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Why Nvidia can't quit China · The Financial Exchange Show

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Speaker 2: Kicking things off here warm welcome to all those joining
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Speaker 2: us on Serious XM channel one thirty two. It is
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Speaker 2: our first show that we're doing on your station. We
1:21
Speaker 2: appreciate you listening to us, To all of our other
1:24
Speaker 2: listeners all around the country. Always appreciate you. Obviously, It's Chuck,
1:29
Speaker 2: Mike and Tucker with you, and top story this hour,
1:33
Speaker 2: UH is well, what's moving in markets today? We got
1:36
Speaker 2: Jay Powell's going to be speaking a little bit later
1:39
Speaker 2: in the day. Don't really know exactly what the topic
1:42
Speaker 2: of conversation is going to be, but in advance of that,
1:46
Speaker 2: markets are relatively flat, a little bit mixed. The Dow
1:49
Speaker 2: is off one hundred and seventy six points right now,
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Speaker 2: about point four percent. The S and P five hundred,
1:54
Speaker 2: down ten points, about a quarter percent. NASDAK is off
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Speaker 2: I'm sorry now up three points point zero two percent,
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Speaker 2: moving up and so again, kind of mixed, fairly quiet
2:06
Speaker 2: markets to start off the week. Here we got the
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Speaker 2: ten year US Treasury selling off very modestly, up one
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Speaker 2: point six basis points to four point four three four percent.
2:17
Speaker 2: We got a big move happening in oil. It was
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Speaker 2: up nearly five percent on West Text Intermediate earlier in
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Speaker 2: the day. Now we'll be about three and a half
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Speaker 2: percent to sixty two to ninety five of two dollars
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Speaker 2: and sixteen cents per barrel. When we look at gold,
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Speaker 2: another big move up there as well, up eighty five
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Speaker 2: sixty ounce to thirty three seventy four and fifty cents.
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Speaker 2: And so those are your major moves happening in the market.
2:45
Speaker 2: We get a piece from CNBC today. It's titled why
2:48
Speaker 2: the stock market continues to hold up in the face
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Speaker 2: of uncertain trade policy? And the answer is the economic
2:56
Speaker 2: data has not gotten bad yet.
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Speaker 3: Yeah, earnings have been really solid. What do we see
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Speaker 3: MAGS seven earnings showed up at a twenty seven percent
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Speaker 3: jump from a year earlier. Why does it matter just
3:08
Speaker 3: what I'm talking about with MAG seven? Will they drag
3:10
Speaker 3: up the entire rest of the market. We see that
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Speaker 3: every single day. And so, yeah, you did see that.
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Speaker 3: Earnings for the first quarter. Where do we come in from?
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Speaker 3: Facts at wise like thirteen fourteen percent year of year.
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Speaker 2: Thirteen point three percent four Q one with ninety eight
3:24
Speaker 2: percent of companies reporting.
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Speaker 4: So why is the market holding up? Pretty well?
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Speaker 3: There's been a massive de escalation when it comes to
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Speaker 3: trade policy, which I think many had predicted result in
3:34
Speaker 3: recession if it continued forward. You have seen earnings that
3:39
Speaker 3: held on pretty darn well without an uptick in any
3:42
Speaker 3: of the core data that comes to the economy. That
3:45
Speaker 3: really matters. Is sentiment bad in some areas and some surveys. Absolutely,
3:50
Speaker 3: does sentiment mean people stop spending money? No, not always
3:55
Speaker 3: can can lead to that, but it doesn't always mean
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Speaker 3: that things are going to earn.
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Speaker 2: The question is is going to be very simple for
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Speaker 2: the stock market. Do earnings continue to grow at the
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Speaker 2: pace that they're projected to or does a slowing economy
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Speaker 2: hit and impact earnings. To give you some context on this,
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Speaker 2: right now, the S and P five hundred is trading
4:19
Speaker 2: twenty one point three x forward earnings according to fact
4:23
Speaker 2: sets May thirtieth report. If you look at what typically
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Speaker 2: happens in a recession, earnings typically decline anywhere from ten
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Speaker 2: to twenty five percent. So if you look at it
4:35
Speaker 2: right now and you say, okay, you know, right now,
4:38
Speaker 2: you've got S and P five hundred earnings you know
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Speaker 2: projected you know, to be next year in twenty twenty five,
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Speaker 2: somewhere around you know, three hundred and five, three hundred
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Speaker 2: and ten dollars a share. I think actually we're now
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Speaker 2: down around not not per share, but three hundred and
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Speaker 2: ten dollars. If you think you're gonna go from like
4:53
Speaker 2: three hundred down to two fifty, and you say, hey,
4:56
Speaker 2: instead of a twenty one point three x multiple, slap
4:59
Speaker 2: in eighteen on it, that gets you to forty five
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Speaker 2: hundred on the s and p five hundred, Like there
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Speaker 2: is your twenty five percent downside scenario is a standard
5:10
Speaker 2: run of the mill recession that happens last anywhere from
5:15
Speaker 2: two to six quarters and then you move on with
5:18
Speaker 2: you know, your economy, even though there's been an awful
5:20
Speaker 2: lot of economic pain during that time. If that doesn't materialize,
5:25
Speaker 2: then you look at this and you say, yeah, this
5:26
Speaker 2: is a market that's deeply valued. But if earnings do
5:29
Speaker 2: continue to grow for you know, this year, fact sets
5:33
Speaker 2: projections are or not their projections, but the consensus analyst
5:38
Speaker 2: estimates are for nine point one percent earnings growth this
5:41
Speaker 2: year now and thirteen and a half percent next year. Okay,
5:44
Speaker 2: if that's what you end up getting, this market is
5:48
Speaker 2: highly valued. But highly valued markets can stay that way
5:51
Speaker 2: for quite a while, see the last you know, four
5:54
Speaker 2: years of the nineteen nineties, and there's continued upside here.
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Speaker 2: So the data is going to ultimately have to show
6:03
Speaker 2: us over the next three to four months where things
6:06
Speaker 2: are going, because quite honestly, like if you get out
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Speaker 2: to like next May or June and nothing has happened yet,
6:13
Speaker 2: you can't really point back to terriff announcements as being
6:16
Speaker 2: a cause for anything. The economy is in a completely
6:18
Speaker 2: different place, you know, twelve months after the fact.
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Speaker 3: I'll also point out that again, there are many different
6:25
Speaker 3: types of companies that do business in the United States,
6:26
Speaker 3: many of whom rely heavily on trade with foreign countries.
6:30
Speaker 3: But some of the biggest ones don't have a whole
6:33
Speaker 3: lot of impact from trade tariffs. Think about Microsoft in
6:37
Speaker 3: Nvidia is a different story, given you know, you know,
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Speaker 3: some of the breakdown of trade between US and China.
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Speaker 3: But Alphabet, Google's parent company, Meta, Facebook's parent company.
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Speaker 4: These aren't companies that.
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Speaker 3: You look at and say, oh, yeah, if trade escalates
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Speaker 3: with the European Union, Am I terrified about Microsoft's earnings potential?
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Speaker 2: So you say terrified or terrified terrif.
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Speaker 3: Oh yeah, good, I didn't pick up on that as
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Speaker 3: an accident. These aren't companies that I that come to
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Speaker 3: mind immediately to say, oh yeah, look out, uh, trade
7:06
Speaker 3: escalation between the EU and the United States. I'm really
7:09
Speaker 3: worried about Microsoft and Meta's earnings. No, probably not.
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Speaker 2: Maybe eventually depends on the potential responses. You could see
7:16
Speaker 2: a world in which you know, another country or block
7:19
Speaker 2: says hey, you know what, you're tariffing our goods imports.
7:24
Speaker 2: We're gonna tear if your services imports.
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Speaker 3: Could be But the low hanging fruit so far has
7:28
Speaker 3: been right, go after us. We're gonna hit your bourbon industry,
7:31
Speaker 3: We're gonna hit your net gas industry, and a few others.
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Speaker 2: Yeah, so I think ultimately, again, very easy answer on
7:39
Speaker 2: the question of hey, why is the stock market held
7:41
Speaker 2: up so well in the It's earnings have held up
7:43
Speaker 2: well and the economic data has been fine as well.
7:46
Speaker 2: Are there signs that the economic data could change.
7:49
Speaker 3: Yeah.
7:49
Speaker 2: We've talked about some of the things as it relates
7:51
Speaker 2: to continuing jobless claims and things like that that maybe
7:54
Speaker 2: in the early stages of telling us something, but they're
7:58
Speaker 2: still early and and you see wiggles all the time
8:02
Speaker 2: that turn into nothing and so I on our show again.
8:06
Speaker 2: If you're one of those listeners, you know, on serious
8:09
Speaker 2: joining us for the first time. Most people in the
8:12
Speaker 2: financial business are the ones who call recession like a
8:14
Speaker 2: hundred times out of one recession. You know, they're always
8:17
Speaker 2: trying to hype up the recession. Oh this is good,
8:20
Speaker 2: this is the big one. We're the show you listen
8:22
Speaker 2: to if you want to hear, hey, there's something happening,
8:27
Speaker 2: but it's probably nothing, because more often than not that's
8:31
Speaker 2: the case in the economy. It's not to like make
8:33
Speaker 2: things boring, it's just if you're always dialed up to eleven, well,
8:39
Speaker 2: then what happens when it actually hits the fan? You know,
8:42
Speaker 2: like how we don't go to twelve.
8:45
Speaker 3: Our pets heads can't always be falling on. We don't
8:47
Speaker 3: go to twelve. You know, we go to twelve o'clock,
8:50
Speaker 3: but not twelve on the audio dial.
8:52
Speaker 2: How about that. Let's take a quick break here. When
8:54
Speaker 2: we come back, we got a little bit of trivia,
8:56
Speaker 2: and then we're gonna talk about in video and their
8:58
Speaker 2: China business. After this, the.
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Speaker 5: Let's do a little bit of trivia here on the
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10:31
Speaker 2: Wall Street Journal piece why in video just can't quit
10:33
Speaker 2: China money anything else?
10:37
Speaker 4: Stay here? They it's money.
10:40
Speaker 3: It's money that stems from the Chinese Communist Party investing
10:44
Speaker 3: a lot of money in artificial intelligence, just like the
10:47
Speaker 3: United States, although more of it's probably private money here
10:51
Speaker 3: in the US and UH producing massive numbers of AI
10:56
Speaker 3: researchers and top talents out of their university to folk
10:58
Speaker 3: out of their universities to focus on AI development, and
11:02
Speaker 3: willingness to pay companies like Nvidia for their highest end chips.
11:08
Speaker 2: So here's the thing. Jensen Wong has been all over
11:12
Speaker 2: the place the last couple of weeks talking about how
11:16
Speaker 2: much he dislikes not being able to sell into China
11:19
Speaker 2: the way that he wants to. Yes, I don't think
11:22
Speaker 2: I've ever heard him talk publicly about something the way
11:25
Speaker 2: he's talking about this, And his argument boils down to
11:29
Speaker 2: one very simple. It's a really simple one. He basically says, Look,
11:34
Speaker 2: if you allowed us to sell into China, there would
11:38
Speaker 2: be no Chinese domestic industry for producing the kind of
11:42
Speaker 2: chips required to run AI because we have the best
11:46
Speaker 2: product out there and no one can compete with us.
11:48
Speaker 2: That's his arguments.
11:49
Speaker 3: And the flip side of that is, if you don't
11:51
Speaker 3: allow us to, then China will build its own waldoff
11:54
Speaker 3: semiconductor industry, and you don't want that because go look
11:59
Speaker 3: at every other industry where China has been able to
12:01
Speaker 3: do this, and sometimes it's a pretty bad case scenario.
12:06
Speaker 2: Except the counter to that is most of those are
12:10
Speaker 2: cases where China invites in foreign competitors see Tesla as
12:16
Speaker 2: an example, basically watches what they do and as you know,
12:21
Speaker 2: joint ventures set up to be able to know exactly
12:24
Speaker 2: how this stuff is produced. And then several years later,
12:27
Speaker 2: you know, Chinese domestic firms, often state owned enterprises, start
12:31
Speaker 2: producing competitors that then put an awful lot of pressure
12:34
Speaker 2: on the foreign competitor, in many cases, either forcing them
12:37
Speaker 2: out of the country or forcing them out of business.
12:40
Speaker 3: Yeah, I was going to say, there seems to me
12:44
Speaker 3: to be a very compelling case that China is going
12:47
Speaker 3: to attempt to develop their own walled off, self dependent
12:50
Speaker 3: semiconductor industry no matter what. And it's a question only
12:54
Speaker 3: of how long it takes.
12:56
Speaker 2: So I guess the question where I come back to On.
12:59
Speaker 2: This is something that we've talked about quite often, which
13:02
Speaker 2: is if if you look at things only through the
13:05
Speaker 2: economics lens, you basically get to a point where you're like, well,
13:09
Speaker 2: everyone should be able to sell everything to anyone.
13:12
Speaker 4: That's the idea of free trade.
13:14
Speaker 2: No, but like everyone should be able to sell anything
13:16
Speaker 2: to everyone, like whatever you want, Like, hey, in vidio,
13:20
Speaker 2: if you want to like start selling like illicit substances
13:23
Speaker 2: or whatever, like okay, But obviously there are non economic
13:27
Speaker 2: reasons why we decide, Hey, maybe we shouldn't allow multinational
13:31
Speaker 2: corporations to load up beverages with cocaine, Like we decide
13:34
Speaker 2: this is, you know, a bad thing.
13:36
Speaker 4: We should have a speed limit.
13:37
Speaker 2: Correct, or you know, in national security concerns, Hey, you know,
13:41
Speaker 2: during the Cold War, maybe even though you know, Raytheon
13:45
Speaker 2: can make a whole bunch of money selling to the
13:48
Speaker 2: Soviet Union, probably not a good idea for them to
13:51
Speaker 2: be able to or even more recently, you know, think
13:55
Speaker 2: about Congressional Review of weapons sales to countries in the
13:58
Speaker 2: Middle East and stuff like that, the F thirty five program,
14:01
Speaker 2: and how we don't allow Turkey to participated in any
14:03
Speaker 2: more after Turkey, you know, took delivery of Russian missile systems,
14:08
Speaker 2: that there are reasons for national security that you don't
14:11
Speaker 2: want to give certain countries access to the crown jewels
14:16
Speaker 2: of US technology. And in this case, I mean, look,
14:19
Speaker 2: the great thing that you can say about in Video
14:21
Speaker 2: is they are one of the crown jewels of US
14:25
Speaker 2: technology these days.
14:26
Speaker 1: I mean, the.
14:28
Speaker 2: Stuff that they can do with their processors is wild.
14:34
Speaker 2: But because of what artificial intelligence could mean, not just
14:40
Speaker 2: in the conventional military sense, but also in kind of
14:45
Speaker 2: the modern evolution of you know, how militaries might plan
14:50
Speaker 2: large scale attacks on competitors, the ability of artificial intelligence
14:55
Speaker 2: to be used for you know, electronic warfare and things
14:59
Speaker 2: along the those lines, cyber warfare. I mean, like, there's
15:03
Speaker 2: all kinds of problems with simply allowing Nvidia to sell
15:07
Speaker 2: their chips to basically anyone in China. Yep. So what
15:14
Speaker 2: do we do with this is the question.
15:18
Speaker 3: I mean, if you're in Vidia and you're the CEO
15:20
Speaker 3: of Nvidia, I think you probably will continue to venture
15:24
Speaker 3: frustrations and push for change there because it's.
15:26
Speaker 4: Going to be your bottom line.
15:29
Speaker 3: But I think from a US government standpoint, you look
15:33
Speaker 3: at this for what it is a strategic threat to
15:37
Speaker 3: the United States and prevent it from happening while fully
15:40
Speaker 3: understanding that generally speaking, when we're talking about high tech
15:44
Speaker 3: stuff like this, you don't prevent a country forever from
15:48
Speaker 3: developing it, especially when it's China, right Like, No, my
15:52
Speaker 3: guess would be even if we have the most robust
15:56
Speaker 3: chip restrictions on China ever, which we don't, because we're
15:59
Speaker 3: selling this stuff to countries that will probably sell at
16:01
Speaker 3: black market back to China, see many of the deals
16:04
Speaker 3: we made in the Middle East. But maybe you can
16:07
Speaker 3: delay it a couple of years. And as long as
16:10
Speaker 3: you're going in eyes wide open about that part, because
16:13
Speaker 3: I don't think it will be a permanent delay in
16:14
Speaker 3: China's ability to build their own semiconductor industry, then that
16:20
Speaker 3: might be worth it.
16:22
Speaker 2: So I don't have a ton of sympathy for Jensen's
16:27
Speaker 2: arguments on this.
16:30
Speaker 3: I just don't know so, And we've got a few
16:33
Speaker 3: decades of history of companies making this argument internally over
16:38
Speaker 3: and over again. Well, look at the size of the
16:41
Speaker 3: Chinese market and how profitable it can be, and for
16:45
Speaker 3: decades now. I don't understand how CEOs have not learned
16:49
Speaker 3: this lesson yet or maybe the lesson they've learned is
16:51
Speaker 3: it's worth the sacrifice. But if you go sell especially
16:56
Speaker 3: high tech product to China, the implicit deal is you
17:02
Speaker 3: can sell it here, you can manufacture it here, but
17:04
Speaker 3: we're going to learn how you do.
17:05
Speaker 2: It, and we're going to make better, cheaper competitors.
17:10
Speaker 4: Or at least cheaper, not always better, but cheaper.
17:13
Speaker 2: No, I'll say they're oftentimes better.
17:15
Speaker 4: Oftentimes they are better.
17:16
Speaker 2: Yeah, Like they're oftentimes better, Like when we're talking about
17:19
Speaker 2: if if you look at like Chinese cell phones, just
17:22
Speaker 2: as an example, they're better technologically than anything Apple offers.
17:28
Speaker 3: You can You're getting to the point now, by the way,
17:30
Speaker 3: where you can make the same argument about Chinese made vehicles.
17:34
Speaker 2: And I'm not saying I would ever buy either of them,
17:36
Speaker 2: because I have all kinds of privacy concerns about where
17:39
Speaker 2: that data goes. But ultimately, if the Chinese government says, hey,
17:44
Speaker 2: we're going to funnel a bunch of money to state
17:45
Speaker 2: owned enterprises to produce this stuff more cheaply than anyone
17:48
Speaker 2: else can, and subsidize technology that might not even really
17:53
Speaker 2: be feasible in most cases, like you talk about the
17:56
Speaker 2: like the really fast charging for the evs that they're
17:59
Speaker 2: doing over them, and it's like, well, this has to
18:02
Speaker 2: be located like on top of the extra an actor
18:05
Speaker 2: of a nuclear power plant in order to work.
18:07
Speaker 3: And by the way, that's not my opinion. I've never
18:09
Speaker 3: driven a by D car. That's the opinion of the
18:13
Speaker 3: I think rumored opinion of the CEO of Ford.
18:16
Speaker 2: Yeah, he came back from China. It was like, we're
18:18
Speaker 2: all gonna die. We have some catching up today. We're
18:21
Speaker 2: I think he said it was basically like an extinction
18:23
Speaker 2: level threat to the car makers. So I think where
18:29
Speaker 2: I get to on all of this is, Hey, the
18:33
Speaker 2: best way to counter development of new technologies from China
18:40
Speaker 2: is to pull out all the stops to develop what
18:42
Speaker 2: you can internally and restrict the heck out of what
18:46
Speaker 2: you export to them that could in any way, shape
18:48
Speaker 2: or form be repurposed for national security uses by the
18:52
Speaker 2: Chinese government. It's not the best economic proposal.
18:59
Speaker 1: No, But.
19:01
Speaker 2: I don't know, Like, you can't just listen to the
19:05
Speaker 2: dollar signs on this stuff, because it gets you to
19:07
Speaker 2: a pretty bad place if you're talking about a country
19:10
Speaker 2: that does not share the same views when it comes
19:14
Speaker 2: to things like freedom of speech, religion and all the
19:16
Speaker 2: things that you know, we've generally viewed to be important
19:19
Speaker 2: in the world. So there's that. Just take a quick
19:22
Speaker 2: break here. When we come back, we got the trivia
19:24
Speaker 2: answer and then we are talking social security after this.
19:42
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Speaker 1: Time now for Wall Street. Watch a complete look at
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Speaker 1: what's moving market so far today right here on the
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Speaker 1: Financial Exchange Radio Network.
20:12
Speaker 5: Well, markets are starting off the month of June slightly
20:15
Speaker 5: negative territories investors react to the latest trade tensions between
20:19
Speaker 5: the US and China, in addition to disappointing ism manufacturing
20:24
Speaker 5: data posted earlier this morning. Right now, the Dow is
20:27
Speaker 5: down by about a half a percent. S and P
20:29
Speaker 5: five hundred is down by a quarter percent, and the
20:32
Speaker 5: Nasdaq only off by eight points. Russell two thousand is
20:35
Speaker 5: mostly flat. Ten year treasureeled at the moment is up
20:39
Speaker 5: by three basis points now at four point four to
20:41
Speaker 5: five percent. And crude oil up three percent higher today,
20:45
Speaker 5: trading at sixty two dollars and sixty eight cents a barrel.
20:48
Speaker 5: Steel stocks are seeing gains on the day after President
20:51
Speaker 5: Trump doubled tariffs on the medal to fifty percent from
20:54
Speaker 5: twenty five percent. Cleveland Cliffs jumping by twenty four percent,
20:58
Speaker 5: while newcre and steel dim Dynamics are also seeing gains. Meanwhile,
21:03
Speaker 5: French drug maker Santa Fi agreed to buy Blueprint Medicines
21:06
Speaker 5: for up to nine and a half billion dollars. Santa
21:09
Speaker 5: Fi is retreating by about one percent, while Blueprint shares
21:12
Speaker 5: are jumping by twenty six percent. Elsewhere, Alphabet down by
21:16
Speaker 5: one and a half percent after a judge on Friday
21:19
Speaker 5: discussed limiting Google's search engine monopoly, including curbing how it
21:23
Speaker 5: competes in AI. According to the Wall Street Journal, Meta
21:27
Speaker 5: plans to fully automate advertisement creation using AI by the
21:32
Speaker 5: end of twenty twenty six. Meta up by over one percent,
21:36
Speaker 5: and this afternoon, all eyes will shift to FED Chairman
21:39
Speaker 5: Jerome Poll who will be speaking at one o'clock where
21:42
Speaker 5: he is expected to provide insight into the Fed's monetary
21:45
Speaker 5: policy position. Tucker Silvan, That's Wall Street watch, Let's pay
21:50
Speaker 5: off our trivia winner today. A winner was Ray from Shrewsbury, mass.
21:54
Speaker 5: He answered the question how many episodes did Ken Jennings
21:58
Speaker 5: win during his record breaking street and the answer was
22:01
Speaker 5: seventy four. So Ray is taking home a Financial Exchange
22:04
Speaker 5: Show t shirt and we play trivia every day here
22:07
Speaker 5: on the Financial Exchange See complete contest rules at Financial
22:10
Speaker 5: Exchange Show dot com.
22:12
Speaker 2: Mike, you got a piece in Barns. It's titled Retirees
22:15
Speaker 2: tune out the noise when filing for Social Security? Mike,
22:19
Speaker 2: what is the noise?
22:21
Speaker 3: I think threats to the program and concerns that it
22:23
Speaker 3: is going bust, which are all true threats. I don't
22:29
Speaker 3: want to minimize any of those. There are real concerns
22:33
Speaker 3: that I think everyone should have about the viability of
22:36
Speaker 3: a few of our different social programs that we have
22:39
Speaker 3: out there, including Medicare and Social Security. But ultimately how
22:44
Speaker 3: those get resolved is completely unknowable, and depending on who
22:50
Speaker 3: you talk to, they come up with completely different ideas
22:52
Speaker 3: as to how it's going to be resolved. Yes, but
22:54
Speaker 3: I will say that one thing that seems pretty consistent
22:57
Speaker 3: across the board is most experts who know this program
23:01
Speaker 3: no politics seem to think it's pretty unlikely that existing
23:07
Speaker 3: recipients of Social Security, and even those that are close
23:10
Speaker 3: to being eligible for soci Security, are going to be
23:13
Speaker 3: affected with their benefits at all.
23:15
Speaker 2: Because right now, if there are no changes made to
23:17
Speaker 2: the program, when the trust fund reserves are exhausted, which
23:23
Speaker 2: is projected to be anywhere from twenty thirty two to
23:25
Speaker 2: twenty thirty four, so anywhere from seven to nine years
23:28
Speaker 2: from now, the incoming payroll taxes will only be enough
23:32
Speaker 2: to fund seventy nine percent of benefits, meaning if nothing
23:36
Speaker 2: else changed, and based on the way the program's currently structured,
23:40
Speaker 2: retirees who are who have already claimed Social Security, would
23:43
Speaker 2: take a twenty one percent cut in their benefits, right,
23:46
Speaker 2: And that's which is that that's the thing that's a
23:50
Speaker 2: little nervous, yep.
23:51
Speaker 3: And I also think it's misunderstood because rarely do I
23:54
Speaker 3: have anybody telling me, oh, I'm pulling soci Security exap
23:56
Speaker 3: I'm worried by benefits are going to be cut by
23:58
Speaker 3: twenty one percent eight years from now. Right Usually the
24:01
Speaker 3: answer I get is I'm playing my benefits now because
24:03
Speaker 3: I'm worried that Social Security is not going to exist
24:05
Speaker 3: anymore in ten years, and I have to say, I
24:07
Speaker 3: think that's a completely unfounded concern. Yes, the point that
24:11
Speaker 3: we are trying to make is social security is often
24:16
Speaker 3: thought of very differently from pretty much every other retirement
24:21
Speaker 3: income source that people have.
24:23
Speaker 4: And my mere point here is I don't think it
24:26
Speaker 4: should be.
24:27
Speaker 3: It should be looked at as just another asset that
24:29
Speaker 3: you have to fund your life down the road. And
24:33
Speaker 3: if you instead attach all this emotion to it, like
24:36
Speaker 3: attaching emotion to your investment portfolio, it can lead you
24:39
Speaker 3: down the wrong path and lead you to make the
24:41
Speaker 3: wrong decision. I'm not telling you you have to wait
24:44
Speaker 3: on your Social Security I don't know who's listening to
24:47
Speaker 3: me right now. That is not the universal advice that
24:50
Speaker 3: anyone would give. The universal advice that I think everyone
24:54
Speaker 3: should take is understand how the program actually works, Understand
24:59
Speaker 3: the benefits and of taking the benefit at a certain age.
25:03
Speaker 3: And then if you say, look, I understand the concerns,
25:05
Speaker 3: I understand the benefits and drawbacks, and I'm still taking
25:08
Speaker 3: it early because that's what makes me feel good. At
25:10
Speaker 3: least you've done your research and you understand all that.
25:13
Speaker 3: If you haven't done that yet, then you're approaching that
25:16
Speaker 3: social security timeframe, Please give the folks at Armstrong Advisory
25:19
Speaker 3: Group a call. We work with our clients every day
25:22
Speaker 3: on topics like this, and the phone number is eight
25:24
Speaker 3: hundred three nine three for zero zero one. We offer
25:29
Speaker 3: education and free consultation all across the country. You can
25:32
Speaker 3: call us at eight hundred three nine three for zero
25:35
Speaker 3: zero one.
25:36
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
25:39
Speaker 1: registered investment advisor. Nothing in the ad or in any
25:41
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
25:44
Speaker 1: your own financial tax into state planning advisors before making
25:47
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
25:50
Speaker 1: advisory services.
25:52
Speaker 2: Michael, want to talk a little bit about this piece
25:53
Speaker 2: from CNBC discussing discussing the child tax credit and how
25:59
Speaker 2: the tax bill making its way through Congress could potentially
26:03
Speaker 2: change that. I don't want to get into, like the
26:06
Speaker 2: specifics of what the bill says, because.
26:08
Speaker 4: Ander disclosure on tax bills, we don't know what it's
26:09
Speaker 4: gonna pass.
26:10
Speaker 2: Right when it finally is done, we'll talk about what happened,
26:13
Speaker 2: but so much can change between now and passage that
26:16
Speaker 2: I'm not going to get into specifics on like well
26:19
Speaker 2: this is gonna be no, here is I think the
26:24
Speaker 2: place that I'm trying to I've been spending a lot
26:28
Speaker 2: of time on this for the last like four or
26:30
Speaker 2: five years. Like having had kids, you know, in the
26:32
Speaker 2: last four or five years, you spend more time thinking
26:35
Speaker 2: about the child tax credit and what you want it
26:38
Speaker 2: to do. Based on pretty much every body of research
26:42
Speaker 2: out there about whether child tax credits incentivized people to
26:45
Speaker 2: actually have children, I think the answer that I've come
26:49
Speaker 2: to is we shouldn't be using tax policy in that
26:52
Speaker 2: way for two reasons. The first, it's not effective. It
26:54
Speaker 2: doesn't actually increase the birth rate. There's a whole bunch
26:57
Speaker 2: of countries in Europe that have like put massive child
27:00
Speaker 2: subsidies in place, and their birth rates are still in
27:02
Speaker 2: the toilet.
27:03
Speaker 3: Yeah, there's been a select few scenarios where this type
27:06
Speaker 3: of policy, all around, type of policy, not just tax policy,
27:10
Speaker 3: have addressed birth rates. But it's been on the heels
27:14
Speaker 3: of investment not just in tax credits bid it, but
27:16
Speaker 3: in massive government investment in trying to increase the birth rate,
27:20
Speaker 3: including everything from free child care to all sorts of
27:24
Speaker 3: different benefits outside of just here's some extra money on
27:26
Speaker 3: your tax return.
27:27
Speaker 2: The second piece is, Okay, do we want to make
27:30
Speaker 2: it easier for parents with children to have more money
27:34
Speaker 2: in their pocket to spend on their children. Does it
27:37
Speaker 2: produce better outcomes? The research does say pretty conclusively yes
27:41
Speaker 2: in that case, just terms of being able to afford
27:43
Speaker 2: you know, in many cases necessities and some childcare and
27:46
Speaker 2: stuff like that. So I think that it makes sense there.
27:50
Speaker 2: But beyond that, like trying to get to hey, what's
27:52
Speaker 2: like the right number for the child tax credit? How well?
27:57
Speaker 2: I f I know?
27:58
Speaker 3: Yeah, And again, where this seems to come out to
28:03
Speaker 3: me is more less of a tax policy that seems
28:07
Speaker 3: to have an end goal and more of a tax
28:08
Speaker 3: policy that's designed to give a gift to people that
28:11
Speaker 3: are struggling. And I think a popular one is those
28:15
Speaker 3: with young children as well as retirees. What about retirees,
28:21
Speaker 3: retirees using the child tax credit? No, just popular groups
28:24
Speaker 3: to give money.
28:25
Speaker 2: To, got it? Yes, retirees tend to vote, and people
28:29
Speaker 2: with children tend to be sympathetic, and you don't want
28:32
Speaker 2: to appear like you are against them.
28:34
Speaker 3: Yeah, so I'm not necessarily against this, but I don't
28:39
Speaker 3: like when it when lawmakers put it out there and say,
28:44
Speaker 3: and this is what's going to save the US workforce, Like,
28:48
Speaker 3: I have some doubts about that, or it's going to
28:52
Speaker 3: make The worst one is when they say it's going
28:54
Speaker 3: to make childcare cheaper. No, not going to do that.
28:57
Speaker 1: No.
28:57
Speaker 2: Generally, when we throw more money at anything, it makes
28:59
Speaker 2: it more expensive see college, healthcare, housing, you know, federally
29:06
Speaker 2: guaranteed mortgages. Like sure, they're great when you can get them,
29:09
Speaker 2: but ultimately it drives up the cost of housing.
29:13
Speaker 5: Yeah.
29:13
Speaker 2: I it's not something that I look at and I'm like, hey,
29:17
Speaker 2: this is bad. Like I think that having large child
29:19
Speaker 2: tax credits it is a good thing. How large should
29:23
Speaker 2: it be and how should it be? I got nothing. Yeah,
29:28
Speaker 2: let's take a quick break here. When we come back,
29:30
Speaker 2: let's do a little bit of stack roulets.
29:33
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30:48
Speaker 3: Michael, what have you for, stack Roulettes, I have summer
30:51
Speaker 3: vacation plans and cool. The continued story is about foreigners
30:58
Speaker 3: dropping their plans to visit the United States, and we're
31:00
Speaker 3: starting to see some real evidence of it. And I
31:03
Speaker 3: think certainly if you are in the Portland area of Maine,
31:07
Speaker 3: or Burlington, Vermont, or anywhere around there, you're seeing the
31:11
Speaker 3: effects and in fact, air travel from Canada to the
31:14
Speaker 3: United States in April drops some twenty percent, while land
31:17
Speaker 3: crossings dropped thirty five percent. And the Wallstreet Journal has
31:20
Speaker 3: this piece today on this very subject, and what you
31:24
Speaker 3: do notice in their numbers is, yeah, there's a drop
31:27
Speaker 3: off from twenty four to twenty five. But what they
31:31
Speaker 3: point out is that there's a much more severe drop
31:33
Speaker 3: off that occurred a few years ago and coincide with COVID,
31:37
Speaker 3: and since then the numbers seemingly have not ever rebounded
31:40
Speaker 3: to where they were. When you go take a look at,
31:42
Speaker 3: for instance, UK tourism to the United States, French Netherlands
31:47
Speaker 3: tourism to the United States, and visitor numbers, they have
31:50
Speaker 3: never gotten back to where they were pre COVID. And
31:52
Speaker 3: I find that piece almost as interesting as I do
31:55
Speaker 3: this most recent piece about current travelers year over year declining.
32:02
Speaker 3: The overall tourism story to the United States seems to
32:05
Speaker 3: be one that just hasn't recovered from pre pandemic.
32:08
Speaker 2: The data that they have here is also looking at
32:10
Speaker 2: the first four months of the year, right, And I
32:13
Speaker 2: guess what I'll say is I don't know that that's
32:17
Speaker 2: a relevant period.
32:19
Speaker 3: Did people react, did people change their plans based on
32:23
Speaker 3: what they were seeing on trade tensions for the first
32:27
Speaker 3: four months the year. Did they just said, no, I
32:28
Speaker 3: booked this back in September, and I'm gonna stay with
32:30
Speaker 3: my plans.
32:31
Speaker 2: And I think for most people it's like, no, I
32:33
Speaker 2: already booked this. I'm not changing it. What I'm interested
32:36
Speaker 2: in seeing is, hey, how what what do the next
32:39
Speaker 2: you know, eight months of the year look like? In particular, Hey,
32:43
Speaker 2: show me like the second half of the year, because
32:47
Speaker 2: you know, we know that from hearing from different airlines
32:51
Speaker 2: and hotels, there's a lot of booking that happens, you know,
32:54
Speaker 2: within eight weeks of people actually going on different trips
32:59
Speaker 2: and so oh okay, like how much it was traveling?
33:03
Speaker 2: I mean, hey, like travel in January could not have
33:05
Speaker 2: been affected by outrage over tariffs because there was no
33:09
Speaker 2: there were no new tariffs in place. Then by February
33:12
Speaker 2: could there have been a little Sure? But I want
33:15
Speaker 2: to see like July through December of this year, and
33:19
Speaker 2: we'll see what it shows. It may show a continuation
33:22
Speaker 2: of not really too much change. It may show, hey,
33:26
Speaker 2: there's an inflection point where things have started to slow down.
33:29
Speaker 2: I don't know what we're going to see. But including
33:32
Speaker 2: a period in this data where no tariffs were in place,
33:36
Speaker 2: it's not relevant. Doesn't really tell you anything about the
33:39
Speaker 2: data if you happen to run an Airbnb or no,
33:43
Speaker 2: somebody that runs a hotel. We've heard from other sources
33:46
Speaker 2: that especially non city hotel bookings have been down across
33:51
Speaker 2: the New England region. But if you have some firsthand
33:53
Speaker 2: experience with this decline in tourism demand, maybe it's down
33:56
Speaker 2: the Cape, maybe it's up in Portland or or anywhere
33:59
Speaker 2: that is that popular destination for foreigners to visit. You
34:03
Speaker 2: can text the show at six one seven three six
34:04
Speaker 2: two thirteen eighty five with what you have been seeing again?
34:08
Speaker 2: That's six one seven thirst three six two thirteen eighty
34:11
Speaker 2: five is the text line for the show piece of
34:13
Speaker 2: the New York Times. Uh as we get towards lunch,
34:17
Speaker 2: I always look for food items to indeed torture myself.
34:22
Speaker 2: Can gen Z's nostal just save chain restaurants? And what
34:26
Speaker 2: it's talking about is all these kids, remember gen Z,
34:28
Speaker 2: They're the new millennials, They're the new twenty year olds.
34:31
Speaker 2: Millennials are older now and they're all balding and starting
34:34
Speaker 2: to you know, kind of hit that that time period
34:38
Speaker 2: where we're not all looking so hot anymore. Speak for yourself, Mike, Yeah,
34:43
Speaker 2: and uh, in any case, gen Z, they are the
34:46
Speaker 2: twenty year olds, and it's talking about Hey, like, did
34:48
Speaker 2: these people have fun going to these chain restaurants with
34:52
Speaker 2: their parents? And when we say chain, we're not talking
34:54
Speaker 2: about fast food chains, but much more you sit down
34:57
Speaker 2: chain restaurants, you're Chili's, your red Robin, Longhorn out back,
35:01
Speaker 2: olive Garden, cracker barrel, red lobster Fridays, things like that.
35:06
Speaker 4: And so the question is gen Z going to rescue
35:09
Speaker 4: these brands?
35:10
Speaker 2: The answer is no. I'm gonna put that out there,
35:14
Speaker 2: and I say, this is someone some of my fondest
35:17
Speaker 2: memories in like college was taking like the meager amount
35:21
Speaker 2: of cash that we had and going to Applebee's like
35:24
Speaker 2: twice a year and just you know, having a grand
35:27
Speaker 2: old time. Would it be fun for me to do
35:30
Speaker 2: that again today? Once?
35:33
Speaker 1: Sure?
35:33
Speaker 2: I think it would be a blast. You know, I
35:35
Speaker 2: got a college reunion coming up this summer. Could we
35:38
Speaker 2: hit up the old Applebee's? Honestly, probably not have better
35:40
Speaker 2: things to do, but like, could it be something that
35:45
Speaker 2: I do?
35:45
Speaker 5: Like?
35:45
Speaker 2: Once? Sure, but the places that I continue to go to,
35:50
Speaker 2: whether chain or not, are places where I think I
35:53
Speaker 2: get something on an extended basis from it. Case in point,
35:57
Speaker 2: my deep unending love and affection for all things Taco Bell.
36:01
Speaker 2: It's not because I view Taco Bell as something that
36:03
Speaker 2: will make me look better. It won't even make me
36:05
Speaker 2: feel better. It'll make me feel worse at the time.
36:08
Speaker 2: But I enjoy it quite a bit, and my wife
36:10
Speaker 2: does too, and we have a grand old time going
36:12
Speaker 2: to Taco Bell and eaten all like the taco stuff
36:16
Speaker 2: that we can there.
36:17
Speaker 3: So I mean, look, nostalgia can work as a theme.
36:20
Speaker 3: The ground Round just opened a new restaurant out in Shrewsbury,
36:24
Speaker 3: and Shrewsbury was it Okay, I don't remember exactly where
36:27
Speaker 3: it was. I think that can work. But when you
36:31
Speaker 3: look at, hey, what's driving companies to do well or
36:34
Speaker 3: poorly in the restaurant industry, it's usually not playing on
36:38
Speaker 3: what they thought was really cool twenty years ago. It's
36:41
Speaker 3: delivering some sort of value proposition. It's delivering something new
36:45
Speaker 3: and exciting that people want to go visit it. And
36:48
Speaker 3: plenty of these restaurants, by the way, I remember, do
36:51
Speaker 3: we cover Tji Friders or was it Applebee's recently that
36:54
Speaker 3: has been having a ton of success by just saying, hey,
36:57
Speaker 3: our prices are about the same as going to a
37:00
Speaker 3: fast food restaurant and we'll give you.
37:01
Speaker 2: A waiter a bar.
37:04
Speaker 5: Yeah.
37:04
Speaker 2: It was chilling that deal.
37:07
Speaker 1: Yeah.
37:08
Speaker 4: So my answer is, also, what.
37:11
Speaker 2: Are you gonna give me that that's gonna be? If
37:14
Speaker 2: you provide good value and a good experience, people will
37:17
Speaker 2: come back. Nostalgia gets you in the door once, it
37:22
Speaker 2: doesn't make you come back.
37:23
Speaker 4: That said, I'm now picturing.
37:26
Speaker 2: Especially if the experience isn't as good as you remember. Yeah,
37:29
Speaker 2: And let's be honest, it almost never is, because you
37:31
Speaker 2: block out all the bad stuff that used to happen.
37:34
Speaker 2: We've all seen the episode of mad Men where he
37:36
Speaker 2: talks about nostalgia not gonna go be John Ham because
37:40
Speaker 2: he's much taller than me and better looking. But nostalgia
37:43
Speaker 2: is a thing, but it's you fade out all the
37:46
Speaker 2: stuff that's not as good. It's a good point.
37:49
Speaker 3: I think you might do it once and then if
37:52
Speaker 3: there's nothing but nostalgia, you're not gonna keep going back.
37:54
Speaker 2: Right exactly. That's kind of sad. It leaves you feeling
37:56
Speaker 2: kind of emptier. Actually, you're like, now what, okay, I've
37:59
Speaker 2: done that. Great. Now if you go back to you know,
38:02
Speaker 2: Applebee' and you're like, wow, this was amazing, Okay, then
38:06
Speaker 2: you got something. So nostalgia will get you in the door.
38:08
Speaker 2: I don't think it saves your business, because if your
38:11
Speaker 2: business were that good to begin with, you wouldn't need
38:14
Speaker 2: to rely on nostalgia to get people back. How's that
38:18
Speaker 2: I'm gonna eat lunch. Sounds great. Markets are mixed. We're
38:22
Speaker 2: done for the day. Back at it tomorrow. We'll see
38:24
Speaker 2: you then,