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Target sends a warning to every American consumer · The Financial Exchange Show

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Speaker 2: Good morning, Welcome back to the Financial Exchange. It's Mike
1:14
Speaker 2: Armstrong and Paul Lane and Tucker Silva with you on
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Speaker 2: a Tuesday where markets are selling off for a second
1:20
Speaker 2: straight day in reaction to announced tariffs on Canada, Mexico,
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Speaker 2: and China. In particular, what we're talking about here are
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Speaker 2: twenty five percent tariffs on imported goods from Mexico and Canada,
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Speaker 2: excluding energy products from Canada, which will instead face a
1:35
Speaker 2: ten percent levy. In China, we are attacking an additional
1:39
Speaker 2: ten percent on everything, as well as eliminating a minimus
1:43
Speaker 2: exception on import goods under eight hundred dollars in value.
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Speaker 2: This has investors quite nervous. Yesterday you saw the S
1:53
Speaker 2: and P five hundred clothes down about one point nine percent.
1:57
Speaker 2: Dow I think finished the day off more than six
1:59
Speaker 2: hundred points at the moment. On the now, we're off
2:01
Speaker 2: over seven hundred and seventy points, are about one point
2:04
Speaker 2: eight percent. NASDAK down about one point six percent in
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Speaker 2: early trading and approaching bear market territory of a sorry correction,
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Speaker 2: territory of a ten percent sell off overall US equities.
2:16
Speaker 2: S and P five hundred down about six and a
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Speaker 2: quarter percent from the all time highs it reached just
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Speaker 2: a few weeks ago on February nineteenth. And Yeah, we've
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Speaker 2: got businesses across the country discussing tariffs and announcing what
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Speaker 2: they think it could mean for their businesses in twenty
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Speaker 2: twenty five. And I think we can start right there
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Speaker 2: with Target, who warned this morning the tariffs and consumer
2:39
Speaker 2: uncertainty will hurt their profit for the year, and they
2:42
Speaker 2: expect to raise prices in reaction to tariffs that they
2:45
Speaker 2: are likely to face on a broad swath of goods
2:48
Speaker 2: that they sell to American consumers.
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Speaker 3: Yeah, what we've seen from Target, da've struggled in this
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Speaker 3: retail environment over the course the last six to twelve
2:55
Speaker 3: months or so. It does seem like consumers are more
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Speaker 3: focused on gravitating towards Walmart and Amazon and Costco for
3:02
Speaker 3: lower prices and better delivery options. The stock was as
3:06
Speaker 3: high as in the one fifties or one sixties if
3:10
Speaker 3: you look back to the fall. It sits at one
3:11
Speaker 3: hundred and thirteen dollars stay and in terms of the
3:14
Speaker 3: commentary that they presented in this most recent earnings report,
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Speaker 3: the earnings that they provided for Q four those were
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Speaker 3: satisfactory and beat some estimates, but the concerns really were
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Speaker 3: more for this upcoming quarter, and in particular for the
3:29
Speaker 3: month of February, they saw a net decline of sales
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Speaker 3: of about one percent and did allude to the fact
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Speaker 3: that some of these tariffs could be something that presents
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Speaker 3: a challenge for Target going forward. One of the things
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Speaker 3: that they're looking to invest in is right now they
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Speaker 3: source about thirty percent of their products from China. They're
3:47
Speaker 3: trying to get that down to twenty percent in the
3:50
Speaker 3: next four or five years or so to mitigate some
3:53
Speaker 3: of the impact of terifts and diversify their supply chain
3:56
Speaker 3: a little bit. But Mike Target has struggled really, you know,
3:58
Speaker 3: compared to those piers that I mentioned, and they haven't
4:00
Speaker 3: been as successful. So as much as they allude to
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Speaker 3: consumer confidence weakening and some concerns about sales trends, I'd
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Speaker 3: like this to be echoed by other major retailers too,
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Speaker 3: before I fully buy into the trend.
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Speaker 2: Yeah, I'm wondering how much of this is some tariff
4:17
Speaker 2: scapegoating the Target's trying to accomplish here, because what they
4:20
Speaker 2: mentioned is that their February sales. February sales, that's a
4:26
Speaker 2: tough couple words, fell year over year, and specifically that
4:30
Speaker 2: had nothing to do with tariffs. Yep, right, Like, maybe
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Speaker 2: consumers were less confident in February because they expect tariffs,
4:37
Speaker 2: maybe it was cold weather. But to sit here and say, oh, yeah,
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Speaker 2: you know tariffs are affecting our business already, well not really. Yeah,
4:44
Speaker 2: your bad business management seems to be affecting your sales
4:48
Speaker 2: so far, and February you saw a year over year
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Speaker 2: drop in sales, which is not a great sign. Again,
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Speaker 2: could be whether related, could be other things. But Target,
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Speaker 2: as you mentioned, has very much struggled to shine the
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Speaker 2: same way that Walmart done has done. I mean, Walmart
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Speaker 2: has genuinely convinced investors right or wrong, that they are growing,
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Speaker 2: growing fast and are the kind of end all be
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Speaker 2: all for consumers these days with their grocery business and others,
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Speaker 2: and Target I think has been attempting to imitate them
5:17
Speaker 2: in some ways, and that could come at the wrong time, right,
5:20
Speaker 2: You know, expansions of their grocery business might not be
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Speaker 2: great if you are suddenly facing higher prices from imports
5:26
Speaker 2: of Canadian and Mexican food items. So it'll be an
5:31
Speaker 2: interesting path for Target here. I myself was shopping there
5:36
Speaker 2: with my three kids and wife last night, and you know,
5:41
Speaker 2: to get like a two hundred and fifty dollars spring
5:43
Speaker 2: clothing bill because these kids, I don't know, if you
5:45
Speaker 2: knew this, grow fast, oh yeah yeah, and they are
5:49
Speaker 2: really expensive. Yeah, so, which is why we buy all
5:52
Speaker 2: their clothes at Target.
5:53
Speaker 4: My boys just ripped pajamas all the time, just ripping pajamas,
5:56
Speaker 4: just like their knees are just ripped all the time.
5:58
Speaker 4: Because they're just animal on the floor and wrestling and
6:01
Speaker 4: all that.
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Speaker 3: That's probably the only position that they possess a differentiated strength.
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Speaker 3: And I feel like it's the apparel compared to something.
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Speaker 2: I think it's waning. We do go to Target for
6:11
Speaker 2: a lot of that apparel stuff, and I think that
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Speaker 2: a lot of people are saying, you know, Walmart's doing
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Speaker 2: a pretty good job of catching up to Target at
6:17
Speaker 2: a lower price point. And so that was like, that's
6:21
Speaker 2: in part why my wife loves going to Target is
6:23
Speaker 2: because she thinks the apparel is better. But I haven't
6:25
Speaker 2: been hearing that same message from people quite as much.
6:28
Speaker 2: And I think between Walmart and TJX companies TJ Max,
6:32
Speaker 2: Home Goods, Marshals, et cetera. They seem to be eating
6:34
Speaker 2: targets lunch, left, right and center here.
6:37
Speaker 3: And then you got Amazon two not in like the
6:38
Speaker 3: apparel side, but just there. Those are kind of the
6:41
Speaker 3: big three. And then if you're looking just for the
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Speaker 3: best low cost price, then it's costco too. So it's
6:46
Speaker 3: just they find themselves in a difficult thought from a
6:48
Speaker 3: positioning standpoint.
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Speaker 2: You know, where they kind of find themselves now that
6:51
Speaker 2: I think about it more, it falls into that same
6:54
Speaker 2: category that we've talked about of a business that is
6:57
Speaker 2: not exactly targeting the low income earner, and they're not
7:04
Speaker 2: exactly going after the very high income households either, which
7:08
Speaker 2: has been a success. Right. If you're just targeting people
7:10
Speaker 2: making more than a quarter million dollars, you're doing pretty
7:13
Speaker 2: well recently because that's a growing group who is feeling
7:17
Speaker 2: especially wealthy now because of the stock market growth. Target
7:20
Speaker 2: sits kind of in the middle here, and guess what,
7:22
Speaker 2: we've had a declining middle class here for the last
7:24
Speaker 2: several decades, and that I don't know, I just don't
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Speaker 2: know what. I don't know what position they are serving
7:31
Speaker 2: these days. Walmart is more and more eating up some
7:34
Speaker 2: of their I guess allure as a special brand. Well.
7:38
Speaker 3: Also, Walmart's blowing it out of the water in terms
7:41
Speaker 3: of the e commerce development that they had. They've really
7:43
Speaker 3: invested a ton in building out their infrastructure for pickup
7:46
Speaker 3: and delivery to compete with Amazon. And again that pivots
7:50
Speaker 3: back to Target. You don't really feel like you have
7:53
Speaker 3: the same sort of strategic advantage for their business model
7:57
Speaker 3: compared to some of the peers. It's much more of
7:59
Speaker 3: an inch being experienced typically that you think of for Target.
8:02
Speaker 2: In any case, the company's been on a cost reduction
8:06
Speaker 2: push for the last year. They said that they reduced
8:08
Speaker 2: the price of more than ten thousand items last year.
8:11
Speaker 2: They said their comp sales on e commerce rose by
8:14
Speaker 2: eight point seven percent in the latest quarter, while sales
8:16
Speaker 2: from stores fell half a percent, and that's still driving
8:19
Speaker 2: a good chunk of those overall sales. Target stock has
8:23
Speaker 2: been jumping around all over the place. That one point
8:25
Speaker 2: is off more than six percent, currently off about five
8:28
Speaker 2: percent in trading. That brings it down sixteen and a
8:31
Speaker 2: half percent four year to date and over twenty percent
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Speaker 2: over the course of the last twelve months.
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Speaker 3: Can I take a listener question real quick here who
8:40
Speaker 3: had texted into the show on the tear front. Yeah,
8:44
Speaker 3: pleaefully here listener had asked, well, tariffs have a positive
8:48
Speaker 3: impact on our federal deficit. The short answer is yes,
8:52
Speaker 3: it would, but the size of that is not as
8:55
Speaker 3: large as you may anticipate. I was looking at some
8:58
Speaker 3: statistic earlier today that these measures that we're talking about,
9:02
Speaker 3: the tariffs on the imports from Canada and Mexico and China.
9:05
Speaker 3: This was from earlier in February, so the number may
9:07
Speaker 3: be higher now with some of the additional tariffs on China,
9:10
Speaker 3: would be about one hundred and forty billion that would
9:13
Speaker 3: be raised to these tariff measures. Mike, I'm not sure
9:15
Speaker 3: if you've seen different figures, but to the point being
9:17
Speaker 3: of you know, yeah, that would eat into our deficit,
9:20
Speaker 3: but we operated a two trillion dollar deficits, so to
9:22
Speaker 3: be clear, this is not the end all be all
9:24
Speaker 3: in terms of resolving the deficit problems that we have.
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Speaker 2: Yeah, and now you know, of course, all eyes also
9:29
Speaker 2: turning to tax cuts and what is going to be
9:32
Speaker 2: the promise there? And this is where again this formula
9:36
Speaker 2: gets really complicated. Right, you know, what goods are going
9:38
Speaker 2: to face import tariffs. How long will they be in place.
9:42
Speaker 2: If they are in place for long term, how much
9:44
Speaker 2: of that economic drop in activity? Because let's call it
9:46
Speaker 2: what it is, it's a tax, it's a new tax.
9:48
Speaker 2: And if you use it to pay off the deficit,
9:50
Speaker 2: I like what that does for the long term economy,
9:52
Speaker 2: but it's not great for the short term. It just
9:55
Speaker 2: means that, you know, the government is then spending net
9:59
Speaker 2: a little bit less on the economy, and which that
10:02
Speaker 2: could lead to contraction. But if you, at the same
10:04
Speaker 2: time reduce taxes across the board, what positive effect could
10:09
Speaker 2: that have on the other side of all of this.
10:11
Speaker 2: So a whole lot more to come on this story,
10:15
Speaker 2: including how serious are we about these over the long
10:19
Speaker 2: term once those costs really start to be absorbed by
10:23
Speaker 2: American households. We won't start getting data on this at
10:26
Speaker 2: the earliest until April, right, we are a full month
10:31
Speaker 2: out from any reasonably useful data when it comes to
10:35
Speaker 2: how much consumers are bearing the cost of tariffs. And
10:38
Speaker 2: so I'm not sure you know, there's a lot of
10:41
Speaker 2: people guessing that, hey, these aren't going to be here
10:44
Speaker 2: long term, it's going to turn around. Well, I'm not
10:46
Speaker 2: so sure because that conjecture around the real effect on
10:49
Speaker 2: American households, nobody's going to know anything until probably April
10:53
Speaker 2: or May in the first place. And that's in all
10:56
Speaker 2: likelihood when you could see the show up and when
10:58
Speaker 2: the FED needs to start addressing it along those Yeah,
11:00
Speaker 2: and you.
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Speaker 3: Make a good point to be clear that estimate that
11:03
Speaker 3: I was throwing out there, in terms of the reduction
11:05
Speaker 3: to deficit or revenue raised, assume that the tariffs are
11:07
Speaker 3: in for the rest of the current physical year, which
11:09
Speaker 3: is a massive, massive assumption.
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Speaker 2: Indeed, let's take a quick break when we come back,
11:14
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Speaker 4: SORR. For trivia here on the Financial Exchange And on
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Speaker 4: this day in nineteen thirty three, FDR was inaugurated as
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Speaker 4: a thirty second US President, FDR pledged to pull the
11:56
Speaker 4: country out of the Great Depression, stating in his inaugural
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Speaker 4: or address that the only thing we.
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Speaker 3: Have to fear is fear itself.
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Speaker 4: Trivia question today, who did FDR beat in the nineteen
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Speaker 4: Who did FDR beat in the nineteen thirty two presidential election?
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12:39
Speaker 2: We have a Federal Reserve meeting coming up in almost
12:42
Speaker 2: exactly two weeks Paul, and guess what I know what
12:45
Speaker 2: all of his questions are going to be about. Uh
12:50
Speaker 2: March nineteenth will be the next Federal Reserve meeting. As
12:54
Speaker 2: of right now, there is an eighty nine percent probability
12:57
Speaker 2: according to the cbo E Chicago Board of Sorry Chicago
13:01
Speaker 2: Mercantile Exchange, that the rates will stay exactly where they
13:07
Speaker 2: are eighty nine percent chance that they stay where they
13:09
Speaker 2: are eleven percent chance they are cut. That is up
13:12
Speaker 2: pretty significantly from just a week ago prior to the
13:14
Speaker 2: tariffs being enacted, where that was sitting at only a
13:17
Speaker 2: four percent chance of a cut. So if you are
13:20
Speaker 2: interpreting all of that, this one market, as I read it,
13:24
Speaker 2: is more worried about the recessionary effect of implemented tariffs
13:29
Speaker 2: and perhaps some other data that came out of the
13:30
Speaker 2: course of the last week consumer confidence, ism, manufacturing, to
13:34
Speaker 2: name a few, then they are about the inflationary effect
13:37
Speaker 2: of the tariffs. Because if they were more worried about
13:41
Speaker 2: the inflationary effect, you would see a more propensity for
13:44
Speaker 2: rates to go up in reaction to this rather than
13:47
Speaker 2: them coming down. So that is the read from this market.
13:49
Speaker 2: If we fast forward out even further, now, wow, there's
13:52
Speaker 2: a lot of f's. You now have about a fifty
13:56
Speaker 2: to fifty chance of rates being lower by that May
13:59
Speaker 2: seventh meeting. That is again up pretty substantially from where
14:03
Speaker 2: we were a week ago, where it was still only
14:05
Speaker 2: a twenty five percent chance that rates were cut by
14:08
Speaker 2: that May seventh meeting. So big swing and expectations on
14:11
Speaker 2: interest rates and kind of matches what we are seeing
14:14
Speaker 2: in terms of the bond market right now. We've talked
14:17
Speaker 2: quite a bit about forget the Federal Reserve rate. That's
14:20
Speaker 2: you know, you know, a rate that almost nobody actually faces.
14:23
Speaker 2: But when we talk about things like mortgages like car loans,
14:26
Speaker 2: we're more referring to the tenure treasury yield on the
14:30
Speaker 2: ten year Treasury as of early trading now down below
14:32
Speaker 2: four point two percent. We're sitting at four point one
14:36
Speaker 2: four percent on the US Treasury. Trying to think last
14:40
Speaker 2: time we got this low where we last summer? Let's
14:44
Speaker 2: take a look.
14:45
Speaker 3: Here, Well, we spiked big time in turn.
14:49
Speaker 2: Late last year. Yeah, so we spend most of the
14:51
Speaker 2: late summer and early fall below that four percent range.
14:55
Speaker 2: That was when you did start to see mortgage rates
14:58
Speaker 2: again approaching that low six range was you know, third
15:03
Speaker 2: and beginning of the fourth quarter of last year. As
15:06
Speaker 2: of this morning, according to Mortgage News Daily, you've got
15:09
Speaker 2: rates sitting at about six point seventy four percent on
15:13
Speaker 2: the thirty year fix. I expect to see that come
15:15
Speaker 2: down further tomorrow on this bond market move. The piece
15:20
Speaker 2: from market Watch, however, I'm not sure I agree with
15:23
Speaker 2: it's about how Trump's tariffs and task cuts could leave
15:26
Speaker 2: the FED unable to do its job, And I'm not
15:30
Speaker 2: sure I agree they have this job of maintaining stable
15:35
Speaker 2: employment and prices. I agree that these things will challenge
15:39
Speaker 2: the FED, and if we do slip into a recession
15:42
Speaker 2: or an inflationary environment, I'm not exactly going to line
15:45
Speaker 2: up to blame the FED for it. But I don't
15:49
Speaker 2: see why tariffs are different than any other cause of inflation. Yes,
15:53
Speaker 2: it's self inflicted, but you know the FED is going
15:56
Speaker 2: to have to sit there and try and continue to
15:58
Speaker 2: weigh Okay, with this new policy, what's the bigger risk
16:02
Speaker 2: unemployment inflation both? And what do we do to react
16:06
Speaker 2: to it? So I don't think it in any way
16:08
Speaker 2: kneecaps what the FED is trying to accomplish.
16:10
Speaker 3: So oftentimes we're prisoners of the moment and feel as
16:12
Speaker 3: if this is, you know, the worst of times. And
16:16
Speaker 3: just think about how difficult the Fed's job was back
16:19
Speaker 3: in twenty twenty when we had a global pandemic that
16:21
Speaker 3: we hadn't seen the likes of inn one hundred years.
16:23
Speaker 2: Yeah, that was tricky.
16:24
Speaker 3: How do you go and set monetary policy? At this point, they.
16:27
Speaker 2: Trying to figure out Jay Powell's trying to figure out
16:29
Speaker 2: how to you zoom for the first time ever.
16:31
Speaker 3: This is something that has a lot of historical precedence.
16:35
Speaker 3: Perhaps we've been operating, of course in a lower terra
16:38
Speaker 3: for environment over the last eighty plus years, but it's
16:41
Speaker 3: not economic concepts that are unheard of. So I would
16:44
Speaker 3: too push back against this notion that their job is
16:48
Speaker 3: they're unable to do it. I always reiterate this when
16:51
Speaker 3: I talked about on the show. I'm sure as heck
16:53
Speaker 3: would not want to do their job because it's really
16:56
Speaker 3: very challenging, But that doesn't mean it can't be done.
17:00
Speaker 2: Got kind of buried in the news over the course
17:03
Speaker 2: of the last two days, but doze in the Trump
17:05
Speaker 2: administration announcing some fairly significant cuts to the Social Security Administration.
17:10
Speaker 2: I was asked about it yesterday. Some seven thousand workers
17:14
Speaker 2: of the fifty seven thousand approximately Social Security workers that
17:18
Speaker 2: are at the agency today, there's discussion of cutting those jobs,
17:22
Speaker 2: and the question was raised to me, Okay, what does
17:25
Speaker 2: this mean for the average recipient? You know, is it
17:27
Speaker 2: going to mean delays, Is it going to mean worse
17:29
Speaker 2: customer service? Is it going to mean I'm not getting
17:31
Speaker 2: my benefits. And again this is this is what happens
17:35
Speaker 2: when so much news gets thrown at you at the
17:37
Speaker 2: same time, people start to freak out. So first things first,
17:40
Speaker 2: let's separate two issues. Issue number one, the Social Security
17:44
Speaker 2: Trust Fund, if we continue along the current path, is
17:47
Speaker 2: going to run out of money in ten years. If
17:49
Speaker 2: it runs out of money, there's only enough funds coming
17:51
Speaker 2: in from collected taxes to pay about seventy to eighty
17:54
Speaker 2: percent of benefits. So under current law, in approximately ten years,
17:59
Speaker 2: every Social Security was recipient would not be paid their
18:01
Speaker 2: full benefit amount that they are owed, because that is
18:04
Speaker 2: what the rules are stated to be. Separate discussion. The
18:09
Speaker 2: government is talking about cutting some of the fat at
18:12
Speaker 2: the Soci Security Administration in terms of employees to the
18:15
Speaker 2: tune of seven thousand people. I don't know what that
18:19
Speaker 2: would do to their servicing time, but I'm guessing it
18:21
Speaker 2: would not increase the quality of customer service. That's just
18:24
Speaker 2: my guess. I don't know for certain, but my guess
18:27
Speaker 2: is that you're not going to have any improvements to
18:29
Speaker 2: customer service if you eliminate what's that one of the
18:37
Speaker 2: workforce there. Why this could matter in particular, well, One
18:42
Speaker 2: of the really complicated things right now that Social Security
18:45
Speaker 2: is dealing with is the Social Security Fairness Act, so
18:48
Speaker 2: brand new bill pass back in January, eliminating the windfall
18:52
Speaker 2: elimination provision as well as the government pension offset. As
18:55
Speaker 2: part of that bill, what it's said is that those
18:58
Speaker 2: recipients who are owed money, we'll go back to January
19:02
Speaker 2: of twenty twenty four and pay them back. That's a
19:05
Speaker 2: pretty complicated process. You got to figure out who those
19:07
Speaker 2: people are, where they bank, do we already have electronic
19:11
Speaker 2: funds transfer instructions on file and start paying those people,
19:15
Speaker 2: some of whom have never been in the Social Security
19:17
Speaker 2: system before. So average recipient, you're probably not going to
19:21
Speaker 2: notice anything with these changes to the soci Security administration.
19:24
Speaker 2: New people to the system first time signing up or
19:28
Speaker 2: owed money from all of this, or trying to communicate
19:30
Speaker 2: with Soci Security, Yeah, that could get tricky. Quick break.
19:34
Speaker 2: When we come back, I want to talk a bit
19:36
Speaker 2: more about Social Security and the funding issues they face,
19:38
Speaker 2: along with Trivia Winner, bringing.
19:41
Speaker 5: The latest financial news straight to your radio. Every day.
19:46
Speaker 5: It's the Financial Exchange on the Financial Exchange Radio Network.
19:51
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19:55
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19:57
Speaker 1: All morning. Long Face is the Finalincial Exchange Radio network.
20:05
Speaker 2: Shure me.
20:06
Speaker 4: A question today was who to FDR beats in the
20:10
Speaker 4: nineteen thirty two presidential election.
20:13
Speaker 3: That would be Herbert Hoover.
20:15
Speaker 4: John from Harwich, Mass is our winner today, taking home
20:17
Speaker 4: a Financial Exchange Show t shirt.
20:19
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20:21
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20:25
Speaker 4: See complete contest rules at Financial Exchange Show dot com.
20:29
Speaker 2: We were talking a bit about cuts to the Social
20:31
Speaker 2: Security Administration that have been announced from the White House here,
20:36
Speaker 2: and instead I want to focus a little bit more
20:39
Speaker 2: on Social Security in general and the design of the
20:44
Speaker 2: program and just where things stand these days. There's a
20:46
Speaker 2: piece in market Watch. Let's go with that that interviews
20:52
Speaker 2: the man who, in the eighties under the Trump administraor
20:56
Speaker 2: excuse me, under the Reagan administration, was tasked with fixing
21:00
Speaker 2: Social Security. He was the commissioner in the early eighties
21:03
Speaker 2: during the last major legislative reform that took place to
21:06
Speaker 2: so security. You could argue that the Fairness Act that
21:10
Speaker 2: passed in January is pretty major but didn't really do
21:12
Speaker 2: anything to address long term funding issues. And there are
21:16
Speaker 2: a few pieces that I found interesting. Obviously, you know,
21:18
Speaker 2: in the eighties, this guy came under fire, just like
21:20
Speaker 2: anyone would today for talking about benefit cuts. And his
21:24
Speaker 2: counterpoint was pretty simple. Look, this program was created in
21:27
Speaker 2: nineteen thirty five. In nineteen thirty five, the average life
21:31
Speaker 2: expectancy of a white male worker, which is pretty much
21:34
Speaker 2: the only people this was covering at the time, was
21:37
Speaker 2: sixty two years old. At the time, full retirement age
21:41
Speaker 2: was sixty five. This was a program that was designed
21:44
Speaker 2: in nineteen thirty five to not really cover a lot
21:46
Speaker 2: of people. Most people would be dead by the time
21:49
Speaker 2: they filed for benefits. Today, as everyone knows, life expectancy
21:53
Speaker 2: is in the seventies, we have expanded benefits to a
21:58
Speaker 2: whole slew of different populations, the disabled, spouses of workers.
22:05
Speaker 2: We previously had some offsets in there for you know,
22:08
Speaker 2: spouses of government workers or government workers themselves that would
22:11
Speaker 2: reduce so security benefits. Those have gone away. And so
22:13
Speaker 2: his main argument here is, look, I recognize that the
22:18
Speaker 2: US government made a promise to the American worker, but
22:21
Speaker 2: that promise was predicated on a very different setup when
22:25
Speaker 2: it came to the state of the American population, and
22:29
Speaker 2: so the program as it did back in the eighties
22:32
Speaker 2: faces some very real funding issues, in part because of
22:37
Speaker 2: how it was designed, in part because of how long
22:40
Speaker 2: we're living. A lot of different factors play a role
22:43
Speaker 2: in here, and the fact of matters that I would
22:49
Speaker 2: find one of the most discouraging things that we talk
22:51
Speaker 2: about to be the way O lawmakers are just refusing
22:54
Speaker 2: to address it in any real way. And why I
22:57
Speaker 2: think that's such a problem as opposed to other real
23:00
Speaker 2: issues that Congress has to deal with, is with this problem,
23:04
Speaker 2: the longer you wait, the more painful, the more painful
23:07
Speaker 2: the solution needs to be. If you just fix the
23:11
Speaker 2: problem now and started refilling those buckets or cutting benefits now,
23:15
Speaker 2: I'm not going to sit here and tell you which
23:17
Speaker 2: one I think is the right way to go, but
23:19
Speaker 2: it unless you're just going to run deficits up higher,
23:22
Speaker 2: which I hope all of us can agree as a
23:23
Speaker 2: stupid idea and a stupid way to solve this problem.
23:26
Speaker 2: You have to replenish the trust Fund. You can do
23:29
Speaker 2: so by finding more workers to pay into Social Security
23:32
Speaker 2: good luck. You can do so by raising taxes. You
23:36
Speaker 2: can do so by reducing the amount of benefits that
23:39
Speaker 2: are coming out of the trust fund. Some combination of
23:42
Speaker 2: those different things is how you fix this problem. And
23:45
Speaker 2: instead we're having conversations like, well, maybe we shouldn't tax
23:48
Speaker 2: benefits anymore. Again, maybe we shouldn't, But can we have
23:53
Speaker 2: a conversation that's genuinely about, Okay, we're not going to
23:57
Speaker 2: tax benefits anymore, and this is how we're going to
23:59
Speaker 2: re plannish the trust fund so it doesn't run out
24:02
Speaker 2: for our most vulnerable people in the population ten years
24:05
Speaker 2: from now.
24:06
Speaker 3: I thought this was a really good piece. In particular,
24:08
Speaker 3: he had some really strong insights because of all the experience.
24:12
Speaker 3: And one of the things that he mention is that
24:14
Speaker 3: when they raised the full retirement age, they did it
24:17
Speaker 3: for people who were twenty one at the time, so
24:19
Speaker 3: their future retirement age to be raised by twenty four months.
24:21
Speaker 3: So when you're twenty one, all of us can agree
24:23
Speaker 3: that's the last thing you're worry about. It enough to
24:26
Speaker 3: understand is that's the last thing that you're worry about.
24:28
Speaker 3: But it was interesting to hear him say exactly what
24:30
Speaker 3: you just said, Mike. It's a simple system. There's two
24:33
Speaker 3: ways to think about it. Fixing it reduce benefits, or
24:37
Speaker 3: increase taxes by raising the cap on social security. So
24:40
Speaker 3: right now it's capped out I believe one sixty to
24:42
Speaker 3: one sixty five when you no longer have to pay
24:45
Speaker 3: social security taxes. So those are the two things that
24:47
Speaker 3: you can focus on or put more people in the system.
24:49
Speaker 3: But I'm not even gonna try to make that a
24:52
Speaker 3: point that could fix everything. Or raise the full retirement
24:56
Speaker 3: age is another way to delay it out. But the problem,
24:59
Speaker 3: and we've talked this Death Channel show, is that.
25:03
Speaker 2: Just make it to age eight and then sorry, where
25:05
Speaker 2: we're done here again. We can't afford sour security anymore.
25:08
Speaker 2: So see you later.
25:08
Speaker 3: Something's got to be done and it won't be touched
25:11
Speaker 3: by It's frustrating. It's really frustrating because no one wants
25:14
Speaker 3: to be the bearer of bad news and touch it.
25:17
Speaker 2: This is the type of thing that I fully recognize,
25:20
Speaker 2: you know, can get overblown because honestly, my honest assessment
25:24
Speaker 2: of social security, if you're to pin me down on it,
25:26
Speaker 2: it is that lawmakers figure this out. Unfortunately, I think
25:29
Speaker 2: they figured out in the dumbest way, which would be
25:31
Speaker 2: too just you know, blow out the deficit even further
25:33
Speaker 2: in order to afford the payments. But I do think
25:35
Speaker 2: that they figure it out ultimately. That haven't been said
25:38
Speaker 2: social Security. It's a major source of folks retirement income
25:43
Speaker 2: that they are planning for for the future. There have
25:45
Speaker 2: been huge changes to Social Security over the course of
25:48
Speaker 2: the last twelve months, especially for workers in Massachusetts, in Maine,
25:52
Speaker 2: and you know, seven other states across the country, but
25:55
Speaker 2: here in New England, MASSA choose it's in Maine. Big
25:57
Speaker 2: big changes that workers here are now facing. Because of
26:00
Speaker 2: the way that our states are structured, there are likely
26:03
Speaker 2: to be many more changes to the structure of this
26:06
Speaker 2: overall system as you head towards retirement. If you are
26:10
Speaker 2: staring this system down and trying to figure out what
26:12
Speaker 2: that means for your retirement scenario, please give the experts
26:16
Speaker 2: at Armstrong Advisory Group a call. We work with clients
26:18
Speaker 2: every day to assess that Social Security question and figure
26:22
Speaker 2: out what's the best strategy for your personal scenario. Because
26:25
Speaker 2: guess what the best strategy for your cousin's neighbor who
26:29
Speaker 2: worked for the Social Security Administration for fifteen years probably
26:32
Speaker 2: doesn't look all that similar to your personal situation. If
26:36
Speaker 2: you're trying to assess and have questions, give the folks
26:38
Speaker 2: at Armstrong Advisory Group a call numbers eight hundred three
26:41
Speaker 2: nine three for zero zero one. Again, that's the Armstrong
26:45
Speaker 2: Advisory Group at eight hundred three nine three for zero
26:48
Speaker 2: zero one.
26:49
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
26:52
Speaker 1: registered investment advisor. Nothing in the ad or in any
26:54
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
26:57
Speaker 1: your own financial tax into state planning advisors before making
27:00
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
27:03
Speaker 1: advisory services.
27:05
Speaker 2: Walgreens Boots Alliance, but they still remember Walgreens a huge company.
27:10
Speaker 2: I've got one in my town that I frequent But
27:14
Speaker 2: all of the major pharmacy brands have been struggling, to
27:18
Speaker 2: say the least. Over the course of the last two decades,
27:22
Speaker 2: they've faced mounting pressure both from the healthcare industry, where
27:25
Speaker 2: they derive all of their income on prescription drugs. Not
27:28
Speaker 2: that people aren't getting prescription drugs, but just that the
27:32
Speaker 2: markups and a lot of the rules around that sector
27:35
Speaker 2: have been coming under change. They've faced increasing pressure on
27:38
Speaker 2: the pharmacy side from home delivered medications. Amazon invested in
27:43
Speaker 2: a major business and then I probably don't need to
27:46
Speaker 2: explain to you that not as many people are going
27:48
Speaker 2: to Walgreens and cvs these days to buy their laundry, detergent, diapers,
27:53
Speaker 2: and other items because I can click a button on
27:56
Speaker 2: Amazon it'll show up forty eight hours later. That has
27:59
Speaker 2: affected their front store sales as well. Walgreens is apparently
28:03
Speaker 2: nearing a deal to take the ten billion dollar company private.
28:06
Speaker 2: It'd be a ten billion dollar deal being backed by
28:09
Speaker 2: Sycamore Partners, could be completed as soon as this Thursday.
28:12
Speaker 3: Yeah, Walgreens has been public since nineteen twenty seven and
28:16
Speaker 3: reached a peak market cap of about one hundred billion
28:19
Speaker 3: dollars back in twenty fifteen, and as you alluded to,
28:22
Speaker 3: now going to be sold for in and around ten
28:25
Speaker 3: billion dollars or so. It just points to the fact that,
28:28
Speaker 3: you know, businesses need to evolve over time, and the
28:32
Speaker 3: pharmacy industry has been one that has been really difficult.
28:35
Speaker 3: CBS has grappled with these challenges as well, not to
28:38
Speaker 3: the negative impacts that Walgreens has felt, but certainly it's
28:42
Speaker 3: an ever evolving business and now by going private, you'd
28:47
Speaker 3: think that makes it a little bit easier for Walgreens
28:49
Speaker 3: to operate and keep their business going.
28:51
Speaker 2: Let's take a quick break here. When we come back,
28:55
Speaker 2: bit a stack roulette here on the Financial Exchange.
28:57
Speaker 1: Text does six one seven, two, one, three eight five
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30:02
Speaker 2: Paul. Have you ever had one of Canada's claim to fames?
30:05
Speaker 2: The Ketchup potato chip.
30:07
Speaker 3: I haven't How will they be impacted by terrace?
30:10
Speaker 2: I don't know, not strong, not well. Could see could
30:13
Speaker 2: face some retaliation because I bought some on my way
30:16
Speaker 2: back from Canada's. I always load up on coffee crisps
30:19
Speaker 2: and Ketchup flavored potato chips when I come back from Canada. Delicious,
30:23
Speaker 2: you didn't bring.
30:24
Speaker 4: Any leftovers for the show to not bring anything.
30:26
Speaker 2: Actually, there might be an open pack of coffee crisps
30:28
Speaker 2: that I could bring in. I'll take a look around
30:30
Speaker 2: and see what I can never had. But exciting news.
30:35
Speaker 2: Are you ready for Ketchup flavored sparkling alcoholic beverages because
30:43
Speaker 2: craft Hinds is dipping their toe into booze. I'm joking.
30:46
Speaker 2: Of course. They also own the brand Crystal Light, which
30:50
Speaker 2: is those kind of gross looking lemonade dry packets that
30:53
Speaker 2: you pour into water to make lemonade and then sell
30:56
Speaker 2: it to adults on the road for you know, a
30:59
Speaker 2: huge markup your lemonade stand sugar. That brand Crystal Light,
31:04
Speaker 2: which again, maybe other people have a better opinion of
31:07
Speaker 2: that brand, but that's the one that they are going
31:08
Speaker 2: to be branding their new hard Seltzers under and initially
31:12
Speaker 2: they're only going to have a lemonade and wild strawberry.
31:16
Speaker 2: And I think we can say that when Kraft Hindes
31:18
Speaker 2: gets into the game, the hard Seltzer game is dead.
31:21
Speaker 2: Can we call that trend dead?
31:22
Speaker 1: Now?
31:23
Speaker 4: These are just going to collect dust on a shelf.
31:25
Speaker 3: I have a little infinity for these. I'm not gonna
31:27
Speaker 3: lie to you, guys.
31:28
Speaker 2: Hard Seltzer's or the crystal light.
31:30
Speaker 3: Crystal light thing, I kind of lived off it in college.
31:33
Speaker 2: Freshly, we would, okay, so you would get so Paul
31:38
Speaker 2: has already made alcoholic crystal light is what is referred.
31:43
Speaker 3: So you'd be a freshman and you have you'd struggle
31:46
Speaker 3: to get a case of beer, so you were more
31:49
Speaker 3: often stuck with getting a very lousy vodka, whether it
31:52
Speaker 3: be Popov or some of the cheaper ones out there, Dubra,
31:56
Speaker 3: and so in order to drown out that awful taste,
31:58
Speaker 3: what we would gravitate to is the local food mart
32:02
Speaker 3: at our college had crystal light packets, which would dilute
32:05
Speaker 3: the flavor of it.
32:06
Speaker 2: So, are there any other crimes you'd like to admit
32:08
Speaker 2: to on live radio before we move on.
32:11
Speaker 3: I wouldn't drink it, but I would just make it
32:13
Speaker 3: for my friends, you know. Yeah, yes, that's it.
32:16
Speaker 2: So yeah, that is the newest news from Craft Times,
32:19
Speaker 2: who has been struggling to really differentiate over the course
32:24
Speaker 2: of the last few years, but nonetheless very late to
32:27
Speaker 2: the to the canned alcohol game. Here Crystal Light rolling
32:32
Speaker 2: out their wild strawberry and lemonade.
32:34
Speaker 3: They've got one by ourselves.
32:36
Speaker 2: Yeah, Paul is going to be a sole purchaservice, which
32:39
Speaker 2: might actually be fine.
32:41
Speaker 3: How fast food apps are taken over drive through the
32:44
Speaker 3: launch of mobile apps for a lot of the major
32:46
Speaker 3: fast food change began in two thousand and nine, where
32:49
Speaker 3: Starbucks came out with its mobile app. Ever, since then,
32:52
Speaker 3: every single company out there are the primarily the biggest
32:55
Speaker 3: fast food companies, all have some sort of mobile app,
32:58
Speaker 3: but now people are using them to order for the
33:01
Speaker 3: drive through line rather than speaking to that speaker box
33:04
Speaker 3: that most of us are so accustomed to, So instead
33:07
Speaker 3: of having to give their order, they're just telling the
33:10
Speaker 3: drive through employee their name or a code in order
33:13
Speaker 3: to get their particular package and the piece that they
33:16
Speaker 3: go into Here in this article is this idea that
33:21
Speaker 3: the amount of mobile app adoption is extremely prevalent particularly
33:26
Speaker 3: among younger consumers. There is a cost to that where
33:28
Speaker 3: these mole lapps are free, but you have to fully
33:31
Speaker 3: acknowledge getting onto them that they are taking a ton
33:35
Speaker 3: of your data.
33:36
Speaker 2: And for Seminder mobile app is free. Yeah, if something's free,
33:41
Speaker 2: you're paying. Who is the product? You are the product.
33:45
Speaker 3: So, for example, if you have the Taco Bell app,
33:47
Speaker 3: it has access to your social media accounts, it could
33:50
Speaker 3: use that data to better understand the demographics and inform
33:54
Speaker 3: its advertising marketing activities. The same applies for other companies
33:58
Speaker 3: out there in terms of the access.
34:00
Speaker 2: I'm going to quote this here, buried deep in McDonald's
34:02
Speaker 2: privacy policy to which all app users have to agree
34:05
Speaker 2: to before placing an order.
34:06
Speaker 4: You didn't read the terms and services. There go, they
34:09
Speaker 4: now own your firstborn child.
34:12
Speaker 2: No, I'm joking. Quote inference is drawn from collected data.
34:16
Speaker 2: Create a profile about a consumer reflecting the consumer's preferences, characteristics,
34:21
Speaker 2: psychological trends, predispositions. Hold on, it's torn a little bit here, Behavior, attitudes, intelligence.
34:30
Speaker 2: They're apparently measuring your IQ with all the data that
34:33
Speaker 2: they are getting, abilities or aptitudes. As you mentioned, the
34:37
Speaker 2: Taco Bell app, access is your social media accounts. The
34:41
Speaker 2: amount of data that I have seen these apps alleged
34:44
Speaker 2: to collect. I don't work for McDonald's. I have no
34:46
Speaker 2: idea if they can actually see this. But one of
34:48
Speaker 2: the examples was given that, hey, this person always gets
34:52
Speaker 2: hungry around two pm frequently is ordering from us. We
34:56
Speaker 2: also know, because of all the data that we're able
34:59
Speaker 2: to collect, that they get every Friday at three pm.
35:03
Speaker 2: So guess what we're going to do. We're going to
35:05
Speaker 2: start offering a not heavily discounted promotion from the app
35:09
Speaker 2: that's going to pop up on your phone the moment
35:12
Speaker 2: that your paycheck hits to your bank account at you know,
35:16
Speaker 2: a specific price where we are getting. What these apps
35:19
Speaker 2: are designed to do is get you away from going
35:23
Speaker 2: into the store and looking at the menu and I
35:25
Speaker 2: analyzing all those prices and making a decision. Instead, I
35:29
Speaker 2: have no idea what prices Paul has versus what I have.
35:34
Speaker 2: There is no ability for me to know, Hey, what's
35:38
Speaker 2: the price that Paul's going to pay if he goes
35:40
Speaker 2: through the drive through versus Michael goes through the drive through.
35:43
Speaker 2: And there's nothing necessarily illegal about anything that they're doing. Right,
35:47
Speaker 2: if they want to give a promotion to Tucker this
35:49
Speaker 2: afternoon because they have, you know, looked at his aptitude
35:54
Speaker 2: and determined that he is more intelligent than Michael and
35:57
Speaker 2: therefore is not going to fall for the garbage price
36:00
Speaker 2: point that they're putting on their McDonald's order. There's nothing
36:03
Speaker 2: illegal about that. They can go and do that and say, well, yeah, Tucker,
36:06
Speaker 2: he's a smarter guy, so we're offering him the bigger
36:09
Speaker 2: discount on that food item. So these things are very convenient.
36:15
Speaker 3: How many do you guys have on your phone?
36:16
Speaker 4: I get Starbucks and Duncan Starbucks only Duncan. Duncan smokes
36:22
Speaker 4: Starbucks in terms of the app To.
36:23
Speaker 2: Be fair, I would absolutely have McDonald's on my phone
36:27
Speaker 2: if my wife didn't. We have a tradition every once
36:30
Speaker 2: in a while on Sundays, I take my kids to
36:32
Speaker 2: my hockey practice to go on the ice with me
36:35
Speaker 2: for like five minutes during warm ups, and then as
36:37
Speaker 2: part of that deal, they all get McDonald's on their
36:39
Speaker 2: way there. So we order for McDonald's, you know, almost
36:43
Speaker 2: on a weekly basis, and it is really convenient. Yeah,
36:47
Speaker 2: they offer all sorts of discounts, they offer all sorts
36:49
Speaker 2: of promotions to get on the app, but remember that
36:52
Speaker 2: once you have something downloaded on that phone of yours.
36:56
Speaker 2: You know, I don't think that McDonald's is going to
36:58
Speaker 2: sell your bank account information to a I'm not worried
37:01
Speaker 2: about that, but they are going to legitimately build a
37:04
Speaker 2: very accurate profile of you. And if you're okay with that, fine, right.
37:08
Speaker 2: If you're not buyer, beware read what you're actually signing
37:12
Speaker 2: up for.
37:13
Speaker 3: The accuracy behind them. It is nice when you have
37:15
Speaker 3: the mobile app, you're typically getting one hundred percent order
37:18
Speaker 3: accuracy because of the way you're able to transmit that information.
37:21
Speaker 2: So now, dude, they forgot my kids Apple slices the.
37:24
Speaker 3: Other day and those things are cross.
37:26
Speaker 2: There was hell on the Oh yeah, it's a favorite
37:30
Speaker 2: part of these kids like an apple.
37:32
Speaker 3: My kids like them too. I'm like, these are the
37:34
Speaker 3: worst apples out there.
37:35
Speaker 2: Just by the damn app skins removed.
37:37
Speaker 3: Yeah, no, I know, It's just they look so dry
37:39
Speaker 3: and bad.
37:40
Speaker 2: All right. We have gotten off subject, folks. Marks markets
37:43
Speaker 2: are making a bit of a rebound here. We are
37:45
Speaker 2: still strongly negative in early trading, but at one point
37:49
Speaker 2: Dow and sp and NAZAC were off quite a bit
37:51
Speaker 2: more than one and a half percentage points as we
37:53
Speaker 2: close out today's show, Dow currently off six hundred and
37:56
Speaker 2: sixty points one and a half percent, SMP off seventy
37:59
Speaker 2: seven points, are one point three percent. The Nasdaq, where
38:02
Speaker 2: we're seeing the most recovery, off one hundred and fifty
38:05
Speaker 2: four points, a little bit more than eight tenths a
38:07
Speaker 2: percent in early trading here. We'll have a lot more
38:10
Speaker 2: for you tomorrow and tune in because this stuff is
38:13
Speaker 2: going to be volatile. It's going to move markets and
38:16
Speaker 2: can all change on a whim, so a lot more
38:18
Speaker 2: to come tomorrow on the Financial Exchange