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Millennials need to stop complaining about recessions · The Financial Exchange Show

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Speaker 1: Zada and Mike Armstraw.
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Speaker 2: Jobs Friday here on the Financial Exchange. In the aftermath
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Speaker 2: of this morning's job report, which showed one hundred and
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Speaker 2: thirty nine thousand jobs created in the unemployment rates staying
1:19
Speaker 2: at four point two percent, We've got stocks, green, bonds red,
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Speaker 2: with the Dow up four hundred and sixty eight points,
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Speaker 2: the S and P's up sixty eight, and the Nasdaq
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Speaker 2: up two sixty four. The tenure Treasury is selling off
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Speaker 2: eight basis points to four point four to seven six percent.
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Speaker 2: Oil is up a dollar seventeen a barrel to sixty
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Speaker 2: four fifty four per barrel, and we've got gold down
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Speaker 2: twenty eight ten and ounced to thirty three forty seven
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Speaker 2: at the moment. As well. As I mentioned that jobs
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Speaker 2: report this morning came out one hundred and thirty nine
1:53
Speaker 2: thousand jobs created four point two percent an employment rate.
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Speaker 2: So the headline numbers were strong mic but under the
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Speaker 2: surf some things that aren't red flags. You're not you know,
2:03
Speaker 2: sitting there screaming saying, oh, like it's all gonna fall
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Speaker 2: apart tomorrow. But some things where you say, even though
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Speaker 2: the headline numbers are good, this might not be the
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Speaker 2: healthiest labor market, and we need to watch how it
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Speaker 2: develops over the next few months.
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Speaker 3: Yeah, you've had a divergence between what businesses are saying
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Speaker 3: and household are saying, which is not abnormal. You also
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Speaker 3: have those revisions that came in for the last two months,
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Speaker 3: and so, yeah, some underlying cracks, but overall, you can't
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Speaker 3: describe a job market that at this stage is adding
2:32
Speaker 3: what did we say, one hundred and thirty thousand plus
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Speaker 3: jobs as weak by any stretch.
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Speaker 2: It's not weak, but it's weaker than we thought it
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Speaker 2: was even at the time. And what I mean by that,
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Speaker 2: I was looking at the BLS data, because you know,
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Speaker 2: that's that's what we do. That's it's our job is
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Speaker 2: to look at this stuff. So let's just look at
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Speaker 2: this this year so far. Okay, January the initial report
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Speaker 2: comes out one hundred and forty three thousand jobs added.
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Speaker 2: First revision takes it down to one twenty five. Second
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Speaker 2: revision takes it down to one hundred eleven thousand. So
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Speaker 2: you've get a net loss of thirty two thousand jobs
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Speaker 2: compared to where we thought we were. Yep. February one
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Speaker 2: hundred and fifty one thousand jobs created good. Looks looks fine.
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Speaker 2: First revision takes us down to one seventeen. Second takes
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Speaker 2: us down to one oh two. It's forty nine thousand
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Speaker 2: jobs fewer. Okay, I'm not feeling great there. March two
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Speaker 2: hundred and twenty eight thousand jobs created. Hey, everything is great.
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Speaker 2: Things are booming. First revision takes us down to one
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Speaker 2: eighty five. Second takes us down to one twenty. It's
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Speaker 2: one hundred and eight thousand delta that we saw there.
3:36
Speaker 2: It's a massive shift. So we go. If if you
3:39
Speaker 2: look at the first numbers and take those as you
3:42
Speaker 2: know gospel for Q one, you say, okay, Q one,
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Speaker 2: we had one hundred and seventy four thousand jobs a
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Speaker 2: month added. But then you go through the revisions and
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Speaker 2: you put those numbers into your old calculator and you're like, now,
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Speaker 2: it wasn't one hundred and seventy one thousand, It was
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Speaker 2: a hundred eleven thousand. Like a third of the jobs
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Speaker 2: that we thought we had during the initial readings weren't there.
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Speaker 2: After we got more data that came in and this
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Speaker 2: is continuing in the April number, which originally was one
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Speaker 2: seventy seven. The first revision that we got out today
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Speaker 2: was one forty seven, and so you kind of look
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Speaker 2: at it. You're like, I've got all these revisions that
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Speaker 2: are happening, and they're all negative and fairly substantially negative.
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Speaker 2: And so what it does is that Q one, you know,
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Speaker 2: one hundred eleven thousand jobs being created. The interesting thing
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Speaker 2: that we have seen now is not the unemployment rate
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Speaker 2: but the number of unemployed people. And I know that
4:40
Speaker 2: this is like kind of a weird one, but the
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Speaker 2: number of unemployed people in the United States has now
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Speaker 2: increased for the last four months in a row. And
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Speaker 2: you might say, like, okay, like that doesn't really matter
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Speaker 2: because the magnitude wasn't big enough to move the unemployment rate,
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Speaker 2: and that's that's true, Like that's that's fine. But ultimately
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Speaker 2: you still don't want to see more people reporting their
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Speaker 2: unemployed than the prior month, because eventually you reach a
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Speaker 2: breaking point where that stuff starts to matter. And so
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Speaker 2: I do find that to be notable. And again it's
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Speaker 2: it's a slow labor market right now. And this dovetails
5:18
Speaker 2: very nicely into our top story for the Hour, which
5:22
Speaker 2: is from the New York to Mays. I think it's
5:25
Speaker 2: called Times and it's titled job market is getting tougher
5:29
Speaker 2: for college graduates. And this is a story that we've
5:33
Speaker 2: been covering for the last I think it first came
5:35
Speaker 2: to our attention maybe four or five months ago, Mike,
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Speaker 2: but it's been building for the last couple of years,
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Speaker 2: which is, Hey, in the twenty tens. The interesting thing
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Speaker 2: was that the not interesting thing kind of that the
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Speaker 2: norm until then was, Hey, recent college grads had a
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Speaker 2: lower unemployment rate than the population as a whole. Part
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Speaker 2: of this was becoming because you were coming off of
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Speaker 2: a horrible recession where a bunch of experienced people in
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Speaker 2: the labor market lost their jobs from seven through early
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Speaker 2: twenty ten. But the trend for a while was, Hey,
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Speaker 2: if you just got a college degree, great businesses are
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Speaker 2: going to scoop you up because you're hungry, you're cheap,
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Speaker 2: and great they want you. Yeah.
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Speaker 3: My first job right out of college, there was a
6:16
Speaker 3: pretty clear undertone that I had replaced somebody making two
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Speaker 3: to three x what I was previously.
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Speaker 2: How did that make you feel? You're just happy to
6:24
Speaker 2: have a job. YEA, honestly didn't care. Today, what we
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Speaker 2: have is for recent college grads, the unemployment rate and
6:31
Speaker 2: This is according to data from the Federal Reserve Bank
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Speaker 2: in New York, unemployment rate for recent college grads five
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Speaker 2: point eight percent, for all other workers four percent. And
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Speaker 2: so you look at that and you're like, okay, like
6:46
Speaker 2: what does this tell us? And the only place that
6:48
Speaker 2: I think just about everyone gets to is if you
6:51
Speaker 2: have a job, you're generally not being laid off. Right now,
6:55
Speaker 2: that may be changing a little, but we still haven't
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Speaker 2: seen any conclusive data to suggest to move up there.
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Speaker 2: And if you don't have a job recent college grads,
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Speaker 2: it's really hard to find one right now. Yeah, that's
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Speaker 2: the only way to read it.
7:10
Speaker 3: And the question becomes why is it just business lack
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Speaker 3: of confidence?
7:17
Speaker 2: Is it you know? Is it AI? Is it tariffs
7:24
Speaker 2: and those risks playing out?
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Speaker 3: I think there's a big temptation in my mind to
7:28
Speaker 3: blame some of this on artificial intelligence. I know there's
7:30
Speaker 3: a big temptation on those recent college grads to cite
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Speaker 3: that as one of the reasons too. And I don't
7:36
Speaker 3: think you can throw it out at this point as
7:38
Speaker 3: a as a possibility at least.
7:41
Speaker 2: Yeah, it's it could be a combination of all the
7:44
Speaker 2: things that you mentioned here. So I think it's something
7:48
Speaker 2: that Warrant's future monitoring, and clearly is not something that
7:53
Speaker 2: is a great indicator for the overall health of the
7:56
Speaker 2: labor market. But what you do with this, I don't
8:01
Speaker 2: really know right.
8:02
Speaker 3: Yeah, And you know, when I get out a few
8:06
Speaker 3: years too, I do have to wonder if this lasts
8:10
Speaker 3: because that baby boomer demographic is only going one direction
8:15
Speaker 3: in the labor force and it's out of it. I
8:18
Speaker 3: don't know how long it takes. And you know, certainly,
8:21
Speaker 3: if I'm sitting here in twenty twenty five and I'm
8:24
Speaker 3: sixty four, sixty five years old, I might have put
8:27
Speaker 3: off some retirement plans after the market jitters and what we've.
8:31
Speaker 2: Seen this year.
8:31
Speaker 3: But that's a big generational demographic push that I think
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Speaker 3: is going to ultimately require twenty to twenty four year
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Speaker 3: olds to take some of those places.
8:42
Speaker 2: To take a quick break here. When we return, we're
8:44
Speaker 2: going to be joined by Michael Santoli from CNBC talking
8:47
Speaker 2: about the markets right after this.
8:50
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9:34
Speaker 3: Joining us now is CNBC's Michael sand Totally Michael, thanks
9:39
Speaker 3: for joinings.
9:39
Speaker 2: Appreciate it. Oh, Gret Mery, thank you so markets once again.
9:44
Speaker 3: SMP was briefly touching six thousand there earlier this morning,
9:47
Speaker 3: still up a good one percentage point this morning. What
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Speaker 3: did investors seem to like out of the jobs report
9:52
Speaker 3: this morning?
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Speaker 4: Well, for one thing, it was not just better than forecasts,
9:57
Speaker 4: but better than feared. There was a sense some of
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Speaker 4: the leading indicators of employment we're looking like maybe they
10:02
Speaker 4: were getting Lobby ADP report on Wednesday, So there was
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Speaker 4: some sensitivity out there that maybe finally we're going to
10:09
Speaker 4: see one of these monthly reports really kind of lay
10:13
Speaker 4: an egg. It didn't happen. In fact, if anything, I
10:15
Speaker 4: think the sweet spot in terms of job growth was,
10:18
Speaker 4: you know, let's say between one hundred and twenty thousand
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Speaker 4: and one and eighty thousand, and we more or less
10:23
Speaker 4: hit it. So I think that you have this relief trade.
10:26
Speaker 4: I don't think anybody's necessarily saying, Okay, the economy's gangbusters
10:30
Speaker 4: from here, but we can sort of roll forward our
10:32
Speaker 4: concern about the broader economy and the labor market buckling
10:36
Speaker 4: for at least in the four weeks or so.
10:38
Speaker 3: We oftentimes get this market trade of you know, hey,
10:41
Speaker 3: bad news is good news. Rates coming down. FED gonna
10:44
Speaker 3: cut rates. That's clearly not the indication this morning. Where
10:47
Speaker 3: do you put the higher risk for the Fed? If
10:49
Speaker 3: you're in J. Powell shoes and you're looking at this
10:51
Speaker 3: inflation and unemployment trade off, you know, both seem manageable
10:56
Speaker 3: right now, and so it seems unlikely that they make
10:58
Speaker 3: a move.
10:59
Speaker 2: But where where do you see the higher risks at
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Speaker 2: the moment.
11:02
Speaker 4: I think that there's slightly higher risk that the economy
11:07
Speaker 4: will soften up more than sustainable inflation will pick off.
11:12
Speaker 4: So I do think it's growth risks that are more important.
11:15
Speaker 4: I think that you know, the market probably is there too,
11:18
Speaker 4: But because of what the FED has said about they're
11:19
Speaker 4: going to be wait and see about how tariffs effect
11:22
Speaker 4: and measured inflation readings. You know, that's to me why
11:26
Speaker 4: the market was celebrating today, because if you have it
11:29
Speaker 4: as a given that the FED is kind of planning
11:32
Speaker 4: to be late, then you you better have the economy
11:35
Speaker 4: hang in there so that it doesn't really force their hands.
11:39
Speaker 3: But I love to change gears here for a little bit.
11:41
Speaker 3: As entertaining as the President Trump Elon Musk tweet war
11:46
Speaker 3: was yesterday, it had real ramifications for Tesla's shareholders. To
11:51
Speaker 3: some degree, Tesla's share price has always been much more
11:55
Speaker 3: predicated on the promises and reputation of Elon Musk than
11:58
Speaker 3: it has been the realities of Tesla's been business.
12:00
Speaker 2: But how does an investor of Tesla approach this.
12:04
Speaker 3: This stock right now, given the CEO risk that seems
12:08
Speaker 3: to be playing out and changing on a day to
12:10
Speaker 3: day basis.
12:12
Speaker 4: You really have to have some sense of why you
12:15
Speaker 4: own it and what the assumptions were behind it, right,
12:18
Speaker 4: And so I'll just point out that on election day,
12:21
Speaker 4: Tesla share is exposed at two point fifty one. Okay,
12:26
Speaker 4: they ran up to four and forty dollars in six weeks, okay,
12:29
Speaker 4: And that was mostly about Musk's proximity to the administration,
12:33
Speaker 4: the idea that it would help the businesses get approvals, robotax,
12:37
Speaker 4: all that, but also just kind of the general vibes.
12:40
Speaker 4: It was a way of expressing excitement or support for
12:43
Speaker 4: lots of things maybe that the administration was going to do.
12:46
Speaker 4: So that's been mostly unwound, but not entirely right the
12:49
Speaker 4: stops right now, creating just under three hundred bucks. I
12:53
Speaker 4: really do think that it creates a wide range of
12:55
Speaker 4: potential outcomes here in terms of retaliation on Tesla, but
12:58
Speaker 4: I am not confident enough to trapilate how this plays
13:01
Speaker 4: out from here.
13:02
Speaker 2: Because I don't know anyone that will.
13:04
Speaker 4: We see reconciliations. You could completely see this, you know,
13:08
Speaker 4: maybe just being kind of a blip, but look it's
13:12
Speaker 4: a one. It's it's like almost a trillion dollar market cap. Again,
13:15
Speaker 4: the business today really can't sustain but close to half
13:19
Speaker 4: that very generously. So it's all about must ability to
13:24
Speaker 4: keep people hanging on for that promised future.
13:27
Speaker 3: Speaking of reconciliation, the big beautiful bill making its way
13:31
Speaker 3: to the Senate and a lot of pressure. Obviously, this
13:34
Speaker 3: is kind of what culminated in the firestorm yesterday between
13:38
Speaker 3: Musk and President Trump. What's your sense of this bill's
13:42
Speaker 3: likelihood of making its way through the Senate by the
13:44
Speaker 3: president's July fourth deadline? How much different does it look?
13:48
Speaker 3: Any any sense from DC on what's going to happen
13:51
Speaker 3: to that bill.
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Speaker 4: It's look something will obviously get through in the basic form.
13:58
Speaker 4: I really don't think anybody's willingness say well, they'll just
14:00
Speaker 4: throw up their hands and tax rates are going to
14:02
Speaker 4: revert back up to where they were in twenty seventeenth.
14:06
Speaker 4: I think there's a decent chance that maybe you get
14:10
Speaker 4: additional spending cuts and some of the tax breaks maybe
14:14
Speaker 4: get trimmed back a little bit. A lot of this
14:15
Speaker 4: can just be, you know, kind of peaking the assumed.
14:19
Speaker 4: You know, like right now, the no tax on tips thing,
14:22
Speaker 4: it's not set to expire for four years. That supposedly
14:25
Speaker 4: reduces the future cost of this thing. You could play
14:27
Speaker 4: games like that and get this thing through. What I
14:29
Speaker 4: think is interesting, though, is the market is not super
14:32
Speaker 4: concern about what people keep trumpeting as the bad deficit
14:37
Speaker 4: effects of this film. Most of it is just about
14:39
Speaker 4: caring forward with the current tax rates, bond neils, treasury yields,
14:42
Speaker 4: they're kind of in their range. They've been in for
14:44
Speaker 4: a couple of years except for the thirty year. So
14:46
Speaker 4: I do think that you can you sort of have
14:48
Speaker 4: a little bit of a cushion here to play around,
14:51
Speaker 4: because it's not as if we're blowing out the deficit
14:53
Speaker 4: into a new trend. Well, you're definitely not reducing it.
14:56
Speaker 4: But also the tariff revenue, I think is starting to
14:59
Speaker 4: come into people's heads. Well, the risk to me is
15:02
Speaker 4: that we effectively get cooked on tariff revenue long term,
15:05
Speaker 4: and then what does that mean for you know, growth
15:08
Speaker 4: rates and the friction and the global trade and things
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Speaker 4: like that.
15:10
Speaker 3: I'm going to take your statements to mean that you
15:12
Speaker 3: think the rumors of the bond vigilantes returning that I
15:17
Speaker 3: feel like everyone and their mother has been writing about
15:19
Speaker 3: over the last few months might be a little bit
15:21
Speaker 3: overblown or is that a real risk?
15:23
Speaker 4: Yes, I really think that's mostly been overstated. I think
15:26
Speaker 4: there's an instinct to think that the bond market is
15:30
Speaker 4: mostly responding to sort of fiscal structural breakpoints or whatever else.
15:36
Speaker 4: Look globally, yields have been going up. The absolute level
15:39
Speaker 4: of yields right now is kind of where nominal GDP is.
15:42
Speaker 4: That's not out of whack historically. I don't think you
15:46
Speaker 4: would expect the yell curve to be that different as shape.
15:49
Speaker 4: Like all the things you would look at to say
15:50
Speaker 4: what's normal or what's a proper yield, it doesn't get
15:54
Speaker 4: you that far from where we are right now. Again,
15:57
Speaker 4: ten thirty year maturities, there definitely seems to be a
15:59
Speaker 4: little bit of sometimes a choke point in supply demand
16:03
Speaker 4: for very long term treasuries. But on the shorter end
16:06
Speaker 4: five years, that's where a lot of private deck gets priced,
16:09
Speaker 4: there's nothing really happening there. They've been pretty much steady,
16:12
Speaker 4: So I think there's a potential for the markets to
16:15
Speaker 4: have a little bit of a hiccup on that. But
16:18
Speaker 4: it's also tough to really isolate because it's also getting
16:21
Speaker 4: caught up in this idea that globally investors are kind
16:24
Speaker 4: of not as willing to buy dollar assets right the
16:28
Speaker 4: dollar's been going down. They'd rather try to find another
16:31
Speaker 4: place for their serpplus savings. And you know, is that
16:35
Speaker 4: because the federal government's deficits are too wide, or because
16:37
Speaker 4: the tariffs feel like we have to, you know, have
16:40
Speaker 4: to create other places for the money to go. That's
16:44
Speaker 4: the part about tariffs that is very interesting. You know
16:46
Speaker 4: the fact that we have a trade deficit puts a
16:48
Speaker 4: lot of dollars overseas and then they bring it back
16:51
Speaker 4: to us in the form of buying our financial assets
16:53
Speaker 4: and fund our deficits. Who knows when that matters. I
16:56
Speaker 4: don't think that's what's really moving markets today.
16:58
Speaker 3: Michael stand totally from CNBC joining us this Friday, talk
17:02
Speaker 3: about well, just about everything that I could I could
17:04
Speaker 3: think of to Pepper questions for now, Michael, thank you
17:06
Speaker 3: so much for joining us. Appreciate it, and we'll talk
17:08
Speaker 3: to you against you have a great weekend.
17:10
Speaker 4: Thanks a lot you too.
17:11
Speaker 5: All right, time for trivia here on the Financial Exchange,
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Speaker 5: and on this day. In eighteen forty four, the YMCA
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Speaker 5: was formed by George Williams in London. The YMCA, proved
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Speaker 5: later the first YMCA was opened in the US. SO
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Speaker 5: trivia question today, which city opened the first YMCA in
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Speaker 5: the US. Once again, which city opened the first YMCA
17:46
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18:10
Speaker 2: Taking a look at markets as we head towards the
18:13
Speaker 2: bottom of the hour, the Dow up three hundred and
18:15
Speaker 2: forty three points, the S and P is up fifty two,
18:20
Speaker 2: so a little bit off highs, but still you know,
18:23
Speaker 2: a significant move up in equity markets, the Nasdaq at
18:26
Speaker 2: two oh seven. I do want to move over talk
18:28
Speaker 2: a little bit about bonds, just what we're seeing there,
18:30
Speaker 2: So the ten years at four four seven, uh at
18:33
Speaker 2: the moment and basically what we've seen, I'm gonna I'm
18:36
Speaker 2: gonna strip out April, second, third, and fourth, just because
18:43
Speaker 2: those weren't real days, you know, like they weren't real days.
18:50
Speaker 2: But aside from those few days, you basically have a
18:54
Speaker 2: situation where since mid October, the low that we've seen
18:59
Speaker 2: on the tenure treasury is about four and a quarter
19:03
Speaker 2: and the high is about four point eight. And we've
19:07
Speaker 2: basically been in, you know, that trading range of about
19:10
Speaker 2: a half percent give or take over that time. There's
19:13
Speaker 2: been no conclusive break in either direction, and most of
19:16
Speaker 2: the time has actually been spent between like four three
19:18
Speaker 2: and four seven. The vast majority is in a pretty
19:20
Speaker 2: narrow range there. So I do think that you do
19:24
Speaker 2: have a market that's kind of coiling up with a
19:26
Speaker 2: lot of energy here. And I think the very valid
19:29
Speaker 2: question is does it, you know, find that energy being
19:32
Speaker 2: released in either direction. We'll have to see quick break trivia.
19:36
Speaker 2: Answer is next.
19:41
Speaker 1: Bringing the latest financial news straight to your radio every day.
19:46
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:52
Speaker 1: Time now for Wall Street. Watch a complete look at
19:55
Speaker 1: what's moving market so far today right here on the
19:58
Speaker 1: Financial Exchange Radio Network.
20:00
Speaker 5: Well, markets are rallying on the heels of a made
20:03
Speaker 5: jobs report that came in higher than forecasts one hundred
20:07
Speaker 5: and thirty nine thousand jobs added last month, above forecasts
20:11
Speaker 5: of one hundred and twenty six thousand, while the unemployment
20:14
Speaker 5: rate held steady at four point two percent. Right now,
20:18
Speaker 5: the Dow up by eight tenths of a percent or
20:21
Speaker 5: three hundred and fifty two points, SMP five hundred up
20:25
Speaker 5: nine tenths of a percent, and the NASDAC up over
20:27
Speaker 5: one percent higher or two hundred and twelve points. Russell
20:30
Speaker 5: two thousand dollars is up one and a third percent
20:33
Speaker 5: or twenty seven points. Ten year treasure reeled up eight
20:36
Speaker 5: basis points now at four point four to seven percent,
20:40
Speaker 5: and crude oil up one and a half percent higher,
20:42
Speaker 5: trading at sixty four dollars in thirty seven cents a barrel.
20:46
Speaker 5: After a day of turmoile due to the online spat
20:48
Speaker 5: between Elon Musk and President Trump over the tax build
20:51
Speaker 5: Tesla rebounding five percent today after plunging fourteen percent yesterday.
20:57
Speaker 5: According to NBC this morning, President Trump is quick vote
21:00
Speaker 5: not interested in a call with Musk to resolve their feud. Meanwhile,
21:04
Speaker 5: chip maker Broadcom narrowly beat first quarter earnings and revenue expectations. However,
21:09
Speaker 5: its free cash flow in the second quarter disappointed investors.
21:13
Speaker 5: Broadcom down three and a half percent. Elsewhere, Lulu Lemon
21:17
Speaker 5: sinking twenty percent after the athleisure ware retailer cut its
21:22
Speaker 5: annual profit forecasts as tariffs threaten to raise costs. Lula
21:26
Speaker 5: Lemon sources many of its products from Southeast Asia. Another
21:31
Speaker 5: stock tumbling today is Docu sign where shares are now
21:34
Speaker 5: sliding nineteen percent. While the electronic signature company beat earnings
21:39
Speaker 5: and revenue estimates, its current quarter guidance for billings came
21:43
Speaker 5: up short of analyst forecasts, and after rocketing one hundred
21:47
Speaker 5: and sixty eight percent on its IPO day yesterday, shares
21:50
Speaker 5: in stable coin companies Circle Internet Group are up another
21:55
Speaker 5: thirty two percent today. I'm Tucker Silva and that is
21:59
Speaker 5: Wall Street Watch. In our trivia question today was which
22:02
Speaker 5: city opened the first YMCA in the US. That would
22:06
Speaker 5: be Boston, Virginia from Sutton, mass is our trivia winner today,
22:10
Speaker 5: taking home a Financial Exchange Show t shirt, and we
22:13
Speaker 5: played trivia every day here on the Financial Exchange See
22:17
Speaker 5: complete contest rules at Financial Exchange Show dot com.
22:21
Speaker 2: Mike, I want to talk about this Wall Street Journal
22:23
Speaker 2: piece titled three Recessions in less than two decades. A
22:27
Speaker 2: millennial's lament stop wineing millennial, and I gotta say stop
22:34
Speaker 2: wine in millennial.
22:35
Speaker 3: All right, So we've had twelve recessions in the last
22:38
Speaker 3: seventy five or so years. Yes, that gives you one
22:41
Speaker 3: every six years. There's been very few periods in modern
22:46
Speaker 3: US history post Great Depression where anyone could live two
22:49
Speaker 3: decades without three recessions.
22:51
Speaker 2: And look, this is not to say that like it's
22:54
Speaker 2: not hard going through recessions. It is. But I always
22:59
Speaker 2: like to ask this question because I think it's a
23:01
Speaker 2: good one, And the question is, if you could choose
23:06
Speaker 2: to live anywhere else in recorded history, both from a
23:11
Speaker 2: time and place perspective, is there any other period that
23:16
Speaker 2: you would choose other than right now? And most you know,
23:23
Speaker 2: people might say, well, you know, like the nineteen fifties
23:26
Speaker 2: sound great, or hey, like the nineteen ninety sound great,
23:29
Speaker 2: to which I respond, okay, But like think about all
23:31
Speaker 2: of the healthcare advances since then and all of the
23:34
Speaker 2: stuff that you know, you had to deal with, you know,
23:36
Speaker 2: then people might be like, oh, like I think it
23:38
Speaker 2: would be great to be like a frontiersman in the
23:40
Speaker 2: eighteen hundreds. I'm like, good luck with cholera, like have
23:43
Speaker 2: fun with typhoid, Like I've played Oregon Trail and that stuff.
23:46
Speaker 2: It's it's not great for you. And so it's not
23:51
Speaker 2: to say, hey, like it's not hard when you have
23:53
Speaker 2: to go through recessions. But my point is every single
23:59
Speaker 2: generation that has ever lived anywhere in the world has
24:05
Speaker 2: had to deal with them. You look like the eighteen hundreds,
24:07
Speaker 2: you had won every like two to three years.
24:09
Speaker 3: Basically I was gonna say, from nineteen forty eight to
24:11
Speaker 3: nineteen sixty eight you had four recessions, right.
24:14
Speaker 2: So it's it's not something where you know, you look
24:18
Speaker 2: back and you're like, hey, look at all these periods
24:20
Speaker 2: of like twenty years with no recessions or one recession. History,
24:25
Speaker 2: Like the longest period in the twentieth century that we
24:29
Speaker 2: had without a recession, there were two periods that were
24:33
Speaker 2: almost ten years, one in the nineteen sixties and one
24:37
Speaker 2: in the nineteen eighties. The nineties, the nineties you can
24:41
Speaker 2: include as well. Again, the nineties I think arguably in
24:43
Speaker 2: my opinion, where the best decade for the US economy ever.
24:47
Speaker 2: But ultimately that nineteen nineties period where you went like
24:52
Speaker 2: ten years without a recession, that's the exception to the rule.
24:56
Speaker 2: The norm is, hey, generally you have won every five
25:01
Speaker 2: to seven years. Sometimes they're sooner than that, depending on
25:05
Speaker 2: you know, how policy actually is implemented and It's not
25:10
Speaker 2: to say that they're easy, but millennials, of which I
25:13
Speaker 2: am part of that group, what you're going through is
25:18
Speaker 2: not unique. It's it's just different twists on what human
25:21
Speaker 2: beings have been experiencing forever. And I don't really like
25:28
Speaker 2: this piece that tries to make it seem like, womp, womp,
25:32
Speaker 2: we're dealing with such hard times. Three recessions in twenty years,
25:37
Speaker 2: and by the way, by the way, by the way,
25:41
Speaker 2: that third recession hasn't even happened yet. So let's at
25:44
Speaker 2: least wait before we say that it's three and twenty years.
25:46
Speaker 3: There's just so many real things that you can go
25:48
Speaker 3: and complain about, and to complain about maybe getting a
25:50
Speaker 3: third recession in twenty years.
25:52
Speaker 1: I just.
25:54
Speaker 3: You want to complain to me about the cost of
25:56
Speaker 3: housing or the cost of college, and you know how
25:58
Speaker 3: that stuff compares to where incomes have gone over the
26:01
Speaker 3: last seventy years.
26:02
Speaker 2: I'm all ears, there's real meat on that bone.
26:05
Speaker 3: Don't give me this garbage about three recessions in twenty
26:08
Speaker 3: years when the third one hasn't even happened yet.
26:10
Speaker 2: Even complaining about the cost of housing, Okay, go try
26:13
Speaker 2: to buy a home back in the nineteen seventies with
26:15
Speaker 2: interest rates at twenty percent. It yes, yeah, sure, the
26:19
Speaker 2: cost of the house was, you know, ten thousand dollars,
26:22
Speaker 2: but you were making eight thousand dollars a year and
26:26
Speaker 2: paying two thousand dollars a year in interest on the
26:27
Speaker 2: ten thousand you had to borrow. So yeah, I don't know.
26:33
Speaker 2: Everyone had their troubles. We always love to look back
26:36
Speaker 2: and be like, wow, it would have been so nice
26:37
Speaker 2: to live. Then it's like, no, polio kind of would
26:40
Speaker 2: have sucked in the nineteen twenties, Like, yeah, they were roaring,
26:45
Speaker 2: but they were roaring with polio too, you know, like I, hey,
26:50
Speaker 2: the Gold Russian you know, eighteen forty nine, wouldn't that
26:53
Speaker 2: have been great? I bet it would have. But if
26:56
Speaker 2: you scratched yourself on a rock, you could have died
26:58
Speaker 2: from the infection old dysenterry, you know. Like I don't know.
27:03
Speaker 2: I'm just a big believer that. Yeah, Like, there are
27:07
Speaker 2: these ebbs and flows, but ultimately, in the course of
27:10
Speaker 2: all of our lives, we're gonna have to go through
27:12
Speaker 2: both good and bad times, and that's them's the breaks,
27:15
Speaker 2: Like that's just how it is with you.
27:18
Speaker 3: And again, if you're gonna complain about something economically, at
27:22
Speaker 3: least find a legitimate issue to complain about rather than
27:24
Speaker 3: making one up.
27:26
Speaker 2: Yeah, I think that's fair. I think that's fair. Just
27:28
Speaker 2: take a quick break. When we come back. Paul A
27:30
Speaker 2: Monica from Barons is going to be joining us right
27:35
Speaker 2: after this, talking about Circle. The latest big IPO this week.
27:41
Speaker 1: The Financial Exchange has gone national. Hear the show daily
27:45
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28:15
Speaker 1: Ladies and Gentlemen the Weekend.
28:20
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28:23
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28:52
Speaker 2: As promised, Paulmonica from Barrens joins us now to talk
28:57
Speaker 2: a little bit about one of the newest little companies.
29:02
Speaker 2: Now that's not really little. When you're twenty three billion
29:05
Speaker 2: dollar market cap, you're decently sized, but one of the
29:07
Speaker 2: newest companies on the market, Circle. Paul, how are you today?
29:12
Speaker 6: I'm good. Thanks.
29:12
Speaker 2: How you guys doing doing well? So Circle, just from
29:16
Speaker 2: you know, reading all of the literature about them, they
29:19
Speaker 2: are big in the world of stable coins. So all
29:23
Speaker 2: of our listeners want to know what is a stable
29:26
Speaker 2: coin and how does Circle actually make money doing whatever
29:30
Speaker 2: they do with them.
29:32
Speaker 6: Yeah. Now, USDC is the stable coin that Circle is
29:39
Speaker 6: known for. And this is a cryptocurrency that's pegged to
29:44
Speaker 6: the US dollar, so it's designed and not be as
29:49
Speaker 6: vollied all obviously as bigcoin and ethereum and doge coin
29:53
Speaker 6: and everything else out there, so it can be used
29:57
Speaker 6: for money transfers, remittances, you know, more of you know,
30:02
Speaker 6: parts of financial transactions that have and need stability. So
30:07
Speaker 6: that is something that I think a lot of people
30:11
Speaker 6: are excited about. And they tend to generate a lot
30:16
Speaker 6: of their income basically on interest from reserves they held
30:20
Speaker 6: on their balance sheets. So it's not, you know, at
30:22
Speaker 6: the end of the day, not nearly as exciting or
30:26
Speaker 6: sexy as as what you're seeing with Bitcoin and you know,
30:30
Speaker 6: some of the other cryptocurrencies out there. But it's a
30:33
Speaker 6: very lucrative business. A rival Tether, which operates the us
30:38
Speaker 6: d C token sorry USDT, their us d T versus
30:44
Speaker 6: us d C for Circle. These are two companies that
30:47
Speaker 6: their tokens are collectively worth, you know, one hundred and
30:52
Speaker 6: fifty billion for Tether and about sixty billion or so
30:57
Speaker 6: for Circles us DTS USDC. So these are very large
31:02
Speaker 6: players in the crypto universe.
31:05
Speaker 2: Why is it so lucrative? I mean, I look at
31:07
Speaker 2: this and I guess, I mean, it's basically what banks do.
31:13
Speaker 2: But it's not like banks that they're saying like, oh,
31:16
Speaker 2: we just make like a ton of money sitting in
31:17
Speaker 2: US treasuries, like banks let the money out to individuals
31:21
Speaker 2: and businesses to make money. Are these guys just sitting
31:24
Speaker 2: on US treasuries and just taking the spread?
31:27
Speaker 6: That's a big part of it, definitely. I mean again,
31:29
Speaker 6: these are companies that are FinTechs that you know, emphasize
31:34
Speaker 6: the financial part of it. They do operate in many
31:38
Speaker 6: respects like the banks. But I think there is so
31:42
Speaker 6: much excitement about the fact that, you know, in general,
31:46
Speaker 6: what everyone is all of, you know, the big bigcoin
31:50
Speaker 6: and crypto bulls. They're proponents of the fact that this
31:54
Speaker 6: makes you know, finance truly global, truly twenty four to seven.
31:58
Speaker 6: You're not weaiting for settlements from a bank. Everything can
32:02
Speaker 6: be done in a digital, seamless way. I think the
32:06
Speaker 6: question that remains to be seen for a company like
32:10
Speaker 6: Circle is definitely will the big banks kind of step
32:15
Speaker 6: up their own digital efforts and make a company like Circle,
32:20
Speaker 6: if not obsolete, maybe a little bit less relevant in
32:24
Speaker 6: the world of global finance.
32:27
Speaker 2: Does that have to do with banks aren't allowed to
32:30
Speaker 2: create stable coins at this point? Correct?
32:32
Speaker 6: Correct? Yeah? Is yes, regulations are still a big issue
32:36
Speaker 6: that will prevent the financials from truly a cirfit. A
32:39
Speaker 6: company like Circle or.
32:40
Speaker 2: Tether are they trying to get into this space actively.
32:44
Speaker 6: I'm not sure if they're looking to get into it
32:48
Speaker 6: actively as of yet. I mean, it wouldn't surprise me
32:50
Speaker 6: if they're thinking about it. But because you have these
32:53
Speaker 6: two companies that are entrenched and now Circle is going public,
33:00
Speaker 6: I wouldn't be surprised if they just sit on the
33:03
Speaker 6: sidelines and see how you know, regulations also unfold. I mean,
33:08
Speaker 6: we are obviously in a more crypto friendly environment in
33:12
Speaker 6: the US, and I think that's the case globally as well.
33:15
Speaker 6: But you know, anything can obviously change.
33:17
Speaker 2: So what's like the what's the optimistic scenario where things
33:21
Speaker 2: continue to go well for them? Is it just more
33:22
Speaker 2: acceptance of crypto and more adoption in things along those lines.
33:26
Speaker 6: Yeah, I would think that that's probably the case. I mean,
33:29
Speaker 6: of course, now that Circle is publicly traded, there will
33:32
Speaker 6: be a lot of scrutiny on their financials and just
33:36
Speaker 6: exactly how they do make money, whether or not there
33:39
Speaker 6: will be ways for them to diversify their revenue stream.
33:43
Speaker 6: But as long as they post a healthy profit in
33:47
Speaker 6: their first quarter, you know, and coming quarters ahead, that
33:51
Speaker 6: probably bodes well for the stock.
33:53
Speaker 2: And I think it's.
33:54
Speaker 6: Potentially good for the IPO market written large. We've had
33:57
Speaker 6: a lot of hype about where we the AI cloud
34:01
Speaker 6: company that stumbled it first because they went public in
34:05
Speaker 6: late March, right before Liberation Day, but they've taken off
34:08
Speaker 6: since then. And you know, we've got a couple of
34:10
Speaker 6: the big IPOs coming up. Chime, the fintech of you know,
34:15
Speaker 6: banking company, They're going to be going public next week.
34:18
Speaker 2: What's what's their deal?
34:20
Speaker 6: You know, Chime is your company probably most well known for,
34:26
Speaker 6: you know, having a product that lets people access their
34:31
Speaker 6: pay a little bit early, but without some of those
34:35
Speaker 6: very usurious high interest rate payday loans that you know
34:39
Speaker 6: have come under scrutiny. So that's going to be I
34:42
Speaker 6: think something that a lot of people are going to
34:44
Speaker 6: look at next week, when you know, Chime sets its
34:47
Speaker 6: IPO price and probably goes public. You know, I'm hearing
34:51
Speaker 6: June twelfth is their likely dat, you know, next Thursday.
34:54
Speaker 2: Anything else to add on circle just for listeners who
34:58
Speaker 2: you know just might want more in from the company.
35:00
Speaker 6: Yeah, I mean the stock is up again today, so
35:04
Speaker 6: I think investors have to be wary when you have
35:08
Speaker 6: a company that priced its IPO at thirty one dollars
35:13
Speaker 6: and is now already trading at one twelve. So you know,
35:18
Speaker 6: congrats if you were able to get an allocation at
35:22
Speaker 6: the offering price. But chasing IPOs in the aftermarket is
35:27
Speaker 6: always risky and you know, can be dangerous, so you know,
35:32
Speaker 6: that's the advice I would have you know, we obviously
35:34
Speaker 6: saw it in the late nineties during the tech ipo boom,
35:38
Speaker 6: you know, and it looks like we're seeing it now
35:40
Speaker 6: at the fintech ipo boom as well.
35:43
Speaker 2: All right, very good, Paul, appreciate you joining us, and
35:46
Speaker 2: I hope you have a great weekend.
35:47
Speaker 6: Thanks a lot, same to you guys.
35:49
Speaker 2: That is Paul A Monica with Barons talking about Circle Mike,
35:55
Speaker 2: what else you got for me?
35:56
Speaker 3: I want to talk about these buy now, pay later
35:58
Speaker 3: apps Shock. We covered this a bit this week, but
36:02
Speaker 3: there's a piece written about people using Klarna or a
36:04
Speaker 3: firm or one of these for buying groceries, for example,
36:07
Speaker 3: And where I landed on it was I don't know
36:11
Speaker 3: what to make of it. I certainly don't think it's
36:13
Speaker 3: great news that people are turning to these apps to
36:16
Speaker 3: buy things like groceries, But I also have a tough
36:19
Speaker 3: time definitively saying that this is a signal that the
36:22
Speaker 3: economy as a whole is falling apart. And I'm wondering
36:25
Speaker 3: if you have a take if it's just hey, are
36:27
Speaker 3: people buying things in new ways that they didn't used
36:30
Speaker 3: to and similar to the adoption of credit cards, it's
36:33
Speaker 3: just a new generation using a new tool. Or should
36:38
Speaker 3: we be deathly afraid of the fact that people are
36:40
Speaker 3: using Clarina to buy groceries and it's taking them four
36:42
Speaker 3: months to repay their grocery bill.
36:45
Speaker 2: Well, I would say if you're taking if it's taking
36:49
Speaker 2: people four months to repay their grocery bill, it's a problem.
36:54
Speaker 2: I would too if people are using it and saying, hey,
36:59
Speaker 2: I I am. If you're putting it on your credit
37:03
Speaker 2: card but paying your credit card off every month, who cares?
37:06
Speaker 2: Who cares?
37:07
Speaker 3: And likewise the argument I made, which is, you know,
37:10
Speaker 3: I checked with a few of these apps. You can
37:12
Speaker 3: do this If I'm buying my groceries for four hundred
37:15
Speaker 3: dollars and making four hundred dollars payments of the next
37:19
Speaker 3: four months while using my credit card and paying that
37:22
Speaker 3: stuff off, which apparently as possible, it can actually be
37:26
Speaker 3: a good financial decision.
37:28
Speaker 2: Albeit you know, wait, say that one more time.
37:31
Speaker 3: You can apparently you can apparently use your credit card
37:34
Speaker 3: to pay off your AFFIRM bill.
37:37
Speaker 2: That's that doesn't seem good.
37:39
Speaker 3: Well again, if I am delaying payments and then able
37:42
Speaker 3: to earn interest on the cash that I have sitting there,
37:45
Speaker 3: plus earn points on my credit card, I recognize a
37:48
Speaker 3: lot of people aren't going to do that and are
37:49
Speaker 3: going to default and pay a bunch of fees. But
37:52
Speaker 3: mathematically I can make some spread there.
38:00
Speaker 2: So I'm gonna pay off one purchase that I don't
38:05
Speaker 2: have the money. Mike, I think you're far too generous
38:09
Speaker 2: in terms of how you're viewing this. I think if
38:11
Speaker 2: if it's taking someone four months to pay off their groceries,
38:13
Speaker 2: bad it tells you bad things about the economy. But
38:16
Speaker 2: that's just me, your mils, my vary. We're done for
38:19
Speaker 2: the day, We're done for the week. Hope you all
38:21
Speaker 2: have a great weekend. We'll see you Monday.