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Has Trump changed the American Dream? · The Financial Exchange Show

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Speaker 2: Kicking off our two the Financial Exchange. It's a Jobs
1:12
Speaker 2: Friday here, and at eight thirty am this morning, we
1:16
Speaker 2: received the job's report for the month of February, and
1:23
Speaker 2: what we saw was one hundred and fifty one thousand
1:25
Speaker 2: jobs created, which, while technically under one hundred and sixty
1:28
Speaker 2: thousand expected by the market, is well within the margin
1:31
Speaker 2: of error. And so honestly, all the headlines saying that
1:33
Speaker 2: this was, you know, fewer jobs than expected, it's just
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Speaker 2: not even it's not statistically accurate. Quite honestly, yeah, it's
1:43
Speaker 2: it's actually not statistically accurate given the average size of
1:48
Speaker 2: revisions to these. So I am saying that this report
1:51
Speaker 2: was right in line in my opinion. So take that
1:55
Speaker 2: headline writers. Unemployment rate did bump up to four point
1:58
Speaker 2: one percent, and average hourly earnings came in at a
2:01
Speaker 2: point three percent month over month clip overall headline numbers look,
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Speaker 2: you know, pretty good. You don't want to see the
2:06
Speaker 2: unemployment rate go up, but it was a minor shift.
2:09
Speaker 2: The underlying stuff, there's some concerning stuff in there that
2:11
Speaker 2: you got to watch for. The labor force participation rate
2:14
Speaker 2: drop by two tenths of a percent, So if that
2:16
Speaker 2: didn't happen, the unemployment rate would be four point three percent. Also,
2:20
Speaker 2: the U six the underemployment rate went from seven and
2:24
Speaker 2: a half up to eight percent. So that's not something
2:26
Speaker 2: that you like to see. But overall, these are you know,
2:29
Speaker 2: kind of one time things that we've seen here, and
2:31
Speaker 2: you don't want to extrapolate too far on them. So
2:34
Speaker 2: I think this report is fine with a note of caution.
2:38
Speaker 2: I give it a B minus as a result, Mike,
2:40
Speaker 2: I think you said you give it a B and
2:43
Speaker 2: we'll see what happens next month.
2:44
Speaker 3: I think I think it bears reminding too that, you know,
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Speaker 3: a unemployment rate of four point one percent. We've been
2:50
Speaker 3: talking about this frozen labor market, and I do think
2:52
Speaker 3: that this is a labor market that would have a
2:54
Speaker 3: tough time absorbing a bunch of layoffs if they were
2:58
Speaker 3: to occur. You could see that unemployment rate, you know,
3:00
Speaker 3: shoot up pretty rapidly if companies started cutting, if the
3:03
Speaker 3: government followed through on its cut, Say, you know, it's
3:05
Speaker 3: not a labor market that is going to immediately absorb
3:09
Speaker 3: those new entrants to the labor market if they get
3:11
Speaker 3: their job cut. Four point one percent unemployment is fairly rare. Still,
3:17
Speaker 3: this is a very low unemployment market. It might be frozen.
3:22
Speaker 3: It might be challenging for new college graduates to enter
3:25
Speaker 3: the labor force right now. It may be challenging to
3:28
Speaker 3: find a new job in your area of expertise if
3:32
Speaker 3: you are laid off. It is not a bad labor market.
3:35
Speaker 3: It is, in fact, quite a strong labor market given
3:39
Speaker 3: what we know about it today.
3:40
Speaker 2: Yeah, the excuse me. The question that you end up
3:43
Speaker 2: with labor markets is, Hey, there are two components to
3:46
Speaker 2: how good a labor market is. The first is, okay,
3:50
Speaker 2: what are your baseline conditions? And the second is what's
3:52
Speaker 2: the direction of travel? And so, as an example, if
3:56
Speaker 2: the unemployment rate over the next few months goes from
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Speaker 2: four to four and a half percent, yes, while still
4:01
Speaker 2: low historically, it also indicates that there are more people
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Speaker 2: losing jobs than gaining jobs, and as such, that's not
4:08
Speaker 2: a good labor market anymore because the direction of travel
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Speaker 2: is bad. That hasn't been the case that we've seen
4:13
Speaker 2: for the last six months now. The direction of travel's
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Speaker 2: basically been flat. We've been floating between three nine and
4:19
Speaker 2: four to one four I want to say, like six
4:22
Speaker 2: months now I think going back to like August, maybe
4:25
Speaker 2: I haven't looked quite honestly, but it's somewhere in that ballpark.
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Speaker 2: I'll pull it up right now, actually, just so I
4:31
Speaker 2: can speak more conclusively. Yeah, So, if you look at
4:34
Speaker 2: the unemployment rate and where it has been, it's it's
4:40
Speaker 2: basically been between three to nine and four one since
4:43
Speaker 2: last April actually, so twelve months four to two, three
4:47
Speaker 2: nine and four two. So we're right in the middle
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Speaker 2: of that range. There's been no directional shift in the
4:51
Speaker 2: labor market over that time, as opposed to Hey, beginning
4:55
Speaker 2: of twenty four you were at three to eight and
4:57
Speaker 2: then you went up to four to two, So you say, okay,
5:00
Speaker 2: directionally it was moving in the wrong direction. And that's
5:02
Speaker 2: why we were watching the labor market closely, saying, hey,
5:05
Speaker 2: is there something happening here? This right now, it's one
5:09
Speaker 2: data point moving up like the last couple have been
5:11
Speaker 2: coming down for the unemployment rate. So let's not overreact
5:15
Speaker 2: to what we see here. This job support is just fine,
5:18
Speaker 2: and we'll see what we get out of the next
5:20
Speaker 2: couple and then we can actually have some data to
5:23
Speaker 2: play with instead of overreacting for a completely fine jobs report.
5:28
Speaker 3: May I add one piece on the labor market, just
5:30
Speaker 3: as a good reminder to folks out there. It is
5:33
Speaker 3: not a leading indicator. You do not have people getting
5:36
Speaker 3: laid off because companies are worried about a recession to come.
5:40
Speaker 3: It is quite the other way around. As an example, here,
5:43
Speaker 3: we entered recession in December of two thousand and seven.
5:47
Speaker 3: During the Great Recession, unemployment rate was at five percent.
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Speaker 3: We did not hit peak unemployment until October of two
5:54
Speaker 3: thousand and nine, when we hit ten percent, and we
5:57
Speaker 3: had already left that recession.
5:59
Speaker 2: So let's talk a little bit about Treasury Secretary Scott
6:04
Speaker 2: Besson's comments from yesterday. I'll read the quote that he
6:09
Speaker 2: said at the Economic Club of New York. Access to
6:12
Speaker 2: cheap goods is not the essence of the American dream.
6:14
Speaker 2: The American dream is rooted in the concept that any
6:16
Speaker 2: citizen can achieve prosperity, upward, mobility, and economic security. For
6:21
Speaker 2: too long, the designers and multilateral trade deals have lost
6:24
Speaker 2: sight of this. The first sentence is kind of what
6:26
Speaker 2: got all of the buzz in relation to the tariffs
6:29
Speaker 2: that were implemented earlier this week, and then some of
6:32
Speaker 2: them pulled back. But that access to cheap goods is
6:35
Speaker 2: not the essence of the American dream. I get what
6:39
Speaker 2: he is trying to say, but the combination of the
6:43
Speaker 2: timing and then the way he said it, I don't
6:45
Speaker 2: think is really as you are, you know, potentially seeing
6:50
Speaker 2: prices being increased because of it recently implemented tariffs. I
6:54
Speaker 2: don't think that it's the best thing to be like, hey,
6:58
Speaker 2: you shouldn't want cheap stuff.
7:00
Speaker 3: Well, yeah, it's basically telling people to suck it up,
7:03
Speaker 3: which is a fine me Like, I get that, yeah, you.
7:06
Speaker 2: Know, but the counterpoint to it is, Okay, if you
7:09
Speaker 2: want to tell people to suck it up, then why
7:11
Speaker 2: are you pulling the tariffs back later in the day. Yeah.
7:14
Speaker 3: I think there's a lot of problems with consistency between
7:17
Speaker 3: messaging and action, and I fully accept all that. But
7:21
Speaker 3: I think the stuff we've been hearing from best and
7:24
Speaker 3: I think does actually address what at least he thinks
7:28
Speaker 3: the Trump administration is attempting to accomplish here, which is,
7:32
Speaker 3: we are going to inflict some uncomfortable periods of time
7:37
Speaker 3: on the American public and buckle up for that because
7:40
Speaker 3: we think that the other stuff that will come down
7:42
Speaker 3: the line can really benefit folks who are who have been,
7:47
Speaker 3: you know, missed for the last fifty years in terms
7:50
Speaker 3: of economic development and progress in the United States. And
7:53
Speaker 3: that's a lot of people, right, A lot of people, yeah,
7:55
Speaker 3: have missed out on the asset growth and the wealth
7:58
Speaker 3: effect in the United States the course of the last
8:00
Speaker 3: few decades. And he's trying to speak to that. But
8:05
Speaker 3: I think where the rubber hits the road. He spoke
8:08
Speaker 3: about many other things. I think most of these were yesterday.
8:10
Speaker 3: But you know, hey, if we can raise terrasts which
8:13
Speaker 3: raise prices for consumers, but then deliver two consumers things
8:17
Speaker 3: such as tax cuts on social Security tips and overtime,
8:21
Speaker 3: then we are doing exactly what we're promising here, which
8:24
Speaker 3: is trying to impact upward mobility and make the rules
8:27
Speaker 3: of our economy work more in favor of main street.
8:31
Speaker 3: The problem is, I don't think anyone is really buying
8:33
Speaker 3: that that is necessarily going to happen right now.
8:35
Speaker 2: Well, look, there's gonna be two ways, and we're six
8:38
Speaker 2: weeks in, so you can't judge anything at this point
8:42
Speaker 2: because you're not through it. But there's gonna be two
8:46
Speaker 2: things that you look at in order to judge this
8:48
Speaker 2: the first is how deep is the pain and the
8:53
Speaker 2: second is how long does it last before that better
8:55
Speaker 2: part comes, like what's the recovery look like afterwards? And
9:00
Speaker 2: dangers on this are twofold. There's there's two things that
9:02
Speaker 2: can potentially go wrong, and we're not gonna know until
9:05
Speaker 2: it's gonna be like a couple of years, like it's
9:08
Speaker 2: it's been six weeks, like let's let's be patient on
9:11
Speaker 2: this a little bit. But ultimately, when an economy starts
9:16
Speaker 2: slowing down, it's it's it's kind of hard to recover
9:20
Speaker 2: it and rein it back in, you know. It's this
9:23
Speaker 2: is why when we talk about, you know, the FED,
9:24
Speaker 2: they often have this con this quote of hey, there
9:27
Speaker 2: are long and variable lags in monetary policy, which is basically, yeah,
9:31
Speaker 2: when we start cutting interest rates, it doesn't turn the
9:34
Speaker 2: economy on a dime, and we're never quite sure exactly
9:37
Speaker 2: how it's gonna play out. Hence the variable piece, like
9:40
Speaker 2: it things. The economy is a complex set of systems,
9:43
Speaker 2: and you don't you don't just manage it by pushing
9:47
Speaker 2: a button, you know. So I think one of the
9:49
Speaker 2: dangers is do they lose control to the downside too far?
9:53
Speaker 2: I don't know. I'm not gonna punish them for something
9:55
Speaker 2: that hasn't happened yet. It's just, hey, this is what
9:57
Speaker 2: could happen. The second one is okay after the downturn
10:01
Speaker 2: abates again because the Preston is coming out and saying like, yeah,
10:04
Speaker 2: this is where I think we're going after it debates
10:09
Speaker 2: what does the recovery look like in terms of the
10:12
Speaker 2: speed and the distribution of it. The Great Financial Crisis
10:17
Speaker 2: recovery was really bad for two reasons. Number one, it
10:21
Speaker 2: was slow. It took like six years to get back
10:24
Speaker 2: to unemployment under six percent, so that was a long
10:29
Speaker 2: time that a lot of people were without jobs. And
10:32
Speaker 2: the recovery was also very unevenly distributed. Income inequality widened
10:36
Speaker 2: during that time. Wealth and equality widened during that time.
10:40
Speaker 2: So the question is on the back end, can you
10:43
Speaker 2: then have a rather rapid recovery where the recovery is
10:49
Speaker 2: more evenly distributed to the people that you're trying to
10:53
Speaker 2: help on this stuff? And we're not gonna know that yet,
10:55
Speaker 2: Like we can't say it's good or bad because it
10:58
Speaker 2: hasn't happened yet. We just have to wait and see,
11:02
Speaker 2: Like that's what it's gonna be am I wrong.
11:05
Speaker 3: No, you're defining it correctly. And I think the important
11:09
Speaker 3: question is both how willing is the administration to truly
11:14
Speaker 3: inflict that pain, how severe is it going to be,
11:16
Speaker 3: how long is it going to last? And are Americans
11:20
Speaker 3: willing to take it?
11:21
Speaker 2: Or do they.
11:23
Speaker 4: You know, do they vote two years from now to
11:26
Speaker 4: change the direction?
11:27
Speaker 2: Well, look here, Mike, you and I have talked about
11:29
Speaker 2: this quite a bit. We can't just do all the
11:32
Speaker 2: fun stuff. Eventually you have to do the unfund stuff too. Yeah,
11:36
Speaker 2: and look if if the Trump administration is willing to say,
11:40
Speaker 2: this is our attempt to do the unfund stuff, let's go,
11:44
Speaker 2: let's let's see how it happens, We're still gonna have
11:46
Speaker 2: to see the results. But I buy the premise of, yeah,
11:49
Speaker 2: we've kind of done too much fun stuff economically, and
11:51
Speaker 2: I don't know, the economy doesn't really seem like it's
11:53
Speaker 2: been fun lately or you know, for the last like
11:55
Speaker 2: couple decades, and stuff like it's tech. Hey, here's your
11:59
Speaker 2: tech bubble, and there's your housing crisis, and here's COVID
12:02
Speaker 2: and then here's inflation, Like it's kind of been you know,
12:06
Speaker 2: sucky in a lot of respects, but part of it is, hey,
12:10
Speaker 2: like we've got, you know, rolling deficits that are now
12:13
Speaker 2: seven percent annually, Like they're too high. You can't just
12:16
Speaker 2: keep paying more money out to people and not doing
12:19
Speaker 2: anything on the tax side. Like, you've got to manage
12:21
Speaker 2: these things. And I give the administration credit for saying, hey,
12:26
Speaker 2: we're gonna try to do it, and here's how we're
12:28
Speaker 2: gonna do it. Whether it works or not, that's the
12:31
Speaker 2: open question. But no one's tried to tackle this for
12:34
Speaker 2: twenty years, and so if they make a serious, good
12:38
Speaker 2: faith effort to say, yeah, we're gonna do this and
12:40
Speaker 2: give it a shot, Okay, let's let's roll. Let's see
12:43
Speaker 2: what happens, you know, Like that's that's kind of where
12:45
Speaker 2: I'm at.
12:46
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13:11
Speaker 2: Mike, we got a piece in the Blumityburg Americans fall
13:15
Speaker 2: behind on car payments at the highest rate in decades.
13:19
Speaker 2: So what we've got here is that in January of
13:22
Speaker 2: this year, the shriff subprime autoborrow was there at least
13:24
Speaker 2: sixty days past due rose to six point five six percent.
13:28
Speaker 2: That is the highest level that we have seen for
13:31
Speaker 2: auto delinquencies in that group since they began collecting data
13:37
Speaker 2: in nineteen ninety four. Which doesn't seem great.
13:41
Speaker 3: No, it is not great, and it follows some other
13:43
Speaker 3: similar data like credit card debt.
13:46
Speaker 2: What I these are subprime borrowers, And the simple way
13:50
Speaker 2: to say it is people at the low end of
13:52
Speaker 2: the income spectrum are in a real pickle right now
13:56
Speaker 2: and are not able to not able to navigate this
14:03
Speaker 2: economy very well at this point.
14:04
Speaker 3: Yeah, wages haven't kept pace with inflation if you are
14:08
Speaker 3: on that scale, and especially if you've had to buy
14:10
Speaker 3: any borrow any money to buy something like a house,
14:13
Speaker 3: like a car. With these interest rates where they are,
14:16
Speaker 3: it has been particularly difficult to keep pace with that.
14:20
Speaker 3: I guess other important question though, Chuck, auto loan market
14:25
Speaker 3: probably not the thing that's going to send us into
14:28
Speaker 3: a subprime loan crisis driven recession.
14:30
Speaker 2: Right. No, here's the thing. The auto market is tiny
14:33
Speaker 2: compared to the housing market. It's about a tenth of
14:35
Speaker 2: the size. And furthermore, when you look at the housing
14:38
Speaker 2: market delinquencies, the transfer rate between loans that are minimally
14:44
Speaker 2: delinquent and seriously delinquent, there's nothing out there that is,
14:49
Speaker 2: you know, flashing red in the housing market. The housing
14:52
Speaker 2: market is as healthy as you have I mean, aside
14:55
Speaker 2: from like twenty twenty one when like a lot of
14:57
Speaker 2: people didn't have to pay their mortgages and stuff like.
15:00
Speaker 2: This is basically the healthiest that the housing market is
15:02
Speaker 2: ever looked from a lending perspective. Now, from a price perspective,
15:07
Speaker 2: like if you're you know, saying, hey, our home price
15:09
Speaker 2: is you know, potentially gonna come down this year, there
15:12
Speaker 2: are markets where it's already happening. You look at lots
15:14
Speaker 2: of Florida, Texas, parts of Georgia. Now you're seeing home
15:17
Speaker 2: prices that are coming down. But from a pure lending
15:21
Speaker 2: quality perspective, there is nothing out there. There's not even
15:25
Speaker 2: a yellow flag in the housing market. It is all
15:29
Speaker 2: green right now. So what's happening in autos and credit cards? Remember,
15:33
Speaker 2: if you are a subprime auto borrower, and if you
15:35
Speaker 2: are a sub like a low quality credit card borrower,
15:40
Speaker 2: you're not buying a house to begin with. Like this is,
15:43
Speaker 2: these are people that have credit ratings below six p forty.
15:47
Speaker 2: They're not buying houses today because the underwriting underwriting is
15:50
Speaker 2: that good. So I think that in looking at this,
15:53
Speaker 2: the message that I would take is, yeah, that they're
15:55
Speaker 2: real problems for lots of Americans right now, the ones
16:00
Speaker 2: that are experiencing them, because we have such a skewed
16:03
Speaker 2: distribution of income and wealth in the country. They own
16:07
Speaker 2: such a little percentage of the wealth and produce so
16:10
Speaker 2: not produce, but earn so little income that it's just
16:14
Speaker 2: not big enough to affect the US economy in my opinion.
16:18
Speaker 3: It does also speak to, though, I think something that
16:20
Speaker 3: this administration is at least voicing properly, which is we
16:25
Speaker 3: can be a lot more effective if we can control
16:27
Speaker 3: the long end.
16:27
Speaker 4: Of the curve.
16:28
Speaker 3: What I mean by that is, I'm not going to
16:31
Speaker 3: necessarily pressure the Fed to lower interest rates because it
16:34
Speaker 3: might not actually do anything for the average person other
16:37
Speaker 3: than drive stock prices up. So we are going to
16:40
Speaker 3: be working on the ten year treasury Scott Esson talks
16:42
Speaker 3: about this a lot. We want to see that come down.
16:45
Speaker 3: We think we can do it through cuts to government expenses.
16:48
Speaker 3: That's not been what they've gotten recently, which has been
16:51
Speaker 3: a fallen yields because of worries about recession. But that
16:54
Speaker 3: is where they are saying. Their focus is because they
16:56
Speaker 3: want to be able to bring down things like rates
16:58
Speaker 3: on car loans home Yeah, not home equity lines, but
17:01
Speaker 3: car loans, mortgage rates, et cetera.
17:03
Speaker 2: That is, yeah, I think entirely accurate in terms of
17:06
Speaker 2: what they're talking about here. So we'll see what exactly
17:11
Speaker 2: comes out of this. But in my opinion, car auto
17:16
Speaker 2: delinquencies and defaults are just not a big enough market
17:19
Speaker 2: to cause a significant de leveraging issue in the US
17:23
Speaker 2: that typically results in recession. It's too small of a market,
17:27
Speaker 2: and specifically, this subprime market is, you know, again, even
17:31
Speaker 2: a fraction of what is already a relatively small market
17:34
Speaker 2: relative to housing. There are other parts of the economy
17:38
Speaker 2: that you look at and you're like, Okay, there's some
17:39
Speaker 2: dodgy stuff going on there, but this is this is
17:43
Speaker 2: just not something that I think is big enough to
17:45
Speaker 2: cause an issue. It could be exacerbated if the economy
17:47
Speaker 2: slows further, but that's a different issue.
17:54
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Speaker 2: All right.
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Speaker 5: Trivia question today was what did Alexander Graham Bell believe
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Speaker 2: That would be either a hoy or a hoy hoy?
18:35
Speaker 6: Uh?
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18:53
Speaker 2: Micha, let's talk about this piece from Barons says social
18:56
Speaker 2: security is in turmoil? Should you lock in benefits? Now?
19:00
Speaker 2: What's it talking about? What turmoil are we talking about?
19:03
Speaker 3: We are mixing issues here. So social Security administration is
19:07
Speaker 3: under threat. Of losing seven thousand employees of their current
19:11
Speaker 3: fifty seven thousand that work there. I'm sure if you
19:14
Speaker 3: work at SOI Security, it feels like you're a bit
19:15
Speaker 3: in turmoil because you don't if you're gonna have a
19:17
Speaker 3: job next week. The commitment that Social Security seems to
19:22
Speaker 3: be making, and that lawmakers seem to be making two
19:26
Speaker 3: beneficiaries of Social Security does not at all seem in turmoil.
19:30
Speaker 3: In fact, it seems to be like one of the
19:31
Speaker 3: only issues that both Republican elected officials and Democrats seem
19:36
Speaker 3: to agree on right now, which is we are not
19:38
Speaker 3: going to cut benefits for beneficiaries of Social Security, and
19:43
Speaker 3: so there's I think there's nervousness whenever you talk about
19:48
Speaker 3: turmoil at an administration that has the approval ratings that
19:51
Speaker 3: Social Security does, right I think it's only the second
19:54
Speaker 3: most popular administration in the government, second to Medicare, or
19:59
Speaker 3: most popular govern program second to Medicare. But I don't
20:03
Speaker 3: think folks should be confusing the turmoil that the employees
20:07
Speaker 3: might be facing there and the delays that you could
20:09
Speaker 3: face on the phone when dealing with Social Security, for example,
20:12
Speaker 3: with the nation's commitment to the program itself are you
20:16
Speaker 3: reading anything differently here, Chuck than I am about how
20:20
Speaker 3: America's elected officials right now are treating Social Security.
20:24
Speaker 2: No, I'm not. I think that it's the big thing
20:27
Speaker 2: on the potential staffing cuts is that you could see again,
20:33
Speaker 2: longer delays less you could actually end up with like
20:36
Speaker 2: less efficient or less effective transmission of benefits and things
20:41
Speaker 2: like that, just because it takes longer to actually do
20:45
Speaker 2: what you want to with the system. But that's fundamentally
20:49
Speaker 2: different from Hey, the program's like not going to pay
20:53
Speaker 2: what you thought it was gonna pay, and that's just
20:57
Speaker 2: not something that is reasonable at this point point.
21:00
Speaker 3: Yeah, I can't imagine all I can imagine being in
21:05
Speaker 3: the shoes of trying to make this decision. But can
21:07
Speaker 3: you imagine a worse decision than saying, Hey, I'm worried
21:10
Speaker 3: about the customer service at Social Security, So I'm making
21:13
Speaker 3: a financial decision that's going to affect me for the
21:15
Speaker 3: rest of my life based on my concerns about about
21:20
Speaker 3: customer service like that. That is not something that you
21:23
Speaker 3: want to see happening. But in the best of times,
21:26
Speaker 3: there's concern and uncertainty about how Social Security might play
21:33
Speaker 3: out for the average person.
21:35
Speaker 4: And you know, my.
21:35
Speaker 3: Personal view is that for folks that are already eligible,
21:39
Speaker 3: I really don't think there's going to be changes to
21:41
Speaker 3: how those benefits work long term, but those, you know,
21:44
Speaker 3: potential changes to customer service and delays in getting things
21:47
Speaker 3: processed could be real for people. If you are staring
21:51
Speaker 3: down this social security decision, particularly if you're going to
21:56
Speaker 3: be eligible for benefits anytime in the next decade, that's
21:59
Speaker 3: where I think the rubber hits the road, because within
22:02
Speaker 3: the next decade, what we know is that the trust
22:04
Speaker 3: fund is due to run out of money. This is
22:05
Speaker 3: where the decisions are going to be made, and I
22:09
Speaker 3: think that too often there are decisions around social security
22:11
Speaker 3: made based on fear rather than actually understanding the real situation.
22:16
Speaker 3: If you have questions about your own social Security benefits,
22:19
Speaker 3: how they could change in the future, and most importantly,
22:23
Speaker 3: what that would mean for your personal financial plan, give
22:26
Speaker 3: the folks at Armstrong Advisory Group a call. The phone
22:28
Speaker 3: number is eight hundred three nine three for zero zero one.
22:32
Speaker 3: We work with clients on a daily basis to evaluate
22:35
Speaker 3: how social security is going to play into that bigger
22:37
Speaker 3: financial strategy. And once again the number is eight hundred
22:42
Speaker 3: three nine three four zero zero one.
22:45
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
22:47
Speaker 1: registered investment advisor. Nothing in the ad or in any
22:50
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
22:53
Speaker 1: your own financial tax into state planning advisors before making
22:56
Speaker 1: any investment decisions. Armstrong make contact you to offer investment advisory.
22:59
Speaker 2: Ser Mike, we got a couple of stories that I
23:02
Speaker 2: have to get to just because we got Paul Monica
23:05
Speaker 2: coming on in in a little bit with us. Uh. First,
23:09
Speaker 2: have you ever visited the Humber Estuary?
23:11
Speaker 3: I have not, Chuck. Is it a common lane where
23:16
Speaker 3: they ship eggs? Buy any chance?
23:18
Speaker 2: Uh? That would be devastating, don't know, Tucker. Have you
23:21
Speaker 2: ever been to the Humber Estuary? No? I haven't either.
23:26
Speaker 2: It is a it's a large tidal estuary on the
23:29
Speaker 2: east coast of northern England. It's actually located between East
23:34
Speaker 2: Riding of Yorkshire and Lincolnshire. Yes, which I've spent many
23:38
Speaker 2: a summer there riding frogs, because that's what you do there.
23:43
Speaker 2: I don't know, like it's whatever. So we got another
23:47
Speaker 2: boat stuck, Mike. Exciting news the h and S Wisdom.
23:52
Speaker 2: Oh Jimmy, you got to keep it out of the mud.
23:56
Speaker 2: I know you got through the canal, keep it out
23:58
Speaker 2: of the mud. So basically what happened. We should have some.
24:02
Speaker 3: Real expertise on this by now. You can you ship
24:05
Speaker 3: some people over there. I really know what they're doing.
24:07
Speaker 3: I can't ship anything. The boat's stuck. So the H
24:10
Speaker 3: and S Wisdom is stuck.
24:12
Speaker 2: It was trying to go to Gunness Wharf port near
24:15
Speaker 2: Scunthorpe on Sunday, and basically what happened was low tide.
24:23
Speaker 2: I wish I were kidding, but I'm not. They've tried
24:26
Speaker 2: to refloat the vessel three different times. But now, because
24:30
Speaker 2: remember tides are a function of the Moon, the Earth
24:33
Speaker 2: and the Sun, and basically because of the relative positions
24:36
Speaker 2: of those, the BBC has now been told that the
24:39
Speaker 2: tidal conditions will not be suitable for a further attempt
24:41
Speaker 2: until the beginning of April, so the crew has to
24:45
Speaker 2: stay on the boat for an extra three and a
24:46
Speaker 2: half weeks while they wait for it to float perfect.
24:51
Speaker 2: It's just sitting there right now, and you look at
24:54
Speaker 2: this and this is it's it's a big boat. I mean,
24:58
Speaker 2: it's it's not you know, some tiny little thing that's
25:00
Speaker 2: just you know, stuck there. In pulling it up, I'm
25:05
Speaker 2: trying to get a sense of how big this thing
25:07
Speaker 2: actually is, just so that I can here we go.
25:09
Speaker 2: What does MarineTraffic dot com tell me about this thing? Okay,
25:15
Speaker 2: here we go. No, I still don't know exactly how
25:17
Speaker 2: big it is. But it's it's it's a big ship.
25:21
Speaker 2: It's it's just like it's it's a big ship that
25:23
Speaker 2: is is stuck there, and it's gonna be stuck there
25:26
Speaker 2: for the next three and a half weeks now at least.
25:29
Speaker 4: Perfect.
25:30
Speaker 2: So there's that. If that wasn't enough these stories, Tucker,
25:35
Speaker 2: I gotta give you some credit. You nailed the stack today,
25:39
Speaker 2: absolutely nailed it. This from Gizmoto. Scientists develop a device
25:45
Speaker 2: that lets you taste video games. Is it called drugs?
25:50
Speaker 2: So you can taste the mushrooms and Mario, Now, finally,
25:53
Speaker 2: what are we doing here? So it's it's basically a
25:57
Speaker 2: thing that sits on your lower t who asked for
26:01
Speaker 2: this and inject's flavors into your mouth in response to
26:04
Speaker 2: stimuli delivered by the video game. So you're you're playing
26:11
Speaker 2: on So you're you're you're playing Call of Duty and
26:15
Speaker 2: your character dies and you taste blood in your mouth,
26:19
Speaker 2: Or you're playing Grand Theft Auto and you pick up
26:22
Speaker 2: a slice of pizza and you got pepperoni right in there.
26:26
Speaker 2: So the things in that game you could taste. Ye.
26:29
Speaker 2: So I'm just I'm just not really sure what the
26:33
Speaker 2: uh the the demand is for this.
26:36
Speaker 3: And furthermore, I guess it it seems like something that
26:39
Speaker 3: Zuckerberg's gonna try and buy very quickly.
26:41
Speaker 2: Well, does it seem like this isn't hard to make? Actually,
26:46
Speaker 2: like you basically program like okay, if pepperoni shoot pepperoni
26:51
Speaker 2: in like.
26:53
Speaker 3: Well, I mean yes, and no, I don't have any
26:57
Speaker 3: knowledge of the device that would need and how many
26:59
Speaker 3: different you can possibly create with such a How big
27:04
Speaker 3: is this thing?
27:04
Speaker 4: So is it the size of a room?
27:06
Speaker 2: Well no, it's it's kind of like these little boxes
27:10
Speaker 2: that sit outside your mouth. So you gotta like you
27:12
Speaker 2: kind of look like a wal horse when you put
27:14
Speaker 2: it on. And and basically they've got different flavors. So
27:21
Speaker 2: they got salt for salty flavors, citric acid for sour,
27:25
Speaker 2: glucose for sweet, magnesium chloride for bitterness, and glutamate for umami.
27:32
Speaker 2: And so they can combine these to make different flavors,
27:35
Speaker 2: I guess. So it's like, okay, so two parts of
27:39
Speaker 2: salt and one part of umami for pepperoni, you know,
27:43
Speaker 2: is what you get or something. Who knows how they're
27:45
Speaker 2: gonna actually do it, but it apparently is something that
27:52
Speaker 2: someone's trying to develop to attempt to make money.
27:56
Speaker 3: Right there alongside mung bean eggs in things that were
28:01
Speaker 3: developed that nobody asked for.
28:02
Speaker 2: They can reproduce that flavor too, So we'll have to
28:07
Speaker 2: follow up on this and see how it goes. But
28:10
Speaker 2: just fantastic, fantastic stuff in it.
28:13
Speaker 3: I would prefer the KFC cologne that they came out
28:17
Speaker 3: with a few.
28:17
Speaker 4: Years ago over this product.
28:18
Speaker 3: I wear that if I had my choice. That's where
28:22
Speaker 3: my money's going.
28:23
Speaker 2: Absolutely one percent. Let's take a quick break. When we
28:27
Speaker 2: come back, we are going to be joined by the
28:29
Speaker 2: one and only Paul Monica from Baron's right after this.
28:33
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28:55
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29:48
Speaker 2: Joining us now as promised is Paul Monica from Barons
29:52
Speaker 2: here to talk a little bit about the stocks of
29:55
Speaker 2: various different government contractors. Paul, how are you today?
29:59
Speaker 6: Good?
30:00
Speaker 2: You guys? Don't it doing great? When we look at
30:04
Speaker 2: the first six weeks of the Trump administration, one of
30:07
Speaker 2: the things that is notable in terms of changes from
30:11
Speaker 2: prioristrations is the Department of Government Efficiency trying to find
30:15
Speaker 2: ways to reduce cost for the federal government and the question,
30:20
Speaker 2: because look, employment is only one part. It's a relatively
30:24
Speaker 2: small cost of the overall federal government expenses. When we
30:28
Speaker 2: look at the payments that go out to government contractors,
30:31
Speaker 2: that is a huge sum of money. And so the
30:33
Speaker 2: obvious question is, hey, is there any chance that government
30:36
Speaker 2: contractors see those contracts impacted? And should investors be concerned
30:43
Speaker 2: about how their stocks perform?
30:45
Speaker 6: Yeah, I think it's a great question. I think investors
30:47
Speaker 6: do need to be worried about the classic defense contractors
30:52
Speaker 6: and companies maybe like news Allan Hamilton, you know, other
30:58
Speaker 6: big revenue from government contractors. But some stocks have been
31:02
Speaker 6: caught up in your worries that you know, they're probably overdone.
31:08
Speaker 6: So you know, BA Base Securities, Bank of America, they
31:11
Speaker 6: did a list earlier this week, you know, noting that
31:15
Speaker 6: some companies that are among the top twenty five federal
31:18
Speaker 6: contractors still only get less than fifteen percent of revenue
31:22
Speaker 6: from government deals. So that's companies like Dell, Geerospace, Techtron.
31:28
Speaker 6: But one in particular that looks interesting is Accentia, which
31:33
Speaker 6: really only has about eight percent or so of revenue
31:38
Speaker 6: from government contracts. You know, stocks down now, you know,
31:41
Speaker 6: nearly fifteen percent from a fifty two week high from
31:44
Speaker 6: just a month ago. So there might be you know,
31:47
Speaker 6: a particular opportunity with that company.
31:50
Speaker 2: In terms of when we're actually going to know about
31:52
Speaker 2: these impacts, how long do you think it is before
31:55
Speaker 2: we start to get some clarity on how they may
31:57
Speaker 2: be impacted.
31:59
Speaker 6: Yeah, it's a it's a great question. I mean, when
32:01
Speaker 6: you look at the jobs report that came out this morning,
32:05
Speaker 6: you know, there weren't as many job cuts at a
32:08
Speaker 6: federal level for February as many as thought may have
32:12
Speaker 6: been the case because of you know, what's going on
32:14
Speaker 6: with DOGE. But you know a lot of economists point
32:16
Speaker 6: out that, you know, this is happening very quickly. You
32:20
Speaker 6: might see more you know, job losses in the months ahead.
32:23
Speaker 6: To keep an eye on, you know, the March jobs
32:25
Speaker 6: report that comes out in early April. But in regards
32:28
Speaker 6: to you know, a company like you know, Accenture, you know,
32:32
Speaker 6: I think they're all in the stage right now where apparently,
32:36
Speaker 6: you know, Doge in the administration are asking for companies
32:40
Speaker 6: to explain exactly what it is they do. And you
32:44
Speaker 6: know there are you know, a company like Accenture. They've
32:48
Speaker 6: had you know, big contracts with the Department of Energy,
32:51
Speaker 6: the i R S. Other federal agencies that you know
32:54
Speaker 6: may get hit, but you can't imagine that they're going
32:57
Speaker 6: to get totally gutted, because you know, it's important for
33:03
Speaker 6: the federal government to collect taxes and have a policy
33:07
Speaker 6: about you know, oil and you know, other sources of energy.
33:11
Speaker 6: So I think maybe the pendulum slung a little bit
33:14
Speaker 6: too far. If you look at a company like Excentsure,
33:17
Speaker 6: you know, you know, a lot of analysts have you know,
33:20
Speaker 6: price targets that are significantly higher than where that stock
33:24
Speaker 6: is now, and you know it's it's not that expensive
33:27
Speaker 6: to stock either.
33:28
Speaker 2: Well you mentioned it not being that expensive of a stock.
33:31
Speaker 2: Isn't that one of the things that I think makes
33:33
Speaker 2: it different from a lot of other stocks that are
33:34
Speaker 2: being kind of punished right now, is a lot of
33:36
Speaker 2: them tend to be the price of your ones. This
33:38
Speaker 2: seems to be kind of a more unique situation there.
33:42
Speaker 6: Yeah, I think that is the case. I mean, ECCENTI
33:44
Speaker 6: just by you know, by no means you know, a
33:48
Speaker 6: dirt cheap stock, but you know, the pe is you know,
33:53
Speaker 6: in the mid twenties, so a little bit higher now
33:57
Speaker 6: than where the overall market is, you know, given the
34:01
Speaker 6: pullback that we've seen in your recent weeks, but you
34:05
Speaker 6: know the earning spread is expected to be, you know,
34:07
Speaker 6: pretty strong.
34:09
Speaker 3: You know.
34:09
Speaker 6: Ex Censure obviously has a lot of consulting businesses with
34:13
Speaker 6: corporate Americas, so they are again by no means as
34:18
Speaker 6: sensitive and tied to the government as day a company
34:22
Speaker 6: like Lockey Martin or you know the other big defense
34:25
Speaker 6: contractor shot there. Even a company like Gooeing that you
34:27
Speaker 6: know has a significant aerospace business and a lot of
34:30
Speaker 6: troubles of its own in that unit. You know, it
34:33
Speaker 6: generates a lot more revenue than Extensure from our government.
34:36
Speaker 2: Contract All right, very good, Paul, appreciate the time today.
34:40
Speaker 2: Thank you so much for joining us, and I hope
34:43
Speaker 2: you have a fantastic weekend.
34:46
Speaker 6: Great Jamy you guys before talking again next byday.
34:49
Speaker 2: All right, that is Paul Lamonica from Barons talking about
34:54
Speaker 2: Accenture as well as some other government contractors. Mike, you
34:58
Speaker 2: know what happens this weekend?
35:01
Speaker 4: Uh spring forward?
35:02
Speaker 2: You got it kind of snuck up on me. I
35:04
Speaker 2: thought it was next weekend for some reason, but it's
35:07
Speaker 2: actually going to be this Sunday, Sunday where we.
35:10
Speaker 4: Go to the correct time, Yes, looking forward to that.
35:12
Speaker 4: What should be the always time?
35:14
Speaker 2: Yes, the always.
35:15
Speaker 4: Let's reignite this debate.
35:17
Speaker 3: We never have to debate all this time here on
35:19
Speaker 3: the financial Exchange, no.
35:22
Speaker 2: One ever talks about it. Hey, you know what would
35:25
Speaker 2: just be better? How about a globe that doesn't spin?
35:27
Speaker 2: So it's always like, ah, there we go. What if
35:30
Speaker 2: we just attached some rockets to the earth to stop
35:32
Speaker 2: it from spinning?
35:34
Speaker 4: Wouldn't that spin faster?
35:35
Speaker 2: Well not if you push against the spin. Don't you
35:38
Speaker 2: got to spin it the other way? Talker, You gotta
35:39
Speaker 2: you gotta push it fast.
35:40
Speaker 1: We could go faster.
35:41
Speaker 2: Nice, you want to go faster? Yeah, I want to
35:44
Speaker 2: go fast. Yeah. If you thought you didn't have enough
35:47
Speaker 2: time in the day, now, waiting until we get to
35:49
Speaker 2: twenty three hour days. Night, it's day, it's night, it's day.
35:54
Speaker 2: It's not.
35:56
Speaker 1: Long week.
35:57
Speaker 4: Obay, oh boy, oh my gets like terrible.
36:01
Speaker 2: Yeah. The market continues to be not very The interesting thing, Mike,
36:06
Speaker 2: and I know that it sounds weird to say this,
36:07
Speaker 2: like it's been really orderly in terms of this house.
36:10
Speaker 4: Yeah, we have not had any circuit breakers.
36:13
Speaker 2: No part of you is kind of like, can you
36:14
Speaker 2: just puke and get it over with so we can
36:16
Speaker 2: be done with it. Cause here's the thing. When you
36:18
Speaker 2: have this kind of action, this unfortunately like reminds me
36:22
Speaker 2: of twenty twenty two, where the market never really puked,
36:24
Speaker 2: it just kind of sold off and then rallied a
36:27
Speaker 2: little bit and then kept set. Like this is kind
36:29
Speaker 2: of bear marketing. The way it's it's moving. It's not
36:32
Speaker 2: just okay, like get it done with, have your ten
36:35
Speaker 2: percent correction and move on. It's like slow, let's take
36:39
Speaker 2: a quick break here for the entire weekend. We'll see
36:42
Speaker 2: you on Monday.