Latest / The Financial Exchange Show / Why does Trump want Fannie and Freddie to buy $200B of mortgage debt?

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Why does Trump want Fannie and Freddie to buy $200B of mortgage debt? · The Financial Exchange Show

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1:03
Speaker 1: This is the Financial Exchange with Mike Armstrong, and Paul Lane.
1:11
Speaker 2: Good morning, Happy jobs Friday.
1:13
Speaker 3: Here from the Financial Exchange, we've got markets in positive
1:16
Speaker 3: territory shifting into a higher gear.
1:18
Speaker 2: Here.
1:18
Speaker 3: SMP's up closing in on half percent, an ASDAC up
1:22
Speaker 3: over half percent. Right now, it's Mike, Paul and Tucker
1:24
Speaker 3: with you, and our top story of the day is
1:27
Speaker 3: the jobs report that was released at nine thirty eight
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Speaker 3: thirty sorry am this morning, generally being received pretty positively.
1:37
Speaker 3: Four point four percent unemployment rate, fifty thousand jobs created.
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Speaker 3: A few revisions made to previous reports as well, one
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Speaker 3: that made the November jobs picture not look quite as
1:49
Speaker 3: weak with a revision down on the unemployment rate, another
1:53
Speaker 3: making the October job situation look worse than it was,
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Speaker 3: with one hundred and seventy six hundred seventy three three
2:00
Speaker 3: thousand jobs eliminated in the month of October. Investors seemed
2:06
Speaker 3: to be taking this as a encouraging sign for the
2:09
Speaker 3: labor market, one that will likely pause FED action on
2:13
Speaker 3: interest rates at the next meeting later this month.
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Speaker 2: Wage growth was fine.
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Speaker 3: I'm just trying to think of any other big highlights
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Speaker 3: from this job's report, but I think that just about
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Speaker 3: summarizes it. The unemployment rate, which the FED and its
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Speaker 3: chairperson Drome Powell has themselves claimed to be the most
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Speaker 3: important thing from this report went down and that broke
2:37
Speaker 3: the trend line and I think can be seen as
2:41
Speaker 3: a positive story here, and it once again raises this
2:44
Speaker 3: question is which direction is the labor market truly heading?
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Speaker 3: Because last year, sorry, two years ago, it showed signs
2:53
Speaker 3: of flashing warning signs that you saw the unemployment rate
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Speaker 3: increase at a pretty quick pace, and we were left
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Speaker 3: there wondering, Hey, is this a sign of something new.
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Speaker 2: Or is this a normalization?
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Speaker 3: Lo and behold, it was a pretty clear normalization that
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Speaker 3: we got in twenty twenty four, twenty twenty five, we
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Speaker 3: saw similar warning signs, especially in the second half of
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Speaker 3: last year, when the job creation pace dramatically slowed the
3:19
Speaker 3: unemployment rate continued to tick up. This would be the
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Speaker 3: first indication that once again we are seeing further normalization
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Speaker 3: rather than free fall. Yes, need some confirmation, but I
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Speaker 3: think that's what this report and a few of the
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Speaker 3: reports that we got over this week have indicated thus far.
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Speaker 2: Anything else to add on jobs, Paul.
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Speaker 4: No, I think you hit all the main points there.
3:40
Speaker 3: There were some rumors that perhaps the Supreme Court would
3:43
Speaker 3: release their ruling on tariffs today. That has been clarified
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Speaker 3: that will not be happening, but literally could be any
3:50
Speaker 3: day here.
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Speaker 2: So we will see when we.
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Speaker 3: Get an announcement from them on the lawsuits against the
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Speaker 3: Trump administration and their imposed tariffs. And overnight you had
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Speaker 3: a pretty big other move from the White House when
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Speaker 3: it comes to interest rates. So again clarifying how interest
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Speaker 3: rates typically float and work. The Federal Reserve generally uses
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Speaker 3: the Fed Fund's target rate as one of the tools
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Speaker 3: they use to affect the economy in different ways. And
4:21
Speaker 3: they have this dual mandate of inflation and unemployment, and
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Speaker 3: they target it based on a number of their tools,
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Speaker 3: but the biggest one being the interest rates setting policy right,
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Speaker 3: and then also the statements that they make. Overnight, what
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Speaker 3: the President did was continue his talk of home affordability.
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Speaker 3: Earlier this week, he proposed banning large corporations from buying
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Speaker 3: single family homes. Today telling Fanny and Freddie Fanny May
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Speaker 3: and Freddie May to Freddie Mac to go and buy
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Speaker 3: two hundred billion dollars worth of mortgage debts. So let's
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Speaker 3: lay it out simply here. Why would you, as president
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Speaker 3: want these agencies to go and do this, plain and simple.
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Speaker 4: If they are to buy more bonds, that eats up
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Speaker 4: the available inventory and should drive down interest rates for
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Speaker 4: the mortgages out the mortgage mortgage interest rates down, there
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Speaker 4: by affecting some of the supply side of things.
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Speaker 3: So we have some recent experience with this. Back in
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Speaker 3: the early stages of COVID, the Federal Reserve embarked on.
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Speaker 2: A bond buying program. Every month, they were buying tens
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Speaker 2: of billions.
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Speaker 4: For fifty billions something in that.
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Speaker 3: Yeah, and they're doing it every month, and they were
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Speaker 3: doing it on a schedule, and they were buying both
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Speaker 3: treasuries as well as government agency no hold on mortgage bonds,
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Speaker 3: I believe is what they were buying is mortgage backed
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Speaker 3: securities and treasure curds in order to artificially hold those
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Speaker 3: longer term yields down during an economic crisis. Generally, something
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Speaker 3: that is not, at least from what I can recall,
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Speaker 3: ever been commit by the White House to go and
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Speaker 3: do this and runs. I wouldn't say directly in contradiction
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Speaker 3: to what the FED is doing right now, but you know,
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Speaker 3: the Fed is talking about a pause in some of
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Speaker 3: their policies, and this is another government agency going out
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Speaker 3: there and trying to keep artificially interest rates lower.
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Speaker 2: Now.
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Speaker 3: I don't know how much success they're going to have
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Speaker 3: in this, to be clear, when we talk about two
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Speaker 3: hundred billion dollars, it is undoubtedly a large sum of money.
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Speaker 3: They have the cash on hand to be able to
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Speaker 3: do this. It's about two percent of the market.
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Speaker 2: Yep. Unlike the Federal Reserve, the you.
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Speaker 3: Know, these government agencies can't just print money and continue
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Speaker 3: this bond buying program and perpetuity. So might it bring
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Speaker 3: down mortgage rates a little bit in the short term? Yeah,
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Speaker 3: I think very clearly that is the intent here is, Hey,
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Speaker 3: if you add buyers to this market, then you know,
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Speaker 3: naturally the interest rate should come down just by supply
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Speaker 3: and demand. How much will it because you know today
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Speaker 3: you're seeing yields pop up a little bit, you know,
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Speaker 3: a slight increase in.
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Speaker 2: Some of those.
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Speaker 3: And so I think some open questions on how successful
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Speaker 3: this will be. But the theme here is pretty consistent.
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Speaker 3: The President wants to make home affordability.
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Speaker 4: A big focus for twenty twenty six, a.
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Speaker 2: Big focus for twenty twenty six.
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Speaker 3: I think undoubtedly that is the message to take away
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Speaker 3: here other you know, just things that are noticeable with this.
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Speaker 3: It has been a goal of the president's to spin
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Speaker 3: these out of the government. These agencies have been under
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Speaker 3: much more direct government control since the Great Financial Crisis
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Speaker 3: and no weight. And the idea here was, Hey, maybe
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Speaker 3: we can ipo these things sometime in the future and
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Speaker 3: make these so that they are not so beholden to
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Speaker 3: government policy future governments. The idea was, yeah, maybe we
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Speaker 3: can move forward with an initial public offering of Fanny
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Speaker 3: and Freddy.
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Speaker 2: That's taking a very big back seat with action like this.
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Speaker 4: Certainly, certainly you would you would not think to be
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Speaker 4: embarking on this road of taking them public if you
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Speaker 4: wanted them to buy two hundred billion dollars of more.
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Speaker 3: Absolutely, So, you know that is I think what comes
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Speaker 3: to mind with all this. There's a very clear intent.
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Speaker 3: So when you read that Trump, you know, President Trump
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Speaker 3: directing Fanny and Friday to buy two hundred billion dollars
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Speaker 3: worth mortgage debt. What's that mean? Plain and simple, trying
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Speaker 3: to bring down mortgage rates. Yep, some companies, by the way,
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Speaker 3: moving in response to this. Publicly traded companies are moving
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Speaker 3: up on this news. You do have you know some
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Speaker 3: mortgage lenders specifically moving pretty big on this rocket companies
8:37
Speaker 3: loan depot rose rose in early trading.
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Speaker 2: I don't know where they are now. And the yield
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Speaker 2: on the ten year Treasury currently.
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Speaker 3: Down to four point one six percent, So again, mortgage
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Speaker 3: rates take a little while to update.
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Speaker 2: I think that they do end up probably.
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Speaker 3: Coming down on this, but how substantially and what and
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Speaker 3: in what time frame is a very big question. And okay,
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Speaker 3: so let's say we get mortgage rates down to five
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Speaker 3: point eight percent on this, it will make things more affordable, right,
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Speaker 3: I don't know that it changes the aer around home affordability.
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Speaker 3: I don't know where that threshold is, but I don't
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Speaker 3: think it's a five eight or five.
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Speaker 4: Nine, No, you have I forget what the recent numbers
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Speaker 4: on it, but let's call at least it seems like
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Speaker 4: more than half of the country is still sitting with
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Speaker 4: those really desirable four percent or lower mortgages from yester
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Speaker 4: year of twenty nineteen, twenty twenty and that sort of era.
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Speaker 4: So getting it down to five eight, while that's an
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Speaker 4: improvement and perhaps would create some more transaction activity on
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Speaker 4: the buy side of things that decline is not enough
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Speaker 4: to do it. It may spark activity, but it's not
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Speaker 4: going to be the solution. What is brought up here
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Speaker 4: in another piece at a barons, which I think is
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Speaker 4: a good way to look at it, and we've mentioned
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Speaker 4: this on the show before. To me, the easiest way
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Speaker 4: to attack this issue would be in terms of legislation
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Speaker 4: and regulation. That would be while I recognize is that
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Speaker 4: many housing decisions are done at the local level, if
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Speaker 4: there could be policy changes that encourage further development of
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Speaker 4: housing or lower some of the parameters that are you know,
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Speaker 4: put together for putting mortgages in place, that would be
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Speaker 4: a good step to try and get some increase on
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Speaker 4: the inventory side of things.
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Speaker 3: Yeah, but quite honestly, I don't think it's likely to happen, right.
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Speaker 2: I mean to be plain here.
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Speaker 3: The idea of the federal government stepping on the toes
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Speaker 3: of state and local governments and saying, hey, we are
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Speaker 3: going to now.
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Speaker 2: Control your zoning or control you.
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Speaker 3: Know, or incentivize different zoning to build more homes I
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Speaker 3: find unlikely. And so you're seeing these executive actions, you're
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Speaker 3: seeing things like you know, populist ideas like banning corporations
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Speaker 3: from buying homes. I'm not sure that there's much else
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Speaker 3: to be done here right Like, we are sitting at
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Speaker 3: a point now. I want to make this clear because
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Speaker 3: it doesn't feel real to those of us listening in
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Speaker 3: the Midwest or northeast of the United States. But in
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Speaker 3: November of twenty twenty five, there were how do I
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Speaker 3: phrase this, nearly ninety four percent as many homes for
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Speaker 3: sale as there were in November of twenty nineteen. I
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Speaker 3: know they are not as affordable as they were in
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Speaker 3: November of twenty nineteen, but that is going to come.
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Speaker 3: The affordability problem is going to fix itself over a
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Speaker 3: period of time, and the more mechanisms you toss in
11:31
Speaker 3: there to try and fix it faster are going to
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Speaker 3: have downstream impacts that we haven't quite thought of yet.
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Speaker 3: If you artificially try and keep interest rates lower right now,
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Speaker 3: are they going to need to snap back higher a
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Speaker 3: few years from now because of inflation. If you try
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Speaker 3: and put into place a corporate ban on buying homes,
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Speaker 3: what are you going to do the next time there's
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Speaker 3: a crisis and you need those corporate buyers to bail
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Speaker 3: you out. I think there are just so many downstream
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Speaker 3: effects here. The real sustainable path for me is if
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Speaker 3: you want to do something on housing, then, like Paul said,
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Speaker 3: have an intelligent debate about what that means and what
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Speaker 3: it means for what communities look like. But that is
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Speaker 3: not something that we seem to be willing to do
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Speaker 3: on the federal level. So instead, I think that's gonna
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Speaker 3: have to be done locality by locality.
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Speaker 4: You gotta do something to boost the the try and
12:19
Speaker 4: boost the inventory that's been that's a problem that dates
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Speaker 4: back what sixteen years of under development.
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Speaker 2: Yes, so.
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Speaker 4: To me, like you think about the Northeast, even if
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Speaker 4: we get back to higher inventory levels, it's still going
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Speaker 4: to be expensive to buy around here because there's so
12:35
Speaker 4: few options available and there's gonna be a lot of competition.
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Speaker 4: I just don't know how you try.
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Speaker 3: To go back to it. You don't because that's what
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Speaker 3: people want, right. They don't want dense housing develops and
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Speaker 3: the developments in the Northeast, and there's environmental and all
12:49
Speaker 3: sorts of reasons behind that. But that is the reality.
12:52
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15:15
Speaker 3: Uh General motors taking a six billion dollar hit tied
15:19
Speaker 3: to electric vehicles, continuing to see demand for these things
15:24
Speaker 3: just fall off a cliff. I some interesting context here.
15:28
Speaker 3: I just spent the last two weeks shopping for an EV.
15:31
Speaker 3: We decided on one that is not a general motors vehicle.
15:35
Speaker 3: But looking at we did look at Chevy's, we looked
15:38
Speaker 3: at Hyundai's, and we bought a Ford. There were a
15:41
Speaker 3: lot of incentives to get these things off the lot.
15:43
Speaker 3: Let me just let me just put it that way.
15:46
Speaker 3: Sure the calls, got a few follow up calls, and
15:49
Speaker 3: we're talking, you know, on the Hundai especially, I was
15:53
Speaker 3: looking at potentially fifteen thousand off of MSRP to take
15:57
Speaker 3: a previous model year. I think it might have been
15:59
Speaker 3: even a twenty two twenty four model a year that
16:01
Speaker 3: was new. We're talking about fairly steep discounts. And when
16:05
Speaker 3: you see stories like this you can guess why. But
16:07
Speaker 3: GM taking a six billion dollar charge on its EV business.
16:10
Speaker 3: That follows a charge that Ford took on their EV business.
16:14
Speaker 3: Basically seeing these sales creater since the expiration of the
16:19
Speaker 3: EV tax credit of seventy five hundred bucks that was
16:21
Speaker 3: in place until September of last year. I don't know
16:25
Speaker 3: that there's much else to be said about this. Again,
16:28
Speaker 3: we ended up buying an EV for our household. We
16:32
Speaker 3: have two gas powered vehicles. We need three vehicles just
16:35
Speaker 3: based on hauling our kids.
16:36
Speaker 2: All over New England.
16:38
Speaker 3: So we ended up buying an EV for our third
16:41
Speaker 3: car that's primarily going to be a commuter. Very happy
16:44
Speaker 3: with it. I've enjoyed driving other evs before. I think
16:47
Speaker 3: I'll be happy with this one. But generally speaking, these
16:51
Speaker 3: companies have all poured a lot of money into these
16:53
Speaker 3: EV businesses and are very rapidly finding that without the
16:58
Speaker 3: incentives in place, pretty big mismatch between their supply and
17:03
Speaker 3: demand from consumers.
17:04
Speaker 4: Yeah, not too much more to add. You did hit
17:06
Speaker 4: a lot of the major points. It's only six percent
17:08
Speaker 4: of GM sales are EV's and if you look at
17:12
Speaker 4: where gas prices sit today, it's hard when you're under
17:16
Speaker 4: three three dollars a gallon to really make a huge
17:19
Speaker 4: push for for evs. And then you talk about all
17:22
Speaker 4: the policy changes too. It's just it's a tougher spot
17:24
Speaker 4: for them right now.
17:25
Speaker 2: But continues to surprise me.
17:27
Speaker 3: They all kind of copied Tesla, and so in my mind,
17:31
Speaker 3: the reason that things like Chevy supercrus or GM Supercrews
17:35
Speaker 3: and Ship and fort Blue Crews exist is because Tesla
17:38
Speaker 3: did it first, and they felt they needed to match that,
17:41
Speaker 3: and so most of these car companies are primarily putting
17:44
Speaker 3: those really cool pieces of technology exclusively into their electric vehicles,
17:49
Speaker 3: and I just don't get it.
17:50
Speaker 2: To me, that is a huge selling point in a car.
17:52
Speaker 3: I know I'm in kind of rare company with this stuff,
17:55
Speaker 3: but I don't really understand why they put it in there,
17:59
Speaker 3: And the only context I have is that they feel
18:01
Speaker 3: like they need to compete with Tesla's, or at least
18:03
Speaker 3: they did feel like they needed to compete with Tesla's,
18:05
Speaker 3: when in fact, I think the self driving car technology
18:08
Speaker 3: is pretty darn cool and something that a lot of
18:11
Speaker 3: people buying all sorts of different commuter cars.
18:15
Speaker 2: Would really like. That.
18:16
Speaker 3: That's where it's helpful as commuting. It's not like it's
18:19
Speaker 3: really going to help you on your drive to the
18:21
Speaker 3: grocery store. But if you're driving a long haul, thirty
18:25
Speaker 3: forty mile commute with stop and go traffic into Boston
18:27
Speaker 3: every day, man, that technology is pretty useful. Sure, it
18:32
Speaker 3: really does make a difference, at least from my experience,
18:36
Speaker 3: in not having to constantly monitor the road in such
18:40
Speaker 3: an exhausting fashion as you need to when you're driving,
18:44
Speaker 3: for instance, anywhere on ninety five from Maine to Florida.
18:48
Speaker 3: So yeah, GM and many others kind of reshaping that
18:51
Speaker 3: business and we will see what comes next in the
18:54
Speaker 3: vehicle market.
18:55
Speaker 2: I still think that Toyota really has a leg.
18:59
Speaker 3: Up on all these guys with the investments that they
19:03
Speaker 3: have made into their hybrid vehicle space.
19:06
Speaker 2: They are pretty far beyond everybody else.
19:10
Speaker 3: Pricing isn't all that out of whack, and I think
19:12
Speaker 3: the other guys have some catchup to do to.
19:15
Speaker 4: In the discipline that they showed when in the twenty
19:18
Speaker 4: twenties everyone wanted to talk evs.
19:20
Speaker 3: Everyone wanted to be Tesla, and Toyota said no, thank you.
19:23
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20:01
Speaker 5: Markets are in positive territory after the December jobs report
20:06
Speaker 5: revealed fifty thousand jobs were added in December, softer than
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Speaker 5: forecasts of seventy three thousand. The unemployment rate fell to
20:13
Speaker 5: four point four percent, better than estimates of four point
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Speaker 5: five percent. Right now, the Dow is up about four
20:21
Speaker 5: tenths of a percent or one hundred and fifty one points.
20:25
Speaker 5: Sm P five hundred also up four tenths of a
20:27
Speaker 5: percent or thirty points. NASDAC up six tenths of one
20:30
Speaker 5: percent of one hundred and forty three points higher. Russell
20:34
Speaker 5: two thousand is up nearly one percent now, Tenure Treasure
20:37
Speaker 5: reeled down one basis point of four point one seven
20:40
Speaker 5: three percent, and crude oil up nearly three percent now,
20:44
Speaker 5: trading fifty nine dollars in thirty eight cents a barrel.
20:47
Speaker 5: Intel shares are rallying six percent after President Trump said
20:51
Speaker 5: yesterday he finished a great meeting with CEO lip Boutan.
20:55
Speaker 5: The US government took a ten percent stake in Intel
20:59
Speaker 5: through an eight and a half billion dollar back in August. Meanwhile,
21:03
Speaker 5: nuclear power companies, including Vista and Ochlow, are both rallying
21:07
Speaker 5: over twelve percent after Meta announced agreements with the companies
21:11
Speaker 5: in addition to terror Power as part of Meta's efforts
21:14
Speaker 5: to secure necessary resources for its AI ambitions. MetaStock is
21:20
Speaker 5: up modestly, and General Motors were revealed it would record
21:24
Speaker 5: a seven point one billion dollar loss for the final
21:27
Speaker 5: quarter of twenty twenty five, primarily from its investments in
21:31
Speaker 5: electric vehicles. Last month, competitor Ford said it expected to
21:35
Speaker 5: take nineteen point five billion dollars in charges, mostly tied
21:38
Speaker 5: to its EV business. GM shares it down nearly three percent.
21:45
Speaker 5: I'm Tucker Silvan. That is Wall Street watching. In the
21:47
Speaker 5: previous segment, we asked you the triviute question, what year
21:50
Speaker 5: did the Concord supersonic jets retire? That will be two
21:55
Speaker 5: thousand and three. Timothy from Shrewsbury, Masis is our winner today,
21:58
Speaker 5: taking home a Financial sit Show t shirt. Congrats to Timothy,
22:02
Speaker 5: and we play trivia every day here in the Financial
22:04
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22:07
Speaker 5: dot com.
22:08
Speaker 2: Well, Tucker is still a little bit of the thunder here.
22:10
Speaker 3: I do still want to talk about Vistra and Vistracorp
22:13
Speaker 3: and Oaklow, so not household names. Vistra is a current
22:17
Speaker 3: operator of retail electricity a few nuclear power plants.
22:22
Speaker 2: Oaklow is more of a startup.
22:23
Speaker 3: They are a designer of small modular nuclear reactors based
22:27
Speaker 3: in California.
22:28
Speaker 2: Startup in twenty thirteen.
22:29
Speaker 3: Bill Gates back no Gae, Bill Gates back terror Power. Sorry,
22:35
Speaker 3: but these two companies are moving up big today, thirteen
22:38
Speaker 3: percent on Oaklow, twelve point four percent on Vistra. This
22:43
Speaker 3: is a fairly significant deal. And we've talked a lot
22:45
Speaker 3: about the.
22:46
Speaker 2: Energy requirements needed here.
22:49
Speaker 3: It is if we talk about a bottleneck or constraint
22:52
Speaker 3: for the USAI industry, it's not so much the semiconductors. Yeah,
22:57
Speaker 3: we talked about RAM price in every storage price is
23:01
Speaker 3: going up. But the energy electricity problem seems to be
23:05
Speaker 3: a growing one for this industry. And when you talk
23:11
Speaker 3: to the experts in this space who are saying, hey,
23:13
Speaker 3: we want to construct data centers, the number one answer
23:16
Speaker 3: they're getting is yeah, but are you going to be
23:18
Speaker 3: able to hook up to the power grid? And so
23:20
Speaker 3: now you have Meta putting big, big dollars into this,
23:25
Speaker 3: enough to drive these stock prices up.
23:26
Speaker 2: Again.
23:27
Speaker 3: This is we talked about hypothetical a lot, but this
23:30
Speaker 3: is real. These stock prices are moving twelve or thirteen
23:33
Speaker 3: percent on this newly announced deal for them.
23:37
Speaker 4: Again, the stock prices are moving. There has been any money.
23:39
Speaker 3: Made yet, but there is not the Two things that
23:42
Speaker 3: I think are interesting about this one what's this going
23:46
Speaker 3: to continue to do to consumer electricity prices? You are
23:51
Speaker 3: competing I know not you directly, but you are competing
23:55
Speaker 3: for electricity with Facebook. Now they got deeper pockets than you.
24:00
Speaker 3: This is this is a finite resource right now. Right
24:02
Speaker 3: I don't mean yes, you can create more electricity, We
24:05
Speaker 3: can build more nuclear power plants. But in the immediate term,
24:09
Speaker 3: electricity is a finite resource that we do not have
24:11
Speaker 3: a lot of capability to dramatically scale up. It is
24:14
Speaker 3: going to increase prices regionally, nationally, et cetera. More and
24:19
Speaker 3: more communities pushing back against this. The other big question
24:23
Speaker 3: that I have is if you buy that we are
24:25
Speaker 3: in an AI arms race with China. There's one big
24:29
Speaker 3: competitive advantage that the United States has, chip design. We
24:34
Speaker 3: build and design far more efficient chips that we do
24:38
Speaker 3: not allow to be sold at least on mass to China.
24:41
Speaker 3: They get funneled in there, they get stolen and moved
24:45
Speaker 3: across borders illegally. But by and large China Chinese companies
24:50
Speaker 3: do not have the ability to go buy a ton
24:53
Speaker 3: of Nvidia, Blackwell chips, Google, Facebook, Amazon, all doom. China
24:58
Speaker 3: has one big competit of advantage over the United States.
25:01
Speaker 3: Way more electricity, way more electricity, way more capacity for
25:05
Speaker 3: new electricity and the ability to just tell their citizens,
25:09
Speaker 3: you know, hey, we're building a dam here, you're out
25:12
Speaker 3: of here.
25:13
Speaker 2: Seal later.
25:14
Speaker 3: We don't do that in the United States, thank god.
25:16
Speaker 3: But that is the competitive advantage, and I don't think
25:19
Speaker 3: that well. I am certainly not qualified to tell you
25:23
Speaker 3: which advantage is more important to the development of the
25:27
Speaker 3: next new, profitable AI tool that the whole world is
25:30
Speaker 3: going to want to make. But if you buy that
25:32
Speaker 3: this is an arms race, that's what you're up against
25:35
Speaker 3: is better designs chips. Here in the United States, maybe
25:39
Speaker 3: we've got some creative competitive advantage that has been proven
25:42
Speaker 3: over the years in the US compared to China. China
25:45
Speaker 3: has a giant competitive advantage when it comes to generating electricity,
25:49
Speaker 3: and so they might have far less efficient semiconductors and
25:53
Speaker 3: you know, data centers that run these models. I'm not
25:56
Speaker 3: sure how much that matters when you can construct a
25:59
Speaker 3: new nuclear power plant in China in something like eighteen.
26:02
Speaker 4: Months, right, Yeah, it is. That is what is at
26:05
Speaker 4: stake in one of the biggest arms race that we'll
26:08
Speaker 4: be focusing on over the next few years. It is
26:12
Speaker 4: really significant.
26:14
Speaker 3: I want to talk to folks about the brand new
26:16
Speaker 3: guide from the Armstrong Advisory Group. We put one together
26:20
Speaker 3: this month on what we deem to be the most
26:23
Speaker 3: frequent questions we get from clients, especially those that are
26:26
Speaker 3: heading towards retirement, and they're all about Social Security and Medicare.
26:30
Speaker 3: These are two programs that apply to almost every working
26:34
Speaker 3: American once they get to that key age, and this
26:37
Speaker 3: guid is all about how to apply for the programs.
26:40
Speaker 3: What sort of documentation you're going to need if you
26:43
Speaker 3: are divorced, if you have if you are a widower
26:47
Speaker 3: or a widow, what sort of documentation are you going
26:49
Speaker 3: to need when you apply for Social Security? When you
26:51
Speaker 3: apply for Medicare? What are these specific ages that you
26:55
Speaker 3: need to be focused on? When do you need to apply?
26:57
Speaker 3: How does part A work if you are still working?
27:00
Speaker 3: These are all very frequent questions that Paul gets that
27:03
Speaker 3: I get on a weekly basis. We put together a
27:06
Speaker 3: guide for you to try and answer some of them.
27:09
Speaker 3: The name of the guide how to apply for Social
27:11
Speaker 3: Security and Medicare. It's our new guide for January twenty
27:14
Speaker 3: twenty six. It's free. You can get it by calling
27:16
Speaker 3: us at eight hundred three nine three for zero zero one. Again,
27:21
Speaker 3: our brand new guide on social Security and Medicare. You
27:24
Speaker 3: can request it online at Armstrong Advisory dot com or
27:27
Speaker 3: you can call us at eight hundred three nine three
27:30
Speaker 3: for zero zero one.
27:32
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
27:34
Speaker 1: registered investment advisor. Nothing in the ad or in any
27:37
Speaker 1: Armstrong Guide a specific financial, legal, or tax advice. Consult
27:40
Speaker 1: your own financial tax into state planning advisors before making
27:43
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
27:46
Speaker 1: advisory services.
27:47
Speaker 4: Had to help my mother in law rull into Medicare party,
27:49
Speaker 4: I should just give her the guide.
27:50
Speaker 3: Yeah, would have saved the time missed opportunity there, Paul,
27:53
Speaker 3: I'm sure she would have loved that. No, no, Ma,
27:56
Speaker 3: no help for you, take this thing figured out on
27:58
Speaker 3: your own.
27:58
Speaker 4: Just kidding.
28:00
Speaker 2: Uh may not?
28:03
Speaker 4: I or at least that she helps a lot with
28:05
Speaker 4: the kids.
28:06
Speaker 3: So yeah, that's the trade that's actually a reasonable trade off.
28:09
Speaker 3: The state of California is. If you thought that the
28:13
Speaker 3: millionaires tax in Massachusetts about the billionaires, wait until you
28:17
Speaker 3: hear about the billionaire at tax in California. So very
28:20
Speaker 3: early stages here, but honestly, I'm not sure there's a
28:23
Speaker 3: good reason to believe this wouldn't pass. They are talking
28:27
Speaker 3: about a five percent one time wealth tax in California
28:33
Speaker 3: on anyone worth more than a billion dollars who is
28:36
Speaker 3: a resident.
28:37
Speaker 4: I believe there are two hundred and twenty some odd
28:40
Speaker 4: billionaires in California. I thought I had read it's.
28:43
Speaker 2: A lot of dough. Yeah, that would be coming in here.
28:47
Speaker 3: The questions that I had initially, I was thinking about constitutionality.
28:50
Speaker 3: I don't think there's anything there. I know, I know
28:53
Speaker 3: that's been raised before. But Paul, you have a car,
28:56
Speaker 3: you pay an excise tax.
28:57
Speaker 4: I'm a billionaire, you're a billionaire.
29:03
Speaker 3: We all own You pay an xise tax that's not
29:06
Speaker 3: based on your income, based on your property.
29:09
Speaker 2: This isn't all that different. Now.
29:11
Speaker 3: Would they be able to say, hey, you own a
29:13
Speaker 3: home in Texas and we're counting that as part of
29:15
Speaker 3: your wealth and assessing your tax on it.
29:17
Speaker 2: I doubt it. Massa Chuse has tried to try.
29:19
Speaker 3: I think mass Choos has tried something similar with their
29:22
Speaker 3: estate tax and they got that kicked out.
29:24
Speaker 2: So I doubt they'd be able to do something like that.
29:27
Speaker 2: But if you are.
29:29
Speaker 3: Jensen Wong and you live in California, own multiple homes
29:32
Speaker 3: and own, you know, sixty percent of a company headquartered
29:36
Speaker 3: in California. I don't know that there's a constitutional issue here.
29:41
Speaker 3: I think there's a massive wealth flight issue that California
29:45
Speaker 3: is going to face with this, because I'm sure there
29:48
Speaker 3: are a number well no, I'm not. I'm sure there
29:50
Speaker 3: are a number of billionaires who have already announced they
29:52
Speaker 3: are going to leave the state out of concern that
29:55
Speaker 3: this might pass.
29:56
Speaker 4: Oh you have to if you're in their shoes.
29:58
Speaker 3: I mean you're talking about billions of dolls, billionaires.
30:01
Speaker 4: I bet you have other properties that you could easily
30:03
Speaker 4: make your private residence pretty quickly.
30:05
Speaker 2: Yeah.
30:05
Speaker 3: I mean we talked about this with the millionaire's tax,
30:08
Speaker 3: and I was kind of theorizing, like, Okay, you know,
30:10
Speaker 3: how much do you have to be worth to just
30:11
Speaker 3: say I'm going to move to Portsmouth, New Hampshire and
30:13
Speaker 3: avoid this and just take my helicopter to Boston every day.
30:18
Speaker 3: If you're a billionaire, it's not even a question like
30:20
Speaker 3: you already owned the home in Florida. You just got
30:22
Speaker 3: to change a few records over So we'll be it'll
30:25
Speaker 3: be interesting to see if this actually goes anywhere, and
30:28
Speaker 3: how dramatic the effect would be. The governor has actually
30:33
Speaker 3: expressed concerns about this. He's not in favor of the
30:36
Speaker 3: billionaire's tax. It seems they are just in the signature
30:40
Speaker 3: stage of setting this up. But this would be, I mean,
30:44
Speaker 3: this would easily be the most significant tax on the
30:47
Speaker 3: ultra wealthy that we've seen at any.
30:49
Speaker 2: State level by far, definitely by far, and.
30:53
Speaker 3: Would really reshape the conversation there. Let's take quick break.
30:57
Speaker 3: Paul Lamonica is waiting for us next from Baron's. We'll
30:59
Speaker 3: be right back.
31:00
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31:29
Speaker 1: This is the Financial Exchange Radio Network, Ladies and gentlemen.
31:35
Speaker 6: The weekend, as promised, we are joined by Paul Amnica
31:46
Speaker 6: from Barons to talk a little bit about a recent
31:50
Speaker 6: company's IPO.
31:51
Speaker 4: Paul, thanks so much for joining us.
31:53
Speaker 7: Yeah, thank you very much, appreciate it, Paul.
31:55
Speaker 4: Obviously, this year is rumored twenty twenty six to be
31:58
Speaker 4: a huge year for IPOs. Rumor has it, you could
32:01
Speaker 4: see SpaceX, Data, Bricks and some other anthropics, some really
32:05
Speaker 4: large company IPOs. But we're covering here a recent IPO
32:08
Speaker 4: of a company called weal Front that was a little
32:12
Speaker 4: bit more lackluster than some of these other big names
32:16
Speaker 4: would anticipate their performance being on the public market. Entry,
32:19
Speaker 4: give us a little bit of background, Paul, first about
32:21
Speaker 4: well Front, you know who they are and what they do,
32:23
Speaker 4: and then just give us some context on their recent
32:26
Speaker 4: public offering.
32:27
Speaker 7: Yeah, definitely. I mean obviously, wealth Front much smaller company
32:30
Speaker 7: than the ones you name that are rumored to be
32:34
Speaker 7: twenty twenty six IPO candidates. Your wealth Front is, you know,
32:38
Speaker 7: a wealth management firm. I think a lot of people
32:42
Speaker 7: might recognize it for their quote unquote robo advisor type
32:47
Speaker 7: product you know, using you know AI you know to
32:54
Speaker 7: you know help you know, come up with portfolios for investors,
32:59
Speaker 7: you know, in public, like in December at about fourteen
33:05
Speaker 7: dollars a share, and you know, the stock has declined
33:10
Speaker 7: since then, even though we've had you know, this rally
33:14
Speaker 7: in the broader market. But what's really interesting and perhaps
33:18
Speaker 7: maybe concerning, is that you know, had several investment bankers,
33:23
Speaker 7: you know, Wall Street firms you'll launch coverage of the
33:26
Speaker 7: stock this week, and while there are some fairly bullish ones,
33:30
Speaker 7: the analystic Goldman Sachs, you know, has a price target
33:34
Speaker 7: of you know, just fourteen fifty a share, which is
33:38
Speaker 7: below you know where the you know, the price was
33:42
Speaker 7: trading just a few days ago of you know, so
33:46
Speaker 7: I and he has a you know, kind of a
33:47
Speaker 7: neutral rating on it. You know. His concern is that
33:52
Speaker 7: one of the products that is popular is this high
33:55
Speaker 7: yield savings you know product, and that might be something
34:00
Speaker 7: that with bond yields coming down, the possibility of more
34:04
Speaker 7: fed rate cuts, you know, that might be something that
34:08
Speaker 7: investors aren't as interested in at a time where you know,
34:12
Speaker 7: you know, they could be looking for yield elsewhere.
34:15
Speaker 4: Yeah, Paul, it seems like part of their calling card
34:17
Speaker 4: is the the money market interest rate that they're able
34:20
Speaker 4: to offer, and that's hyper competitive. I mean, it's hard
34:23
Speaker 4: to really it seems like differentiate yourself that much there.
34:26
Speaker 4: You mentioned the robo advisor piece, which is something that
34:30
Speaker 4: isn't necessarily a new concept, but you did mention here
34:34
Speaker 4: in this piece something regarding a new mortgage offering. What
34:36
Speaker 4: does that entail and could that add any legs to
34:40
Speaker 4: the stock?
34:41
Speaker 7: Yeah, that's going to be something that I think is
34:43
Speaker 7: interesting because you know, wealth Front you know, has a
34:47
Speaker 7: lot of what analysts refer to as kind of a
34:51
Speaker 7: younger digitally native millennial gen Z demographic. These are you know,
34:57
Speaker 7: the types of people that might be finally in uh
35:02
Speaker 7: you know, a prime age of potentially looking for a
35:06
Speaker 7: house and then obviously the mortgage that goes with that.
35:09
Speaker 7: So that's why some analysts have you know, buy and
35:13
Speaker 7: outperform ratings on the stock because there is the hope
35:17
Speaker 7: that the you know, the offering uh you know mortgages
35:21
Speaker 7: is a you know, very nascent part of the business
35:25
Speaker 7: that could grow pretty rapidly. So uh, you know, that's
35:30
Speaker 7: potentially an area for wealth Front to uh, you know,
35:34
Speaker 7: increase its customer base and you know, I think that
35:37
Speaker 7: it goes out saying would probably be you know, a stickier,
35:41
Speaker 7: higher margin type of business than you know what you're
35:45
Speaker 7: seeing with these uh you know, uh, the the cash
35:49
Speaker 7: you know yield uh type products and even uh you know,
35:52
Speaker 7: I think the hope is that if you lock in
35:56
Speaker 7: some customers to uh you know, have a mortgage, that
35:59
Speaker 7: they may all so want to use some of their
36:02
Speaker 7: extra income on the side to be investing in stocks
36:06
Speaker 7: and ETFs.
36:07
Speaker 4: Sure take up more wall chair. That's Paul Monica from
36:10
Speaker 4: Baron's talking to us about Well Front. Paul, thank you
36:13
Speaker 4: so much for your time, and have a fantastic weekend.
36:15
Speaker 7: Thanks lots and you guys appreciate it.
36:18
Speaker 3: CS wraps up today the Consumer Electronics Show and Wirecutter's
36:22
Speaker 3: got a summary for us on the good, the bad,
36:24
Speaker 3: and the ugly.
36:25
Speaker 2: There.
36:25
Speaker 3: They said, there are a ton of robots, so many
36:27
Speaker 3: dancing robots. There was a robot that could fold laundry
36:31
Speaker 3: pretty poorly, deal cards very slowly, played table tennis for
36:35
Speaker 3: some reason, and do mixed martial arts the top of
36:40
Speaker 3: the list that they put out there. CS debuted a
36:43
Speaker 3: company that is putting out a BlackBerry like smartphone Clicks
36:48
Speaker 3: Communicator going to be running on Android. Looks just like
36:51
Speaker 3: a BlackBerry and has a physical keyboard. Don't know what
36:53
Speaker 3: the market looks like. They highlighted a stair climbing robot, vacuum.
36:57
Speaker 4: Stair climbing robo of it.
36:59
Speaker 3: Okay, pretty cool, vacuum those stairs well, I mean, if
37:03
Speaker 3: I wanted to vacuum my downstairs and down stairs, now
37:06
Speaker 3: I can buy one robot instead of take six take
37:09
Speaker 3: it currently, take that six roombas that I currently. The
37:13
Speaker 3: other highlight that I put in here, which was big
37:17
Speaker 3: headline disappointment in the in the reality, it's a robot
37:23
Speaker 3: lawnmower with lasers.
37:25
Speaker 2: And immediately my blade went to know.
37:28
Speaker 3: My mind immediately went to Austin Powers with you know,
37:31
Speaker 3: little robots with lasers on their heads, but instead you
37:35
Speaker 3: just have a robot that runs on lidar.
37:37
Speaker 2: So lasers to detect stuff that's in your lawn that
37:40
Speaker 2: are going to mow it laser.
37:43
Speaker 3: Other than that, I didn't see much that they highlighted
37:45
Speaker 3: that got me all that excited.
37:47
Speaker 2: I mean, I think the.
37:48
Speaker 3: Idea of the robot lawnmower is pretty cool, but we've
37:52
Speaker 3: already had it for a few years, so not all
37:54
Speaker 3: that new. And they did highlight that, hey, while the
37:57
Speaker 3: ten thousand dollars full laundry robot is pretty clunky and.
38:02
Speaker 2: Slow, that if they've figured out how to get this.
38:05
Speaker 3: Far, you know a few years from now, maybe we'll
38:07
Speaker 3: all have a laundry folding robot taking care.
38:10
Speaker 2: Of things for us.
38:11
Speaker 3: My wife would love that markets are up more than
38:15
Speaker 3: half a percent as we close out the show today
38:17
Speaker 3: on a Jobs Friday, we'll be back on It at
38:19
Speaker 3: It on Monday.
38:20
Speaker 2: Have a great weekend, everybody,