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This selloff has no mystery behind it · The Financial Exchange Show

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Speaker 1: making a donation Today. Face is the Financial Exchange with
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Speaker 1: Mike Armstrong and Mark Vandetti.
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Speaker 2: Good morning, Happy Friday, and welcome back to the Financial Exchange.
1:14
Speaker 2: It's gonna be another big day of tariff talks here
1:17
Speaker 2: on the Financial Exchange and a look into markets. If
1:20
Speaker 2: you missed yesterday's show or just I don't know, we're
1:24
Speaker 2: in a coma yesterday. Tariffs renounced Wednesday after the bell,
1:28
Speaker 2: starting around four pm during a press conference Yesterday during markets,
1:33
Speaker 2: you saw a substantial selloff in equity markets. SMP finished
1:37
Speaker 2: the day down what was at four point seven percent thereabouts, Mark,
1:41
Speaker 2: NASDAK worst, Russell worst of all. The Russell two thousand
1:44
Speaker 2: is your typical small cap names that you probably haven't
1:49
Speaker 2: heard of, and that is now in bear market territory.
1:52
Speaker 2: We're gonna start throwing out terms that we haven't used
1:54
Speaker 2: a little. While bear market would indicate a drop from
1:57
Speaker 2: recent ties of twenty percent or more so, the RUSS
2:00
Speaker 2: two thousand US index has reached that level. Nasdak, I
2:04
Speaker 2: don't know. With today's moves, we might be there now,
2:07
Speaker 2: but as of yesterday was off a good seventeen or
2:09
Speaker 2: eighteen percent from those all time highs, and as I mentioned,
2:13
Speaker 2: NASDAK this morning down a good three percent and the
2:15
Speaker 2: S and P with today's moves likely down in the
2:18
Speaker 2: fifteen percent range. So we did have a jobs report
2:22
Speaker 2: that came out at eight thirty this morning. We're not
2:24
Speaker 2: going to make that our first story because frankly, it's
2:26
Speaker 2: not the most important story of the day because it's
2:29
Speaker 2: backward looking and the world changed a little bit on Wednesday.
2:32
Speaker 2: So we're going to start right there. Yesterday during the program,
2:36
Speaker 2: we classified the tariffs in kind of two buckets. And
2:39
Speaker 2: I know, Mark, you weren't you weren't here, but we
2:42
Speaker 2: we classified the tariffs that were announced in two different buckets.
2:45
Speaker 2: One was the baseline tariffs applied to one hundred and
2:48
Speaker 2: sixty countries across the globe, goes into effect five days
2:53
Speaker 2: from now, and those baseline tariffs are at a rate
2:56
Speaker 2: of ten percent. In addition, there are what we're describing
3:00
Speaker 2: again these are our words, not the presidents, not the
3:02
Speaker 2: White Houses. There are an additional set of tariffs on
3:06
Speaker 2: fifty seven some odd country that are countries that we're
3:08
Speaker 2: referring to as the reciprocal tariffs because they seem to
3:11
Speaker 2: be designed to hit at countries where we have a
3:16
Speaker 2: trade deficit with them of one sort or another. And
3:19
Speaker 2: so those are the ones we are describing as reciprocal
3:22
Speaker 2: in nature. And what we said during yesterday's show was
3:26
Speaker 2: that the next six days are going to be fairly
3:28
Speaker 2: critical in terms of determining the direction of some of
3:32
Speaker 2: this stuff over the short term, because they go into
3:35
Speaker 2: place on the ninth. And I think if there was
3:38
Speaker 2: one silver lining to yes Wednesday's press conference, it was that, hey,
3:42
Speaker 2: there's a delay in the implementation of these but perhaps
3:45
Speaker 2: leaving room for negotiation. Well we got the first mover
3:48
Speaker 2: on that, and it was not a negotiation. It was
3:51
Speaker 2: a retaliation. And China has announced that they will be
3:54
Speaker 2: retaliating with thirty four percent tariffs on all US made
3:58
Speaker 2: goods entering China. I believe that that begins immediately, but
4:04
Speaker 2: I don't with China. With China, I saw April tenth.
4:07
Speaker 2: April tenth is the implementation date of those tariffs on
4:10
Speaker 2: US goods going into China. So taking a pause here,
4:15
Speaker 2: markets interpreting that as bad news. You had futures a
4:19
Speaker 2: little bit flat immediately after the bell yesterday, but as
4:22
Speaker 2: this news came out, you started to see, you know,
4:24
Speaker 2: the futures turn negative this morning, and at this moment
4:27
Speaker 2: you've got all three major indices down, you know, at
4:30
Speaker 2: the least two and three quarters percent on the down,
4:32
Speaker 2: at the most about four percent on the rustle. So
4:35
Speaker 2: big takeaways from any of those announcements, Mark, Well.
4:38
Speaker 3: It's the uncertainty that's the killer. The prescription when it
4:43
Speaker 3: hits will be obviously demand sapping and will slow economic growth.
4:48
Speaker 3: The uncertainty in the interim, even if none of this happens,
4:52
Speaker 3: will postpone investment decisions and spending decisions. Imagine if you
4:56
Speaker 3: didn't know what your tax rate was going to be
4:59
Speaker 3: a week from now, and you need that Harney, and
5:03
Speaker 3: imagine if you didn't know that, it could be anywhere
5:05
Speaker 3: for your top marginal rate or whatever your average rate
5:07
Speaker 3: is maybe a better way to think about it, it could
5:09
Speaker 3: be anywhere from five to forty percent. You'd say, well,
5:12
Speaker 3: this is preposterous. I was going to make a big purchase.
5:15
Speaker 3: We need a washing machine, going to buy a new car, whatever.
5:17
Speaker 3: I need to move some money from stocks to something
5:20
Speaker 3: more liquid so I can pay my tax bill. If
5:22
Speaker 3: you're lucky, I guess it's sort of like that for
5:26
Speaker 3: an individual. That's the only analogy I can come up with.
5:29
Speaker 3: So whether or not the amount to me. There's a
5:33
Speaker 3: lot of theater around the roll out. They've got the
5:35
Speaker 3: game show board and he's pointing to this country. I've
5:37
Speaker 3: been here, and we're going to do this to them.
5:39
Speaker 3: It's a nice place. But I still get a tarifum.
5:41
Speaker 3: That's all kind of theater and politics and done for effect,
5:44
Speaker 3: and I understand that. But what I get from all
5:48
Speaker 3: of that is the uncertainty that it engenders. One of
5:51
Speaker 3: the main channel in times like this, I just tend
5:54
Speaker 3: to retreat into history and numbers for personal sanity purposes,
5:59
Speaker 3: and one of the main transmission channels of the Great Depression.
6:02
Speaker 3: And I'm not suggesting at all that were on the
6:04
Speaker 3: press was of anything like that, but it was uncertainty
6:08
Speaker 3: that led people to pull back in their purchases of
6:10
Speaker 3: durable goods and interest sensitive goods. We all know Ben Bernanki,
6:14
Speaker 3: he ran the FED. He made his bones as an
6:17
Speaker 3: economist studying the Great Depression. So I went back and
6:19
Speaker 3: read his work from the early eighties and he did
6:21
Speaker 3: about twenty years worth of just prolific stuff on the
6:23
Speaker 3: Great Depression. And the big takeaway is the crash, the
6:26
Speaker 3: stock market crash. It didn't it wasn't approximate and primary
6:30
Speaker 3: cause of the depression, but it did spark uncertainty yep,
6:33
Speaker 3: and that caused people and businesses to hold off. And
6:35
Speaker 3: what sticks with you after reading that literature on one
6:39
Speaker 3: of the causes of the Great Depression is how important
6:41
Speaker 3: policy certainty is.
6:42
Speaker 2: Mike, So, taking a look at specific trade with China,
6:46
Speaker 2: I think, you know, it's pretty clear when we talk
6:48
Speaker 2: about import tariffs of Chinese manufactured goods into the United
6:52
Speaker 2: States what we're talking about there because everyone buys stuff
6:55
Speaker 2: made in China, we know, right, Like, take a look
6:57
Speaker 2: at your TV, take a look at your clothes, take
6:59
Speaker 2: a look at your coffee mug, probably your iPhone. It's
7:02
Speaker 2: pretty great. What's less clear, especially for people in the Northeast,
7:06
Speaker 2: is what exactly does the United States make that gets
7:08
Speaker 2: exported to China. And that's the new announcement that's as
7:11
Speaker 2: of today. So I took a look at twenty two numbers.
7:13
Speaker 2: So this was data put together for trade with China
7:17
Speaker 2: going back to twenty twenty two, which has likely shifted
7:20
Speaker 2: somewhat since then, especially on the semiconductor side of things.
7:23
Speaker 2: But generally, I think we can think of as a proxy.
7:26
Speaker 2: So in twenty twenty two the largest export to China,
7:30
Speaker 2: which again, if you think about the announcements recently, you'll
7:33
Speaker 2: realize this oil seeds and grains accounted for about twenty
7:36
Speaker 2: five billion dollars worth of exports to China. That was
7:39
Speaker 2: the largest single category. It's agriculture imports. And we've talked
7:43
Speaker 2: about a little bit of this, but one of the
7:46
Speaker 2: key benefactors of all this trade policy might be Brazil
7:49
Speaker 2: because they compete with US in those agricultural goods significantly.
7:53
Speaker 2: They did not face any substantial tariffs on Wednesday's announcement,
7:57
Speaker 2: and already it's being looked at as hey, China turn
8:00
Speaker 2: towards Brazil for buying those goods there instead of in
8:03
Speaker 2: the United States. Semiconductors and components did account for another
8:07
Speaker 2: eleven point two billion dollars. So think about companies like
8:11
Speaker 2: in video getting hit yesterday. I haven't looked at their
8:14
Speaker 2: stock today, but that most certainly plays a role too.
8:17
Speaker 2: Oil and gas or idiot down by six percent after
8:20
Speaker 2: being down what was it nine percent yesterday? Maybe a
8:23
Speaker 2: little bit more. I don't recall exactly. Oil and gas
8:26
Speaker 2: exports accounted for about eleven billion. Pharmaceuticals and medicines accounted
8:31
Speaker 2: for ten point nine billion. Everything else other than that
8:34
Speaker 2: was less than ten billion dollars. So I won't go
8:37
Speaker 2: through those piece by piece, but again, I think helps
8:40
Speaker 2: you set a framework for what we're actually talking about,
8:43
Speaker 2: because trade is both ways. We talk about trade and balance,
8:46
Speaker 2: but that doesn't mean that we don't sell anything to China.
8:49
Speaker 2: That obviously there's obviously a massive amount of trade that
8:52
Speaker 2: happens with China. They are i think, account for what
8:54
Speaker 2: the second largest amount of trade other than European Union
8:59
Speaker 2: in terms of total No that Canada and Mexico take
9:03
Speaker 2: the cake on those, but between United States and China,
9:07
Speaker 2: there's a massive amount of trade. And what we're talking
9:10
Speaker 2: about today with these newly announced tariffs from China on
9:14
Speaker 2: the United States primarily, I think hits Middle America right.
9:18
Speaker 2: It's primarily talking about farmers and what they are going
9:21
Speaker 2: to struggle with over the next six months to a
9:24
Speaker 2: year as these things get navigated out, or perhaps much
9:27
Speaker 2: shorter if something gets agreed upon. But today, the first
9:31
Speaker 2: move on tariffs was not some sort of negotiation, was
9:34
Speaker 2: not some sort of reconciliation with trade partners. It was
9:37
Speaker 2: further escalation towards a full on trade war, and I
9:40
Speaker 2: think that's to me, what's moving markets more than anything
9:43
Speaker 2: else today. It's the uncertainty nop.
9:45
Speaker 3: Yeah, I'm sorry. I just we don't know what they're
9:47
Speaker 3: going to be, when they're going to get implemented, and
9:49
Speaker 3: that sort of gut wrenching uncertainty. You feel it physically,
9:54
Speaker 3: at least I do. And I don't think it's just
9:55
Speaker 3: because we work in financial services.
9:57
Speaker 1: Mike.
9:58
Speaker 3: If you're watching the news, it's very, very nerve. Can
10:00
Speaker 3: you have to pull away from it?
10:02
Speaker 2: Yeah? I think that was the general tone. I conducted
10:05
Speaker 2: calls or meetings with about fifteen to twenty clients of
10:09
Speaker 2: mine yesterday in a group setting, and that was the
10:13
Speaker 2: general tone from people. It was not extreme pessimism. It
10:17
Speaker 2: was not extreme optimism either.
10:20
Speaker 3: It was the anxiety.
10:21
Speaker 2: It was the anxiety stage. It was what does all
10:24
Speaker 2: this mean? What's it going to mean for me? How
10:26
Speaker 2: is it going to develop? How long is it going
10:28
Speaker 2: to take? Will it look better on the other side.
10:32
Speaker 2: Those are the questions, the anxious questions that I think
10:35
Speaker 2: are being raised most commonly. When I talked to the Joy.
10:39
Speaker 3: Trust directly into market volatility, one almost wishes and I
10:42
Speaker 3: know I pined for this all the time, that we
10:44
Speaker 3: could go back to the era of the evening news,
10:46
Speaker 3: the morning edition, the afternoon edition, this stuff. You had
10:49
Speaker 3: talk radio in between, but the focus was different then.
10:53
Speaker 3: When I say then, I mean seventies, eighties and before
10:56
Speaker 3: obviously the ascendants of twenty four hour cable news, and
11:00
Speaker 3: of course the Internet. It amplifies volatility. How much I
11:04
Speaker 3: don't know, but it's playing a big role right now
11:07
Speaker 3: because of the Exceptionally, this is such a unique and
11:10
Speaker 3: singular event. No one's people have made analogies to the
11:14
Speaker 3: tariffs that were enacted in nineteen thirty. At that point,
11:18
Speaker 3: though the economy was already contracting, we'd already had a
11:20
Speaker 3: stock market crash, so that that's an interesting parallel in
11:24
Speaker 3: some senses. In another's it's a completely inapt parallel. So
11:28
Speaker 3: nobody knows what to refer to to extrapolate where we're
11:36
Speaker 3: going to be next.
11:37
Speaker 2: Let's take a quick break here when we come back.
11:40
Speaker 2: As I mentioned, we did get a job to report
11:41
Speaker 2: today thirty they'd normally be the top story of the day.
11:44
Speaker 2: We are going to cover that next, and then I
11:45
Speaker 2: want to dig in there because it'll be a little
11:48
Speaker 2: while before we start getting hard data on this economy
11:51
Speaker 2: that actually matters in light of the recent changes. So
11:55
Speaker 2: let's say quick break. The Jobs Report is next here
11:57
Speaker 2: on the Financial Exchange.
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12:52
Speaker 2: Mark. I want to get to the jobs report in
12:54
Speaker 2: just a moment. Here In terms of market action. We've
12:57
Speaker 2: got the Dow now off three percent, SMP off about
12:59
Speaker 2: three and a half. In the bond market, we are
13:02
Speaker 2: seeing yields move down again a second day in the row.
13:06
Speaker 2: We are now under four percent on the ten year treasury.
13:10
Speaker 2: And my point with the market moves that we're seeing
13:12
Speaker 2: right now oil seeing a big sell off as well
13:15
Speaker 2: is And again I bring this up because it was
13:18
Speaker 2: directed at me as some questions from clients of the day.
13:20
Speaker 2: This is not a market that's worried about inflation right now,
13:23
Speaker 2: in spite of the fact that tariffs could raise prices
13:25
Speaker 2: in the short term. This is a market that's worried
13:28
Speaker 2: about recession, and so I want to kind of keep
13:30
Speaker 2: that in context. When we're talking about this jobs report,
13:33
Speaker 2: which measured employment back during the month of March, and
13:36
Speaker 2: that job's report came out this morning at eight thirty am,
13:39
Speaker 2: it would normally be the only thing we're talking about,
13:42
Speaker 2: but most market experts are basically throwing this in the trash.
13:45
Speaker 2: It is probably not a useful indicator of what happens next.
13:49
Speaker 2: The unemployment rate sat at four point two percent in
13:52
Speaker 2: the month of March, no significant change there from the
13:55
Speaker 2: previous month. Back in February, the number of people unemployed
13:59
Speaker 2: were sitting at seven point one million individuals, and that
14:03
Speaker 2: that unemployment rate has really been sitting in this narrow
14:06
Speaker 2: range of between four and four to two going back
14:09
Speaker 2: to May of last year, so nearly a year now,
14:12
Speaker 2: we've been sitting and bumping around in this range of
14:15
Speaker 2: again a starting point of very low unemployment. Other numbers
14:20
Speaker 2: that were in there mark anything else that you know
14:22
Speaker 2: that mattered to you. There were two hundred and twenty
14:24
Speaker 2: eight thousand jobs created in the month of March, and
14:28
Speaker 2: so taking a look at those numbers, that is again interesting.
14:31
Speaker 2: Was there anything noticed on the government side in terms
14:34
Speaker 2: of employment?
14:34
Speaker 3: If you strip that, there's been a lot of attention
14:36
Speaker 3: paid to that lately, and if you strip out government
14:39
Speaker 3: jobs of the two twenty eight, I think it amounted
14:42
Speaker 3: to it was sorry I have that and now I've
14:47
Speaker 3: lost track of it.
14:48
Speaker 2: It wasn't It wasn't a meaningful potion soment. Federal government
14:53
Speaker 2: employment declined by only four thousand in March, so not
14:56
Speaker 2: a big read there. It did lose eleven thousand in February,
15:00
Speaker 2: so those are cumulative, but generally speaking, and it actually
15:04
Speaker 2: calls out in the survey. Employees on paid leave or
15:07
Speaker 2: receiving ongoing severance pay are counted as employed in this survey.
15:12
Speaker 2: So if you are technically losing your job in the
15:15
Speaker 2: future from the federal government but still getting paid, they're
15:17
Speaker 2: going to count you as employed still, and so we
15:20
Speaker 2: might be under counting the effect of the federal government
15:22
Speaker 2: layoffs in this report here as well.
15:24
Speaker 3: Yeah, the other statistic that some researchers pay attention to
15:27
Speaker 3: is the change in average hourly earnings, because wages feed
15:30
Speaker 3: into They're not the only determinant, or even the biggest necessarily,
15:33
Speaker 3: but they feed into inflation. The annualized rate there was
15:37
Speaker 3: about three percent, so steady as she goes. Not exactly
15:42
Speaker 3: what the Fed wants to see. They might want to
15:44
Speaker 3: see slower wage growth, but all bets are we're talking
15:47
Speaker 3: like it was like it was, you know, two weeks ago.
15:50
Speaker 3: It feels silly to be discussing this in a vacuum, because,
15:53
Speaker 3: as you said at the beginning of this segment, Mike,
15:55
Speaker 3: the fears have clearly shifted from an economy that's running
15:58
Speaker 3: too hot an economy that might be stalling, although that
16:02
Speaker 3: doesn't necessarily put downward pressure on inflation. Inflation does have inertia,
16:07
Speaker 3: so to speak, it's pretty persistent. And if the underlying
16:10
Speaker 3: force is generating inflation, which ultimately come down to too
16:13
Speaker 3: much money, at least in the long run, too much
16:14
Speaker 3: money being printed by the Fed. If those haven't changed,
16:17
Speaker 3: or if the Fed responds to these tariffs, which you
16:20
Speaker 3: can think of as a shock to supply, things coming
16:23
Speaker 3: into the economy from outside getting more expensive, we could
16:26
Speaker 3: model that as a supply so called supply shock, just
16:29
Speaker 3: like an oil price increase. The FED may decide to
16:31
Speaker 3: accommodate that supply shock, because if they don't, if you
16:34
Speaker 3: think about people having to spend more money on what
16:36
Speaker 3: gets imported and domestic goods because substitute goods will go up.
16:39
Speaker 2: To go ahead, you're going quickly here, so I want
16:41
Speaker 2: to slow it down for it for everybody else.
16:44
Speaker 3: Is it the third cup of coffee?
16:45
Speaker 2: When again, when we talk about the FED accommodating a
16:48
Speaker 2: supply shock, define that's a little technical. Define all parts
16:51
Speaker 2: of think about.
16:52
Speaker 3: This when stuff.
16:55
Speaker 2: Define every word you just said, if you don't mind.
16:57
Speaker 4: What he's trying to say, is what.
17:00
Speaker 3: Okay?
17:01
Speaker 2: That You're right, Mike?
17:02
Speaker 3: That is a that is a researcher's term. When something
17:06
Speaker 3: gets more expensive, like oil that comes into the economy
17:09
Speaker 3: from outside. One way to think about it is a
17:14
Speaker 3: is as a supply shock. It's a shock because it's
17:17
Speaker 3: an increase, a relative change in the price of something
17:19
Speaker 3: oil compared to hamburgers or your shoes or whatever. Oil
17:23
Speaker 3: has become relatively more expensive. If you need just as
17:26
Speaker 3: much oil as you did the day before gasoline more relatably,
17:30
Speaker 3: you're gonna have less money to spend on everything else, sure,
17:33
Speaker 3: because the price of everything else doesn't immediately go down.
17:36
Speaker 3: There's another concept that I won't call that I won't
17:39
Speaker 3: name because it's also technical that comes into this discussion.
17:42
Speaker 3: Just take it at phase value that in the short run,
17:45
Speaker 3: you have less money if one thing gets more expensive
17:47
Speaker 3: relative to the other because you can't change your consumption
17:50
Speaker 3: patterns traumatically.
17:51
Speaker 2: And you bring up oil, I think because then because
17:53
Speaker 2: of success is the text half ample of a supply shock.
17:56
Speaker 2: It happened, and saw are there's.
17:58
Speaker 3: Productivity, there's tariffs, there are others. So the FED has
18:02
Speaker 3: to decide do we let the economy slip into recession
18:04
Speaker 3: or slow down, or do we print more money to
18:07
Speaker 3: accommodate the increased need for money. I'm oversimplifying a little bit,
18:12
Speaker 3: but that's where this notion comes from, of the FED
18:15
Speaker 3: accommodating a supply shock. The most recent example is during COVID,
18:19
Speaker 3: when the price of things coming in and the price
18:22
Speaker 3: of domestically produced goods went up because we shut the
18:25
Speaker 3: economy down the FED so that price rise was not
18:29
Speaker 3: met by immediate price falls elsewhere in the economy. So
18:33
Speaker 3: the FED decided to accommodate the COVID supply shock and
18:36
Speaker 3: the demand shock from COVID too, for that matter, because
18:38
Speaker 3: we were pumping a lot of stimulus into the economy.
18:41
Speaker 3: That's what allows inflation to take hold. So the FED
18:44
Speaker 3: can't just be thinking about, geez one, do we cut
18:46
Speaker 3: rates if the economy sliding into recession because of these tariffs.
18:49
Speaker 3: They also have to consider the supply shock implications for inflation.
18:55
Speaker 3: It makes their job a lot harder. Mic and I
18:57
Speaker 3: don't think we're going to get out of this without
18:59
Speaker 3: some inflation pain and probably some economic pain, though we
19:02
Speaker 3: don't know enough about the tariffs to say for sure yet.
19:04
Speaker 2: Right, yeah, it is still very early on in terms
19:07
Speaker 2: of upcoming economic data. We get a whole bunch of
19:10
Speaker 2: stuff next week. But I have to say that in
19:12
Speaker 2: terms of the big things that we usually report on
19:15
Speaker 2: on this show, whether it's unemployment, CPI, other measures of spending,
19:21
Speaker 2: we probably won't get great data on what consumers are
19:24
Speaker 2: doing post tariff announcement till the May time frame. Quick
19:29
Speaker 2: Break Wall Street watches next.
19:43
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 Street.
19:55
Speaker 1: Watch a complete look at what's moving market so far
19:58
Speaker 1: today right here on the Financial Exchange Radio Network.
20:04
Speaker 4: Well, the steep market selloff continues for a second consecutive
20:09
Speaker 4: day as Wall Street continues to grapple with the escalating
20:12
Speaker 4: trade war, where China this morning said it will impose
20:15
Speaker 4: a thirty four percent tariff on all goods imported from
20:19
Speaker 4: the US beginning on April tenth. Right now, the Dow
20:24
Speaker 4: is down by three and a half percent, just over
20:26
Speaker 4: fourteen hundred points, SMP five hundred, down four point one
20:31
Speaker 4: percent or two hundred and twenty two points, and the
20:34
Speaker 4: Nasdaq is down four and a half percent. Now sell
20:38
Speaker 4: off picking up steam or seven hundred and forty three points,
20:42
Speaker 4: so Russell two thousand down by five percent at the
20:45
Speaker 4: moment ten You're treasure reeled below four percent, now down
20:48
Speaker 4: fifteen basis points now sets a three point nine zero percent,
20:53
Speaker 4: and crude oiled down eight percent today. On top of everything,
20:59
Speaker 4: traders are also react to the March jobs report, where
21:02
Speaker 4: two hundred and twenty eight thousand jobs were added last month,
21:05
Speaker 4: well above expectations of one hundred and forty thousand. The
21:08
Speaker 4: unemployment rate ticked higher from four point one percent to
21:13
Speaker 4: four point two percent. Bank stocks including Goldman, Sachs, JP,
21:16
Speaker 4: Morgan Chase, Morgan Stanley, and others are also seeing losses
21:20
Speaker 4: of between six and eight percent due to increasing fears
21:24
Speaker 4: of an economic slowed down amid the growing trade war.
21:27
Speaker 4: Nike down another three percent today after taking a fourteen
21:30
Speaker 4: percent hit yesterday. Meanwhile, tech stocks continue to sell off
21:34
Speaker 4: due to tariff in trade fears. After shedding nine percent yesterday,
21:39
Speaker 4: Apple down another three percent today. As China accounts for
21:42
Speaker 4: about eighty percent of the tech giants production capacity, with
21:46
Speaker 4: about ninety percent of iPhones assembled in the country. Chip
21:50
Speaker 4: stocks including Nvidia and Broadcom, are down between six and
21:56
Speaker 4: seven percent. Boeing down by nine percent. On the heels
22:00
Speaker 4: of China's retaliatory announcement, and equipment manufacturers including deer In
22:05
Speaker 4: Caterpillar also taking hits of anywhere between three and six percent.
22:10
Speaker 4: I'm Tucker Silvan, that's Wall Street Watch.
22:12
Speaker 2: So yesterday's market was much more technology hardware companies that
22:17
Speaker 2: were selling products in the United States, as well as
22:19
Speaker 2: a pairrel.
22:20
Speaker 3: Maybe Tucker should just read what's up. What if something's up,
22:24
Speaker 3: you should report it, otherwise assume it's down.
22:29
Speaker 2: Today the focus is much more on companies whose products
22:33
Speaker 2: are either used to support the agriculture sector, which is
22:36
Speaker 2: you know, looking at a big hit due to China tariffs,
22:38
Speaker 2: or companies that export goods directly to China. GE Healthcare
22:43
Speaker 2: off nearly fifteen percent, that's the spinoff from General Electric,
22:47
Speaker 2: DuPont down about sixteen percent. APA Corp. Who is oil
22:54
Speaker 2: and gas.
22:55
Speaker 3: It all makes sense, logical sense.
22:58
Speaker 2: Yeah, this is not a market. We talked about this
23:00
Speaker 2: a bit yesterday. It's not a market where you are
23:03
Speaker 2: seeing everyone selling everything right Like yesterday, for instance, you
23:07
Speaker 2: had some utility companies and telecoms up you know.
23:11
Speaker 3: In past dramatic.
23:13
Speaker 4: Sorry, Mike, there's there's some green. By the way, just
23:16
Speaker 4: a little bit, a lot of consumer staples, Vertex, Pepsi,
23:20
Speaker 4: Mondoley's craft is up, d R Horden is up, Connagras up,
23:26
Speaker 4: Leonar up.
23:27
Speaker 3: Interesting. There are one thing that comes to my I
23:31
Speaker 3: think about past big draw downs in markets two thousand
23:34
Speaker 3: to two thousand and three, two thousand and eight, two
23:37
Speaker 3: thousand and nine, people were trying to peer through the
23:41
Speaker 3: fog and find out who's selling, what's going on, who's
23:44
Speaker 3: getting liquidated here, what's triggering this. There's no mystery this time. True,
23:51
Speaker 3: you don't need the autopsy. We know exactly why things
23:54
Speaker 3: are selling off, and the relationship in the magnitudes kind
23:59
Speaker 3: of makes.
24:00
Speaker 2: It sort of does I think taking We're going to
24:04
Speaker 2: have plenty of people out there doing the minute to
24:07
Speaker 2: minute updates on markets, tariffs, et cetera, and we'll be
24:11
Speaker 2: doing that plenty of that as well. But I want
24:13
Speaker 2: to kind of take a broader look at this mark
24:15
Speaker 2: because the US economy, whether it was good for you
24:19
Speaker 2: individually or bad for you individually, for that the last
24:22
Speaker 2: eighty years has kind of had a theme of free markets,
24:28
Speaker 2: pushing to reduce trade barriers, and the United States being
24:32
Speaker 2: one of the most well probably the most powerful military
24:35
Speaker 2: in the history of the world. But yeah, you know,
24:38
Speaker 2: opening up trade, opening up corridors for c you know,
24:42
Speaker 2: for global trade v C. Powerful navy that would police
24:46
Speaker 2: those waters. And the entire idea has been US being
24:51
Speaker 2: a reliable trade partner and defense partner over the course
24:55
Speaker 2: of the last eighty years. And that has been let's
24:59
Speaker 2: talk what that's meant for, you know, a different crier.
25:02
Speaker 3: So the structure of the world trading system as it
25:04
Speaker 3: existed prior to the new i'll just call it regime.
25:08
Speaker 3: It's not just about the Trump administration, because Biden was
25:11
Speaker 3: a protectionist too. Sure, this new spirit of protectionism, new mercantilism.
25:16
Speaker 3: If you're like, that's a specific term, I probably won't
25:18
Speaker 3: use it again. It's it's at odds with the trend
25:22
Speaker 3: of the post war.
25:26
Speaker 2: Patterns pattern, Yeah.
25:27
Speaker 3: Pushing toward more and it was quite deliberated. The world
25:30
Speaker 3: was in shambles except for US, right, so we as
25:35
Speaker 3: part of we made the dollar the world's reserve currency.
25:38
Speaker 3: You've heard of the World Bank, the IMF, the UN.
25:40
Speaker 3: All of these institutions came out of the horrific turmoil
25:44
Speaker 3: of not just World War two, but World War One
25:46
Speaker 3: as well. We tried some of this after World War One,
25:48
Speaker 3: when we were the creditor nation to the world for
25:50
Speaker 3: the most part. So these institutions were very deliberately set
25:53
Speaker 3: up by America and its allies, but with US at
25:56
Speaker 3: the lead, and we benefited from them enormously economically. If
25:59
Speaker 3: you don't believe that, if you buy into the we're
26:02
Speaker 3: getting ripped off, beloney, Frankly, just look at our GDP
26:05
Speaker 3: relative to anybody else's. You can quibble that that's not
26:07
Speaker 3: the best measure of economic welfare. We've grown faster, and
26:11
Speaker 3: we have been and continue to be the envy of
26:13
Speaker 3: the world. And that's due to anyone who knows the evidence,
26:16
Speaker 3: not some politician blowing smoke. That's due to US forcing
26:20
Speaker 3: open markets and allowing for free trade. Go ahead, because
26:24
Speaker 3: we'll talk about the trade deficit too, and its causes
26:26
Speaker 3: and whether it's good or bad. I presume at some point, yeah.
26:28
Speaker 2: And I think, look, that part is undebatable, right, the
26:32
Speaker 2: US economy has grown faster than anywhere else in the world.
26:35
Speaker 2: There are obvious Yeah, for the most part, there are
26:39
Speaker 2: obvious downsides to that for some portions of Americans, because
26:44
Speaker 2: not everybody has participated equally in all that, and I
26:48
Speaker 2: think that's why you're seeing some of this protection has
26:50
Speaker 2: push over the course of LA questions.
26:52
Speaker 3: Coming from Midwestern I'm gonna be very specific here, Mike,
26:55
Speaker 3: the same group of Midwestern politicians in the forties and
26:58
Speaker 3: fifties there were the taft republic Plicans, not President Have
27:01
Speaker 3: but his son Ike, and the global what you would
27:05
Speaker 3: call today globalist Republicans today it's a pejorative. Then it
27:08
Speaker 3: was not. They instead looked outward they won, and the
27:13
Speaker 3: Republican Party from then on and the Democratic Democratic Party
27:16
Speaker 3: I think they prefer to be called the Democratic Party
27:18
Speaker 3: too embraced for the most part, free trade. But the Midwest,
27:22
Speaker 3: and this is the strain you see in jd Vance
27:25
Speaker 3: today and his cadre of techno. They say they're libertarian,
27:30
Speaker 3: but they're not really anti free traders. They've always thought
27:34
Speaker 3: they were walled off from the world because they're just
27:35
Speaker 3: too darn far from the oceans. So I see strains
27:38
Speaker 3: of the protectionism in the forties and fifties rearing its
27:41
Speaker 3: head here. But that is such that is so at
27:43
Speaker 3: odds with the prosperity that openness and multilateral institutions that
27:48
Speaker 3: today get demonized produced for us here in the United States.
27:53
Speaker 2: In either case, this is the reversal that we are
27:55
Speaker 2: talking and that is the trend that is pushing things.
28:00
Speaker 2: At least today, I have no real sense of where
28:03
Speaker 2: that's going to continue. But the longer that it continues,
28:05
Speaker 2: the longer that this push is put into place the
28:08
Speaker 2: narratives of what, for instance, built the stock market into
28:11
Speaker 2: the behemoth that it is today, that built the US
28:16
Speaker 2: as the reserve currency today, all of these things are
28:18
Speaker 2: being challenged, changed, and potentially relooked at as part of
28:23
Speaker 2: all this. And I think is also why anyone looking
28:27
Speaker 2: at this economy today and trying to tell you that
28:30
Speaker 2: they have seen through the fog and know where we're
28:34
Speaker 2: going to land at the end of it is blowing smoke.
28:37
Speaker 2: Nobody has any real sense of where this turns because
28:41
Speaker 2: there is so much dependence not only on what the
28:43
Speaker 2: United States does next, but what our trade partners, what
28:46
Speaker 2: other countries do next in terms of retaliation versus changes
28:53
Speaker 2: to policies and negotiation.
28:56
Speaker 3: And this is why the Fed's job gets so difficult.
28:58
Speaker 3: The models they're using are predicated on relationships that were formed,
29:07
Speaker 3: if you will, relationships between variables, I mean between between
29:10
Speaker 3: macro economic indicators that were a product of the old
29:16
Speaker 3: structure of the economy. It's very difficult as a forecaster
29:20
Speaker 3: if old relationships change, to make forecasts that are worth
29:27
Speaker 3: their salt. So everybody's I guess My point is forecasters
29:31
Speaker 3: at the FED and we in the private sector do
29:34
Speaker 3: try to do it are to an alarming extent using
29:40
Speaker 3: models that no longer apply because the structure of the
29:44
Speaker 3: US economy and indeed the world economy in some ways
29:47
Speaker 3: is changing.
29:49
Speaker 2: Let's take a quick break. When we come back, I
29:51
Speaker 2: want to cover two different stories that are talking about
29:53
Speaker 2: your retirement savings and giving you opposite advice and what
29:58
Speaker 2: to do about it. So we'll cover that next on
30:00
Speaker 2: the Financial Exchange.
30:02
Speaker 1: If you missed any of today's show, catch up whenever
30:04
Speaker 1: you want on our YouTube page. Find daily show segments
30:07
Speaker 1: and full shows. Just go to YouTube dot com and
30:10
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30:13
Speaker 1: breaking business and financial news. This is the Financial Exchange
30:17
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30:22
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30:25
Speaker 1: right here on the Financial Exchange Radio Network.
30:43
Speaker 2: We brought it up yesterday, But if you have questions,
30:45
Speaker 2: for the show. You can text the line at six
30:46
Speaker 2: one seven three six two thirteen eighty five. We did
30:49
Speaker 2: get one question, Maria. The basic point was, it's just money.
30:54
Speaker 2: Let's talk about the jobs that will be coming back
30:56
Speaker 2: to America. And I think that is Look, that's the
30:58
Speaker 2: entirety of the of these policies. Like the main point
31:03
Speaker 2: of these policies, when combined with what the President is
31:07
Speaker 2: trying to do on taxes, which we will get to
31:09
Speaker 2: later in the program, because we keep hearing hints about
31:11
Speaker 2: the new tax bills that are being proposed, is we
31:15
Speaker 2: want to perhaps make some sacrifices to capital what we're
31:20
Speaker 2: seeing in equity markets make some sacrifices to temporary growth
31:25
Speaker 2: in order to incentivize companies to bring jobs back to
31:28
Speaker 2: the United States. That is the entirety of the gamble,
31:31
Speaker 2: and that is what I'm hearing, you know, pushed to
31:34
Speaker 2: me by clients too, who are saying, yeah, look. The
31:38
Speaker 2: most honest assessment I had of this was from a
31:40
Speaker 2: client the other day who's staring down retiring in the
31:42
Speaker 2: next few days, and his point to me was, look,
31:46
Speaker 2: I fully recognize that this could mean substantially lower returns
31:51
Speaker 2: in my investment. Portfolio for the rest of my life.
31:54
Speaker 2: But I also think that it could mean really good
31:56
Speaker 2: things for my grandkids who will have more opportunities.
32:00
Speaker 3: Are they not investors?
32:01
Speaker 1: No?
32:02
Speaker 3: Is this other generation? Oh okay, let me kind of
32:04
Speaker 3: make a comment about the whole job's thing. The jobs
32:06
Speaker 3: thing is perspective. We have no idea. I know some
32:08
Speaker 3: companies are coming out and as part of the political
32:12
Speaker 3: theater of this saying we're going to invest this or that.
32:15
Speaker 3: That's all perspective. They haven't done it yet. You don't
32:17
Speaker 3: make big investments in a declining economy. There's no demand
32:20
Speaker 3: requiring that you make the investments. So this idea that
32:23
Speaker 3: we're going to tolerate the economy slowing down or worse
32:26
Speaker 3: in the short term, but that's okay, it's going to
32:27
Speaker 3: bring all these companies back. Companies don't make investments when
32:30
Speaker 3: the economy is contracting, for Pete's sake. The logic for
32:33
Speaker 3: that is really really poor. Mike, and I know the
32:36
Speaker 3: person that texted in heard that from a commentator who
32:38
Speaker 3: sounded authoritative. But people who make statements like that are
32:43
Speaker 3: part of the reason why this is so damaging, is
32:46
Speaker 3: part of the reason why people are so confused about
32:48
Speaker 3: trade to begin with. That honestly just makes no sense.
32:51
Speaker 3: If you slow the economy, investment will slow. You're not
32:54
Speaker 3: going to get more of it in the hopes of
32:56
Speaker 3: what a brighter day tomorrow or something. The whole point
32:58
Speaker 3: of a recession is you don't know how deep it's
33:00
Speaker 3: going to be. You don't know when it's going to end.
33:02
Speaker 3: The presumption here this is going to be what a
33:03
Speaker 3: three year, six month pull back, and then we're going
33:05
Speaker 3: to come out of it stronger than ever. What if
33:07
Speaker 3: we don't. They're playing with fire, and that's what gives
33:11
Speaker 3: me they are.
33:12
Speaker 2: That is again, the entire promise of the future, though,
33:16
Speaker 2: is that those jobs eventually come back. And I think
33:19
Speaker 2: there's two pieces today. I think this one's from how
33:23
Speaker 2: to Protect your Savings Now? Is that New York Times
33:25
Speaker 2: Wall Street Journal one piece how to protect your savings
33:28
Speaker 2: now as markets plunged. The other, Hey Retire is from
33:31
Speaker 2: Baron's The best thing to do to your stock portfolio
33:34
Speaker 2: is nothing. And they direct the contradictor with each other,
33:37
Speaker 2: because New York Times is saying, hey, don't stay the course,
33:39
Speaker 2: you might want to be thinking about some changes. The
33:41
Speaker 2: Baron's is saying stay the course. And I keep getting
33:45
Speaker 2: asked this question too, is hey, when does this come
33:48
Speaker 2: to an end? When do we see the end of
33:50
Speaker 2: this type of big draw down in stocks? And my
33:52
Speaker 2: answer is always that there will be some end to it.
33:56
Speaker 2: But how deep, how long it lasts? What do I
33:59
Speaker 2: do in the interim? Is the age old question, And
34:02
Speaker 2: you are right, Mark, I don't think you will see
34:04
Speaker 2: that in potential increase in employment, potential increase in jobs,
34:08
Speaker 2: while it may come further down the road, and I
34:10
Speaker 2: acknowledge that it won't until you have the depths of
34:14
Speaker 2: that draw down, the depths of that uncertainty reach a
34:18
Speaker 2: peak level of concern.
34:20
Speaker 3: You don't want to start an avalanche because you don't
34:22
Speaker 3: know where it's going to end. It could be a
34:24
Speaker 3: small when it could end high up on the mountain.
34:26
Speaker 3: This is not my analogy. People who've looked at stock
34:28
Speaker 3: crashes have tried to determine is there any relationship between, say,
34:34
Speaker 3: what they look like early on and what they look
34:36
Speaker 3: like later? And there really isn't. Some that start out
34:38
Speaker 3: small and under good economic conditions. Nineteen twenty nine is
34:41
Speaker 3: an example, turned out to be enormous as that just snowball. Now,
34:45
Speaker 3: we have a lot of safeguards in place in the
34:48
Speaker 3: economy that make a repeat of that unlikely, starting with
34:51
Speaker 3: bank insurance and other mechanisms that are now automatic. But
34:54
Speaker 3: you don't know how deep a recession or a stock
34:57
Speaker 3: draw down is going to be, which is why you
34:59
Speaker 3: don't egg goe on in the first place.
35:02
Speaker 2: To be clear, the President very clearly disagrees with you.
35:06
Speaker 3: Yeah, he's the only one any researcher who's ever looked
35:08
Speaker 3: at this anywhere except for his bought and paid for
35:12
Speaker 3: economists who say what he wants them to say. And
35:13
Speaker 3: there's only like two of them out of the tens
35:16
Speaker 3: of thousands who actually practice in new research, who believe
35:18
Speaker 3: that might it makes no sense.
35:20
Speaker 2: So that's where we are going, though. Is the President
35:23
Speaker 2: very clearly disagrees he is willing to bring on that
35:27
Speaker 2: avalanche to continue the analogy that you've made here in
35:30
Speaker 2: order to get the changes that he sees as necessary
35:33
Speaker 2: to the economy. And I think that's the important piece
35:36
Speaker 2: to acknowledge. Is anybody that's telling you they know where
35:39
Speaker 2: that's going to go in the short term or the
35:40
Speaker 2: medium term is lion and.
35:42
Speaker 3: Stocks look ahead. Stocks are down another five percent today.
35:45
Speaker 3: I know I said we wouldn't be alarmist today. Let's
35:47
Speaker 3: be a calming influence. There's enough alarmism. Well, they're down
35:51
Speaker 3: another five percent today. To those of you who think
35:53
Speaker 3: that we're going to come out of this the other
35:55
Speaker 3: end of the tunnel, that's going to be a new
35:56
Speaker 3: bright future, a golden age, stocks are not stupid. They
36:00
Speaker 3: look ahead. They the price change of security, any security
36:06
Speaker 3: today reflects prospects for future earnings. So the fact that
36:09
Speaker 3: investors on average don't think this is a good thing
36:12
Speaker 3: should tell everybody something.
36:14
Speaker 2: The emotion that's dominating markets today and yesterday is fear
36:19
Speaker 2: and anxiety. I saw it written the end of the
36:21
Speaker 2: day another investment advisor not associated with us, since she
36:26
Speaker 2: has two types of clients today, those who are anxious
36:28
Speaker 2: and those who are lying about the fact that they're anxious.
36:31
Speaker 2: There is a lot of nerves playing out there right now.
36:34
Speaker 2: I fully recognize that if you are experiencing those nerves
36:37
Speaker 2: and are unsure about what to do with them, if
36:40
Speaker 2: you haven't had those conversations with yourself or with another
36:44
Speaker 2: advisor about what's going to happen. If we do see
36:46
Speaker 2: eight twenty percent further sell off from here. I'm not
36:49
Speaker 2: saying we will get there. I'm just saying that it
36:51
Speaker 2: is possible, and we've seen it before. If you're thinking
36:54
Speaker 2: about those conversations, especially if you're on the tail end
36:57
Speaker 2: of your working career, call the Armstrong Advisor Group at
36:59
Speaker 2: eight hundred three nine three four zero zero one. That
37:02
Speaker 2: number once again, eight hundred three to nine three for
37:06
Speaker 2: zero zero one.
37:07
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
37:10
Speaker 1: registered investment advisor. Nothing in the ad or in any
37:12
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
37:15
Speaker 1: your own financial, tax into state planning advisors before making
37:18
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
37:21
Speaker 1: advisory services.
37:23
Speaker 2: We are, as Mark mentioned, seeing another bloodbath in markets
37:26
Speaker 2: this morning. Thus far, SMP at the moment off two
37:30
Speaker 2: hundred and thirty five points four and a third percent,
37:33
Speaker 2: the NASDAK officially entering bear market territory. Now. We are
37:36
Speaker 2: seeing the NASDAK off about twenty two percent in trading
37:40
Speaker 2: in total from their peak before. It's off about four
37:43
Speaker 2: point eight percent today. The Russell two thousand continues its
37:47
Speaker 2: march into bear market territory, off about six percent, and
37:50
Speaker 2: the Dow Jones Industrial Average off fourteen hundred and eighty
37:53
Speaker 2: points about three and two thirds percent in trading so far.
37:57
Speaker 2: Yield on the tenure Treasury down more than fourteen basis
38:01
Speaker 2: points to three point nine percent, so those mortgage rates
38:04
Speaker 2: might be finally coming back, and oil prices plummeting today
38:08
Speaker 2: on the reciprocal tariffs and the retaliation, down nine percent.
38:13
Speaker 2: We'll have a lot more for you in the second hour.
38:15
Speaker 2: Stay tuned, folks, we'll be right back