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Big Bank Forecasts Miss Again as AI and Fed Risks Build · The Financial Exchange Show

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Speaker 1: and Mark Vandetti.
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Speaker 2: A busy day here in the Financial Exchange, as Federal
1:14
Speaker 2: Reserve Chair nominee Kevin warsh is appearing as we speak
1:17
Speaker 2: in front of the Senate Banking Committee for his confirmation hearing.
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Speaker 2: We also had the big news that came out from
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Speaker 2: Apple in which it will have a new CEO at
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Speaker 2: the Helm, effective on September first, the first new CEO
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Speaker 2: for the last fifteen years. Tim Cook has held down
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Speaker 2: that job, taking over for Steve Jobs in twenty eleven.
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Speaker 2: He will see that position on September first. However, he
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Speaker 2: will still remain as executive chair on the board. And
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Speaker 2: so briefly here we'll just talk about Cook's tenure, which
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Speaker 2: was an incredibly successful one from a stock market from
1:53
Speaker 2: a marketcap perspective, in which Apple stock climb nearly two
1:57
Speaker 2: thousand percent since he took over, compared to the S
2:00
Speaker 2: and P five hundred of about five hundred percent over
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Speaker 2: the same time. John Turnis will be the new CEO
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Speaker 2: of Apple, and he will be in charge of sort
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Speaker 2: of focusing on this strategic pivot that Apple has to
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Speaker 2: go through in which it really has little presence at
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Speaker 2: all within artificial intelligence and any sort of adoption or
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Speaker 2: new products that incorporate that within their hardware. That is
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Speaker 2: really what John Turnis will be tasked with, as he
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Speaker 2: has been with the company for twenty five years and
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Speaker 2: largely has a hardware background working on the MacBooks as
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Speaker 2: well as some other hardware products out there. But certainly
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Speaker 2: a successful tenure for Cook and a tremendous challenge lays
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Speaker 2: ahead for John Turnas as I mentioned, we're also talking
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Speaker 2: about Kevin Warsh. Are focusing on Kevin Walsh, who is
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Speaker 2: in front of the Senate Banking Committee at the moment,
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Speaker 2: and he is discussing his expectations for interest rate policy.
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Speaker 2: Some of the quotes that we've had from earlier in
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Speaker 2: his testimony that again at ten am this morning, stating
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Speaker 2: that the Fed missed its mark and I quote.
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Speaker 1: In twenty twenty one.
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Speaker 3: In twenty twenty.
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Speaker 2: Two, we are still dealing with those legacy of the
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Speaker 2: policy errors that occurred during that period of time. Another
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Speaker 2: quote that he mentions here is that once you let
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Speaker 2: inflation take hold in the economy, it's more expensive and
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Speaker 2: harder to bring it down. Mark your thoughts here on
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Speaker 2: some of the initial testimony that we've gotten from him.
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Speaker 3: Well, I want to back up again and say the
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Speaker 3: Fed's job is to balance inflation and unemployment. You could argue,
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Speaker 3: and I would, personally, that the FED should be focused
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Speaker 3: just on inflation, and Warsh has made statements to that
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Speaker 3: effect in the past. The problem now is that he's
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Speaker 3: entering into the job and he's going to be confirmed.
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Speaker 3: I assume with some presumptions. He's presuming that AI will
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Speaker 3: proceed a pace. He's presuming that it will increase productivity.
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Speaker 3: He's presuming that those productivity increases will help keep wages
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Speaker 3: and inflation down. And he's presuming and I'm not just
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Speaker 3: repeating myself, he's layering assumption on top of assumption. He's
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Speaker 3: presuming that the right course of action will be the
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Speaker 3: lower interest rates today because AI might at some point
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Speaker 3: in the future lower productivity by some unknown amount, and
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Speaker 3: we don't know what's happening elsewhere in the economy at
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Speaker 3: that point. That argument is so flawed, Paul, that it's
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Speaker 3: hard to know where to start. People were texting in
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Speaker 3: I ranted on this subject. It's not a rant. Hopefully
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Speaker 3: it's thoughtful. It's sincere anyway, Hey, calm down, No, I
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Speaker 3: won't calm down. It took fifty years the disastrous FED
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Speaker 3: misreading of the economy in the nineteen seventies and thinking
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Speaker 3: monetary policy couldn't do anything about inflation. It took the blood, sweat,
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Speaker 3: soil tears of the nineteen seventies to recognize that FED
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Speaker 3: policy should be independent, and should be and can bring
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Speaker 3: down inflation. The cost is usually recession, but it can
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Speaker 3: do it. The mindset that and Walsh may just be
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Speaker 3: saying what he's saying because it's what the President wants
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Speaker 3: him to say. The President wants appliable FED chair. Warsh
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Speaker 3: is saying nice things about FED independence. Does he mean it?
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Speaker 3: Or will he be Trump's puppet? He's acting right now
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Speaker 3: like he'll be Trump's puppet. He's cooking up some really
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Speaker 3: tortured rationale for cutting rates before we even have a
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Speaker 3: sense for how inflation area this oil price shock will be,
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Speaker 3: for example, and even taking that out of the equation,
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Speaker 3: inflation was well above the Fed's target before the conflict
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Speaker 3: in Iran I ran whatever began. So Warsh's disposition going
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Speaker 3: into this is really alarming, and his arguments are incoherent.
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Speaker 3: He's off to a really bad start.
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Speaker 2: It is worth noting that ultimately it comes down to
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Speaker 2: the twelve members of the Federal Reserve Point Committee to
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Speaker 2: make the decision on interest rates. And so while Powell
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Speaker 2: or Warsh in this case are the figurehead for the
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Speaker 2: institution and they have to take the brunt of criticism
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Speaker 2: as well as I mean, I guess Federal Reserve chairs
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Speaker 2: don't often get cheered about as much, but they take
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Speaker 2: the praise too, I guess, but oftentimes it feels like
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Speaker 2: they're the punching bag on the criticism side.
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Speaker 3: But you have to.
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Speaker 2: Convince those twelve people in the room to side with
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Speaker 2: you when it comes to answers straight decisions. And ultimately
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Speaker 2: Wars allegedly has sort of this disposition in which he's
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Speaker 2: able to sort of play both sides. And what you
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Speaker 2: need to do as a FED chair is kind of
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Speaker 2: worked the middle of the room in order to get
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Speaker 2: what you're looking for accomplished. And to just step back
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Speaker 2: for a moment. On the productivity comment, that I don't
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Speaker 2: know if we've made this point before, and Mark you
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Speaker 2: probably know this more clearly than I do, is that
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Speaker 2: productivity or presuming productivity growth is a flawed approach. There
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Speaker 2: is just no economic evidence to indicate that productivity growth
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Speaker 2: is steady and predictable. It's sporadic and really difficult to charges.
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Speaker 3: History is an example, was productivity grew were over two
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Speaker 3: percent from the post war time college just call it
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Speaker 3: nineteen fifty to nineteen seventy and then mysteriously, And I
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Speaker 3: say mysteriously because we still don't fully understand why it happened.
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Speaker 3: Maybe it was the baby boom, cohort entering the labor
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Speaker 3: force in large and women entering the labor force in
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Speaker 3: large numbers, other factors, the premium attached to college education
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Speaker 3: and the skills associated with it. Inevitably declining. Productivity came
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Speaker 3: down a lot in the nineteen seventies, so this is
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Speaker 3: sort of well known bit of a mystery that made
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Speaker 3: the fed's job harder. We didn't know about it at
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Speaker 3: the time. The FED assume the economy could grow faster
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Speaker 3: than it was growing. Productivity growth was pretty slow right
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Speaker 3: through to the mid nineteen nineties. Nineteen ninety six finally
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Speaker 3: picked up, but only for eight years was well above
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Speaker 3: two percent, came back down. It's been back to its
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Speaker 3: pre nineteen ninety six since then for the past several years. Recently,
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Speaker 3: though it's ticked up. Is that AI we don't know.
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Speaker 3: To your point, you shouldn't really try to forecast. We
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Speaker 3: have to make a productivity assumption, and the FED does
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Speaker 3: too when they think about how fast the economy can grow,
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Speaker 3: because that dictates how fast they should grow the money supply.
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Speaker 3: If you want to think about the FED as trying
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Speaker 3: to balance the rate of growth and demand, which they
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Speaker 3: can influence, with the rate of growth and supply, which
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Speaker 3: they can't. But warsh is coming into this presuming that
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Speaker 3: AI we will realize all the vaunted sort of benefits
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Speaker 3: of AI, touted benefits of AI, and that we know
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Speaker 3: what the effects of those results will be, and that
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Speaker 3: we know what else is going on in the economy.
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Speaker 3: I'll say again, his argument is not coherent. It could
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Speaker 3: because he's not an economist. I do think it's strange,
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Speaker 3: given how specialized monetary policy is, that we couldn't find
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Speaker 3: a PhD economist like Alan Greenspan, like Ben Bernanke, like
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Speaker 3: Janet Yellen. Powell is not one, and I think it's
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Speaker 3: frankly showed in some of his press conferences his explanations
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Speaker 3: were garbled. Warsh Is, again, I'll say, not off to
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Speaker 3: a promising start. He may turn out to be a
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Speaker 3: great FED chairman. He may be saying what he thinks
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Speaker 3: he needs to say to placate the President. That will
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Speaker 3: be interesting to see that play out if he doesn't
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Speaker 3: accommodate the President's demands to immediately lower interest rates. But
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Speaker 3: as of right now, Paul not looking good.
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Speaker 2: We will keep you apprized of any more significant updates
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Speaker 2: that come out of Kevin Worsh's testimony with the Senate
9:31
Speaker 2: Bank Committee as the testimony is still ongoing here. JP
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Speaker 2: Morgan lifts its S and P five hundred target as
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Speaker 2: AI rally regains momentum. These stories are just drive me
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Speaker 2: absolutely insane. I'm so sick of them at this point
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Speaker 2: because guess what a month ago, JP Morgan lowered its
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Speaker 2: target for the S and P five hundred, and guess
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Speaker 2: what happened over the last month The market went up
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Speaker 2: and now they're raising their target. I mean, I know
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Speaker 2: that there are incredibly talented folks there within their research
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Speaker 2: department that go through a significant slew of economic data
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Speaker 2: and do have insights that I'm not privy to, and
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Speaker 2: have a background that is much more sophisticated in terms
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Speaker 2: of analyzing the market than I do. Probably, but these
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Speaker 2: targets that they have to throw out, presumably just because
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Speaker 2: you have to put a number as a prediction to something.
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Speaker 2: There's just so little weight that you can put on
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Speaker 2: JP Morgan saying that their target for the S and
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Speaker 2: P five hundred is going to be seventy six hundred,
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Speaker 2: which is five hundred points higher than it is today,
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Speaker 2: implying you know, growth of about ten or eleven percent,
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Speaker 2: or from where we are, seven percent from where we are.
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Speaker 2: There's just there's just nothing you can do with these things,
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Speaker 2: because if the market goes down over the next month,
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Speaker 2: we're going to be covering another story that they lower it.
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Speaker 2: So I know, I'm sure they have to come out
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Speaker 2: with this stuff, but it's just so useless in terms
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Speaker 2: of the information.
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Speaker 3: Yeah, this is it's one of those bottom up estimates.
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Speaker 3: So they if you think some number for P E,
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Speaker 3: which is just a quotient P divided by E, if
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Speaker 3: you think some number for P is reasonable, Yeah, and
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Speaker 3: that's one way to value stocks, and you increase your
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Speaker 3: earnings estimate, but your PE over your your estimate of
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Speaker 3: the PE ratio doesn't change. You have to increase your
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Speaker 3: P YEP. That's I think it's just that This is
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Speaker 3: a bottom up We think earnings will be a little
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Speaker 3: bit better. We don't think pees will come down. It
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Speaker 3: follows from that that the p's got to go up
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Speaker 3: to keep p toe constant. I think it's pretty mechanical.
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Speaker 3: It depends on the group that's making the prediction. This
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Speaker 3: was made by their equity analysts, so it's bottom up.
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Speaker 2: It's just a valuation point. You don't know what multiple is, Well,
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Speaker 2: what's the right So what.
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Speaker 3: If risk aversion increases? What if people start demanding more
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Speaker 3: for a dollars worth of earnings? Is a pe multiple?
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Speaker 3: I'm not saying they use twenty, but it's probably in
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Speaker 3: that ballpark. Is that the right pe? What if it's
11:55
Speaker 3: like you know, what if this what if this thing
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Speaker 3: in the Middle East goes on and the present and
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Speaker 3: decides to start tariffing everybody he doesn't like again, Yeah right, we're.
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Speaker 2: Workers have never been more dissatisfied with their pay and
14:41
Speaker 2: their ability to get ahead. This is according to a
14:43
Speaker 2: survey done by the New York Federal Reserve Bank in
14:47
Speaker 2: which they saw recently the portion of workers that were
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Speaker 2: satisfied with their compensation and a survey done in March
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Speaker 2: that they conduct every four months was fifty two point
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Speaker 2: three percent. That was the small share in the survey's
15:02
Speaker 2: twelve year history of workers who actually felt that they
15:04
Speaker 2: were getting adequately compensated for their work. That was a
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Speaker 2: three point three percentage point drop from where it was previously.
15:13
Speaker 2: It goes on to say in this piece some other
15:17
Speaker 2: pieces of data that they picked up is that while
15:20
Speaker 2: employees may not be satisfied with their compensation, their concerns
15:24
Speaker 2: about losing their jobs are actually reaching a low point
15:29
Speaker 2: that they haven't seen since March of twenty twenty one.
15:33
Speaker 2: The on average, workers are seeing a decreasing odds that
15:36
Speaker 2: they will have a new employer in the next four month.
15:39
Speaker 2: The likelihood of such move dropped to about nine point
15:42
Speaker 2: seven percent, which was at its lowest in March of
15:45
Speaker 2: twenty one.
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Speaker 1: Like I mentioned, so.
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Speaker 2: Mark, again this is just you know, survey data here,
15:51
Speaker 2: but indicating that perhaps reflecting the trends of a kind
15:55
Speaker 2: of no hire, no fire labor market that we've been
15:58
Speaker 2: in where people perhaps don't have a lot of optimism
16:02
Speaker 2: about switching jobs to get higher pay elsewhere like they
16:05
Speaker 2: may have when the labor market really heated up in
16:08
Speaker 2: twenty one and twenty two, but at the same point
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Speaker 2: in time, there is a supply shortage on the labor
16:13
Speaker 2: market that we've talked about that has not as many
16:16
Speaker 2: people being laid off from their positions, but perhaps that's
16:19
Speaker 2: being reflected a little bit in the survey data here.
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Speaker 3: Yeah, the best way to raise your raise your wages
16:23
Speaker 3: is to switch jobs. Yeah, if people aren't motivated to
16:26
Speaker 3: do that or don't feel like there are good prospects
16:29
Speaker 3: for that, I guess that would explain why they're not
16:31
Speaker 3: satisfied with their Although if you're not satisfied, why aren't
16:34
Speaker 3: you I'm not satisfied, say the typical respondent to this
16:37
Speaker 3: survey says, I'm not satisfied with my wages, but I'm
16:40
Speaker 3: also not looking.
16:42
Speaker 2: Perhaps fears on the sort of stasis on the hiring front.
16:45
Speaker 3: Well, and then again, they didn't say they're not looking.
16:47
Speaker 3: They just said they're not they're not happy. Yeah, yeah,
16:50
Speaker 3: they're not happy. What was the language about switching. I'm sorry, Paul,
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Speaker 3: I'm making you do all the work here, decreasing odds
16:58
Speaker 3: they will have a new employer. Okay, so say they're
17:00
Speaker 3: not looking, they're trying, but they're they're they're despairing. I'll
17:04
Speaker 3: just say weird, because it's supposed to be representative. We
17:06
Speaker 3: on average, the average worker is a despondent about current
17:13
Speaker 3: wages and also doesn't believe. We don't believe that we
17:16
Speaker 3: can get a new job. That's sort of a depressing
17:20
Speaker 3: combination of factors. Look, no new jobs were created last year.
17:24
Speaker 3: We went from and it's I'm not saying there's there
17:28
Speaker 3: are larger trends at work here, like two and a
17:30
Speaker 3: half million jobs were created in twenty twenty three, and
17:33
Speaker 3: one and a half in twenty twenty four and zero
17:36
Speaker 3: in twenty twenty five. We can talk about the reasons
17:39
Speaker 3: at some other time why that might have been the case,
17:43
Speaker 3: but it's it's it's it's it's undeniable that a Paul,
17:48
Speaker 3: a stagnant Paul, has has been cast over the job market.
17:52
Speaker 3: And maybe it's a I maybe it's tariff uncertainty just
17:56
Speaker 3: coincided exactly with the month in which all the tariff
17:59
Speaker 3: chaos started on again, off again stuff. You can't deny
18:02
Speaker 3: that policy plays a role here. Businesses said at the time,
18:05
Speaker 3: we're not hiring, we're not going to invest. We don't
18:07
Speaker 3: know what the cost of goods is going to be
18:08
Speaker 3: because of these tariffs. So tariffs probably played a role
18:11
Speaker 3: in that, but it's it's manifest now in surveys like this.
18:16
Speaker 2: Monopspy is a word that I learned today.
18:21
Speaker 3: Sorry I did sound like a jerk, but no, I
18:24
Speaker 3: don't what is it? Because this is a you know,
18:27
Speaker 3: you know, monopoly is one company is like one one
18:31
Speaker 3: one one, one buyer, right, Okay, it's is it one buyer,
18:37
Speaker 3: one pool?
18:37
Speaker 4: It is?
18:38
Speaker 3: I forget a market situation. Isn't it one market situations?
18:43
Speaker 2: A market situation when there's only one buyer.
18:46
Speaker 3: So basically, so it is it is one buyer of
18:48
Speaker 3: labor services.
18:49
Speaker 2: Okay, sorry, So basically the premier because you're you're the economy,
18:54
Speaker 2: this isomy the labor guy.
18:56
Speaker 3: I mean, it's a it's a specialized field. You did,
19:00
Speaker 3: yeah the whole time.
19:01
Speaker 4: I just waiting for you guys to figure it out.
19:04
Speaker 2: I'm sure it's basically that he knew that a monoposi
19:08
Speaker 2: was where there's only one buyer.
19:10
Speaker 3: One buyer. Okay, thank you.
19:11
Speaker 2: Obviously, in order to create a competitive in order to
19:16
Speaker 2: create a competitive labor market, you need to have multiple
19:19
Speaker 2: employers that are competing for intensely for workers. If you
19:23
Speaker 2: just have one employer out there, it makes it more difficult.
19:26
Speaker 2: We'll maybe have more on that after this bake, but
19:28
Speaker 2: what we will definitely have is an upgrade on Wall
19:31
Speaker 2: Street with Wall Street Watch, and he answered to our
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Speaker 2: trivia question right after this break stick with us.
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20:02
Speaker 4: Well, markets have turned slightly negative as traders continue to
20:06
Speaker 4: monitor developments out of the Middle East regarding peace talks
20:09
Speaker 4: between the US and Iran ahead of the ceasefire tomorrow.
20:13
Speaker 4: Investors are also focusing on comments from Kevin Warsh during
20:17
Speaker 4: his Senate confirmation hearing for FED share that is happening
20:20
Speaker 4: right now. The Dow is down over a tenth of
20:23
Speaker 4: a percent or seventy nine points lower, SMP five hundred,
20:27
Speaker 4: down two tenths of a percent or fifteen points lower,
20:31
Speaker 4: NASDAC down only thirteen points, so mostly flat. Russell two
20:36
Speaker 4: thousand down about a tenth of a percent. Tenure treasure
20:39
Speaker 4: eealed up four basis points at four point two nine
20:43
Speaker 4: six percent, and oil now up three and a half percent,
20:46
Speaker 4: trading right around ninety two dollars a barrow. The big
20:50
Speaker 4: news on the day comes out of the tech sector
20:52
Speaker 4: after Apple announced longtime CEO Tim Cook will step down
20:57
Speaker 4: and hand the reins over to veteran and engineer John
21:01
Speaker 4: Turnas on September one. Cook will remain with the company
21:05
Speaker 4: as executive chairman. Apple shares are down almost two percent. Meanwhile,
21:10
Speaker 4: Amazon said it would invest in another five billion dollars
21:13
Speaker 4: in Anthropic, bringing its total investment to as high as
21:17
Speaker 4: twenty five billion dollars. Amazon stock is up over one percent. Elsewhere,
21:23
Speaker 4: United Health stock is rallying over seven percent after the
21:26
Speaker 4: health insurance company handily beat first quarter earnings and revenue expectations.
21:31
Speaker 4: United also hiked its full year earnings outlook. In ge
21:35
Speaker 4: aerospace shares it down nearly six percent despite it beating
21:39
Speaker 4: first quarter earnings and revenue forecasts. I'm Tucker Silvan. That
21:44
Speaker 4: is Wall Street watching. On the previous segment, we asked
21:47
Speaker 4: you the trivia question to name one of the four
21:51
Speaker 4: cities that host one of the world marathon majors. While
21:55
Speaker 4: the cities are Berlin, Tokyo, London, and Sydney. Mike from Rutland,
22:01
Speaker 4: mass is our winner today, taking home the Financial Exchange
22:04
Speaker 4: Show t shirt. Congrats to Mike and we played trivia
22:07
Speaker 4: every day here on the Financial Exchange. See complete contest
22:11
Speaker 4: rules at Financial Exchange Show dot com.
22:15
Speaker 2: Finally, as we approach the month of May, college graduates
22:18
Speaker 2: are catching a break in this job market. It had
22:20
Speaker 2: been much covered, including on our program as well, that
22:24
Speaker 2: the unemployment rate for those who are between twenty to
22:27
Speaker 2: twenty four years old with a bachelor's degree had been
22:30
Speaker 2: as high as eight point nine percent last fall. Recent
22:34
Speaker 2: data here has shown that through the month of March
22:38
Speaker 2: at the unemployment rate in those ranges between ages of
22:42
Speaker 2: twenty and twenty four with a bachelor's degree has dropped
22:44
Speaker 2: down to five point three percent, with employers expecting to
22:48
Speaker 2: boost new get graduate hires by almost six percent this spring.
22:53
Speaker 2: So this comes at a good time where we had
22:55
Speaker 2: covered extensively that there were some significant concerns that, of course,
22:59
Speaker 2: AI has been sort of pointed as the potential scapegoat
23:03
Speaker 2: here as to why employers were very hesitant to hire
23:07
Speaker 2: entry level workers, which typically lend to the recent college
23:11
Speaker 2: graduates to do those entry level positions. However, some of
23:14
Speaker 2: the major employers out there such as McKinsey and IBM
23:18
Speaker 2: are saying that they are going to up their graduate
23:22
Speaker 2: hiring this year. So an encouraging sign to see if
23:24
Speaker 2: you know anyone who is an upcoming college graduate. It
23:27
Speaker 2: seems like the labor market is getting a little bit
23:30
Speaker 2: stronger for them, so good good news on that front.
23:33
Speaker 2: Americans are losing confidence in having enough for retirement. A
23:37
Speaker 2: survey says sixty one percent of workers are confident that
23:42
Speaker 2: they have enough resources from retirement. That is down from
23:46
Speaker 2: sixty seven percent in twenty twenty five and a high
23:49
Speaker 2: of seventy two percent in twenty twenty one. A lot
23:52
Speaker 2: of workers very concerned mark about the cost of living
23:57
Speaker 2: in retirement. Inflation is a big concern that get gets mentioned.
24:01
Speaker 2: Of course, you have the looming potential falling a part
24:05
Speaker 2: of the Social Security benefit system where it's supposed to
24:08
Speaker 2: reach its depletion in I think it's twenty thirty three
24:12
Speaker 2: off the top of my head, but I might have
24:13
Speaker 2: years off a little bit. Yeah, don't worry, It'll still
24:17
Speaker 2: be there for you. And Medicare. Medicare as well is
24:22
Speaker 2: some of the major concerns. But it is surprising in
24:25
Speaker 2: a sense mark, because for those people who have been
24:28
Speaker 2: participants in four to one ks, they've seen their balances
24:32
Speaker 2: rise significantly over the course of the last four or
24:35
Speaker 2: five years with very little interruption outside of a bad
24:38
Speaker 2: year in twenty twenty two.
24:39
Speaker 3: Yeah, so I guess it's inflation. Yeah, I feel like
24:42
Speaker 3: that has to be sets her up, as you point out.
24:44
Speaker 3: So it could only be that they think their expenses
24:46
Speaker 3: will be higher, or that something bad is going to
24:48
Speaker 3: happen to assets at some point. I don't know what's
24:51
Speaker 3: behind the reasoning in each case. Obviously they don't go
24:55
Speaker 3: that deep, but it could only be inflation, which doesn't
24:58
Speaker 3: seem misplaced by the way.
24:59
Speaker 2: Yeah, health care costs, inflation and social security of the
25:03
Speaker 2: big thing.
25:04
Speaker 3: So look at what's happened over the past year. Inflation
25:06
Speaker 3: is higher now than it was a year over year,
25:09
Speaker 3: or if you want to annualize the past whatever however
25:12
Speaker 3: you want to massage it. Inflation is higher than it
25:14
Speaker 3: was a year ago. Asset prices have bounced back since
25:20
Speaker 3: market conviction investor conviction that this conflict will be resolved
25:24
Speaker 3: soon as sort of firmed up. But you know, for
25:29
Speaker 3: a while, stock prices hadn't gone anywhere for like six months.
25:32
Speaker 3: That may be close to still the may. That may
25:36
Speaker 3: be still the case. But well, they're they're up a
25:39
Speaker 3: little bit, but for a while it was they were
25:41
Speaker 3: treading water. So I imagine there's a certain amount of
25:47
Speaker 3: focus on the recent stuff that influences people's response. And
25:50
Speaker 3: you know, stocks are up a little but not at
25:53
Speaker 3: the clip they were rising in twenty twenty three, twenty
25:55
Speaker 3: twenty four, and even twenty twenty five when it slowed
25:57
Speaker 3: down a bit, but they were still up with eighteen
26:00
Speaker 3: I think last year s and P five hundred total return.
26:02
Speaker 3: That's something like something like that. That's for sixteen eighteen
26:04
Speaker 3: percent mark. I know you mentioned you're concerned a little
26:07
Speaker 3: bit about social security. Well do I have the thing
26:09
Speaker 3: for you. We are putting together a retirement planning seminar
26:14
Speaker 3: here as part of the Armstrong Advisor Group, in which
26:17
Speaker 3: we will focus on social security and medicare essentials. The
26:21
Speaker 3: seminar will be led by Susan Powers, who is a
26:23
Speaker 3: managing partner and an investment advisor representative at the Armstrong
26:28
Speaker 3: Advisor Group, and also with fie Vesulis, who is a
26:31
Speaker 3: experienced medicare planning specialist. Together they're going to break down
26:35
Speaker 3: key decisions, common pitfalls and strategies to help you become
26:39
Speaker 3: more confident and make informed choices as you approach retirement.
26:43
Speaker 3: You'll learn in this seminar how to maximize social Security
26:46
Speaker 3: benefits and avoid costy claiming mistakes and key Medicare decisions
26:52
Speaker 3: as well, and how do social security and Medicare work together.
26:56
Speaker 3: The seminar is going to be held out in the
26:59
Speaker 3: Crown Plaza in Wuburn.
27:01
Speaker 2: It will be from five to six thirty on April thirtieth.
27:04
Speaker 2: If you'd like to register for the event, give us
27:07
Speaker 2: a call at eight hundred three nine to three for
27:10
Speaker 2: zero zero one again that number eight hundred three nine
27:14
Speaker 2: three for zero zero one, or you can email us
27:17
Speaker 2: at contact at Armstrong Advisory dot com. The space is
27:22
Speaker 2: limited for this event. Registration is required, so please reach
27:25
Speaker 2: out if you would like some assistance with a great
27:28
Speaker 2: Retirement Planning seminar coming up here on April thirtieth.
27:32
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
27:34
Speaker 1: registered investment advisor. Nothing in the ad or in any
27:37
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
27:40
Speaker 1: your own financial tax into state planning advisors before making
27:43
Speaker 1: any investment decisions. Armstrong make contact you to offer investment
27:46
Speaker 1: advisory services.
27:48
Speaker 2: Home insurance costs hit America's heartland the hardest. A piece
27:52
Speaker 2: here from Bloomberg. In several counties, Americans are paying more
27:55
Speaker 2: than seven percent of their household income on just homeanshaurance alone,
28:00
Speaker 2: according to Bloomberg Intelligence, particularly for those families who have
28:05
Speaker 2: real low incomes, the levels are reaching almost ten percent
28:09
Speaker 2: or more. A huge concern for areas of the country
28:13
Speaker 2: that have been impacted by all sorts of different natural
28:16
Speaker 2: disasters to whether it be floods or hurricanes. You've got
28:19
Speaker 2: areas of Florida that have been significantly impacted on the
28:23
Speaker 2: home owners insurance front, and it's making challenge very challenging
28:27
Speaker 2: for those people living on a fixed income to cover
28:30
Speaker 2: those insurance costs.
28:31
Speaker 3: Mark Yeah. It doesn't help with inflation either, obviously, although
28:35
Speaker 3: as we talked about, in the long run, the inflation,
28:37
Speaker 3: the buck stops with the Fed on inflation. Warshoes testifying today,
28:40
Speaker 3: is absolutely right about that.
28:43
Speaker 2: We're going to take a quick break here on the
28:44
Speaker 2: financial exchange, but when we come back a little bit
28:47
Speaker 2: of stack roulette right after this break.
28:49
Speaker 1: Follow the financial Exchange show on Instagram and see what's
28:53
Speaker 1: driving the conversation about Wall Street and economic trends. Is
28:57
Speaker 1: the Financial Exchange Radio network? Okay, real time financial insight
29:02
Speaker 1: as news breaks. The Financial Exchange is life on x
29:05
Speaker 1: Watch the show and follow us for the most up
29:08
Speaker 1: to date business news. You need to know the face.
29:10
Speaker 1: He's the Financial Exchange.
29:19
Speaker 2: All right, it is time for a little bit of
29:21
Speaker 2: stock roulette. And if I know my co host as
29:24
Speaker 2: well as I think I do, I know he's chomping
29:27
Speaker 2: at the bit to get something in here about the
29:29
Speaker 2: Federal Reserve Chair.
29:30
Speaker 1: Kevin Will.
29:31
Speaker 3: I'm not a complicated.
29:32
Speaker 2: Guy, so without further ado.
29:35
Speaker 3: I've been tough on him today, Paul and I wanted
29:37
Speaker 3: to point out a couple of totally level headed things
29:39
Speaker 3: that he said.
29:40
Speaker 2: Excellent.
29:40
Speaker 3: I've been tough on him because his economic views are
29:43
Speaker 3: incoherent and he's recklessly committed to cutting interest rates in
29:47
Speaker 3: anticipation of some AI productivity driven boon that's yet to materialize.
29:52
Speaker 3: But all that aside, he has pointed out that it's
29:56
Speaker 3: probably not productive for FOMC, the subset of Fed policymakers
30:02
Speaker 3: that actually sets the short term interest rate, the Fed
30:04
Speaker 3: Funds right. He thinks they talk too much ahead of
30:07
Speaker 3: FOMC meetings, all these public appearances in which they opiness.
30:12
Speaker 3: He puts it on their view. I think he's absolutely right.
30:15
Speaker 3: There's way too much chatter and it's confusing. And he's
30:18
Speaker 3: also said good things about the inflation buck stopping with
30:22
Speaker 3: the FEDI seems to recognize that inflation in the long run,
30:25
Speaker 3: not the short run, but in the long run as
30:26
Speaker 3: a monetary phenomenon, to use Friedman's phrase. So he's got
30:30
Speaker 3: some big picture things right. The problem is it's interspersed
30:34
Speaker 3: with some bizarre statements like we're at full employment today.
30:38
Speaker 3: He said this, we're at full employment that would normally
30:40
Speaker 3: mean whole rates steady. In fact, you might even want
30:44
Speaker 3: to consider increasing rates of inflation is ticking up, which
30:46
Speaker 3: it is. But then out of the other side of
30:48
Speaker 3: his mouth he says, but we should be lowering rates
30:50
Speaker 3: because of AI. That's where he breaks my brain, because
30:54
Speaker 3: it's so economically incoherent, and I wonder, could we not
30:57
Speaker 3: find an economist for this? Did we have to hire
31:01
Speaker 3: an NBA or a lawyer or whatever he is? But
31:04
Speaker 3: this is what we're stuck with.
31:06
Speaker 2: I guess drinking game Alert if Mark says he wishes
31:10
Speaker 2: that we had a economist with a PhD on the program.
31:14
Speaker 3: Take is that too much to ask a shot? I mean,
31:17
Speaker 3: you know a show whiskey. There are a lot of
31:19
Speaker 3: them out there. Who is your pick? I don't have it.
31:22
Speaker 4: I'm not a well no, I like, who was your preferred?
31:25
Speaker 3: There are a lot of Like if I gave you
31:27
Speaker 3: names you I mean were no offense, try you wouldn't
31:29
Speaker 3: try me. Larry Ball, greg MANQ. You might recognize Jason
31:34
Speaker 3: Furman because he's got a public profile. I mean, there
31:38
Speaker 3: are so many monetary economists out there, many of whom
31:41
Speaker 3: have advised. Again, these are not household names. These are specialists.
31:46
Speaker 3: I don't know them. I just read stuff by them.
31:49
Speaker 3: I mean, there are so many.
31:51
Speaker 4: Larry Ball is a former NFL player, Lawrence Ball.
31:55
Speaker 3: He's a Lawrence Ball. Yeah, he's a Johns Hopkins. Anyway,
32:00
Speaker 3: This is why I don't name names. YouTube goof balls.
32:03
Speaker 3: And I'm not pretending to be an egg. This is
32:05
Speaker 3: not my Yeah. I mean, he looks like a fed chair.
32:09
Speaker 4: He looks like the Boston guy.
32:11
Speaker 3: He looks like I didn't know that.
32:13
Speaker 2: Boston guy with markets. Larry Ball, he's kind of on a.
32:17
Speaker 3: You know I'm making Yeah, I'm trying to make it
32:20
Speaker 3: more accessible. My point is there are a lot of
32:22
Speaker 3: highly qualified people, but look, warsh was on the f
32:25
Speaker 3: O m C. He No one doubts that he understands
32:28
Speaker 3: the nuts and bolts of policy making. Uh, it's just
32:32
Speaker 3: that he's trying to please the president, I think, and
32:35
Speaker 3: as a result he's saying stupid things.
32:37
Speaker 2: Maybe that'll pass in a more significant development of Freedom
32:41
Speaker 2: Lay and.
32:44
Speaker 3: Of more hard hittings.
32:48
Speaker 2: I can't even say it with the straight face. The
32:50
Speaker 2: company has cut prices on its snack products, including Lay's,
32:54
Speaker 2: Doritos and Cheetos, So good news for all listeners out
32:57
Speaker 2: there than in February. As much as as we are
33:00
Speaker 2: focused on interest rate policy, the important things that are
33:03
Speaker 2: being addressed in this country are that Pepsi and Freedo.
33:07
Speaker 2: Lay has taken steps since February to cut prices on
33:10
Speaker 2: many of its snack products. They have cut down the
33:13
Speaker 2: excessive amount of brands that they have, leading to a
33:16
Speaker 2: more streamline operation and cheaper prices for consumers. And in
33:21
Speaker 2: fact they've seen volume growth of about two percent, which
33:24
Speaker 2: I know two percent sounds small, but in the size
33:27
Speaker 2: and scale that you're talking about. With Pepsi in this
33:31
Speaker 2: division of lays and Doritos in their North American food division,
33:34
Speaker 2: they've seen after several consecutive quarters of declines, two percent
33:39
Speaker 2: volume growth from its Lays in Doritos units. And it's
33:43
Speaker 2: interesting here. Obviously I went into this tongue in cheek
33:46
Speaker 2: off the fit of reserve chatter, but this was on
33:49
Speaker 2: the backs of Elliott Management, which is an active investor,
33:53
Speaker 2: taking a pretty significant stake in the company last Secember,
33:56
Speaker 2: and typically speaking, activist investors have I would say a
34:02
Speaker 2: challenging track record or a track record that frustrates executives
34:06
Speaker 2: on a lot of publicly traded companies because they come
34:09
Speaker 2: in and are looking for a quick pop in the
34:11
Speaker 2: stock and oftentimes they don't align with management's approach. However,
34:15
Speaker 2: it seems at least in this case, that the two sides,
34:18
Speaker 2: both the PepsiCo board and Elliott Management, were able to
34:21
Speaker 2: come together and agree on this plan going forward to
34:24
Speaker 2: cut costs aggressivelly, trim down their product lineup, and then
34:28
Speaker 2: use their savings to lower prices and reinvest to win
34:31
Speaker 2: consumers back. Because what had happened is there had been
34:33
Speaker 2: a lot of focus on people looking for private label
34:36
Speaker 2: options instead of going to the standards of the lays.
34:40
Speaker 2: Do Rito's, Cheetos and et cetera.
34:42
Speaker 3: Yeah, when I think free to lay, you think of
34:44
Speaker 3: like a sodium orgy. But it's not though entirely that
34:48
Speaker 3: they've got some organic stuff in their product. They do
34:51
Speaker 3: that people would say blood pressure issues or who want
34:54
Speaker 3: to live into their seventies and be say functional, can enjoy.
34:58
Speaker 3: It's realized how diverse it was.
35:00
Speaker 2: It is amazing how diverse both Coke and Pepsi are
35:03
Speaker 2: in terms of their their product lines. You know, Coke
35:06
Speaker 2: on the beverage side and then Pepsi on really the
35:09
Speaker 2: snack side, but but also the beverage side too.
35:11
Speaker 3: There are really and they have versions of their pop.
35:13
Speaker 3: They had like Cheetahs, which everybody loves. They have a
35:15
Speaker 3: baked version. Right, how much healthier that is but marginally healthy?
35:20
Speaker 2: Whatever gets the spot right. Another piece that we had
35:24
Speaker 2: here on electric vehicles. Excuse me that we're being tested
35:30
Speaker 2: Chinese electric vehicles. We had a TikToker really enthusiastic about
35:35
Speaker 2: the idea of new evs on the US market. There's
35:39
Speaker 2: no way that these would come to the US, right,
35:41
Speaker 2: not under current law. They can't, right, No, I don't
35:44
Speaker 2: think so.
35:44
Speaker 4: Are you all right?
35:45
Speaker 3: I'm dying, I'm just I'm watching, I'm watching. Oh this
35:50
Speaker 3: is interesting. Let's see how this plays out. Look like
35:54
Speaker 3: you can breed. Let's see how this place?
35:56
Speaker 2: You got to carry me home?
35:57
Speaker 3: No I can't, but you you you can't. You they're
36:01
Speaker 3: technology writers, marvel about Chinese evs. They charge in five minutes,
36:07
Speaker 3: not all of them, but they've got all the latest
36:09
Speaker 3: bells and whistles. They charge in minutes. They're good looking.
36:13
Speaker 3: You can affordable. Yeah, that's the Yeah, that's actually why
36:16
Speaker 3: didn't I say that first? It's right? Yeah, but you can't.
36:19
Speaker 3: But no, you want a car here, you have to
36:21
Speaker 3: go buy an suv.
36:22
Speaker 2: No, it's I mean, obviously consumers are gonna want what
36:24
Speaker 2: they can't have. But some of these videos out here
36:27
Speaker 2: have accumulated millions of views. The price tag on these
36:31
Speaker 2: vehicles is twenty four thousand bucks for an suv with
36:35
Speaker 2: roomy interior and a wide digital display.
36:38
Speaker 3: So I'm sorry, can you repeat the price?
36:40
Speaker 2: Twenty four thousand bucks for the US dollars US dollars,
36:44
Speaker 2: that's right, pretty weak.
36:46
Speaker 3: You couldn't get it even if they were even if
36:48
Speaker 3: they were to allow it, they'd put it undred put
36:49
Speaker 3: a tariff on it. To me, they tear at one
36:51
Speaker 3: hundred percent, like they do with our pickups. Right, you
36:53
Speaker 3: can't buy a pickup made outside the United States. I
36:57
Speaker 3: think the frontiers and the Tacomas and the rest of
36:59
Speaker 3: them are made to avoid these prohibitive tariffs that protect
37:03
Speaker 3: the F one fifties and the silverados, et cetera. Really
37:07
Speaker 3: really distorted market. Yeah, automotive market.
37:12
Speaker 2: Very Thank you so much for your help. I was
37:14
Speaker 2: dying back there and you carried me through.
37:17
Speaker 3: I appreciate it. I waited way, if anybody watches the tape,
37:20
Speaker 3: they you might they might not view me as much
37:22
Speaker 3: of a humanity. That was just sort of cure.
37:26
Speaker 2: When you host a radio show and your and your
37:28
Speaker 2: voice just goes on you and gets absolutely when you're you,
37:32
Speaker 2: and then your impulse, I will prevail.
37:38
Speaker 3: I will prevail.
37:39
Speaker 2: Taking a look around at markets, we've got the Dow
37:41
Speaker 2: Jones off over one hundred points, the S and P
37:43
Speaker 2: five hundreds off about a quarter percent, the Nasdaq is
37:47
Speaker 2: off about thirty four points at the moment. You've got
37:50
Speaker 2: the US Tenure Treasury rising a little bit at four
37:53
Speaker 2: point three percent, up four basis points, and West Texas
37:57
Speaker 2: Intermediate is up about four percent today at ninety three
38:00
Speaker 2: dollars a barrel. Thankfully for my voice. We've reached the
38:03
Speaker 2: conclusion of our program today in the Financial Exchange. We'll
38:07
Speaker 2: be back tomorrow morning with the recap of Chairman Kevin
38:11
Speaker 2: Wars's testimony and much much more on tomorrows show. Thanks
38:15
Speaker 2: so much for joining us.