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Which is more important, Fed Meeting or Presidential Election? · The Financial Exchange Show

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by Veterans Development Corporation. This is the Financial Exchange with
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Chuck Zada and Mike Armstrong.
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Speaker 2: Kicking things off on a busy week here on the
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Financial Exchange, we're through the vast majority of the you know,
1:20
economic data that we were waiting for last week. We're
1:23
through most of the important earnings at this point for
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Q three. At this point, just to give you a
1:31
quick little earnings update, seventy percent of S and P
1:34
five hundred companies have now reported earnings. The only one
1:36
that really matters to the index that hasn't reported is
1:40
in Video, which typically reports about two to three weeks
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after all your other major tech companies. I think it's
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going to be like the third or fourth week in
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November this year.
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Speaker 3: They don't like any competition.
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Speaker 2: What's that?
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Speaker 3: They don't like any competition?
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Speaker 2: Why would you? Why would you? And so thus far
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through that seventy percent of companies reporting SP five hundred.
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Annual growth rate for earnings is five point one percent.
2:04
That'll be the fifth straight quarter of year over year
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earnings growth. When we look at the projections heading into
2:11
the quarter, on September thirtieth, the S and P five
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hundred was expected to see four point three percent earnings growth.
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And remember this is missing Nvidia, which is a heavy
2:19
weight and is showing rapid earnings growth. So this number
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is going to end up higher than where it is
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today unless like the other twenty nine percent of companies
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end up reporting poorly. And so again, it's been a
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good quarter for earning so far. Overall, it has not
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been one where you've seen any major challenge to you know,
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the idea that the US is in a growing but
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slowing economy. I think that's, you know, kind of a
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fair statement. And at this point stocks have largely been
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humming along, aside from a brief interruption last Thursday where
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we saw about a two percent pullback on the S
2:57
and P five hundred.
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Speaker 4: Let's face the music here for a moment. This week,
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none of this matters. The most important political and economic
3:05
event of the week is the election tomorrow. I would
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say most important economic event of the week too, not
3:11
because it's going to determine whether the economy continues to
3:14
grow or contract, but obviously the priorities of the President
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and the Senate and the House are going to override
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really anything that I can think of that we might
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hear from Jerome Powell from publicly traded corporations.
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Speaker 3: Or anywhere else.
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Speaker 4: It is going to be the most important, even economic
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event of the week will be tomorrow's election, the outcome
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of which hopefully we'll have some clarity about by Wednesday, and.
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Speaker 3: All of the other stuff that's going to happen.
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Speaker 4: I mean, you know, the Federal Reserve is so aware
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of this that they kicked their meeting back by a
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full day so that they didn't have to compete for
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any eyeballs with the election coming out. So that's going
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to be all that really matters, and I can understand
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why people listening might have a tough time focusing on
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anything other than that this week.
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Speaker 2: I'll disagree with that, will you fed meeting is more important?
4:06
Completely disagree j Powell. At the stroke of a pen
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or push of a button or however they actually whatever
4:15
they actually do in order to change interest rates, it's
4:18
unclear to me the exact mechanism, whether it's button, dove,
4:21
lever dove. I don't think they change rates by dove.
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Hawk could be a hawk could carry sometimes that was
4:29
gonna be my case.
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Speaker 3: They carry a pigeon.
4:32
Speaker 2: It's like you're waiting for them to name the new pope.
4:34
Whatever birds they release out of the uh, but they
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don't burn the birds, that will be bad. Uh. J Powell,
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with the push of a button, can have more impact
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on the US and global economy than any other person
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on the planet, true President, Senate House included. I'm not
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saying that tomorrow 's vote isn't important to you know,
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the the broader idea of like humanity in the world
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and everything. But from an economic perspective, honestly, there is
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nothing like Jay Powell, and not him specifically, but the
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Fed Chair like that there is no one else who
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is that powerful economically. They're like, there's no one else
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that that has that level of control.
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Speaker 4: Yeah, I will still say that, Uh, the importance of
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tomorrow's election outweighs what we're going to hear from Jerome
5:36
Powell in terms of the economic implications, because we don't
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just have the presidential election going on.
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Speaker 3: We have the Senate, we have the House, and we
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have a whole new makeup people law making. None of
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them can do that again, but of course not.
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Speaker 4: But Powell's not going to do something that is outrageously
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out of uh, out of predictability.
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Speaker 2: But nothing unpredictable can really pass. Like even predictable stuff
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has trouble passing Congress. And like, this is the point
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that I come back to the last two presidential elections
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that we've had, twenty sixteen and twenty twenty. In both
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of those cases, you ended up with a trifecta with House,
6:14
Senate and White House control Republicans in twenty seventeen Democrats
6:19
in twenty twenty one. Could either of them accomplish all
6:22
of their priorities even given two years.
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Speaker 4: Of course not, But would you debate that those priorities
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were completely different.
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Speaker 2: I don't think they affected the economy nearly as much
6:32
as people think. I think they affected markets because hey,
6:37
here's where we're gonna give tax breaks, or here's where
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we're going to lower or raise taxes. Yep, and so
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certain sectors may benefit more than others. Sure, but from
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an actual economic perspective, no, I don't think that there
6:50
was a meaningful change as a result. And I know
6:54
that everyone listening like that there's just like exploding, like Chuck,
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you're an idiot, Like you're I get it. I get
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that we want to think that this is what moves markets,
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But for three hundred and sixty four days out of
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the year, and for you know, almost fifteen hundred days
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every four years we don't have elections, and most of
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the time we don't pass anything in Congress.
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Speaker 4: See you agree on ninety you and I agree on
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ninety percent of this. I don't think it's going to
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move markets. I don't think that either candidate leading here
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will change anything in the way of deficits or the
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fact that social Security is going to run out, or
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broadly speaking, what you know, the big economy looks like
7:40
over the next decade. My mere point is that the
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outcome of the election for the economy is more impactful
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than anything Jerome and Powell will have to say on Thursday.
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Speaker 2: But what's that impact of all? That's like what we
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have no idea what it will be.
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Speaker 4: No, but but whether we will still have assault deduction,
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whether or not.
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Speaker 2: Doesn't matter to the economy. Doesn't matter. It doesn't matter
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absolutely does Okay? What walk me through again?
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Speaker 5: No?
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Speaker 2: No, no, no, this is this is really like there's
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a lot of meat here. I think this is like
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really great to dig in on this.
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Speaker 4: So what you're describing is what does it matter to
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the big gross economy of the whole United States, And
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you know the salt deduction doesn't matter. But yes, would
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you say that the salt deduction doesn't matter to your
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personal economy? Would you say it doesn't matter to everyone
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said no, I said it doesn't matter to the economy.
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Speaker 2: Yes, and I believe it does not matter to the economy.
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I believe it absolutely matters to the economy.
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Speaker 1: No.
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Speaker 2: Yeah, the economy will figure out how to live with
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or without the salt deduction. But that's like, but it.
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Speaker 4: Will prioritize different people, and different people win or lose
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based on whether or not it happens.
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Speaker 3: It is immensely and more important than whatever jerone Palace
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say this week.
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Speaker 2: No, here's the thing. J. Powell can quite literally. If
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the FED makes a policy mistake, not intentionally but accidentally. Sure,
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if the FED makes a policy mistake, the US has recession.
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If Congress makes a tax code mistake, the US doesn't
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have a recession. It's just okay, some people get more
9:08
money and some people don't.
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Speaker 4: Are we like on completely different pages here? If the
9:16
US Congress makes a bunch of mistakes, then we have
9:18
another ten trillion dollars of deficits and potentially ruin the
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United States long term future.
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Speaker 3: We've just talked about how there is so much more important, but.
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Speaker 2: We've talked about how there is no meaningful daylight on
9:30
deficits between these two parties agreed, So like, what are
9:33
we talking about?
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Speaker 4: Then I would think that a split Congress would be
9:37
a net positive for all of this.
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Speaker 2: Why split Congress or not? No one's dealing with it. Well,
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the point that I'm making is there's no meaningful difference
9:49
in what you are going to get as far as
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the things that we're concerned about from an economic perspective,
9:55
deficit control, you know how responsive Congress is in the
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event of recessions. There's no meaningful daylight on these things.
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It's just okay, if you end up with Democrats in office, Okay,
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the money is going to clean energy instead of traditional energy. Like,
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is that something that we're really looking at and being like, well,
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you know this is gonna dramatically change the No, Like.
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Speaker 4: It's again, I don't know that it dramatically dramatically changes
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anything between the Republicans what would do and what the
10:27
Democrats would do. But in terms of the importance compared
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to what's going to come out of Jerome Powell's mouth
10:31
on Thursday to me, and I think almost every American's economy,
10:35
real world economy is far more important.
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Speaker 2: I don't know.
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Speaker 4: I just I don't see it, but I don't. And
10:44
land on the other side, I I.
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Speaker 2: Think everyone listening thinks I'm the idiot, which is cool,
10:50
Like it's it's fine, you can think I'm the idiot.
10:53
But ultimately, like, think about the last month just as
10:58
an example, and what we've seen from interest rates and
11:02
things like that, we're gonna say that, like stuff like
11:05
that doesn't matter more than hey, Like on the margins,
11:11
the tax code's gonna shift from you know, the top
11:13
bracket being thirty seven percent to thirty nine six or
11:16
thirty seven to thirty five. Like I can't get there,
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Like I just can't. And the thing about the FED
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is we we don't know if they're making a big
11:28
mistake until a year or two after the fact. Sure,
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like we can't judge any of this even look even Congress,
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if they make a mistake, you look at it and
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you're like, okay, we won't know until I mean, if
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we're talking the deficit, it could be like forty five
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years sure, And it's probably not even this Congress then,
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So it's like, I, I just don't know how from
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an economic perspective we can look at it and say, yes,
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like tomorrow matters so much more than Thursday. A FED
11:58
mistake is like, in my opinion, infinitely more important then
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whatever happens tomorrow from an economic perspective, because I would
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just say that a FED mistake literally causes a recession.
12:12
Speaker 4: Yeah, and A again A depending on the makeup of how
12:18
Congress looks like the country's economic priorities to me look
12:21
vastly different under one party versus another. Again, whether even
12:25
even if that is still these exact same amount of deficits,
12:29
which parts of the economy are prioritized, which people in
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the economy are prioritized, looks incredibly different under these two
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candidates running for president, and nothing that Jerne Powell is
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gonna say on Thursday, specifically, what.
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Speaker 2: Do they actually pass?
12:43
Speaker 3: Like what the hell if? I know but that?
12:45
Speaker 2: But that's like what what's meaningful that's gonna pass?
12:49
Speaker 3: Is it?
12:49
Speaker 2: Like, no one's gonna deal with Social Security while the
12:51
other doesn't. No one's gonna deal with Medicare while the
12:54
other doesn't. No one's gonna deal with the defense budget
12:57
while the other does. Like what, I don't know, what
13:00
are we talking about? Like, hey, there's a billion dollars
13:03
going to like Doe or something like that. All right,
13:06
Like who cares? I don't know. I can't get there
13:11
on tomorrow mattering much economically. I know that that's heathens
13:16
to like everyone in the entire country because it always
13:20
has to be the most important election of our lifetimes.
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Speaker 3: No, I don't think it has to be the most
13:24
important election of our lifetime.
13:25
Speaker 2: No thing about everyone listening more.
13:28
Speaker 4: Important than one FED meeting, more important than one FED
13:31
meeting because it is a presidential end election that will
13:34
swing the Senate in all likelihood.
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Speaker 2: Yeah, I can't get.
13:39
Speaker 3: Excited about it.
13:40
Speaker 2: Sorry, take a quick break here. When we come back,
13:43
we'll talk about what the FED might do on their
13:45
meeting on Thursday.
13:47
Speaker 5: Woll Street watch a full update on the markets performance
13:50
todate week days at ten thirty only here on the
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Get cut up on anything and everything you might have missed.
14:03
This is the Financial Exchange Radio Network, all right, So
14:21
we do have a.
14:22
Speaker 2: FED meeting on Thursday. It's more important than anything else
14:27
going on.
14:27
Speaker 4: How annoyed would you be if every story you brought
14:30
up today, I just said it doesn't matter.
14:31
Speaker 2: Nobody cares. I didn't say nobody cares. I said I
14:35
don't care. I know, I don't speak for anyone else.
14:40
Speaker 3: Big FED meeting coming up on Thursday usually occurs on Wednesdays.
14:43
Speaker 4: They've delayed a day, the only FED meeting certainly of
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the year that's not occurring on a Wednesday, and widely
14:50
anticipated for another twenty five basis point rate cut after
14:55
the fifty basis point during the last meeting. And I
14:59
don't know about your but I can't really think of
15:01
anything at this stage that should dissuade them.
15:04
Speaker 3: From that path.
15:06
Speaker 4: I think Muhammed eler and makes some good points about
15:08
their mistake on whether or not it was mistake to
15:10
do a fifty base point previously. But you know, you
15:13
had a weak jobs report, you had soft inflation, and
15:17
they're already on this cut path. I don't think you
15:19
can divert from it at this stage.
15:20
Speaker 2: No, quite. Honestly, I don't think you would want to know,
15:23
because I also think that you have to realize it's
15:29
there's no immediate pass through in terms of, you know,
15:33
how quickly rates are transmitted in this and that. But
15:37
it is something where okay, people were expecting the FED
15:41
to cut, and did that shift behavior even in advance,
15:46
and people started saying, okay, like, if the Fed's going
15:48
to be cutting, we're going to be okay doing X,
15:51
Y and Z. And look no further than how markets
15:53
have reacted. Just as an example, since the FED started cutting,
15:58
you've had the S and P five hundred situation where
16:00
despite you know, the negative seasonality in September and stuff
16:05
like that, you know, the FED cut on the nineteenth
16:07
of September. The S and P five hundred closed at
16:10
you know, fifty seven thirteen, it still is about two
16:14
thirds of a percent higher than then, and at one point,
16:17
you know, we were like three percent higher when it
16:18
was closing in on fifty nine hundred, and so it's
16:22
something where hey, to markets, the signal is, hey, if
16:26
things get bad, we're gonna cut more like that was
16:30
very clear and so markets, at least in the short
16:32
term found some support because of that. And I think
16:36
if you want to look at you know, recent weakness,
16:40
I think it's probably ascribed to, Hey, the economy might
16:44
be hotter than we think, and maybe the FED doesn't
16:46
need to do as much, and so that's been why,
16:49
you know, rates have been moving up and maybe EVE
16:51
been seeing some signs of I don't want to say
16:54
slow down, because again it's it's mostly the labor market
16:56
that we're concerned about at this point. But I think
17:01
ultimately the FED can probably go through another two to
17:03
three cuts and kind of sit there and say, Okay,
17:06
when we get to four and a half, let's see
17:09
what the situation looks like at that point. And I
17:13
don't think they've necessarily done any harm in continuing on
17:16
that path. And in fact, if this little burst that
17:19
we've had turns out to be a dare I say,
17:22
transitory form of strength, then I think THEE can say, yeah,
17:27
the underlying stuff that we were seeing, which is stuff
17:29
that we've been talking about, Hey, we were justified in
17:32
looking through that strength. Just like remember in the spring
17:37
they were talking about, Hey, we think that this uptick
17:40
in inflation in January through March was kind of this
17:43
aberration that they look through. They might end up being
17:46
justified similarly here and saying yeah, this was, you know,
17:50
transitory strength, and we're not going to get fooled by
17:53
it because the underlying data is pointing still in a
17:56
negative direction.
17:57
Speaker 4: So pretty clear what the outcome of Thursday is going
17:59
to be. By by all accounts, probably no significant change
18:03
in what that means for long.
18:05
Speaker 3: Term rates or mortgage borrowers out there.
18:07
Speaker 4: What do you make of Muhammad al Arian's most recent
18:10
commentaries published this exact story multiple times over the last
18:14
year or so, But I'm starting to buy in more.
18:16
And here's a quote. Consider the following. A FED that
18:19
saw no need to cut interest rates at the end
18:21
of July proceeded to do so by an unusually large
18:25
fifty basis points at its next policy meeting in mid September,
18:28
slashing the target FED funds rate to a range of
18:30
four to seven five to five from a range of
18:32
five and a quarter to five and a half.
18:34
Speaker 3: The intention to go big rather than valid the.
18:35
Speaker 4: Twenty five basis points that the market expected that stage
18:38
was communicated via newspaper leaks. He goes on, I'm starting
18:42
to buy into this a little bit more. To say,
18:44
the Fed seems to lack any long term strategic vision
18:49
and instead seems to be bouncing back and forth to
18:52
different data points and inconsistently, by the way, right to
18:56
your point. Back in the spring, they saw higher inflation,
18:59
didn't really seem to rect to it. This time they
19:01
saw possibly lower inflation and quickly reacted with a fifty
19:03
base point cut.
19:05
Speaker 2: I think it's a FED that has been proven very
19:08
clearly in the last three years to be more afraid
19:11
of causing a recession than letting inflation linger. They've behaved
19:14
dubbishly every time they've had the opportunity to do so.
19:19
I don't know if I agree with Larian that they
19:21
lack strategic vision. I just think that that vision is
19:23
asymmetrically skewed to being afraid of recession more than being
19:27
afraid of inflation. Fair let's take a quick break here.
19:33
When we come back, we got Wall Street Watch and
19:34
we're talking housing.
19:41
Speaker 1: Like us on Facebook and follow us on Twitter. Act
19:44
TFE show Breaking business news is.
19:46
Speaker 5: Always first right here on the Financial Exchange Radio Network.
19:52
Time now for Wall Street Watch, a complete look at
19:55
what's moving markets so far today right here on the
19:58
Financial Exchange Radio Network.
20:01
Speaker 6: The busy stretch on Wall Street continues this week with
20:05
a FED meeting this week in a tiny, little presidential
20:09
election you may have heard of tomorrow. Markets right now
20:13
are in mixed territory. The Dow is off by just
20:16
about a quarter percent, SMP five hundred is up by
20:20
only five points, and the Nasdaq is up by twenty
20:23
three points. Russell two thousand up by half a percent,
20:26
ten year treasure yealed down by nine basis points at
20:30
four point two seven percent, and crude oil is up
20:34
over two percent, trating just above seventy one dollars a barrel.
20:38
Over the weekend, Berkshire halfway posted their third quarter third
20:42
quarter results, narrowly missing earnings expectations. Worn Buffett's conglomerate also
20:47
revealed it further trimmed its holding of Apple stock, selling
20:51
about a quarter of its stake last quarter. Despite the cut,
20:55
Berkshire still remains Apple's largest shareholder. Berkshire also continued to
21:00
reduce its position in Bank of America. Apple shares are
21:03
off by half a percent, while Bank of America shares
21:06
are down by about a third of a percent. Meanwhile,
21:09
after initially jumping at the opening at the opening, bell
21:13
Viking Therapeutic stock now down by eight percent after the
21:16
biotech company reported promising results from an obesity pill trial.
21:20
If successful, the pill could compete with medications from Novo
21:25
Nordisk and Eli Lilly, which have to be injected elsewhere.
21:29
Boeing up by about a third of a percent ahead
21:32
of the big vote from its machinist union on a
21:35
new labor deal with the hopes of ending the seven
21:38
week strike, and ahead of Friday's opening. Bell and Video
21:41
will join the dowd Jones Industrial Average, replacing Intel. Paint
21:46
manufacturer Sherwin Williams will take Chemical Company Down Incorporated's place
21:53
in Video shares up by two percent while Sherwan Williams
21:56
stock is up by four percent. I'm Tucker Silvan. That's
21:59
Wall Street Watch.
22:01
Speaker 2: It's always exciting when you get some new Dow components.
22:04
It's also confusing because you're now comparing stocks today to
22:11
stocks that are no longer in there.
22:13
Speaker 3: Yeah, I mean, like.
22:14
Speaker 2: Mentally, I always struggle with this one when a new
22:17
component comes in, especially in a thirty company index.
22:20
Speaker 3: Right.
22:21
Speaker 4: Yeah, it's one thing with the S and P five
22:23
hundred when somebody gets the boot and yeah, you're technically
22:26
comparing very different companies today than you were thirty years ago.
22:31
Speaker 3: Even in the S and P five hundred.
22:32
Speaker 4: But yeah, when it's when it's only thirty companies and
22:35
they boot out a company like Intel, who's off by
22:39
fifty percent this year, and replace it within Video Who's.
22:41
Speaker 3: Up what one hundred and fifty percent this year? It
22:44
does distort things a bit.
22:46
Speaker 2: It does. And I also want to U just reference
22:50
one thing that I love to go back to. Do
22:52
you remember when Salesforce got added to the dow? Uh
22:55
twenty one or two twenty twenty? Okay, and do you
22:58
remember who they replaced? Ibm uh Exon Mobile?
23:04
Speaker 3: Really?
23:04
Speaker 2: Yeah, they basically do the same thing.
23:07
Speaker 4: Yeah, obviously, Yeah, obviously Salesforce and Exon Mobile have a
23:11
lot in common.
23:12
Speaker 2: Since August twenty fourth of twenty twenty, Salesforce is up
23:17
forty two percent, Exon Mobil is up two hundred and
23:20
twenty six percent.
23:22
Speaker 4: What was the prespice for? What was the cause to
23:24
give x on the boot? Is there another integrated oil company?
23:28
Speaker 3: And press? Is?
23:28
Speaker 5: What?
23:29
Speaker 2: Negative that?
23:29
Speaker 5: Sure?
23:30
Speaker 2: That's all I can think of.
23:31
Speaker 3: But like, is there a single other oil producer in
23:34
the Dow?
23:35
Speaker 2: Let me think of who's Lescu?
23:36
Speaker 4: That's a massive absoint if you're just gonna say, hey,
23:38
this is the representation of the US marketing von still
23:42
in there.
23:42
Speaker 3: Chevrons in there.
23:43
Speaker 2: Okay, Chevron's in there.
23:44
Speaker 3: And again, I.
23:45
Speaker 4: Don't know how you prioritize keeping Chevron over exon given
23:49
the comparable size the two.
23:50
Speaker 3: But nonetheless, here we are.
23:52
Speaker 2: I believe it's called Chevron deference. Yeah, it's such like
23:57
show like it's such a nerd I crap joke. There's
24:01
like this three of our talking about. Actually no, I
24:07
would say most of our listeners might know about that.
24:09
Speaker 4: They've heard of the Chevron difference. Yeah, but a very
24:13
small portion of them would find that joke funny, like
24:15
I did.
24:17
Speaker 2: I'm glad I made you smile, Mike. Let's talk a
24:19
little bit about the housing market, something that's not gonna
24:21
make anyone smile anytime soon. If you own a home,
24:25
I'm not if you want to move, and not if
24:28
you want to refinance. Basically, if if you like everything
24:32
exactly how it is right now with your housing situation,
24:34
you can smile. If you have any problems, you probably can't.
24:38
Piece from connor Son in Bloomberg Opinion Today, It's titled
24:41
Squeezed homebuilders are bad news for the housing market and
24:43
This is a story I've been following for the last
24:45
couple of weeks, which is homebuilders have been reporting earnings
24:48
just like other companies over the last couple of weeks,
24:51
and there are two things going on. First, the earnings
24:53
have been bad, just not good. The second is that
24:58
these companies are just significantly reducing backlogs in places where
25:02
they're actually building houses in large numbers. Remember, the housing
25:06
industry is just hugely fragmented. There is no there is
25:10
no apple for housing. Even the biggest home builders in
25:14
the country build like two percent of all the new
25:18
homes that are built each year, so like it's just
25:20
not a very concentrated market. But what we're seeing from
25:24
those large home builders is in places like Texas, Florida, Georgia,
25:30
all the places where the growth has been population wise
25:33
the last few years, the backlogs that they are reporting
25:37
in terms of you know, unit construction and orders and
25:39
things like that are dropping by like twenty to thirty
25:42
percent year over year. And what this means is these
25:45
companies are looking at pricing and looking at what people
25:48
can actually pay, and they're pretty much saying, hey, we
25:53
can't sell nearly as many homes as we used to,
25:55
so we're not gonna build them.
25:57
Speaker 3: And that's also problematic.
25:59
Speaker 4: Like you could look at that and say, well, you know,
26:01
if people are leaving Florida and Georgia and North Carolina
26:05
and returning back to the northeastern California, for example, which
26:08
does some extent might be happening somewhere out the margins,
26:11
maybe you know, the logical thing to be like, well,
26:13
just build the homes in New England.
26:14
Speaker 3: But that doesn't really happen.
26:16
Speaker 4: It is just so much more difficult to build a
26:19
home anywhere in New England compared to Florida and Georgia
26:21
and North Carolina that you won't see an easy replacement.
26:25
Like Chuck said, also, the same companies that build those
26:28
homes in Georgia aren't the same ones that do it
26:30
in New England.
26:30
Speaker 3: In the first place.
26:31
Speaker 4: But yeah, nonetheless, a slow down in housing construction is
26:35
a slow down for the US economy. And you know,
26:39
it was wildfire for the last few years in terms
26:41
of cost materials and everything else. And a somewhat logical
26:47
turnaround here, although you know could look could have looked
26:51
very different. Head rates started coming down a little bit
26:53
faster than they have recently.
26:56
Speaker 2: Yeah, and so this is ultimately going to be a
27:01
big continued problem because if you don't build enough new housing,
27:07
then you don't get enough used housing, and then you
27:10
end up with prices that don't really move the way
27:14
you want them to. We've seen this with the auto
27:17
market in terms of how it's cleared, but even in
27:19
the auto market, you still are not quite back to
27:23
where you would expect it to be, just because part
27:26
of that is just a shift in consumer preferences and
27:28
what we're seeing in autos. But even in the auto market, look,
27:33
once automakers squared away their supply chains, you've had like
27:36
two years now have used car prices going down. They've
27:38
kind of bottomed out a little bit, but it still
27:42
is something where, hey, once you finally produced enough new cars,
27:46
it cleared a lot of the issues on the used
27:48
car market that we were seeing that we're leading to them,
27:51
you know, going up in value by thirty forty percent
27:53
a year.
27:55
Speaker 4: This is only tangentially attached to housing. Have you seen
28:00
any uptick in ADU construction in your area? Only because
28:06
nationally there's been a big push for accessory dwelling units
28:10
and specifically a big push for states and municipalities to
28:15
pass laws saying hey, by default, you're able to build
28:18
one of these. I know in my town, for instance,
28:20
there's an exemption where you know, you don't have to
28:23
go through traditional zoning requests and things like that, so
28:26
long as it's under a certain square footage, sure, and
28:28
as long as you're not in an environmental zone. For example,
28:31
I was working with somebody else up in Maine who
28:33
you know, so long as it's not being used for
28:35
short term rentals, pretty much can construct one of these
28:38
things without much in the way of requirements. I haven't
28:43
seen locally any significant uptick, but to me that logically
28:46
makes a good bit of sense for folks that you
28:50
know might have family or you know, aging family that
28:54
needs to be close by.
28:57
Speaker 3: Seems like a logical next step.
28:58
Speaker 4: But I haven't can't say I've seen a ton of it,
29:00
and I wonder if from builders, if they're saying it anecdotally.
29:03
Speaker 2: I haven't seen much either. It's something where I also
29:08
don't know in some cases like how you would see it,
29:11
because the idea behind these ADUs is, hey, they might
29:14
be built as like like it almost looks like a
29:18
slightly larger shed behind someone's house, So true, you might
29:21
not see it. You might not have the signs of it.
29:25
You might see, you know, construction vehicles outside someone's house,
29:28
but it looks like they're just doing a kitchen renovation,
29:31
but really they're building an ADU behind it, and so
29:33
you just don't know it's which is again, that's kind
29:37
of the whole point of making them more allowable, is Hey,
29:41
if you can't see it from the street, who cares?
29:45
What are we really doing here?
29:46
Speaker 3: Now?
29:47
Speaker 2: Like there's limits to that. Obviously, this is an ADU,
29:49
not you know, a missile silo. I know there's a
29:53
lot of middle ground between that, but ultimately, you know,
29:57
nuclear power plant things like that, Like you wouldn't just
30:00
be like, yeah, pop a little miniature reactor in your
30:02
backyard and hook your Dolorean up to it and you're
30:05
good to go. But yeah, you would hope that you're
30:08
seeing more of this, but you might not actually see it.
30:11
If that makes sense either way, that the housing market
30:15
is stuck. It really doesn't really show any signs of
30:20
budget either. With rates where they are no and the
30:22
places that do now have higher inventory levels than pre pandemic.
30:26
You're seeing prices coming down and that is something that
30:31
feels like a feature, not a bug of this market. Unfortunately,
30:35
at this point, if you're if you're trying to sell
30:39
in one of those high inventory areas, it's it's it's
30:44
not great like it's it's unclear there's gonna be anything
30:46
that clears that in the near future. Take a quick
30:49
break here when we come back, talk a little bit
30:52
about Berkshire, Hathaway and Boeing. Right after this text, does.
30:58
Speaker 5: Six one seven drink six to two one three five
31:00
with your comments and questions about today's show.
31:03
Speaker 1: This is the Financial Exchange Radio Network.
31:07
Speaker 5: The Financial Exchange Show podcast drops every day on Apple, Spotify,
31:11
and iHeartRadio. Hit that subscribe button and leave us a
31:14
five star review. You're listening to the Financial Exchange Radio Network.
31:21
Speaker 6: Just want to remind everybody that coming up right here
31:24
on the show at eleven am, we have the Ultimate
31:26
Boston Sports Auction to benefit the Disabled American American Veterans
31:32
Department of Massachusetts once again, that auction is going to
31:35
open up at eleven am. We'll have four incredible items
31:38
to bid on in one massive package, including a pair
31:42
of tickets to see each of the Boston sports teams.
31:46
Some nice memorabilia, including a Drake May autograph, team jersey
31:51
of Pedro Martinez autograph baseball and much more. It's a massive,
31:56
max massive Boston sports auction in that will be open
32:00
again coming up here at eleven am and will be
32:03
happening the entire week and again all the proceeds will
32:07
benefit the Disabled American Veterans Department of Massachusetts once again.
32:12
That will be open at eleven am and the phone
32:14
number to call at eleven am is eight eight eight
32:17
two zero five two to two sixty three. To bid
32:20
at eleven am once again, the number eighty eight two
32:23
zero five two two six three.
32:27
Speaker 2: Love the Drake, wonderful play at the end of yesterday.
32:30
Oh yeah, I love the Drake. He's a stud. There's
32:33
not much else going on there, but uh yeah, that's it.
32:38
There's not much else. Just to see Drake May.
32:40
Speaker 6: I mean that would be amazing, right.
32:42
Speaker 2: Like just fantastic, absolutely fantastolutely Mike, did you watch any
32:45
of the game yesterday?
32:47
Speaker 3: I did. I watched them listen overtime.
32:48
Speaker 2: Yeah, oh good good. It was one of the more
32:51
enjoyable overtime losses I've ever waitnessed.
32:54
Speaker 6: Our house, our household was standing watching that game all
32:58
that matters, which hasn't happened in a while. And right,
33:00
but this new quarterback, Drake May, who stud.
33:03
Speaker 2: Drake May so hot? Right now, let's talk a little
33:06
bit about Berkshire Hathaway. They announced that they are continuing
33:11
to trim some of their holdings, specifically their Apple holding.
33:16
They sold about one hundred million shares of Apple in
33:18
the quarter, but it's about twenty five percent of their
33:21
steak and they've now sold more than six hundred million
33:25
Apple shares this year, so they've reduced their steak by
33:29
almost seventy percent over the course of the year. Does
33:33
Warren know something, Mike, what's he doing?
33:37
Speaker 4: Probably he knows lots of things he does. I think
33:39
it's a good reminder that while Warren Buffett does have
33:43
a lot of great advice to dole out, and frequently
33:46
does on all sorts of different topics, from taxes to
33:51
how to invest, using Berkshire Hathaway's investment strategy as your own,
33:58
should you know should be looked at with some extreme caution.
34:03
To know the least, no one is able to invest
34:05
like Berkshire Hathaway. Berkshire Hathaway is an entity that is
34:10
designed to hopefully continue to exist for decades after this
34:14
has all sorts of reporting and regulatory requirements to its
34:17
shareholders that don't and should not invest and exist for
34:21
the average investor.
34:22
Speaker 2: Beyond that, I think there's a very simple thing that
34:24
I come back to, which is, there's a reason why
34:27
Warren Buffett is Warren Buffett in your you and I
34:30
include me in the your you right category like it's
34:32
all of us, yeah, and we're us.
34:35
Speaker 3: You know.
34:35
Speaker 2: It's he's really good at investing. I know that he's
34:41
playing the long game. He can afford to play the
34:45
long game. You know, when when he comes in in
34:48
two thousand and eight and makes the deal with Bank
34:51
of America to rescue them from blowing up, he wasn't
34:55
concerned about, Hey, how's this going to look for me
34:57
next year, next week? Or do I need the money
34:59
to buy a house? He's no, I'm getting a huge
35:01
deal on this, And even if it doesn't pay off
35:04
for eight to ten years, which is it took like
35:06
seven or eight years for it to kind of get
35:07
to be as good of a deal as it was. Hey,
35:10
that's fine, I can sit and wait on that. That's
35:13
no problem. On top of that. Remember, Warren Buffet's also
35:16
a great example of like do as I say, not
35:18
as I do. He always talks about the dangers of leverage.
35:20
Warn Buffet uses a ton of leverage his businesses. It's
35:23
because he knows what he's doing. And I'm not saying
35:25
that none of us know what we're doing either, But
35:28
Warren's pretty special. There's a reason why most people don't
35:31
accumulate the level of wealth and the types of returns
35:35
that he has. It's because he's really good at it.
35:38
And you can't just look at what he did in
35:40
the prior court and be like, I should do that,
35:42
because you don't know why he was doing it. You
35:44
don't know when he was selling it, what prices, you
35:46
don't know when it's all.
35:47
Speaker 3: He's done for the better part of a century.
35:50
Speaker 2: Right, Yeah, he's ninety four years old, He's seen some stuff,
35:54
knows a few things.
35:55
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36:57
Speaker 3: Chuck, how many leaders are an a HECTA leader?
36:59
Speaker 2: One hundred?
37:00
Speaker 3: Okay.
37:02
Speaker 4: In twenty twenty three, global wine consumption came in at
37:05
two hundred and twenty one million hecto leaders, which sounds
37:09
like a lot, but it was actually down almost ten
37:11
percent from two hundred and forty seven million Hecto leaders
37:15
back in twenty seventeen, which hopefully means that I'm going
37:19
to start finding some bigger discounts on wine.
37:21
Speaker 2: It's three point five billion fewer bottles of wine. To
37:24
put that in you know term that we're more than
37:26
a lot because most of us don't buy by the
37:28
Hecto leader. No, we don't even buy the leader. No,
37:31
he buy three quarters for flye. And so what you're
37:36
seeing here is that apparently there is too much wine
37:39
being produced and not enough people drinking wine. There's various
37:43
different reasons for this. There's one theory that baby boomers
37:48
have been the primary wine you know consumers, and younger
37:50
generations are more beer and whiskey.
37:53
Speaker 4: You know now that there is that younger consumers just
37:55
aren't drinking as much alcohol in general.
37:57
Speaker 2: Yep, you've got kind of like dry anuary and stuff
38:00
that goes on. Ultimately, as someone who does enjoy drinking wine,
38:05
I come back to the idea that hey, if no
38:07
one else wants to buy it, it's better for supply
38:09
and demand for me, and hopefully I can get some
38:12
better pricing on it. Sounds nice.
38:14
Speaker 3: Some winers will probably also go out of business.
38:15
Speaker 2: Not great if you're in the wine business, though, It's uh,
38:18
you know, something that's gonna be a real challenge. Let's
38:21
take a quick break here. Hour two coming up in
38:23
a bit