three percent increase. But
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Speaker 3: in twenty twenty four, inflation went up again by the
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Speaker 3: CPI Consumer Price Index headline number by just under three
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Speaker 3: percent two point nine percent. That's not terrific relative to
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Speaker 3: the Fed's long term goal, but it's lower than twenty
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Speaker 3: twenty three's three point three percent and much lower than
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Speaker 3: twenty twenty two six point four percent rates, So progress
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Speaker 3: year over year in a larger sense, biggest contributor in December. Now,
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Speaker 3: I was personally surprised at how big the headline jump was.
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Speaker 3: I haven't seen a point four percent month over month
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Speaker 3: print for a while, but I probably shouldn't have been,
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Speaker 3: because we know energy prices went up by a lot,
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Speaker 3: and they're a component of headline inflation. They're about six
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Speaker 3: and a half percent of headline inflation. Not quite the
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Speaker 3: biggest constituent. Food is bigger, but they're big, and energy
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Speaker 3: prices went up by a little over two and a
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Speaker 3: half percent, so they were the big driver. And because
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Speaker 3: you don't want to get fooled, by one offs and prices.
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Speaker 3: The statisticians that the Department of Labor also calculate something
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Speaker 3: we call core inflate.
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Speaker 4: No, we don't call it. Everybody calls it core inflation.
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Speaker 3: That's headline less food and energy, and there the results
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Speaker 3: were a little tamer, so called core inflation ex Food
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Speaker 3: and energy inflation was up by zero point two percent
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Speaker 3: month over month, down from zero point three percent the
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Speaker 3: month before. And there were some subcomponents of core that
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Speaker 3: researchers watch closely, like shelter, which tends to be persistent
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Speaker 3: and is a huge contributor to core, and for that matter,
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Speaker 3: headline inflation that were flat month over month. So the
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Speaker 3: market loved this morning's report. I don't quite get the overreaction,
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Speaker 3: but you talked in the last hour about reasons why
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Speaker 3: the bond market might have been ready to rally, But
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Speaker 3: the core inflation news, I guess, was the key takeaway.
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Speaker 3: Though I should mention that other measures of the trend
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Speaker 3: in inflation, which is what CORE tries to get at,
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Speaker 3: were less encouraging today, and maybe we'll talk about that
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Speaker 3: later in the hour.
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Speaker 2: Speaking about energy, piece here a Wall Street Journal exclusive
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Speaker 2: Trump plans quote energy dominance executive orders after inauguration. What
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Speaker 2: is being discussed in terms of potential policies roll out?
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Speaker 2: What types of things are they discussing here?
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Speaker 4: Yeah, allow more.
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Speaker 3: I guess this is the operationalization of his drill drill, drill,
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Speaker 3: A rallying cry, make more land available, loosen regulations, do
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Speaker 3: what you can by executive order. I guess you can
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Speaker 3: make more federal land available for drilling by executive order,
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Speaker 3: and over time, which he may need the help of
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Speaker 3: Congress on, reduce regulatory burdens on exploration and production companies.
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Speaker 3: Of course, these commodity oil, like many commodities, are priced
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Speaker 3: in a global market and subject to global factors. It's
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Speaker 3: not obvious that a president with a wave of his
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Speaker 3: pen can make it easier to explore for and pull oil,
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Speaker 3: or any commodity for that matter, out of the ground,
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Speaker 3: even if they very aggressively and earnestly wanted to. So
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Speaker 3: we'll see oil prices aren't acting like they think this
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Speaker 3: is going to be see changing.
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Speaker 5: Well.
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Speaker 2: I think another question is do energy companies actually want
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Speaker 2: to drill more?
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Speaker 4: I can answer that no, they don't.
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Speaker 2: And the reason why we say that is because, remember,
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Speaker 2: the United States is not the only place that you
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Speaker 2: can drill for oil. We produce today about was it
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Speaker 2: twelve thirteen percent of world oil. The US is the
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Speaker 2: largest producer of oil in the world. But ultimately there
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Speaker 2: are plenty of places that you can produce oil. And
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Speaker 2: so I think the piece that I look at on
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Speaker 2: this is, Hey, you have a situation where for the
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Speaker 2: last several years, even when presented with higher prices, companies
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Speaker 2: of oil companies have maintained really strict discipline. And the
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Speaker 2: reason why they haven't overextended themselves is because back in
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Speaker 2: the twenty tens, coming out of the Great Recession, you
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Speaker 2: had oil prices that got up into the you know,
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Speaker 2: eighty ninety a barrel range, and a lot of US
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Speaker 2: you know, energy companies said, oh, this is great, Like
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Speaker 2: we can make all this money. Let's let's you know,
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Speaker 2: deploy all this capex, let's let's drill, and let's just
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Speaker 2: get as much oil as we can out of the ground.
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Speaker 2: And in twenty fifteen, might have even been late twenty fourteen,
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Speaker 2: I forget the exact timing on it. Russia, who was
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Speaker 2: unhappy with, you know, starting to lose market share in
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Speaker 2: the global oil sales market. They said, you know what,
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Speaker 2: screw it, We're gonna just turn on the spigots and
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Speaker 2: pump out as much oil as we can to drive
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Speaker 2: the price down. And it took the price of oil
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Speaker 2: on West Texas Intermediate. If you look at where it
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Speaker 2: went the price of oil heading into this I haven't
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Speaker 2: pulled up here now. So at the end of July
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Speaker 2: of fourteen, West Texas Intermediate was at ninety eight a barrel.
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Speaker 2: Late in fourteen is when Russia did this, And by
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Speaker 2: January of twenty sixteen, the price of oil was twenty
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Speaker 2: nine dollars a barrel, cut seventy dollars off the cost
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Speaker 2: of oil, and these energy companies just had their lunch
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Speaker 2: absolute And anyone who's listening who was invested in energy
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Speaker 2: stocks during the twenty tens, you're nodding along, going yep,
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Speaker 2: I remember it. It was like the worst decade to invest
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Speaker 2: in energy stocks in a long long time. It was
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Speaker 2: just absolutely brutal for them. And so the people that
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Speaker 2: run these oil companies, they are sitting there now and
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Speaker 2: they have these these memories are fresh in their mind.
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Speaker 2: I mean, to anyone listening, you think back to like
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Speaker 2: twenty fourteen, twenty fifteen, you're like, yeah, I remember that
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Speaker 2: pretty well, and it just left scars on these oil executives.
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Speaker 2: And so my question, I guess is, look, the Trump
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Speaker 2: administration can say we're gonna make this easier for oil companies.
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Speaker 2: I have no doubt that they will, Like I'm not
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Speaker 2: saying that they're going to make it harder. The question
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Speaker 2: is do oil companies actually want to drill more? And
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Speaker 2: I don't know that the facts are in evidence. Do
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Speaker 2: they want it to be easier and cheaper when they
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Speaker 2: do drill? Yes? Absolutely, of course. They want fewer regulations,
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Speaker 2: fewer costs they have to pay for drilling, and they're
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Speaker 2: gonna get it.
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Speaker 4: Yeah, oh yeah, the wait get it.
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Speaker 2: The question is does it result in more energy being produced?
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Speaker 2: The net amount of oil that the US produces is
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Speaker 2: probably going to go up, because it's going up for
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Speaker 2: the last fifteen to twenty years. Ever since the frackers,
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Speaker 2: you know, figured out how to do it in the
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Speaker 2: mid two thousands, you've had a nice upward trend in
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Speaker 2: US energy production aside from the Great Recession. But are
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Speaker 2: you going to see some huge transformation where all of
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Speaker 2: a sudden energy companies wake up and say, you know what,
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Speaker 2: this is the time to increase US production by twenty
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Speaker 2: five percent.
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Speaker 4: No, of course not.
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Speaker 2: No, I don't think so.
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Speaker 3: As a producer, you want higher prices, and that's much
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Speaker 3: of the country now.
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Speaker 4: We are a net or exporter.
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Speaker 3: Yeah, I go, okay there, let's just put it that way.
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Speaker 3: We make more oil than we consume, even though the
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Speaker 3: relationships start to get complicated because we still import oil.
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Speaker 3: And that's hard for me and non energy experts to understand.
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Speaker 3: But we produce a lot of oil. Half of what
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Speaker 3: we produce, though, comes from so called fracking, this new
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Speaker 3: technique that came about in the eighties and it was
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Speaker 3: perfected in the early two thousands. Fracking's more expensive. You
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Speaker 3: need to get a higher price for your product for
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Speaker 3: it to be profitable. So frackers who gave lavishly to
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Speaker 3: Trump's campaign need a higher oil price to satisfy their shareholders.
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Speaker 3: They could have produced more over the past, however many years. Again,
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Speaker 3: they produce about half of ar oil now according to
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Speaker 3: the Energy administ Information Agency. They don't want a lower price.
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Speaker 3: So this particular promise of the incoming administration, the promise
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Speaker 3: to both deregulate oil and lower prices or satisfy the
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Speaker 3: oil industry. I should say and lower prices. Those two
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Speaker 3: promises are intention just like the promise to lower inflation
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Speaker 3: prices generally, but at the same time increase tariffs and
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Speaker 3: expand the economy more vigorously. Those two promises are intention.
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Speaker 3: A lot of the promises made by the incoming or
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Speaker 3: any new administration or intention. It'll be really interesting to
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Speaker 3: see how they get resolved.
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Speaker 2: It's not to say that this is all going to
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Speaker 2: end badly. It's much more, Hey, this has to resolve someway,
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Speaker 2: and how is it going to actually play out? We
11:04
Speaker 2: don't really know. We have to wait and see how
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Speaker 2: this all goes, especially because we still don't have a
11:11
Speaker 2: ton of specifics. But we're starting to get closer. I mean, look,
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Speaker 2: we are five days away, so we're we're just about there.
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Speaker 2: I've I'm so glad we're not gonna have to speculate anymore. Again.
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Speaker 2: We've talked about my big complaint in this whole you
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Speaker 2: know process over the last two months is it doesn't
11:30
Speaker 2: need to be two months. You're elected, great, move in
11:33
Speaker 2: the next week, Like, why do we need a two
11:35
Speaker 2: month gap? You don't have to take the covered wagon
11:37
Speaker 2: from New York down used to two months four months.
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Speaker 4: Was it March?
11:42
Speaker 3: What was the inauguration date? I have no idea prior
11:45
Speaker 3: to I want to say prior to Lincoln.
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Speaker 2: Well, and again, part of that was because you had
11:49
Speaker 2: to literally blow up the wagon and get everyone down
11:53
Speaker 2: to DC like it was a whole production. Today, Great,
11:57
Speaker 2: hop on the next jet blue flight, hop on the
11:59
Speaker 2: next Delthard light like call a day.
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Speaker 4: Yeah, but you need this.
12:03
Speaker 3: You need the Senate to conform, to advise and consent
12:05
Speaker 3: on his nominees. The Senate was just sworn in a
12:08
Speaker 3: few weeks ago. That process takes a little bit of
12:10
Speaker 3: time to gear up.
12:11
Speaker 2: So my solution is, don't move the inauguration, move the election,
12:16
Speaker 2: make it the look, make it like the first week
12:20
Speaker 2: in December. Cut the time in half. It should be
12:22
Speaker 2: a month between. Four weeks is fine. You mean to
12:26
Speaker 2: tell me that you're running for president and you can't
12:29
Speaker 2: figure out how to get your staff.
12:30
Speaker 4: In order, thinking all that, if you can't get.
12:32
Speaker 2: Your staff in order in four weeks, then you shouldn't
12:35
Speaker 2: be president of the United States. Like, what are we
12:39
Speaker 2: really doing here?
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Speaker 3: Yeah, we should be able to do it real quick,
12:44
Speaker 3: more quickly. It feels like it happened though at a
12:46
Speaker 3: pretty brisk pace. I mean it took some states.
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Speaker 2: Oh my goodness, the amount of time that we've had
12:51
Speaker 2: to spend speculating about, well, this tariff happened with that one.
12:54
Speaker 3: That's because he keeps chanting. Frankly, Trump is being a
12:57
Speaker 3: little bit more, probably for negotiation reasons.
12:59
Speaker 4: But he's stock.
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Speaker 2: But cut the time down.
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Speaker 4: But he's unusual.
13:04
Speaker 3: He will just call him skilled in the art of
13:06
Speaker 3: creating uncertainty. Yes, I guess for leverage. Yes, So that's
13:10
Speaker 3: it's been magnified by his style. Otherwise you normally wouldn't
13:13
Speaker 3: hear anything from a candidate.
13:14
Speaker 2: Put the time down, make it a month, it'll be fine.
13:17
Speaker 4: We don't feel that urgency. But if it's gonna go
13:21
Speaker 4: like this.
13:22
Speaker 2: Quicker these days, you know everything's quicker. You don't need
13:25
Speaker 2: a month between the send him in that evening. You
13:28
Speaker 2: know you're out, buddy, Send him in, Like why do
13:33
Speaker 2: we have a lame duck president? Like when when when
13:37
Speaker 2: people have voted you out? Move on, Let's let's let's
13:40
Speaker 2: get going. I don't know, we don't need this whole
13:44
Speaker 2: time in between. Let's take a quick break, speaking of
13:46
Speaker 2: time in between, and when we come back, we've got
13:49
Speaker 2: trivia right after this.
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Speaker 2: Piece in Bloomberg opinion, the two trillion dollar home insurance
15:16
Speaker 2: nightmar is getting worse, and yeah it is. So here's
15:19
Speaker 2: the deal. H Home insurance rates are skyrocketing around the
15:23
Speaker 2: country obviously, Like the places where you've heard this the
15:26
Speaker 2: most are you know, Florida and the Gulf Coast, where
15:31
Speaker 2: you've seen premiums double triple, even quadruple in some cases
15:34
Speaker 2: over the last several years. Uh, California is heading in
15:38
Speaker 2: that direction because since the nineteen eighties they have not
15:41
Speaker 2: allowed for more than seven percent annual premium increases in
15:46
Speaker 2: order to try to keep home insurance rates low. As
15:49
Speaker 2: insurance have left that market, they've now been forced to
15:51
Speaker 2: pivot and are starting to approve, you know, increases even
15:54
Speaker 2: just for one year in the thirty to fifty percent range.
15:57
Speaker 2: So look, this is this is going to be in
16:03
Speaker 2: my opinion, like when you look at where recessions come from,
16:10
Speaker 2: it's usually always something on the financial side where people
16:14
Speaker 2: went too far in one direction, and you know, the
16:17
Speaker 2: last one was mortgages back in two thousand and eight.
16:20
Speaker 2: In my opinion, the insurance markets for both home and
16:24
Speaker 2: auto insurance are completely broken. And if I had to
16:28
Speaker 2: pick out where the next financial crisis is going to be,
16:31
Speaker 2: it's not going to be in banks. It's going to
16:33
Speaker 2: be with insurers. In my opinion.
16:35
Speaker 3: Yeah, there are a lot of possible culprits. I hadn't
16:37
Speaker 3: thought about their size and the potential impact of, say,
16:42
Speaker 3: the failure of a major insurer, though they should be hedging.
16:46
Speaker 4: These I'll call them my abilities.
16:49
Speaker 3: And there are markets where you can do that. You
16:51
Speaker 3: can offload your risks as an insurance company.
16:54
Speaker 2: But someone else picks up that someone else does.
16:56
Speaker 3: But it's in theory diffused catastrophe bonds provide an outlet
17:01
Speaker 3: for that risk. But as you like to point out,
17:03
Speaker 3: risk can be sort of dissipated. It can be spread
17:06
Speaker 3: out but never eliminated. And this was the problem in
17:09
Speaker 3: OH eight. Risk on mortgages was spread out, it was
17:12
Speaker 3: not eliminated. It's it's not funny, that's nervous. That's a
17:15
Speaker 3: nervous chuckle. I don't know, chuck, I don't know what
17:18
Speaker 3: the long run, you know, we say the market is broken,
17:20
Speaker 3: but actuarily it is what it is. The risks are
17:24
Speaker 3: growing fast and they're more varied than they used to be.
17:28
Speaker 3: How do you price that as an actuary?
17:32
Speaker 2: Mike and I talked about this a little bit last week.
17:35
Speaker 2: Actuaries can price it. The questions are state insurance Commission's
17:38
Speaker 2: going to allow them to?
17:40
Speaker 4: You'll put those into the marketull out.
17:41
Speaker 2: And this is where we are right now. And this
17:45
Speaker 2: is not just exclusive to California and Florida again, two
17:50
Speaker 2: states that have dramatically different governance but are obviously going
17:53
Speaker 2: through very similar things in terms of insurance markets that
17:56
Speaker 2: are completely broken and have had insurance leaving the for
18:00
Speaker 2: you know, various different reasons this is going to be.
18:04
Speaker 2: I mean, you look at just about anywhere in the
18:07
Speaker 2: United States and the natural disasters that you are seeing,
18:12
Speaker 2: and the cost of dealing with them is continuing to
18:15
Speaker 2: move higher. And insurance money, it doesn't just get created
18:19
Speaker 2: out of thin air. I think we all need to
18:21
Speaker 2: do some homework in understanding what insurance is and what
18:25
Speaker 2: it isn't because when you put insurance on your when
18:29
Speaker 2: you go and take out a policy for homeowner's insurance,
18:33
Speaker 2: it specifies this is what we cover. Here are situations
18:37
Speaker 2: where you are not covered, Here's how much we will pay,
18:41
Speaker 2: and here's you know what you're entitled to. Nowhere in
18:44
Speaker 2: it does it say you're going to rebuild this exactly,
18:48
Speaker 2: and have you know all the stuff you used to
18:50
Speaker 2: and this and that. And this is why I think
18:53
Speaker 2: sometimes there's a disconnect in terms of how people you know,
18:57
Speaker 2: look what people think. Home insurance doesn't wait, they don't.
19:00
Speaker 2: They just say, well, my home is destroyed, Like why
19:02
Speaker 2: won't my insurance cover it? And it's like, well, you
19:04
Speaker 2: have a policy that said it didn't cover fire, and
19:06
Speaker 2: your home was just destroyed by a fire. So you
19:10
Speaker 2: you've got to do your research on this stuff and
19:13
Speaker 2: understand what your covered perils are, what they aren't, what
19:15
Speaker 2: your coverages are. And this is stuff you got to
19:17
Speaker 2: be looking at every single year. And if the prices
19:20
Speaker 2: are moving in the wrong direction, you got to figure
19:23
Speaker 2: out ways to mitigate that, either through carrier changes, changes
19:25
Speaker 2: to deductibles, things that you can do there. But it's
19:29
Speaker 2: not just going to go away. You can't stick your
19:31
Speaker 2: head in the sand because this is here to stay
19:32
Speaker 2: as an issue. Quick Break Trivia Answers Next.
19:42
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20:06
Speaker 5: Trivia question today was what is the name of the
20:09
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20:12
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20:18
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20:21
Speaker 2: Congrats to Michael.
20:22
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20:32
Speaker 2: All right, piece here in the Financial Times titled falling
20:37
Speaker 2: birth rates raised prospect of sharp decline in living standards.
20:43
Speaker 2: I'll quote from here a McKinsey report investigating the economic
20:46
Speaker 2: impact of declines and birth rates found the UK, Germany,
20:49
Speaker 2: Japan and the US all have to see productivity rise
20:52
Speaker 2: at double the pace seen over the past decade to
20:54
Speaker 2: maintain the same growth in living standards witnessed in the
20:58
Speaker 2: nineteen nineties. Okay, so a couple things on this that
21:06
Speaker 2: I have thoughts about. First, if they looked at those
21:08
Speaker 2: four countries, take a look at China and tell me
21:11
Speaker 2: how much their productivity would have to rise in order
21:14
Speaker 2: to maintain the same growth in living standards that they've seen.
21:18
Speaker 2: Because if you think the demographics are bad in the UK, Germany, Japan,
21:21
Speaker 2: and the US, they're worse in China. Next. I think
21:26
Speaker 2: that when you look at productivity growth, part of me
21:32
Speaker 2: wonders if it's a chicken and egg situation in that, Hey,
21:38
Speaker 2: if your living standards are fine with the productivity growth
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Speaker 2: that you have, how like how much do you need
21:45
Speaker 2: to push the envelope? Because like, if basically what I'm saying,
21:48
Speaker 2: if there isn't a problem, how many resources get devoted
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Speaker 2: to solving it? Not many. On the other hand, if
21:56
Speaker 2: you start to see living standards decline, and the case
21:58
Speaker 2: they're making is like, look, you don't have enough people
22:00
Speaker 2: and so you won't be able to produce all the
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Speaker 2: stuff that you need, won't companies spend more money trying
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Speaker 2: to build automation solutions to whatever those problems are increased
22:11
Speaker 2: productivity because they say, hey, there's a market that we
22:14
Speaker 2: can sell to, but we don't have enough people. We
22:17
Speaker 2: need to figure out alternate ways of producing the stuff
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Speaker 2: that's needed. I kind of wonder if it's a chicken
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Speaker 2: and egg thing.
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Speaker 3: Yeah, we don't really know what causes economic growth. Unfortunately,
22:28
Speaker 3: we know that the labor force growth is a key
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Speaker 3: part of it. But populations have grown throughout history and
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Speaker 3: we haven't always had economic growth, So so productivity growth
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Speaker 3: is the key to growth models that became widespread in
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Speaker 3: the twentieth century. Productivity growth is a residual in those
22:49
Speaker 3: It falls out of the accounting. It's what cannot be
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Speaker 3: explained by growth in the labor force and growth in
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Speaker 3: the so called stock of capital, just all the stuff
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Speaker 3: we used to produce goods and services. And it's not
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Speaker 3: as easy as ratcheting up investment to get productivity growth.
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Speaker 3: The two are correlated, but that doesn't mean that just
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Speaker 3: rising investment, raising investment, spending more capital and discriminately is
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Speaker 3: going to increase productivity growth. So I never know really
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Speaker 3: what to make of this. On the surface, it's not
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Speaker 3: a good thing. You can't have economic growth without labor
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Speaker 3: force growth and productivity growth. Productivity growth might make up
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Speaker 3: for some of the slow down in labor force growth,
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Speaker 3: and it's really been dramatic in the nineteen sixties. From
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Speaker 3: the nineteen sixties to today, let me just make sure
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Speaker 3: I just pulled the right series here. Labor force was
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Speaker 3: growing at one point three percent in the sixties, one
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Speaker 3: point one percent in the seventies, dropped off in the eighties,
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Speaker 3: little over one point two percent in the nineties, and
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Speaker 3: a lot of this is all just demographic and immigration.
23:52
Speaker 3: By the way, we can control the Spickett to a degree,
23:55
Speaker 3: and it's now half that rate. It's been slowing down
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Speaker 3: virtually every decade since the nineties nineties, So I guess
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Speaker 3: it is and it is not a problem Chuck either way,
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Speaker 3: there's no easy solution.
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Speaker 2: I feel like every time we talk about this that
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Speaker 2: there are a couple of things that come to mind.
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Speaker 2: The first is you bring up, you know, falling birth rates,
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Speaker 2: and everyone's like, oh, like, we got to do something
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Speaker 2: about this. But then like you tell people that means
24:20
Speaker 2: that there's gonna be more people in your town, and
24:21
Speaker 2: they're like, no, don't build any more housing. I don't
24:23
Speaker 2: want I don't want more people here, like we've we've
24:25
Speaker 2: got enough. And then on top of that, you say, oh, well,
24:29
Speaker 2: like you know, it must be a money thing, like
24:32
Speaker 2: that's why people aren't having kids, because that's what they say.
24:36
Speaker 2: But the countries that have actually gone and tried to
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Speaker 2: incentivize you know, higher birth rates. Have found that giving
24:43
Speaker 2: people more money to have kids doesn't actually do it.
24:46
Speaker 4: So now in the wealthyer you get, the fewer kids
24:48
Speaker 4: you have too.
24:49
Speaker 2: It's I think part of it, quite honestly. And and
24:54
Speaker 2: and look like everyone makes their own decisions about kids.
24:57
Speaker 2: Like the single worst thing that I think we could
24:58
Speaker 2: do is like basically forcing people to have children. I mean,
25:02
Speaker 2: I can't imagine any worse environment to grow up in.
25:07
Speaker 2: Alcohol good point, how do you do that? But I
25:11
Speaker 2: guess what I'm what I'm getting at on this is that, Look,
25:16
Speaker 2: they're all different reasons why people choose to either have
25:18
Speaker 2: children or not have children, Like there's no right or
25:22
Speaker 2: wrong way to do it. Historically, the reason why people
25:25
Speaker 2: had kids was pretty darn simple. You needed people to
25:30
Speaker 2: do all of the work involved with staying alive throughout
25:34
Speaker 2: much of human history. You needed people to you know,
25:37
Speaker 2: handle the farming stuff. You needed like you literally needed
25:40
Speaker 2: people to like, hey, I gotta you know, we've great,
25:43
Speaker 2: We've got to you know, chop all the firewood for
25:45
Speaker 2: this year in order to stay warm in the winter
25:47
Speaker 2: that you didn't just have like the oil truck pull
25:50
Speaker 2: up to the front of your house and do that.
25:52
Speaker 2: So the reason why people had kids historically in human
25:55
Speaker 2: society was A, you needed them in order to survive,
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Speaker 2: and B there's a decent chance, like a fifty to
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Speaker 2: fifty shot, that half of them weren't going to make
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Speaker 2: it to age five.
26:07
Speaker 3: Till the NIST, it wasn't reliable birth control until the
26:10
Speaker 3: twentieth century. So his wealth rises and his education levels rise,
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Speaker 3: people have fewer kids. This is a basic empirical sort
26:16
Speaker 3: of fact.
26:17
Speaker 2: And so I think I don't know that we are
26:20
Speaker 2: going to get to a point where we see a
26:22
Speaker 2: dramatic reversal in birth rates. Is where I'm going. I
26:25
Speaker 2: think we need to figure out how to deal with this.
26:27
Speaker 2: It depends rather than expecting things to reverse somehow.
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Speaker 3: And my point is I don't think there's much you
26:33
Speaker 3: can do about it, Chuck, because you can't just wave it.
26:35
Speaker 3: Just like you can't wave a wand and increase oil production,
26:39
Speaker 3: you can't wave a wand and increase productivity. I'll say again, economist,
26:43
Speaker 3: don't you were going to say baby production? I don't
26:44
Speaker 3: really end I don't really under serving in.
26:47
Speaker 2: A number of levels.
26:48
Speaker 3: Yeah, yeah, you can't just dictate that or think really
26:54
Speaker 3: hard about it, or devote a lot of effort to it,
26:55
Speaker 3: and by force of will get productivity to rise. It's
26:57
Speaker 3: not it's not that easy. Economic growth both is a
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Speaker 3: recent phenomenon. By that, I mean roughly the mid seventeen
27:03
Speaker 3: hundreds starting in the UK to present. Before that, there
27:07
Speaker 3: was very little economic growth, like a couple tenths a
27:11
Speaker 3: decade on average.
27:12
Speaker 4: It's hard for it.
27:14
Speaker 3: Takes centuries just to get a new pair of shoes
27:17
Speaker 3: or a better one. It's hard for us to conceive
27:19
Speaker 3: of that because we're so used to living standards doubling
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Speaker 3: within our lifetime, which they continue to though the doubling
27:26
Speaker 3: the time to doubling is slower than it used to be.
27:28
Speaker 2: Do you know why cobblers are called cobblers? You're talking
27:32
Speaker 2: about getting a pair of shoes, because historically, the way
27:35
Speaker 2: it would work, like, you'd have a pair of shoes
27:37
Speaker 2: made when you were you know, basically when your feet
27:39
Speaker 2: were fully grown, and as they wore out, you would
27:43
Speaker 2: take them to the cobbler who would cobble something together
27:46
Speaker 2: with spare scraps of leather and things like that, and
27:48
Speaker 2: you'd basically wear the same shoes for most of your life.
27:51
Speaker 2: That was kind of how it worked. So that's where
27:53
Speaker 2: the term cobbler.
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Speaker 4: Why is that not a last name?
27:55
Speaker 3: We've got Coopers and Tanners and Smiths, and do you
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Speaker 3: know any is Cobbler a surname?
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Speaker 4: Uh?
28:02
Speaker 2: I know?
28:03
Speaker 4: Or is that just to know?
28:04
Speaker 2: The only thing that I know that's a cobbler is
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Speaker 2: an apple cobbler, which is delicious. Oh the actually oh
28:09
Speaker 2: the okay, okay, yes, the actual dessert which is delicious.
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Speaker 4: That was a person. I'm like, what the hell do
28:13
Speaker 4: they do?
28:14
Speaker 2: No?
28:14
Speaker 4: But an apple cobbler? Yeah, it's yeah, you'd really fascinating, Tucker.
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Speaker 2: Do you know anyone with the last name Cobbler?
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Speaker 1: No?
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Speaker 4: And no, nor does he want to take anything any day?
28:24
Speaker 4: Hell are we talking about? No?
28:26
Speaker 2: It was just a question.
28:27
Speaker 4: I've had a very eye went there.
28:28
Speaker 2: No, I've had a very eventful twenty minutes. I want
28:31
Speaker 2: to play.
28:32
Speaker 4: For retracted Chuck everything.
28:33
Speaker 2: Okay, I am I. I got this message on my
28:36
Speaker 2: phone at eleven fourteen am. This is from Wichita, Kansas
28:41
Speaker 2: number that called me. We'll see if this this works here. Hi,
28:45
Speaker 2: this is Comcast Exfinity.
28:48
Speaker 1: This is your final notice regarding your fifty percent discount
28:51
Speaker 1: offer on your monthly.
28:52
Speaker 3: Bill which expires today.
28:54
Speaker 2: Very disappointing to send your rate from increasing.
28:57
Speaker 1: Call back now at the number on your caller IV
29:00
Speaker 1: thank you.
29:02
Speaker 2: So I got that from a Kansas number and obviously
29:06
Speaker 2: called them back right away. The first thing, I'm not
29:09
Speaker 2: a Comcast subscriber, so I immediately knew that it was fake.
29:12
Speaker 2: But I can totally see how. Look if if you
29:15
Speaker 2: are one, and you know, maybe you had some discount
29:17
Speaker 2: because you just moved in like a year ago, Okay,
29:20
Speaker 2: like you might call back, but it's it's obviously a scam.
29:23
Speaker 2: I then at eleven twenty nine am got a text message.
29:27
Speaker 2: It says easy Drive m a alert. Your vehicle has
29:29
Speaker 2: an unpaid toll bill to avoid excess of late fees.
29:32
Speaker 2: Please settle promptly. Thank you for cooperation. It includes a
29:35
Speaker 2: link to click on. It also tells me to please
29:37
Speaker 2: reply why and blah blah blah and do this and
29:39
Speaker 2: that and so in this case, I went to my
29:42
Speaker 2: easy pass account just because I you know, I know
29:46
Speaker 2: that I don't have an unpaid toll and I went
29:48
Speaker 2: there and actually have sixteen dollars and eighty two cents
29:50
Speaker 2: in my easy pass account right now, So that was
29:52
Speaker 2: kind of exciting to me. But the point that I'm
29:55
Speaker 2: making with this is both of these are obvious scams,
30:00
Speaker 2: and if you're not constantly on the lookout for stuff
30:04
Speaker 2: like this, it's easy to end up getting fooled and
30:08
Speaker 2: you accidentally send your information to someone who shouldn't have it,
30:12
Speaker 2: who's trying to scam you out of a whole bunch
30:15
Speaker 2: of money. The Armstrong Advisory Group has put together a
30:18
Speaker 2: guide this month titled seven common financial Frauds and Scams.
30:22
Speaker 2: It's just about the precautions that you need to take
30:24
Speaker 2: to make sure that you're not getting caught by these
30:26
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30:29
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30:31
Speaker 2: you know, for these things. But you have to stay
30:34
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30:36
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30:38
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30:41
Speaker 2: eight hundred three nine three four zero zero one. The
30:46
Speaker 2: way I look at it, look, each year you spend
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30:51
Speaker 2: you spend like eighty thousand hours working to build up
30:54
Speaker 2: your nest egg, spend like half an hour reading this
30:58
Speaker 2: to figure out what you know not to do to
31:00
Speaker 2: undo that all. I think this is hugely important. There's
31:03
Speaker 2: so much this that goes on right now. Please make
31:07
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31:10
Speaker 2: want to request it, it's seven common financial Frauds and Scams.
31:14
Speaker 2: Call eight hundred three nine three for zero zero one.
31:18
Speaker 2: That number again is eight hundred three nine three for
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31:23
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
31:26
Speaker 1: registered investment advisor. Nothing in the ad or in any
31:28
Speaker 1: Armstrong Guide a specific financial, legal, or tax advice. Consult
31:31
Speaker 1: your own financial, tax, and estate planning advisors before making
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Speaker 1: any investment decisions. Armstrong may contact you to offer investment
31:37
Speaker 1: advisory services.
31:38
Speaker 2: Follow up on a story that we covered first last year,
31:41
Speaker 2: Capital One is accused of cheating millions of customers out
31:44
Speaker 2: of interest rate payments. The Consumer of Financial Protection Bureau
31:48
Speaker 2: accused Capital One of freezing the rates of its three
31:50
Speaker 2: sixty Savings accounts at low levels and then not telling
31:56
Speaker 2: people that the bank offered a new account that offered
31:58
Speaker 2: better rates without telling three sixty Savings customers. I was
32:01
Speaker 2: one of these by the way, who my Capital one
32:05
Speaker 2: account was not being paid the interest that I thought
32:09
Speaker 2: I was going to get, and eventually I had to
32:11
Speaker 2: open up a new account in order to get what was,
32:16
Speaker 2: you know, the new rate and things like that. Capitol
32:19
Speaker 2: one says that they're deeply disappointed to see the CFPB
32:21
Speaker 2: continue to reacing pattern of filing eleventh hour lawsuits ahead
32:24
Speaker 2: of a change in administration. Okay, so what so you're
32:28
Speaker 2: you're not denying that you did this, You're just saying, hey,
32:31
Speaker 2: you waited too long to do this, and hopefully the
32:33
Speaker 2: next administration doesn't follow through on it. Man, Like, what
32:37
Speaker 2: a scummy thing to do.
32:39
Speaker 4: Yeah, that's terrible. So that's terrible.
32:41
Speaker 2: I gotta tell you, I've been a Capital one three
32:45
Speaker 2: sixty customers since before they were Capital one three sixty,
32:47
Speaker 2: back when they were I in g direct. If anyone listening,
32:49
Speaker 2: you know, remembers Capital one bought that business maybe eight
32:52
Speaker 2: nine years ago. Pretty sure on this leg again, when
32:56
Speaker 2: Capitol one comes out and says stuff like that, kind
32:59
Speaker 2: of done, kind of done something right. Sorry, Like there's
33:04
Speaker 2: other places that you can get good interest rates with
33:06
Speaker 2: online banks, And if you're gonna treat your customers like
33:09
Speaker 2: that and then basically like spit in the face of
33:12
Speaker 2: someone who's saying, hey, you treated your people wrong. Sorry, guys,
33:17
Speaker 2: kind of done.
33:18
Speaker 3: That's so appalling. I almost don't believe it. Kind of
33:21
Speaker 3: dogs person would say that.
33:22
Speaker 4: Who said that? Was it?
33:23
Speaker 3: It's just a spokesperson or was it a C suite
33:25
Speaker 3: executive to it?
33:26
Speaker 2: Said Capital One said in a statement, So I think
33:28
Speaker 2: it was going.
33:28
Speaker 4: So a good vet. It went through there in house
33:31
Speaker 4: attorney and stuff.
33:33
Speaker 2: Wow, we strongly disagree with their claims and will vigorously
33:35
Speaker 2: defend themselves in court. The new account was marketed widely,
33:39
Speaker 2: including on national television. Well, look, I was a Capital One.
33:43
Speaker 2: I generally like to think of myself as not being
33:46
Speaker 2: hugely dumb. I'm at least like kind of intelligent. And
33:50
Speaker 2: I had no idea that they had like launched a
33:53
Speaker 2: new account and that the old one that was marketed
33:56
Speaker 2: that way was no longer eligible for the higher rates.
33:59
Speaker 2: So yeah, I would say it was a little bit deceptive.
34:03
Speaker 2: Quick break here, when we come back, we got stack Roulette.
34:06
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35:24
Speaker 2: Mark what do you got for me for stack roulette?
35:26
Speaker 3: Well, markets reacted jubulantly to the core the x food
35:31
Speaker 3: and energy component of inflation, coming in ato point two
35:34
Speaker 3: percent month over month, which was pretty tame, though maybe
35:37
Speaker 3: not as low as the Fed needs it to be.
35:40
Speaker 3: There are other measures, though, of the trend in inflation.
35:44
Speaker 3: We talk sometimes about the median, which just means the
35:46
Speaker 3: one in the middle, or other forms of calculating inflation
35:51
Speaker 3: that trim the extremes that can happen from month to month,
35:54
Speaker 3: whether they come from food, energy, insurance, or cell phone prices.
35:57
Speaker 3: There's a Federal Reserve Bank that calculates media and another
36:01
Speaker 3: measure of trimmed inflation every month. It's the Federserve Bank
36:05
Speaker 3: of Cleveland. They came out with that number this morning.
36:07
Speaker 3: Median CPI point three trimmed means, so they trimmed roughly
36:11
Speaker 3: the ten percent right and leftmost extreme observations also point three.
36:17
Speaker 4: You don't need.
36:18
Speaker 3: Sophisticated mathematics to annualize those. Just multiply by twelve. That
36:21
Speaker 3: suggests inflation. If you want to annualize this month somewhere
36:23
Speaker 3: in the mid threes. And if you want to take
36:26
Speaker 3: the last three and six months for a slightly long
36:28
Speaker 3: term perspective, you also get inflation in the load to
36:30
Speaker 3: mid three. So I'm not sure the markets exuberances justified
36:36
Speaker 3: as we talked about earlier, Chuck, I.
36:38
Speaker 2: Want to talk a little bit about Walmart did either.
36:42
Speaker 2: If you happen to see that they rolled out a
36:44
Speaker 2: new logo today.
36:46
Speaker 5: Needed a magnifying glass to see the difference, but yes,
36:48
Speaker 5: I did see it.
36:49
Speaker 2: So Walmart rolled out a new logo. They wrote a
36:52
Speaker 2: whole page of stuff about it. It basically looks like
36:58
Speaker 2: they did select all and then made the text bold yeah,
37:04
Speaker 2: and like the yellow star like a little bigger Yeah,
37:08
Speaker 2: they bolded everything. Yeah. It's like, you pay somebody for this. Really,
37:15
Speaker 2: how much do you think they paid to do this?
37:17
Speaker 5: The person?
37:18
Speaker 2: No, Walmart? Like, what do you think the dollar value
37:21
Speaker 2: is that they spent on figures? Hitting both figures? Probably?
37:27
Speaker 2: I mean, I guess it's good work if you can
37:29
Speaker 2: get it. And companies are always doing this kind of stuff,
37:33
Speaker 2: and I get that you want your brand to be current.
37:37
Speaker 2: It's just I mean, this is it Mark, this is
37:45
Speaker 2: it I'm holding up my computer. I know no one
37:47
Speaker 2: listening can see, but it's literally they the color blues
37:51
Speaker 2: a little different. They're calling it true blue, which feels
37:56
Speaker 2: like is gonna get in them into a fight with
38:00
Speaker 2: Is that JED blue? The blue? Yeah?
38:03
Speaker 1: Ye?
38:04
Speaker 2: Are they gonna buy Jed blue? Are they gonna buy
38:05
Speaker 2: an airline? If it's a hint, yeah, maybe they're gonna
38:09
Speaker 2: buy an airline. And then they're gonna Yeah, they're gonna
38:13
Speaker 2: be sending products through the sky right to your doorstep
38:19
Speaker 2: by drone in Jersey.
38:22
Speaker 3: Somebody's got to think this stuff works. Though they're spending
38:24
Speaker 3: money on it, they're not stupid people.
38:26
Speaker 2: Quick break for the rest of the day. We'll see
38:27
Speaker 2: you tomorrow on the Financial Exchange