Latest / The Financial Exchange Show / Economic hazards are piling up. Are they one-offs or something worse?

Transcript

Economic hazards are piling up. Are they one-offs or something worse? · The Financial Exchange Show

• 0:00
  Speaker 1: The Financial Exchange is produced by Money Matters Radio and
• 0:02
  Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
• 0:05
  Speaker 1: registered investment advisor. All opinions expressed are solely those of
• 0:08
  Speaker 1: the hosts, do not reflect the opinions of Armstrong Advisory
• 0:11
  Speaker 1: or anyone else. Investments can lose money. This program does
• 0:14
  Speaker 1: not offer any specific financial or investment advice. Please consult
• 0:17
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 0:20
  Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
• 0:23
  Speaker 1: this program do not endorse each other or their services.
• 0:26
  Speaker 1: Armstrong and Money Matters Radio do not compensate each other
• 0:28
  Speaker 1: for referrals and are not affiliated. This is the Financial
• 0:34
  Speaker 1: Exchange with Chuck Zada and Mark fan Daddy, your exclusive
• 0:38
  Speaker 1: look at business and financial news affecting your day, your city,
• 0:42
  Speaker 1: your world. Stay informed and up to date about economic
• 0:46
  Speaker 1: and market trends, plus breaking business news every day. The
• 0:50
  Speaker 1: Financial Exchange is a proud partner of the Disabled American
• 0:53
  Speaker 1: Veterans Department of Massachusetts. Help us support our great American
• 0:57
  Speaker 1: heroes by visiting dav five K, Don Buston and making
• 1:01
  Speaker 1: a donation today. This is the Financial Exchange with Chuck
• 1:05
  Speaker 1: Zada and Mark Fandetti.
• 1:10
  Speaker 2: Kicking off hour two of the Financial Exchange, the last
• 1:14
  Speaker 2: hour of the Financial Exchange for this week. Actually, so
• 1:17
  Speaker 2: enjoy it while you can, because then we take the
• 1:19
  Speaker 2: whole weekend off and we'll see you on Monday. Kentucky
• 1:23
  Speaker 2: Derby weekend. By the way, either you got any any
• 1:26
  Speaker 2: ponies you're looking at?
• 1:27
  Speaker 3: This has been the least amount I've paid attention to
• 1:30
  Speaker 3: the Derby in sometime. It kind of caught me by
• 1:32
  Speaker 3: surprisers this weekend. Honestly, I couldn't tell you a single horse,
• 1:36
  Speaker 3: not a single horse, not one horse, Chuck Tucker, if you.
• 1:40
  Speaker 4: Owned a horse, what would you call it? Fandetty? Nice?
• 1:47
  Speaker 5: Because it only runs when it wants to? Yeah, no,
• 1:50
  Speaker 5: fair truck looks money, I'm good.
• 1:52
  Speaker 4: Just call it failure.
• 1:55
  Speaker 2: Oh wait a second, So the favorite looks to be
• 1:59
  Speaker 2: we got three to one odds on Journalism, and then
• 2:02
  Speaker 2: Sovereignty is at five to one and Sandman is at
• 2:05
  Speaker 2: six to one, so those appear to be the three favorites. Again,
• 2:11
  Speaker 2: I know, this is the one weekend a year that
• 2:14
  Speaker 2: I follow horse racing, actually one out of three, you know,
• 2:17
  Speaker 2: and usually like quite honestly, I can't remember the last time.
• 2:22
  Speaker 2: What's the sequence for the triple crowns it it's Belmont?
• 2:26
  Speaker 4: Is the Belmont?
• 2:26
  Speaker 3: Next is the Belmont last Belmont's last.
• 2:29
  Speaker 4: Preakness is next.
• 2:31
  Speaker 3: So this is the first Kentucky.
• 2:33
  Speaker 4: This is the first.
• 2:34
  Speaker 2: Okay, I could remember if it was Preknous or Belmont second.
• 2:37
  Speaker 2: Usually I don't even know one watches the Belmont usually
• 2:39
  Speaker 2: because there's no triple crown, you know, contender at that point.
• 2:41
  Speaker 4: Usually.
• 2:43
  Speaker 2: But yeah, I know absolutely nothing about horse racing. But
• 2:48
  Speaker 2: what I do know is that markets today, So yeah,
• 2:53
  Speaker 2: we did that. Markets today are broadly positive, and we've
• 2:58
  Speaker 2: got the Dow Jones Industrial Average four hundred and fifty
• 3:00
  Speaker 2: points about one point one percent, SP five hundreds up
• 3:03
  Speaker 2: to seventy one points about one to quarter percent, and
• 3:06
  Speaker 2: the Nasdaq two hundred and forty six points about one
• 3:10
  Speaker 2: point four percent. So overall, we've got all three major
• 3:13
  Speaker 2: US indices broadly up. The interesting thing is this is
• 3:17
  Speaker 2: happening despite Amazon being down a quarter percent after earnings
• 3:20
  Speaker 2: and Apple being down four percent. So even with those
• 3:23
  Speaker 2: two big companies creating some drag, you just got a
• 3:26
  Speaker 2: ton of other stocks that are moving up pretty meaningfully today.
• 3:30
  Speaker 2: And so that is dragging indices significantly high. This would
• 3:34
  Speaker 2: be the ninth day in a row by the way
• 3:36
  Speaker 2: that the S and P five hundred closes up. If
• 3:39
  Speaker 2: it were to, uh, you know, continue on this path. Obviously,
• 3:43
  Speaker 2: anything could happen in the last five hours of the
• 3:45
  Speaker 2: day and week. But look, you've got nine days in
• 3:48
  Speaker 2: a row. I will tell you, you know, stocks don't usually
• 3:51
  Speaker 2: continue going up every day forever. But hey, it's it's
• 3:54
  Speaker 2: been a huge relief rally that we've seen since last Monday,
• 3:59
  Speaker 2: where it looked like stocks might be heading back to
• 4:01
  Speaker 2: retest some of the lows that we saw earlier in April.
• 4:05
  Speaker 2: Bonds also selling off meaningfully today, and so you you know,
• 4:11
  Speaker 2: again you try to make sense out of you know,
• 4:12
  Speaker 2: what this means and what it's telling us, because none
• 4:15
  Speaker 2: of us know for sure. But the tenure treasury is
• 4:18
  Speaker 2: up seven and a half basis points, back above four
• 4:20
  Speaker 2: point three percent after a brief trip down in the
• 4:23
  Speaker 2: last week or so. And so you got a few
• 4:25
  Speaker 2: different ways that you can interpret this mark. I'm curious,
• 4:28
  Speaker 2: none of us know, but I'm curious which one of
• 4:30
  Speaker 2: these you think has the most credence. Number One, we
• 4:34
  Speaker 2: had some signs that maybe we're getting to the point
• 4:37
  Speaker 2: where we're talking about talking about having China US trade talks.
• 4:41
  Speaker 2: If so, does that mean you know, world growth recovers
• 4:43
  Speaker 2: and US growth recovers, So you might be seeing bond
• 4:47
  Speaker 2: selling off because of that. That's one possibility. Possibility Number two,
• 4:52
  Speaker 2: the Trump administration unveiled their kind of broad outlines of
• 4:57
  Speaker 2: their budget plan today that had significant increases in defense
• 5:02
  Speaker 2: spending and things along those lines. That is likely to,
• 5:05
  Speaker 2: you know, result in the deficit not becoming smaller over time.
• 5:10
  Speaker 2: Is this, you know, the bond market pushing back against
• 5:12
  Speaker 2: the idea of higher deficits.
• 5:15
  Speaker 4: Maybe that's something that's going on.
• 5:17
  Speaker 2: Uh, you know, is there anything else out there that
• 5:20
  Speaker 2: could be doing this?
• 5:21
  Speaker 4: I don't know.
• 5:22
  Speaker 2: These are kind of the two biggest stories today, but
• 5:24
  Speaker 2: maybe some combination of those things.
• 5:27
  Speaker 4: I'm curious to get your thoughts on it.
• 5:29
  Speaker 5: I think it's a combination. As always, it's hard to
• 5:33
  Speaker 5: decompose any one variable like interest rates and how much
• 5:38
  Speaker 5: they moved and attribute that movement to with like pinpoint accuracy,
• 5:42
  Speaker 5: to various causes. So I think it's probably some combination.
• 5:46
  Speaker 5: And what makes it a little confusing is that the
• 5:47
  Speaker 5: rates we see quoted in the newspaper on TV wherever
• 5:50
  Speaker 5: these are nominal rates, and underlying that nominal rate, there's
• 5:54
  Speaker 5: a real rate, which is driven by real forces, the
• 5:57
  Speaker 5: deficit increased borrowing that you alluded to, or perhaps better
• 6:01
  Speaker 5: economic growth prospects are driving real rates higher, or perhaps
• 6:07
  Speaker 5: the rise of nominal rates is due to the expected
• 6:09
  Speaker 5: inflation part of nominal rates. As I said, under the hood,
• 6:12
  Speaker 5: there's a few things going on with the nominal rate.
• 6:15
  Speaker 5: We see quoted every day, and it's only in retrospect,
• 6:18
  Speaker 5: and even then not with great accuracy unfortunately, that we
• 6:22
  Speaker 5: can say what drove interest rates higher over an extended, say,
• 6:26
  Speaker 5: period of time.
• 6:28
  Speaker 2: Peace in the Washington Post talking about basically some of
• 6:33
  Speaker 2: the style economic hazards are piling up? Are they one
• 6:36
  Speaker 2: offs or something worse? And look, I think this is
• 6:39
  Speaker 2: kind of the question that no one has all of
• 6:41
  Speaker 2: the answers to right now, but you do have some
• 6:44
  Speaker 2: things that are, you know, popping up as concerning signs.
• 6:46
  Speaker 2: What are some of the things that are discussed in
• 6:48
  Speaker 2: this piece, Mark.
• 6:49
  Speaker 5: I think it's most of what you and Mike Armstrong
• 6:52
  Speaker 5: and Paul Lane have been talking about here on the
• 6:55
  Speaker 5: show for the past several weeks. They whether you look
• 6:58
  Speaker 5: at the commentary coming out of corporate leaders and it's
• 7:03
  Speaker 5: measured just to say the least, they're expressing, as Amazon
• 7:07
  Speaker 5: did yesterday, a lot of uncertainty in the economic picture.
• 7:10
  Speaker 5: Or so, there's the corporate there's the increasingly gloomy corporate picture,
• 7:16
  Speaker 5: at least in terms of short term expectations. There's survey data, which,
• 7:21
  Speaker 5: as you have covered amply on this show, has deteriorated
• 7:25
  Speaker 5: at an epic historic pace in the past several weeks.
• 7:28
  Speaker 5: But maybe that'll turn around as tariff deals are struck,
• 7:30
  Speaker 5: we don't know. And then there's the so called hard data,
• 7:33
  Speaker 5: like we got earlier this week in terms of GDP,
• 7:37
  Speaker 5: which was negative, maybe due to one offs, maybe not
• 7:42
  Speaker 5: in the first quarter. So, whether you look at the
• 7:44
  Speaker 5: hard data the soft data, in terms of surveys, what
• 7:48
  Speaker 5: corporate leaders are saying, they're painting an increasingly bleak at
• 7:52
  Speaker 5: least short term outlook.
• 7:55
  Speaker 2: It does seem like the next two to three months
• 7:58
  Speaker 2: are going to be critical for to terming where the
• 8:01
  Speaker 2: US economy goes.
• 8:02
  Speaker 4: Is that a fair statement.
• 8:03
  Speaker 5: Mark, Yeah, And I think you could you could say
• 8:06
  Speaker 5: that at any anytime, not just in periods of seemingly
• 8:09
  Speaker 5: acute uncertainties we're experiencing today.
• 8:12
  Speaker 2: No, but I think like that there's I mean, obviously, look, yes,
• 8:16
  Speaker 2: you can always say that the next couple months of
• 8:18
  Speaker 2: data are important, but generally, generally there's nothing that you
• 8:21
  Speaker 2: would expect to really change the data very much in
• 8:23
  Speaker 2: the next couple months.
• 8:25
  Speaker 4: Yeah.
• 8:25
  Speaker 5: I hate to be a stickler, but I mean, there
• 8:28
  Speaker 5: never is. It's not like the big shocks. Look, the
• 8:30
  Speaker 5: best forecast of GDP or inflation or even unemployment is
• 8:34
  Speaker 5: what it was last time, or what it or what
• 8:36
  Speaker 5: it's changed was last time. That's what a random walk is.
• 8:39
  Speaker 5: My best guess is what it did yesterday. It's also
• 8:41
  Speaker 5: true of stocks and interest rates is I think I'm
• 8:43
  Speaker 5: repeating myself now, But anyway, so you can kind of
• 8:45
  Speaker 5: always say that those models do really well the so
• 8:48
  Speaker 5: called naive forecasting approach. Tell me what it did yesterday,
• 8:51
  Speaker 5: I'll tell you what it's gonna do today. And tell
• 8:53
  Speaker 5: me what it did today, and I'll tell you what
• 8:54
  Speaker 5: it's gonna do tomorrow. Very high accuracy associated with those models.
• 8:57
  Speaker 5: Where they really go off the rails is an abrupt,
• 9:01
  Speaker 5: sort of unexpected turning point. As you'd expect, the past
• 9:05
  Speaker 5: becomes a very bad predictor when the underlying regime has changed.
• 9:11
  Speaker 2: And I guess that's what I'm getting at, is that
• 9:13
  Speaker 2: you have a clear policy shift that has happened here
• 9:17
  Speaker 2: and and so it's it's I think what I'm more
• 9:19
  Speaker 2: getting at is, Hey, we're gonna have to see how
• 9:22
  Speaker 2: businesses and households actually respond to that policy shift in
• 9:26
  Speaker 2: the next few months. And that's something that can get
• 9:29
  Speaker 2: you away from that that you know, Okay, whatever it
• 9:32
  Speaker 2: was doing before is probably what it's going to be
• 9:34
  Speaker 2: doing next. I think that's the key thing that we
• 9:37
  Speaker 2: need to see, which is, hey, how does this actually
• 9:40
  Speaker 2: impact the decisions of millions of people and millions of
• 9:45
  Speaker 2: businesses and how they go about making their financial decisions? Yeah,
• 9:51
  Speaker 2: like what are the what are the concrete impacts going
• 9:54
  Speaker 2: to be? And we can theorize all we want, but again,
• 9:57
  Speaker 2: we don't know, but we're gonna have to see what
• 9:59
  Speaker 2: those decisions look like in the aggregate. It's I think
• 10:03
  Speaker 2: everyone everyone who's all like completely dooming gloom is like,
• 10:07
  Speaker 2: you know, expecting something like March of twenty and it's
• 10:09
  Speaker 2: not that just because the like you're not actually shutting
• 10:13
  Speaker 2: that much stuff down. But yes, You're gonna have businesses
• 10:16
  Speaker 2: that do close because of you know, they're not able
• 10:19
  Speaker 2: to import the stuff they need at the price they
• 10:21
  Speaker 2: need from China. You're gonna have trucking companies. We've already
• 10:23
  Speaker 2: seen a couple that are you know, closing down because
• 10:26
  Speaker 2: of this. So it's it's something where you're going to
• 10:29
  Speaker 2: have these, you know, kind of sporadic pockets of things
• 10:32
  Speaker 2: that you're seeing. I think the question is does it
• 10:34
  Speaker 2: develop into something that's big enough to change that trajectory
• 10:38
  Speaker 2: of the US economy.
• 10:39
  Speaker 5: If March of twenty twenty happened again, it wouldn't unfold
• 10:42
  Speaker 5: the same way because we've had that experience already that
• 10:44
  Speaker 5: gets incorporated into our expectations. Sure, so our response changes.
• 10:49
  Speaker 5: And economists by the name of Robert Lucas, who just
• 10:52
  Speaker 5: passed away last year, who won the Nobel Prize, made
• 10:55
  Speaker 5: this point. It's called the Lucas critique. You cannot rely
• 10:59
  Speaker 5: on past relationships when doing your forecasts because those relationships
• 11:04
  Speaker 5: are influenced by expectations, which are themselves formed by past experience.
• 11:10
  Speaker 5: I'm not saying this as elegantly as he did, but
• 11:13
  Speaker 5: you get the point. So history is interesting. It's the
• 11:17
  Speaker 5: only guide we've got, but it's not a very good
• 11:19
  Speaker 5: one because because of the very fact that we can
• 11:22
  Speaker 5: refer back to it, it affects our expectations of how
• 11:25
  Speaker 5: the future will unfold.
• 11:27
  Speaker 4: Let's take a quick break here.
• 11:29
  Speaker 2: When we come back, we'll do our trivia question for
• 11:33
  Speaker 2: the day, and then we'll talk about where we're starting
• 11:34
  Speaker 2: to see companies hiking prices because of tariffs.
• 11:37
  Speaker 4: Right after this.
• 11:39
  Speaker 1: The global trade war is in full swing. How long
• 11:42
  Speaker 1: will it last? Is anyone's gas? Keep it here for
• 11:45
  Speaker 1: the most up to date information plus breaking news every
• 11:48
  Speaker 1: day right here on the Financial Exchange Radio Network. Find
• 11:52
  Speaker 1: daily interviews and full shows of the Financial Exchange on
• 11:55
  Speaker 1: our YouTube page. Like us on YouTube and get caught
• 11:58
  Speaker 1: up on anything and everything you might have missed. This
• 12:01
  Speaker 1: is the Financial Exchange Radio Network.
• 12:10
  Speaker 3: This segment of The Financial Exchange is brought to you
• 12:12
  Speaker 3: in part by the US Virgin Islands Department of Tourism.
• 12:15
  Speaker 3: The US Virgin Islands are Saint Croix, Saint Thomas, and
• 12:18
  Speaker 3: Saint John and are consistently voted one of the top
• 12:21
  Speaker 3: Caribbean vacation destinations. Enjoy world class cuisine, Pristine Beach's rich
• 12:26
  Speaker 3: history and a vibrant nightlife. Book your trip now to
• 12:28
  Speaker 3: visit America's Caribbean paradise the United States Virgin Islands. For
• 12:32
  Speaker 3: reservations and more information, go to visit USVII dot com.
• 12:36
  Speaker 3: That's visit USVII dot com. Time for trivia here on
• 12:40
  Speaker 3: the Financial Exchange and today is David Beckham's fiftieth birthday.
• 12:45
  Speaker 3: The global soccer star made his name as a member
• 12:49
  Speaker 3: of the multi champion Manchester United squad. Beckham's fame rose
• 12:53
  Speaker 3: to another level when he married Victoria Adams, a member
• 12:57
  Speaker 3: of a hugely popular female musical group in the nineteen nineties.
• 13:02
  Speaker 3: It's your rey question today. What female group was Victoria
• 13:06
  Speaker 3: Adams a member of in the nineties? Once again, what
• 13:08
  Speaker 3: female group was Victoria Adams a member of in the nineties.
• 13:13
  Speaker 4: Uh be the.
• 13:15
  Speaker 3: Seventh person today to text us at six one seven
• 13:18
  Speaker 3: three six two thirteen eighty five with the correct answer,
• 13:21
  Speaker 3: and you win a brand new Financial Exchange Show T shirt.
• 13:24
  Speaker 3: Once again, the seventh correct response two text us to
• 13:28
  Speaker 3: the number six one seven three six two thirteen eighty
• 13:32
  Speaker 3: five will win that T shirt. See complete contest rules
• 13:35
  Speaker 3: at Financial Exchange Show dot com.
• 13:37
  Speaker 2: Mark we get a piece in the New York Times. Uh,
• 13:40
  Speaker 2: the headline is companies are serving notice, we're raising prices
• 13:43
  Speaker 2: because of tariffs. And look, this is not surprising. When
• 13:47
  Speaker 2: companies have an increased cost that they have to pay,
• 13:52
  Speaker 2: they often try to pass that cost on to their
• 13:56
  Speaker 2: end buyer in order to maintain their margins and their profit.
• 14:00
  Speaker 2: I think it's an open question right now if this
• 14:04
  Speaker 2: is going to be successful, simply because I think there
• 14:07
  Speaker 2: are some different dynamics compared to twenty twenty two and
• 14:11
  Speaker 2: twenty one, when we saw inflation, you know, spike up
• 14:14
  Speaker 2: to north of nine percent. I'm not sure that the
• 14:20
  Speaker 2: end buyer is necessarily going to want to or be
• 14:24
  Speaker 2: able to absorb these price hikes the same way that
• 14:27
  Speaker 2: they could.
• 14:28
  Speaker 5: Then your thoughts, yeah, I guess it depends on how
• 14:31
  Speaker 5: sensitive the demand for the various goods affect it is
• 14:37
  Speaker 5: or are is. I don't look it should be broad.
• 14:42
  Speaker 5: Tariff should be inflationary, at least temporarily when prices and
• 14:46
  Speaker 5: the Treasury Secretary made an erroneous argument that was debunked
• 14:50
  Speaker 5: long ago, but it's since we got on the topic.
• 14:53
  Speaker 5: I'll just very briefly say the Treasure Secretary said, but yeah,
• 14:56
  Speaker 5: you got less money to spend on other things, so
• 14:58
  Speaker 5: shouldn't prices go down? People made this argument in the
• 15:01
  Speaker 5: seventies too, Well, oil prices are going up, but that
• 15:03
  Speaker 5: means you got less money, so shouldn't the price of
• 15:05
  Speaker 5: other things go down in the long run. The answer is,
• 15:07
  Speaker 5: of course yes, But in the short run, other prices
• 15:09
  Speaker 5: are sticky or rigid is economists like to say, and
• 15:12
  Speaker 5: that pushes the average price up in the short term.
• 15:15
  Speaker 5: Question is what does the FED do? If the FED
• 15:17
  Speaker 5: keeps the money supply growth rate constant, the economy contracts
• 15:21
  Speaker 5: because there's less money in. Because there's less money overall
• 15:27
  Speaker 5: to spend on stuff, You're spending more on the tariff good,
• 15:30
  Speaker 5: same amount on everything else. The money supplies growing at
• 15:32
  Speaker 5: the same rate, you get recession. FED has to accommodate that.
• 15:36
  Speaker 5: That's what leads to the cycle of wage price increases
• 15:40
  Speaker 5: that we saw in the seventies. I got a little
• 15:42
  Speaker 5: bit off track there, but I just want to make
• 15:43
  Speaker 5: the point that it is a truism. Virtually some economists
• 15:48
  Speaker 5: would disagree, but they're a very very small minority that
• 15:51
  Speaker 5: just because some prices are going up doesn't mean you
• 15:54
  Speaker 5: spend less on everything else, and therefore those goods prices
• 15:57
  Speaker 5: go down. That's not how things have worked in an empirical,
• 16:01
  Speaker 5: so to speak sense. That's why tariffs are likely to
• 16:04
  Speaker 5: be in inflationary unless the FED allows a recession to
• 16:08
  Speaker 5: happen or doesn't ease as a result, that could produce
• 16:11
  Speaker 5: a different outcome.
• 16:13
  Speaker 2: When let's talk about, you know, the combination of potentially
• 16:20
  Speaker 2: recessionary forces versus that that potential build up for inflation.
• 16:26
  Speaker 2: Is there a case to be made that if those
• 16:28
  Speaker 2: forces are strong enough, then you actually end up with
• 16:33
  Speaker 2: I mean it kind of It's just like, where's the
• 16:35
  Speaker 2: pain going to be felt? Is it going to be
• 16:36
  Speaker 2: felt by everyone through inflation or through companies having to
• 16:41
  Speaker 2: kill their margins because their demand is getting eaten up?
• 16:44
  Speaker 4: Is that correct?
• 16:46
  Speaker 5: I would frame it in terms of a trade off
• 16:48
  Speaker 5: between unemployment and inflation, which is the traditional way to think.
• 16:52
  Speaker 5: But I'm we're saying the same thing. So yeah, I
• 16:54
  Speaker 5: think it is the Fed's gut to decide. And always historically,
• 16:58
  Speaker 5: even Paul the legendary Paul Woker came down on the
• 17:01
  Speaker 5: side of protecting as many jobs as possible. He flinched,
• 17:04
  Speaker 5: like a few times Paul Boker did people choose not
• 17:07
  Speaker 5: to remember that, but in eighty two we were lowering
• 17:11
  Speaker 5: rates aggressively in response to contracting economic growth despite lingering
• 17:16
  Speaker 5: high inflation. There were other forces bringing inflation down at
• 17:19
  Speaker 5: that point. But the FED has always cut rates in
• 17:22
  Speaker 5: response to economic weakness, regardless of the inflation picture.
• 17:26
  Speaker 2: And I think that you can say that those facts
• 17:28
  Speaker 2: are in evidence with this Fed as well, in terms
• 17:30
  Speaker 2: of their responsiveness to concerns about unemployment relative to how
• 17:35
  Speaker 2: they've responded to inflation.
• 17:38
  Speaker 4: You go back. I always like to go back to
• 17:40
  Speaker 4: this one just because it's fun.
• 17:41
  Speaker 2: But you go back to January of twenty twenty two
• 17:43
  Speaker 2: and you're sitting there and you're like, hey, inflation is
• 17:48
  Speaker 2: you know, sitting at you know, I think at the
• 17:50
  Speaker 2: time it was in the high sevens or something like that,
• 17:52
  Speaker 2: and just about ready to ratchet up to nine in
• 17:54
  Speaker 2: the first half of that year. And you're sitting there
• 17:57
  Speaker 2: and you know, after Russia and it's Ukraine, you go, okay,
• 18:01
  Speaker 2: like this has to be inflationary, and the FED goes,
• 18:03
  Speaker 2: we're gonna hike a quarter percent. We don't want to
• 18:05
  Speaker 2: do more because we're not sure, you know, what the
• 18:07
  Speaker 2: overall impact is gonna be. And you're sitting there, you're like,
• 18:09
  Speaker 2: oh my goodness, inflations, you know, in the high single digits,
• 18:12
  Speaker 2: and you're hiking a quarter percent because you're worried about,
• 18:15
  Speaker 2: you know, an invasion of a resource rich country, like
• 18:17
  Speaker 2: what what are we?
• 18:18
  Speaker 4: What are we doing here? So clearly they were slow there.
• 18:22
  Speaker 2: And then you go back to last fall, where I
• 18:26
  Speaker 2: always love going back to this one as well. You know,
• 18:28
  Speaker 2: we get the I think it was the August jobs
• 18:30
  Speaker 2: report and Jeremy Siegel from you pen Is on you know, look,
• 18:35
  Speaker 2: I like to give you know, Jeremy Siegel a little
• 18:37
  Speaker 2: bit of little little nudge here and there, just because
• 18:40
  Speaker 2: he's you know, really smart guy, way smarter than I
• 18:42
  Speaker 2: ever will be. But he was still on every news network,
• 18:45
  Speaker 2: you know, yelling about, hey, we need you know, one
• 18:46
  Speaker 2: hundred and fifty basis points and emergency rate cuts right
• 18:49
  Speaker 2: now because of you know, a couple bad not even
• 18:52
  Speaker 2: bad bad jobs reports, just you know, weaker than we
• 18:54
  Speaker 2: wanted to see, and the Fed you know, responds with
• 18:56
  Speaker 2: a fifty basis point cut, and then you know, to
• 18:58
  Speaker 2: twenty five basis point cuts later in the year before pausing.
• 19:02
  Speaker 2: And so it's I think there are definitely facts and
• 19:04
  Speaker 2: evidence that the power fed is has a very much
• 19:08
  Speaker 2: a Dovish tilt to it, where at the first sign
• 19:10
  Speaker 2: of actual weakness they're going to move very quickly to
• 19:13
  Speaker 2: protect the employment side the best they can.
• 19:15
  Speaker 5: Yeah. I think that's both because of baby personal bias.
• 19:18
  Speaker 5: We'd all want to preserve as many jobs as possible.
• 19:20
  Speaker 5: We're human. It's also what their models are telling them,
• 19:22
  Speaker 5: their models at the time. We're saying these price increases
• 19:24
  Speaker 5: will be temporary. We don't have to be overly restricted.
• 19:27
  Speaker 4: In response quick break here we get the trivia answer.
• 19:30
  Speaker 4: When we return.
• 19:41
  Speaker 1: Bringing the latest financial news straight to your radio every day,
• 19:46
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:52
  Speaker 1: Text us six one seven, three, six two thirteen eighty
• 19:55
  Speaker 1: five with your comments and questions about today's show and
• 19:58
  Speaker 1: let us know what you think the stories we are covering.
• 20:01
  Speaker 1: This is the Financial Exchange Radio Network.
• 20:08
  Speaker 3: Tribute question today was what female musical group was Victoria
• 20:13
  Speaker 3: Adams a member of back in the nineteen nineties. That
• 20:17
  Speaker 3: would be the Spice Girls. Bobby from Manchester by the
• 20:21
  Speaker 3: Sea is our winner today, taking home a brand new
• 20:24
  Speaker 3: Financial Exchange Show t shirt. Congrats to Bobby and We
• 20:27
  Speaker 3: play trivia every day here on the Financial Exchange. See
• 20:30
  Speaker 3: complete contest rules at Financial Exchange Show dot com.
• 20:35
  Speaker 2: Mark we got a piece in Bloomberg that really confused
• 20:37
  Speaker 2: me today. It's titled Warren Buffett's Favorite Valuation Indicator flashes
• 20:44
  Speaker 2: a by signal and what it notes, and it has
• 20:48
  Speaker 2: the chart here, which is why I'm particularly confused.
• 20:52
  Speaker 4: I'll read here.
• 20:53
  Speaker 2: The Buffet indicator measures the ratio of the total value
• 20:57
  Speaker 2: of the US stock market via the Wilshare five index. Okay,
• 21:01
  Speaker 2: so value the stock market divided by the dollar value
• 21:05
  Speaker 2: of US GDP, and this is one that he's talked
• 21:07
  Speaker 2: about quite a lot. It stands at its lowest level
• 21:11
  Speaker 2: since early September, even after a bounce that is sent
• 21:14
  Speaker 2: stock screaming higher.
• 21:15
  Speaker 4: In recent weeks.
• 21:16
  Speaker 2: So then I look at the chart because I was like, okay,
• 21:19
  Speaker 2: so you know this, this has to be like.
• 21:21
  Speaker 4: You know, kind of a low value on the chart.
• 21:24
  Speaker 2: The ratio right now is closing in on almost two
• 21:30
  Speaker 2: to one, which the highest that we've ever been was.
• 21:33
  Speaker 4: We had two.
• 21:33
  Speaker 2: Periods, one in twenty twenty one early two and one
• 21:37
  Speaker 2: late last year where the ratio of you know, how
• 21:40
  Speaker 2: much the stock market is worth relative to GDP hit
• 21:42
  Speaker 2: this level, so we're basically just shy of it. And
• 21:46
  Speaker 2: this piece, and someone in this piece that they are
• 21:49
  Speaker 2: interviewing about this, someone by the name of Adam Sarhan
• 21:53
  Speaker 2: or Adam Sarhan of Fifty Park Investments, is saying, I'll
• 21:58
  Speaker 2: read his quote this, it's a crucial indicator because it
• 22:01
  Speaker 2: helps traders know when to deploy capital and buy stocks.
• 22:03
  Speaker 2: There's still reasons to be concerned, but if Trump isn't
• 22:06
  Speaker 2: playing hardball with Terift, people are gonna buy with valuations
• 22:08
  Speaker 2: much more reasonably priced now. Valuations much more reasonably priced now.
• 22:13
  Speaker 2: The thirty year average of this valuation metric is a
• 22:19
  Speaker 2: ratio of like one point two to one, and we're
• 22:23
  Speaker 2: fifty percent above that here, And he's saying that stocks
• 22:26
  Speaker 2: are much more reasonably priced now. Now, look, you can
• 22:30
  Speaker 2: make a case like in the last couple of weeks, okay, like, yeah,
• 22:33
  Speaker 2: people got really nervous and then the market bounced back,
• 22:35
  Speaker 2: and so obviously I've seen a recovery. But I don't
• 22:38
  Speaker 2: see anyone who's been screaming for the last two weeks
• 22:41
  Speaker 2: about the reason they're buying being valuations are now cheap.
• 22:44
  Speaker 5: Yeah, this is a very bad article. It's poorly written,
• 22:50
  Speaker 5: the charts are poorly interpreted. You should be skeptical. We
• 22:53
  Speaker 5: were advised by a prominent government official lately to quote
• 22:57
  Speaker 5: do our own research quote with respect to a complicated
• 23:00
  Speaker 5: topic which we don't need to veer into. But you know,
• 23:04
  Speaker 5: doing your own research on matters that are decided by
• 23:08
  Speaker 5: evidence is hard without professional training. And I say this
• 23:13
  Speaker 5: as someone who spends a lot of time trying to
• 23:15
  Speaker 5: improve their own skills. It takes a lot of work,
• 23:17
  Speaker 5: and you're often wrong any kind of When somebody slaps
• 23:21
  Speaker 5: two things together, makes a ratio out of them, then
• 23:24
  Speaker 5: charts it, you got to be very careful in drawing conclusions.
• 23:28
  Speaker 4: I'll just.
• 23:30
  Speaker 5: Yeah, they didn't. Now, of course, valuations are still sky.
• 23:33
  Speaker 5: You've made this point. I don't know why I'm even
• 23:35
  Speaker 5: saying it. Valuations are still through the roof. By that,
• 23:39
  Speaker 5: I mean the price of stocks relative to In this case,
• 23:41
  Speaker 5: they use GDP gross domestic product. Not clear to me
• 23:43
  Speaker 5: why you'd want to form a ratio of those two things,
• 23:46
  Speaker 5: but we can talk about that on a different day.
• 23:48
  Speaker 5: The point is, even if you believe that ratio held meaning,
• 23:51
  Speaker 5: and I don't, But even if you did it's still
• 23:54
  Speaker 5: it's still at the second or third highest point in
• 23:57
  Speaker 5: history rather than the highest point in history. That doesn't
• 24:00
  Speaker 5: sound like a time to back up the truck. To me,
• 24:02
  Speaker 5: is is something you've already said.
• 24:05
  Speaker 3: Creating the right of state plan to help secure your
• 24:08
  Speaker 3: future takes effort. Cushing and Dolan are experts in estate planning.
• 24:12
  Speaker 3: Their new guide is called Detour Ahead is State planning
• 24:16
  Speaker 3: Blunders to Avoid. In it, you'll learn how to make
• 24:19
  Speaker 3: the right decisions to always protect your assets while avoiding
• 24:22
  Speaker 3: costly mistakes, any one of which could have a dramatic
• 24:26
  Speaker 3: and damaging effect on your financial strategy. As an example,
• 24:30
  Speaker 3: if you created a trust more than ten years ago
• 24:33
  Speaker 3: and haven't updated it since you're setting yourself up for
• 24:36
  Speaker 3: some problems, don't take chances with the assets you've worked
• 24:40
  Speaker 3: so hard to attain. Cushing in Dolan's new guide will
• 24:44
  Speaker 3: help you address issues like this, so call right now
• 24:48
  Speaker 3: eight six six eight four eight five six nine nine.
• 24:51
  Speaker 3: That's eight six six eight four eight five six nine
• 24:55
  Speaker 3: to nine, or you can request the guide from their
• 24:57
  Speaker 3: website Legal exchange show dot com.
• 25:01
  Speaker 1: The proceeding was paid for and the views expressed are
• 25:03
  Speaker 1: solely those of Cushing, and Dolan. Cushing and Dolan and
• 25:05
  Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
• 25:09
  Speaker 1: Cushing and Armstrong do not endorse each other and are
• 25:11
  Speaker 1: not affiliated.
• 25:12
  Speaker 2: I do actually want to dig in on that last
• 25:14
  Speaker 2: topic that you mentioned, just because I think it's an
• 25:16
  Speaker 2: interesting one to explore and explain to people in terms of, Hey,
• 25:20
  Speaker 2: should you be comparing the value of US.
• 25:25
  Speaker 4: Stocks to GDP? No?
• 25:30
  Speaker 2: Yes, I agree, I agree, But the reason what? Let
• 25:36
  Speaker 2: me tell you my reason why, and then you can
• 25:37
  Speaker 2: tell me yours. Yours might just be as simple as
• 25:40
  Speaker 2: the two have no like, no business being compared just
• 25:43
  Speaker 2: because they shouldn't be. You're comparing a level to a rate,
• 25:50
  Speaker 2: which is the problem here. And what I mean by
• 25:52
  Speaker 2: that is the value of the market is how much?
• 25:59
  Speaker 2: Is how much your stock's worth? It's a level. It's
• 26:01
  Speaker 2: it's saying this is you know how much is these
• 26:04
  Speaker 2: are worth today? GDP is not a level. It's a
• 26:09
  Speaker 2: measure of how much output the US produces in a year.
• 26:13
  Speaker 2: It's no different from miles per hour. This would be
• 26:16
  Speaker 2: like comparing miles per hour to miles per gallon. It
• 26:20
  Speaker 2: doesn't do you any good to do that. It's it's
• 26:24
  Speaker 2: it's completely different things. I know, those are like two rates,
• 26:27
  Speaker 2: but one's actually a level in terms of like miles
• 26:29
  Speaker 2: per gallon is you know, a fixed level, and miles
• 26:32
  Speaker 2: per hour is how fast you're traveling. So I think
• 26:36
  Speaker 2: that ultimately, if you're looking at this, it may have
• 26:41
  Speaker 2: you know, you know, some kind of weak correlation that
• 26:44
  Speaker 2: you can you know, use in certain circumstances. Maybe you
• 26:47
  Speaker 2: personally find it useful or something. Okay, fine, whatever, but
• 26:51
  Speaker 2: ultimately it's not really a useful comparison because there are
• 26:56
  Speaker 2: plenty of times that you can point to this ratio
• 26:59
  Speaker 2: as having been expensive relative to history and said, oh,
• 27:03
  Speaker 2: like I should sell stocks now, and that was the
• 27:05
  Speaker 2: exact wrong thing to do.
• 27:07
  Speaker 4: Likewise, there are other times.
• 27:08
  Speaker 2: Where you could be like, hey, these look really cheap
• 27:10
  Speaker 2: based on you know, history, and it was the wrong
• 27:13
  Speaker 2: time to buy them.
• 27:15
  Speaker 4: So yeah, it's just not a.
• 27:18
  Speaker 2: Reliable metric that I think you can use in any way,
• 27:21
  Speaker 2: shape or form, because simply saying well, it's gone down,
• 27:25
  Speaker 2: so I should buy it gets me back to my
• 27:29
  Speaker 2: favorite quote about stocks. How does a stock loose seventy
• 27:31
  Speaker 2: five percent of its value? Well, it loses fifty and
• 27:33
  Speaker 2: then loses another fifty anything else to add mark.
• 27:38
  Speaker 5: Now, other than when you see two series of anything,
• 27:42
  Speaker 5: any variable, and it could be in any domain, any
• 27:44
  Speaker 5: aspect of life. When they're both trending up, don't assume
• 27:48
  Speaker 5: that one's moving the other. Assume they're both responding to
• 27:52
  Speaker 5: a third factor that you're just not thinking about. So
• 27:56
  Speaker 5: things will appear to be correlated. Is true, they are correlated,
• 27:59
  Speaker 5: but there's no there's no causal, as researchers like to
• 28:04
  Speaker 5: say effect. We've all heard that expression correlation is not causation,
• 28:08
  Speaker 5: and keeping that in mind will prevent you from reading
• 28:11
  Speaker 5: something incorrect into graphts like this. But you're absolutely right
• 28:14
  Speaker 5: about stock and flow concepts GDPs of stock, as an
• 28:19
  Speaker 5: accountant might say, and GDP's of flow. Excuse me, I've
• 28:23
  Speaker 5: already gotten myself confused. GDP's of flow variable and stocks
• 28:27
  Speaker 5: are well in this case, no pun intended, they're a
• 28:29
  Speaker 5: stock variable.
• 28:30
  Speaker 4: There you go. Let's take a quick break.
• 28:32
  Speaker 2: When we return, we're going to continue talking Warren Buffett Is.
• 28:36
  Speaker 2: We're going to be joined by Paul Monica from Barons.
• 28:38
  Speaker 2: We are talking Berkshire Hathaway. Right after this.
• 28:43
  Speaker 1: Tara fever is in high gear. We've got the latest
• 28:46
  Speaker 1: on what might be next and how long it might last.
• 28:49
  Speaker 1: Only here on the Financial Exchange Radio Network. Miss any
• 28:54
  Speaker 1: of the show. The Financial Exchange Show podcast is available
• 28:57
  Speaker 1: on Apple, Spotify, and iHeartRadio. Hit the subscribe button and
• 29:01
  Speaker 1: leave us a five star review. This is the Financial
• 29:05
  Speaker 1: Exchange Radio Network, Ladies and gentlemen. The weekend.
• 29:12
  Speaker 3: The Financial Exchange is brought up our partnership with the
• 29:15
  Speaker 3: Disabled American Veterans Department of Massachusetts. This year's five K
• 29:20
  Speaker 3: Saturday November eighth, and registration is now open. The race
• 29:23
  Speaker 3: has sold out each of the past four years and
• 29:26
  Speaker 3: slots will fill up quickly, so don't delay. Visit DAV
• 29:29
  Speaker 3: five k dot Boston today and reserve your spot, or
• 29:33
  Speaker 3: join our team here at the Financial Exchange by registering
• 29:37
  Speaker 3: under Team TFE. That's Saturday, November eighth for this year's
• 29:40
  Speaker 3: DAV five K. Sign up now at DAV five k
• 29:44
  Speaker 3: dot Boston.
• 29:46
  Speaker 2: As promised, we are now joined by the one and
• 29:48
  Speaker 2: only Paul Amonica from Barons here to talk a little
• 29:51
  Speaker 2: bit about a few Warren Buffet adjacent topics since Berkshire
• 29:57
  Speaker 2: Hathway does have their annual meeting this weekend.
• 30:00
  Speaker 4: Paul, you're not heading out there this year.
• 30:02
  Speaker 6: Correct, I am not going to Omaha. I've been there
• 30:05
  Speaker 6: a couple of times. It's always a lot of fun.
• 30:08
  Speaker 6: I had the pleasure one year of actually having a
• 30:10
  Speaker 6: sit down interview with the late Charlie Munger. That was
• 30:14
  Speaker 6: a trip. To put it mildly, he was a colorabal individual.
• 30:17
  Speaker 6: So yeah, I missed that. I won't be out there
• 30:21
  Speaker 6: this year.
• 30:22
  Speaker 2: So let's talk a little bit about Berkshire Hathaway because
• 30:25
  Speaker 2: as much as this year has been a roller coaster
• 30:28
  Speaker 2: ride for the stock market as a whole, Berkshire has
• 30:32
  Speaker 2: been holding up pretty fantastically. Actually, it's up almost seventeen
• 30:36
  Speaker 2: percent this year. What's the deal? What is mister Buffett
• 30:41
  Speaker 2: doing right this year or is it something that's just,
• 30:45
  Speaker 2: you know, not related to anything he's doing well.
• 30:48
  Speaker 6: I think he hasn't done anything, I would say specifically
• 30:53
  Speaker 6: this year to justify the appperformance. I think it really
• 30:58
  Speaker 6: is just an accumulation of the fact that Berkshire Hathaway
• 31:03
  Speaker 6: is a company that owns several operating businesses that are
• 31:09
  Speaker 6: very solid financially Geico first and foremost probably, but also
• 31:15
  Speaker 6: it is known for being an investor in value oriented
• 31:20
  Speaker 6: companies and while Apple has been a bit of a
• 31:24
  Speaker 6: problem this year with along with the rest of tech.
• 31:27
  Speaker 6: You know, companies like Coca Cola have done extremely well,
• 31:31
  Speaker 6: and that's you know, a top stock, long time holding
• 31:35
  Speaker 6: for Berkshire Hathaway. You can probably expect that the Orakila
• 31:38
  Speaker 6: Omaha will be swilling several cans of coke on stage
• 31:42
  Speaker 6: tomorrow to show his support. So I think that's really
• 31:46
  Speaker 6: what this is a reflection of. In times of market volatility,
• 31:50
  Speaker 6: investors recognize that the consummate buy and hold investor that's
• 31:56
  Speaker 6: scooping up undervalued stocks, that's where you want to be
• 31:59
  Speaker 6: in the market like.
• 32:00
  Speaker 4: This, Paul, what's the last company that Berkshire bought?
• 32:04
  Speaker 6: That's a good question. I bought outright as an acquisition
• 32:08
  Speaker 6: or bought as an investment.
• 32:10
  Speaker 2: As an acquisition, I know they make, you know, changes
• 32:12
  Speaker 2: to the investment portfolio here and there, but I'm struggling
• 32:15
  Speaker 2: to think of the last time an outright bought it.
• 32:18
  Speaker 1: Yeah.
• 32:18
  Speaker 6: That that is the thing. I mean, the company has
• 32:20
  Speaker 6: this war chest of cash that a lot of people
• 32:24
  Speaker 6: are waiting for Buffet to do some sort of whale
• 32:30
  Speaker 6: of a deal. They've got over three hundred billion dollars.
• 32:33
  Speaker 6: They don't buy back stock. Really, they don't pay a dividend,
• 32:38
  Speaker 6: so everyone's waiting for an acquisition. I want to say
• 32:41
  Speaker 6: that the last major acquisition was Precision cast Parts, you know,
• 32:45
  Speaker 6: an industrial parts company, and that hasn't exactly panned out
• 32:50
  Speaker 6: all that well. So I'm not sure if Berkshire is
• 32:55
  Speaker 6: a little reticent to do deals because of Decision Cast
• 33:00
  Speaker 6: Parts not being a great long term value for the stock,
• 33:05
  Speaker 6: even though you know, of course, over the years, you know,
• 33:08
  Speaker 6: Berkshire has done a lot of you know, great deals,
• 33:11
  Speaker 6: but again, three hundred billion dollars more than that in cash.
• 33:16
  Speaker 6: The stock market has pulled back this year. You'd have
• 33:18
  Speaker 6: to think that Berkshire's looking and that Buffett, who's not
• 33:22
  Speaker 6: getting any younger, wants to do that big whale of
• 33:25
  Speaker 6: a deal before he retires or you know, moves on
• 33:30
  Speaker 6: to the great and Wall Street and the sky. If
• 33:33
  Speaker 6: you will not to be morbid.
• 33:36
  Speaker 2: What about the companies that Berkshire owns in their investment portfolio?
• 33:41
  Speaker 2: What changes have we seen there in the last year
• 33:43
  Speaker 2: or so, and and how do you think it tells
• 33:46
  Speaker 2: what do you think it tells us about how Buffett
• 33:48
  Speaker 2: or his disciples maybe looking at this market at this point.
• 33:53
  Speaker 6: Yeah, it's a great question. As you just say, and
• 33:55
  Speaker 6: you say disciples. We all know that, you know, Todd
• 33:59
  Speaker 6: Combs and Ted Westler two of his investing lieutenants. They
• 34:04
  Speaker 6: are definitely another of you know, people are gonna be
• 34:08
  Speaker 6: focusing on what they're doing even more closely. You know,
• 34:12
  Speaker 6: there are questions about Apple, I think, and whether or
• 34:16
  Speaker 6: not you know that is you know, a holding that
• 34:20
  Speaker 6: you know, Berkshire, are they souring on or not. They
• 34:23
  Speaker 6: haven't you know, necessarily bought as much. But you know,
• 34:28
  Speaker 6: Berkshire in the past couple of years has made some
• 34:31
  Speaker 6: interesting new holdings.
• 34:33
  Speaker 4: You know, looking up.
• 34:34
  Speaker 6: What the most recent ones are here, you know that
• 34:38
  Speaker 6: they have uh, you know bought uh uh you know
• 34:42
  Speaker 6: Constellation Brands and Domino's Pizza. You know, those are two
• 34:47
  Speaker 6: stakes that are relatively new that I think shows that
• 34:50
  Speaker 6: Berkshire continues to favor the American consumer. Those are both
• 34:56
  Speaker 6: brands that obviously resonate with you know, American consumers. Pool Corp.
• 35:01
  Speaker 6: Is another, you know, interesting one they've increased their position in,
• 35:06
  Speaker 6: you know that distributes swimming pool supplies. So interesting is
• 35:11
  Speaker 6: if you're going to bet on the housing market, maybe
• 35:14
  Speaker 6: uh you know, rebounding. If interest rates continue to follow,
• 35:17
  Speaker 6: Pool Corp could potentially benefit there.
• 35:20
  Speaker 4: So those are three in particular.
• 35:22
  Speaker 6: That that look like, you know, compelling new ish holdings
• 35:26
  Speaker 6: to go along with the you know, Apples and Bank
• 35:29
  Speaker 6: of Americas and Cokes and other you know, longer term,
• 35:33
  Speaker 6: longer time holdings for Berkshire halfway.
• 35:37
  Speaker 2: Very good, Paul, appreciate you joining us today. Have a
• 35:40
  Speaker 2: great weekend, enjoy the ponies tomorrow. I know the Derby
• 35:45
  Speaker 2: is always a favorite for everyone in the spring, but
• 35:48
  Speaker 2: we'll catch up with you soon.
• 35:49
  Speaker 6: And hey, journalism is the favorite. That's not a phrase
• 35:53
  Speaker 6: you're going to hear all that much in this day
• 35:55
  Speaker 6: and age, but go journalism.
• 35:57
  Speaker 4: I saw that. What a fantastic name for a horse.
• 36:01
  Speaker 2: Right now, Paul, have a great, great weekend and we'll
• 36:05
  Speaker 2: see you soon.
• 36:06
  Speaker 6: Thanks a lot. I have a good one, guys.
• 36:08
  Speaker 2: That is Paul Lamonica from Barons Mark. What did we
• 36:12
  Speaker 2: not get to that you want to make sure we
• 36:14
  Speaker 2: cover today?
• 36:15
  Speaker 5: Japan's finance minister Chuck brandishing the threat of using their
• 36:20
  Speaker 5: massive treasury hoard, and treasury debt is just the debt
• 36:25
  Speaker 5: of the US government. There's over thirty six trillion dollars
• 36:28
  Speaker 5: in debt outstanding. FED owns several trillion of that. The
• 36:31
  Speaker 5: other twenty nine trillion that the FED doesn't own is
• 36:33
  Speaker 5: owned by US and foreigners. Foreigners own about a third
• 36:37
  Speaker 5: of that Japan owns. I'm gonna call it a one
• 36:41
  Speaker 5: thirtieth of that, a little over one point one two
• 36:44
  Speaker 5: five trillion dollars looking at what rates are doing today now,
• 36:48
  Speaker 5: I don't think what Japan's finance minister said today suggesting
• 36:52
  Speaker 5: that Japan could sell it's treasuries if this trade war
• 36:55
  Speaker 5: drags on. But foreigners overall own about ten trillion of
• 36:59
  Speaker 5: the over a debt held by the public. If this
• 37:02
  Speaker 5: thing dragged on and they did choose to use that
• 37:05
  Speaker 5: as a weapon in trade war, or if they just
• 37:08
  Speaker 5: lose confidence long term in the ability of the US
• 37:11
  Speaker 5: government to meet its obligations, it's just another force pushing
• 37:14
  Speaker 5: up interest rates in the longer term.
• 37:18
  Speaker 2: I think the piece that I find interesting just with
• 37:21
  Speaker 2: this is, you know, obviously kind of what you get
• 37:24
  Speaker 2: at there, but look, if you if you're talking about
• 37:26
  Speaker 2: countries where you would think there would be a quicker
• 37:30
  Speaker 2: path to a resolution with some of these trade questions
• 37:33
  Speaker 2: out there, Japan would be pretty close to the top
• 37:36
  Speaker 2: of the list in my mind, and it doesn't seem
• 37:38
  Speaker 2: like they're they're you know, that close to a deal now.
• 37:40
  Speaker 2: Of course, like next Wednesday or something. They'll can be like, hey,
• 37:44
  Speaker 2: like we've you know, figured something out with Japan and
• 37:46
  Speaker 2: blah blah blah. Everything's you know, going back to normal.
• 37:48
  Speaker 2: But there is this And I also saw reports that
• 37:50
  Speaker 2: Japan was really pushing back on the auto tariffs for
• 37:53
  Speaker 2: you know, obvious reasons with Japanese automakers being impacted. But
• 37:57
  Speaker 2: I found, you know, and this should be one of
• 38:01
  Speaker 2: the countries that you kind of view as low hanging
• 38:02
  Speaker 2: fruit to being able to get a deal done, and
• 38:05
  Speaker 2: you know the fact that you're hearing this from the
• 38:07
  Speaker 2: Japanese side is kind of interesting me in that respect.
• 38:12
  Speaker 2: We are done for the day and the week. Hope
• 38:15
  Speaker 2: you all have a great weekend and.
• 38:18
  Speaker 4: We'll be back on Monday.
• 38:19
  Speaker 2: Busy week next week with the FED meeting on Wednesday,
• 38:22
  Speaker 2: so a lot to touch on there. Stocks remain positive.
• 38:25
  Speaker 2: We will see you on Monday.