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What is the most important economic need the next President has to address? · The Financial Exchange Show

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Base is the Financial Exchange with Mike Armstrong and Mark Fandetti.
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Speaker 2: Good morning, Happy election Day, and welcome to the Financial Exchange.
1:19
We open up with market strongly in positive Territory. It's
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Mike Armstrong, Mark Fandetti and Tucker Silva with you this
1:26
Tuesday morning. And it is apparent to me at least
1:29
that Tucker's got it out for both Mark and me,
1:31
as he came up with a stack almost entirely about
1:34
presidential election politics this morning, So we cannot wait to
1:38
dive right in. Uh, it's also the.
1:41
Speaker 3: Other per Is it his mustachioed evil Twins?
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Speaker 2: Yeah, it might be, It might be.
1:45
Speaker 3: Yeah, it's that Is that Tom Selleck?
1:48
Speaker 2: It is to tell.
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Speaker 4: Yeah, I was total idiot that that was Mario for Halloween,
1:54
and I might keep it.
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Speaker 2: Not gonna link yeah, wife super into firefighters. So this
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works out well. So starting out the show here, we're
2:06
gonna talk a lot about economic policy and what you know,
2:09
campaign pledges that have been out there. But I want
2:11
to start out with how I'm reading polls and betting markets.
2:14
And I'm sure how I'm reading is imperfect and different
2:17
than other people, but taking a look at the stories
2:21
out there. This is obviously, by all accounts and by
2:23
all experts, of incredibly close race, closer than many others
2:27
according to the polling data. According to five thirty eight,
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what I like about their system, and you know, we
2:33
can talk about different models, but they average a whole
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bunch of polls and try and favor the ones that
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have historically been more accurate and less biased than others.
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And they run simulations based on that polling data and
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basically considered a coin toss. Out of a thousand simulations,
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they've got Harris winning five hundred three of them, Trump
2:50
winning four hundred and ninety five. This has nothing to
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do with the popular vote. They're running simulations in the
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electoral college. That is a toss up, folks. So according
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to the polling data, things look awfully close. That does
3:03
not translate to the election will be closed. Right. You
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have to understand that that just because polling data comes
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out one way, could still mean that they're within the
3:13
margin of error and every swing state goes towards Donald
3:15
Trump or the other direction. And a week ago Nate
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Silver said as much. You know that, hey, the chances
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of a Donald Trump sweep in the swing states is
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sitting around twenty percent compared to Harris's twelve, So that
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is an entire possibility. I will also say about polls,
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I'm not somebody who looks at how poles are engineered,
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but others do. And again to quote Nate Silver here,
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he has kind of come out and made some allegations
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against some of the pollsters, basically that they are tipping
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the scales, and not so much tipping the scales because
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they want to tip the vote of the election per se,
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but because, in his opinion, a lot of them are
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terrified about being wrong a third presidential election in a row.
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And if you are that wrong a third election in
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the row, then you might not be relied upon heavily.
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And so he points out that it's almost statistically impossible
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for this many polls to be showing basically a fifty
4:16
to fifty split in all these swing states. Your numbers
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aren't all quote the quote from date Silver, your numbers
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aren't all going to come out at exactly one point
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leads when you're sampling eight hundred people over dozens of surveys.
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He's been lashing out about this for a few weeks,
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but effectively what he accuses some polisters of doing is
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hurting their numbers, making them look like previous elections, and
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dumping results that favor one candidate too much over another.
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And so my point would be, I'm not sure how
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reliable a lot of these polls are because they're all
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just trying to model something based on how previous elections went,
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which may or may not be how this one goes.
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Speaker 3: There are two yeah, there are two basic statistical issues
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in play here, and they're they apply.
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Speaker 2: To all sorts of other statistics, like the.
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Speaker 3: Economic data that we talk about. We always say that
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one hundred last month, twelve thousand jobs were created. That
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is a sample. That number comes from a survey, which
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is itself a sample. The actual number is twelve thousand
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plus or mine as one hundred and thirty thousand. That's
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not statistically different than zero. When the plus or minus
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the estimate includes zero, that means it could be zero.
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So you may be asking why is it so hard
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to get an accurate poll, And the answer is because
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it's very hard to keep all else equal. When you're
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taking a random sample of voters, you try to ensure
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that they share no common characteristic disproportionately relative to the population.
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For example, you wouldn't ask a bunch of people at
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I don't know my church, Saint Mary's in Rantham, how
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do you feel about abortion? Well, these are Catholics, of
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course eighty percent of the parishioner are going to be
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opposed to abortion. That is not a random sample. In
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nineteen thirty six, they asked who do you like alf
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Landin or FDR? Who did they ask people with people
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with telephones? Who had telephone?
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Speaker 1: What?
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Speaker 3: Did they not control for wealth income? Because only rich
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people had telephones. They predicted readers digested alf Landing by
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a landslide.
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Speaker 2: That's not biased.
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Speaker 3: It was a biased sample. That's the textbook example of
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bad polling, of failure to control for factors that could
6:30
bias your estimate. And that's why it's so difficult to
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get a statistically significant and representative result from a poll
6:41
like this. And the second point is hurting. But I'll
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stop there because hurting is another interesting phenomenon.
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Speaker 2: Yeah, they're hurting again, just very simply not wanting to
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be an outlier because this is your job, and if
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you're an outlier and you're wrong, then everyone's going to
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look at you and say you're bad at your job,
6:57
and so there are accusations of hurting out there as well.
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Speaker 3: How to selver know that they're hurting? Because by random
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chance alone, some should say forty seven percent, some should
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say fifty one. That's just randomness. If you're all at
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forty nine to fifty, that's much tighter distribution than random chance.
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Speaker 2: It doesn't present evidence other than statistically, this is close
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to zero possibility of it happen.
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Speaker 3: If I said I flipped ten heads in a row,
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you'd be suspicious. You didn't see my process. You don't
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know the coin is loaded, but you'd say that's different
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than the outcome suggested by random chance. So you could say,
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without even knowing anything about the process, that these polls
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are suspicious. They're too concentrated on the same est.
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Speaker 2: So I'm not saying throw it out, but don't necessarily
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expect an incredibly close race that we don't call until Thursday.
7:46
Taking a look at betting markets, that's been a discussion
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point a lot during this cycle and for the last
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several cycles. I'm looking at predicted dot org, just one
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of many betting markets on presidential elections, and they have
7:59
a Republican or Donald Trump as the presidential winner, somewhere
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in the fifty eight to fifty nine percent possibility range.
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I don't know if that's any better than any other,
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but clearly in favor pretty significantly of Trump. I would
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also say that gambling markets typically are dominated by men.
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Men are voting more heavily towards Donald Trump. Is that
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influencing the betting markets in some way, shape or form
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entirely possible? I don't know how much to rely on
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that either.
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Speaker 3: So this is another example of a non random, potentially sample.
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People who have the money to bet, people who are
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inclined to gamble, are going online and making bets. Is
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that a random sample of voters of know it? They're
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wealthier and they're more inclined to gamble, which means they're
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skewed toward men. These people will be more pro Trump.
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They're involved in financial markets, prediction markets in this case,
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and they're unbalanced men. You got to ask yourself when
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you see a poll. Should I believe that the sample
8:58
was random? Is there anything about it that might bias
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the result? This is a huge problem in economics and
9:06
finance generally, and it's a good way to make what
9:10
is otherwise an arcane I think subject accessible to everybody
9:13
because we all get why going into a church and
9:16
asking people their views on abortion will give you a
9:19
biased result. Clearly that sample is random, and that's the
9:24
problem that polsters run into.
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Speaker 2: Mic One final point on different data points coming in
9:29
here in terms of early voting, according to some tracking
9:34
by NBC, of the more than fifty eight million mail
9:37
in and early in person votes that have been cast
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nationally so far, fifty four percent cast by women, forty
9:44
four percent cast by men. In the swing states of Pennsylvania, Michigan, Georgia,
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North Carolina, there's at least a ten point gap between
9:51
men and women in early vote. I'll also say this
9:54
is pretty typical. But does it mean something different in
9:58
this cycle than it did in previous one. I just
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genuinely don't know, and we will have to wait to
10:03
find out. But again, as I take a look at
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the data, I still consider this to be highly unpredictable
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and tough to know, as every presidential election is. Right, like,
10:14
I think, just a little bit of humility from everybody
10:17
here that looks at this professionally professionally is appreciated because
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ultimately Nobody knows how those ballots are going to cast,
10:24
whether women will swing the vote, whether women will split
10:28
a ticket, for instance, on an abortion issue versus a
10:30
presidential issue. Nobody knows, and hopefully we will know sometime
10:37
very late tonight or tomorrow.
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Speaker 3: That's a great thing, unlike the economic data that we
10:41
talk about every day almost here, where we never really
10:44
know what the real rate of unemployment is. Despite the
10:47
confidence with which we talk about the state of the economy,
10:50
these are all just estimates.
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Speaker 2: We're going to know, one will know. There you go,
10:54
Let's take a quick break. When we come back, Let's
10:57
talk a little bit about the number one issue on
11:00
all voters' minds, the economy. That's next here on the
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Financial Exchange.
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Speaker 2: Mark Yesterday, Chuck and I on the program had a
12:30
very cynical debate about whether or not the election matters
12:33
for the economy. He was of the opinion that the
12:35
fed's next meeting was more important than the presidential election,
12:38
and I disagreed with him. But nonetheless, here we are
12:40
still still talking to each other.
12:42
Speaker 3: With the economy on the long term, short term.
12:45
Speaker 2: That's the thing is it just has a great discussion.
12:47
Speaker 3: But that's the question I had.
12:49
Speaker 2: Yeah, it's very difficult to define these things. I would
12:53
like to instead talk about where this election probably does
12:57
matter for the economy, and where it's seemingly.
12:59
Speaker 3: About the election matter for the FED. We got one
13:01
candidate who says, I want to say in interest rates.
13:04
We got another candidate who says, I respect the Fed's
13:07
hard won independence. How does that affect long term economic
13:12
stability and growth? I have an opinion that I can
13:16
economists have come to conclusions about that.
13:18
Speaker 2: Yeah, the economists conclusions that FED independence is incredibly important.
13:22
Thank you. So another one of those questions about Donald
13:25
Trump's campaigning pledges that you have to ask yourself is
13:29
he serious about this one or or is he just
13:31
using it to buy votes and to convince people of
13:37
his side of things?
13:39
Speaker 3: And I guess if you're more interested in, say, legal issues,
13:42
it would be like advocating the Supreme Court is sacrisanct
13:46
and it's taken a long time to treat the Court
13:50
as a truly independent branch of government. The FED is
13:53
not independent. It's a creature of Congress. So this is
13:56
an entirely apt analogy. But it would be like fusing
14:00
with the Supreme Court, which which Harris wants to do.
14:03
What does that imply for stability and rule of law
14:06
and consistency and application of law? The FED would be
14:10
my more immediate concern, but a parallels, so.
14:13
Speaker 2: To paint with a really broad brush here about the
14:16
very large macroeconomy. It seems to me that if either
14:19
of these candidates had their full way on economic policy,
14:23
then what we would see is continued deficit spending in
14:26
the seven percent range of GDP or more multi trillion
14:30
dollars added to that total federal deficit, and it would
14:36
come in different formats. But that's kind of what you
14:39
have to read from the campaign pledges that are being
14:41
made On the Donald Trump side of things. There are
14:43
tax cuts for just about everyone that I can think
14:46
of it in front of other than the illegal immigrants.
14:49
But even then they might somehow still benefit from the
14:51
tax cuts. On the Kamala Harris side, you have massive
14:54
new spending plans that are being talked about, and I
14:58
would call them opaque areas of tax increases that I
15:02
think are unlikely to go forward, such as a wealth
15:04
tax on people with more than one hundred million dollars
15:07
in assets. So one area I agree with Chuck on
15:09
is that it seems to me that should either presidential
15:13
candidates somehow win both the House and Senate, which we
15:16
have to talk about that too, because the likelihood of
15:19
a Kamala Harris sweep on the House, Senate and White
15:22
House is incredibly unlikely. But in either event, it does
15:27
seem to me from a broad economic perspective, there will
15:30
be winners and losers, but the net result would be
15:32
trillions more added to the national debt. Yeah, so I
15:36
agree with you, there's not a huge difference.
15:38
Speaker 3: There's been an independent ANALYSI he's done of this. The
15:40
Committee for a Responsible Federal Budget is looked at both
15:43
candidates plans. Trumps will add over seven trillion dollars over
15:48
ten years I think was their time horizon. Harris's will
15:51
add about three and a half trillion, So if you're.
15:53
Speaker 2: Right, my point would be that Harris would only add
15:55
to only three and a half trillion because it's assuming
15:57
that she could get her tax increases through, which.
16:00
Speaker 3: Yeah, given what we know today, and if they were sure,
16:04
if both candidates had their way with Congress, a huge
16:08
if ain't going to happen. If your criteria for making
16:12
a decision is who's worse for the deficit, who's worse
16:16
for upward pressure on interest rates and probably inflation, the
16:19
answer is probably Trump. But you may argue that for
16:22
other reasons those policies make sense, say national security reasons
16:27
or whatever. But on a sort of narrow economic scale
16:31
deficits and debt and interest rates, probably because more debt
16:35
means higher interest rates all lseqal, Trump is probably worse.
16:39
But again there may be mitigating considerations there that are
16:42
more important to you as a voter.
16:44
Speaker 2: So taking a look. Financial Times has a piece out
16:47
today in terms of again we don't know who's going
16:50
to be the next president, but you know serious economic
16:52
issues that they're going to need to tackle, and they
16:54
list five of them, and I have issues with some
16:58
of the ways that they are phrased here, but the
17:01
first the five issues. First, the incoming president must find
17:04
a way to maintain growth while repositioning the economy to
17:07
take advantage of the drivers of tomorrow's prosperity. Oh thanks,
17:12
so basically the job of the president. Second challenge is
17:15
to come to grips with high budget deficits and rapidly
17:18
rising debt. Come to grips is the term that I've
17:21
struggle with because I don't know what come to grips
17:24
recognize and means, yeah, I guess.
17:27
Speaker 3: Problems that result. Third hands are sorry.
17:30
Speaker 2: Third candidates would need to resist the excessive use of
17:33
the economic tools they favor. For Harris, this means avoiding
17:36
overregulation and blunt industrial policy. For Trump, it means containing
17:40
the use of tariffs and tax cuts. I would actually
17:42
agree there. I think both of them have some extreme
17:45
economic policies that have not done many people favors. And then, fourth,
17:49
the new administration needs to restore credibility of American leadership
17:52
at the center of the global economic and financial order.
17:56
Good luck. Final issue is proper communication. Okay, I don't
18:02
know how to rank or prioritize these, but I will
18:06
tell you that one of them that I took the
18:08
biggest issue with this second challenge is to come to
18:10
grips with high budget deficits and rapidly rising debt. I
18:14
have one prediction for you, which is, regardless of who
18:18
our next president is, they are not going to come
18:21
to grips with the reality of high budget deficits and
18:23
rapidly rising debts and recognize what I believe to be
18:27
the real threat of all that to the US economic system.
18:31
Speaker 3: You know why this hit me recently. Nobody cares. Nobody
18:37
cares about it. You and I are the only too.
18:39
There may be some listeners because this is an audience
18:42
concerned with matters financial, but nobody cares. If they cared,
18:46
the political parties would realign.
18:48
Speaker 2: Accordingly, yeah, nobody does seem to care about this issue
18:51
right now, and frankly, recent evidence is in favor of
18:58
that view that you shouldn't care.
18:59
Speaker 3: It's going to take a massive, sustained, persistent rise in
19:03
rates to put it on people's radar, just like it's
19:05
going to take a sustained change in climate to put
19:11
global warming on people's radar and really commit to solutions.
19:15
Speaker 2: Absolutely, it is, like I said, I don't think it's
19:19
actually reality that any candidate over the next four years
19:23
is going to address deficits as a real threat to
19:25
this economy. Quick break taking a look at Marcus at
19:29
Wall Street Watch coming up next. Like us on.
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Speaker 1: Facebook and follow us on Twitter at TFE show breaking
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business news is always first right here on the Financial
19:50
Exchange Radio Network. Time now for Wall Street Watch a
19:55
complete look at what's moving markets so far today right
19:58
here on the Financial Exchange Radio Network.
20:02
Speaker 4: Well, markets are well into positive territory as all eyes
20:06
are obviously on the outcome of the presidential election today.
20:11
Right now, the Dow is up by three hundred points
20:14
are about three quarters of a percent. SMP five hundred
20:17
is also up about three quarters of a percent, or
20:19
forty four points, the Nasdaq up nearly one percent higher
20:23
one hundred and sixty five points, Russell two thousand is
20:25
up nearly two thirds of a percent. Ten You're Treasure
20:28
reeled up by four basis points at four point three
20:31
five percent, and crude oil is up just over one
20:34
percent higher today, trading at seventy two dollars and twenty
20:37
three cents a barrel. Shares in Trump Media and Technology
20:41
jumping by fourteen percent, where the stock has been trading
20:44
in volatile fashion and has been a proxy of election
20:47
expectations over the past several weeks. Meanwhile, Boeing down by
20:52
one percent after the playmaker ratified a new labor deal
20:55
last night, ending a week's long strike and clearing the
20:58
way for factories to resume production. Machine has voted fifty
21:02
nine percent in favor of the new deal, which included
21:04
thirty eight percent wage increases over four years for workers. Elsewhere.
21:10
Shares in cybersecurity company Pallenteer jumping by twenty percent after
21:15
the company posted strong third quarter results, beating earnings and
21:19
revenue expectations. The company cited unrelenting AI demand and a
21:24
thirty percent jump in revenue from the year ago. Burger
21:27
King Restaurant excuse me, Burger King parent company Restaurant Brands
21:31
International miss third quarter earnings in revenue forecast, sending that
21:35
stock down by over one and a half percent. Wind
21:38
Resorts also missed third quarter earnings and revenue estimates, sending
21:41
that stock down by eight percent, and Dollar Tree announced
21:45
CEO Rick Driyling had stepped down from his role due
21:50
to health issues. The discount retailer also re reiterated its
21:55
third quarter guidance that stock today is flat. I'm Tucker
21:59
Silva and that's Wall Street Watching. Want to tell you
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Speaker 2: Mark. At the moment, equity markets broadly up, as Tucker mentioned,
23:37
and unlikely to hear any significant election results data by
23:41
the time they close today at four pm. And then
23:43
we'll start looking at aftermarket trading activity, which you know
23:47
can be quite volatile on election nights depending on where
23:51
this thing goes and what types of turns it takes.
23:53
But I'm interested in another question instead, which is, let's
23:58
look at a slightly longer term time period of from
24:03
election day through the end of the year, because there
24:06
is a piece out today about how markets have performed
24:09
during this relatively narrow window, and big surprise markets have
24:14
historically gone up between election day and the end of
24:16
the year. My question Whenever we get a piece like
24:20
this predicting or telling you how markets have done during
24:23
previous cycles, I always have to call them out as
24:26
I'm not sure this is relevant or not. So my
24:30
question for the general publicker for you, Mark was I
24:34
would imagine that markets, because of things that we talk
24:37
about frequently like the Santa Claus rally, usually go up
24:40
between November and December anyway, And so is there any
24:44
significance to it being an election year and markets going
24:48
up historically or is this just hey, markets usually go
24:50
up between November sixth and December thirty first, because that's
24:53
what markets do.
24:54
Speaker 3: There is an end of year effect. There are a
24:56
lot of calendar effects in finance. You've heard sell in
25:00
May then go away, just because from the forties through
25:03
the seventies the pattern of returns was unfavorable during the spring,
25:09
late spring and early summer. There's a more durable. By durable,
25:13
I mean it hasn't gone away. The sell and may
25:16
gone away and then go away adage would not have
25:19
worked well for you and say, like the nineties to
25:22
the present, but the end of year effect, the November effect,
25:25
December effects specifically has persisted. So if you go back
25:29
roughly one hundred years. And this data comes from a
25:32
firm called morning Star. You may have heard of them.
25:34
They're a respected third party in finance. They provide data.
25:38
Speaker 2: If you've ever looked at any mutual fund ever, they
25:41
usually advertise their morning sarrating yeah, yeah.
25:43
Speaker 3: They're like the good housekeeping of investments. They're regarded as
25:48
a good objective referee like it. They also provide I
25:51
didn't come up with that, but thank you. They also
25:55
provide data for those of us who subscribe then from
25:59
nineteen twenty six to present through the end of last year.
26:02
Because we're not we haven't completed in November December pair
26:06
here yet this year. And this is using their morning
26:09
Stars Large Cap Index, which is like the S and
26:11
P five hundred. It basically moves perfectly with it. The
26:14
average return for November is one point six percent. The
26:16
average return for December is one point six percent. You
26:20
can sort that by did an election happen? Is it
26:24
an even year so Congress or the presidency, or did
26:28
it not happen? And to cut to the chase here,
26:30
returns in non election years are about half the average
26:33
for returns in election years. Moreover, returns when Congress is
26:39
up for reelection, so every two years are the highest
26:43
of any month, and congressional elections include presidential election years.
26:47
Obviously for as a multiple two, you can't avoid that.
26:50
But it's and the difference, and I don't need to
26:53
get into all the differences because at some point the
26:56
numbers just become my numbing. But there is this interesting
26:58
effect of stuff returning more in November December than any
27:03
other two months of the year, and stocks returning even
27:07
more than that every other year, even years specifically. So
27:12
there's something something to the action, but I wouldn't attribute it.
27:15
You can't tease out using the approach I used here,
27:18
which is very simple. You can't tease out the effect
27:21
of elections, and you kind of have to ask what
27:24
was happening. Was there a war on where big tax
27:26
cuts being promised? Was there going to be a blu
27:28
ray wave or a red wave? There are lots of other,
27:31
obviously variables that you can think about when doing this
27:34
type of quote analysis, But yeah, there's something to it, Mike.
27:38
Speaker 2: I'd also say, you know, this piece from the New
27:40
York Times today has data looking at the S and
27:44
P over the last Let's see one two, three, four, five, six, seven,
27:48
eight presidential administrations, and I'll just spout them off here
27:52
to see if you can find any trend or decide
27:55
what to do with all of this. Clinton first, Clinton
27:57
presidency up seventy percent on the S and P five
28:00
one hundred. Next, Clinton presidency up one hundred and one percent.
28:03
Bush administration down twenty one percent. Second, Bush down eleven,
28:07
Obama up forty two, Obama up fifty, Trump up fifty seven,
28:12
Biden up seventy. Even if you take a longer term
28:15
look at this, I know we've talked about this one
28:17
before as well, Mark, but there's many I think listening
28:21
who probably would have a bias towards Hey, economy and
28:23
markets should perform better under a Republican administration under a
28:27
Democrat administration, And I'm here to say that I just
28:31
don't think it has much of an impact in the
28:34
way that you think it does. And it has much
28:35
more about much more to do with the timing of
28:38
the business cycles. Did President Bush's policies on lower taxes
28:42
or passing of TARP, for example, cause the great recession
28:48
and sell off that we saw there or the beginning,
28:50
you know, the end stage of the dot com bubble.
28:52
I would argue, probably not, but he happened to be
28:55
president during both of them, and so yeah, you have this,
28:59
you know, trend where a Republican was at the helm
29:02
for some of the worst market performance in history. Go
29:05
back further. Did Herbert Hoover cause the Great Depression? Probably not.
29:12
I mean, maybe he passed something that had to do
29:14
with it, But.
29:15
Speaker 3: Well, he'd only been in office for several.
29:17
Speaker 2: Months and he ended up presiding over again one of
29:20
the worst market performances in history. And so you might
29:24
take a look at that say, well, you know, with
29:25
those two, I'm sure the Republican averages are quite terrible
29:29
for how the markets have performed. But you have to
29:32
ask yourself is this really a cause and effect or
29:34
is it just coincidence? And we don't have enough data
29:37
to really tell anything.
29:38
Speaker 3: In some cases, the direction of policy advocated by president
29:45
with a different agenda, the Kennedy agenda get the economy
29:48
moving again, and Reagan approached the economy with a sort
29:52
of similar set of policy prescriptions lower taxes sure, while
29:58
keeping spending the same or increasing it. That probably made
30:01
a difference. Kennedy taxes were stimulative, that effect didn't kick
30:04
in until after after he was assassinated. Sadly, Reagan's took
30:09
a couple of years. Everybody remembers the depths of the
30:11
eighty one to eighty two recession. Reagan was not popular.
30:14
Had the election happened, then his butt would have been
30:16
booted out of there. As you say, Mike, it's all
30:18
about timing. It's also about policy to some extent. Either way,
30:22
though it takes fiscal policy a long time to make
30:26
its way through Congress and then get enacted. Monetary policy
30:30
acts much more quick, much faster.
30:32
Speaker 2: Let's take a quick break when we come back, a
30:34
little bit of talk on taxes. Very likely change come
30:37
twenty twenty six, if not sooner. Which direction might they go?
30:40
That's next Here on the Financial Exchange.
30:43
Speaker 1: Text does six one seven, twenty six, two one three
30:46
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31:36
Speaker 2: So Mark, We started the first forty five minutes of
31:40
the show with stuff that we seemingly don't know. Don't
31:43
know who's gonna be the next president, don't know how
31:45
the stock market's likely to perform, although it's usually up
31:48
in November and December. Uh, And I don't really know
31:51
what the policies are going to look like out of
31:53
that next president and whether or not they'll have the
31:56
controlling votes in the House Senate to be able to
31:59
pass that policy.
32:00
Speaker 3: Other than that, you're home for the latest. I have
32:02
markets in election.
32:03
Speaker 2: One thing that I am fairly confident about. Though I
32:06
think taxes are going to change over the next four years.
32:10
I feel pretty well even if there's gridlock though. So
32:14
let's assume that there's total gridlock in Washington over the
32:18
next four years, because you know one likely outcome there
32:23
would be the Senate's polling at like ninety percent likelihood
32:26
for Republicans and the White House's toss up. So you
32:29
get a Harris presidency combined with a Senate that's Republican,
32:34
you got some gridlock. So I would be fairly confident
32:37
to say that I think tax rates are probably going
32:40
to shift around in twenty twenty six, not only because
32:42
it's been a massive campaign promise, but you have the
32:45
existing tax laws that were passed under the first Trump
32:48
presidency in twenty seventeen that automatically sunset on January first
32:53
of twenty twenty six. So I want to start there
32:56
because what it means for a bunch of Americans is
32:58
that most of them, we'll see their tax rates increase.
33:01
All of the rates will go up in those brackets
33:05
at the low end from twelve to fifteen percent, on
33:08
the high end from I think thirty seven to nearly
33:11
for forty percent.
33:13
Speaker 3: I would think that they would take action, even if
33:15
the Congress and the Presidency are held by different parties,
33:20
they would take action to ensure that the vast majority
33:23
of Americans tax rates.
33:24
Speaker 2: I think so too. I think they can agree on
33:26
that much. They can seemingly agree that, hey, that doesn't move.
33:30
So you know, if you're making one hundred grand anywhere
33:33
in the country, maybe your tax rates don't change.
33:35
Speaker 3: But if you're making I think they'll find common hundreds million.
33:38
Speaker 2: Maybe they do change. But in any case, I think
33:41
that's likely to happen. And again, with so much uncertainty
33:46
out there, what I've been hearing from people, and what
33:48
I've been hearing from executives that we cover on the
33:50
show is that they're seeing consumers with a whole bunch
33:53
of paralysis. I just don't want to make a decision.
33:56
I don't want to, you know, whatever analogy you want
34:00
to make, rock the Apple cards where I don't want
34:02
to change anything right now because I want to get
34:04
through this election and see what happens before I make it.
34:08
Speaker 3: For procrastinating, it is a pretty.
34:11
Speaker 2: It is a pretty good excuse for my arasination. I
34:14
mean silly things like I saw the way of a
34:18
mattress company saying that people are putting off mattress. Not
34:23
sure that that makes a ton of sense.
34:25
Speaker 3: People aren't drowning in your waterbeds or anything. It's it's
34:27
election anxiety, but give me a break.
34:29
Speaker 4: Mind.
34:30
Speaker 2: The point that I would make again is there's a
34:32
lot of stuff that's uncertain right now, and I don't
34:33
know what the markets will do. The case, it's it's
34:35
always the case, but there's some stuff around taxes that
34:39
you do have a fair bit of certainty on. You
34:41
do have a genuine amount of certainty around how much
34:44
you're gonna be able to put into your four O
34:45
one K, what your tax rates are going to look
34:47
like today versus a decade from now, and what you
34:51
can actually do today to position yourself better. And again,
34:57
some of this stuff is really unknowable. No, I don't
34:59
know what you're your personal tax rate's going to be
35:01
in twenty twenty six, but there are some general guidelines
35:05
that we can operate by to try and position things
35:08
better for the future. And while I get the procrastination argument,
35:12
if it's playing out that way this year and you're
35:15
giving up one of the last few years of a
35:17
lower tax rate under the Trump tax cuts prior to
35:20
twenty twenty six by not doing anything because you've got
35:22
your head stuck in the sand, that could be a mistake.
35:26
That's all I'm gonna say about is that could be
35:27
a mistake. If you have questions along those lines, then
35:30
you do feel you've been procrastinating when it comes to
35:33
your retirement plan and your tax scenarios. Please give the
35:36
folks at Armstrong Advisory Group a call. We focus on
35:39
this type of planning, that individual planning for the future
35:43
with our clients every single day, and we'd be happy
35:47
to provide you a free consultation as well. You can
35:50
call our offices at eight hundred three nine three four
35:54
zero zero one. We've got local offices close to you.
35:58
We can sit down in person and review your strategy.
36:00
And that phone number again for the Armstrong Advisory Group
36:03
is eight hundred three nine three four zero zero one.
36:08
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
36:10
registered investment advisor. Nothing in the ad or in any
36:13
Armstrong guide a specific financial, legal or tax advice. Consult
36:16
your own financial, tax into state planning advisors before making
36:19
any investment decisions. Armstrong may contact you to offer investment
36:22
advisory services.
36:23
Speaker 2: Mark. I'm not entirely sure what to do with this
36:25
piece of data, but I did find it fascinating homeowners. Homeowners,
36:29
home sellers, and home buyers today are older than they
36:32
have ever been. The typical age of home sellers, according
36:35
to the National Association of Realtors, is up to age
36:39
sixty three. That's up from sixty just a year ago.
36:42
That's a pretty extreme divergence, but not hugely surprising one
36:46
that did shock me. Buyers this year age fifty six.
36:50
That's up from age forty nine last year, a seven
36:54
year jump in the average age of home buyers out there.
36:57
I just find these data points to be absolutely fascinating. Uh,
37:01
The average new first time home buyer I think is
37:04
in their late thirties now. Again, all speaks to the
37:07
lack of affordability, and really you're only seeing transactions out
37:11
there for folks without mortgages or with an incredible amount
37:14
of home equity. And I don't think that this causes
37:18
any big changes to the real estate market, but I
37:21
think it's rather just a symptom of this incredibly unaffordable
37:24
market that we are seeing right now.
37:26
Speaker 3: And a rail in your bathroom it might sell faster,
37:30
I guess. Yeah, wait to make sure you're everything's accessible. Yeah, really,
37:35
I mean I'm being a little bit flip, but.
37:38
Speaker 2: No, I mean the average buyer at fifty six years old, like, yeah,
37:42
you do need if you're selling going downhill fast, you
37:46
know there is a lot. Yeah. Really, the only buyer
37:51
out there seems to be that one with a lot
37:53
of cash and not needing a mortgage at this point
37:56
in time. So hopefully this starts to shift back to
38:00
norms as we see more inventory coming on the market,
38:02
because I don't think it's really a healthy symptom that
38:05
the average buyer is as old as it is, but
38:07
nonetheless that's where we are. Let's take a quick break,
38:10
but a lot more to cover in the second hour
38:13
of the Financial Exchange, including big news over on the
38:15
West Coast from Boeing. That's up next on the Financial Exchange.