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Could tariffs have been implemented without the massive disruption? · The Financial Exchange Show

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Speaker 1: a donation today. This is the Financial Exchange with Chuck
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Speaker 1: Zada and Mike Armstrong.
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Speaker 2: Chuck, Mike and Tucker with you here as we kick
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Speaker 2: off the second hour of the show today, and markets
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Speaker 2: have been wild. The technical term is an uncaged beast
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Speaker 2: where you don't know where it may roam. But yeah,
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Speaker 2: we've been all over the place. So the S and
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Speaker 2: P five hundred, let me let me just walk you
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Speaker 2: through what we've seen this morning, because it's it's stuff
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Speaker 2: that you don't just see every Monday. So the S
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Speaker 2: and P five hundred last Friday closed at five thoy
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Speaker 2: seventy four fine, open today at forty nine to fifty three,
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Speaker 2: so down about two and a quarter percent. It promptly
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Speaker 2: fell another two percent to forty eight thirty five, so
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Speaker 2: down call it four and a half four point seventy
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Speaker 2: five percent.
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Speaker 3: Uh.
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Speaker 2: It then in a span of minutes rallied from there
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Speaker 2: up to fifty two to forty six, about an eight
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Speaker 2: percent rise, and then fell three and a half percent
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Speaker 2: over the next ten minutes, and now is sitting here
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Speaker 2: down three points. As Shakespeare once said, full of sound
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Speaker 2: and fury, signifying nothing. So the S and P five
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Speaker 2: hundred has been in an eight percentage point range so
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Speaker 2: far today and is trading basically flat, the Dows off
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Speaker 2: about four hundred points one percent, the Nasdaq is currently
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Speaker 2: up about a third of a percent forty three points,
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Speaker 2: and the SMP just fell another half a percent. Of
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Speaker 2: the time I was talking literally and is now down
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Speaker 2: twenty points. You've only been talking like thirty seconds. Chock,
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Speaker 2: what's up with that? So again, things are moving quickly
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Speaker 2: at the moment. I want to talk about the ten
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Speaker 2: year US treasury, which again is you know, normally you say, okay,
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Speaker 2: you know, during an economic slide, the ten year yield
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Speaker 2: is going to be moving down, and it was on
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Speaker 2: Thursday and Friday, not today. Tenure treasury is up fourteen
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Speaker 2: basis points in yield to four point one two three
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Speaker 2: yields rising today. What does it mean? It could mean
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Speaker 2: any one of like five different things. We could actually
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Speaker 2: talk about some of those, but I'm not going to
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Speaker 2: do it right off the bat. But let me just
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Speaker 2: put that as a note four why move later ten
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Speaker 2: year later? Thanks? So we'll talk a little bit about
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Speaker 2: that as we go. Other things that are moving around today,
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Speaker 2: which is everything. We've got oil down eighty four cents
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Speaker 2: a barrel on West Text Intermediate to sixty one fifteen,
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Speaker 2: we're actually below sixty a barrel at one point today
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Speaker 2: trip a national averagur gas prices up one tenth of
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Speaker 2: a cent overnight to three twenty five and nine tenths,
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Speaker 2: but kind of hanging steady in that mid three twenty
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Speaker 2: five range. Given where oil prices have gone, even with
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Speaker 2: the switch over to the summer blends, you're probably gonna
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Speaker 2: have those coming back down towards three dollars a gallon
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Speaker 2: in the coming weeks. If we around sixty dollars a
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Speaker 2: barrel here. Finally, we've got gold down twenty dollars now
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Speaker 2: it's to threeenty fifteen and thirty cents. We've been saying
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Speaker 2: all show, Hey, if you got questions, text in, we're
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Speaker 2: happy to attempt to answer them. The text line here
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Speaker 2: is six one seven three six two thirteen eighty five.
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Speaker 2: We can't answer personal questions about like should I buy
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Speaker 2: or sell this stock or stocks or because we don't
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Speaker 2: know you, that's not how this works. But we can't
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Speaker 2: answer questions about what's going on in markets the economy,
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Speaker 2: and we'll give you the best answers that we can.
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Speaker 2: Everyone is kind of going through this together, so hey,
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Speaker 2: we're we're gonna give you the best answers that we can.
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Speaker 2: Let's talk about Oh hello, let's talk about this one
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Speaker 2: here that we got first, nice nice words of praise
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Speaker 2: for us, great commentary over the past several weeks. We
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Speaker 2: are indeed in uncharted territory. These tariff should be rolling
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Speaker 2: in implementation. The trading market is too global and too efficient.
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Speaker 2: We need some support in market and yet to see
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Speaker 2: major major problems. So I think the gist of that
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Speaker 2: text is, hey, could this have been done more gradually
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Speaker 2: to achieve you know, a more desired effect without so
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Speaker 2: much disruption to markets?
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Speaker 4: My answer yes, but doesn't matter because it wasn't. Yeah,
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Speaker 4: it wasn't. And cats out of the bag. Now you can't.
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Speaker 4: You can't unroll that. Right If you say, now, oh,
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Speaker 4: you know, we rethought things and we're going to make
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Speaker 4: them gradual instead, nobody's gonna believe you.
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Speaker 2: Right, It's so that that's what's pass this past. Yes,
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Speaker 2: the hindsight on this I think is absolutely true. And
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Speaker 2: you know that, Look, if we want to just engage
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Speaker 2: in you know, kind of going down the path of hey,
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Speaker 2: how could you potentially implement this with less you know, disruption. Okay,
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Speaker 2: here's what you do. You say, we're going to over
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Speaker 2: the next four years, on January first of each year,
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Speaker 2: institute a new five percent tarify on all imports coming
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Speaker 2: into the US, So five percent year one, ten percent
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Speaker 2: to fifteen and twenty and so on and so forth.
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Speaker 2: We're also going to be providing funds for startups in
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Speaker 2: the US and for building new factories in the US
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Speaker 2: that are going to be highest in year one and
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Speaker 2: then declining as you go forward. So trying to spur
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Speaker 2: investment now such that you you know, get the boost
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Speaker 2: happening now and then by year four you've done most
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Speaker 2: of it. Maybe that would be more sustainable, maybe it wouldn't. Again,
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Speaker 2: it's as Mike said, we're here now and we kind
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Speaker 2: of have to deal with, you know, the situation that's
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Speaker 2: out there. But you can't just go back to how
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Speaker 2: things were on April first, because everyone out there knows
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Speaker 2: that this is possible, and so it's always going to
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Speaker 2: be there as a potential threat that they have to
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Speaker 2: deal with. From how they run their business, how they
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Speaker 2: run their investment portfolios. All those decisions now have to
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Speaker 2: factor this in in a way that they didn't previously. Right,
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Speaker 2: you know, we had gotten a text. This was on
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Speaker 2: Friday of last week.
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Speaker 4: This isn't one of these ones, but the text was
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Speaker 4: along the lines of, look, guys, it's just money. What
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Speaker 4: about all the job creation that happens on the tail
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Speaker 4: end of this?
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Speaker 2: And I don't know.
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Speaker 4: I'm raised my hand to say, look, you know, the
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Speaker 4: US does rely less on trade than other countries that
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Speaker 4: are out there, and so maybe there is something to
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Speaker 4: be said for the job gains on the other end
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Speaker 4: of it. But based on the way that this is
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Speaker 4: being implemented, what you have to understand is a those
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Speaker 4: job those job creation only you know, those job creation
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Speaker 4: numbers only really matter if you are of working age,
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Speaker 4: first of all. So you know, let's talk about who
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Speaker 4: this is actually going to benefit. It's not going to
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Speaker 4: be your sixty seven year olds, and there's anytime in
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Speaker 4: the near short term. The question that I can't answer is, Okay, yes,
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Speaker 4: there's clearly an incentive to move employees to the United
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Speaker 4: States and move manufacturing in particular to the United States.
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Speaker 4: How much is that going to be outweighed by the
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Speaker 4: risk of a recession? Right, because if you no longer
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Speaker 4: need to produce as many cars, planes, and vacations bad
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Speaker 4: example here, but cars, planes, and whatever else you're going
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Speaker 4: to be buying. Because demand falls down a cliff, then
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Speaker 4: you might be getting a larger portion of those jobs
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Speaker 4: back in the United States. But in the short term
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Speaker 4: it could still mean significant net job loss. And that's
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Speaker 4: the piece that I think is a huge gamble with
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Speaker 4: all this.
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Speaker 2: Yeah, I look, I have no idea whether the US
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Speaker 2: economy is going to have a higher proportion, lower proportion
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Speaker 2: of the same proportion of manufacturing jobs ten fifteen years
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Speaker 2: from now. I can't go through all of the different
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Speaker 2: machinations that are going to happen geopolitically that you know,
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Speaker 2: things we haven't even thought of yet, right that you know,
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Speaker 2: aren't even conceptualized in our heads yet. About what could
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Speaker 2: happen to either help or disrupt that potential change. It's
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Speaker 2: a possibility, but we don't know, and I think we're
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Speaker 2: going to have to wait and see what actually happens there.
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Speaker 2: Take a quick break here. When we come back, we're
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Speaker 2: gonna be joined by Charlie Gasparino from Fox Business right
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Speaker 2: after this, talking about markets on the Financial Exchange.
9:10
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9:41
Speaker 2: If you've got questions about what is going on in markets,
9:47
Speaker 2: totally normal. First of all, I mean, these are again
9:50
Speaker 2: the Thursday Friday sell off was the fourth largest two
9:53
Speaker 2: day selloff since nineteen fifty. So I get it if
9:57
Speaker 2: you're a little bit spooked. But we got our text
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Speaker 2: line up and it's six one seven three six two
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Speaker 2: thirteen eighty five, Texas. If you got questions, don't do
10:05
Speaker 2: it while you're driving, don't do it while you're you know,
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Speaker 2: on the forklift. But textas at six one seven three
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Speaker 2: six two thirteen eighty five. And we'll do our best
10:14
Speaker 2: to answer your questions, because I know that you probably
10:16
Speaker 2: have a lot of them. I know it's a little
10:17
Speaker 2: bit scary to see how markets are moving, but we'll
10:21
Speaker 2: see what we can do too. Uh to answer those
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Speaker 2: questions again, textus at six one seven three six two
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Speaker 2: thirteen eighty five. Uh. Again, market's just moving very rapidly.
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Speaker 2: We went to break and I said the SMP was
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Speaker 2: like basically flat. It then fell two percent in about
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Speaker 2: three minutes. This on an announcement, Tucker, do we have
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Speaker 2: any attribution for where that was?
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Speaker 5: I'm only seeing uh snippets here and there on Twitter.
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Speaker 5: I'm not sure where it came from though, but it is.
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Speaker 2: Oh no, here we go. Yep, it's a it's a
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Speaker 2: truth social post. Yeah, and I'll quote the whole thing. Uh,
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Speaker 2: this is from President Trump. Yesterday, China issued retaliatory tear
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Speaker 2: of thirty four percent on top of they're already record
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Speaker 2: setting tariffs non monetary tariffs I legal subsidization of companies
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Speaker 2: in massive long term currency manipulation. Despite my warning than
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Speaker 2: any country that retaliates against the US by issuing additional
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Speaker 2: tariffs above and beyond they're already existing long term tariff
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Speaker 2: abuse of our nation would be immediately met with new
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Speaker 2: and substantially higher tariffs over and above those initially set. Therefore,
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Speaker 2: if China does not withdraw its thirty four percent increase
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Speaker 2: above their already long term trading abuses by tomorrow, April eighth,
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Speaker 2: the United States will impose additional tariffs on China of
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Speaker 2: fifty percent effective April ninth. So it sounds like that's
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Speaker 2: fifty percent above the thirty four, which would be getting
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Speaker 2: pretty close to one hundred, and so also saying here
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Speaker 2: negotiations with other countries which have requested meetings will begin
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Speaker 2: taking place immediately. Thank you for your attention to this matter.
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Speaker 2: So that is basically what we have here. The real
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Speaker 2: meat of this, quite honestly, is like the China tariff,
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Speaker 2: you know, threat I think is something. Take from it
12:09
Speaker 2: what you will, but I think it's kind of setting
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Speaker 2: up that that last couple of sentences, Hey, we're gonna
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Speaker 2: be negotiating with some other countries. Don't be surprised if
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Speaker 2: you get some announcements coming out in the next couple
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Speaker 2: of days, you know, potentially as we get closer to
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Speaker 2: the tariff deadline. And I think that's kind of where
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Speaker 2: we're heading here. I would not be surprised to see
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Speaker 2: the tariffs on China maintained. I don't know if this
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Speaker 2: additional fifty percent you know, ends up going forward or not,
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Speaker 2: but I I believe through all of this the main
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Speaker 2: target on this is China and the eute you know,
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Speaker 2: kind of a secondary extent for very different reasons. Obviously,
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Speaker 2: the rest I kind of and again I the speculation,
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Speaker 2: it's not worth the time you're spending listening to it.
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Speaker 2: But I kind of think that the rest of it
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Speaker 2: might end up being you know, negotiated somewhat, but we
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Speaker 2: still end up with some significant new tariffs that are
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Speaker 2: in place that obviously can still significantly impact the US economy.
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Speaker 2: But uh, this is the news from the most recent
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Speaker 2: post from the present. This was at eleven fourteen AM,
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Speaker 2: so about you know, seven eight minutes ago is when
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Speaker 2: that ended up going through. So we'll continue to see
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Speaker 2: what's going on in markets. But again you're seeing on
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Speaker 2: the headlines, you know, two to three percent moves in
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Speaker 2: a span of minutes. These are not stable markets in
13:43
Speaker 2: any way, shape or form at the moment. And so
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Speaker 2: I think you just gotta again take everything slow down,
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Speaker 2: don't you know, overreact in any particular direction, and we'll
13:55
Speaker 2: see where things go. Joining us now has promised. We
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Speaker 2: got Charlie Gasparina from Fox Business on the line. Charlie,
14:01
Speaker 2: how are you doing today?
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Speaker 3: I don't know.
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Speaker 2: I know if you asked me five minutes ago, I'd say, well,
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Speaker 2: the the S and P's flat. Now it's down two
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Speaker 2: percent again, So it's we're minute to minute here on
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Speaker 2: the show. What obviously it seems like this is going
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Speaker 2: to come to a head over the next couple of days.
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Speaker 2: Does anyone have any idea how this is going to resolver?
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Speaker 2: We all just flying by the seat of our pants.
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Speaker 3: I don't know. I mean, I hate making predictions with Trump,
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Speaker 3: but you know, what I think will happen is that
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Speaker 3: he will pivot. I'm hearing this from my sources who
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Speaker 3: are plugged into the administration, but you know, this might
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Speaker 3: be wishful thinking. My sources all are on Wall Street,
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Speaker 3: you know, and they're getting there, you know, what's handed
14:44
Speaker 3: to him right now. I think he's going to be
14:46
Speaker 3: pivoting to cutting deals, which is kind of what I've
14:50
Speaker 3: been writing and other people, you know, I've been saying
14:53
Speaker 3: that that if he goes this route, you know, this
14:55
Speaker 3: stuff is much more palatable and uh and and by
14:59
Speaker 3: the way, it'll be or lived. I mean, if he
15:01
Speaker 3: literally goes to pivoting towards deals, we you know, we
15:07
Speaker 3: gotta you know, we're gonna have a It's gonna be good.
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Speaker 3: It's gonna be a much better outcome for America. Well,
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Speaker 3: the yields are on the tenure and this is something
15:17
Speaker 3: we should always follow in your yield.
15:20
Speaker 2: This is gonna be my next question to you.
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Speaker 3: Actually, they spiked up dramatically. Now they're back down again.
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Speaker 3: They're still they're still green to say, now, what does
15:29
Speaker 3: that mean. If the yield is up, that means the
15:33
Speaker 3: bond is lower. You're thinking that there's gonna be bad inflation.
15:40
Speaker 3: If bonds are lower, that generally means that the economy
15:45
Speaker 3: is poised to maybe rally because you're gonna you're gonna
15:52
Speaker 3: get some figure inflation. Uh So, you know right now
15:58
Speaker 3: is still pricing in. They're up, they're they're both were,
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Speaker 3: they're both four there were you know I started three
16:05
Speaker 3: ninety last week three eighty which really was processionary territory.
16:10
Speaker 3: Three eighty three, three eighty six five was below. That
16:14
Speaker 3: was last week. It was like Thursday Friday. That's definitely
16:17
Speaker 3: recessionary territory. This is pricing and stuffing. It's different right now.
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Speaker 3: So you know, who knows bond market is starting to
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Speaker 3: give out sort of signals that maybe there's a deal.
16:27
Speaker 3: He's going to be doing deals. The EU came out
16:30
Speaker 3: and said it's now willing to negotiate down to zero tariffs.
16:35
Speaker 3: I think that's what they fill without. You know, there
16:36
Speaker 3: was an Errand headline. You gotta be really careful with
16:39
Speaker 3: all the stuff you say these days. European Commissioner, you know,
16:45
Speaker 3: just talking about zero zero pack, that tariffs deal with
16:49
Speaker 3: the US. Finally she she actually said this. I could
16:52
Speaker 3: see her saying it, So I feel very confident. There
16:55
Speaker 3: was an Errand headline that Kevin has to be an
16:58
Speaker 3: interview by by Brian killed me. The Fox came out
17:02
Speaker 3: and said that you know, there's going to be a
17:04
Speaker 3: ninety day pause. It wasn't. He didn't say anything like that.
17:07
Speaker 3: Brian asked them if there would be a ninety day pause,
17:10
Speaker 3: the less you can sort of surmise some bodice. You
17:13
Speaker 3: didn't really say yes or no. He just said it's
17:15
Speaker 3: the present decision. So you gotta be really careful with
17:19
Speaker 3: the headlines these days. It's a lot of a lot
17:22
Speaker 3: of stuff floating around, a lot of wishful thinking. Markets
17:25
Speaker 3: are clearly on edge. But you know this is more
17:30
Speaker 3: than markets. If we don't get I mean this trade stuff,
17:33
Speaker 3: I mean Trump is one undred percent right in terms
17:36
Speaker 3: of the you know, the deals don't be cut. I mean,
17:38
Speaker 3: they screw us at every turn. All these countries have
17:41
Speaker 3: massive powers and value added taxes and things of that
17:45
Speaker 3: nature against our goods, makes our goods more difficult to
17:49
Speaker 3: sell Overseaits The real question is approach. I mean, this
17:53
Speaker 3: sort of fledgehammer approach doesn't work. It probably is not
17:59
Speaker 3: the way to all about this. The other thing I
18:02
Speaker 3: think it's pretty scare to say is there's probably a
18:04
Speaker 3: civil war going on in the White House on this stuff.
18:08
Speaker 3: I'm sure there's the Scott Besson type who want us
18:11
Speaker 3: to go. What's more methodical, it's the Treasury secretary and
18:15
Speaker 3: you know, the Peter Navarro types who want us to go,
18:18
Speaker 3: you know, full bore guns blazing with parts. So there's
18:22
Speaker 3: a little bit of that. Obviously, the guy at the
18:23
Speaker 3: top makes the decision.
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Speaker 2: You know, Charlie, appreciate you joining us today. We got
18:28
Speaker 2: to run just because we're gonna head to break in
18:29
Speaker 2: a bit. But thanks for joining us. And uh, we'll
18:32
Speaker 2: keep watching you to see what's what's going on as
18:34
Speaker 2: we go through this.
18:36
Speaker 3: You got it. Thank you.
18:37
Speaker 2: That is Charlie Gasparino from Fox Business talking about what's
18:42
Speaker 2: going on in markets currently. Tuck, you want to do
18:46
Speaker 2: trivia now? Are you well?
18:47
Speaker 4: Do it?
18:47
Speaker 2: On the other side. Oh, that sounds fun, that'll be exciting.
18:50
Speaker 2: Taking a look at markets then, as we head towards
18:51
Speaker 2: the bottom of the hour, the Dow is off one
18:55
Speaker 2: thousand and thirty nine points about two point seven percent,
18:57
Speaker 2: The S and P's down one twelve two point two
19:00
Speaker 2: and the Nasdaq is off three hundred and nine points
19:03
Speaker 2: about two percent as well. So stock still can't get
19:07
Speaker 2: any kind of consistent traction. Again, it's just a very
19:10
Speaker 2: headline driven market that we have right now, and that
19:15
Speaker 2: seems to be uh the story at the moment. It's just,
19:20
Speaker 2: quite honestly like some of the highest volatility that I've
19:23
Speaker 2: ever seen minute to minute and even second to second,
19:27
Speaker 2: if we're willing to operate on that short of a timeframe.
19:30
Speaker 2: Let's take a quick break here when we come back,
19:32
Speaker 2: trivia right after this.
19:41
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Speaker 1: This is the Financial Exchange Radio Network.
20:06
Speaker 5: Now it's time for trivia here in the Financial Exchange
20:08
Speaker 5: and on this day. Back in nineteen sixty eight, gangsters
20:11
Speaker 5: Henry Hill and Tommy de Simone committed the Air France robbery,
20:15
Speaker 5: stealing four hundred and twenty thousand dollars from cargo terminal
20:19
Speaker 5: at New York City's JFK International Airport. The heist would
20:24
Speaker 5: become a major plot point in the nineteen ninety film Goodfellas.
20:29
Speaker 5: Trivia question today, pretty easy one. Which actor Portrade Henry
20:33
Speaker 5: Hill in Goodfellas?
20:35
Speaker 1: Once again?
20:35
Speaker 5: Which actor Portrade Henry Hill in Goodfellas be the ninth
20:40
Speaker 5: person today? That secks us at six one seven three six,
20:43
Speaker 5: two thirteen eighty five with the correct answer, and you
20:46
Speaker 5: get a brand new Financial Exchange Show T shirt once
20:49
Speaker 5: again the ninth correct response to text us at six
20:52
Speaker 5: one seven three six two thirteen eighty five. We'll get
20:54
Speaker 5: that t shirt. See complete contest rules at Financial Exchange
20:58
Speaker 5: Show dot com.
20:59
Speaker 2: Mike, we got he know the text in that Tucker
21:01
Speaker 2: sent over to us again sixty one seven three six,
21:04
Speaker 2: two thirteen eighty five. Hi, guys, what do you recommend
21:07
Speaker 2: for someone planning to retire next year? Does it mean
21:09
Speaker 2: I should continue working over the next few years? Thank
21:12
Speaker 2: you so caveat. Look, we don't know you. We don't
21:17
Speaker 2: know if you should keep working or not. We don't
21:19
Speaker 2: know how your portfolio set up. We don't know your
21:21
Speaker 2: social security if you have a pension, We don't know
21:23
Speaker 2: if you're a man woman sixty five eighty five, twenty five,
21:26
Speaker 2: So we we can't give you specific advice.
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Speaker 4: But how would we judge that question normally outside of
21:33
Speaker 4: not knowing this person?
21:34
Speaker 2: Right?
21:34
Speaker 4: I think that's the question is how do you approach
21:37
Speaker 4: that if you are in that position? Interestingly, you know,
21:41
Speaker 4: it wasn't a question of should I sell all my
21:44
Speaker 4: stocks and go to cash? It was it was really, Hey,
21:47
Speaker 4: I have this ability today to bring in a wage,
21:51
Speaker 4: bring in savings, put more into the market. I don't
21:54
Speaker 4: really want to do that, But should I extend that further?
21:57
Speaker 4: Based on what we're seeing right now?
21:59
Speaker 2: And basically what it boils down to is two things
22:03
Speaker 2: really simple but also kind of complex. How they all
22:06
Speaker 2: work together. Hey, what what do you need to spend
22:08
Speaker 2: in any given year? And when you retire, how easily
22:12
Speaker 2: are you going to be able to replace that? So
22:14
Speaker 2: if you need to spend forty thousand dollars a year
22:16
Speaker 2: in order to live and you have twenty thousand a
22:19
Speaker 2: year coming in from Social Security once you retire, how
22:22
Speaker 2: do you fill that twenty thousand dollars gap. If it
22:25
Speaker 2: is with eighty thousand dollars that you have in savings
22:29
Speaker 2: can be a problem, then you probably need to continue
22:31
Speaker 2: to work longer. If it's with a million dollars that
22:34
Speaker 2: you have in savings, then you probably don't need to consider,
22:39
Speaker 2: right working longer and anything in between. You know, you
22:42
Speaker 2: can figure out, Okay, maybe do I reduce my expenses
22:45
Speaker 2: from forty thousand to thirty six thousand? Can I do that?
22:48
Speaker 2: You know, there's there's ways where you can say, hey,
22:50
Speaker 2: maybe I stop working full time and move down to
22:54
Speaker 2: part time, so making an extra ten thousand dollars a
22:56
Speaker 2: year in order to you know, make ends meet. These
22:59
Speaker 2: are the kinds of conversations that Mike and I have
23:03
Speaker 2: as we're you know, kind of working with people to
23:07
Speaker 2: help build financial plans for them and assess when you
23:10
Speaker 2: can retire, in what you can do.
23:12
Speaker 4: And when we're working with clients on this type of thing,
23:16
Speaker 4: we always acknowledge that a lot of this is uncertain
23:19
Speaker 4: right because we don't know what your expenses are going
23:20
Speaker 4: to look like. Five years from now, what if tariffs
23:22
Speaker 4: drive up the costs of everything so dramatically that life
23:25
Speaker 4: looks a fair bit different from now. How do you
23:28
Speaker 4: plan for these sort of things? And so we almost
23:30
Speaker 4: never put some form of certainty on that retirement question.
23:34
Speaker 4: It's almost never like oh yeah, very clearly, boom here
23:38
Speaker 4: you are right. Oftentimes it's a probability, like hey, you know,
23:41
Speaker 4: when we look out, depending on how long you live,
23:43
Speaker 4: we are this confident that you can basically live this
23:47
Speaker 4: retirement lifestyle without needing to make changes to it at
23:50
Speaker 4: any point in the future. And you know, I think
23:52
Speaker 4: obviously those people that we're close to closer to one
23:55
Speaker 4: hundred percent probability of being in a good place are
23:58
Speaker 4: probably still close to that those who were fifty to fifty.
24:02
Speaker 2: It's looking a lot more.
24:03
Speaker 4: Challenging today based on all this uncertainty if you're falling
24:08
Speaker 4: into that same boat though, right, we can't answer these
24:11
Speaker 4: questions on the radio because we know nothing about you.
24:13
Speaker 4: But you can come and talk to us if you
24:15
Speaker 4: are sitting on your investment portfolio. And you know, I'm
24:19
Speaker 4: taking calls today about hey, I you know, went through
24:22
Speaker 4: this threshold, and in my mind that was a kind
24:25
Speaker 4: of threshold that I hoped to not cross back under.
24:29
Speaker 2: What do I do about it?
24:30
Speaker 1: You know?
24:30
Speaker 4: How am I exposed? What if this happens, what if
24:33
Speaker 4: that happens? And what does it mean for my retirement?
24:37
Speaker 4: Those are only questions that can be answered one on one.
24:39
Speaker 4: There isn't going to be a web resource or computer
24:42
Speaker 4: algorithm that I'm aware of today that's going to be
24:44
Speaker 4: able to answer that question with any degree of confidence
24:48
Speaker 4: without spending some time getting to know you. If you
24:51
Speaker 4: would like somebody Armstrong advis someone at the arm Strong
24:53
Speaker 4: Advisory Group to get to know you a little bit
24:57
Speaker 4: and then provide you that feedback on how you are
25:00
Speaker 4: set up, give us a ring the numbers eight hundred
25:03
Speaker 4: three nine three for zero zero one. We obviously know
25:08
Speaker 4: how stressful of a time this is. If you are
25:10
Speaker 4: looking for that second opinion, which is what this is,
25:14
Speaker 4: give us a ring the number once again, eight hundred
25:17
Speaker 4: three nine three four zero zero one.
25:20
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
25:22
Speaker 1: registered investment advisor. Nothing in the ad or in any
25:25
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
25:28
Speaker 1: your own financial tax into state planning advisors before making
25:31
Speaker 1: any investment decisions, Armstrong may contact you to offer investment
25:34
Speaker 1: advisory services.
25:35
Speaker 2: Another text that came in on the text line again
25:38
Speaker 2: six one, seven three six two thirteen eighty five. Does
25:42
Speaker 2: the last few days of volatility resemble the first two
25:44
Speaker 2: years of the Reagan administration nineteen eighty one to eighty three.
25:47
Speaker 2: Uh No, the volatility that we have seen the last
25:50
Speaker 2: two days remembers resembles three other periods in the last
25:53
Speaker 2: seventy five years. Black Monday in nineteen eighty seven, March
25:58
Speaker 2: of twenty twenty, specifically, March eleventh and twelfth of twenty twenty,
26:03
Speaker 2: and November nineteenth and twentieth of two thousand and eight.
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Speaker 2: Those are the only three periods on record that have
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Speaker 2: had a larger two percent draw down than what we've seen.
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Speaker 2: The other ones are all scattered around two thousand and eight,
26:17
Speaker 2: like November fifth and sixth, October fourteenth and fifteenth, October
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Speaker 2: sixth and seventh, like it's basically twenty eight, twenty twenty,
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Speaker 2: and Black Monday, and other than that, there's nothing like
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Speaker 2: this that we've seen in the last seventy five years
26:33
Speaker 2: on a two day period. Now, in terms of the
26:35
Speaker 2: overall magnitude of the draw down. Yes, while it is
26:38
Speaker 2: true that during the morning the S and P five
26:40
Speaker 2: hundred did enter a bear market, meaning down twenty percent
26:44
Speaker 2: from its previous high, we have seen far deeper, you know,
26:49
Speaker 2: overall selloffs in the tech bubble and during the financial crisis,
26:53
Speaker 2: and even during COVID.
26:54
Speaker 4: Tech in twenty twenty two, the US equity market sold
26:56
Speaker 4: off by more than it has so far.
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Speaker 2: Yes, but the two day volatile in the last two
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Speaker 2: days is a historic event. There have only been three
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Speaker 2: times in the last seventy five years that we have
27:09
Speaker 2: seen a bigger two day draw down. A lot of times,
27:12
Speaker 2: Mike and I like to you know, kind of poop
27:13
Speaker 2: poo things where you know, every every time the market
27:16
Speaker 2: has like a two percent fall, and you know, the
27:18
Speaker 2: Wall Street journals are like, oh, is this it for
27:20
Speaker 2: the markets or you know, Bloomberg run you know, CNBC
27:23
Speaker 2: runs markets and turmoil, where I was like, guys, it's
27:27
Speaker 2: been like two percent or it's been like two days
27:29
Speaker 2: of the year, like let's let's pump the brakes. These
27:31
Speaker 2: are the terms. This is one where you can be like, yeah,
27:34
Speaker 2: we we just lived through it, and that was real.
27:38
Speaker 2: That was something that that happened there that you don't
27:43
Speaker 2: see every twelve, eighteen, twenty four months.
27:47
Speaker 4: When we talk about market downturns of any different sort,
27:51
Speaker 4: we there's always a narrative around it. In the narrative
27:54
Speaker 4: right now, obviously Tariff's uncertainty, all of that. Yeah, And
27:57
Speaker 4: when I think about the turn away from that downturn,
28:00
Speaker 4: that the bottoming of that downturn, and the move towards
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Speaker 4: a recovery.
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Speaker 2: In markets, there's a shift in that narrative.
28:08
Speaker 4: And I think that's what everyone is out there looking
28:10
Speaker 4: for and why it's impossible for anyone to answer, Hey,
28:13
Speaker 4: how long does this one lasts? Nope, nobody has any idea.
28:15
Speaker 4: But you think about the last few right like twenty
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Speaker 4: twenty two. I think what we started to see towards
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Speaker 4: the end of that was a breaking in the inflation
28:23
Speaker 4: data where you started to look at and say, oh, okay,
28:25
Speaker 4: we are not heading forward.
28:26
Speaker 2: It was actually the opposite. The market bottomed in the
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Speaker 2: October inflation report, or it was really the September one,
28:32
Speaker 2: but the market bottomed on a really hot September inflation
28:34
Speaker 2: report and basically said can't it can't get worse?
28:38
Speaker 4: Right in twenty twenty we bottomed on the we started
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Speaker 4: making gains again on the news that basically the federal
28:47
Speaker 4: Reserve was not going to allow companies to go bankrupt.
28:49
Speaker 4: They were going to buy any corporate bond that existed.
28:52
Speaker 4: And then Congress came in with a whole bunch of
28:54
Speaker 4: stimulus in eight yeah, or March of When when did
28:58
Speaker 4: TARP pass?
28:59
Speaker 2: H October of a eight. I believe that.
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Speaker 4: So you started having these giant government bailouts to to
29:05
Speaker 4: support things.
29:06
Speaker 2: Now, No, there, you didn't bottom for five months.
29:08
Speaker 4: Yeah, it took quite some time, and arguably, you know,
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Speaker 4: this will be debated for the rest of time, but
29:13
Speaker 4: arguably Congress didn't do enough in that point in time
29:16
Speaker 4: to sort of bail things out.
29:17
Speaker 2: And push things forward.
29:19
Speaker 4: So the question in my mind is not how long
29:22
Speaker 4: does this last? It's how long until there is some
29:26
Speaker 4: change in the status quo. That's what it is to me,
29:30
Speaker 4: is you know, how long until either markets completely capitulate
29:34
Speaker 4: and and are suddenly on sale or there is a
29:37
Speaker 4: turn in the narrative That could take so many different forms.
29:41
Speaker 2: So there's one other thing I wanted to get into.
29:43
Speaker 2: You said, you know, how long until market's completely capitulate
29:45
Speaker 2: and or you know, on sale. Here's the interesting case
29:48
Speaker 2: that you can make right now. Markets did just capitulate
29:53
Speaker 2: like that was that was a big fall in two days, right,
29:56
Speaker 2: So you could be like and like, you look at
29:58
Speaker 2: how just everything's trading, and you're like, it's about as
30:01
Speaker 2: capitulating as you can be. I don't know if you
30:03
Speaker 2: can make that a word, but we just did because
30:06
Speaker 2: you're welcome the interesting case to be made right now.
30:12
Speaker 2: Markets may have capitulated, but they're also not cheap. And
30:18
Speaker 2: we started a very expensive starting point in this and
30:22
Speaker 2: that's the thing. Like this market on the Friday close
30:25
Speaker 2: was still about eighteen times forward earnings, which, if you
30:29
Speaker 2: look at again just kind of like long term averages,
30:35
Speaker 2: sixteen to seventeen is kind of where you've historically sat
30:37
Speaker 2: long term. In recent years, it's been higher obviously, you know,
30:40
Speaker 2: eighteen nineteen, but it's something where you say, hey, if
30:45
Speaker 2: you do think some economic slowing is coming, if you
30:48
Speaker 2: do think a recession is coming, then two things typically happen.
30:51
Speaker 2: Number One, multiples usually come in further, usually into that
30:55
Speaker 2: twelve to fifteen range, and forward earnings estimates usually get
30:59
Speaker 2: revised down as well. And so you can have the
31:03
Speaker 2: very interesting case. And this is kind of how bear
31:05
Speaker 2: markets usually develop, where it's not usually COVID thirty five
31:09
Speaker 2: percent in three weeks. It's usually okay, market falls fifteen percent,
31:16
Speaker 2: rallies for you know, a month or so, falls another
31:19
Speaker 2: ten percent, rallies for a month or so.
31:22
Speaker 4: Love quoting this, how many times did markets rally by
31:24
Speaker 4: like five or ten percent during the dot com bubble?
31:27
Speaker 2: I forget it's like five times instead of rallied, the
31:30
Speaker 2: NASDACK rallied had I think it was either six or
31:32
Speaker 2: seven different ten percent rallies before it finally bottomed, and
31:36
Speaker 2: it was a two year bottoming process. So it's not
31:39
Speaker 2: to say that that's what you will or won't get
31:40
Speaker 2: here like none of us know, but there's a case
31:44
Speaker 2: to be made. Hey, if you're not optimistic about where
31:47
Speaker 2: the US economy goes in the short term, stocks still
31:50
Speaker 2: aren't cheap even though you've had this short term capitulation here,
31:53
Speaker 2: So maybe you get a relief rally and then things
31:55
Speaker 2: fall like no one knows, it's it's not even worth
31:58
Speaker 2: speculating on. But I just point out, hey, you've had
32:03
Speaker 2: you know, a big dip here, but stocks still aren't
32:04
Speaker 2: cheap because they were priced so expensively to begin with,
32:08
Speaker 2: Where do you go from here? Choose your own adventure?
32:11
Speaker 2: A lot of different paths that still can take quick break.
32:14
Speaker 2: When we come back, we'll do a little bit of
32:15
Speaker 2: stack root left.
32:17
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32:43
Speaker 5: This segment of The Financial Exchange brought to you in
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Speaker 5: for more information and to book your trip today. That's
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Speaker 5: visit USVII dot Com. Trivia question today was simply which
33:14
Speaker 5: actor portrayed Henry Hill and Goodfellas.
33:18
Speaker 2: That's of course.
33:18
Speaker 5: Ray Liota, Christian from Nantucket is our winner today taking
33:23
Speaker 5: home a brand new Financial Exchange Show T shirt. And
33:26
Speaker 5: we played trivia every day here on the Financial Exchange
33:29
Speaker 5: See complete contest rules at Financial Exchange Show dot com.
33:32
Speaker 2: I have a bone to pick about the trivia question
33:36
Speaker 2: actually too easy, No, just the lead into it. So
33:39
Speaker 2: it was talking about the Air France robbery. Yeah, the
33:42
Speaker 2: Air France robbery was in April of nineteen sixty seven.
33:46
Speaker 2: The one that was covered in Goodfellas was the Luftanza heist,
33:51
Speaker 2: which took place in December of nineteen seventy eight. Bad,
33:55
Speaker 2: they were different events. Ben just ran out the door.
34:00
Speaker 5: Well, I don't know, that's what he saw this morning.
34:01
Speaker 2: Henry Hill was involved in both of them in different ways.
34:04
Speaker 5: Nonetheless, the trivia question was.
34:07
Speaker 2: About the movie, correct, But I just had a bone
34:10
Speaker 2: to pick on the intro to the trivia questions. So
34:13
Speaker 2: it's better that Chuck catch it.
34:14
Speaker 4: Than a listener catch it and get angry, and so yeah,
34:17
Speaker 4: better than good good job.
34:18
Speaker 2: What else you got for me, Mike?
34:21
Speaker 4: I want to talk about long term interest rates because
34:24
Speaker 4: it has been a big push from Scott Bessett since
34:28
Speaker 4: the day he moved into the White House.
34:30
Speaker 2: Didn't literally move into the White House. I don't think
34:32
Speaker 2: he lives there.
34:33
Speaker 4: That Hey, the Trump administration wants to bring down long
34:36
Speaker 4: term interest rates and they want to be able to
34:38
Speaker 4: help Americans with housing and things like that. I also
34:40
Speaker 4: saw an op ed piece in Fox over the weekend
34:43
Speaker 4: about intentionally bringing down interest rates in order to make
34:48
Speaker 4: refinancing the debt that's coming due in twenty twenty five
34:52
Speaker 4: more affordable. I have a bone to pick with that
34:55
Speaker 4: narrative because I just don't know how that works out.
34:58
Speaker 4: But here's the here's the bas of the argument is, Hey,
35:01
Speaker 4: if you can get everyone all concerned about a recession,
35:05
Speaker 4: then you can bring down long term interest rates, because
35:08
Speaker 4: that's typically what happens. It's certainly what we've seen so
35:11
Speaker 4: far in like certainly Thursday and Friday, what we saw
35:14
Speaker 4: a long term interest rates was them coming down because
35:17
Speaker 4: people were piling into those types of types of assets.
35:20
Speaker 4: And so the argument is played out like, hey, very
35:23
Speaker 4: risky decision to make, because if you do sink the
35:25
Speaker 4: economy into recession, that's probably a lot worse than having
35:28
Speaker 4: to refinance the debt at four and a half percent.
35:31
Speaker 4: But if you could pull off a fear of recession
35:33
Speaker 4: without getting one, you will yeah a growth scare, and
35:37
Speaker 4: you could bring down interest rates. Unfortunately, today nobody's buying that.
35:42
Speaker 4: Today you have equity markets, I don't.
35:44
Speaker 1: Know what they're doing.
35:45
Speaker 2: They've been all over the place. They've been.
35:49
Speaker 4: Eight percent swings, but you've got ten your treasury yields
35:52
Speaker 4: moving up by more than a tenth of a percent.
35:56
Speaker 2: Can we just give some context on this. The stock
35:58
Speaker 2: market today has had a wider range than October through February. Jeez,
36:08
Speaker 2: the tiber than a five month The October through February
36:11
Speaker 2: range for the S and P five hundred was about
36:13
Speaker 2: six and a half percent. We have had a wider
36:16
Speaker 2: range in market values today than that entire five month period.
36:20
Speaker 4: So let that sink in for a moment. But the
36:22
Speaker 4: point would be here. If you do push ahead with teriffs,
36:27
Speaker 4: not only do you potentially cause a recession and then
36:30
Speaker 4: have a much worse problem than refinancing expensive debt, but
36:33
Speaker 4: you also, potentially, through the use of these tariffs, prevent
36:37
Speaker 4: foreign buyers from buying treasuries and therefore make your problem
36:40
Speaker 4: a lot worse. Plus if you do get that recession,
36:43
Speaker 4: what usually happens to net deficits Chuck in yours, when
36:48
Speaker 4: you have recessions, Uh, typically they go up anywhere from
36:51
Speaker 4: two to four percent. So you would actually have to
36:53
Speaker 4: issue more debt in order to get that. So I'm
36:56
Speaker 4: not saying that the president's wrong on this. I'm saying
36:59
Speaker 4: that the ed ryder in the foss So I just
37:02
Speaker 4: don't think the numbers really add up for that to
37:04
Speaker 4: make any sense in terms of this is why the
37:06
Speaker 4: Trump administration is doing this again.
37:09
Speaker 2: If they can pull it off, more power to them.
37:11
Speaker 2: But we said at the beginning, there's a lot that
37:16
Speaker 2: has to go right in order for this to work out,
37:19
Speaker 2: you know, with the optimal outcome. We're still not We're
37:23
Speaker 2: not even in the first we are in the first inning.
37:25
Speaker 2: But it's like this early the first like two pitches
37:28
Speaker 2: have been thrown in the baseball game on both sides,
37:30
Speaker 2: there's a combined to like two hundred and ninety eight
37:32
Speaker 2: additional pitches that need to be thrown. And that's assuming
37:35
Speaker 2: we don't go into extra innings, which sometimes you do
37:38
Speaker 2: in the playoffs. Good the two thousand good baseball analogy there,
37:42
Speaker 2: Chuck I appreciate that.
37:44
Speaker 4: You know what sport I was talking about. You know,
37:46
Speaker 4: it's big missed opportunity. Speak of which, jod Polo analogy.
37:50
Speaker 2: Did you guys happen to see Alexevetchkin top and way
37:53
Speaker 2: in Gretzki of course, yep, penguin slide. Pretty incredible, pretty remarkable.
37:57
Speaker 2: I mean, talk about records that don't think anyone ever
38:00
Speaker 2: thought would be broken and uh still going.
38:02
Speaker 4: We'll see see if he's uh Wayne apparently did. By
38:05
Speaker 4: the way, you think Gretzky's gonna come back? No, bet,
38:08
Speaker 4: I know think I think he knew that his record
38:10
Speaker 4: would someday be broken.
38:11
Speaker 2: Maybe not the points, No never. We're done for the day.
38:15
Speaker 2: Markets remain in negative territory, but we're minute to minute here.
38:18
Speaker 2: We'll see you tomorrow. We'll keep you all caught up
38:20
Speaker 2: on what's going on.