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Baby Boomers are keeping the economy afloat · The Financial Exchange Show

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1:03
Speaker 1: This is the Financial Exchange with Mike Armstrong and Paul Lane.
1:12
Speaker 2: Good morning, welcome back to the Financial Exchange. Hope everyone
1:15
Speaker 2: had a lovely Memorial Day long weekend and was somewhere
1:21
Speaker 2: where the weather was not as terrible as it was
1:23
Speaker 2: here in New England. We are taking a look here
1:27
Speaker 2: at a market that is surging on news that the
1:29
Speaker 2: Trump administration is suspending terrif escalations on the European Union,
1:34
Speaker 2: which were due to go into effect in four days
1:37
Speaker 2: on June first at a rate of fifty percent. Those
1:39
Speaker 2: have apparently been delayed until July first to allow for
1:43
Speaker 2: negotiations to occur. Markets moving up strongly, as I mentioned
1:47
Speaker 2: on the heels of that news, with the S and
1:50
Speaker 2: P five hundred surging over one and a half percent,
1:53
Speaker 2: the Dow up four hundred ninety two points a little
1:55
Speaker 2: bit more than one percent, and the NASDAC up nearly
1:58
Speaker 2: two percent on the news. In terms of interest rates,
2:02
Speaker 2: you have yields actually moving down down to four point
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Speaker 2: four to six percent on the news. Oil prices also
2:10
Speaker 2: moving down about one point seven percent. We've been talking
2:14
Speaker 2: a lot about interest rates recently, so a check in
2:17
Speaker 2: on mortgage rates, where they are sitting above seven percent
2:20
Speaker 2: on the average thirty year fixed rate mortgage, according to
2:23
Speaker 2: Mortgage News Daily, probably why nobody is applying for a
2:26
Speaker 2: mortgage right now. And at the pump we're seeing not
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Speaker 2: a whole lot of movement. The national average for a
2:32
Speaker 2: gallon of gas is sitting at three dollars seventeen cents.
2:35
Speaker 2: Here in Massachusetts we're at about three dollars. Even up
2:38
Speaker 2: in New Hampshire you're at about two dollars ninety main
2:40
Speaker 2: sit at three oh six Vermont at three oh nine.
2:44
Speaker 2: Rhode Island, if I can hover over you, is about
2:45
Speaker 2: the same as Massachusetts and Connecticut, sitting at three dollars
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Speaker 2: and twelve cents per gallon. Paul, anything else catching your
2:54
Speaker 2: eye on in markets today?
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Speaker 3: Surprise, the teslas up from what we covered in the
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Speaker 3: first hour by five percent.
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Speaker 4: But that's the way it chakes out.
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Speaker 2: It is tesla. Neil Kashkari, among many other Federal Reserve
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Speaker 2: Board members, has been speaking today and I think reiterated
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Speaker 2: what we already know. Hey, if you've got markets surging
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Speaker 2: on data about the trade war, if you've got you know,
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Speaker 2: equities basically flat for the year, you've got consumer confidence,
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Speaker 2: which we'll cover in just a minute, surging on trade
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Speaker 2: de escalation, news, then the FED is going to be
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Speaker 2: a no rush to cut interest rates, and that has
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Speaker 2: been the theme from j Powell. It's cashcar is saying
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Speaker 2: the same thing here. But the next FED meeting is
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Speaker 2: June eighteenth, and there is currently a ninety eight percent chance,
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Speaker 2: according to Chicago Mercantallics Change that they do not move
3:49
Speaker 2: on interest rates at that meeting in a few weeks.
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Speaker 2: In fact, it is not until let's see, you have
4:01
Speaker 2: to go out to the meeting in September before you know,
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Speaker 2: people gambling on this question see it even crossing the
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Speaker 2: fifty percent likelihood threshold that rates are lower, and so
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Speaker 2: you're getting out to the fall before anyone is even
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Speaker 2: questioning the likely path for interest rates. At this stage,
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Speaker 2: they're not going higher in any meaningful way in the
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Speaker 2: short term, but certainly not going lower either, and so
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Speaker 2: again good news if you are saving in a CD
4:29
Speaker 2: or in a money market that rate does not appear
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Speaker 2: to be moving lower anytime soon, but likely still to
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Speaker 2: see no real relief when it comes to credit card rates,
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Speaker 2: home equity line rates, mortgage rates. In fact, we've seen
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Speaker 2: mortgage rates go the complete opposite direction of short term
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Speaker 2: rates over the course of the last year or so.
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Speaker 3: Yeah, it's something where really wait and see defines sort
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Speaker 3: of this whole movement with the Federal Reserve. At the moment,
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Speaker 3: you have to kind of continue to follow how these
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Speaker 3: negotiations faire over time. There isn't a screaming reason, in
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Speaker 3: my opinion, that you should cut rates. We've been looking
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Speaker 3: for signs of economic weakness. We covered in the first
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Speaker 3: hour of the show. We haven't really seen anything that's
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Speaker 3: noteworthy from a data standpoint so far. Really most of
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Speaker 3: the negative sentiment has come from consumer confidence readings and
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Speaker 3: things like that, and that probably segues well to kind
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Speaker 3: of our next topic was we actually did get a
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Speaker 3: recent Consumer Confidence Board report that came out this morning
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Speaker 3: that did indicate a pretty significant jump in the month
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Speaker 3: of May for consumer confidence in the United States.
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Speaker 2: Here. So when it comes to these surveys, there's two
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Speaker 2: main ones that we cite. We have the University of Michigan.
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Speaker 2: It's consumer Sentiment Index that they do are reading on
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Speaker 2: and have been since the nineteen forties. This Consumer Confidence Index,
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Speaker 2: I think has been around since the eighties, but you know,
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Speaker 2: speak more directly to what we saw in that because
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Speaker 2: it was a dramatic rise.
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Speaker 3: Yeah, so we just saw that the Consumer Conference Board
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Speaker 3: Index leaped to ninety eight, which was a twelve point
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Speaker 3: three increase from the month of April and much better
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Speaker 3: than estimates, which it indicated they were anticipating that number
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Speaker 3: would come in.
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Speaker 4: At eighty six.
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Speaker 3: A lot of the reason for the positive sentiment, of course,
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Speaker 3: is the developments regarding the US China trade impass, as
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Speaker 3: well as the pause in some of those reciprocal tariffs.
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Speaker 3: It was really visible in and around May twelfth. That's
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Speaker 3: kind of when the US trying to trade deal gains
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Speaker 3: some momentum, and after that that's when you saw a
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Speaker 3: uptick in some of the confidence come from those those
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Speaker 3: items that we spoke about there. This is falling five
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Speaker 3: straight months of declines. I mentioned that before, where while
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Speaker 3: we hadn't seen a hard economic data that had been negative,
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Speaker 3: we had seen those consumer sentiment reports being quite dismal
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Speaker 3: really in terms of what we saw the prior five
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Speaker 3: months here.
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Speaker 2: Yeah, the consumer has been honestly, like, very clearly understanding
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Speaker 2: the effect of tariffs on the economy. I think many
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Speaker 2: willing to accept those effects for the potential trade offs,
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Speaker 2: but no real lack of clarity around what these tariffs
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Speaker 2: could mean for the price of goods and the state
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Speaker 2: of trade, and I think that's reflected in things like
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Speaker 2: this that again don't really tell you about what consumers
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Speaker 2: are going to do, but rather how they are feeling.
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Speaker 2: And the big jump that we saw, I think is significant,
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Speaker 2: and I think we will continue to see them in
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Speaker 2: one direction or another given where trade goes. But it's
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Speaker 2: also at a level here. So you know that most
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Speaker 2: recent read, which came in at ninety eight for some
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Speaker 2: context on this, we did spend most of the post
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Speaker 2: COVID era above one hundred. If you go take a
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Speaker 2: look at the chart on this, you know we surged
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Speaker 2: to the one twenties in twenty twenty one before inflation
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Speaker 2: set in, but most of twenty twenty two and then
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Speaker 2: all of twenty three and twenty four we were above
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Speaker 2: one hundred. We're sitting just below one hundred now after
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Speaker 2: dipping into the low eighties in April. Compared to post
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Speaker 2: financial crisis time period, people are still pretty bullish about
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Speaker 2: things at the moment, and I want to make that clear.
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Speaker 2: According to this survey, right, even those lows that we
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Speaker 2: saw back in April of this year, they were substantially
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Speaker 2: higher than we were from any time between two thousand
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Speaker 2: and eight and like twenty sixteen, basically, And so I
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Speaker 2: think that informs you a little bit of where people
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Speaker 2: are right now, which is there's a lot going for them.
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Speaker 2: They are generally employed, They generally have more money than
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Speaker 2: they did and more wealth than they did five years ago.
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Speaker 2: They don't seem abundantly concerned about inflation, although that is
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Speaker 2: showing up in you know, in pieces here and there,
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Speaker 2: and they're generally pretty optimistic about where things go at
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Speaker 2: the moment. Even when those readings do dip a little bit.
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Speaker 2: The question that I have would be, you know, are
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Speaker 2: they I guess too reactionary to those moves in trade
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Speaker 2: given how volatile they've been, And does it actually mean anything,
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Speaker 2: you know, when we see these massive dips. Historically they
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Speaker 2: have been coinciding with recession. This time around, it hasn't
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Speaker 2: been happening for the last five years or so, and
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Speaker 2: so I hesitate to read too much into a drop
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Speaker 2: or an increase in these readings because recently they haven't
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Speaker 2: meant anything for the real economy. Let's take a quick break.
9:18
Speaker 2: When we come back, we'll do a little bit trivia
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Speaker 2: here for you next on the Financial Exchange.
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Speaker 2: Paul I feel frequently that there are pieces written about
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Speaker 2: the baby boomer generation moving its way through society and
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Speaker 2: it and the the age brackets and the pending doom
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Speaker 2: that it's going to represent, whether it's going to be
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Speaker 2: from a shortage of workers or a massive need for
11:44
Speaker 2: long term care, or any number of different negativities associated
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Speaker 2: with this generation moving its way because of just their
11:52
Speaker 2: size through the economy. This is the first one that
11:56
Speaker 2: I've read that it's been like, No, this is actually
11:57
Speaker 2: a stabilizing factor right now, and lays out an argument
12:01
Speaker 2: of stuff that we probably see every day, which is,
12:05
Speaker 2: this generation is spending a whole crap ton of money,
12:09
Speaker 2: and they have a lot of money to spend, and
12:10
Speaker 2: it seems to be helping out the economy in a
12:12
Speaker 2: number of different, perhaps unforeseen ways. But let's cover a
12:16
Speaker 2: few of these a few of these basics here. There
12:20
Speaker 2: were a record eleven two hundred Americans turning sixty five
12:25
Speaker 2: every day in twenty twenty four. A decade ago that
12:29
Speaker 2: was ten thousand. So this is a market increase in
12:32
Speaker 2: the number of people turning sixty five. What does that mean?
12:36
Speaker 2: You're eligible for Medicare? What else does it mean? You're
12:38
Speaker 2: getting pretty close to covering to pulling Social Security? And
12:43
Speaker 2: while the Social Security bucket is definitely something that this
12:45
Speaker 2: generation earned, it is a new series of incomes coming
12:49
Speaker 2: into the households. And so I can tell you firsthand,
12:53
Speaker 2: while it shouldn't people think about their Social Security checks
12:56
Speaker 2: differently than they do when they spend their own savings.
12:59
Speaker 2: I would tell you as a financial person that you
13:01
Speaker 2: shouldn't think about it that way. But people definitely do.
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Speaker 2: They get more comfortable spending they certainly get more comfortable
13:07
Speaker 2: retiring once they are eligible for that Medicare, and we
13:11
Speaker 2: are seeing the benefits. I think of all of that
13:15
Speaker 2: on the big pieces of our economy right now, with
13:18
Speaker 2: some admittedly sizeable drawbacks too.
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Speaker 3: Yeah, it's interesting some of these statistics quoted in here. Mike,
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Speaker 3: you mentioned the amount of Americans turning sixty five every day,
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Speaker 3: but you also have had just a tremendous amount of
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Speaker 3: so new social security recipients. Back in twenty fifteen, one
13:35
Speaker 3: point two million were added of new people turning on
13:38
Speaker 3: their social Security. Over the last twelve months, we've seen
13:40
Speaker 3: that increase to one point eight million. And then if
13:43
Speaker 3: you just look at the other piece that's examined here
13:46
Speaker 3: is those who are collecting social Security versus the amount
13:50
Speaker 3: of job growth that we're seeing as a country. And
13:52
Speaker 3: the argument that's being made in this piece is back
13:55
Speaker 3: in let's say two thousand and four to two thousand
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Speaker 3: and six, the US added six point six million jobs.
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Speaker 3: During that span of time from four to six, there
14:05
Speaker 3: was one point three million new social Security beneficiaries, a
14:09
Speaker 3: ratio of about five to one. If you look at
14:11
Speaker 3: that today, it's basically one to one. Over the past year,
14:14
Speaker 3: we've added about two million jobs and there's one point
14:17
Speaker 3: eight million new Social Security beneficiaries. So as a result
14:21
Speaker 3: of that, in the piece here in Bloomberg, theorizing that
14:24
Speaker 3: perhaps because we've seen more people retiring and stepping away
14:29
Speaker 3: from their job, it is holding up this labor market
14:32
Speaker 3: a little bit more. As you have a phasing out
14:35
Speaker 3: of older employees, more focus on employers retaining that prior
14:40
Speaker 3: that younger generation, and you've seen perhaps less in the
14:44
Speaker 3: way way of layoffs as a result of that.
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Speaker 2: Yeah, that is a interesting theory, right. I think there's
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Speaker 2: been all this anticipation of oh ai is going to
14:52
Speaker 2: just wipe out a portion of the workforce. The answer
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Speaker 2: might be, you don't need to if you've got this
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Speaker 2: many baby boomers retiring proactive and voluntarily.
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Speaker 3: Yeah, it's it's a spot where we're so conditioned to
15:05
Speaker 3: see in every single day because we work with a
15:07
Speaker 3: lot of people who are tyree.
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Speaker 4: So I read this, I say, oh, of course, but
15:11
Speaker 4: we're we face.
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Speaker 3: It, you know, head on every single day because we're
15:14
Speaker 3: dealing with folks in that age bracket. But it does
15:17
Speaker 3: seem like this doesn't negate the negative impact that I
15:20
Speaker 3: think it has on. We talked about new college grads
15:24
Speaker 3: really having a difficult time sort of finding new jobs
15:27
Speaker 3: to be added in the labor forces.
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Speaker 2: Yeahs like that. The labor force is, at the best
15:31
Speaker 2: of times, difficult to summarize and describe as either good
15:36
Speaker 2: or bad. And you know, my temptation is to call
15:38
Speaker 2: this a good job market right now, but you're right,
15:41
Speaker 2: if you are a twenty one year old graduating college,
15:44
Speaker 2: it doesn't feel that way. Right The youth unemployment right
15:48
Speaker 2: now is quite high. You are not seeing a lot
15:50
Speaker 2: of turnover in those jobs. It's just that if you've
15:52
Speaker 2: had the job for a while, you're not likely to
15:54
Speaker 2: be losing it right now. The other piece that you're
15:57
Speaker 2: seeing some of this negative negativity on this one, you
16:01
Speaker 2: mentioned social security, So you know, part of that big
16:03
Speaker 2: surge that we saw over the last twelve months, by
16:05
Speaker 2: the way, was due to the Social Security Fairness Act,
16:08
Speaker 2: where a whole bunch of retirees that weren't previously eligible
16:11
Speaker 2: for SoCal security overnight became eligible. So that that adds
16:14
Speaker 2: to it, but it doesn't matter because it's still new
16:17
Speaker 2: money in the system that didn't exist prior to so
16:20
Speaker 2: one downside that money's gonna run out soon. We're gonna
16:23
Speaker 2: have to deal with some politicians. Is going to have
16:26
Speaker 2: to be brave enough to stand up and say, yes,
16:28
Speaker 2: this program is going to go bankrupt and we're going
16:31
Speaker 2: to need to someday do something about it. So far,
16:34
Speaker 2: no real appetite to do that, so we'll just keep
16:37
Speaker 2: kicking that old can down the road. The other one
16:41
Speaker 2: that I think many would point to as a downside
16:44
Speaker 2: to all of this is that happens anytime there's wealth
16:49
Speaker 2: inequality that has built up. And the wealth inequality, I'm
16:52
Speaker 2: not describing this as like diversity or race or anything
16:56
Speaker 2: like that. It's just older people have more wealth. They've
16:58
Speaker 2: paid off their mortgages, they owned homes at are rated
17:01
Speaker 2: higher than most anybody else, and so the amount of
17:05
Speaker 2: wealth that has been built up in that older generation
17:08
Speaker 2: is massive, and so that has led to the average
17:11
Speaker 2: age of a home buyer being a record fifty six
17:14
Speaker 2: years old.
17:15
Speaker 4: I was stunning.
17:15
Speaker 2: Also, that's unheard of. Told Brothers mentioned that the portion
17:20
Speaker 2: of homes that they are selling, twenty four percent of
17:23
Speaker 2: their customers are just paying cash. Tough to compete obviously
17:27
Speaker 2: if you were that now, never mind the twenty one
17:29
Speaker 2: year old let's call it the twenty eight year old
17:31
Speaker 2: trying to buy their first home. Well, yeah, the homes
17:34
Speaker 2: are more and more being designed for the baby boomers,
17:37
Speaker 2: and that many of them are coming in with cash
17:39
Speaker 2: to buy those homes, and so there are some downsides
17:43
Speaker 2: to this, But honestly, the biggest downsides that I see
17:46
Speaker 2: aren't going to play out for a few years. Yes,
17:48
Speaker 2: there is going to be a surgeon demand for healthcare.
17:51
Speaker 2: I don't really know how we are going to satisfy
17:54
Speaker 2: that with our current systems, but that's what innovation's all about,
17:58
Speaker 2: and I suspect that we will find systems to fix it.
18:01
Speaker 2: The other one is the stress on our Medicare and
18:03
Speaker 2: Social Security systems, which were poorly funded before the baby boomers,
18:09
Speaker 2: and this has exacerbated the issues substantially, and no politician
18:13
Speaker 2: out there even wants to talk about it.
18:15
Speaker 1: No.
18:15
Speaker 3: No. In the housing market, I can't really see any
18:18
Speaker 3: positive catalysts to come on that side either.
18:22
Speaker 2: Nationally, it seems like the type of thing that it
18:24
Speaker 2: just needs to reach a breaking point before people do
18:26
Speaker 2: something right.
18:28
Speaker 3: It has to be so profitable to make homes that
18:30
Speaker 3: maybe that would set out for more.
18:32
Speaker 2: Increasing I don't know, you know, in my community where
18:36
Speaker 2: I live, we voted down any sort of denser housing
18:39
Speaker 2: building that's to be built because, you know, I think logically,
18:44
Speaker 2: because people are self interested. They don't want more traffic,
18:47
Speaker 2: they don't want more dense housing. They want the same
18:50
Speaker 2: feel of the low traffic, quiet suburban town. And sorry,
18:55
Speaker 2: but that does not lead to cheaper housing. In fact,
18:57
Speaker 2: it leads to much more expensive housing. Hence why I
19:00
Speaker 2: could not afford to buy my home today, just couldn't
19:05
Speaker 2: couldn't afford to do it with the mortgage rates and
19:07
Speaker 2: the prices that they have gone to these days. And
19:09
Speaker 2: I didn't buy it two decades ago, by the way,
19:13
Speaker 2: five years ago, pretty recently, definitely can't afford it. Now,
19:18
Speaker 2: let's take a quick break. When we come back, I'm
19:20
Speaker 2: going to give you the trivia winner here and then
19:23
Speaker 2: want to talk a little bit about investing in twenty
19:27
Speaker 2: twenty five. A couple of stories here that I think
19:30
Speaker 2: are worth talking about. That's next year.
19:31
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Speaker 5: Trivia question today was what was the highest grossing movie
20:12
Speaker 5: of twenty twenty two? It wasn't Top Gun, Maverick, It
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20:34
Speaker 2: Wall Street Journal piece today, Yes you have too much
20:37
Speaker 2: money in that one hot stock now. I think the
20:41
Speaker 2: questions that they got here are pretty extreme. The author
20:45
Speaker 2: claims that they've had readers, friends and family asked questions like, quote,
20:50
Speaker 2: is it a bad idea to have eighty five percent
20:52
Speaker 2: of my portfolio in Nvidia? Should I own some other
20:55
Speaker 2: stocks besides Apple? If Bitcoin is ninety percent of my assets,
20:58
Speaker 2: should I scale back? I'm not going to answer any
21:00
Speaker 2: of those questions, because I one, I can't too. I
21:03
Speaker 2: don't know who was asking these questions, but the answer
21:06
Speaker 2: to all of them seems pretty obvious to me. Regardless,
21:11
Speaker 2: I think it is happening more and more these days
21:13
Speaker 2: because of the concentrated surge that you have seen in
21:17
Speaker 2: the stock market, and quite honestly some kind of conflicting
21:21
Speaker 2: advice because for the wealthiest of Americans, they never sell
21:27
Speaker 2: right when you talk about like the uber wealthy, what
21:30
Speaker 2: they do is a strategy called buy, borrow, and die.
21:34
Speaker 2: You buy the asset, you never sell it because if
21:36
Speaker 2: you are imagine that you are earning fifteen million dollars
21:40
Speaker 2: a year and living in Massachusetts, if you go and
21:43
Speaker 2: sell that asset for a capital gain, you're going to
21:45
Speaker 2: face let's see, a federal capital gain rate of nearly
21:48
Speaker 2: twenty four percent plus another nine to the Commonwealth of Massachusetts. No,
21:52
Speaker 2: you're just gonna die with that thing, and you're gonna
21:54
Speaker 2: let somebody else deal with it, because you're going to
21:56
Speaker 2: your kids are going to save a whole bunch of
21:58
Speaker 2: taxes if you just die owning it. The problem is one,
22:03
Speaker 2: I don't think people understand how that works because at
22:05
Speaker 2: the same time, that person that is making fifteen million
22:08
Speaker 2: dollars a year has methods of diversifying. One, they probably
22:12
Speaker 2: own a bunch of other stuff. Two, they might be
22:14
Speaker 2: using some complex option strategies in order to diversify out
22:18
Speaker 2: of their real estate holding or their or their individual
22:21
Speaker 2: stockholding in some meaningful way. I don't feel as though
22:25
Speaker 2: there is some perfect ground rule for how diversified somebody
22:30
Speaker 2: needs to be. But frequently what I see when people
22:34
Speaker 2: are investing is they do not understand just how concentrated
22:38
Speaker 2: they are. And that's where I think the danger comes, right, is,
22:42
Speaker 2: oh yeah, i' muber concentrated in this one position. And
22:46
Speaker 2: then you go take a look at their less obvious stuff. Right, Oh,
22:49
Speaker 2: let's take a look at your four oh one K,
22:50
Speaker 2: and oh I have this one tech holding, and my
22:53
Speaker 2: four oh one K is dominated by S and P
22:56
Speaker 2: and technology funds, and oh yeah, it turns out what
22:59
Speaker 2: I thought was like a eight percent concentrated exposure to
23:03
Speaker 2: this one company turns out it's like twenty. Right. How
23:07
Speaker 2: to deal with this is the tricky part. You know,
23:09
Speaker 2: where to set the thresholds is tricky in and of itself,
23:12
Speaker 2: but how you manage exiting a position, how you manage
23:15
Speaker 2: raising cash for your retirement for when you need to
23:18
Speaker 2: spend this money. If you're considering gifting in your you know,
23:22
Speaker 2: later years, perhaps to your kids or grandkids, what do
23:26
Speaker 2: you choose to gift do I gift cash? Do I
23:27
Speaker 2: gift money into a roth ira A five twenty nine?
23:30
Speaker 2: Do I gift stock that's appreciated a whole bunch that
23:33
Speaker 2: I want to give to the next generation. These are
23:35
Speaker 2: complicated questions that honestly only kind of relate to investing right.
23:41
Speaker 2: A lot of these are tax related questions, a lot
23:43
Speaker 2: of these are state planning related questions. But I can
23:46
Speaker 2: tell you firsthand that I see them all the time.
23:48
Speaker 2: And I think that because of the massive run up
23:53
Speaker 2: that you have seen in some of these high flying
23:55
Speaker 2: tech names over the last few years, really since like
23:59
Speaker 2: two and ten, with very little downside to it, there's
24:03
Speaker 2: been some complacency built in on the part of individual investors.
24:07
Speaker 2: If you have landed yourself in this position, congratulations, it
24:11
Speaker 2: means you've probably made a boatload of money. Protecting that
24:16
Speaker 2: sum of money and ensuring that it's still there to
24:19
Speaker 2: work for you a decade from now, in three decades
24:22
Speaker 2: from now is an incredibly challenging thing to do. And
24:26
Speaker 2: I can tell you again firsthand the number of people
24:29
Speaker 2: that I have seen lose eighty percent of their wealth
24:32
Speaker 2: from not making those diversifying decisions. If you're facing this
24:36
Speaker 2: type of difficult set of choices and unsure about how
24:39
Speaker 2: to proceed with them. Give the folks at Armstrong Advisory
24:42
Speaker 2: Group a call and let us walk you through our method.
24:45
Speaker 2: The numbers eight hundred three nine three four zero zero one.
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Speaker 2: We have financial advisors and offices located throughout the New
24:52
Speaker 2: England area and would be happy to meet with you
24:54
Speaker 2: over the phone, via zoom or in person whatever works
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Speaker 2: best for you and your schedule. The number again is
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Speaker 2: eight hundred three nine three four zero zero one.
25:03
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
25:06
Speaker 1: registered investment advisor. Nothing in the ad or in any
25:08
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
25:12
Speaker 1: your own financial tax into state planning advisors before making
25:14
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
25:17
Speaker 1: advisory services.
25:19
Speaker 2: All right, Paul, We've been talking a lot about the
25:20
Speaker 2: student loan crisis and the kind of pending doom of it,
25:25
Speaker 2: because starting next month, starting this month, the Trump administration
25:28
Speaker 2: already began putting millions of student loan borers into collections.
25:34
Speaker 2: Starting next month, those collections, I believe are actually going
25:36
Speaker 2: to begin where those in default can have their wages
25:41
Speaker 2: tax refunds federal benefits get collected by the United States government.
25:47
Speaker 2: Morgan Stanley is estimating that the payments this year or
25:51
Speaker 2: two student loans will be a collective one to three
25:53
Speaker 2: billion dollars per month that need to be made, some
25:56
Speaker 2: of which obviously won't because the loans are in default.
25:59
Speaker 2: But the question is how does that start to weigh
26:01
Speaker 2: on the economy as a whole, And that's obviously a
26:05
Speaker 2: difficult one two answer.
26:07
Speaker 3: Yeah, they've estimated that it could trim a GDP by
26:11
Speaker 3: zero point one percent. That the same economists said Morgan
26:14
Speaker 3: Stanley that did that particular estimate. It seems like those
26:20
Speaker 3: delinquencies that we're going to see here. This month, the
26:23
Speaker 3: Federal Reserve Bank of New York reported the student loan
26:26
Speaker 3: delinquency rate was up from point seven percent in Q
26:30
Speaker 3: four to eight percent in Q one, back right around
26:33
Speaker 3: where it was before the pandemic.
26:35
Speaker 2: So, and that's important because I feel like we keep
26:38
Speaker 2: talking about the student loans in terms of the giant
26:41
Speaker 2: problem that it is, and it I think is. But
26:45
Speaker 2: the delinquency rate in the first quarter got back to
26:47
Speaker 2: where it was pre pandemic. It didn't go to twice
26:50
Speaker 2: where it was sure it just got back to where
26:52
Speaker 2: it was pre pandemic. I think the problem is that
26:55
Speaker 2: there were no payments made by a whole bunch of
26:57
Speaker 2: people during the pandemic, and so those delinquencies might be
27:00
Speaker 2: on much higher balance.
27:01
Speaker 4: I imagine.
27:02
Speaker 3: So I'm you know, I've mentioned this story before and
27:05
Speaker 3: this doesn't relate to the economic impact of it, but
27:07
Speaker 3: it's just very challenging to have a lot of sympathy
27:10
Speaker 3: for those bars just because of how it was such
27:13
Speaker 3: a long period of time of forbearance that I just
27:16
Speaker 3: I don't have the sympathy.
27:18
Speaker 4: You know, there there is going to be.
27:20
Speaker 3: A calling a day of reckoning at some point when
27:23
Speaker 3: you have debt out there. It can't just be fully
27:26
Speaker 3: wiped away, and you should take advantage of what was
27:28
Speaker 3: a period of time to pay some of that off.
27:31
Speaker 3: But that's I'm with Like every comes up, and it
27:35
Speaker 3: just frustrates me why there should be much empathy on
27:38
Speaker 3: this issue. Plenty of other issues out there economically that
27:41
Speaker 3: I can have empathy for and difficult situations for people,
27:43
Speaker 3: but this one is just not one of those.
27:45
Speaker 2: Yeah. Look, I think the way we deal with university
27:48
Speaker 2: and college is a mistake in this country. I think
27:50
Speaker 2: we do a crap job of, you know, explaining to
27:54
Speaker 2: seventeen year olds what it means to borrow one hundred
27:56
Speaker 2: thousand dollars. There should be a lot more education on
27:59
Speaker 2: how that works and what it means and whether or
28:01
Speaker 2: not you'll ever be able to pay it back. So,
28:03
Speaker 2: you know, I have some empathy from that standpoint, But
28:06
Speaker 2: you're right. Every interview I see done is like, oh, yeah,
28:09
Speaker 2: I was getting these notices, but I just ignored them
28:12
Speaker 2: because I didn't recognize what it was, and so then
28:14
Speaker 2: I got a collections notice and my wages are being garnished.
28:17
Speaker 2: It's like you just threw out mail to you from
28:20
Speaker 2: the federal government and year and a half.
28:22
Speaker 3: You know how many notices you must have gotten during
28:24
Speaker 3: that span. It's not like they just do it once.
28:27
Speaker 3: You get a lot of notices, you do.
28:29
Speaker 4: You really have to have your head in this.
28:30
Speaker 2: Now, the debt collectors have changed. Some of them went
28:32
Speaker 2: bankrupt during COVID and new ones emerged, and so the
28:35
Speaker 2: name of the entity that is trying to collect from
28:37
Speaker 2: you could be different. But again, yeah, you really have
28:41
Speaker 2: to intentionally ignore this stuff. And in the case of
28:44
Speaker 2: the person that I remember this reading man, I'm like, okay,
28:47
Speaker 2: and then you posted about this on social media. It's like,
28:51
Speaker 2: I would never hire you. I would never hire somebody
28:54
Speaker 2: who intentionally ignored a bunch of stuff that came to them, Like,
28:58
Speaker 2: why would I have any confidence it's that you're going
29:00
Speaker 2: to respond to my emails in a timely faction. The
29:05
Speaker 2: other really scary and disheartening piece of this there are
29:08
Speaker 2: approximately three and a half million Americans who are over
29:12
Speaker 2: the age of sixty that have student loan debt.
29:15
Speaker 1: Wow.
29:16
Speaker 2: Totals one hundred and twenty five billion dollars in student
29:19
Speaker 2: loan debt held by Americans over the age of sixty.
29:23
Speaker 2: I don't remember the stat on specifically how many of
29:26
Speaker 2: those are in default, but it's not an insignificant portion.
29:29
Speaker 2: I believe it's more than ten percent of that three
29:32
Speaker 2: and a half million who are not paying on them
29:34
Speaker 2: and are in default and are going to see their
29:36
Speaker 2: Social Security checks starting to get garnished pretty soon for
29:40
Speaker 2: those payments. So that is the piece that continues to
29:43
Speaker 2: shock me, is those those baby boomers who still are
29:46
Speaker 2: holding on to that debt and have been unable to
29:48
Speaker 2: repay it. Let's take quick break when we come back
29:52
Speaker 2: stack Roulette here on the Financial Exchange.
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30:56
Speaker 2: Paul, time forbid to stack Rolette. I want to start
30:58
Speaker 2: off with art official intelligence at the doctor's office. And
31:02
Speaker 2: I have a funny story about this, and then I
31:05
Speaker 2: want to actually talk about the seriousness of it and
31:07
Speaker 2: where it's, where it's working, where I don't think it's working.
31:10
Speaker 2: I have a friend of mine who gets pretty queasy
31:14
Speaker 2: with medical stuff. I've seen her get lightheaded by that's me,
31:17
Speaker 2: that's you went like seeing blood. Oh yeah, I.
31:20
Speaker 4: Can't watch the pit on HBO.
31:23
Speaker 2: They had a doctor's appointment recently where the doctor was
31:27
Speaker 2: looking at something and he was using AI or he
31:31
Speaker 2: or she was using AI to note take for them
31:34
Speaker 2: and make sure that it worked well. And so what
31:38
Speaker 2: my friend found was that they were describing everything that
31:40
Speaker 2: they saw in a lot of detail because they wanted
31:43
Speaker 2: the note taking to accurately capture what they were seeing.
31:47
Speaker 2: She passed out, full on fainted in the middle of
31:50
Speaker 2: the doctor's appointment because of what he was describing out
31:52
Speaker 2: loud to the AI system. I'm guessing that that's a
31:55
Speaker 2: pretty rare side effect. But you can imagine, right, like
31:58
Speaker 2: stuff that usually just silently goes in your notes you're
32:01
Speaker 2: saying out loud and describing in a whole bunch of
32:03
Speaker 2: gory detail wasn't for this person. I don't think they'll
32:06
Speaker 2: be allowing the AI in their offices anymore, or this
32:10
Speaker 2: patient rather. But the reality is that it does appear
32:14
Speaker 2: to be saving a lot of time. And by the way,
32:18
Speaker 2: this exists in the investment industry too. It's one of
32:20
Speaker 2: the fastest growing areas where if you're meeting with your
32:22
Speaker 2: financial advisor, they will have an AI assistant on their
32:25
Speaker 2: phone open and listening to your conversation and taking notes.
32:29
Speaker 2: I think it has vast applications in any industry where
32:33
Speaker 2: details are important, legal meetings, doctors' offices, financial advisory meetings.
32:41
Speaker 2: I see a lot of downside to it too. But
32:43
Speaker 2: in the pilot that MGH did where they had twenty
32:45
Speaker 2: five hundred physicians using the technology, they found that the
32:50
Speaker 2: daily documentation time outside of clinic hours, which was running
32:54
Speaker 2: ninety minutes, cut down to under thirty minutes. Wow, that
32:57
Speaker 2: is a huge, huge cost saving. The other future that
33:01
Speaker 2: they predict with all of this is an AI system
33:03
Speaker 2: that would go through your medical records, because you imagine, Paul,
33:07
Speaker 2: I've got my annual physical, the doctor probably has a
33:10
Speaker 2: bunch of notes from maybe ah, you know, the doctor
33:15
Speaker 2: might have some notes in there from my visit to
33:17
Speaker 2: a emergency carisplace or to somewhere else. The AI system
33:21
Speaker 2: can summarize it all up for you and put it
33:24
Speaker 2: together in terms of some concise stuff to read through
33:27
Speaker 2: and give the doctor some information on My problem is
33:30
Speaker 2: privacy and comfortability. I just do wonder, right, like, if
33:34
Speaker 2: I'm going to my doctor's office and they in Massachusetts,
33:38
Speaker 2: they have to tell you that they are recording you
33:40
Speaker 2: in several other states as well, and get your buy in.
33:42
Speaker 2: They're going to put a device on the table, let's
33:44
Speaker 2: say and say, hey, this is going to record our conversation.
33:47
Speaker 2: I use it for note taking. Am I going to
33:50
Speaker 2: be as forthcoming and transparent and honest with that doctor
33:55
Speaker 2: as I would be just one on one with somebody
33:57
Speaker 2: that I know? Personally, I'm a little bit worried about
34:00
Speaker 2: it in the medical space than I am others. But
34:02
Speaker 2: I don't know. I don't want every word I say
34:04
Speaker 2: being recorded.
34:06
Speaker 4: Yeah, you would.
34:07
Speaker 3: You would hope that with that medical industry, you know,
34:11
Speaker 3: protecting you know a patient confidentiality.
34:15
Speaker 2: Come on is the most But they've been right than
34:18
Speaker 2: any other.
34:19
Speaker 4: Yeah, they've been hacked like crazy.
34:20
Speaker 3: So but kind of to make that argument like, yeah,
34:23
Speaker 3: your YEAD has probably been hacked anyway, right, like it's
34:26
Speaker 3: your medical workers are.
34:27
Speaker 4: Probably already out there.
34:28
Speaker 3: Yeah, so it certainly is a it's a tough one, certainly,
34:35
Speaker 3: the idea of being recorded. I don't know if anyone
34:37
Speaker 3: feels always fully comfortable with that because you just don't
34:40
Speaker 3: can't have the same level of candor.
34:42
Speaker 2: It's probably a generational thing. Yeah, you know. My guess
34:45
Speaker 2: would be I'm uncomfortable with it today, and my kids
34:49
Speaker 2: will be fine with it.
34:51
Speaker 4: I could. I agree. I agree, because they're just going
34:54
Speaker 4: to grow up.
34:54
Speaker 2: They're just going to grow up with it. It's going
34:56
Speaker 2: to be normal, and their generation will see these big
35:00
Speaker 2: cost savings from AI that doctors and other professionals are
35:04
Speaker 2: able to do.
35:05
Speaker 3: The same thing with us in electronic payments. If you
35:07
Speaker 3: think about it over the computer and over your phone,
35:09
Speaker 3: that is an area where I would argue you and
35:11
Speaker 3: I are much more comfortable than our parents are doing
35:14
Speaker 3: it now. They've acclimated and the pandemic really pushed that
35:17
Speaker 3: forward a little bit, but much more comfort doing business
35:21
Speaker 3: or e commerce on your phone, and that same sort
35:23
Speaker 3: of thing could happen here. I think from a diagnostics perspective,
35:26
Speaker 3: though this could be it does have potential to be
35:30
Speaker 3: a huge benefit to be able to aggregate symptoms and
35:33
Speaker 3: health history in order to assist, but you never want
35:37
Speaker 3: it to be the end all be all.
35:38
Speaker 2: Yeah, I mean, I don't know. I think my answer
35:41
Speaker 2: there is the same way that I'm approaching it with investing,
35:45
Speaker 2: Like until somebody proves out that an AI system is
35:48
Speaker 2: going to be able to accurately take a whole mound
35:50
Speaker 2: of data and predict what the best stock is going
35:53
Speaker 2: to be next year, or until a doctor is able
35:56
Speaker 2: to use AI to collect a bunch of data and
35:58
Speaker 2: predict what the most likely ail isn't a patient. I
36:01
Speaker 2: don't want to jump into any conclusions there, and I
36:03
Speaker 2: think you are seeing more evidence of that in the
36:05
Speaker 2: medical space than you are the investment world. But I
36:09
Speaker 2: don't know. I hesitate to believe that that's going to
36:11
Speaker 2: be the case.
36:13
Speaker 3: It's a possibility, It certainly is a possibility for my
36:18
Speaker 3: stack Roulette. Waimo is making its way through Boston. This
36:20
Speaker 3: is a story that we covered a couple over the
36:23
Speaker 3: last week or so, so weimo for those who don't know,
36:27
Speaker 3: is the self driving taxis They are coming to town
36:30
Speaker 3: in Boston. But to be very explicit here, this is
36:33
Speaker 3: not that there is going to be self driving vehicles
36:36
Speaker 3: out there with passengers. This is just they are mapping
36:39
Speaker 3: out the streets of Boston, and of course Boston and
36:42
Speaker 3: the Globe has had a field day with us, and
36:44
Speaker 3: we had a field day with it on the show
36:46
Speaker 3: here obviously with our local presence where this one Reddit
36:50
Speaker 3: user said, good bleep in luck to these potential waymo's
36:54
Speaker 3: mapping out the streets of Boston to see whether or
36:56
Speaker 3: not they'd want to do business here in the future.
36:59
Speaker 3: They mentioned things like the case circle will it's a
37:02
Speaker 3: notorious door tester, rotary is going to bring the software
37:06
Speaker 3: to its knees, and many other uh, just quirks that
37:12
Speaker 3: come with driving in Boston. To put as nicely as possible, Uh,
37:16
Speaker 3: we'll have to see. And this doesn't even include the
37:19
Speaker 3: potential impacts of weather. This is obviously going to be
37:21
Speaker 3: mapped over the next couple weeks. Here we sit in
37:23
Speaker 3: the month of May where you don't have to worry
37:25
Speaker 3: about icy roads and snow as an impediment to those
37:32
Speaker 3: drivers driving around the city.
37:35
Speaker 2: I respect it. I don't know if they're actually serious
37:37
Speaker 2: about coming to Boston or not, and I think they're
37:39
Speaker 2: going to struggle to do so. But for this company
37:41
Speaker 2: to say, you know what, we are intentionally going to
37:44
Speaker 2: make a big deal of coming to one of the
37:47
Speaker 2: most notoriously difficult cities in the country to drive in.
37:51
Speaker 2: You have to respect that. Even if they fail miserably
37:54
Speaker 2: like the cyber truck, I have to respect the goal
37:58
Speaker 2: of doing something different.
37:59
Speaker 3: Definitely throwing on your big boy pants, step into UH
38:02
Speaker 3: to Boston because right now it's San Francisco, Phoenix and
38:05
Speaker 3: Austin that the operating a little safer to drive quick
38:08
Speaker 2: Break for the next twenty two hours, SMP up one
38:11
Speaker 2: point seven percent of the NASDAC up over to now
38:13
Speaker 2: as we close out the show, have a great rest
38:15
Speaker 2: of you day, everybody,