Latest / The Financial Exchange Show / Is Economic Growth Outpacing the Labor Market?

Transcript

Is Economic Growth Outpacing the Labor Market? · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:03
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:08
Speaker 1: the hosts, do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:17
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
Speaker 1: this program do not endorse each other or their services.
0:26
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:28
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Chuck Zada and Mark Fandaddy, your exclusive look
0:39
Speaker 1: at business and financial news affecting your day, your city,
0:43
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends, plus breaking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:53
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:57
Speaker 1: heroes by visiting DAV five Boston and making a donation today.
1:03
Speaker 1: This is the Financial Exchange with Chuck Zada and Mark Vandetti, Chuck.
1:11
Speaker 2: Mark and Tucker kicking things off for you. And we've
1:13
Speaker 2: got a nice little rally going on today as markets
1:18
Speaker 2: continue to bounce off of what at least right now
1:21
Speaker 2: appears to be another interim bottom round sixty eight hundred
1:25
Speaker 2: on the S and P five hundred touch below. They're
1:26
Speaker 2: around sixty seven seventy five. It's where we got down
1:30
Speaker 2: to yesterday. But we're back up sixty nine hundred now,
1:32
Speaker 2: so again within about one and a half percent of
1:35
Speaker 2: all time highs in what is just a really narrow
1:38
Speaker 2: rangebound market right now, where the SMP is about a
1:41
Speaker 2: quarter percent below where it was in late October. Just
1:45
Speaker 2: no real movement with any conviction in either direction right now.
1:51
Speaker 2: But today again like today, has some conviction. You just
1:55
Speaker 2: can't really string a lot of these together. At the moment.
1:57
Speaker 2: The Dow's up three hundred and ten points, the the
2:00
Speaker 2: S and P is up sixty two, NASDAK composits up
2:03
Speaker 2: three twelve, so anywhere from about a two thirds of
2:05
Speaker 2: one percent to one in a third percent gain on
2:07
Speaker 2: your major USN disease. Ten year Treasury rates up just
2:12
Speaker 2: a little bit point zero two five or two and
2:15
Speaker 2: a half basis points to four point zero seven seven percent.
2:19
Speaker 2: When we take a look at what is happening in
2:23
Speaker 2: other parts of the market, you know, you'd see what's
2:26
Speaker 2: going on with the dollar, just as an example, up
2:30
Speaker 2: point two eight percent to ninety seven thirty three. Gold
2:33
Speaker 2: is up two and a quarter percent, about one hundred
2:36
Speaker 2: and ten bucks an ounce to five thy sixteen dollars
2:39
Speaker 2: and sixty cents. We got crude oil up one ninety
2:43
Speaker 2: nine a barrel on West Text Intermediate to sixty four
2:45
Speaker 2: to thirty two the sound renewed concerns about potential action
2:49
Speaker 2: in the Middle East. Triple A national amatur gas price
2:53
Speaker 2: is up six tens of ascent as well to two
2:55
Speaker 2: ninety two and three tenths. We've kind of settled in
2:57
Speaker 2: that load a mid two nineties range in the last
2:59
Speaker 2: couple weeks after being down in the low two eighties
3:02
Speaker 2: for most of December and January. And so that is
3:07
Speaker 2: what is moving in markets today. Let's see what do
3:13
Speaker 2: we want to talk about. Let's talk a little bit
3:15
Speaker 2: about the US and Japan. Japan announcing that they are
3:19
Speaker 2: planning to invest thirty six billion dollars into US oil,
3:23
Speaker 2: gas and mineral projects. This is the first tranch of
3:27
Speaker 2: a five hundred and fifty billion dollar commitment under the
3:29
Speaker 2: trade agreement that it struck with the Trump administration and
3:36
Speaker 2: Japanese Prime Minister Takaichi basically saying, look, we're trying to
3:40
Speaker 2: focus on areas that are critical for economic security, mainly
3:45
Speaker 2: focusing on energy and certain mineral deposits, and the biggest
3:51
Speaker 2: investment is going to be in a natural gas facility
3:54
Speaker 2: in Ohio that's expected to generate nine point two gigawatts
3:59
Speaker 2: of power, or as Doc Brown say, jigawatts. But uh,
4:03
Speaker 2: back to the.
4:04
Speaker 3: Feat, Yeah, I know, I'm trying to.
4:05
Speaker 2: One point jigawatts.
4:08
Speaker 3: Did he say jigawatts? Gigawatts?
4:09
Speaker 2: Yeah? Okay, I don't know if that was intentional, if
4:12
Speaker 2: that's just how like it was pronounced back then, I
4:16
Speaker 2: I or maybe it was.
4:17
Speaker 4: I don't call other people saying it back then. I
4:20
Speaker 4: didn't use the gigawatt, was not Oh okay, huh.
4:25
Speaker 2: Yeah, we didn't really do much with gigawatts back then.
4:28
Speaker 4: Well, I mean they didn't exactly have a scientific advisor
4:31
Speaker 4: on that movie, So I'm not surprised. You sure corrected him,
4:34
Speaker 4: pretty sureipher Lloyd wasn't actually a scientistic exactly no, I
4:39
Speaker 4: mean like an advice, you know, star trek Will physicist
4:43
Speaker 4: Tony the script.
4:44
Speaker 2: Okay, sorry, no, it's it's fine. So in any case,
4:47
Speaker 2: you've got most of this investment is going to be
4:50
Speaker 2: into uh that gas plant of the thirty six billion,
4:54
Speaker 2: thirty three billion is going there. It's gonna be led
4:57
Speaker 2: by a subsidiary of soft Bank Group SB Energy, And
5:02
Speaker 2: if that plant does get up to full capacity, it
5:06
Speaker 2: is in theory enough to power about seven point four
5:08
Speaker 2: million homes within the United States. So there's that.
5:14
Speaker 3: Yeah, I mean, big deal.
5:16
Speaker 4: The president running around doing and I would made the
5:19
Speaker 4: same criticisms of Biden when Gina Ramundo was handing out
5:22
Speaker 4: capital to semiconductor manufacturers and.
5:26
Speaker 3: Stuff like that.
5:27
Speaker 4: The job of the federal government ought to be to
5:29
Speaker 4: just set the general conditions conducive to economic growth, not
5:32
Speaker 4: try to cut individual deals. There's plenty of capital around
5:36
Speaker 4: to finance these deals. We extorted this capital from Japan
5:40
Speaker 4: under the threat of retaliation in the form of tariffs.
5:44
Speaker 4: Presumably these investments would have happened anyway.
5:47
Speaker 2: They might have gone somewhere else within the US, like
5:50
Speaker 2: into something else.
5:51
Speaker 4: Capital is like fungible, It's gonna find its highest and
5:53
Speaker 4: best use. So this makes for nice theatrics, and the
5:56
Speaker 4: media dutifully reports that, know, this investment's going to be made,
5:58
Speaker 4: but we extored it well.
6:00
Speaker 2: And I think ultimately you're gonna have to see how
6:02
Speaker 2: these end up playing out when it's all said and done.
6:05
Speaker 2: I remember, you go back and look in just about
6:08
Speaker 2: any presidential administration, you can find things like this. You
6:11
Speaker 2: go back to the first Trump administration and uh, you
6:15
Speaker 2: remember all of the fanfare about the fox Con plant
6:17
Speaker 2: that was going to be built in Wisconsin. Vaguely, there
6:20
Speaker 2: was a ton of it, and ultimately, like basically the
6:22
Speaker 2: plant never ended up getting built because they were like, oh,
6:25
Speaker 2: we're not actually going to do this. You can go
6:29
Speaker 2: through basically every administration and see, hey, here's a commitment
6:33
Speaker 2: that you know, we thought was going to happen, but ultimately,
6:35
Speaker 2: for reasons X, Y, and Z, it never came to fruition.
6:37
Speaker 4: Yeah, I'm not saying it's not politically smart. By the way,
6:39
Speaker 4: you if to create some jobs, don't see are the
6:44
Speaker 4: jobs that weren't created elsewhere? Because to your point, capital
6:48
Speaker 4: seeking its highest and best use may not have landed
6:51
Speaker 4: on a deal that was ultimately decided a location a
6:57
Speaker 4: project for political reasons. The President's making these, he likes
7:00
Speaker 4: to be involved. He's a businessman. I get that, but
7:02
Speaker 4: better off and I'm sure maybe somebody's telling him this
7:06
Speaker 4: maybe not better off again, just trying to keep regulations modest,
7:09
Speaker 4: and they're trying to do in other areas.
7:12
Speaker 2: Let's talk a little bit about the FED. There's a
7:13
Speaker 2: piece from Barons and I think this is right in
7:16
Speaker 2: your wheelhouse mark in terms of, you know, kind of
7:19
Speaker 2: looking at the big macro picture. Are the Fed's economic
7:23
Speaker 2: models wrong? What does this?
7:25
Speaker 3: Could you be more specific?
7:27
Speaker 1: Please?
7:27
Speaker 4: No, no, I'm not saying you no, I mean the author.
7:29
Speaker 4: I find these pieces very frustrating.
7:31
Speaker 2: Talk to me about why you find him frustrating.
7:33
Speaker 4: Well, look, a model is puts into symbols what you'd
7:37
Speaker 4: normally say in a sentence. You could have a model
7:39
Speaker 4: of a little market of demand and supply, and then
7:41
Speaker 4: play out what you think will happen to demand or
7:44
Speaker 4: supply or prices when you do something. How will raising
7:48
Speaker 4: taxes on a good in a particular market effect demand?
7:51
Speaker 4: You really can't reason that out just talking through it.
7:55
Speaker 4: You could try. You could if you've ever read like
7:57
Speaker 4: Adam Smith in college, or something. You should see see
8:00
Speaker 4: how difficult it is to communicate with words versus symbols.
8:04
Speaker 4: So a model puts a thought into symbols and then
8:06
Speaker 4: allows you to reason consistently because it's easier to look
8:09
Speaker 4: back at what ultimately is an equation or set of
8:12
Speaker 4: equations and say, ooh, this was not consistent when I'm
8:15
Speaker 4: writing down now, is not consistent with what I said
8:16
Speaker 4: two steps ago. I need to correct my thinking. So
8:18
Speaker 4: a model is just a way of clearly expressing yourself,
8:21
Speaker 4: and all fields, many fields use them, or they're quantitative obviously,
8:25
Speaker 4: not just econ. The criticism here is I think directed
8:30
Speaker 4: at the big models. The furbuss is the acronym used
8:35
Speaker 4: to describe the dynamic random They call that stochastic general equilibrium,
8:42
Speaker 4: very fancy way of saying total economy model that takes
8:45
Speaker 4: into account the fact that the variables as they play
8:49
Speaker 4: out over time, play out with a great deal of uncertainty.
8:53
Speaker 4: So the FAT as like you could think of it
8:54
Speaker 4: as a big computer, even though it's not. Obviously you
8:57
Speaker 4: put in a bunch of assumptions about we're gonna change
9:00
Speaker 4: monetary policy a little bit, fiscal policy is going to
9:03
Speaker 4: do this. There are no shocks hitting the economy from outside.
9:06
Speaker 4: What happens to economic growth so called GDP? If monetary
9:11
Speaker 4: policy tightens up, if interest rates go up by a
9:15
Speaker 4: quarter or a half a percent today, what happens over
9:17
Speaker 4: the next several quarters. This computer, it's really a model
9:20
Speaker 4: running on a computer, but you know what I mean,
9:22
Speaker 4: will spit out the path of say the variable you
9:26
Speaker 4: want if you want to tweak something else. So when
9:29
Speaker 4: you say when the author says their models might be flood, yeah,
9:34
Speaker 4: well no kidding, they're always of course they're flawed. Nobody
9:36
Speaker 4: would say they weren't. They're arguing against a so called strongman. Economists,
9:41
Speaker 4: like researchers in any quantitative fielder constantly improving their models.
9:45
Speaker 4: So I don't really know what that Whenever I hear
9:47
Speaker 4: criticisms like this, it's invariably there're from people who don't
9:50
Speaker 4: get the math. Forgive me, but it takes a lot
9:52
Speaker 4: of math to get to the point, to like years
9:55
Speaker 4: and years worth to understand these things, and their criticisms
9:57
Speaker 4: are so vague as to be unhelpful, because economics will
10:00
Speaker 4: be the first person to tell you that their models
10:03
Speaker 4: are deeply flawed and they're just a way of sort
10:05
Speaker 4: of enshrining and improving on your intuition.
10:11
Speaker 2: It often economists often get lumped in the same category
10:14
Speaker 2: as meteorologists for good reason, and that they're really complex
10:18
Speaker 2: systems where you have models where you try to predict
10:20
Speaker 2: what's going to happen, but ultimately you're still going to
10:23
Speaker 2: be wrong. Yeah, because of unforeseen factors and things.
10:27
Speaker 3: Yeah, you know, that's a good example.
10:28
Speaker 4: Like suppose global warming is changing the way the climate works,
10:31
Speaker 4: changing the way things interact. If you make predictions using
10:34
Speaker 4: a model that was a fit to an old climate,
10:38
Speaker 4: you're going to be wrong. You're going to be wrong
10:40
Speaker 4: about snowfall totals or something. Climate and snowfall totals or
10:44
Speaker 4: cerfaent things, of course. But yeah, that that's a good analogy.
10:47
Speaker 4: And of course meteorology is physics based. Economics, as you
10:50
Speaker 4: like to point out, doesn't depend on concepts which are
10:54
Speaker 4: invariant to policy and things like that.
10:58
Speaker 2: Let's take a quick break. When we come back, we've
11:00
Speaker 2: got some trivia and then we'll talk about the housing
11:03
Speaker 2: market right after this.
11:05
Speaker 1: The Financial Exchange is now available every day from eleven
11:08
Speaker 1: to noon on Serious XM's business radio channel one thirty two.
11:12
Speaker 1: Stay informed about the latest from Wall Street, fiscal policy,
11:15
Speaker 1: and breaking business news. Every day, The Financial Exchange is
11:19
Speaker 1: live on Serious XM's business radio channel one thirty two.
11:23
Speaker 1: This is the Financial Exchange Radio Network. The Financial Exchange
11:28
Speaker 1: streams live on YouTube. Subscribe to our page and stay
11:31
Speaker 1: up to date on breaking business news all morning long.
11:34
Speaker 1: This is the Financial Exchange Radio Network.
11:47
Speaker 5: Remember you can watch the show live every day on
11:50
Speaker 5: our YouTube page. Well breaking business news and all of
11:53
Speaker 5: our content is also archived, so if you want to
11:56
Speaker 5: go back and see an interview or a discussion about
11:58
Speaker 5: a specific topic, it's all there. With click of a
12:01
Speaker 5: button to search The Financial Exchange on YouTube, and be
12:06
Speaker 5: sure to hit that subscribe button. Time for trivia here
12:11
Speaker 5: on the Financial Exchange, and it's now official. A boneous
12:14
Speaker 5: chicken wing does not need to come from a wing.
12:19
Speaker 5: An Illinois circuit judge ruled against a man who was
12:22
Speaker 5: suing Buffalo Wild Willing Wings for misleading customers over their
12:27
Speaker 5: boneous wings. The disgruntled customer was seeking ten million dollars
12:32
Speaker 5: in damages. So our trivia question today is simply what
12:36
Speaker 5: city We're Buffalo wings? Popularized in once again, what city
12:41
Speaker 5: We're Buffalo Wings? Popularized. If I could say that popular
12:44
Speaker 5: lies in, I can't say that word popular popularz popular ride.
12:51
Speaker 2: It's like me with dispensary dispensary.
12:54
Speaker 5: You can't say that.
12:55
Speaker 2: I have to think about it. We just did, though
12:57
Speaker 2: it took a lot of brain power. Otherwise I say dispensary,
13:01
Speaker 2: which sounds like dysentery. Wait, maybe maybe I said it
13:05
Speaker 2: wrong to begin with.
13:06
Speaker 3: I don't know, I forget.
13:07
Speaker 4: Now what are you trying to say? Because most people
13:09
Speaker 4: don't use the word dispensary anymore?
13:11
Speaker 2: Is a dispensary? It's not a dispensary you get you
13:14
Speaker 2: get dysentery, so it's not a dispenser.
13:16
Speaker 4: You would go to a dispensary for dysentery, one would hope?
13:21
Speaker 3: Right? Wouldn't you get it? Get a drug? Am I
13:23
Speaker 3: thinking of the right?
13:23
Speaker 2: Is that what?
13:24
Speaker 3: I just screw it?
13:25
Speaker 2: Be the fine?
13:25
Speaker 5: Fifth person to text us at six one seven three
13:29
Speaker 5: six two thirteen eighty five with the correct answer along
13:32
Speaker 5: with the keyword trivia and you win a financial Shane
13:35
Speaker 5: showed T shirt once again the fifth correct response to
13:38
Speaker 5: texts to the number six one seven three six two
13:41
Speaker 5: thirteen eighty five with correct answer along with the keyword
13:44
Speaker 5: trivia will win that t shirt. See complete contest rules
13:48
Speaker 5: at Financial shine show dot com.
13:51
Speaker 2: Glad we had that conversation. It's good. Let's talk about
13:54
Speaker 2: the housing market. There's a piece in uh, the Financial Time.
14:00
Speaker 2: It's titled the housing market is not getting much better
14:02
Speaker 2: and neither is inflation. And I think I'm going to
14:10
Speaker 2: read a couple of pieces here just because there's there's
14:11
Speaker 2: parts that I kind of agree with. There's a lot
14:14
Speaker 2: that I don't agree with in here. Uh first part,
14:18
Speaker 2: the housing market is probably the darkenest corner of the
14:20
Speaker 2: US economy and it did not get much brighter last month. True,
14:23
Speaker 2: like it's still in the aggregate, the housing market is
14:26
Speaker 2: kind of a mess. And to be fair, January data
14:29
Speaker 2: was probably skewed down because half the country was covered
14:31
Speaker 2: in snow. So I don't really, you know, put too
14:34
Speaker 2: much stock in housing activity during the month of January,
14:37
Speaker 2: which is normally a quiet time. Anyways, you're looking at
14:41
Speaker 2: me like I have a few heads.
14:42
Speaker 4: I've just seen an awesome social media post that ties
14:45
Speaker 4: into this. Please continue, So no, no, it's on at
14:47
Speaker 4: all response to you.
14:49
Speaker 2: So I think if you want to say, look, housing
14:51
Speaker 2: is is you know, kind of at a pretty low point.
14:53
Speaker 2: I think that that is an accurate statement. It's also
14:57
Speaker 2: this piece then also lays out that allowing any May
15:00
Speaker 2: and Freddie Mack to purchase a bunch of mortgage backed
15:02
Speaker 2: securities to reduce mortgage rates probably won't do much, which
15:04
Speaker 2: I also tend to agree with because generally these things are,
15:07
Speaker 2: you know, kind of self limiting. If you only have
15:10
Speaker 2: so much of a pool of money that you can
15:11
Speaker 2: apply there, it's not gonna do very much. You don't
15:14
Speaker 2: have an endless bazooka to just keep throwing at the problem.
15:18
Speaker 2: Institutional investors are not, you know, really the culprit here.
15:23
Speaker 2: I believe that, you know as well, so like, that's
15:27
Speaker 2: not gonna have a big impact on home prices. But
15:30
Speaker 2: what I do believe is that we are starting to
15:32
Speaker 2: see green shoots in the parts of the housing market
15:35
Speaker 2: that have been the hardest hit, namely throughout the Southeast.
15:39
Speaker 2: You're starting to see transaction volumes ticking up in Florida
15:42
Speaker 2: while inventory starts to come down. That's the sign of
15:45
Speaker 2: a market that is showing you know, demand at current pricing,
15:49
Speaker 2: which is good to see given out prices have fallen there.
15:52
Speaker 2: I suspect you'll start to see that throughout other parts
15:54
Speaker 2: of the south weast, southwest and southeast and into the
15:57
Speaker 2: Southwest as we continue through the year. So I don't
16:03
Speaker 2: think that housing is not, you know, starting to show
16:07
Speaker 2: signs of improvement. I think it is starting to. I
16:10
Speaker 2: don't think any of it is policy driven improvement. I
16:13
Speaker 2: think it's just housing had to go through a correction
16:16
Speaker 2: phase after going so insanely crazy relative to incomes for
16:21
Speaker 2: a couple of years because of a bunch of money
16:23
Speaker 2: pumped into the system in very low interest rates. But
16:27
Speaker 2: I think that we are getting close to some of
16:30
Speaker 2: the most damaged housing markets in the country starting to
16:33
Speaker 2: rebound and pull us through this, though there are parts
16:36
Speaker 2: that still have to go through that correction phase and
16:39
Speaker 2: that'll probably take the better part of the next one
16:41
Speaker 2: to three years. It's just how housing cycles go. They
16:44
Speaker 2: don't either like they don't happen in you don't see
16:48
Speaker 2: the problems happen in a span of three months, and
16:50
Speaker 2: they're not resolved in three months. They take a few
16:53
Speaker 2: years to play out to the upside and a few
16:55
Speaker 2: to the downside. And I think we're kind of that
16:57
Speaker 2: middle point now where housing is in the aggregate bottoming
17:02
Speaker 2: and over the next couple of years will start to
17:04
Speaker 2: become a creative to the US economy again. So that's
17:07
Speaker 2: my fundamental disagreement is this piece is like, oh, everything's
17:11
Speaker 2: bad in housing, and I'm like, no, I disagree. Things
17:14
Speaker 2: are starting to improve in parts of the housing market
17:17
Speaker 2: and will feel that more broadly probably twelve to eighteen
17:20
Speaker 2: months from now.
17:22
Speaker 4: Yeah, I have nothing to add other than that. I
17:26
Speaker 4: think in several years will think it was silly that
17:29
Speaker 4: anybody used the phrase housing crisis. I think that because
17:33
Speaker 4: I suspect the next recession will ring out the excess
17:37
Speaker 4: demand that's pushed up prices, particularly on the high end.
17:40
Speaker 2: You got something that you saw.
17:41
Speaker 3: Did you want to see this is?
17:42
Speaker 4: It's kind of related, Chuck. I think you'll find this interesting.
17:45
Speaker 3: It's brief.
17:47
Speaker 4: Why is total housing stock per person so much greater
17:52
Speaker 4: in some economies than others?
17:55
Speaker 3: Somehow some countries are not.
17:57
Speaker 2: I've seeing this chart where it's like you look at
17:59
Speaker 2: developed economies, mostly through the US and Europe, and we
18:01
Speaker 2: really don't build much housing per capita.
18:04
Speaker 4: This is a brilliant explanation. Often explanations can go back centuries.
18:09
Speaker 4: The guys that won the Nobel Prize in Economics a
18:11
Speaker 4: few years ago, for example, explained differences in per capita
18:16
Speaker 4: income today using institutions that were adopted hundreds of years ago,
18:20
Speaker 4: which were a function of who colonized the country and
18:23
Speaker 4: what type of economy did they put in place. Was
18:26
Speaker 4: it a people who are enslaved based economy or was
18:29
Speaker 4: it like a New England economy? Sure, okay, So breakthrough
18:33
Speaker 4: type research often comes from looking back in history. There's
18:37
Speaker 4: a dramatic difference in the housing stock per person in
18:40
Speaker 4: countries like Ireland, Canada, Australia, the New UK US and
18:46
Speaker 4: countries like Italy.
18:48
Speaker 3: For example.
18:49
Speaker 4: Italy does not have a housing crisis, and it's not
18:51
Speaker 4: just because of demographics. Very suggestive graph I saw that
18:55
Speaker 4: just sort of blew me away because I can't believe
18:56
Speaker 4: I didn't think of it or no one else has
18:58
Speaker 4: publicized the idea. It's based on whether you adhere to
19:03
Speaker 4: a civil law system where judges sort of decide cases
19:06
Speaker 4: that becomes precedent, or a common law Excuse me, I'm
19:10
Speaker 4: getting this backwards. That's common law that I just described.
19:12
Speaker 4: Civil law would be code based, like Roman based civil law.
19:19
Speaker 4: It's under common law it's easier to challenge regulations that
19:24
Speaker 4: restrict home building.
19:26
Speaker 3: That's your explanation.
19:27
Speaker 1: Yep.
19:27
Speaker 2: Let's take a quick break here. When we return, we've
19:30
Speaker 2: got the Trivia Answer and Wall Street.
19:32
Speaker 1: Watch, bringing the latest financial news straight to your radio.
19:44
Speaker 1: Every day. It's the Financial Exchange on the Financial Exchange
19:48
Speaker 1: Radio Network. Time now for Wall Street Watch. A complete
19:54
Speaker 1: look at what's moving markets so far today right here
19:57
Speaker 1: on the Financial Exchange Radio Network.
20:02
Speaker 5: I'll have see yesterday's volatility, Marcus Taar and rally Mode
20:05
Speaker 5: as AI impacted stock's clawback recent losses. Energy markets are
20:09
Speaker 5: also seeing some attention amid more tensions between the US
20:13
Speaker 5: and Iran. Right now, the Dow is up about six
20:16
Speaker 5: tens of a percent, or two hundred and eighty two
20:18
Speaker 5: points higher, SMP five hundred up nearly nine tenths of
20:22
Speaker 5: one percent or sixty points higher, Nasdaq up one point
20:25
Speaker 5: three percent or three hundred and four points. Russell two
20:28
Speaker 5: thousand up one point two percent. A ten Yere treasureeled
20:32
Speaker 5: is up two basis points at four point zero seven
20:35
Speaker 5: five percent. In crewde oil up three and a third percent,
20:39
Speaker 5: trading at sixty four dollars and thirty eight cents a barrel,
20:42
Speaker 5: Meta and Now said has expanded its partnership with Nvidia
20:45
Speaker 5: to use millions of the company's AI chips for its
20:48
Speaker 5: data center buildouts. In a statement, Meta CEO Mark Zuckerberg
20:52
Speaker 5: said that the expanded partnership continues his company's push to
20:56
Speaker 5: deliver personal superintelligence to everyone in the world. The world,
21:00
Speaker 5: Meta shares are Flatwele and Video stock is up over
21:03
Speaker 5: two percent. Sticking with the chip sector, where Analog Devices
21:07
Speaker 5: posted stronger than expected quarterly results and guidance where it's
21:11
Speaker 5: revenue jump thirty percent last quarter, that stock is up
21:14
Speaker 5: by three percent. Meanwhile, cybersecurity firm Palo Alto Networks posted
21:19
Speaker 5: better than expected quarterly results and lifted its annual revenue outlook. However,
21:23
Speaker 5: the company's earnings per share guidance for the current quarter disappointed,
21:28
Speaker 5: sending the stock down by six percent. And home builder
21:32
Speaker 5: Toll Brothers reported stronger than expected quarterly results, boosted by
21:35
Speaker 5: a jump in land sales revenue. Toll stock is now
21:39
Speaker 5: edging higher. I'm Tucker Silva and that is Wall Street Watch.
21:43
Speaker 5: In the previous segment, we asked you the trivia question
21:46
Speaker 5: what city where Buffalo wings? Popularized in Buffalo Obviously Meghan
21:52
Speaker 5: from Buzzard's Bay Masses our winner today taking home a
21:55
Speaker 5: Financial Exchange Show t shirt. Congrats some Meghan and we
21:58
Speaker 5: play trivia every day here on on the Financial Exchange
22:01
Speaker 5: See complete contest rules at Financial Exchange Show dot com.
22:05
Speaker 2: A couple of things I found interesting just from uh
22:08
Speaker 2: Tucker reading Wall Street Watch number one Meta with that
22:13
Speaker 2: big announcement on additional purchase and this and that, Oh
22:16
Speaker 2: that one. Yeah, I find it very interesting that, like
22:21
Speaker 2: that's the kind of announcement that in the last couple
22:24
Speaker 2: of years would just be driving a stock higher in
22:28
Speaker 2: the AI space. Meta closed yesterday. It's six thirty nine
22:31
Speaker 2: and twenty nine cents. It's it's six thirty nine and
22:34
Speaker 2: sixty two cents right now. It's basically flat.
22:36
Speaker 5: Is that related to Zuckerberg's testimony at the moment?
22:40
Speaker 2: I don't know.
22:40
Speaker 5: I mean the children addictiveness to the platform. What's he
22:45
Speaker 5: really gonna say, Yeah, probably not much. I just don't
22:48
Speaker 5: know if that's why it's flat at the moment.
22:51
Speaker 2: Either way, Like you make a big announcement like that
22:54
Speaker 2: about AI a year ago, and the market saying great,
22:58
Speaker 2: you're on the cutting edge, like we're gonna bid you
23:00
Speaker 2: up today. The fact that you can't get a reaction
23:02
Speaker 2: out of it, it's just interesting.
23:04
Speaker 3: I think it's a great sign makes sense, like from in.
23:08
Speaker 2: This washing out malinvestment potentially but very well put. Yeah,
23:12
Speaker 2: it might not be the best for market health.
23:16
Speaker 4: Well, if you're concerned about valuations, what pushes them up
23:18
Speaker 4: is exuberance, is the speculative and hopeful buying. The fact
23:23
Speaker 4: that that doesn't appear to be happening. Limited sample here,
23:26
Speaker 4: but take it for what it's worth. Is I think encouraging,
23:29
Speaker 4: as is the dispersion that you were talking about earlier
23:32
Speaker 4: in the show, tech struggling other sectors kind of picking
23:36
Speaker 4: up the slack. That's not a perfect way to think
23:38
Speaker 4: about what happens in financial markets, but it'll do. That's
23:42
Speaker 4: kind of encouraging too to me.
23:44
Speaker 2: The other piece just that I found interesting, Tucker, you
23:46
Speaker 2: mentioned analog devices.
23:48
Speaker 3: I did.
23:49
Speaker 2: Isn't it wild? In the age of AI, analog devices
23:52
Speaker 2: still exists, but Digital Equipment Corporation has been shuttered for
23:55
Speaker 2: twenty plus years now. Kind of wild, you know, just
24:00
Speaker 2: a food for thoughts. Let's talk about the job market
24:03
Speaker 2: and college grads. A lot of ink has been spilled
24:06
Speaker 2: over the last couple of years about how recent college
24:11
Speaker 2: grads are having a harder time finding a job right now,
24:14
Speaker 2: and that their unemployment rate has actually been higher than
24:17
Speaker 2: the general population recently. And I just think this is
24:27
Speaker 2: there's a couple things that I find interesting here when
24:31
Speaker 2: we look at it. The first is this idea that, hey,
24:36
Speaker 2: the unemployment rate with recent college grads is high. I
24:41
Speaker 2: do think is a good signal for the overall strength
24:43
Speaker 2: of the job market, because usually if you are a
24:46
Speaker 2: company that is trying to hire cheap white collar labor,
24:50
Speaker 2: that's where you go recent college grads. They're going to
24:52
Speaker 2: be cheaper than anyone else in the workforce that have
24:56
Speaker 2: the prerequisites that you want. You may not need a
24:59
Speaker 2: re in college grad to do the work, but you
25:01
Speaker 2: may say, hey, like it's it's gonna be safer for
25:04
Speaker 2: me to hire someone with a college degree as opposed
25:06
Speaker 2: to someone without, and so you end up hiring them.
25:10
Speaker 2: What I find interesting is, look, I'm a millennial, and
25:14
Speaker 2: as a millennial, I'm naturally lazy and love avocado toast.
25:18
Speaker 2: It's baked into my DNA, like it just is. I
25:21
Speaker 2: had just have this inherent laziness embedded in me. But
25:25
Speaker 2: back during the time, right after I graduated from college,
25:28
Speaker 2: it was one of the worst economies that we had
25:30
Speaker 2: seen in recorded history. Sorry about that, You're welcome. In
25:35
Speaker 2: any case, the talk then was, hey, millennials, Like the
25:40
Speaker 2: unemployment rate for millennials was one thing, but we talked
25:43
Speaker 2: a lot about the underemployment. It was you know, the
25:45
Speaker 2: person with you know, the advanced degree who was working
25:48
Speaker 2: as a barista at Starbucks. What I find interesting right
25:52
Speaker 2: now is that we're talking more about, Hey, the unemployment
25:56
Speaker 2: rate is x for you know, millennials, not millennials, but
25:59
Speaker 2: for recent college grads gen zers. I don't find that
26:04
Speaker 2: there's a very robust discussion that's going on about the
26:08
Speaker 2: quality of work that they're finding. And I'm wondering why
26:11
Speaker 2: that is, because in theory, you would expect to find
26:14
Speaker 2: a similar conversation to what we found fifteen years ago
26:18
Speaker 2: in the twenty tens, and there's no discussion about that.
26:21
Speaker 1: Really.
26:21
Speaker 4: Yeah, if you buy into the idea that companies are
26:24
Speaker 4: holding off on hiring white collar entry level because they
26:28
Speaker 4: think those jobs could be I'll just say automated sure
26:31
Speaker 4: shorthand for AI can do a lot of which it
26:33
Speaker 4: absolutely can. By the way, a spreadsheet worker, and I
26:36
Speaker 4: say that affectionately, not to diminish it, because I was
26:40
Speaker 4: and still am one.
26:41
Speaker 3: In many ways. AI can do a lot of it,
26:43
Speaker 3: but you need an.
26:44
Speaker 4: Experienced person to check the work, ask the right questions
26:46
Speaker 4: to make sure the answers make sense. I can see,
26:50
Speaker 4: because I have experienced how automation can replace a lot
26:53
Speaker 4: of what entry level spreadsheet workers do, and that's what
26:56
Speaker 4: many finance majors and newly minted MBAs, even depending on
27:01
Speaker 4: the program you went to, might start out doing in
27:03
Speaker 4: financial services or a corporate job in any company you
27:10
Speaker 4: spend your day as britcheet. Yeah, you know, those weren't gratifying.
27:14
Speaker 4: Those not necessarily gratifying jobs unless you really like data analysis.
27:19
Speaker 4: I happen to some people do. But I don't know, Chuck,
27:23
Speaker 4: I don't know if i'd describe those as like high
27:26
Speaker 4: quality and riching jobs.
27:27
Speaker 2: I think the thing, though, is, you know a lot
27:29
Speaker 2: of this talk about youth unemployment or young adult unemployment
27:36
Speaker 2: focused on the period about, you know, twelve months ago,
27:38
Speaker 2: like this is when you first started seeing the pieces
27:40
Speaker 2: written by IT, and I just knowing what we know
27:42
Speaker 2: now about how AI is being used by companies and
27:45
Speaker 2: how you know how deeply it's being used or not
27:48
Speaker 2: in many cases, Yeah, it's hard for me to imagine that,
27:53
Speaker 2: you know, age twenty to twenty four unemployment moved up
27:55
Speaker 2: in any meaningful way in like January of last year
27:58
Speaker 2: because of AI. I just I don't think that's the case.
28:01
Speaker 2: Where I think that this is coming from, and this
28:05
Speaker 2: is not my own idea, but it's one that I've
28:07
Speaker 2: kind of grabbed onto in the last couple weeks is ultimately,
28:13
Speaker 2: when you look at the period from twenty one through
28:15
Speaker 2: mid twenty two, it was just a race for any
28:19
Speaker 2: kind of talent you could get, Like companies were just
28:21
Speaker 2: hiring like nuts. And we've seen this attempted kind of
28:25
Speaker 2: normalization of the labor market in the last few years.
28:28
Speaker 2: And one of the questions that people are asking now
28:31
Speaker 2: after the last like six to nine months is, hey,
28:34
Speaker 2: GDP has appeared to be relatively strong despite the labor
28:38
Speaker 2: market weakness scorching. What gives? And the answer that I
28:42
Speaker 2: think I'm coming around to is companies over hired during
28:46
Speaker 2: that time period, and so they have had excess labor
28:50
Speaker 2: already on their books and now they are trying to
28:54
Speaker 2: wring all the efficiency possible out of that excess labor,
28:58
Speaker 2: and that is where the boost to GDP means coming from,
29:01
Speaker 2: because basically, like the labor, the extra labor that was
29:05
Speaker 2: added in was so front loaded that it took time
29:09
Speaker 2: to actually have the work that was ready to be
29:11
Speaker 2: done by them. And now it's showing they.
29:13
Speaker 4: Learned how to work and now they're more efficient. Because
29:16
Speaker 4: that that also, some people gravitate towards the AI explanation
29:20
Speaker 4: for the productivity apparent productivity boom. We don't have numbers yet,
29:23
Speaker 4: but we do know that GDP boomed, and that's not
29:26
Speaker 4: an understatement. Sometimes hyperbole is yeah, I mean we're growing
29:29
Speaker 4: it like twice. The most researchers estimate of trend or
29:33
Speaker 4: potential GDP so economic growth.
29:35
Speaker 2: Is we get Q four data on Friday. By way,
29:38
Speaker 2: we'll see what that shows.
29:39
Speaker 4: So we had like no labor force growth and I
29:41
Speaker 4: talked about this with Mike Armstrong on the other day too,
29:43
Speaker 4: no labor force growth, but productivity. Excuse me, but GDP
29:48
Speaker 4: growing it it's sort of exceptional. Is an understatement rates
29:54
Speaker 4: by definition that means productivity must have exploded. Is that
29:57
Speaker 4: because everybody started incorporating into their workflow and getting more
30:02
Speaker 4: out of them. I mean maybe some proponents of AI are
30:04
Speaker 4: making that claim. You offer a different, not necessarily exclusive.
30:10
Speaker 4: These two things aboutssary exclusive explanation of what we're seeing
30:13
Speaker 4: because last year was really weird, very very high growth
30:17
Speaker 4: and no job growth that normally happens early on.
30:20
Speaker 5: Winter dates, Philip fast. So if you're thinking about escaping
30:23
Speaker 5: the cold, well, now's the time to plan a getaway
30:25
Speaker 5: to the US Virgin Islands, America's Caribbean paradise. Here you
30:29
Speaker 5: can fall naturally in rhythm with the heartbeat of the island.
30:31
Speaker 5: Spend your days on powder soft beaches and crystal clear water, sailing, snorkeling,
30:36
Speaker 5: or simply relaxing under the sun. Your evenings will be
30:40
Speaker 5: just as memorable with world class dining, local cuisine, live music,
30:43
Speaker 5: and unforgettable sunsets. Explore Saint Croix, Saint Thomas or Saint John,
30:48
Speaker 5: three distinct islands, each with its own vibe, its own flavor,
30:51
Speaker 5: in its own way of helping you unplug and reset
30:54
Speaker 5: this winter. Flights from New England could not be easier.
30:57
Speaker 5: There's no passport required, in no money to exchange. Start
31:00
Speaker 5: planning your trip today because winter getaways don't last forever.
31:04
Speaker 5: Had to visit USBI dot com for details and more
31:07
Speaker 5: information and get set the jet on your dream vacation.
31:11
Speaker 5: Discover why the US Virgin Islands are America's Caribbean paradise.
31:14
Speaker 3: Book your trip today.
31:15
Speaker 5: At visit USBI dot com. That's visit USBI dot com.
31:21
Speaker 2: Let's see. I don't want to talk more about artificial
31:24
Speaker 2: intelligence right now. I'm just I'm good with it for
31:28
Speaker 2: a bit. We can you know, we spend like half
31:30
Speaker 2: the show on. I want to talk about restaurants. Piece
31:34
Speaker 2: of the Financial Times, US restaurants downsized meals to counter
31:37
Speaker 2: anti obesti drugs and affordability crisis. So I'll quote here
31:43
Speaker 2: from the Financial Times the super sized servings that have
31:45
Speaker 2: long defined American dining, or shrinking is. Rising costs and
31:48
Speaker 2: the growing use of weight loss drugs prompt restaurants to
31:50
Speaker 2: offer smaller portions. The trend towards lighter and snack sized
31:54
Speaker 2: main meals across the US also comes as restaurants seek
31:57
Speaker 2: to entice cash strapped customers who want lower cost options.
32:02
Speaker 2: I think the latter is true. I don't think offering
32:06
Speaker 2: smaller meals has anything to do with people on GLP
32:10
Speaker 2: on a great public service they're doing like, oh, you
32:13
Speaker 2: want to eat less, give you less, Like I'm sorry,
32:18
Speaker 2: that's just not the case. Like if you have too
32:21
Speaker 2: big of a meal for yourself, you take a doggie
32:24
Speaker 2: bag and bring it home and now you've got lunch tomorrow,
32:27
Speaker 2: Like no one ever complained. Gee, I'm waiter this this
32:31
Speaker 2: meal's too big. I'm on a GLP one. Could you
32:34
Speaker 2: make it smaller for me next time?
32:36
Speaker 3: Gladly pay the same price.
32:37
Speaker 2: If that person's not hungry because they're on a GLP one,
32:40
Speaker 2: they're not going to the restaurant. They're not like, oh no,
32:44
Speaker 2: I couldn't possibly eat that. I know it's they're just
32:48
Speaker 2: not going out to You.
32:49
Speaker 4: Need to fire your public relations people and come up
32:51
Speaker 4: with a better explanation.
32:53
Speaker 2: So I do believe that restaurants are like, hey, we're
32:56
Speaker 2: trying to figure out how to get more people in
32:57
Speaker 2: the door. Let's shrink the portions, as every food company,
33:01
Speaker 2: whether it's restaurants, groceries, or anything else, are doing. But
33:06
Speaker 2: it is not, oh, well, we think these people eat less,
33:10
Speaker 2: so let's make the portion smaller so they feel comfortable. No,
33:13
Speaker 2: you can, you can take that and go.
33:14
Speaker 4: Home st off for a pro rated menu right next
33:17
Speaker 4: to the first column. Next column is half portions, and
33:20
Speaker 4: you apply a factor of point five.
33:22
Speaker 2: To that to the price, which to my knowledge, has
33:25
Speaker 2: been done, you know in restaurants all over the place forever.
33:28
Speaker 2: Like you see that stuff done all the time.
33:30
Speaker 4: Oh yeah, have you ever seen it late out the
33:31
Speaker 4: way I just envisioned it? No, but like you can
33:33
Speaker 4: get a cup of super it's a good idea, by
33:35
Speaker 4: the way. There you go, you know, you get same
33:37
Speaker 4: do that same thing.
33:38
Speaker 3: You know.
33:38
Speaker 2: It's hey, Tucker, last time that you went to dunks,
33:43
Speaker 2: did the coffee come in one size or do they
33:45
Speaker 2: have multiple sizes?
33:46
Speaker 5: Last I checked, they had multiple size?
33:48
Speaker 2: Oh it has the smaller one been cheaper?
33:50
Speaker 1: Yes?
33:50
Speaker 2: And has that been the case even before people were
33:53
Speaker 2: on anti obesity drugs? Yes, thank you, it's you're well,
33:58
Speaker 2: you're welcome to You're extra welcome. Let's take a quick break.
34:02
Speaker 2: And I'm sorry this this piece just really bothered, Like
34:05
Speaker 2: it really described my gears stupid. It is like, no,
34:08
Speaker 2: the reason restaurants are making smaller portions is so that
34:11
Speaker 2: they can cut their costs and still get people to
34:15
Speaker 2: come in the door for cheaper prices, it's not because
34:17
Speaker 2: they want to make the person on Ozebek feel comfortable.
34:21
Speaker 4: And no one, no one pushes back, the authors don't
34:23
Speaker 4: push back on that explanation so patently silly explanation.
34:27
Speaker 2: Well, that's what we're here for. We are pushing back
34:31
Speaker 2: and uh yeah, you're welcome. Quick break, Wall Street watches
34:36
Speaker 2: next or no.
34:37
Speaker 1: No, it's not.
34:38
Speaker 2: What's next? Stack re Sorry, I'm all out of sorts
34:41
Speaker 2: now stack Roulette is next?
34:43
Speaker 1: Text does six one seven, twenty six, two one three
34:46
Speaker 1: eight five with your comments and questions about today's show.
34:50
Speaker 1: This is the Financial Exchange Radio Network. The Financial Exchange
34:54
Speaker 1: Show podcast drops every day on Apple, Spotify, and iHeartRadio.
34:59
Speaker 1: Hit that subscribe by then leave us a five star review.
35:02
Speaker 1: You're listening to the Financial Exchange Radio Network.
35:06
Speaker 5: The Financial Exchange is incredibly proud to be a partner
35:09
Speaker 5: of the Disabled American Veterans Department of Massive Shusetts. Planning
35:13
Speaker 5: as well underway for the twenty twenty six DAV five K.
35:16
Speaker 5: The event sold out in record time last year, so
35:19
Speaker 5: head to DAV fivek dot Boston for all the information
35:22
Speaker 5: about how you can participate this November or make a
35:25
Speaker 5: donation to support our great American heroes. Your gifts help
35:28
Speaker 5: fund free rides to medical appointments for veterans in the
35:31
Speaker 5: nation's first dav ledhousing initiative, providing homes for single veterans
35:35
Speaker 5: and veteran families. Go to dav five k dot Boston
35:38
Speaker 5: and make your donation today. That's dav five k dot Boston.
35:42
Speaker 2: Mark. What do you got for me?
35:43
Speaker 4: For stack Rouleax Bloomberg released the story after we went
35:47
Speaker 4: on the air, I think this morning. It relates to
35:49
Speaker 4: something we were just talking about. So all this very
35:51
Speaker 4: very briefly read the first read a couple relevant excerpts.
35:55
Speaker 4: The headline is unprecedented jobless boom, which is what we
35:58
Speaker 4: were just talking about, a test limit of US economic
36:01
Speaker 4: expansion and the upshot of the well. So by jobless
36:04
Speaker 4: boom we mean roaring economic growth, which it is by
36:07
Speaker 4: any accounts, or at least was through the end of
36:09
Speaker 4: the third quarter, and most, though not all, researchers expect
36:13
Speaker 4: it to be strong in the fourth quarter as well.
36:15
Speaker 4: We'll find out on the twentieth when GDP comes out.
36:19
Speaker 4: But there was no job creation pretty much according to
36:22
Speaker 4: the payroll, the Establishment Survey and the payroll number right
36:25
Speaker 4: last year. That means that productivity probably went up by
36:29
Speaker 4: if indeed twenty twenty five was a very strong growth here,
36:31
Speaker 4: and by very strong I just mean above trend somewhere
36:33
Speaker 4: in the mid high twos, maybe even low threes depending
36:36
Speaker 4: on four Q, that the last outcome would would be
36:40
Speaker 4: really surprising. But anyway, so strong productivity growth. A question
36:44
Speaker 4: is does growth catch down to employment. Is the labor
36:49
Speaker 4: is the lethargic at least in terms of growth in
36:52
Speaker 4: the labor market. Does that bode ill for GDP growth?
36:58
Speaker 4: Or is there something AI or other related going on
37:02
Speaker 4: that will allow us to continue to grow at trend
37:04
Speaker 4: or above without job creation. And I think the main
37:08
Speaker 4: explanation there would have to be something like AI or
37:11
Speaker 4: something something else on the labor supply slash productivity side.
37:16
Speaker 3: I don't know.
37:16
Speaker 4: These are questions that are huge, They're outstanding and will
37:19
Speaker 4: presumably get answers to over the next few months.
37:23
Speaker 2: I want to talk about this piece from Bloomberg. I'll
37:25
Speaker 2: quote here. Round Hill Investments has asked the US Securities
37:28
Speaker 2: and Exchange Commission for permission to launch six ETFs that
37:32
Speaker 2: would let investors wager on US election outcomes through standard
37:36
Speaker 2: brokerage accounts the most ambitious attempt yet to bring prediction
37:40
Speaker 2: markets into mainstream finance. So basically, they would have versions
37:44
Speaker 2: for the Presidency, the Senate, and the House in which
37:46
Speaker 2: you could pick which side wins, and it would hold
37:50
Speaker 2: event contracts that once they settle, they either pay out
37:53
Speaker 2: one dollar or zero. Like it's basically this happened to
37:56
Speaker 2: where this didn't look it's here's the thing. In general,
38:04
Speaker 2: I think that as long as like, you're comfortable with
38:06
Speaker 2: doing whatever you want to do, have at it. When
38:10
Speaker 2: you start getting gambling into actual investment accounts, it raises
38:15
Speaker 2: a bunch of risk because the friction is so low
38:18
Speaker 2: between investing and gambling. Then to take a quick break
38:22
Speaker 2: here for the entire rest of the day, but don't worry.
38:24
Speaker 2: We're back on tomorrow and uh, we'll do better