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Are Oil Shock and Stagflation Back? · The Financial Exchange Show

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Speaker 2: Chuck, Mike and Tucker with you here kicking off another week.
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Speaker 2: And as we start the week here, stocks are down
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Speaker 2: but off their lows pretty meaningfully, especially if you will
1:24
Speaker 2: get the overnight lows. The S and P five hundred
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Speaker 2: down about forty two points right now. At one point
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Speaker 2: overnight it was down about one hundred and twenty hundred
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Speaker 2: and thirty. So better much, actually, I think I saw
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Speaker 2: one hundred and forty points at one point. Much better
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Speaker 2: to be down two thirds of a percent than two percent.
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Speaker 2: We'll take that all day everyone, not all day every day,
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Speaker 2: because that still would be a really bad year eventually
1:45
Speaker 2: be a bad year.
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Speaker 3: But yeah, I think people oftentimes get the headlines in
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Speaker 3: the down more than the S and P dow Last
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Speaker 3: night at the you know, start of futures trading or
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Speaker 3: start of overnight trading was off more than a thousand points.
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Speaker 3: It's currently off less than four hundred and fifty.
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Speaker 2: And the NASDAK can pause down only a third of
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Speaker 2: a percent seventy points this as well. Gee, like again,
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Speaker 2: tell me if you've seen this playbook before this. As
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Speaker 2: you start to see in Vidia, broad Calm and Google,
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Speaker 2: an Apple rallying as the market tries to, you know,
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Speaker 2: find something to kind of support themselves. And look, that's
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Speaker 2: a pretty good place to find support at least over
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Speaker 2: the last few years. We'll see if it does anything here,
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Speaker 2: but at least to this point, you know, helping to
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Speaker 2: call back some losses.
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Speaker 3: On the day, price of barrel of oil going for
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Speaker 3: just about one hundred dollars, that's again off from the
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Speaker 3: overnight highs of about one hundred and sixteen dollars per barrel.
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Speaker 3: So seeing some again just calm taking over some parts
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Speaker 3: of the market.
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Speaker 2: Do you know that you can say calm when oils
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Speaker 2: up ten percent overnight? Yeah, you know, I think in
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Speaker 2: equity markets, like quite honestly, equity markets have been entirely orderly.
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Speaker 2: There is there's no panic there. There's there's definitely like
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Speaker 2: a sell off that's happening. We're down, you know, three
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Speaker 2: four percent, but there's no panic. It's been a very
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Speaker 2: orderly distribution to this point. Oil markets fifty percent jump
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Speaker 2: in a week is not common. Oil markets are insane.
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Speaker 2: Like you see you see a fifty percent jump in
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Speaker 2: oil for a year, and that's like, oh, like there's
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Speaker 2: a big move fifty percent in a week. Yeah, like
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Speaker 2: there's there's there's some some stuff going on. Ten yure
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Speaker 2: treasury not moving a ton today, was up about six
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Speaker 2: basis points earlier, now just up one point four basis points.
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Speaker 2: So not a ton of movement on that side of things.
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Speaker 2: And so overall, I think that the what the market
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Speaker 2: is telling you is the same thing for the last
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Speaker 2: week or so now basically since this conflict conflict kicked off,
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Speaker 2: the market is saying, hey, we're expecting some small disruptions
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Speaker 2: to stocks in their earnings because of this. We're expecting
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Speaker 2: inflation to move move a little bit higher, and we
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Speaker 2: can talk about how we can measure that actually based
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Speaker 2: on you know, what we're seeing in markets, and oil
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Speaker 2: prices are gonna go up a ton but then not
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Speaker 2: necessarily stay there very long, is what's being priced in.
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Speaker 2: So the the market is pricing in a relatively quick
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Speaker 2: resolution to this, and by relatively quick four to eight weeks,
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Speaker 2: the market is saying things are gonna be not entirely
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Speaker 2: back to normal, but the market is saying we expect
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Speaker 2: a buy and large resumption of normal activity somewhere by.
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Speaker 4: Synco demile in that ballpark.
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Speaker 2: Yeah, is that actually gonna happen.
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Speaker 4: I don't know.
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Speaker 2: I sure hope that, like things improve from here, but
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Speaker 2: I don't know. Let's talk a little bit about, you know,
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Speaker 2: kind of the broader implications of what we've been seeing
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Speaker 2: across different asset classes in markets, because there's a piece
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Speaker 2: in Bloomberg stagflation trades sweep markets as Trump signa widening war.
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Speaker 2: So basically what this is talking about is, remember, stagflation
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Speaker 2: is one of these nice words that we've combined, you know,
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Speaker 2: the stag of stagnate andflation offlation, and basically what we
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Speaker 2: end up with is okay, so you're talking about an
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Speaker 2: economy that grows very slowly, if at all, with high inflation.
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Speaker 2: Real case to be made, at least for a meaningful
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Speaker 2: chunk of twenty twenty two stagflationary environment. Did people like that?
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Speaker 2: Let me think, no, not that I recall talker, Can
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Speaker 2: you confirm?
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Speaker 4: Confirm?
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Speaker 2: Okay, So people don't like stagflation because the job growth
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Speaker 2: slows down and the cost of living goes up, which
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Speaker 2: is a really bad combination. It's uncomfortable for everyone. You
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Speaker 2: have no pricing power to raise your wages and the
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Speaker 2: price of things are going up, so it's something that
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Speaker 2: pretty much every government wants to avoid because because it's
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Speaker 2: the kind of things that get governments voted out of
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Speaker 2: power in places that are functioning democracies and where you have,
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Speaker 2: you know, the leader overthrown in places that are not
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Speaker 2: functioning democracies. Stagflation is not good for business if you're
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Speaker 2: in government. So when we talk about stagflationary trades, Mike,
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Speaker 2: what are we what are we seeing?
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Speaker 4: What's this talking about? Well, there's the.
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Speaker 3: Concern and insinuation that obviously the labor market has slowed
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Speaker 3: down considerably. The bond market, I'm not sure is really
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Speaker 3: pricing in stagflation, or maybe it is, because the bond
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Speaker 3: market has no idea what to do if there is stagflation. Right,
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Speaker 3: You are, on one hand, are concerned about jobs being eliminated,
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Speaker 3: and therefore the FED would normally cut rates, but they
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Speaker 3: just can't in an inflationary environment.
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Speaker 4: And so yeah, I.
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Speaker 3: Think domestically there is some risk of this being priced in.
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Speaker 3: Overseas is where I'm a little bit more concerned about it. Yeah,
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Speaker 3: when we talk about economies like just the European block,
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Speaker 3: when we talk about Asian economies, talk.
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Speaker 2: About Japan, Taiwan, Korea.
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Speaker 3: These are as we alluded to earlier in the program,
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Speaker 3: economies that are far more dependent on the price of
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Speaker 3: oil than we are here domestically, their economies are far
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Speaker 3: more affected by it, that is, the price, the availability
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Speaker 3: availability of it too, and that's not likely to be
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Speaker 3: a huge the availability problem here in the United States
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Speaker 3: as much as it will be in other parts of
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Speaker 3: the world, and their economies are also just far less diversified.
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Speaker 3: So I think ultimately stagflation there's a reason why it
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Speaker 3: rarely happens, and it's because it's two forces that typically
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Speaker 3: are pulling in opposite directions.
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Speaker 2: That have to like magically happen at the same time.
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Speaker 2: Because typically if you have a weak job market or
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Speaker 2: a labor market that is shedding jobs, usually that takes
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Speaker 2: care of a lot of inflationary pressure, because if people
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Speaker 2: don't have money to spend on companies raising prices, then
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Speaker 2: they just don't spend it. In this case, though, Okay,
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Speaker 2: what we have remembered, there's two different kinds.
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Speaker 4: Of inflation that you can see.
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Speaker 2: The first one is what we call demand pull inflation,
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Speaker 2: which is, hey, I have more money and I want
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Speaker 2: to buy something, and someone else says I have more money,
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Speaker 2: and I want to buy something, and so the company
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Speaker 2: that's selling the something says, I will charge you more
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Speaker 2: somethings in order to buy something than I used to
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Speaker 2: for something.
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Speaker 4: It's a lot of somethings.
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Speaker 2: That's demand pull inflation. People have more money and it
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Speaker 2: pulls prices up. We saw that was a part of
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Speaker 2: what we saw in twenty twenty two.
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Speaker 4: Because we gave everybody a whole bunch of money.
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Speaker 2: We gave everyone a whole bunch of money and didn't
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Speaker 2: give companies more stuff to sell because the Federal Reserve
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Speaker 2: and the federal government cannot print stuff. They can only print.
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Speaker 4: Money, yep.
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Speaker 2: But the other part that we saw was there were
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Speaker 2: some supply shocks in twenty one and twenty two. Remember
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Speaker 2: you had the whole you know, hey, the world' kind
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Speaker 2: shut up down for a while, and then you had
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Speaker 2: you know, Russian invading Ukraine, and you know, all all
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Speaker 2: kinds of stuff like that, and so you add some
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Speaker 2: supply shocks as well. Those cause what's called cost push inflation.
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Speaker 2: And this is what you're gonna see in the initial
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Speaker 2: stages here, which is, Okay, I am a company that
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Speaker 2: sells I don't know plastic bags, and you didn't come
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Speaker 2: to me saying you're wanting you want to pay more
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Speaker 2: for plastic bags, because plastic bag demand doesn't really change
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Speaker 2: a ton like ziplock demand is pretty fixed, I would imagine.
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Speaker 2: But what is happening is, hey, one of the big
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Speaker 2: inputs into ziploc bags is oil, and my suppliers are saying, hey,
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Speaker 2: we've got to raise your price by fifty percent. Now
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Speaker 2: I don't have fifty percent margins, so I've got to say,
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Speaker 2: you know what, you want to buy my ziplocks. I
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Speaker 2: got to push the price up from I don't know
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Speaker 2: how much ziplocks are one and a half cents a
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Speaker 2: bag to to one point seventy five cents a bag.
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Speaker 3: Here's where I keep going back to Chinny, Like, I
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Speaker 3: see how that you know is all likely to push
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Speaker 3: up costs. Yes, in order for that to cause inflation,
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Speaker 3: as we all see it, there has to be money
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Speaker 3: in the system to feed into those higher costs. Otherwise
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Speaker 3: what's gonna happen is gas prices are going to go
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Speaker 3: up and John Smith is going to say, Okay, I
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Speaker 3: have to buy more gas, and therefore I'm buying less
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Speaker 3: of everything else.
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Speaker 4: There has to be that two parts the equation.
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Speaker 2: We got it not necessarily and here's why, because there's
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Speaker 2: really three parts. There's inflation expectations, which is, hey, if
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Speaker 2: I don't buy this now, it's going to cost even
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Speaker 2: more later, and those have remained elevated. Ye, it's the
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Speaker 2: supply side and the demand side. Now, it's probably unlikely
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Speaker 2: that you get to where you did in twenty twenty
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Speaker 2: two because you don't have that demand side. But remember,
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Speaker 2: if supply drops significantly and demand only drops a little
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Speaker 2: bit at you know, the margin because of a weak economy,
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Speaker 2: the price still goes up. And that's like the stagflationary
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Speaker 2: abyss that that you that you want to avoid. Are
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Speaker 2: we going to actually go there? Again? Let's let's see
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Speaker 2: how things play out. I am very convinced at this
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Speaker 2: point that even if you get a quick resolution here,
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Speaker 2: you are still going to have elevated inflation for the
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Speaker 2: next eighteen months at a minimum. I don't think you
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Speaker 2: can avoid that based on just where we are right now.
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Speaker 2: Is just elevated me in like seven or eight percent? No,
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Speaker 2: but you probably for next eighteen months three and a
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Speaker 2: half to four and a half at least. And I'm
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Speaker 2: very convinced that you get something there. Do you have
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Speaker 2: the stag part of you know, the stagflation?
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Speaker 4: I don't know.
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Speaker 2: Well, we'll have to see how things develop, because there
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Speaker 2: are some cross currents that we're already starting to potentially
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Speaker 2: reaccelerate the US economy into this year, and they might
11:49
Speaker 2: still end up doing so. So I have to watch
11:52
Speaker 2: quick break here. When we come back, We've got Trivia next.
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Speaker 2: Peace in Bloomberg Today, Yard Denny raises odds of US
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Speaker 2: market meltdown to thirty five percent on Iran war.
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Speaker 4: What does a market meltdown and where were his odds before.
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Speaker 2: So first question that you should be asking is who's
14:02
Speaker 2: Eddie or Denny. The answer is he's actually someone who's
14:04
Speaker 2: like pretty well known in the investment management field.
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Speaker 4: Sure he is.
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Speaker 2: I would describe him not as a permeable but pretty
14:13
Speaker 2: close generally pretty optimistic. And so you look at this
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Speaker 2: and you're like, okay, like take note of what he's saying.
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Speaker 2: But here's the thing, and this is where I do
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Speaker 2: start to like get all pooh poohee on this stuff. Oh, quote, here,
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Speaker 2: your Denny has raised the probability of a market meltdown
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Speaker 2: sounds scary to thirty five percent for the rest of
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Speaker 2: the year, up from twenty percent previously. At the same time,
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Speaker 2: he slashed the odds of a melt up, So we're
14:44
Speaker 2: gonna be melting down more than up a rally driven
14:46
Speaker 2: by more investor enthusiasm instead of underlying fundamentals to just
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Speaker 2: five percent from twenty percent.
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Speaker 3: What is a meltdown? What does a melt up? Does
14:54
Speaker 3: he define either? And how is it useful? Because I
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Speaker 3: don't believe he does define either. No, would consider a
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Speaker 3: twenty percent sell off to be a market meltdown, but
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Speaker 3: not if it lasts a week.
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Speaker 2: Well you would. I mean, look, I would still consider
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Speaker 2: April of last year to be a market meltdown, even
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Speaker 2: though it resolved pretty quickly, would you.
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Speaker 4: It was pretty gnarly there, man.
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Speaker 2: Yeah, it was like I'm not saying it didn't resolve,
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Speaker 2: but the market melted down. What if it they had
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Speaker 2: to change the tariff policy completely because the market melted down?
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Speaker 3: Yeah, I mean, I mean again, these definitions are so ludicrous.
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Speaker 3: What if it loses twenty percent over the course of six.
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Speaker 4: Months, melt it just slow melt. It's not a.
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Speaker 3: Meltdown, Like these things are preposterous and I don't think well,
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Speaker 3: and what does.
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Speaker 2: A thirty five percent chance mean? Because like means one
15:42
Speaker 2: in three. Humans are really thank you, humans are really
15:45
Speaker 2: bad at understanding probability. Like if if I tell you
15:49
Speaker 2: something has a twenty eight percent chance of happening, most
15:52
Speaker 2: people be like, ooh, that means that, like it's like
15:55
Speaker 2: it's not gonna happen, when really it means no, that
15:58
Speaker 2: would happen twice every week if it were you happy
16:01
Speaker 2: if it were the odds on a daily basis. So like,
16:04
Speaker 2: something that has a thirty five percent chance is actually
16:06
Speaker 2: quite high. But it's also still not the most likely thing.
16:10
Speaker 2: So basically what you end up with is a thirty
16:12
Speaker 2: to forty percent chance of something happening. Is what investment
16:17
Speaker 2: strategists use when they want to sound informed about something
16:21
Speaker 2: when they really don't have an opinion. I'm not saying
16:24
Speaker 2: yr Denny's not a smart guy.
16:26
Speaker 4: He is.
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Speaker 2: What I'm saying is he doesn't have a real opinion here.
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Speaker 4: Yeah, you know, like.
16:34
Speaker 2: That's kind of where I am. I'm also not sure
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Speaker 2: he's a great macro forecaster either.
16:39
Speaker 4: Sure we were.
16:40
Speaker 3: Talking about the odds or were the best and worst
16:44
Speaker 3: case scenarios for where these events go and and we
16:49
Speaker 3: you know, talked about it in the confines of the
16:50
Speaker 3: best cases cease fire in the next two weeks, and
16:54
Speaker 3: which case the world and the economy looks pretty similar
16:57
Speaker 3: to what it looked like beforehand, and obviously the worst
17:00
Speaker 3: case being a very drawn out conflict. One of the
17:02
Speaker 3: things that I think you can point to as consistent
17:05
Speaker 3: from the Trump administration, especially this go around, has been
17:10
Speaker 3: once markets really begin to pressure the administration to pivot,
17:16
Speaker 3: they have You look at April of twenty twenty five
17:22
Speaker 3: as a prime example there, and it wasn't necessarily equity
17:24
Speaker 3: markets freaking out, though they did, it was the move
17:27
Speaker 3: in bond yields that nearly sank some big banks that
17:31
Speaker 3: shook things.
17:32
Speaker 4: I I do see this event as different.
17:36
Speaker 3: Of course, there are some sets of key objectives that
17:39
Speaker 3: want to be accomplished, but I am curious just how
17:42
Speaker 3: different it is to a global trade war that we
17:45
Speaker 3: undertook back in April of last year. And I think
17:50
Speaker 3: it's fair to say that at this point, I don't
17:51
Speaker 3: believe markets have truly pressured the Trump administration to make
17:54
Speaker 3: a change. Talked about equity markets barely being down, bond
17:57
Speaker 3: markets haven't freaked out, oil markets are breaking out, but
18:00
Speaker 3: I don't think that the Trump administration gets overly concerned
18:03
Speaker 3: about that yet. Obviously, a global shortage of refined products
18:08
Speaker 3: could create some real problems. But that's the question running,
18:11
Speaker 3: you know, running through my mind, is when does the
18:13
Speaker 3: economic and market pressure mount on this administration Because the.
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Speaker 4: Last year or so have proven pretty pretty.
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Speaker 3: Dramatically that when those pressures mount, the administration pivots on
18:26
Speaker 3: their policy and we will see here.
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Speaker 2: I think there are a few questions that need to
18:32
Speaker 2: be asked on that, in terms of like, why could
18:33
Speaker 2: this situation be different.
18:35
Speaker 4: Of course.
18:36
Speaker 2: The first one is Iran has a say on it.
18:40
Speaker 4: Yep, like yep.
18:43
Speaker 2: Trump administration could say, hey, we're we're halting you know,
18:45
Speaker 2: any activities. Iran could say, that's fine, We're still not
18:50
Speaker 2: letting anything through horm moves. Yeap, like, that's very possible.
18:55
Speaker 2: Another piece, Trump administration could say, hey, we've accomplished you know,
18:59
Speaker 2: our goals were halting any activities. Israel could say we're
19:04
Speaker 2: not done with Iron. We have different goals and that
19:07
Speaker 2: you know, and then Iron says, okay, since we're still
19:09
Speaker 2: under attack, we're not letting anything out of hour moves.
19:13
Speaker 2: It's a fundamentally different situation than a policy that you're
19:17
Speaker 2: imposing unilaterally, in that there are other parties that are
19:22
Speaker 2: already involved that may have a say in how long
19:26
Speaker 2: this ends up going and in what way it ends
19:28
Speaker 2: up ending. Let's take a quick break. When we return,
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Speaker 1: Time out full Wall Street Watch treking the stocks, the data,
19:55
Speaker 1: and the headlines driving markets so far today, right here
19:58
Speaker 1: on the Financial Exchange Radio Network.
20:00
Speaker 5: Markets were initially selling off in early trading, However, there
20:03
Speaker 5: is some dip buying occurring by mid days. The war
20:06
Speaker 5: in the Middle East extends to its tenth day. Price
20:09
Speaker 5: of oil continues to dominate headlines after touching over one
20:12
Speaker 5: hundred and fifteen dollars overnight, but is now pulling back.
20:16
Speaker 5: Right now, the Dow is down about nine tenths of
20:19
Speaker 5: one percent, or four hundred and twenty points. SMP five
20:21
Speaker 5: hundred is down just over half a percent or thirty
20:24
Speaker 5: seven points lower, Nasdaq down two tenths one percent or
20:28
Speaker 5: fifty points lower, Russell two thousands down one point two percent.
20:32
Speaker 5: Tenure Treasureil flat at the moment at four point one
20:35
Speaker 5: three four percent, and Oil up over five and a
20:38
Speaker 5: half percent higher, trading right around ninety six dollars a barrel,
20:43
Speaker 5: so below one hundred dollars. Several oil stocks, including APA,
20:46
Speaker 5: Devon Energy and Conico Phillips are seeing modest gains due
20:51
Speaker 5: to the recent surge into oil prices. However, travel stocks
20:54
Speaker 5: including American Airlines, United Airlines in Carnival are taking a
20:58
Speaker 5: hit of as much as four percent now as a
21:00
Speaker 5: result of higher energy costs. Meanwhile, some breaking news from
21:03
Speaker 5: the health sector this morning, after Nova Nordis dropped its
21:06
Speaker 5: case against telehealth provider Hymns and Hers over patent infringement.
21:10
Speaker 5: After the two companies agreed Hymns would sell Novo's branded medicines,
21:14
Speaker 5: including Gozempic and we Govi through its platform. Hims and
21:18
Speaker 5: Her stock is surging forty one percent on that news,
21:21
Speaker 5: while Novo shares are up over two percent. And Live
21:25
Speaker 5: Nation reached the settlement with the Justice Department that lets
21:28
Speaker 5: the concert promoter keep ticketmaster. However, the agreement still needs
21:33
Speaker 5: approval from a judge. Live Nation shares are climbing nearly
21:37
Speaker 5: six percent. I'm Tucker Silva and that is Wall Street Watch.
21:41
Speaker 5: And in the previous segment, we asked you the tribute question,
21:44
Speaker 5: who did Dan Rather succeed as anchor of CBS Evening News.
21:47
Speaker 5: That would be Walter Cronkite. Sean from Months and Masses,
21:51
Speaker 5: our winner today taking home a Financial Exchange Show t shirt.
21:54
Speaker 5: Congrats to Sean. We play trivia every day here on
21:58
Speaker 5: the Financial Exchange. See complete contest rules at Financial Exchange Show.
22:02
Speaker 2: Dot Com got a piece in Barons here. It's titled retirees,
22:06
Speaker 2: Don't do anything rash with your portfolios, and it comes
22:11
Speaker 2: out of time where we had a week jobs report
22:14
Speaker 2: last month. There's obviously a conflict that's continuing in the
22:19
Speaker 2: Middle East, And the question that I think a lot
22:22
Speaker 2: of retirees ask, not just retirees, pre retirees and even
22:26
Speaker 2: not even close to retirees, is hey, should I do
22:30
Speaker 2: anything about this?
22:31
Speaker 4: Yeah?
22:32
Speaker 3: I don't think we get a ton of the rash
22:36
Speaker 3: decision makers with equities doing what they've done so far. Unfortunately, though,
22:41
Speaker 3: the further equity markets fall, the more emotional I think
22:47
Speaker 3: the behavior typically becomes. So you know, it's actually a
22:50
Speaker 3: really good exercise to go through whenever there's an event
22:53
Speaker 3: going on like this. Ideally you do this exercise when
22:56
Speaker 3: equity markets are reaching all time highs. But sit down
23:00
Speaker 3: and ask yourself, like, look at your actual portfolio and
23:03
Speaker 3: just forget about percentages for a minute, do the actual
23:06
Speaker 3: math and say, Okay, if I have one hundred thousand
23:09
Speaker 3: dollars in my four oh one K and it went
23:12
Speaker 3: to ninety, would I be capable of maintaining my current strategy?
23:18
Speaker 4: What about eighty? What about seventy? What about sixty?
23:21
Speaker 3: All of those are like, again, if you're an equity
23:24
Speaker 3: market investor, especially if we've a numbers in the last
23:27
Speaker 3: twenty years, so entirely possible that that could happen. And
23:31
Speaker 3: that's the exercise to ask yourself, even in a moment
23:33
Speaker 3: like this when markets are under pressure.
23:35
Speaker 2: The S Andp's four point four percent from it's high,
23:38
Speaker 2: so it's it is one where you can look at
23:41
Speaker 2: this and say, hey, like, if this goes twice as much,
23:46
Speaker 2: or three times as much or four times as much,
23:48
Speaker 2: you know, pain is what we felt.
23:49
Speaker 4: Now? Am I comfortable with that? Right?
23:52
Speaker 3: And if you get to one of those levels and
23:54
Speaker 3: you say, oh, screw this, I'd I'd be jumping out
23:57
Speaker 3: at that point, I can tell you you're you might
23:59
Speaker 3: be doing it wrong.
24:00
Speaker 4: In that case.
24:01
Speaker 3: It might mean that you've got the wrong allocation. It
24:03
Speaker 3: might be that you shouldn't be investing in the first place.
24:06
Speaker 3: It might be that you need to have a professional
24:08
Speaker 3: in place, like any of those things are possible, And
24:11
Speaker 3: I'm not saying that there's a right solution for everybody,
24:14
Speaker 3: but really important to just ask yourself for that because
24:17
Speaker 3: your portfolio is probably if you've been invested that same
24:19
Speaker 3: way for the last three years, I mean cumulative, how
24:22
Speaker 3: much has your portfolio grown over that period of time
24:24
Speaker 3: at least that much. And so you do have to
24:26
Speaker 3: ask yourself, okay, at any point in time, forget again.
24:30
Speaker 4: It's it's really easy to look at.
24:32
Speaker 3: The numbers on the board here and say, yeah, you
24:34
Speaker 3: know what, in a case of it's fifteen percent market downturn,
24:36
Speaker 3: I know that happens all the time. I'd be okay,
24:39
Speaker 3: forget about the percentages. Use the dollars because the dollars
24:42
Speaker 3: are real to you. The dollars are also new to you.
24:45
Speaker 3: The percentages have been you know, they've been all over
24:48
Speaker 3: the place for all of your investing career. The dollar
24:50
Speaker 3: amounts You've probably never had more saved for your retirement
24:53
Speaker 3: than now. And so ask yourself that, yeah, if I
24:56
Speaker 3: lost one hundred and fifty thousand dollars, could I keep
25:00
Speaker 3: doing what I'm doing and not freak out? If the
25:04
Speaker 3: answer is great, If the answers yes, then that's great.
25:06
Speaker 3: You're you know, you may be in a pretty good spot.
25:08
Speaker 3: If the answer is I'm just not so sure, then
25:13
Speaker 3: maybe it is time to make some changes. If you
25:16
Speaker 3: have questions about where this could all lead to, and
25:20
Speaker 3: especially for those who are staring down retirement in the
25:25
Speaker 3: next decade. You know what big geopolitical events like this
25:29
Speaker 3: have historically mean for markets and what they could mean
25:31
Speaker 3: this time and for your future.
25:34
Speaker 4: Please give the folks at a Armstrong Advisory Group a call.
25:37
Speaker 3: We can help you assess the answers to these questions
25:39
Speaker 3: that I just laid out and hopefully deliver some degree
25:43
Speaker 3: of peace of mind about the strategy and the path
25:45
Speaker 3: that you're on and how it's going to serve you
25:46
Speaker 3: down the road. Happy to take your call, Happy to
25:49
Speaker 3: chat with you about your specifics. But we do need
25:51
Speaker 3: to talk to you about your specifics because, as we
25:54
Speaker 3: talked about on the program, we don't know.
25:56
Speaker 4: You just listening to you listen to us through the radio.
25:59
Speaker 3: We need to know about your specifics in order to
26:02
Speaker 3: work and build something for your future.
26:05
Speaker 4: The numbers eight hundred three nine three four zero zero one.
26:10
Speaker 3: You can book a time for us to call you
26:11
Speaker 3: back at Armstrong Advisory dot com. But that number once again,
26:14
Speaker 3: eight hundred three nine three four zero zero one.
26:18
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
26:20
Speaker 1: registered investment advisor. Nothing in the ad or in any
26:23
Speaker 1: Armstrong guide a specific financial, legal or tax advice consult
26:26
Speaker 1: your own financial tax into state planning advisors before making
26:29
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
26:32
Speaker 1: advisory services.
26:34
Speaker 2: Peace In CNBC, E shaped economy is replacing K shaped one.
26:40
Speaker 2: In twenty twenty six, Economists says the middle class is
26:44
Speaker 2: quote spending in a nervous way. Now, can we just stop?
26:47
Speaker 2: I gotta be honest. We can't do any more letters
26:49
Speaker 2: to describe the economy. Pretty soon we're gonna be like, well,
26:52
Speaker 2: it's the rumpelstilts in economy where it's.
26:55
Speaker 3: The starfish, because they're all going in different directions.
26:58
Speaker 2: Yeah, this, guys, I'm sorry. I do remember the pac
27:08
Speaker 2: Man economy.
27:09
Speaker 4: What was that about?
27:12
Speaker 3: It was something it was supposed to insinuate a different
27:15
Speaker 3: shape than a K, because the mouth kind of looks
27:18
Speaker 3: a bit like a K, but not quite.
27:23
Speaker 4: None of.
27:26
Speaker 3: Here's what you need to know about the American economy.
27:28
Speaker 3: Everyone has a different experience with the moment that we
27:31
Speaker 3: are living in right now. There's no letter that's going
27:34
Speaker 3: to adequately describe, but there's plenty of information about you know,
27:41
Speaker 3: I think one thing that about the economy that I
27:43
Speaker 3: think you can definitively state is that it's more concentrated
27:46
Speaker 3: today in a smaller number of people. But that doesn't
27:51
Speaker 3: take a shape.
27:52
Speaker 2: Why do why do we rush to define the shape
27:55
Speaker 2: of the US economy useful? Oh yeah, I get it
27:59
Speaker 2: is to be shaped like an E because it begins
28:02
Speaker 2: with E.
28:04
Speaker 3: The K shaped construct was barely helpful. To begin with
28:09
Speaker 3: an E shaped one is entirely unhelpful.
28:12
Speaker 2: Yeah, we're we're now heading into a Z shaped economy
28:15
Speaker 2: because if you're at the top, you're moving forward, and
28:17
Speaker 2: if you're at the bottom, you're moving back. Wasn't that
28:19
Speaker 2: the same as the K? No, because it's a Z.
28:24
Speaker 4: What about Oh?
28:25
Speaker 3: Oh, that's the infinite economy.
28:28
Speaker 2: It's the O shaped economy because it's like the circle
28:31
Speaker 2: of life. Man, it's we're all just eating each other
28:34
Speaker 2: out there, doggy dog. Well, no, like it's it's not it.
28:40
Speaker 2: I just I can't do any more letters. I can't
28:43
Speaker 2: do numbers either. I don't want Greek letters. We already
28:45
Speaker 2: did that with all the COVID variants. I don't want
28:48
Speaker 2: to go into cyrillic. I don't even know those letters.
28:51
Speaker 4: It's just laziness, it is, That's what it is like.
28:54
Speaker 3: You don't want to write about what the economy is like,
28:56
Speaker 3: so you try and attribute a shape to it.
28:59
Speaker 2: Right, Oh, this one's like a hexagon. Well why, I
29:05
Speaker 2: don't know, but it is.
29:06
Speaker 3: You know, it's more interesting to me having my kids
29:09
Speaker 3: describe what shape the cloud is. I would rather listen
29:13
Speaker 3: to that for an hour than someone described to me
29:15
Speaker 3: what shape the economy is. Yes, like, actually, if somebody
29:19
Speaker 3: else's kid describing it. Because I love my kids, so
29:21
Speaker 3: I don't mind listening to them talk about the shape
29:24
Speaker 3: of a cloud. Somebody else's kid describing the shape of
29:27
Speaker 3: clouds to me is more interesting than economists telling me
29:29
Speaker 3: what letter it.
29:30
Speaker 2: Yes, this is worse than listening to someone talk about
29:32
Speaker 2: how their fantasy team did last weekend. Yeah, oh I
29:36
Speaker 2: lost the close one.
29:39
Speaker 4: How come my team's E shaped? Oh you better work
29:44
Speaker 4: on that for next week. Man, just a useless construct.
29:47
Speaker 2: Let's take a quick break here.
29:48
Speaker 4: When we come back, we'll do some stack roulette after this.
29:51
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29:54
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30:04
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30:07
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30:10
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30:13
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30:16
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30:23
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30:38
Speaker 2: Mike, what you got for me?
30:39
Speaker 3: For stock rulers, mall rats, gen z, shoppers apparently hanging
30:43
Speaker 3: out at malls, and of course with that, documenting everything
30:47
Speaker 3: that they do on social media, which I find it
30:50
Speaker 3: appalling and annoying, but you know what, they are at
30:53
Speaker 3: least going out in person and doing things, even if
30:56
Speaker 3: they are documenting it all on social media.
30:58
Speaker 2: Like imagine like ding dong ditching p people while videotaping
31:01
Speaker 2: it back in the day.
31:03
Speaker 3: In any case, I mean you know firsthand experience. I
31:06
Speaker 3: don't go to shopping malls often, and when I do,
31:09
Speaker 3: it's not to shop.
31:09
Speaker 4: It's because there's what do you go for?
31:11
Speaker 3: Usually an attraction there of some sort or another. And
31:14
Speaker 3: that's how malls have really evolved quite a bit over.
31:16
Speaker 4: The last few decades.
31:17
Speaker 3: Is it is not just a food court and a
31:21
Speaker 3: bunch of retail locations. At the closest large mall. To me,
31:25
Speaker 3: there is a Dave and Busters. There's a level ninety nine,
31:28
Speaker 3: which is a kind of like a it's not quite
31:31
Speaker 3: an escape room, but it's that sort of attraction. There
31:36
Speaker 3: is a I think a Lucid Auto dealership inside the
31:39
Speaker 3: mall there too, So there's a number of different at Natick.
31:42
Speaker 1: Yeah, Tesla on there.
31:44
Speaker 3: No, I don't think it's it's different, pretty much the
31:47
Speaker 3: same thing. Yeah, And I think the worst malls out
31:52
Speaker 3: there are still going to die, but the smart malls
31:56
Speaker 3: out there have found new ways to bring people in
31:58
Speaker 3: the door.
31:59
Speaker 4: And I'll tell you, for a.
32:01
Speaker 3: Saturday evening, I think we left them all around seven pm.
32:05
Speaker 3: It was very reminiscent of my own childhood in terms
32:08
Speaker 3: of the quantity of people out there, you know, visiting
32:11
Speaker 3: the food court, going to these different shopping places. My
32:16
Speaker 3: girls were like super excited to go into the Claire's
32:20
Speaker 3: store where you pick out jewelry and all that stuff.
32:22
Speaker 4: So, I don't know, I don't know.
32:24
Speaker 3: I'm not willing to declare the shopping mall back, but
32:27
Speaker 3: I think the days of its death are maybe we
32:30
Speaker 3: might have bottomed out on that one.
32:31
Speaker 2: Well, we might have just gotten rid of so many
32:33
Speaker 2: that it's now like the appropriate amount of malls per person. Yeah,
32:38
Speaker 2: it might be. You know mall's per capita. Yeah, was
32:41
Speaker 2: running pretty high for a while. Yeah, and maybe we're
32:44
Speaker 2: back to where it needs to be.
32:45
Speaker 3: The problem is, in order to get that mall to
32:48
Speaker 3: the point where it's being successful, I'd imagine it was
32:51
Speaker 3: a pretty significant investment, one that most shopping centers probably
32:55
Speaker 3: cannot make. I mean, to build out a Dave and
32:58
Speaker 3: buster is to build out this escape room escape thing, like,
33:02
Speaker 3: it's not a small amount of money you have to
33:04
Speaker 3: put down.
33:05
Speaker 2: To be fair, it sounds like it's not a small
33:07
Speaker 2: amount of money being spent. This one sixteen year old
33:10
Speaker 2: who says that she goes to them all every weekend
33:12
Speaker 2: spends between three hundred and five hundred dollars per shopping trip.
33:15
Speaker 4: Who is this kid?
33:16
Speaker 2: She must have quite a piece. How much a three
33:19
Speaker 2: hundred and five hundred per trip, which is about how
33:21
Speaker 2: like two thousand dollars a month going to the malla.
33:26
Speaker 4: That's a lot of mauling. No, that's not buy now,
33:29
Speaker 4: pay later, that's rich parents. Yes, I don't fair.
33:34
Speaker 2: I don't get the sense that affirm is just in
33:36
Speaker 2: the business of handing five hundred dollars a week to kids.
33:40
Speaker 4: You might be wrong about that, but I think this
33:43
Speaker 4: case is pretty clear.
33:44
Speaker 2: Maybe I want to talk about sports betting because I
33:48
Speaker 2: continue to think that it is just becoming a scorge
33:51
Speaker 2: on the United States. This is a piece from the
33:54
Speaker 2: Wall Street Journal. I'm a college student, gen Z. Sports
33:57
Speaker 2: betting is wrecking my friend's lives. And this Matt, this
34:00
Speaker 2: is an eighteen year old who basically talked about, you know,
34:03
Speaker 2: his first year experience at college, and it's pretty much, hey,
34:07
Speaker 2: like everyone is betting on this stuff. They're losing hundreds
34:11
Speaker 2: of dollars because most of the studies done show that
34:14
Speaker 2: between ninety ninety five percent of sports betters lose money
34:17
Speaker 2: and people lying to their family and just like really
34:21
Speaker 2: bad stuff. And so where I continue to land is
34:28
Speaker 2: I think sports betting should be legal, but you should
34:31
Speaker 2: have to go into a casino to do it because
34:33
Speaker 2: it's just too destructive. If you can access it right
34:36
Speaker 2: from your phone.
34:37
Speaker 4: Yeah, it really appears to be.
34:39
Speaker 3: And by the way, this is it's not solely concentrated
34:44
Speaker 3: on young men, but it is very heavily concentrated on
34:48
Speaker 3: young men, and it is setting up a financial future
34:52
Speaker 3: for twenty to thirty year old men. That is going
34:55
Speaker 3: to look very strange. Like, I'm just envisioning a lot
35:00
Speaker 3: of young men in their twenties to thirties in a
35:04
Speaker 3: vastly different financial position than their female counterparts and relationship
35:08
Speaker 3: building and you know, starting a life together is going
35:13
Speaker 3: to be a lot different. If that is the new
35:17
Speaker 3: financial status, Well, let me tell you.
35:18
Speaker 4: Look, here, here's the deal.
35:20
Speaker 2: You're not going to make enough money gambling to support yourself.
35:25
Speaker 2: In fact, it's incredibly likely that you will lose everything
35:29
Speaker 2: you put in.
35:31
Speaker 4: Like those are the statistics, yep.
35:34
Speaker 3: And the problem is it's not being treated like a
35:38
Speaker 3: casino trip was when you and I were in college.
35:40
Speaker 2: Right, I I could go to the casino and say, okay,
35:44
Speaker 2: here's my fifty bucks. That's my entertainment budget for the night.
35:47
Speaker 2: If I lose it, I lose it.
35:49
Speaker 4: But that's it. Yeah, this is this like again on
35:52
Speaker 4: my phone, just like social media.
35:54
Speaker 2: And it's just too easy because if what I can
35:59
Speaker 2: tell you is if I lived in a casino, I
36:02
Speaker 2: would have lost a ton of money because I would
36:04
Speaker 2: have lived in the casino and.
36:06
Speaker 4: Just been like, maybe that's how we fix our housing problem.
36:08
Speaker 2: Well, you know, I guess I'll just you know, I'll
36:10
Speaker 2: go downstairs and maybe I'll just do another twenty bucks.
36:13
Speaker 2: Oh that didn't work out, Okay, I'll just do another
36:14
Speaker 2: twenty bucks. But because you don't live at the casino,
36:17
Speaker 2: eventually you have to leave the casino and you come
36:19
Speaker 2: out of there and you're like, oh man, that was
36:21
Speaker 2: kind of dumb, but I'm out now, so I'm not
36:24
Speaker 2: gonna do that again or like whatever, when it's just hey,
36:28
Speaker 2: I can just keep putting the money in on my phone,
36:31
Speaker 2: like you have no.
36:32
Speaker 4: Exit, yeah, which is what the casino wants.
36:34
Speaker 2: And I don't know why we think this is okay, Like,
36:40
Speaker 2: I don't know why we do. We have plenty of
36:44
Speaker 2: limits on what we can do with all kinds of
36:46
Speaker 2: different things.
36:46
Speaker 4: Yeah. Yeah, the gambling one.
36:48
Speaker 2: You can have it legalized, but you gotta go into
36:50
Speaker 2: this sports book in order to do it, which can
36:52
Speaker 2: be a great time. I've been to sports books, I've
36:54
Speaker 2: made bets in them.
36:55
Speaker 4: It's fun. Like I understand.
36:58
Speaker 3: The other place that this is now seeping into that
37:01
Speaker 3: I also have big problems with is the prediction markets,
37:04
Speaker 3: which h A are not regulated anywhere near the same
37:07
Speaker 3: way as sports gambling. Or other forms of gambling that
37:11
Speaker 3: there is not nearly the same regulation on it, So
37:14
Speaker 3: it's putting these companies on different types of levels. Two,
37:18
Speaker 3: I think it is leading to genuine confusion about what
37:21
Speaker 3: investing is and what gambling is.
37:23
Speaker 4: Now.
37:25
Speaker 3: There are plenty, by the way, who would argue that
37:27
Speaker 3: like stock picking is gambling, And honestly, the odds of
37:31
Speaker 3: some of the success in some areas of stock picking
37:33
Speaker 3: markets are pretty bad, the odds of prediction markets are
37:38
Speaker 3: far worse. And the problem is that the same companies
37:42
Speaker 3: that deliver the infrastructure for you to be able to
37:46
Speaker 3: invest are currently offering the same things on prediction markets.
37:50
Speaker 3: Not all of them, but some of them are stepping
37:52
Speaker 3: into those areas, and you are going to blur the
37:55
Speaker 3: lines between the two and it is going to set
37:57
Speaker 3: up a real problem for our retirement system, is my
38:00
Speaker 3: prediction if it continues.
38:02
Speaker 2: So there's that ye market's remained negative but trying to
38:06
Speaker 2: get towards the green. The NASDAC now only down a
38:08
Speaker 2: tenth of a percent, SMP still remains about half percent down,
38:11
Speaker 2: DOWA four hundred points almost one percent. We'll see where
38:15
Speaker 2: things finish up today, and no matter what, we'll be
38:17
Speaker 2: back tomorrow with more financial exchange.