Latest / The Financial Exchange Show / Will Trump actually impose 25% tariffs on Mexico and Canada?

Transcript

Will Trump actually impose 25% tariffs on Mexico and Canada? · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:03
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:09
Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:18
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:24
Speaker 1: this program do not endorse each other or their services.
0:26
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:29
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Mike Armstrong and Paul Lane, your exclusive look
0:39
Speaker 1: at business and financial news affecting your day, your city,
0:43
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends plus breaking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:54
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:58
Speaker 1: heroes by visiting dav I've Cave Doc Boston and making
1:02
Speaker 1: a donation today. This is the Financial Exchange with Mike
1:06
Speaker 1: Armstrong and Paul Lane.
1:11
Speaker 2: Good morning, Happy Tuesday. I hope everyone dug out of
1:14
Speaker 2: the snowstorm all right. It was pretty modest where I was,
1:17
Speaker 2: but I know up to eight inches in some parts
1:20
Speaker 2: of New England. I believe it's Mike Armstrong, Paul Lane,
1:23
Speaker 2: and Tucker Silva with you on a week that I
1:26
Speaker 2: think we will have no shortage of economic news to address.
1:31
Speaker 2: The Trump administration took office yesterday and did so amidst
1:36
Speaker 2: a just blizzard of executive orders and number of things
1:44
Speaker 2: for us to talk about. And before we even get
1:46
Speaker 2: into that, reminder that it's earning season. So we'll be
1:49
Speaker 2: hearing from Netflix this afternoon after the bell. Schwab reported
1:54
Speaker 2: earnings before the bell three a m. Reported as well.
1:58
Speaker 2: Tomorrow we'll be hearing from doctor Gamble, Johnson and Johnson
2:01
Speaker 2: Abbott Labs. Thursday, we'll be hearing biggest ones here, ge Aerospace,
2:09
Speaker 2: the one of the largest remaining portions of General Electric
2:13
Speaker 2: and Texas instruments. In addition to that, let me see
2:17
Speaker 2: what we've got on the economic news calendar of the week.
2:20
Speaker 2: Not a ton fortunately, but existing home sales coming out
2:24
Speaker 2: on Friday, as well as a flash for the purchasing
2:27
Speaker 2: manager's index as well. But let's start right off with
2:32
Speaker 2: the new Trump administration and what they did, and I think,
2:36
Speaker 2: almost equally importantly, what they did not do on day
2:40
Speaker 2: one in office yesterday, Like I said, just a fury
2:45
Speaker 2: of number of executive orders, a lot of undoing of
2:48
Speaker 2: Biden policies. But when I looked over it, you know,
2:52
Speaker 2: I guess first thing, when I'm thinking about an incoming
2:54
Speaker 2: Trump administration of what we are going to focus on,
2:57
Speaker 2: there's four main categories of items that this administration is
3:01
Speaker 2: looking to do. In my mind, it's cut taxes, deregulate,
3:05
Speaker 2: change policies on immigration, and tariffs. They fall into those
3:09
Speaker 2: broad four categories. And what I think we saw on
3:14
Speaker 2: day one yesterday, which again take GrITT of salt, you
3:17
Speaker 2: had like six hours to do all of this, was
3:20
Speaker 2: a lot on what I would consider to be more
3:23
Speaker 2: social related issues rather than firm economic policy. So where
3:29
Speaker 2: do you want to dive in to start here, Paul,
3:31
Speaker 2: Because I don't think I want to spend a lot
3:32
Speaker 2: of time talking about presidential pardons or you know, things
3:37
Speaker 2: like there's been a push to have people in the
3:40
Speaker 2: Department of Government, if different departments of the US government
3:44
Speaker 2: paying attention to efficiency and orders about IRS pausing hiring.
3:49
Speaker 2: Those are all interesting, but broadly speaking, I think they
3:53
Speaker 2: are more statements about the view for America rather than
3:59
Speaker 2: anything that is worthwhile discussing in terms of its broad
4:02
Speaker 2: impact on americans economic lives. Instead, the absence of any
4:08
Speaker 2: sort of tariffs I think was very notable on day one.
4:10
Speaker 3: That's for the purposes of the financial exchange of the
4:12
Speaker 3: show that we run. That's where we have to lead off, Mike.
4:15
Speaker 3: Is this idea that there was pretty much broad assumption
4:20
Speaker 3: out there that he would come into office day when
4:22
Speaker 3: with some form of terrorists. I think that was the
4:25
Speaker 3: thought across the board, And the biggest takeaway to your
4:28
Speaker 3: point is we didn't see anything. There is nothing concrete
4:31
Speaker 3: that has been mentioned in forms of terists going into effect. However,
4:36
Speaker 3: what was mentioned as a potential policy change would be
4:40
Speaker 3: twenty five percent tariffs on Mexico and Canada by February first,
4:45
Speaker 3: So that has sent those two countries scrambling as to
4:48
Speaker 3: determine how to adjust to those potential teriffs. And again,
4:54
Speaker 3: even with this notion of these tariffs being instituted on
4:59
Speaker 3: February first, there were words used by President Trump, such as,
5:03
Speaker 3: I think we'll do it by February. First, we are
5:08
Speaker 3: thinking in terms of twenty five percent on Mexico and
5:11
Speaker 3: Canada because they are allowing vast numbers of people across
5:14
Speaker 3: the border. That was in response to questions from reporters
5:18
Speaker 3: in the Oval Office. So even still not concrete.
5:21
Speaker 2: Not concrete and interesting the way he put it right.
5:24
Speaker 2: When we talk about tariffs as an economic tool, frequently
5:29
Speaker 2: he's talking about or economists, supporters of Donald Trump, detractors
5:33
Speaker 2: from Donald Trump used tariffs and talk about tariffs in
5:36
Speaker 2: light of we need to rectify a trade issue. We
5:38
Speaker 2: need to rectify an imbalance of power or an imbalance
5:42
Speaker 2: of trade practices such as China subsidizing massive industries. In
5:47
Speaker 2: my view, my reading of this would be, hey, we're
5:50
Speaker 2: threatening Mexico and Canada because they're allowing vast numbers of
5:53
Speaker 2: people across the border, so want to avoid the tariffs.
5:57
Speaker 2: Here's a really piece of low hanging fruit for Canada
6:01
Speaker 2: and Mexico to agree to something and say, hey, we've
6:04
Speaker 2: avoided twenty five percent tariffs by making these firm commitments
6:07
Speaker 2: and pledges when it comes to people crossing the US border.
6:10
Speaker 3: That's where it leans more on the side of perhaps
6:12
Speaker 3: a negotiation tactic, pairing a social issue more so with
6:17
Speaker 3: an economic potential punishment and form of tariffs. This idea
6:21
Speaker 3: and how get in particular, you know, how drugs get
6:24
Speaker 3: lumped lumped in here too, you know, like that.
6:26
Speaker 4: Not to say that Fennel isn't.
6:29
Speaker 3: A substantial issue is but this idea that that has
6:32
Speaker 3: to correlate to tariffs on Mexico and Canada, it does
6:35
Speaker 3: speak to this idea that perhaps it is a negotiation tactic.
6:38
Speaker 3: And also on the immigration front from Canada, I never
6:42
Speaker 3: viewed that as a real substantial problem that this country has,
6:46
Speaker 3: you know, influx of people from Canada.
6:49
Speaker 2: There was a period of time. Again I had to
6:51
Speaker 2: research it myself because it's not something we talk about heavily,
6:54
Speaker 2: but there was over the course of the last few
6:56
Speaker 2: years some serious objections that many made about actual immigration
7:01
Speaker 2: coming over the Canadian border. It was, from what can
7:04
Speaker 2: be you know, from what most have reported on, dealt
7:07
Speaker 2: with pretty quickly and not as much of an issue
7:09
Speaker 2: after a few months, but nonetheless was an actual substantial problem.
7:13
Speaker 2: And so I don't know if we're talking about one
7:17
Speaker 2: of those four economic pillars that we've mentioned in the
7:20
Speaker 2: incoming Trump administration, terras being a big one. It's interesting
7:24
Speaker 2: to me that nothing was done on day one. No
7:27
Speaker 2: tariffs on China, no tariffs on Europe, no tariffs on
7:29
Speaker 2: Mexico or Canada. It's not that he didn't have time.
7:33
Speaker 2: He had time to, you know, sign into law many
7:35
Speaker 2: new executive orders around policy. And again I think very
7:42
Speaker 2: telling that there was not something built in ready to
7:45
Speaker 2: go saying yes, we're going to this day one, and
7:47
Speaker 2: I think it leads me to believe that it is
7:50
Speaker 2: something of a negotiating tactic. Doesn't mean that it won't
7:52
Speaker 2: go into place, right he said February one, we're talking
7:55
Speaker 2: about twenty five percent tariffs.
7:56
Speaker 4: I do not doubt that.
7:57
Speaker 2: I do not doubt that there's a distinct possibility of
8:00
Speaker 2: some form of tariffs going into place on Mexico and Canada.
8:03
Speaker 2: But I think very clearly what he has done here
8:06
Speaker 2: has left a door open for that not to happen.
8:09
Speaker 4: Yes, yes, in.
8:10
Speaker 2: Terms of impacted industries here, the Peterson Institute for International
8:18
Speaker 2: Economics put together a view and look into imports from
8:23
Speaker 2: Mexico and Canada and looking at who and what industries
8:27
Speaker 2: would be hit the hardest under these proposed terraffs, and
8:30
Speaker 2: it purely just looks at hey, dollar amounts in twenty
8:33
Speaker 2: twenty three of US imports by different areas. Heaviest in
8:38
Speaker 2: terms of dollar amounts of imports transportation equipment, so I
8:42
Speaker 2: believe that that would include all sorts of commercial and
8:46
Speaker 2: personal use vehicles. So as you can imagine, that's a
8:49
Speaker 2: huge number. It was came in in twenty twenty three
8:51
Speaker 2: at nearly one hundred and ninety six billion dollars worth
8:54
Speaker 2: of transportation equipment imports. Fuel interesting one hundred and forty
8:58
Speaker 2: five billion. I'm not sure if that's hydro electricity or
9:04
Speaker 2: other forms of fuel imports, but that was the second
9:07
Speaker 2: largest in terms of dollar value of imports across the
9:12
Speaker 2: Mexican and Canadian borders. After that, you had machinery. I
9:16
Speaker 2: guess pretty obviously, right, if you're manufacturing some pretty heavy machinery,
9:20
Speaker 2: it's going to have a big piece there. Electronics and
9:23
Speaker 2: electrical machinery then taking the fourth spot, and other than that,
9:29
Speaker 2: I didn't see any massive categories above that. I mean,
9:31
Speaker 2: we're still talking about tens of billions of dollars that
9:35
Speaker 2: would be very heavily impacted by these proposed twenty five
9:38
Speaker 2: percent tariffs. But again my takeaway from I don't want
9:43
Speaker 2: to read too much into things. It was what a
9:46
Speaker 2: quarter of a day that Donald Trump had to actually
9:48
Speaker 2: act as US president. But the compelling piece to me
9:52
Speaker 2: is not what he did do. It's what he didn't
9:55
Speaker 2: do via executive order on day one as president that
9:59
Speaker 2: I think is about what his policy actually looks like
10:02
Speaker 2: when it comes to tariffs.
10:03
Speaker 3: Yeah, you know, I was all ready to dive into
10:06
Speaker 3: the proposed or the potential impacts on some of these
10:08
Speaker 3: auto manufacturers, because that would be the ones that are
10:12
Speaker 3: the largest hit by any types of tariff being instituted.
10:15
Speaker 3: But I pause a bit, just because is it really
10:19
Speaker 3: worth going down that rabbit hole when there are so
10:21
Speaker 3: many caveats in place?
10:23
Speaker 4: I think it's worth making the point.
10:25
Speaker 2: I think it is because here's the piece that I
10:28
Speaker 2: think far too often gets overlooked. We have a sitting
10:31
Speaker 2: US president who's talking about twenty five percent tariffs on
10:34
Speaker 2: our two closest neighbors.
10:37
Speaker 4: You have to explore that.
10:38
Speaker 2: You have to take the man at his word, and
10:40
Speaker 2: you have to assume, yeah, you do, because he's a
10:42
Speaker 2: sitting US president. And before that he was president elect,
10:46
Speaker 2: and so I think if you just the danger that
10:50
Speaker 2: I see out there is everyone just saying, oh, well,
10:52
Speaker 2: you know, he's not serious about that, or he's not
10:54
Speaker 2: serious about this. There are plenty of things that people
10:56
Speaker 2: did not think he was fundamentally serious about that he
10:59
Speaker 2: took care of on like it, hate it, whatever your
11:02
Speaker 2: perspective is. There are many many items that left and
11:06
Speaker 2: right said no, there's no way he will go and
11:09
Speaker 2: do that, and on day one he did. And so
11:11
Speaker 2: I think you do have to take it seriously. But
11:14
Speaker 2: I will take it as if you're a fan of
11:16
Speaker 2: free trade and didn't want to see tariffs going on
11:18
Speaker 2: in Mexico and Canada, if you're a US automaker and
11:20
Speaker 2: didn't want to have to face those types of higher prices,
11:24
Speaker 2: I think there's good news for you in the fact
11:26
Speaker 2: that it did not go into place on day one.
11:28
Speaker 2: Let's take a quick break. When we come back, I
11:30
Speaker 2: want to talk about inflation. We've seen a vast calm
11:34
Speaker 2: down in the pace of inflation and some pretty interesting
11:37
Speaker 2: stuff happening on expectations. Now, quick break, we'll be right
11:41
Speaker 2: back on the financial exchange.
11:43
Speaker 1: Thanks to US six one seven, three, six two thirteen
11:46
Speaker 1: eighty five with your comments and questions about today's show
11:49
Speaker 1: and let us know what you think about the stories
11:51
Speaker 1: we are covering. This is the Financial Exchange Radio Network.
11:56
Speaker 1: The Financial Exchange streams live on YouTube and stay up
12:01
Speaker 1: to date on breaking business news all morning. Loan Base
12:04
Speaker 1: is the Financial Exchange Radio Network.
12:08
Speaker 5: The Financial Exchange is a proud partner of the Disabled
12:12
Speaker 5: American Veterans Department of Massachusetts.
12:14
Speaker 4: By making a donation, you can.
12:16
Speaker 5: Support the Veteran Advancement Program, which offers permanent and transitional
12:20
Speaker 5: affordable housing to veterans and their dependence. The DAV of
12:24
Speaker 5: Massachusetts is the only DAV department in the country to
12:27
Speaker 5: lead a veterans housing initiative for single vets and those
12:31
Speaker 5: with families. Visit DAV fivek dot Boston to make a
12:35
Speaker 5: donation today and make no for this year's five K
12:38
Speaker 5: to be held on Saturday, November eighth. That's DAV five
12:42
Speaker 5: k dot Boston.
12:45
Speaker 2: With an incoming Trump administration, there is well a number
12:48
Speaker 2: of different things that people are looking, but I think
12:50
Speaker 2: when it comes to markets, there is clearly a transition
12:54
Speaker 2: that's happened over the course of the last month and
12:56
Speaker 2: a half or so where investors have become less concerned
12:59
Speaker 2: to recession, which I think is a positive sign, but
13:03
Speaker 2: they have clearly, at least investors, I won't say this
13:06
Speaker 2: about the general public, but investors at least have also
13:09
Speaker 2: grown more concern about milk or are concerned about inflation.
13:13
Speaker 2: And you see that in the release of data points
13:15
Speaker 2: and how markets react on a day to day basis.
13:17
Speaker 2: It's what I've been talking about, is you know, good
13:19
Speaker 2: news is bad news, bad news is good news. Good example, here,
13:22
Speaker 2: you had a real blockbuster jobs report two fridays ago, Yes,
13:28
Speaker 2: two fridays ago, markets sold off pretty substantially. You had
13:31
Speaker 2: it better than expected inflation reports, and markets moved up,
13:35
Speaker 2: and so investors appear to be optimistic about growth, optimistic
13:40
Speaker 2: the labor market's going to hold up, but slightly concerned
13:44
Speaker 2: about inflation, and economists who were pulled as they are
13:48
Speaker 2: regularly share some of those concerns. The consumer price index
13:51
Speaker 2: is now expected to rise two point seven percent in
13:54
Speaker 2: December of twenty twenty five. That's compared with projections of
13:58
Speaker 2: just two point three percent three months ago. If I'm
14:03
Speaker 2: going to try and be as objective as possible, hear
14:06
Speaker 2: about this and really not put any of my political
14:10
Speaker 2: opinions into this. If you take Donald Trump at his
14:14
Speaker 2: word on the campaign trail leading into this, I think
14:18
Speaker 2: any rational person has to say, Okay, compared to say
14:21
Speaker 2: a Kamala Harris presidency, there seems to be a higher
14:25
Speaker 2: potential for growth and inflation. Those two seem to come
14:28
Speaker 2: hand in hand, and they normally would anyway. Whether or
14:34
Speaker 2: not we will genuinely get higher inflation, I think is
14:37
Speaker 2: anybody's guest. But if I'm just comparing the two on
14:39
Speaker 2: policy and discussions of what they actually want to do
14:42
Speaker 2: and are capable of doing, the Trump administration definitely has
14:47
Speaker 2: at least theoretically a higher possibility of higher inflation. And
14:51
Speaker 2: so this seems rather rational to me. We can talk
14:54
Speaker 2: about that, and then I want to get into some
14:55
Speaker 2: things that are completely irrational when it comes to inflation expectations.
14:59
Speaker 2: But what are your thought so far? And again, what
15:02
Speaker 2: he said on the campaign trail, I'm not sure is
15:04
Speaker 2: useful for what is actually going to go into policy.
15:06
Speaker 3: Yeah, to spin it back to something that we were
15:08
Speaker 3: speaking about in the first segment, This idea that was
15:11
Speaker 3: mentioned yesterday about twenty five percent terraces on Mexico and Canada.
15:14
Speaker 3: Let's just drill down in terms of the inflationary impact
15:17
Speaker 3: you could see on your day to day lives as
15:20
Speaker 3: a consumer specific to the auto manufacturing sector, because that's
15:23
Speaker 3: where many of these companies that we all own cars
15:27
Speaker 3: from import product from. Whether you're looking at Stillantis, which
15:30
Speaker 3: does forty percent of its imports from either Mexico Canada,
15:34
Speaker 3: GM at thirty percent, and Ford at twenty five percent,
15:37
Speaker 3: there's about four million finished vehicles that come from either
15:41
Speaker 3: Mexico or Canada, and according to Woolf Research, these potential
15:45
Speaker 3: tariffs would add three thousand dollars on top of use
15:49
Speaker 3: new car prices, where I believe we're sitting at an
15:51
Speaker 3: average new car prices somewhere forty five thousand or so.
15:55
Speaker 3: So that's a direct impact that many of us would feel,
15:58
Speaker 3: and then you extrapolate that out first there. Ultimately what
16:02
Speaker 3: ends up happening is a tariff is a tax on
16:04
Speaker 3: the end consumer to maintain margins for a company. It
16:07
Speaker 3: gets passed down to us as US consumers. And that
16:11
Speaker 3: speaks to Mike's point earlier about this idea that if
16:13
Speaker 3: you are going to take those policies that were bantered
16:17
Speaker 3: about on the campaign trailer face value, it would be
16:20
Speaker 3: inflation and nature. I don't love getting into this idea
16:24
Speaker 3: of spending too much time on projections for inflation going forward, because,
16:27
Speaker 3: as we've seen, it's incredibly fickle. It's almost impossible to project,
16:32
Speaker 3: and it's a moving target always.
16:34
Speaker 2: For instance, could you convince me that, like Paul said,
16:37
Speaker 2: car costs are going to go up because of tariff's Yes,
16:39
Speaker 2: how much does that get offset by a Trump administration
16:43
Speaker 2: who seems to want to dramatically drill drill, Yeah, oil
16:47
Speaker 2: and natural gas, defloration and drilling. So again, all of
16:50
Speaker 2: this stuff is really really tough to know how it
16:52
Speaker 2: works out. One thing that I think is completely irrational.
16:56
Speaker 2: I wanted to bring up is expectations about inflation by
17:00
Speaker 2: hearty affiliation. This is something that we've drawn attention to before,
17:03
Speaker 2: but according to the University of Michigan, they do surveys
17:07
Speaker 2: of consumers every month on their own expectations about inflation.
17:11
Speaker 2: Prior to the election, you had Democrats on average expecting
17:17
Speaker 2: just one and a half percent inflation over the course
17:20
Speaker 2: of the next twelve months and Republicans expecting three point
17:23
Speaker 2: six percent over the course the next twelve months. The
17:26
Speaker 2: most recent survey, which was conducted in January, shows that
17:30
Speaker 2: Republicans now expect only zero point one percent inflation over
17:35
Speaker 2: the next twelve months, and Democrats now expect four point
17:38
Speaker 2: two percent inflation over the next twelve months. First, I'll
17:43
Speaker 2: pick on Republicans. We have almost never seen a twelve
17:48
Speaker 2: month time period with zero point one percent inflation outside
17:52
Speaker 2: of recessions, so I don't think so. Yeah, that seems
17:57
Speaker 2: very unlikely that we are going to get there, unless
18:01
Speaker 2: most of us aren't working anymore, in which case, yeah, sure, Democrats,
18:06
Speaker 2: we are currently sitting at two point nine percent, and
18:08
Speaker 2: two months ago you said that inflation was gonna be
18:11
Speaker 2: one and a half percent, and now your expectations have
18:13
Speaker 2: nearly tripled to four point two percent.
18:16
Speaker 4: Hate to tell you, but the president doesn't have that
18:18
Speaker 4: much impact on inflation.
18:19
Speaker 2: That is also crazy. So I bring this stuff up because,
18:25
Speaker 2: quite honestly, it's disturbing to me how much we associate
18:29
Speaker 2: our party affiliation with our positive or negative views on
18:34
Speaker 2: things like the economy. I understand that we all have
18:38
Speaker 2: grievances and differences of opinion of how policy is going
18:41
Speaker 2: to work, but this is lunacy and it could hurt
18:45
Speaker 2: you too, Right, Like, if you look at this and say, okay, well,
18:48
Speaker 2: I'm going to use this to I assume if you
18:52
Speaker 2: believe that inflation is going to only be zero point
18:55
Speaker 2: one percent over the course of the next twelve months,
18:57
Speaker 2: then you think there are items that might get cheaper
18:59
Speaker 2: over the course the next twelve months, so you might
19:01
Speaker 2: not purchase them. If you're wrong, then that could be
19:03
Speaker 2: terrible for you. If you're a Democrat and you believe
19:06
Speaker 2: that inflation is going to be four point two percent
19:08
Speaker 2: over the course of the next twelve months, maybe you're
19:10
Speaker 2: pulling purchases ahead of time, which could ruin you financially.
19:14
Speaker 2: I just I get really concerned when we see politics
19:17
Speaker 2: dividing our views on what should be pretty clear facts
19:23
Speaker 2: in one direction or another. Quick break Wall Street Watch
19:26
Speaker 2: is coming up next.
19:42
Speaker 1: Like us on Facebook and follow us on Twitter at
19:45
Speaker 1: TFE show. Breaking business news is always first right here
19:50
Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
19:55
Speaker 1: Street Watch. A complete look at what's moving markets so
19:58
Speaker 1: far today right here on the Financial Exchange Radio Network.
20:03
Speaker 5: On the first trading session of Trump two point zero,
20:06
Speaker 5: markets are narrowly in positive territories. Investors are digesting President
20:11
Speaker 5: Trump's first day executive orders, in addition to Trump's remarks
20:14
Speaker 5: about possible tariffs.
20:16
Speaker 4: On Mexico and Canada.
20:18
Speaker 5: As soon as early February. At the moment, the Dow
20:21
Speaker 5: is up by about two thirds of a percent, or
20:23
Speaker 5: two hundred and sixty five points. SMP five hundred is
20:27
Speaker 5: up by four tenths of a percent or twenty five points.
20:30
Speaker 5: In the NAZAC is up by about a tenth of
20:31
Speaker 5: a percent or twenty two points. Russell two thousand is
20:34
Speaker 5: up nearly nine tenths of a percent or twenty points.
20:37
Speaker 5: Ten year Treasure reeled down by four basis points at
20:40
Speaker 5: four point five to six percent, and crude oiled down
20:43
Speaker 5: by just over two percent on the day, trading its
20:47
Speaker 5: seventy six dollars in nineteen cents a barrel. Apple shares
20:50
Speaker 5: down by three and a half percent after Jeffreys downgraded
20:53
Speaker 5: the iPhone maker to an underperformed rating from hold, with
20:57
Speaker 5: the analyst called it's a outlooks subdued and expects the
21:02
Speaker 5: tech giant to miss its fiscal first quarter revenue growth
21:06
Speaker 5: forecast of five percent. Meanwhile, shares in three M up
21:09
Speaker 5: by four percent after the industrial giant posted fourth quarter
21:12
Speaker 5: earnings that were stronger than expected booster boosted by higher
21:16
Speaker 5: sales of industrial adhesives, tapes, and electronics Elsewhere. Home builder
21:21
Speaker 5: d R. Horden also reported a fiscal fourth quarter beat,
21:24
Speaker 5: where the company said customer incentives such as mortgage buydowns
21:28
Speaker 5: had spurred demand that stock up by about a third
21:31
Speaker 5: of a percent. The US Justice Department sued Walgreens, accusing
21:35
Speaker 5: the drug store chain of helping fuel the opioid crisis
21:38
Speaker 5: by filling millions of unlawful prescriptions. Walgreen shares down by
21:42
Speaker 5: eleven percent and taking a look at the earnings calendar
21:45
Speaker 5: for the week. Netflix will report after today's closing, Bell,
21:49
Speaker 5: Procter and Gamble, Johnson and Johnson will REPORTE will report
21:52
Speaker 5: tomorrow morning. Thursday, we'll see Intuitive Surgical and Texas Instruments,
21:56
Speaker 5: and Friday, American Express and Verizon report. I'm Tucker Silva
22:01
Speaker 5: and that's Wall Street Watch.
22:03
Speaker 2: I want to talk about the TikTok ban moment here,
22:05
Speaker 2: but before we get there, I just had one more
22:07
Speaker 2: piece on energy prices that I just I found compelling.
22:10
Speaker 2: So I want to read from his Donald Trump's inaugural
22:13
Speaker 2: address quote. We have something that no other manufacturing nation
22:17
Speaker 2: will ever have the largest amount of oil and gas
22:20
Speaker 2: of any country on Earth, and we are going.
22:22
Speaker 1: To use it.
22:23
Speaker 2: Goes on to say, we will bring prices down, fill
22:25
Speaker 2: our strategic reserves up again right to the top, and
22:28
Speaker 2: export American energy all over the world. With that quote,
22:31
Speaker 2: I think there's my first thought at least is, hey,
22:34
Speaker 2: this is an administration that is going to be very
22:37
Speaker 2: friendly towards oil and gas companies. When you read through
22:42
Speaker 2: the statements further though, you really have to parse his
22:44
Speaker 2: words and think about it. His main definition I think
22:48
Speaker 2: of success under all this is oil prices down today
22:53
Speaker 2: as a result of at least in part of this,
22:56
Speaker 2: Tucker mentioned that we've got oil prices down about two percent,
23:00
Speaker 2: the SMP energy sector off by about two thirds of
23:05
Speaker 2: a percent today. Those massive oil and gas companies that
23:09
Speaker 2: again are likely to benefit from a deregulation and more
23:14
Speaker 2: strategic importance to the overall economy should oil prices come down,
23:18
Speaker 2: might not be in as good a position as some
23:20
Speaker 2: investors potentially think.
23:22
Speaker 4: So we'll move on.
23:23
Speaker 2: Trump signed the executive order to stall the TikTok ban.
23:27
Speaker 2: I think most have probably heard about this at this stage.
23:30
Speaker 4: This is big, This We've talked about it a world. Yeah.
23:33
Speaker 2: Well, I mean, did you guys see that TikTok? Was
23:37
Speaker 2: it late last week or over the weekend? Went dark
23:40
Speaker 2: for a period.
23:40
Speaker 4: Of I heard about it.
23:42
Speaker 3: I heard somebody jumps in on just people that you
23:46
Speaker 3: don't get into this world much.
23:48
Speaker 4: Sure, all of a sudden had another care for it, and.
23:50
Speaker 2: From what I could tell, that had nothing to do
23:52
Speaker 2: with US government. I think that that was perhaps TikTok
23:55
Speaker 2: scaring some of their users a little bit, saying, hey,
23:57
Speaker 2: this is what it's like if it actually disappears. But
24:00
Speaker 2: I haven't seen any firm reporting on that. Tucker.
24:02
Speaker 4: It was fourteen hours, I believe.
24:04
Speaker 1: No.
24:04
Speaker 5: I was just going to say I was at the supermarket.
24:05
Speaker 5: I heard one of the employees was talking about how
24:08
Speaker 5: is app when dark?
24:10
Speaker 2: Oh?
24:10
Speaker 4: It sucks, man, They're sweet.
24:12
Speaker 3: I gotta tell you don't care because I don't have
24:16
Speaker 3: the app. I don't think I fully realized its power
24:19
Speaker 3: until I saw some of this stuff trickle out over there.
24:22
Speaker 3: This algorithm is powerful, as I'll get up like this
24:25
Speaker 3: has really locked people in, from my mother in law,
24:28
Speaker 3: my sister in law, like many of them making commentaries
24:31
Speaker 3: on issues that they normally would never.
24:34
Speaker 4: Be aware of because this algorithm is there. So because
24:37
Speaker 4: the Chinese part is telling them too.
24:40
Speaker 3: And then that the whole social media just generate. Yeah,
24:43
Speaker 3: it's it's big. It's far reaching. I mean one hundred
24:45
Speaker 3: and seventy million US users that you're talking.
24:48
Speaker 4: About, that's the thing they'll pull.
24:49
Speaker 5: It's all age groups, I'm finding. Yeah, it's much more expansive.
24:55
Speaker 5: Like it's too you're just out of your depth. I
24:58
Speaker 5: you're just saying it's the teeny bopper.
25:00
Speaker 4: It's not that anymore. It's far wider spread. Yeah.
25:04
Speaker 2: In any case, the Trump administration has now ordered a
25:08
Speaker 2: delay of the band. So the band was to take
25:10
Speaker 2: effect today. I believe, given the weekend and all that,
25:14
Speaker 2: the Trump administration has extended that ban for seventy five days.
25:19
Speaker 2: As they, I guess say that we are looking to
25:23
Speaker 2: potentially sell the app, which again is part of that
25:27
Speaker 2: rule that there could be a delay put into place
25:29
Speaker 2: if there is quote a I think it was quote
25:30
Speaker 2: a legitimate offer or deal to sell the application. Big
25:36
Speaker 2: questions about a legitimate offer to do so here. I
25:39
Speaker 2: don't think there's anything real on the table yet, but
25:41
Speaker 2: there has been certainly a softening of words both from
25:45
Speaker 2: TikTok ownership as well as this new Trump administration. When
25:49
Speaker 2: it comes to the app, and we'd covered this last weekend,
25:53
Speaker 2: I continue to firmly believe that this thing needs to
25:55
Speaker 2: be gone out of United States users' hands, needs to
26:00
Speaker 2: be done quickly or a full divesture with no data
26:04
Speaker 2: going to China, and neither of these scenarios at the
26:07
Speaker 2: moment seem to be on the table. I want that
26:09
Speaker 2: to happen. I am now more of the mindset that
26:11
Speaker 2: it is not going to that this app is going
26:13
Speaker 2: to continue to exist in some way, shape or form
26:15
Speaker 2: with a Chinese ownership interest in it, even after the fact.
26:19
Speaker 3: I would agree with you, I don't think that it's
26:22
Speaker 3: going to be successful in this idea of finding us bire.
26:26
Speaker 3: I could be wrong.
26:27
Speaker 4: There's some questions as to.
26:28
Speaker 3: Whether the legality behind this seventy five day delay, whether
26:34
Speaker 3: President Trump can actually do this through executive order, because
26:38
Speaker 3: it doesn't really fall within his power necessarily to effectively.
26:42
Speaker 2: All he's done with this executive order is told his
26:45
Speaker 2: own Justice Department to not enforce a law right which
26:48
Speaker 2: that's you know, that's in his purview. But you have
26:51
Speaker 2: to ask some questions right, So, who are the companies
26:53
Speaker 2: here that are liable. One would be TikTok. Right, TikTok
26:56
Speaker 2: is effectively breaking the law but knowing that it won't
26:59
Speaker 2: be in fours under the Trump administration. But the financial
27:03
Speaker 2: penalties for breaking this law are pretty substantial. I don't
27:06
Speaker 2: remember what they are, but they are thousands of dollars
27:08
Speaker 2: per user. If you are Apple and Google, you are
27:13
Speaker 2: the main distributor of this application in the United States.
27:17
Speaker 2: You're either on an Apple phone or you're accessing the
27:19
Speaker 2: Google Play Store, and you are you are downloading the
27:22
Speaker 2: app from those sources right now, You've been told by
27:25
Speaker 2: the Trump administration that they are not going to sue
27:27
Speaker 2: you for leaving it up there on the app store?
27:30
Speaker 2: Is that enough of an insurance of an assurance?
27:33
Speaker 4: I have read that they've pulled it off the app store?
27:35
Speaker 4: Really yes? That Speaking of the blackout and specific to
27:39
Speaker 4: a coming back online.
27:40
Speaker 2: Tucker, do you can you open up your app store
27:42
Speaker 2: and see if you're able to download TikTok but.
27:46
Speaker 3: Existing users had the capability to get back. That's what
27:48
Speaker 3: I read here, at least through Monday.
27:52
Speaker 4: I believe not there.
27:54
Speaker 2: Okay, TikTok is not in the Apple App Store, So
27:56
Speaker 2: they've taken those steps. Fascinating here because you have the
27:59
Speaker 2: Trumpetministration on one hand saying we will not enforce this law.
28:03
Speaker 2: You have Google and Apple, I think, effectively saying to
28:06
Speaker 2: the Trump administration, not good enough. We don't have an
28:09
Speaker 2: assurance that we will not be sued or will not
28:12
Speaker 2: be found liable for allowing this thing to still exist,
28:14
Speaker 2: so still exists on people's phones. TikTok seemingly taking the
28:18
Speaker 2: risk of saying we will continue to allow users to
28:21
Speaker 2: have it, and Apple and Google not going so far
28:23
Speaker 2: as to say we are blocking access to the app overall,
28:26
Speaker 2: because I do believe they could do that pretty easily,
28:30
Speaker 2: but at least removing it from the App Store and
28:32
Speaker 2: saying new users cannot download it. So, in any case,
28:35
Speaker 2: we start a new seventy five day period. The Supreme
28:37
Speaker 2: Court has already ruled in on this that TikTok has
28:40
Speaker 2: no grounds to stand on. Will we see a deal
28:43
Speaker 2: come together? What will that deal look like? Anyone's guess
28:46
Speaker 2: at this stage. Let's take a quick break. When we
28:49
Speaker 2: come back. We already talked about TikTok. Let's talk a
28:53
Speaker 2: little bit about return to the office. I was talking
28:55
Speaker 2: about it with just my wife just yesterday. Let's see
28:58
Speaker 2: what some other big companies and employers are talking about
29:00
Speaker 2: when it comes to working remotely. That's next here on
29:03
Speaker 2: the Financial Exchange.
29:05
Speaker 1: This is your home for the most comprehensive coverage of
29:07
Speaker 1: the economy and the trends on Wall Street. This is
29:11
Speaker 1: the Financial Exchange Radio Network. Find daily interviews and full
29:15
Speaker 1: shows of the Financial Exchange on our YouTube page. Like
29:19
Speaker 1: us on YouTube and get caught up on anything and
29:21
Speaker 1: everything you might have missed. This is the Financial Exchange
29:25
Speaker 1: Radio Network.
29:37
Speaker 2: Well, one more executive action from the new Trump administration
29:41
Speaker 2: has to do with workers of the federal government and
29:45
Speaker 2: where they operate. And this has been a theme we've
29:48
Speaker 2: talked about JP Morgan Chase. We've talked about Amazon all
29:51
Speaker 2: calling their workers back to the office, and in the
29:55
Speaker 2: Amazon case in particular, we looked at that one and
29:57
Speaker 2: if you missed it, Amazon required all of their workers
30:00
Speaker 2: back in the office five.
30:02
Speaker 1: Days a week.
30:02
Speaker 2: I don't remember when they made the announcement, it was
30:04
Speaker 2: some time I believe in the fourth quarter of last year,
30:07
Speaker 2: maybe the third quarter. They then subsequently maybe a month later,
30:13
Speaker 2: disclosed that they actually did not have enough office space
30:16
Speaker 2: available for all those workers whom they called back to
30:19
Speaker 2: the office, and we theorize that, look, this reads a
30:22
Speaker 2: lot more like a push to reduce headcount without laying
30:27
Speaker 2: off and therefore paying severance and all sorts of things
30:29
Speaker 2: that you'd be contractually required to do, rather than a
30:33
Speaker 2: real desire to have more people in the office. Because
30:35
Speaker 2: you know what, Amazon executives, they may be many things, cutthroat,
30:39
Speaker 2: including but stupid and uninformed doesn't seem to be one
30:44
Speaker 2: of them. They seem to be pretty good at logistics
30:46
Speaker 2: the last time I could tell, and I'm guessing that
30:48
Speaker 2: they were well aware that they did not have enough
30:50
Speaker 2: seats for all their workers. Should all of them come
30:52
Speaker 2: back with the new Trump administration calling all people back
30:57
Speaker 2: to the office, I don't think it's even availed. I
31:00
Speaker 2: don't think Donald Trump genuinely cares or believes whether or
31:05
Speaker 2: not workers are more effective in the office than at home.
31:09
Speaker 2: I think it is very clearly an effort to say
31:12
Speaker 2: we want fewer government workers. Here's a pretty good way
31:15
Speaker 2: to cut a whole bunch of them at once without
31:18
Speaker 2: doing some things that we might not be able to do,
31:20
Speaker 2: such as cut government staff. I don't believe you can
31:23
Speaker 2: easily do that via executive order that's more active and
31:26
Speaker 2: active of Congress, and so this is within his powers,
31:30
Speaker 2: and I think is very much an unveiled attempt to say,
31:34
Speaker 2: we want fewer government workers, so we're going to make
31:36
Speaker 2: life a little bit more difficult for them. And I
31:38
Speaker 2: think that we're going to continue to see this. We've
31:40
Speaker 2: talked about how it hasn't been as much of a
31:42
Speaker 2: thing here in Boston. The work from home rate has
31:46
Speaker 2: seemingly just kind of held steady over the course of
31:48
Speaker 2: the last year or so in the Boston region, but
31:51
Speaker 2: in other parts of the country it has been moving
31:53
Speaker 2: further and further towards that return to office mandate. And
31:58
Speaker 2: I think I've heard from many close to me who
32:02
Speaker 2: have said, you know, the company says they're going to
32:05
Speaker 2: listen and you know, continue to adjust the policy, but
32:08
Speaker 2: they seem to be not doing so in turning a
32:10
Speaker 2: blind eye and just want people back in the office.
32:12
Speaker 2: And my point would be that if you're hearing that
32:15
Speaker 2: type of thing from your employer, it's probably intentional and
32:18
Speaker 2: there might be a good part of them that does
32:20
Speaker 2: not actually want you back in the office. I'm not
32:23
Speaker 2: talking about you in particular. I'm just saying with their
32:26
Speaker 2: workforce in general, it's a pretty seemingly not easy way,
32:31
Speaker 2: but it would be a low hanging fruit method of saying, Hey,
32:35
Speaker 2: there's some employees that we want to reduce headcount by
32:38
Speaker 2: some amount. Let's see what happens when we get these
32:40
Speaker 2: people back in the office requiring it five days a week.
32:44
Speaker 2: There will be some people that don't follow the mandate.
32:46
Speaker 2: We can fire them for cause, there are other people
32:48
Speaker 2: that will quit, and then let's see what we need
32:50
Speaker 2: to adjust in terms of workforce from there, rather than
32:54
Speaker 2: needing to do a big, expensive layoff with a whole
32:57
Speaker 2: bunch of lawsuits that follow and potentially other issues along
33:00
Speaker 2: with it.
33:00
Speaker 4: Yeah.
33:01
Speaker 3: I don't know if you bump into this with your clients,
33:02
Speaker 3: but I have several that are kind of on the
33:05
Speaker 3: cusp of retirement age, or perhaps at retirement age, but
33:08
Speaker 3: they do have the ability to work remote for their job.
33:10
Speaker 3: So they've always said to me that, hey, I enjoy
33:12
Speaker 3: what I'm doing and I get to do it remotely,
33:14
Speaker 3: so I'll continue to do that until I'm not able
33:17
Speaker 3: to do that. And that speaks to this idea that hey,
33:19
Speaker 3: it's an easy way to go after low hanging fruit
33:21
Speaker 3: of that person who is at retirement age, and maybe
33:24
Speaker 3: if they got that mandate, they just say, you know what,
33:26
Speaker 3: I don't really feel like driving to the financial district
33:28
Speaker 3: in Boston to do this job any longer. I'm just
33:30
Speaker 3: gonna pack it up and hang it up.
33:32
Speaker 2: It also, to me speaks to the fact that I
33:35
Speaker 2: don't know fundamentally how serious employers are about needing those
33:39
Speaker 2: people back in the office. And so for those high
33:42
Speaker 2: value employees, I was meeting with one just the other
33:45
Speaker 2: week who's intending to retire in a few months, and
33:49
Speaker 2: it was made very clear to him that if he
33:51
Speaker 2: has any interest in working as a consultant or on
33:54
Speaker 2: any other condition remotely or in person, they would have
33:57
Speaker 2: him back no matter what. And so, while I do
33:59
Speaker 2: think employers are generally going to mandate more people back
34:02
Speaker 2: in the office, for those that have a skill set
34:04
Speaker 2: that their employer wants wants, I think there's a lot
34:07
Speaker 2: of flexibility.
34:08
Speaker 4: And here's the other.
34:09
Speaker 3: Thing, Mike, back to your Amazon point, if it was
34:11
Speaker 3: a productivity issue and they had really seen that this
34:14
Speaker 3: remote arrangement had seriously curtailed productivity, you bet you're you
34:18
Speaker 3: know what, the people would be in the office sooner.
34:21
Speaker 3: But I don't think that's really as widespread that the
34:23
Speaker 3: productivity drop off has been so substantial from this initiative
34:27
Speaker 3: of having, you know, a flexible work arrangement. But it
34:30
Speaker 3: does speak to the inflection point that we may find
34:33
Speaker 3: ourselves in in just the labor market in general. That
34:36
Speaker 3: we've talked about this a lot in the show, that
34:38
Speaker 3: the pendulum of power in terms of leverage between employee
34:42
Speaker 3: and employer very much so the last six months or so.
34:45
Speaker 3: You can point to this notion that the employer has
34:48
Speaker 3: more of the leverage. You know, we are far past
34:50
Speaker 3: the days of quits rates exceeding you know, four plus percent.
34:54
Speaker 3: We're in an era where people are a little bit
34:57
Speaker 3: more hesitant to jump into the labormarket and jump ship,
35:01
Speaker 3: so you can, as an employer enforce these types of
35:04
Speaker 3: policies more readily.
35:06
Speaker 5: The calendars turned and the cold is here to stay.
35:09
Speaker 5: So now's the perfect time to plan that getaway to
35:11
Speaker 5: the US Virgin Islands. Act now and take advantage of
35:14
Speaker 5: a special promotion to Saint Croix, experience a vibe like
35:18
Speaker 5: no other, receive a two hundred and fifty dollars per
35:21
Speaker 5: person airfare credit and a free hotel night when you
35:25
Speaker 5: book a five night minimum stay with any participating hotel
35:29
Speaker 5: before June thirtieth of twenty twenty five. Sant Croi is
35:32
Speaker 5: known for its incredible history and spectacular architecture, along with
35:37
Speaker 5: world class cuisine, incredible golf courses, and a wide variety
35:40
Speaker 5: of water sports. From the moment you arriveal fall naturally
35:44
Speaker 5: and rhythm with the heartbeat of the islands. There's no
35:46
Speaker 5: money to exchange, and travel from New England could not
35:50
Speaker 5: be easier. America's Caribbean paradise is waiting for you. Experience
35:54
Speaker 5: a vibe like no other on the island of Saint Croix.
35:57
Speaker 5: Go to visit USVII dot com and use the code
36:00
Speaker 5: Vibe twenty twenty five for more information and book your
36:03
Speaker 5: trip today. That's visit USBI dot com and code vibe
36:08
Speaker 5: twenty twenty five.
36:09
Speaker 2: Yeah, to your point, Paul, the divergence of this labor market,
36:14
Speaker 2: it is truly a just a strange labor market. You
36:19
Speaker 2: talked about how the hiring rate is quite low, and
36:23
Speaker 2: you know to speak to that. The rate of hiring
36:25
Speaker 2: right now sitting at three point three percent according to
36:29
Speaker 2: the most recent data that puts US in like September
36:33
Speaker 2: of eight, it puts US at the same rate of hiring.
36:35
Speaker 2: In the early twenty tens, twenty eleven, twenty twelve, you
36:38
Speaker 2: had numbers that were below that. But in recent history,
36:41
Speaker 2: like it's only been during those recessions where that has
36:44
Speaker 2: been the case. And I'm going to try and pull
36:46
Speaker 2: some data. So that September of two thousand and eight
36:50
Speaker 2: number that I mentioned, right.
36:51
Speaker 4: You had.
36:55
Speaker 2: The hiring rate at three point three percent, the unemployment
36:57
Speaker 2: rate was above six percent. Today you have the unemployment
37:01
Speaker 2: rate at four point one percent, in the hiring rate
37:02
Speaker 2: at three point three percent. And so Catherine and Edwards
37:06
Speaker 2: is an economist, and she wrote in Bloomberg today about
37:08
Speaker 2: Americans having lost all of their leverage in the workforce.
37:12
Speaker 2: And that's to me, at least very clearly not the case.
37:16
Speaker 2: I think they have lost a substantial amount of leverage
37:19
Speaker 2: from twenty twenty two. But to say that the American
37:21
Speaker 2: worker now has very little in the way of leverage,
37:24
Speaker 2: I think ignores the fact that the unemployment rate is
37:26
Speaker 2: still incredibly low right right. And I bring it up
37:30
Speaker 2: only because I want to point out that it can
37:32
Speaker 2: get a lot worse.
37:33
Speaker 3: Oh yeah, right, Like just for any of us graduates
37:36
Speaker 3: post two thousand and eight, you would just take any
37:38
Speaker 3: job you could get.
37:39
Speaker 2: Yeah, And look, I'm hearing that from new grads today too, right, Like,
37:43
Speaker 2: I totally get that. The difference is, you know, we're
37:46
Speaker 2: we're facing a tough hiring market right now. There's no
37:49
Speaker 2: doubt there's not a lot of turnover in the labor market,
37:53
Speaker 2: and generally speaking, it's tougher to find a new job.
37:56
Speaker 2: But you're not also competing with newly laid off millions
37:59
Speaker 2: of Americans with families that are desperate for work. That
38:03
Speaker 2: is a crucial difference, And I pointed out only because look,
38:06
Speaker 2: it can get worse than this in certain situations. Quick break,
38:10
Speaker 2: but a lot more to cover in the second hour
38:12
Speaker 2: the financial Exchange, we'll have a full market recap and more.
38:16
Speaker 1: That's next. Stay tuned.