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Money Monday with Brian James · Brian Thomas

0:00
Speaker 1: 806-055-KRC, Detox Station. It's Monday. It's that time of week.
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Speaker 1: We get the benefit of Brian James, Mauler Financial. He's
0:07
Speaker 1: a financial planner. He's always providing sound advice while preparing
0:11
Speaker 1: for your future. You've got to do it yourself. I
0:13
Speaker 1: don't think anybody else is going to do it for you.
0:15
Speaker 1: Brian James, welcome back, man. It's always good to have
0:17
Speaker 1: you on a Monday. It is always good to be.
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Speaker 2: Here, Mr. Thomas. I appreciate the opportunity to talk to
0:21
Speaker 2: your crowd again.
0:22
Speaker 1: I appreciate your thoughtful analysis, and I guess the meeting
0:25
Speaker 1: is scheduled for tomorrow, the Federal Open Market Committee. I
0:28
Speaker 1: know Ed Fink used to recall it as the Federal
0:30
Speaker 1: Open Mouth Committee, but either way you want to look
0:32
Speaker 1: at it, they were going to be discussing whether or
0:33
Speaker 1: not we're going to freeze the rates, we're going to
0:35
Speaker 1: lower them, which doesn't look like it's going to happen,
0:37
Speaker 1: or most likely 70% of the... I didn't realize there
0:41
Speaker 1: were interest rate traders, Brian, but according to the article
0:44
Speaker 1: I'm reading... 70% of the interest rate traders are claiming
0:48
Speaker 1: that there's going to be a raise today between 3.75%
0:51
Speaker 1: and 4%. Ryan James, your predictions?
0:55
Speaker 2: Well, I'm going to go with, you know, we never
0:58
Speaker 2: want to predict, but we can definitely look at which
1:00
Speaker 2: way the things are pointing. And yeah, your interest rate traders,
1:03
Speaker 2: that's not a new philosophy.
1:05
Speaker 1: Inflation, right? Exactly.
1:08
Speaker 2: That would be the thing. That's the topic of the day.
1:10
Speaker 2: But in any case, yes, over the past couple of weeks,
1:13
Speaker 2: let's look at recent headlines. Oil has jumped about 20%
1:16
Speaker 2: to close about $ 100 a barrel on Friday. And then
1:20
Speaker 2: along with that, your interest rate traders, that's a different
1:23
Speaker 2: way to put it. But basically, there are, of course,
1:26
Speaker 2: traders of everything out there. And there are people who
1:29
Speaker 2: trade bonds based off what they think interest rates are
1:31
Speaker 2: going to do. We don't talk about them much until
1:33
Speaker 2: these times, but until right around the Fed meeting, that's
1:36
Speaker 2: when they become interesting to talk about. But you can
1:38
Speaker 2: kind of look and see, the people who are putting
1:41
Speaker 2: their own dollars, their money where their mouth is, What
1:44
Speaker 2: do they think is going to happen? And based off
1:45
Speaker 2: of that, you found your 70% figure. There's the traditional
1:49
Speaker 2: bond market, the things that we look at here, showing
1:53
Speaker 2: odds of a Fed rate hike this week moving from 58%, Brian,
1:55
Speaker 2: to 88%. So that reflects that's coming coming from fear
2:00
Speaker 2: of oil price surges. And of course, that trickles into
2:03
Speaker 2: absolutely everything. But the pretty clear that we had, we're
2:07
Speaker 2: hoping last week that we would get a good CPI print.
2:11
Speaker 2: But that didn't quite come out the way that we
2:13
Speaker 2: wanted to. We actually came out a little bit higher.
2:15
Speaker 2: than what economists were expected about that. Core CPI last
2:19
Speaker 2: week was up 0.3% against the 0.2% that economists expected. Remember,
2:23
Speaker 2: that's a monthly figure. So multiply it by 12, and
2:25
Speaker 2: that'll give you roughly what our current inflationary gains are.
2:29
Speaker 2: So the bond traders out there are definitely thinking the
2:32
Speaker 2: Fed just about has no choice but to hike this week,
2:35
Speaker 2: which is really crazy, given the fact that we are
2:37
Speaker 2: headed into an election, Brian.
2:39
Speaker 1: Well, no question about it, but not shocking given the
2:41
Speaker 1: inflationary realities we're dealing with. And, you know, the biggest
2:44
Speaker 1: problem seems to be the disruption of the oil thanks
2:47
Speaker 1: to the conflict in the Middle East. You've got the
2:50
Speaker 1: straight issues. Of course, that's reduced the oil supply flowing
2:53
Speaker 1: through there. You've got the Saudis getting their pipeline bombed.
2:55
Speaker 1: They were using that pipeline as an alternative route to
2:57
Speaker 1: the straight. So they say 4% of the globe's oil
3:00
Speaker 1: may be taken offline for some measure of time. And
3:03
Speaker 1: then the diesel supply. Apparently nobody's refining diesel fuel anymore, Brian,
3:08
Speaker 1: since every damn good and service is connected with diesel
3:11
Speaker 1: fuel in this country and every place else around the world.
3:13
Speaker 1: We're not going to have any refuge from this. It
3:15
Speaker 1: looks like the price is going to continue to go
3:17
Speaker 1: up unless I've misread the reporting or the tea leaves.
3:21
Speaker 2: No, I think you're right, because everything is connected to oil.
3:24
Speaker 2: We can't do much of anything without oil somehow being involved,
3:27
Speaker 2: despite all the advances and all the things where we've
3:29
Speaker 2: tried to get rid of oil over the last several decades.
3:31
Speaker 2: It still is a core and will be for much
3:35
Speaker 2: time to come. So whenever those prices go up, it
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Speaker 2: just trickles through to everything. And these aren't new headlines.
3:40
Speaker 2: We're just getting to the point where we can't get
3:41
Speaker 2: away with it anymore. And the Federal Reserve is looking
3:44
Speaker 2: like it's going to have to do something That probably
3:46
Speaker 2: is not very desired in Washington or, you know, among
3:49
Speaker 2: any of the incumbents out there who are going to
3:51
Speaker 2: who are hearing from their constituents about inflation. And then
3:54
Speaker 2: about what, six weeks or so before six weeks before
3:58
Speaker 2: we have an election, we're going to have an interest
4:00
Speaker 2: rate hike driving everything slightly further. So there's going to
4:03
Speaker 2: be some very loud voices over the next several weeks. Yeah.
4:06
Speaker 1: And of course, the voices will always get louder before
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Speaker 1: the election. And of course, the party in power gets
4:10
Speaker 1: blamed for this kind of thing. And I thought it
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Speaker 1: was a bit absurd when Donald Trump claimed he was
4:14
Speaker 1: going to reduce inflation on day one in office as
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Speaker 1: if anybody has that power. I don't think the Democrats
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Speaker 1: have an alternative solution to lowering the inflation rate. Again,
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Speaker 1: oil alone is out of everybody's hands. Yeah, that's very true.
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Speaker 2: I would think that if the other side, the Democrats,
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Speaker 2: had a response, we'd have been hearing from them. This
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Speaker 2: isn't new news. Inflation has been a topic all year long,
4:37
Speaker 2: and no one has stepped up to say, hey, here
4:39
Speaker 2: is an actual plan. It's been much more about these
4:43
Speaker 2: high school, grade school yard bully games where we just
4:46
Speaker 2: go back and forth with name calling. We don't actually
4:48
Speaker 2: solve problems anymore.
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Speaker 1: Well, it serves as a nice distraction. It's like bread
4:52
Speaker 1: and circuses, Brian James. Oh, look, memores and, you know, meme.
4:56
Speaker 1: Let's click on that. Yeah. None of it makes any sense.
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Speaker 1: I mean, none of it advances society or deals with
5:01
Speaker 1: the actual problems behind the scenes. But again, maybe that's
5:03
Speaker 1: not something we can deal with because we can't build
5:05
Speaker 1: our own refineries anymore. Now, in connection with the interest
5:08
Speaker 1: rate height, which I think if we can go with
5:10
Speaker 1: the betting odds is probably going to happen today, whether
5:12
Speaker 1: it's a quarter point or whatever, that has a direct,
5:15
Speaker 1: not direct, like a quarter point interest doesn't mean a
5:18
Speaker 1: quarter point higher mortgage rate, but there is a correlation
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Speaker 1: between interest rates and mortgage rates. I saw on Thursday
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Speaker 1: and Friday of last week that jumped 7.7 mortgage rates
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Speaker 1: and then 7.12 on Friday. Obviously not providing relief for
5:33
Speaker 1: the American buyer, but the bright light in all this, Brian,
5:38
Speaker 1: that I read is supply is, the housing supply on
5:41
Speaker 1: the market is a lot bigger than it has been.
5:43
Speaker 1: So sellers are outnumbering buyers by 58%, at least according
5:47
Speaker 1: to the story from the Epoch Times that I read.
5:50
Speaker 1: That gives the buyers a little more negotiating power than
5:52
Speaker 1: they had before, but it's still a big ask in
5:55
Speaker 1: terms of interest rates.
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Speaker 2: It absolutely is. And you remember, there's really two components
6:01
Speaker 2: to that. It's the interest rate and the price that
6:02
Speaker 2: you're willing to pay for that house. And while we
6:06
Speaker 2: have seen this huge spike in the prices, as we're
6:08
Speaker 2: well aware, real estate has just blown up over the
6:11
Speaker 2: past two decades, really hasn't taken a breather. I'm hearing headlines, Brian,
6:17
Speaker 2: every now and then we start to hear from people
6:19
Speaker 2: who are looking for homes in Florida, and they keep
6:21
Speaker 2: seeing that Florida housing prices are crashing. Maybe this is
6:24
Speaker 2: the time to go get a bargain on that condo.
6:26
Speaker 2: And then they go look under the hood and realize
6:28
Speaker 2: that's not the case. So we're starting to see some
6:32
Speaker 2: weakness there. For example, in your non-luxury homes, and I'm
6:36
Speaker 2: looking at Florida because this seems to be the first
6:38
Speaker 2: place where things actually might be kind of sort of
6:40
Speaker 2: changing just a little bit. And I think Florida is
6:43
Speaker 2: a good indicator of people buy a lot of discretionary
6:46
Speaker 2: real estate. Real estate I don't have to own. This
6:48
Speaker 2: would be my second home or something like that. But so,
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Speaker 2: for example, you're seeing non-luxury prices down 1.3% in Miami,
6:55
Speaker 2: up about 0.3% in Tampa. These are your starter homes,
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Speaker 2: your regular family homes for people who just live in
7:00
Speaker 2: those areas. On the other hand, Redfin's September report that
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Speaker 2: covered through July of 26 showed luxury homes going up 18%
7:08
Speaker 2: in Miami and 15% in Tampa. For people in this
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Speaker 2: area who are talking about buying in Florida, that's what
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Speaker 2: they're talking about. I don't think we're seeing any fears
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Speaker 2: of inflation driving real estate prices up. Interest rates going
7:23
Speaker 2: up has not slowed these discretionary real estate purchases. Frankly,
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Speaker 2: I think a lot of it comes out of the
7:28
Speaker 2: stock market. Everybody has made so much money over the
7:31
Speaker 2: last 20 years, it's now finding its way because I'm
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Speaker 2: having these conversations directly. Hey, Brian, remember that condo we
7:36
Speaker 2: talked about buying? It was a pipe dream three, four
7:38
Speaker 2: years ago. Yeah. Well, the market's up 60%, 70% since then.
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Speaker 2: Now we have the money, don't we? That's where the
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Speaker 2: demand is.
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Speaker 1: Okay. Now, that's a great question. That's the question that
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Speaker 1: you get as a financial planner from some of your
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Speaker 1: clients from time to time. I understand that. I wrote
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Speaker 1: down a question to ask you as I hear about
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Speaker 1: people buying second homes. It's never been appealing to me,
7:55
Speaker 1: Brian James, because it's something that I'm not going to
7:57
Speaker 1: be using all the time. And I know that if
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Speaker 1: I have to buy a home, I'm going to have
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Speaker 1: the monthly payment, I've got insurance, I've got all these
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Speaker 1: things that go along with it, maybe having to rent
8:05
Speaker 1: it because I don't want it empty all the time.
8:06
Speaker 1: But anyway, it could be a source of income. But
8:09
Speaker 1: in the final analysis, I can rent something for a vacation,
8:13
Speaker 1: use it, and then go back home and not have
8:15
Speaker 1: to buy anything. Do you provide advice on whether or
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Speaker 1: not it's a good idea to even buy a second home?
8:20
Speaker 1: Is that type of analysis you go through? Is there
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Speaker 1: an advantage to buying one? Because it seems to me
8:24
Speaker 1: to be a money pit.
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Speaker 2: Absolutely. It depends on what you're ultimately going to want
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Speaker 2: to do with it. So the very first thing I'll
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Speaker 2: do is this assumes we already have a financial plan
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Speaker 2: in place, right? We already know how to keep the
8:35
Speaker 2: ship afloat. And then we do this as kind of
8:37
Speaker 2: a what-if scenario. We can always calculate the mortgage.
8:40
Speaker 1: That's easy.
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Speaker 2: What would the mortgage be? Where am I going to
8:43
Speaker 2: get the down payment from? Which account? And so forth.
8:46
Speaker 2: But then what I always encourage people to do if
8:48
Speaker 2: we're going to do this, also give me very specifically
8:50
Speaker 2: what are the property taxes, what are the HOA fees,
8:53
Speaker 2: and what does it cost to insure that place that
8:55
Speaker 2: probably just had a hurricane sometime in the past 12 months.
8:58
Speaker 2: Give me those numbers, and then we can do real
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Speaker 2: math to see what the impact would be of you
9:03
Speaker 2: simply owning two homes, period. Now you've got two sets
9:05
Speaker 2: of utility bills, maybe two mortgages, whatever. It doesn't mean
9:08
Speaker 2: you can't afford it, but let's look at it that way.
9:11
Speaker 2: Then if it doesn't look so good or if it
9:15
Speaker 2: looks like somebody just can't stomach that kind of a thing,
9:18
Speaker 2: then what I encourage them to do is A couple things.
9:20
Speaker 2: First off, just like you said, let's plan on just
9:23
Speaker 2: spending more. All that money you were going to sink
9:25
Speaker 2: into a home. If you're talking a Florida condo, you're
9:27
Speaker 2: looking all in. You're looking $ 750, a million, something like
9:31
Speaker 2: that for the kind of place you would think of.
9:34
Speaker 2: If that's the kind of money you have, and I'm
9:36
Speaker 2: not here to tell people they don't have it because
9:37
Speaker 2: a lot of people do. then maybe consider just carving
9:40
Speaker 2: out a sizable chunk of those dollars and renting nicer Airbnbs.
9:43
Speaker 2: Stay in nicer places. Just be okay with it. If
9:46
Speaker 2: you've got that much money, then you can afford to
9:48
Speaker 2: pay for shorter stays.
9:49
Speaker 1: And you get some variety in terms of your destination.
9:52
Speaker 1: If you buy a home in Florida, guess where you're going?
9:55
Speaker 2: Florida. Now you sound like you're selling timeshares.
9:58
Speaker 1: No, no, no. Point taken. my wife and I, for
10:01
Speaker 1: 20 years in a row, my parents owned condos in
10:03
Speaker 1: Florida or rented. They wanted to find out where they
10:05
Speaker 1: wanted to buy, so they rented. My dad took a
10:07
Speaker 1: month of February off, and they went from area to area,
10:09
Speaker 1: golf community to golf community, until they found one that
10:12
Speaker 1: they knew they loved and wanted to buy. But the
10:14
Speaker 1: whole time they were doing this and all the way
10:16
Speaker 1: up until they finally sold it because of my dad's
10:17
Speaker 1: poor health, We went to South Florida to visit them.
10:21
Speaker 1: You know what? After 20 years of South Florida, you
10:23
Speaker 1: kind of get used to the place, and it isn't
10:24
Speaker 1: that exciting destination you used to want to go to before.
10:27
Speaker 1: Is there other places in the world? That's the kind
10:30
Speaker 1: of thing from a practical standpoint I think of. Everybody's
10:32
Speaker 1: got their own choices, and I suppose, as you point out, Brian,
10:35
Speaker 1: if you've got that kind of fat bank and you've
10:36
Speaker 1: done the analysis, maybe it is in your best interest,
10:38
Speaker 1: but that's kind of not where I come down. Anyway,
10:42
Speaker 1: let us pause. We'll talk more about inflation with Brian James, and...
10:46
Speaker 1: Just hang on right back. It's 816 right now. Oh, look,
10:50
Speaker 1: timing's everything. Suzette Lozacamp at Lowe's. 821-55-KRC-D Talk Station. Brian
10:56
Speaker 1: Thomas with Brian James from Allworth Financial. Financial planner he is.
11:01
Speaker 1: I like your qualifying point on the second home purchase.
11:05
Speaker 1: Assuming you already have a financial plan in place, you're
11:08
Speaker 1: dealing with a financial planner. I mean, that's really, I
11:11
Speaker 1: think I would argue, since it's been my case, That's
11:14
Speaker 1: how you get to a point where you can even
11:15
Speaker 1: consider it, having a good, responsible plan into the future.
11:18
Speaker 1: Start early, save what you can, and it builds on itself,
11:21
Speaker 1: and you're ultimately the great recipient of all that time
11:24
Speaker 1: value of money parked away in what is typically a
11:27
Speaker 1: positive market. In other words, it grows over time in
11:31
Speaker 1: spite of setbacks from time to time. Right, Brian?
11:34
Speaker 2: Oh, absolutely. I can't offer anybody any useful information without
11:38
Speaker 2: having a financial plan in place already. You know, that
11:41
Speaker 2: goes for, yeah, buying that second home. When do I
11:43
Speaker 2: file for Social Security? Is a Roth conversion good for me?
11:46
Speaker 2: Every last little decision involves the butterfly effect. If I
11:49
Speaker 2: do one thing over here, that's going to impact something
11:52
Speaker 2: over there. And therefore, can I do it or not?
11:54
Speaker 2: It's always a lot more complicated. So if you're thinking
11:56
Speaker 2: about buying a second home, be prepared to talk about
11:58
Speaker 2: Social Security along the way, too.
12:00
Speaker 1: Well, and, you know, obviously if someone's in a position
12:02
Speaker 1: to buy a second home, they're not worried necessarily about
12:04
Speaker 1: the price of, oh, I don't know, lunch meats. But
12:07
Speaker 1: I saw this article, John Mattarese over at WCPO, who's
12:10
Speaker 1: the don't waste your money guy. And, you know, his
12:13
Speaker 1: articles remind me of the stuff that we were inundated
12:15
Speaker 1: with in the 1970s during stagflation, suggestions on how to
12:19
Speaker 1: better manage your money. Mine the pennies and the dollars
12:22
Speaker 1: mine themselves. Well, he wrote about Kroger discontinuing boar's head meats.
12:28
Speaker 1: And some suggest that, you know, the industry analyst he's
12:32
Speaker 1: written and speculated may have to do with pricing. And
12:35
Speaker 1: it was written here, turkey, oven roasted turkey from boar's
12:42
Speaker 1: head is $ 14. 99 a pound. Now, Brian, I just checked
12:45
Speaker 1: out the price of regular fresh or, you know, frozen turkey.
12:50
Speaker 1: You're looking at something like less than a dollar a pound.
12:53
Speaker 1: Even if you get boneless turkey breast, it's $ 4.
12:55
Speaker 2: 50 a pound.
12:56
Speaker 1: I'm You can make all kinds of turkey sandwiches by
13:01
Speaker 1: roasting it and slicing it yourself. That seems to be
13:03
Speaker 1: an easy fix and probably end up with a better
13:05
Speaker 1: quality product because, of course, it's not processed.
13:09
Speaker 2: Right. And remember, there are other brands on the other
13:11
Speaker 2: side of.
13:12
Speaker 1: That deli case. You can still shave turkey.
13:14
Speaker 2: There's nothing wrong with private selection. I think this is
13:17
Speaker 2: a great example.
13:18
Speaker 1: $ 10. 99 a pound, by the way. John Mattarese mentioned that
13:21
Speaker 1: as well. So it's $ 4, $ 5 savings right there.
13:26
Speaker 2: Yeah, for a turkey that walked around the same pasture
13:28
Speaker 2: that probably all the other ones did, too. I think
13:31
Speaker 2: it's a perfect example of a company getting together at
13:33
Speaker 2: a boardroom table and saying, hey, let's see what we
13:35
Speaker 2: can get away with. Inflation seems to be a headline.
13:37
Speaker 2: Let's just hike our prices just a little bit. I
13:40
Speaker 2: wouldn't say the sum of it, yes, is inflation. But
13:43
Speaker 2: on the other hand, like we just said, somebody is
13:45
Speaker 2: delivering turkey to store shelves for 40% less than what
13:49
Speaker 2: Boar's Head is doing. And this is a big deal
13:50
Speaker 2: because I saw it all over Reddit all over the
13:52
Speaker 2: weekend because People were talking, where can you get Boar's Head?
13:55
Speaker 2: Where can you get Boar's Head? That's why the Boar's
13:59
Speaker 2: Head people say, you know what? We can probably hike
14:01
Speaker 2: these prices because people are going to look for us
14:03
Speaker 2: just a little bit longer. We can squeeze out a
14:04
Speaker 2: little bit.
14:05
Speaker 1: And I imagine, Brian James, one of our favorite pet
14:07
Speaker 1: peeves is to mention Starbucks. Starbucks is still profitable, isn't it?
14:13
Speaker 2: Oh, yeah, they're making a dime or two. I think
14:15
Speaker 2: they're going to be okay, yes.
14:16
Speaker 1: I know, but I love mentioning the fact that you
14:18
Speaker 1: go to Costco, you can get two pounds of coffee for,
14:21
Speaker 1: let's say, 20 bucks. And I did the math on this.
14:23
Speaker 1: I can make 30 pots of coffee with that. And
14:26
Speaker 1: if you look at what it would cost Starbucks, it's
14:28
Speaker 1: like $ 700 or something crazy. I think the coffee at
14:32
Speaker 1: home is excellent. You know, it's ready when I wake up.
14:35
Speaker 2: In the morning. I couldn't agree. Yeah.
14:37
Speaker 1: Exactly.
14:38
Speaker 2: I couldn't agree more. And then you're driving to work
14:40
Speaker 2: and there's the Costco on the corner that has people
14:43
Speaker 2: almost lined up out of the street because that's their
14:45
Speaker 2: morning routine. Drop six, seven bucks on a cup of
14:47
Speaker 2: coffee at Starbucks. That would drive me nuts. The money
14:50
Speaker 2: wouldn't bother me anyway, but just sitting in line, starting
14:53
Speaker 2: off my morning by sitting in line in my car
14:56
Speaker 2: on my way to work. I'm much like you. I
14:58
Speaker 2: need a bulk bucket in the kitchen. That'll do good enough.
15:01
Speaker 1: It is good enough. The caffeine's there. It's hot when
15:03
Speaker 1: you wake up. Put it in the thermos. Take it
15:05
Speaker 1: to work. You are set. There's some money savings right there.
15:08
Speaker 1: Mind the pennies. In this case, the dollars. Everything else, well,
15:12
Speaker 1: we'll follow in order. Brian James, thank you for Allworth
15:14
Speaker 1: Financial loaning you out, and I appreciate the segment we
15:16
Speaker 1: do every Monday. We'll do it again next Monday, and
15:18
Speaker 1: I hope between now and then you have a great week,
15:19
Speaker 1: my friend.
15:21
Speaker 2: You have a good week. Hootay. Let's talk about the
15:23
Speaker 2: win on Monday.
15:24
Speaker 1: There you go. Positive note. They did great yesterday. A
15:27
Speaker 1: little worried there in the third quarter it was going
15:29
Speaker 1: to go as normal, but no, they pulled it out. Thanks,
15:31
Speaker 1: Brian James. Don't go away, folks. We can do local stories.
15:34
Speaker 1: You can chime in.