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Are major supply chains under threat again? · The Financial Exchange Show

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  Speaker 1: donation today. This is the Financial Exchange with Chuck Zada,
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  Speaker 1: and Mike Armstrong.
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  Speaker 2: Another week here on the Financial Exchange. It is Chuck,
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  Speaker 2: Mike and Tucker with you and kicking things off, just
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  Speaker 2: trying to make sense of what is going to be
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  Speaker 2: coming this week. We've got quite a bit of economic data,
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  Speaker 2: earning seasons completely done at this point. Unless you're interested
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  Speaker 2: in seeing what lazy Boy has to say about the
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  Speaker 2: state of the recliner market in the United States, which
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  Speaker 2: or basketball gotta tell you, just not interested, I mean,
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  Speaker 2: other than that this week. This is literally the earning
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  Speaker 2: circuit for the entire week. Lennar, Lazy Boy, Corn Ferry International,
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  Speaker 2: Carnival could be interested in Carnival, but like on the margins,
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  Speaker 2: it's still a twenty ars kind interesting too. We already
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  Speaker 2: know what's going on with housing. It's not in a
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  Speaker 2: great spot. Kroger, okay, tell me what's going on with
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  Speaker 2: grocery prices? No, there's nothing there. Darden restaurants Okay, maybe
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  Speaker 2: I'll get a little bit of information about what's going
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  Speaker 2: on with consumer spending at restaurants and CarMax.
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  Speaker 3: So unless you own one of these companies, you don't
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  Speaker 3: really care.
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  Speaker 2: There's just not much there that's gonna tell you anything
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  Speaker 2: too important about you know, like that we don't already know.
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  Speaker 2: So that's what we got on the earning side, but
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  Speaker 2: a lot of meat on the economic data side of things.
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  Speaker 2: This morning we got New York State Empire Manufacturing Index
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  Speaker 2: came in at minus sixteen versus estimates of minus five
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  Speaker 2: to five. So manufacturers domestically still telling you, hey, like
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  Speaker 2: things aren't great here. We're kind of trying to sort
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  Speaker 2: through all this. That's been the case since April. At
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  Speaker 2: this point. Tomorrow, retail sales come out. Expectations are for
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  Speaker 2: a point seven percent month over month decline. X auto
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  Speaker 2: is looking for a point one percent increase, so again
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  Speaker 2: kind of that whole pull forward of autos thing is
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  Speaker 2: expected to drop the headline number. But what do we
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  Speaker 2: see X Autos? You know, that's kind of the big
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  Speaker 2: one out there. Wednesday we have a jam pack Day.
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  Speaker 2: We've got building permits and housing starts at eight thirty am,
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  Speaker 2: along with a special Wednesday edition of Weekly Jobless Claims
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  Speaker 2: because of the Thursday, June tenth holiday. And then Wednesday
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  Speaker 2: afternoon two pm we get the FED rate decision as
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  Speaker 2: well as a summary of economic projections, which I am
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  Speaker 2: very interested to see. Might I say, and then at
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  Speaker 2: two thirty J Powell and he guess is what color
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  Speaker 2: the tie is going to be?
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  Speaker 3: Purple?
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  Speaker 4: What shade of purple? It doesn't matter, don't know any
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  Speaker 4: shades of purple in any case. Usha, that's more pink,
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  Speaker 4: that's more of a pink.
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  Speaker 2: Shades of purple. Let's see what different shades of purple? Okay,
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  Speaker 2: here we go. What's that?
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  Speaker 1: That's not?
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  Speaker 3: No?
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  Speaker 4: I want it's an important place to start, Tucker. I
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  Speaker 4: want to see what So you don't want to start
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  Speaker 4: Monday with hard hitting stuff? All right, we got to
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  Speaker 4: talk about shades of purple first.
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  Speaker 2: It's fine, we can do this. This is kind of
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  Speaker 2: a big one actually. So in terms of shades of purple,
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  Speaker 2: mauve always a good one, Yeah, bright, lilac, medium, orchid,
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  Speaker 2: electric purple.
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  Speaker 4: All right, you cannot have adjectives in describing a My
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  Speaker 4: wife brought this up the other day. She was looking
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  Speaker 4: for colors that started with a certain letter. Yeah, and
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  Speaker 4: it was all like very green or like that. That
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  Speaker 4: doesn't count.
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  Speaker 2: Well, it's not very it's electric.
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  Speaker 3: Yeah.
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  Speaker 2: No, I mean, isn't every word describing a color basically
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  Speaker 2: an adjective? What do you want?
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  Speaker 3: I think?
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  Speaker 4: Verb?
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  Speaker 3: I think the problem was Yeah, yeah, okay, that's.
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  Speaker 4: You know, you want like heartily green, Like I have
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  Speaker 4: an issue with deep purple?
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  Speaker 2: What about cyber rape?
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  Speaker 4: Yeah, problematic because that's one of I mean, this one's
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  Speaker 4: just dark purple. Great, thanks I could have Who are
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  Speaker 4: the ad wizards who came up with that one? So
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  Speaker 4: we've got that coming out on Wednesday, and then Friday
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  Speaker 4: we've got Philly fed manufacturing. Nothing huge, but again just
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  Speaker 4: interested to see what you got there. Again, you get
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  Speaker 4: into the back half of the month, there's not.
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  Speaker 2: Really a ton of meaningful economic data that you get.
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  Speaker 2: The heavy hitting stuff is the first two weeks of
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  Speaker 2: every month. So this is why, like you kind of
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  Speaker 2: look at everything out to July fourth, and you go, well, absent,
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  Speaker 2: you know, some kind of big geopolitical conflict, You're not
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  Speaker 2: really gonna get much over the next week and a half.
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  Speaker 2: And so the question then turns to the Middle East,
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  Speaker 2: where you say, is this going to turn into a
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  Speaker 2: big geopolitical conflict?
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  Speaker 4: So market wise, overnight we had oil prices spiking on
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  Speaker 4: a whole bunch of things, but strikes on energy plants.
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  Speaker 2: Don't buy anything from the Sunday futures though.
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  Speaker 4: Right, So Sunday Future has popped to what was it,
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  Speaker 4: seventy seven bucks a barrel on West Texas Crew before
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  Speaker 4: calming down, erasing all of those gains. But you know,
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  Speaker 4: what we saw over the weekend I would describe as
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  Speaker 4: more of a continuation than an escalation.
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  Speaker 2: Well, I think the so here's what is going.
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  Speaker 4: To It's tough to escalate after you know, assassinating pretty
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  Speaker 4: much all of the military leadership of Iran.
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  Speaker 2: Well, and this is kind of where everyone is who
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  Speaker 2: actually pays attention to this stuff is they're kind of like,
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  Speaker 2: what now, you know, where do you go from here?
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  Speaker 4: Because almost the supreme leader apparently, which the US is
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  Speaker 4: indicated very publicly, hey, like we don't want you getting
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  Speaker 4: involved at that level.
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  Speaker 2: Take from that what you will, but ultimately the question is, okay,
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  Speaker 2: where does this go from now? And there are basically
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  Speaker 2: two paths that you can take as far as the
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  Speaker 2: actual military conflict. One is, hey, we just continue to
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  Speaker 2: see Israel trying to take out as many you know,
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  Speaker 2: targets as they can, as far as missile launchers and
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  Speaker 2: you know, throwing additional bombs at underground uranium enrichment facilities
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  Speaker 2: and taking out you know, high ranking Iranian officials while
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  Speaker 2: Iran lobs a bunch of missiles back at Israel. And
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  Speaker 2: that's you know, kind of the status quo. If that
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  Speaker 2: is like where we end up, it's it's not good
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  Speaker 2: for the people of either country obviously, but it doesn't
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  Speaker 2: really mean anything as far as markets. True, it doesn't
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  Speaker 2: do anything to markets the place. And by the way,
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  Speaker 2: that like if you look at where this, you know,
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  Speaker 2: where I think this goes, that's probably like the eighty
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  Speaker 2: to ninety percent chance that you have is just that
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  Speaker 2: the ten to twenty percent chance is either a Israel decides, okay,
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  Speaker 2: now beyond just striking you know, internal Iranians storage of
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  Speaker 2: different petroleum products and transportation networks within Iran. Israel decides, hey,
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  Speaker 2: you know what, We're gonna start really going after the
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  Speaker 2: oil fields and more importantly carg Island, which is just
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  Speaker 2: off the coast of Iran, just kind of off the
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  Speaker 2: southwest coast, which is basically where Iran exports its oil from. Hey,
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  Speaker 2: we're gonna target that, and that becomes a thing. Iran
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  Speaker 2: then responds, not necessarily by there's been a lot of
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  Speaker 2: talk about like do they close the straight Offore moves
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  Speaker 2: by doing this that all they really have to do
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  Speaker 2: is credibly threaten it. And by credibly threatening, I mean
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  Speaker 2: if a single ship is targeted by Iran and they
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  Speaker 2: shoot something, you know, across the bow of it, okay,
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  Speaker 2: like traffic diverts, then right, you basically end up with
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  Speaker 2: insurers saying we are not going to cover that area,
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  Speaker 2: and as such nothing gets shipped through there, kind of
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  Speaker 2: like what happened in the Red Sea over the last
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  Speaker 2: couple of.
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  Speaker 4: Years, which then escalates by someone perhaps sending a ship
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  Speaker 4: into this strait of horror moves to.
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  Speaker 2: Protect it the counter to this, okay, and this is
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  Speaker 2: where things start to get like really complicated, really quickly,
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  Speaker 2: and trying to figure out where it all goes. No
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  Speaker 2: one knows for sure, but it's widely estimated that the
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  Speaker 2: biggest buyer of Irani noil, which all gets shipped through
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  Speaker 2: the straight of horm moves China is China. China's not
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  Speaker 2: really in the market to say, like, where are we
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  Speaker 2: going to source another couple million barrels of oil a day?
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  Speaker 2: They prefer not to do that. So there's a pretty
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  Speaker 2: big incentive for Iran not to go scorts to Earth
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  Speaker 2: on basically their own life blood by blocking the straight
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  Speaker 2: of horm moons.
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  Speaker 4: Yeah, to be clear, who would hurt the most from
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  Speaker 4: a block of the straight of horror moves is Iran.
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  Speaker 3: But if you're desperate enough, correct, you might do it.
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  Speaker 2: And this is the thing is when you get you know,
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  Speaker 2: kind of cornered, you start to make bad, dumb decisions
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  Speaker 2: and like, this is where you could potentially end up.
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  Speaker 2: But again I think it's unlikely, but something that you
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  Speaker 2: have to discuss at this point. Other things that you watch.
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  Speaker 2: I mentioned China. The other thing that I think bears
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  Speaker 2: watching in this is how Israel tries to what specifically
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  Speaker 2: they try to attack next, and it's going to be
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  Speaker 2: all through air power and covert operations. Because I've I
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  Speaker 2: kind of laughed over the weekend and look, I'm no
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  Speaker 2: geopolitical expert, but I know enough to be dangerous. I
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  Speaker 2: laughed at the people being like, well, Israel's, you know,
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  Speaker 2: getting ready to send in troops for regime change. I'm like, no,
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  Speaker 2: let's calm down. This is like the people watching like
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  Speaker 2: the hurricanes, hoping it's a Cat five, Like you shouldn't
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  Speaker 2: hope for that. And besides that, if you knew anything
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  Speaker 2: about Iran just from a geographic perspective, it's freaking huge.
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  Speaker 2: First of all, it's the fourteenth largest country in the
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  Speaker 2: world by land mass. Second piece, it's basically all mountains.
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  Speaker 2: Iran is not desert like you think of you know
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  Speaker 2: the Persian golf and you know Saudi Arabia. Iran is
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  Speaker 2: all mountains. You you can't really do anything in. Israel's
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  Speaker 2: not dumb enough to be like, hey, here's a bunch
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  Speaker 2: of ground forces going into Iran, so let's take all
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  Speaker 2: of those. Anyone who's like wishing for like, no, like,
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  Speaker 2: let's let's move on there. The piece that I think
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  Speaker 2: you need to watch is how long can the Iranian
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  Speaker 2: regime actually survive before it kind of loses what is
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  Speaker 2: necessary to actually operate control within the country. If you
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  Speaker 2: start losing internal energy resources and you have you know,
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  Speaker 2: high level leadership continuing to be taken out on a
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  Speaker 2: pretty regular basis, you can see a path where if
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  Speaker 2: that continues, it gets to a point where you just
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  Speaker 2: can't actually maintain control over it can't govern. And I
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  Speaker 2: think that's what Israel is hoping for, is is something
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  Speaker 2: along those lines. Do they get there? I don't know.
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  Speaker 2: And if Iran senses that this is coming. Is that
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  Speaker 2: when they kind of spasm them, you know, and just
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  Speaker 2: involuntarily say okay, like we need to torch this, that
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  Speaker 2: and whatever, because we're not going to make it anyways.
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  Speaker 4: Let's take quick break, But I do I want to
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  Speaker 4: stay on this for just one more moment because it
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  Speaker 4: all leads me back to the question, Okay, economics, markets,
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  Speaker 4: what does this mean for Americans that are listening right now.
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  Speaker 3: Yes, let's take quick break.
• 12:23
  Speaker 4: That's next year on the Financial Exchange.
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• 13:26
  Speaker 2: Mike's the last segment. We were talking about the current
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  Speaker 2: state of play between Israel and Iran and just talking about,
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  Speaker 2: you know how it affects kind of average everyday people
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  Speaker 2: here who aren't going you know what, people aren't going
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  Speaker 2: to visit the Middle East anytime soon, and you know,
• 13:40
  Speaker 2: think things along those lines. Number One, gas prices haven't
• 13:44
  Speaker 2: really budged a ton yet. The expectation, and this is
• 13:48
  Speaker 2: from gas Buddy, is basically, hey, if you have oil
• 13:52
  Speaker 2: prices staying in the low seventies, you're gonna see gas
• 13:56
  Speaker 2: prices moving up to somewhere in the three twenty five
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  Speaker 2: to three already a gallon range nationally from the mid
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  Speaker 2: three like three twelve three fifteen range that they've been
• 14:06
  Speaker 2: in over the last couple of weeks. So I think
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  Speaker 2: that's something where in the next week or two, if
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  Speaker 2: we still have ongoing hostilities and you know, that's kind
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  Speaker 2: of where we are. That is the expectation if you
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  Speaker 2: see anything happen in near basically energy not not even production,
• 14:28
  Speaker 2: but energy transportation networks leading out of the Middle East,
• 14:34
  Speaker 2: straight up home moves things like that. That's where you
• 14:36
  Speaker 2: start talking about oil going north of eighty. But there
• 14:39
  Speaker 2: are no signs that you're heading in that direction, simply
• 14:41
  Speaker 2: because it sure seems like Iran wouldn't want to shoot
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  Speaker 2: itself in the foot that way. And I think Israel
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  Speaker 2: does have some guardrails that are being imposed on it
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  Speaker 2: by the Trump administration as far as targeting you know,
• 14:53
  Speaker 2: Iranian exports, simply because I do think the Trump administration
• 14:58
  Speaker 2: is very concerned about where energy prices could go and
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  Speaker 2: does not want a retaliation from Iran after Israel conducts
• 15:04
  Speaker 2: a first strike against you know, the carg Island export facility.
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  Speaker 4: Just as an example, US equities are moving up pretty
• 15:12
  Speaker 4: much universally one percent. Major indices are up over one
• 15:16
  Speaker 4: percent across the board today. And I keep going back
• 15:19
  Speaker 4: to the lesson that we talked about Friday, right The
• 15:22
  Speaker 4: lesson for the last twenty five years pretty consistently has
• 15:26
  Speaker 4: been don't bet on geopolitical tensions spilling over into economics,
• 15:33
  Speaker 4: I guess, or at least US economics correct, and that
• 15:36
  Speaker 4: has been a trade that has paid very well over
• 15:39
  Speaker 4: the last twenty five years. What you can't know is
• 15:43
  Speaker 4: is this time different. But every time we've talked about
• 15:46
  Speaker 4: tension in the Middle East, Tennchment, North Korea, or pretty much
• 15:50
  Speaker 4: anywhere else, markets might sink a little bit, but they
• 15:54
  Speaker 4: end up rallying right out of it and turning around
• 15:57
  Speaker 4: because those situations have not escalated to.
• 15:59
  Speaker 2: A further right, if you are a short term trader
• 16:04
  Speaker 2: who focuses on those markets, and that's what you do,
• 16:07
  Speaker 2: and that's, you know, kind of where you make your bones. Okay,
• 16:10
  Speaker 2: they can present short term dislocation opportunities for you. Beyond that,
• 16:14
  Speaker 2: as far as any kind of meaningful i'll even say
• 16:18
  Speaker 2: intermediate term impact, there's been nothing, and so the right
• 16:23
  Speaker 2: move has been to fade them. Is that the case
• 16:26
  Speaker 2: in this scenario? Most likely? Yes, But you never know
• 16:32
  Speaker 2: because we haven't seen anything quite to this scale between
• 16:35
  Speaker 2: the two countries in quite a long time. So I
• 16:39
  Speaker 2: think that I mean, in terms of like direct action
• 16:42
  Speaker 2: like this at this scale, I don't think you've ever
• 16:43
  Speaker 2: seen anything quite honestly, so, I think if you're trying
• 16:48
  Speaker 2: to figure out, hey, what does this mean for my
• 16:52
  Speaker 2: daily life here in the United States, probably have gas
• 16:57
  Speaker 2: prices moving up a little bit over the course of
• 16:59
  Speaker 2: the week if this continues. If it doesn't, obviously you
• 17:02
  Speaker 2: can see those you know, oil prices fall right back
• 17:05
  Speaker 2: down to where they were. And other than that, domestically,
• 17:12
  Speaker 2: I'm not sure there's much there, right. I think that's
• 17:16
  Speaker 2: that's kind of how you look at it. If things escalate,
• 17:19
  Speaker 2: obviously you can you know, take that for what it is.
• 17:22
  Speaker 2: But otherwise, this is kind of it. The only other
• 17:26
  Speaker 2: piece that I think bears watching on this, and one
• 17:29
  Speaker 2: place that I just I have in the back of
• 17:31
  Speaker 2: my mind now just is a potential source of constant
• 17:34
  Speaker 2: pressure during during anything involving geopolitics is China and rare earths,
• 17:41
  Speaker 2: and you know, the Trump administration last week very publicly said, hey, like,
• 17:45
  Speaker 2: we don't have anything to do with this, like basically
• 17:48
  Speaker 2: trying to distance the US from Israeli action pretty you know, strongly.
• 17:52
  Speaker 2: But it's not hard to imagine President g sitting in
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  Speaker 2: you know, China saying, you know what, really don't like
• 17:59
  Speaker 2: that Iron's getting hit like this we're gonna, you know,
• 18:03
  Speaker 2: start you know, pulling back on the rare earth exports
• 18:06
  Speaker 2: again unless you get Israel to calm down, Like.
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  Speaker 3: Yeah, I don't.
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  Speaker 4: I can't say I know enough about the China around
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  Speaker 4: relationship to uh to say one way or another. Clearly,
• 18:20
  Speaker 4: they buy a lot of the oil. I'm not sure
• 18:22
  Speaker 4: how much else they see eyed I on, but they
• 18:24
  Speaker 4: buy a lot of their oil.
• 18:25
  Speaker 2: They buy a lot of the oil, and it's it's
• 18:27
  Speaker 2: a buffer for them. It's the same way that you know,
• 18:29
  Speaker 2: Iran viewed Hesbala and Hamas and like it's okay, like
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  Speaker 2: here's a buffer against you know, Western intervention in the region.
• 18:37
  Speaker 2: Yeap and and by the way, like basically no one
• 18:39
  Speaker 2: else in the region particularly likes Iran, Like yeah, I
• 18:42
  Speaker 2: know that, you know, the Saudi's in the UAE have
• 18:44
  Speaker 2: been like, oh, like you know, we condemned this and
• 18:46
  Speaker 2: this and that. I would love to see the private
• 18:49
  Speaker 2: communications that they're saying, because I suspect that they are
• 18:52
  Speaker 2: you know, okay, fine, we'll move on. So that's that's
• 18:57
  Speaker 2: kind of something that's in the back of my mind
• 19:00
  Speaker 2: is hey, I think China would like to have a
• 19:02
  Speaker 2: run there as some kind of anti Europe, anti US
• 19:06
  Speaker 2: buffer in the region. Again, I don't think they have like,
• 19:10
  Speaker 2: you know, strong feelings like oh, like we love these
• 19:12
  Speaker 2: guys like, but I do think they prefer having a
• 19:16
  Speaker 2: more friendly, you know, regime to them in the region.
• 19:20
  Speaker 2: And if they feel that threatened, do they start to say, yeah,
• 19:23
  Speaker 2: we can push back through some economic means on this.
• 19:26
  Speaker 2: Maybe it's it's the one thing that's in the back
• 19:28
  Speaker 2: of my mind as as a potential thing to consider.
• 19:32
  Speaker 2: Quick break here Wall Street watches Next.
• 19:41
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:44
  Speaker 1: TFE show. Breaking business news is always first right here
• 19:48
  Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
• 19:54
  Speaker 1: Street Watch a complete look at what's moving markets so
• 19:57
  Speaker 1: far today right here on the Financial Exchange Radio Network.
• 20:02
  Speaker 5: Well, markets are beginning of the week well into positive
• 20:05
  Speaker 5: territory as traders continue to monitor the fourth straight day
• 20:09
  Speaker 5: of attacks between Israel and Iran, leading to volatility in
• 20:13
  Speaker 5: the energy sector. Investors are also readying for a FED
• 20:16
  Speaker 5: meeting this week, with the decision on interest rates and
• 20:19
  Speaker 5: commentary from FED Chairman Jerome Powell Wednesday afternoon. Right now,
• 20:24
  Speaker 5: the Dow is up by one point two percent, just
• 20:28
  Speaker 5: below five hundred points higher. S and P five hundred
• 20:32
  Speaker 5: is also up by one point two percent or seventy
• 20:34
  Speaker 5: three points, and the Nasdaq is up over one and
• 20:37
  Speaker 5: a half percent now, where three hundred and six points
• 20:40
  Speaker 5: RUSSED two thousand is up one point three percent or
• 20:42
  Speaker 5: twenty eight points higher. Ten year treasure reeled down by
• 20:45
  Speaker 5: one basis point now a four point four zero percent,
• 20:48
  Speaker 5: and crude oil retreating today three and a half percent lower,
• 20:52
  Speaker 5: trading just above seventy dollars a barrel. Shares in US
• 20:57
  Speaker 5: Steel jumping by five percent following president executive order issued
• 21:01
  Speaker 5: on Friday approving its merger with Japan's Nippon Steele For
• 21:06
  Speaker 5: the more, both companies sign an agreement with the Trump
• 21:09
  Speaker 5: administration to resolve national security issues. Meanwhile, an activist investor
• 21:14
  Speaker 5: has built the stake in lingerie retailer Victoria's Secret, with
• 21:18
  Speaker 5: plans to push the company to refresh its board and
• 21:21
  Speaker 5: refocus on its core bra business. Victoria's Secret shares are
• 21:25
  Speaker 5: up by three percent after Bloomberg reported late Friday that
• 21:28
  Speaker 5: President Trump pushed the FCC to resolve a spectrum dispute.
• 21:33
  Speaker 5: Echostars stock is soaring by forty eight percent. The company
• 21:38
  Speaker 5: had previously threatened a file for bankruptcy protection and bro
• 21:42
  Speaker 5: Co shares up by over ten percent after the streaming
• 21:45
  Speaker 5: platform announced an exclusive partnership with Amazon that gives advertisers
• 21:50
  Speaker 5: access to what the two called the largest authenticated footprint
• 21:53
  Speaker 5: in connected TV. The agreement enables advertisers to reach roughly
• 21:58
  Speaker 5: eighty million US house holds through the Amazon platform. I'm
• 22:03
  Speaker 5: Tucker Silva and that is Wall Street Watch.
• 22:05
  Speaker 2: Mike. Also just a one last final update on the
• 22:08
  Speaker 2: Israel Iran situation. The Wall Street Journal has a Wall
• 22:12
  Speaker 2: Street Journal exclusive. It's titled A Battered Iran Signals it
• 22:15
  Speaker 2: wants to de escalate hostilities with Israel and negotiate subhetter
• 22:20
  Speaker 2: messages passed by Tehran through intermediary Sekret return to talks
• 22:23
  Speaker 2: if the US stays out of the fight, and so
• 22:27
  Speaker 2: we'll see where this goes again. I think the you
• 22:31
  Speaker 2: kind of just look at the overall situation right now
• 22:32
  Speaker 2: and you say, look, there's not everyone looking at this
• 22:36
  Speaker 2: over the weekend, says where does this go from here?
• 22:38
  Speaker 2: And it's basically you kind of have to either de
• 22:41
  Speaker 2: escalate the next week or things start to get pretty gnarly,
• 22:43
  Speaker 2: and more likely than not is some kind of de escalation.
• 22:48
  Speaker 2: But we'll just have to see where things go.
• 22:51
  Speaker 4: What's the incentive for Israel to de escalate here? I mean,
• 22:57
  Speaker 4: not exactly a big threat from Iran at the moment.
• 23:00
  Speaker 4: I mean, I know there are a few. I don't
• 23:01
  Speaker 4: mean to minimize the deaths. I don't mean to minimize
• 23:03
  Speaker 4: the attacks over Tel Aviv, like these are serious things.
• 23:06
  Speaker 4: But I don't see what incentive in Israel really has
• 23:10
  Speaker 4: other than a pressure campaign from the US and other countries.
• 23:13
  Speaker 2: And I think that's the only thing because if you
• 23:16
  Speaker 2: are if you are the Israeli government, you're sitting there saying, okay,
• 23:22
  Speaker 2: we've probably damaged, you know, some of Iran's nuclear facilities.
• 23:25
  Speaker 2: There's obviously a ton that are you know, not a ton,
• 23:28
  Speaker 2: but the heavy duty stuff is buried under a mountain
• 23:31
  Speaker 2: that Israeli jets cannot penetrate just because they're not big
• 23:34
  Speaker 2: enough to carry the ordinance that would be required to
• 23:37
  Speaker 2: do so. And if you grant Israel would not want
• 23:43
  Speaker 2: to grant Iran any kind of meaningful pause because it
• 23:46
  Speaker 2: gives them the opportunity to then stage a nuclear breakout
• 23:50
  Speaker 2: where they then have a nuclear weapon, which would obviously
• 23:53
  Speaker 2: be something that could be catastrophic to Israel in the
• 23:57
  Speaker 2: event that Iran is able to get it, and then
• 24:00
  Speaker 2: you know, if they ever decided to launch it in
• 24:02
  Speaker 2: a defensive posture, you wouldn't be able to have the
• 24:05
  Speaker 2: same playing field as you do now. So I don't
• 24:09
  Speaker 2: know what the Again, this is something where it's the
• 24:14
  Speaker 2: exact path that's gonna follow over the next week. There's
• 24:17
  Speaker 2: a lot of places where things can go wrong, but
• 24:19
  Speaker 2: you look at it and you say, Okay, the most
• 24:21
  Speaker 2: likely thing is some kind of de escalation. But you
• 24:23
  Speaker 2: can absolutely see a path where Israel says no, like
• 24:27
  Speaker 2: we're just gonna continue to go at this, and you
• 24:29
  Speaker 2: don't know what the Iranian regime does at that point
• 24:32
  Speaker 2: there or how long they last even you just don't know.
• 24:35
  Speaker 2: Let's talk a little bit about the FED because FED
• 24:37
  Speaker 2: meeting is on Wednesday. It kind of snuck up on
• 24:39
  Speaker 2: everyone who has been focused on trade and earnings and
• 24:43
  Speaker 2: now geopolitics, and hey, guess what, Jay Powell is going
• 24:46
  Speaker 2: to be given a press conference at two thirty on Wednesday,
• 24:49
  Speaker 2: And you got a piece in Bloomberg It's titled the
• 24:51
  Speaker 2: FED on hold leaves Wall Street asking what it will
• 24:53
  Speaker 2: take to cut interest rates, and quite honestly, it's going
• 24:57
  Speaker 2: to be a combination of two things. In order for
• 24:59
  Speaker 2: the FED to cut in interest rates, you have to
• 25:02
  Speaker 2: see further continued weakening of the labor market over the
• 25:04
  Speaker 2: next month or two. And you need to see a
• 25:07
  Speaker 2: couple more a couple more inflation reports that are still
• 25:13
  Speaker 2: pretty tame. If they get that they're going or if
• 25:16
  Speaker 2: the magnitude of the labor market, you know, downward move
• 25:19
  Speaker 2: is significant, the Fed is going to start cutting. I
• 25:23
  Speaker 2: mentioned multiple times in the last week or so, if
• 25:25
  Speaker 2: there wasn't this concern about, hey, what could happen from
• 25:28
  Speaker 2: an inflationary perspective in the next few months. The Fed's
• 25:32
  Speaker 2: probably cutting later this week, but they they realistically can't
• 25:36
  Speaker 2: just because that overhang is still there.
• 25:39
  Speaker 4: The stuff that we've seen so far in the labor market,
• 25:41
  Speaker 4: to your point, is not enough. Right, The jobless claims
• 25:45
  Speaker 4: have been a relatively significant uptick, but without that close,
• 25:48
  Speaker 4: without that uptick and unemployment, the unemployment rate, I don't
• 25:52
  Speaker 4: think you can really make a move here because there
• 25:54
  Speaker 4: are other questions about labor force pressure other than just
• 25:58
  Speaker 4: how many people are filing for unemployment. Right, if you
• 26:01
  Speaker 4: are having this significant move on immigration that is tightening
• 26:06
  Speaker 4: the labor force to some unknown degree. I do think
• 26:10
  Speaker 4: that's happening, right You know, you talk to people, are
• 26:13
  Speaker 4: there are people here that work that are not leaving
• 26:15
  Speaker 4: their homes right now and going to jobs even if
• 26:17
  Speaker 4: they are still in the country illegally. If you have that,
• 26:22
  Speaker 4: plus this continued pressure from retiring baby boomers, there's a
• 26:27
  Speaker 4: real question as to what that actually does to the
• 26:29
  Speaker 4: labor force that the FED I don't think has perfect
• 26:32
  Speaker 4: surveys or answers to and so I don't know that
• 26:36
  Speaker 4: they will wait longer than they normally would, but I
• 26:39
  Speaker 4: think they'd be justified in waiting longer than they normally
• 26:42
  Speaker 4: would if you're showing weakness on the labor market.
• 26:44
  Speaker 2: And the FED still doesn't know exactly where tariffs are
• 26:46
  Speaker 2: going to be. Sure a month or two from now,
• 26:48
  Speaker 2: you got that July ninth deadline that's coming up, the
• 26:51
  Speaker 2: Trump administration signaling, hey, we're going to send the letters
• 26:53
  Speaker 2: out to countries telling them what their new effective tariff
• 26:56
  Speaker 2: rate is. And the FED doesn't know exact actually what's
• 27:00
  Speaker 2: going to come out of that, right And so yeah,
• 27:02
  Speaker 2: if you're the FED right now and you have these
• 27:05
  Speaker 2: lingering questions about, Hey, what's gonna happen with inflation over
• 27:08
  Speaker 2: the next few months. You kind of can't start cutting
• 27:14
  Speaker 2: unless there's a significant deterioration in the labor market first,
• 27:18
  Speaker 2: which the problem is then and again I'm not saying
• 27:21
  Speaker 2: this is no, No, I am saying this is bad.
• 27:23
  Speaker 2: The problem then is the FED is basically reduced to, hey,
• 27:28
  Speaker 2: we can't start cutting until there's a recession, right, which
• 27:31
  Speaker 2: is really problematic.
• 27:33
  Speaker 3: I mean, I'm not.
• 27:34
  Speaker 4: Saying we will go here because it seems unlikely, but
• 27:36
  Speaker 4: imagine for a moment what we end up experiencing is,
• 27:39
  Speaker 4: you know, higher white collar unemployment at the same time
• 27:42
  Speaker 4: that farmers, construction crews, and hotels are in desperate need
• 27:48
  Speaker 4: of labor. That's kind of a scenario that you could
• 27:52
  Speaker 4: envision playing out here over the next few months. And
• 27:56
  Speaker 4: I'll tell you one of those is inflationary much more
• 27:58
  Speaker 4: than you know, a tight labor market on the other
• 28:00
  Speaker 4: side would be Yeah, if you have a shortage of
• 28:02
  Speaker 4: labor in areas like farming and construction, that seems a
• 28:06
  Speaker 4: fair bit more inflation narrow to me than a low
• 28:09
  Speaker 4: unemployment rate for college grads with a degree.
• 28:11
  Speaker 2: Yes and no, because what you went like, let's take
• 28:14
  Speaker 2: the construction side of things. Yep, yes, it's inflationary, and
• 28:17
  Speaker 2: that those companies then are going to pay more for
• 28:21
  Speaker 2: in order to get the workers they need to get
• 28:23
  Speaker 2: the work done. But there's also a limited supply of those,
• 28:27
  Speaker 2: Like Mike, if let's say that you lost your job
• 28:30
  Speaker 2: today and you walk over to Home deep and you're like, hey, anyone,
• 28:34
  Speaker 2: need you know a nice able bodied, you know, millennial
• 28:37
  Speaker 2: to go and they look at you.
• 28:38
  Speaker 5: They'd be like, can't reach the second shelf, right.
• 28:41
  Speaker 2: Right, good luck with the drywall. We don't have ladders
• 28:44
  Speaker 2: tall enough for you, Mike. But like you would not
• 28:49
  Speaker 2: be someone that they'd be like, yeah, come work with
• 28:51
  Speaker 2: us for the next six month, completely unskilled labor. So
• 28:54
  Speaker 2: you can't get there. Likewise you're not even going to
• 28:58
  Speaker 2: apply for a job.
• 29:00
  Speaker 4: Right That's my point is there. It's not something mismagine supply.
• 29:06
  Speaker 4: But then the work just doesn't get done. If if
• 29:09
  Speaker 4: that company can't hire the people, the work just stops.
• 29:13
  Speaker 4: And how much of a demand suck is that on
• 29:15
  Speaker 4: the US economy?
• 29:16
  Speaker 2: And so this is why I also complicated. I almost
• 29:19
  Speaker 2: get to man that if the labor market stuff, you
• 29:24
  Speaker 2: still need a few more weeks or even another month
• 29:27
  Speaker 2: or so of it. But if we get to the point,
• 29:30
  Speaker 2: I'll tell you what my what my lines in the
• 29:33
  Speaker 2: sand are, And I say lines in the sand, not
• 29:35
  Speaker 2: red lines, because you can't erase the red line, but
• 29:37
  Speaker 2: you can push the sand back and forth. If I
• 29:39
  Speaker 2: change my mind later, if you see above two hundred
• 29:45
  Speaker 2: and seventy thousand weekly jobbless claims new initial ones, or
• 29:48
  Speaker 2: if continuing claims go above two million, fed's gotta cut
• 29:54
  Speaker 2: because what that is signaling that there's something different happening
• 29:57
  Speaker 2: in labor this year. So I don't think you're there yet,
• 30:00
  Speaker 2: but it's stuff that's within reach in the next month
• 30:02
  Speaker 2: or so if things go badly on that front.
• 30:04
  Speaker 4: I think you also have to trust data from the
• 30:06
  Speaker 4: business survey right now more than the household survey.
• 30:12
  Speaker 2: I don't have strong insights. I don't have any strong
• 30:15
  Speaker 2: thoughts on it.
• 30:16
  Speaker 4: Yeah, I'm not sure, but you know, if I'm looking
• 30:19
  Speaker 4: at that unemployment rate coming from the household survey, I
• 30:23
  Speaker 4: am more worried about response rates there than I am
• 30:26
  Speaker 4: on the business side. Given the immigration crackdown.
• 30:29
  Speaker 2: Just take a quick break here. When we return, we've
• 30:32
  Speaker 2: got the G seven summit kicking off. I think it is.
• 30:37
  Speaker 2: Is it tomorrow? Is it Wednesday? It's sometime in the
• 30:39
  Speaker 2: next couple of days, Maybe it's maybe it's Thursday, even
• 30:41
  Speaker 2: But we got the G seven summit kicking off this week.
• 30:43
  Speaker 2: We'll talk about what it could mean from a trade
• 30:46
  Speaker 2: perspective after this. GEE seven.
• 30:53
  Speaker 1: The Financial Exchange streams live on YouTube. Like our page
• 30:57
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• 31:00
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• 31:05
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• 31:12
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• 31:24
  Speaker 2: Peace to the Wall Street Journal. It touches on something
• 31:27
  Speaker 2: that we have covered a few times, but it's something
• 31:30
  Speaker 2: that I always come back to, and I got to
• 31:32
  Speaker 2: tell you it's.
• 31:34
  Speaker 3: It's a problem, and it's worse.
• 31:35
  Speaker 2: It's a problem, it's worsening, and it's it's just it's bad.
• 31:40
  Speaker 4: So I want to talk first about two thousand and one.
• 31:43
  Speaker 4: According to Gallup, in two thousand and one, during the
• 31:46
  Speaker 4: George W. Bush presidency, the optimism gap between Republicans and
• 31:49
  Speaker 4: Democrats when it came to the stock market stood at
• 31:52
  Speaker 4: thirteen points. According to the same poll this spring, where
• 31:55
  Speaker 4: did we land Chuck.
• 31:56
  Speaker 2: Forty seven points?
• 31:58
  Speaker 3: Wow.
• 32:00
  Speaker 2: So here's the thing. I'm a big believer in one
• 32:03
  Speaker 2: of the great things about the United States of America
• 32:07
  Speaker 2: is that we can all have our own opinions. I'm
• 32:10
  Speaker 2: also a big believer that those opinions don't have to
• 32:14
  Speaker 2: be validated because they're not always right. And one of
• 32:17
  Speaker 2: the ones that is not always right most often is
• 32:22
  Speaker 2: thinking that because your guy either won or lost the
• 32:26
  Speaker 2: presidential election, that markets are gonna do something.
• 32:30
  Speaker 4: It's damning though, because you can oftentimes be right for
• 32:34
  Speaker 4: short periods of time. I've been a brand two conversations
• 32:37
  Speaker 4: that I had around November of last year with two
• 32:41
  Speaker 4: clients of mine that have very different.
• 32:43
  Speaker 3: Political views on things.
• 32:45
  Speaker 4: Let's just say one of them decided that they wanted
• 32:47
  Speaker 4: to get far more aggressive at their investment portfolio. One
• 32:50
  Speaker 4: of them wants to get more conservative. Depending on how
• 32:53
  Speaker 4: long you waited, both of them ended up being right
• 32:55
  Speaker 4: for different periods of times.
• 32:56
  Speaker 2: Yes, And so I think ultimately what I come back
• 33:01
  Speaker 2: to is if you are making investment decisions because of
• 33:10
  Speaker 2: it's not anything other than fundamentals. Because let's be honest
• 33:13
  Speaker 2: fundamentals don't drive the market most of the time. But
• 33:16
  Speaker 2: if you are making investment decision quite honestly, just because
• 33:21
  Speaker 2: of either Team Red or Team Blue, you're probably not
• 33:26
  Speaker 2: making great investment decisions. And what I mean by this
• 33:30
  Speaker 2: is not that the person who is in office, either
• 33:34
  Speaker 2: in the presidency or in the House or Senate, you know,
• 33:36
  Speaker 2: doesn't have an influence on what policy is going to be,
• 33:39
  Speaker 2: but much more that it's often even if you're completely
• 33:44
  Speaker 2: right about what you think that policy is going to be,
• 33:47
  Speaker 2: you might be completely wrong about how the market interprets it.
• 33:50
  Speaker 2: And there are people that get paid an awful lot
• 33:53
  Speaker 2: of money to sit in front of screens all day,
• 33:55
  Speaker 2: every day analyzing this stuff, and they're probably better at
• 33:57
  Speaker 2: it than you.
• 34:00
  Speaker 3: Quite possibly.
• 34:01
  Speaker 4: I think taking emotions out of the investing is one
• 34:04
  Speaker 4: of the key reasons that I think people work with
• 34:08
  Speaker 4: professional investment advisors, right. I mean, it's not always about
• 34:12
  Speaker 4: you know, finding that next company that's going to revolutionize
• 34:15
  Speaker 4: the world, picking the next you know, giant tech company
• 34:19
  Speaker 4: that's just a baby right now. It's hey, when things
• 34:23
  Speaker 4: get really important, when I am on the verge of retiring,
• 34:26
  Speaker 4: or when I'm starting my new family, and I am
• 34:28
  Speaker 4: suddenly a lot more apprehensive about what my financial future
• 34:32
  Speaker 4: looks like. Will I have the discipline to check the
• 34:38
  Speaker 4: emotions at the door and not allow them to influence
• 34:42
  Speaker 4: me in my decision making process regarding my investment portfolio.
• 34:45
  Speaker 4: If you are finding yourself even thinking about those stressors
• 34:51
  Speaker 4: and thinking about how it could affect your decision making process,
• 34:55
  Speaker 4: great reason to at least talk to somebody in this
• 34:59
  Speaker 4: business and understand.
• 35:02
  Speaker 3: How it all works.
• 35:03
  Speaker 4: If you have questions along those lines, you're nervous about
• 35:06
  Speaker 4: where the markets could go, and you're I'm not going
• 35:10
  Speaker 4: to say guilty of it, but you know know that
• 35:12
  Speaker 4: you could allow that stuff to seep in in the future.
• 35:15
  Speaker 4: Give the folks at Armstrong Advisory Group or Ring the
• 35:17
  Speaker 4: numbers eight hundred three nine three for zero zero one
• 35:20
  Speaker 4: will provide you with a free consultation where we can
• 35:23
  Speaker 4: sit down, understand what you're doing today, and you know
• 35:26
  Speaker 4: point you in the right direction. The number again, eight
• 35:29
  Speaker 4: hundred three nine three four zero zero one.
• 35:33
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 35:35
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 35:38
  Speaker 1: Armstrong guide a specific financial, legal or tax advice consult
• 35:41
  Speaker 1: your own financial tax and to state planning advisors before
• 35:43
  Speaker 1: making any investment decisions. Armstrong may contact you to offer
• 35:46
  Speaker 1: investment advisory services.
• 35:48
  Speaker 2: And one other thing on this, I want to just
• 35:50
  Speaker 2: expand on it. If because this is just for investing
• 35:55
  Speaker 2: in general. If you can't sit down with someone and
• 36:00
  Speaker 2: in thirty seconds explain to them what your edge is
• 36:03
  Speaker 2: in whatever it is that you're doing and have them
• 36:05
  Speaker 2: go hmm, then you don't have an edge. You don't. Yeah,
• 36:12
  Speaker 2: So if you can't think about it, and the edge
• 36:15
  Speaker 2: has to be something more than just well, the election happened, Okay,
• 36:18
  Speaker 2: everyone saw that. Like, there's no edge, we all know that,
• 36:24
  Speaker 2: and edges don't have to be complicated by the way.
• 36:27
  Speaker 2: I have a friend whose edge is literally I want
• 36:30
  Speaker 2: to look for the dumbest companies out there and like
• 36:34
  Speaker 2: hope that someone hypes them and he does it in
• 36:37
  Speaker 2: a way that works for him. I have others who
• 36:40
  Speaker 2: you know, study you know, metals markets. In this there's
• 36:44
  Speaker 2: no one way to. I don't like the skin cats,
• 36:48
  Speaker 2: so there's no one way to, you know, peel an orange.
• 36:53
  Speaker 2: There's a few, yeah, but ultimately you gotta be able
• 36:58
  Speaker 2: to explain what your edge is half people go, oh, okay,
• 37:01
  Speaker 2: that's that's kind of interesting to me. Let's talk a
• 37:04
  Speaker 2: little bit about this G seven summit that is happening,
• 37:10
  Speaker 2: Thank you, Chris. And so it's actually kicking off today,
• 37:14
  Speaker 2: and again I think we just need to have a
• 37:17
  Speaker 2: you know, an openness to hey, maybe we get some
• 37:21
  Speaker 2: improvement on some trade stuff, particularly you know with you know,
• 37:25
  Speaker 2: close neighbors Mexico and Canada. Maybe there's some stuff that
• 37:28
  Speaker 2: comes later in this week or you know, sometime next week,
• 37:31
  Speaker 2: and this kickstarts things. I think oftentimes just when you
• 37:33
  Speaker 2: get people in the room together, that can happen. And
• 37:37
  Speaker 2: I think that's possible. I think it's also very much
• 37:40
  Speaker 2: possible that we get to next week we're like okay,
• 37:42
  Speaker 2: like nothing's really happened on this at all, and we're
• 37:45
  Speaker 2: kind of at the same place we've been in for
• 37:47
  Speaker 2: the last couple of months now, waiting for July nine.
• 37:49
  Speaker 4: That's kind of where I am on that. I think
• 37:51
  Speaker 4: that's the baseline ultimately. Right now, the negotiating the US
• 37:55
  Speaker 4: is kind of negotiating with an empty gun. There's challenges
• 37:59
  Speaker 4: to their tariffs, and so if you can get a
• 38:02
  Speaker 4: real sweetheart deal from the United states, you might be
• 38:04
  Speaker 4: willing to really make some progress.
• 38:06
  Speaker 3: Otherwise, I think it's a delay game.
• 38:08
  Speaker 2: Let's take a quick break. Here's still a bunch to
• 38:11
  Speaker 2: come on the Financial Exchange, including we'll talk about what
• 38:14
  Speaker 2: we're seeing from price increases related to tariffs, and an
• 38:18
  Speaker 2: update on the real estate market.