Latest / The Financial Exchange Show / Hidden Job Strength, Earnings Overhaul, and the Road to Affordability

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Hidden Job Strength, Earnings Overhaul, and the Road to Affordability · The Financial Exchange Show

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Speaker 2: Lane, Good morning, Welcome back to the Financial Exchange. It's Mike,
1:15
Speaker 2: Paul and Tucker with you on a Tuesday before a
1:18
Speaker 2: Federal Reserve meeting Wednesday. They will be starting there well.
1:21
Speaker 2: They'll announce their rate decision at two pm, followed by
1:24
Speaker 2: the press conference at two thirty pm tomorrow in the meantime. Meantime,
1:28
Speaker 2: we received retail sales data this morning that we'll dive into,
1:31
Speaker 2: and markets are in slight sell off mode, with the
1:34
Speaker 2: Nasdaq down a tenth percent, SMP closer to one fifth,
1:38
Speaker 2: and the Dow off about four tenths of a percent
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Speaker 2: in early trading here. Paul, anything else catching your eye
1:46
Speaker 2: in terms of markets or data that I missed this morning.
1:49
Speaker 2: I think that just about covers it for us. We're
1:52
Speaker 2: not seeing any massive swings out there that are worth mentioning.
1:56
Speaker 2: Nothing of the oracle kin that we saw last week,
1:59
Speaker 2: for example.
2:00
Speaker 3: No, no, nothing that stands out. You've hit on all
2:02
Speaker 3: the major ones there.
2:03
Speaker 2: So the job market, sorry, let's go to the retail
2:07
Speaker 2: sales first. The retail sales numbers that we saw for
2:10
Speaker 2: August have reconfirmed something that we've been seeing for the
2:15
Speaker 2: last few months, which is a consumer that's continuing to
2:18
Speaker 2: chug along and pay their bills and expand their spending. Now, again,
2:22
Speaker 2: retail sales data does not get adjusted for inflation, and
2:25
Speaker 2: we are seeing a fair bit of it. In the
2:28
Speaker 2: month of August, you saw headline inflation that came in
2:32
Speaker 2: at zero point four percent month over month. We saw
2:36
Speaker 2: retail sales that came in at how much was it
2:39
Speaker 2: called six ye? So what does that practically mean. It
2:42
Speaker 2: means that consumers bought about two tenths a percent of
2:46
Speaker 2: more stuff. They just paid four tenths more for that
2:50
Speaker 2: stuff that they bought. And so we do see this
2:55
Speaker 2: scenario now taking shape and really forming pretty solidly around
3:00
Speaker 2: higher income consumers handling all the expansion when it comes
3:04
Speaker 2: to spending in this economy, whereas those I guess I
3:08
Speaker 2: would say other ninety percent just kind of cobbling it
3:12
Speaker 2: together to be able to put stuff on the table
3:16
Speaker 2: and maintain their existing spending. I don't think they're falling apart,
3:20
Speaker 2: but a number of indicators would point to that direction,
3:22
Speaker 2: whether it's auto loan delinquencies, trade ins of underwater vehicles,
3:28
Speaker 2: mortgage delinquencies aren't at a concerning level, but all of
3:32
Speaker 2: these things have indicated a more stressed consumer and yet
3:38
Speaker 2: the one that keeps on spending. So this doesn't likely
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Speaker 2: change the odds of a FED rate cut tomorrow. In
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Speaker 2: terms of those odds, we'll just check in on them
3:48
Speaker 2: now from the Chicago Tile Exchange.
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Speaker 3: Ninety six percent probability or ninety six percent probability that
3:54
Speaker 3: we see that quarter basis point cut still four percent.
3:58
Speaker 3: So you're saying there's a chance.
4:00
Speaker 2: Fifty bases point cut. Yeah, I mean this is normal
4:03
Speaker 2: about the stage. It's pretty tied in that. Yeah, we're
4:06
Speaker 2: going to get that cut again. Compared to a month
4:09
Speaker 2: ago before we got this jobs report, you know, there's
4:12
Speaker 2: only an eighty five percent chance of a cut at
4:14
Speaker 2: that point in time. But this week jobs report that
4:16
Speaker 2: we saw last Friday, two fridays ago September is all
4:21
Speaker 2: blending together two fridays ago, really I think solidified the
4:25
Speaker 2: Fed is perspective on this economy right now, which is
4:30
Speaker 2: we're in a bit of a concerning level of job creation,
4:35
Speaker 2: concerning enough that it'll likely impact the overall unemployment rate,
4:38
Speaker 2: and so we're going to pay more attention to that
4:41
Speaker 2: than we are the inflation data. Peace from Bloomberg today
4:46
Speaker 2: seemingly sorry. Is this the Wall Street Journal? Barons? Neither
4:51
Speaker 2: of the two peace from Baron Tucker would tell me.
4:54
Speaker 2: But he's chewing an apple right now? Can you turn
4:56
Speaker 2: your mic on? We all want to hear that arguing that,
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Speaker 2: look the weakness that we're seeing in the labor market,
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Speaker 2: and to point that out, you know several months now
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Speaker 2: of fewer than one hundred thousand jobs created June, we
5:11
Speaker 2: actually saw net job loss. The argument that she makes
5:15
Speaker 2: here is, look, we have to get used to a
5:18
Speaker 2: new normal in terms of the labor market, and that
5:21
Speaker 2: new normal is a significant portion of baby boomers retiring
5:24
Speaker 2: every month and a significantly smaller share of work being
5:29
Speaker 2: done by illegal immigrants or undocumented immigrants or their related family.
5:35
Speaker 2: And so therefore you cannot use the same rules of
5:39
Speaker 2: thumb when measuring this labor market as you once could.
5:41
Speaker 3: It was an interesting way to lay it out where
5:44
Speaker 3: we have been concerned that we've seen a significant reduction
5:48
Speaker 3: in job creation over March of twenty five through March
5:52
Speaker 3: of twenty four. The Bureau of Labor statistics that come
5:55
Speaker 3: out recently with that revision trimming off nine hundred and
5:58
Speaker 3: eleven thousand positions. But The argument made here in this
6:01
Speaker 3: piece in Barns is that as we go forward, if
6:04
Speaker 3: there's going to be a lesser supply of workers, then
6:06
Speaker 3: you don't need to create as many jobs as you
6:09
Speaker 3: were previously. And what she uses as a comparison piece
6:12
Speaker 3: is back in twenty twenty three, when the labor market
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Speaker 3: was in a very great place and had just come
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Speaker 3: off the two years of twenty one and twenty two
6:22
Speaker 3: where we saw a ton of job hopping and an
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Speaker 3: increased amount of demand in the labor market. The break
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Speaker 3: even rate, which is basically the amount of jobs that
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Speaker 3: you need to create on a monthly basis in order
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Speaker 3: to satisfy the amount of people employed in labor markets,
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Speaker 3: was one hundred above one hundred and twenty five thousand.
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Speaker 3: She's now arguing that this year that break even number
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Speaker 3: is somewhere around sixty thousand because we have way less
6:47
Speaker 3: in terms of immigration inflows into the United States, only
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Speaker 3: around five hundred thousand this year compared to three and
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Speaker 3: a half to four million and twenty twenty three. And
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Speaker 3: like you mentioned before, Mike, the baby boomer generation is
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Speaker 3: retiring more significantly in droves as well.
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Speaker 2: Yeah, So I mean put very simply whether it's you know,
7:06
Speaker 2: Kathy bos Jantik, who's the just bost genic Bostaganic. I've
7:12
Speaker 2: heard her interviewed several times. I want to get her
7:14
Speaker 2: name right. So the chief econdomis at nationwide or the
7:17
Speaker 2: Federal Reserve Bank of Saint Louis has estimated another number.
7:20
Speaker 2: But in either case, the number of jobs you need
7:24
Speaker 2: to create every month to keep the unemployment at these
7:27
Speaker 2: current levels of four point three percent is probably somewhere
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Speaker 2: between thirty and eighty thousand, with approximately half what you
7:33
Speaker 2: needed back in twenty twenty three. And that's all defined
7:36
Speaker 2: by a shrinking labor pool to do those same jobs.
7:39
Speaker 2: And so again, I think people are generally aware of this.
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Speaker 2: But to me, if we're looking at, you know, hey,
7:46
Speaker 2: what could possibly cause higher inflation and if we're worried
7:50
Speaker 2: about it over a prolonged period of time, to me,
7:53
Speaker 2: it's this more than any of the tariff stuff. Ho So,
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Speaker 2: so the terrorf related stuff I do will have an
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Speaker 2: inflationary impact, and I think we're starting to see it,
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Speaker 2: right if you look at the most recent CPI report
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Speaker 2: which came in at where we're we year over year
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Speaker 2: numbers of like two high two s, low threes. Month
8:13
Speaker 2: of a month number at four tenths, so a pretty
8:16
Speaker 2: uptick level. What we're really seeing there is, yes, services
8:20
Speaker 2: inflation has been rising, but that's always kind of been
8:24
Speaker 2: the case. You always start to see you know, because
8:26
Speaker 2: wages go up, you see services inflation. But goods inflation
8:30
Speaker 2: is now kind of matching all of that. My perception
8:33
Speaker 2: of goods inflation, you're going to see an uptick and
8:36
Speaker 2: then when you compare it to a year from now,
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Speaker 2: unless we're in a really prolonged trade war with escalating tariffs,
8:42
Speaker 2: then it's gonna be a one time adjustment. You're not
8:44
Speaker 2: gonna have to worry about it for the long term. Okay,
8:47
Speaker 2: The labor market story is not a quick fix like
8:52
Speaker 2: anyone out here. If you were an economist and you
8:55
Speaker 2: identified that, hey, our demand and I don't think we're
8:58
Speaker 2: there right now, but if demand for labor starts to
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Speaker 2: outstrip supply, there is no fit quick fix to that solution.
9:05
Speaker 2: AI might be one of them, but otherwise you have
9:09
Speaker 2: to increase immigration. That's the only quick fix to a
9:13
Speaker 2: super tight labor market. And tell me one politician in
9:18
Speaker 2: the country, Democrat or Republican that genuinely thinks they can
9:20
Speaker 2: get re elected on that framework. I don't see it.
9:25
Speaker 2: And so, yes, tariffs are going to have an effect
9:28
Speaker 2: on prices. If you want to talk about what could
9:31
Speaker 2: actually drive longer term inflation for a decade, to me,
9:35
Speaker 2: it's the labor market.
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Speaker 3: I just don't know how we get that tight necessarily
9:40
Speaker 3: on the labor market perspective, we were at three and
9:41
Speaker 3: a half percent unemployment and maybe you can make the area, well, Paul,
9:44
Speaker 3: that was almost too strong. It led all this inflation. Yeah,
9:48
Speaker 3: maybe I'd argue I'm making all these arguments myself was
9:52
Speaker 3: that that supply chain shocks, that's what led to that,
9:55
Speaker 3: and the infusion of trillions of dollars in the economy
9:57
Speaker 3: like that was the reason why I was problematic, Not
9:59
Speaker 3: the three and a half percent unemployment. It's just it
10:01
Speaker 3: would be a long way to fall to get back
10:04
Speaker 3: to those levels, which we would all agree. We're extremely
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Speaker 3: a tight labor market to the point where they had
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Speaker 3: the employees had so much leverage that it led to
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Speaker 3: this inflationary.
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Speaker 2: Yeah, and they don't. They very clearly do not have
10:16
Speaker 2: that leverage today.
10:17
Speaker 3: Yeah.
10:18
Speaker 2: My only point about this is this is not a trend.
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Speaker 2: That is just going The labor supply story is not
10:24
Speaker 2: one that is going to change on a dime. It
10:26
Speaker 2: is going to be a long term shift in the
10:30
Speaker 2: supply of labor in this country. And I think the
10:34
Speaker 2: potential effects could be inflationary, and we just won't really
10:39
Speaker 2: know how that all works out. If we go into
10:41
Speaker 2: recession and AI starts replacing a bunch of jobs, then yeah,
10:45
Speaker 2: nothing to worry about. If instead we're in this new
10:49
Speaker 2: environment six months from now where taxes are lower and
10:53
Speaker 2: interest rates are lower, and housing picks up, and suddenly
10:57
Speaker 2: companies are trying to hire people in a labor market
10:59
Speaker 2: where there is just not enough people to hire. That
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Speaker 2: is a scenario that drives wages higher and drives prices
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Speaker 2: higher and lasts a long time.
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Speaker 3: Mike, I've done my part. I've had three kids. I
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Speaker 3: can't add any more to the potential future labor.
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Speaker 2: For Cantor won't, Paul Canter, won't. Let's take a quick
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Speaker 2: break when we come back, a little bit trivia. Here
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13:05
Speaker 2: Paul, I think it was yesterday the President brought back
13:08
Speaker 2: up the idea of quarterly earnings reports on behalf of
13:12
Speaker 2: publicly traded companies. It is a requirement today. The President
13:16
Speaker 2: had made an issue of this back in twenty eighteen.
13:19
Speaker 2: Barack Obama had done the same in twenty fifteen. Which
13:23
Speaker 2: side of the argument do you want to take on
13:25
Speaker 2: this one? You you in favor or you want to
13:27
Speaker 2: you want to keep getting the quarterlies?
13:29
Speaker 3: You know, initially in prepping I would have said that
13:32
Speaker 3: I was that I was in favor, But I'll go
13:36
Speaker 3: against and I'll say.
13:37
Speaker 5: You need report sports and the reason for the stance.
13:41
Speaker 2: There because you need a job. And what else would
13:44
Speaker 2: we cover on the financial exchange?
13:45
Speaker 5: We would definitely lose in our quarterly We were definitely lose.
13:47
Speaker 3: In the Financial Exchange quite a bit.
13:50
Speaker 5: We would have very busy.
13:51
Speaker 3: I guess what would they do at June, in December
13:53
Speaker 3: or however they do, we'd have some maybe the summer
13:56
Speaker 3: months will get really, really really dry. But all ultimately
14:01
Speaker 3: I come back to the more information that we can have,
14:04
Speaker 3: the more transparency, the better the counter arguments that have
14:07
Speaker 3: been made to go against my position as well, Paul,
14:10
Speaker 3: there's all of this juxtpedition that these companies do to
14:14
Speaker 3: try and beat these earnings analysts out there, these estimates.
14:18
Speaker 3: They're just trying to be above or beyond the expectations,
14:21
Speaker 3: and that causes them to think more short term than
14:25
Speaker 3: long term.
14:25
Speaker 2: Here's what really happens is every quarter, companies come out
14:29
Speaker 2: and revise their earnings expectations. Right, they don't just tell
14:32
Speaker 2: you how they did, They tell you how they think
14:34
Speaker 2: they're going to do. And so they play this really
14:36
Speaker 2: stupid game where they say, ah, you know, great quarter,
14:39
Speaker 2: but we're only expecting our business to grow by three
14:42
Speaker 2: percent over the course of the next quarter. And then
14:44
Speaker 2: they grow by five percent and everybody applauds them. But
14:48
Speaker 2: they had already been planning to grow by five percent
14:50
Speaker 2: in the first case, since they just wanted to beat
14:52
Speaker 2: those revisals.
14:53
Speaker 3: Yeah, and that generates the statistic that you'll often find
14:56
Speaker 3: quoted where S and P five hundred companies, eighty percent
14:58
Speaker 3: of them are beating earn A earnings expectations on a
15:01
Speaker 3: given quarter. And I would see that at the beginning
15:03
Speaker 3: the first time, I would say that, wow, eighty percent
15:05
Speaker 3: of companies of being your expectations.
15:07
Speaker 5: But they're basically they always have as well.
15:09
Speaker 3: It's like my four year old, like I'm just trying
15:11
Speaker 3: to get the bar for him to be able to
15:13
Speaker 3: jump over at like six inches off the ground, and
15:15
Speaker 3: I'm constantly moving it so that he beats and jumps
15:18
Speaker 3: over that bar. And that's the same thing that companies do.
15:20
Speaker 2: So my counterpoint to that would be they're just going
15:25
Speaker 2: to do that every six months instead of every three months.
15:27
Speaker 2: It's not going to change the incentive structure. The incentive
15:30
Speaker 2: structure is still going to be to beat expectations on
15:32
Speaker 2: your earnings and right now you do it every quarter.
15:35
Speaker 2: In the future, if you did this, you would do
15:37
Speaker 2: it every six months. I think I can point to
15:41
Speaker 2: two main issues that I would say would give lend
15:46
Speaker 2: some credence to this argument. One would be cost yeah.
15:50
Speaker 2: Two would just be a general longer term focus that
15:55
Speaker 2: I would like CEOs to have so on the cost
15:58
Speaker 2: side of things, we don't have enough countains. You need
16:01
Speaker 2: accountants to report to quarterly earnings. It's costly to find
16:04
Speaker 2: those accountants and do this. There have been a number
16:07
Speaker 2: of companies, including TopWare brands, Advance Auto Parts, Lift, and others,
16:11
Speaker 2: who have specifically cited a lack of accounting staff as
16:15
Speaker 2: the reason that they could not on time report their
16:18
Speaker 2: quarterly earnings and do their filings with the SEC. So
16:22
Speaker 2: I think it's costly. Private companies don't need to do this, sorry,
16:28
Speaker 2: And we have been seeing a number of companies choose
16:32
Speaker 2: to stay private for longer this day and age. Part
16:35
Speaker 2: of that's because of a bigger private equity funding market
16:37
Speaker 2: where you can get access to capital in private markets.
16:40
Speaker 2: Part of it's probably the cost and burden of reporting
16:42
Speaker 2: earnings every quarter. A small part don't, but part.
16:44
Speaker 3: Of it I just don't think it's a big enough
16:46
Speaker 3: expense that that is the reason. I think it's all
16:48
Speaker 3: the prop The biggest portion of is the private equity
16:52
Speaker 3: and liquidity that has been outside of their Like, yeah,
16:54
Speaker 3: I don't make a way that Stripe sits there, open
16:57
Speaker 3: Ei sits there.
16:58
Speaker 5: Geez.
16:58
Speaker 3: If only we didn't have to pay accountants with our
17:01
Speaker 3: five hundred billion dollar valuation to report every quarter. That's
17:05
Speaker 3: the reason why we're holding off.
17:06
Speaker 2: Agreed, there's no company out there that's going to say, oh,
17:09
Speaker 2: now that I only have to do it twice a year,
17:10
Speaker 2: I'm going to go public. But everything you can tweak
17:13
Speaker 2: around the edges I think could make a slight improvement,
17:16
Speaker 2: and that marginal company might consider it the bigger piece
17:20
Speaker 2: to me. And I don't know that going to every
17:22
Speaker 2: twice a year instead of four times a year changes
17:24
Speaker 2: any of this. But we focus too much on what
17:28
Speaker 2: CEOs are saying every ninety days. I'm much more interested
17:31
Speaker 2: in what a CEO can do for their business five
17:33
Speaker 2: years in the future, sure, rather than thirty days in
17:36
Speaker 2: the future, because the answer for thirty days in the
17:38
Speaker 2: future is next to nothing. Right, You can do nothing,
17:42
Speaker 2: next to nothing to change your business unless the next
17:44
Speaker 2: thirty days, unless you've already been investing in it for
17:47
Speaker 2: the last two years. And so anything that you can
17:50
Speaker 2: do that slightly makes that focus a little bit more
17:54
Speaker 2: about what is my business going to look like five
17:57
Speaker 2: years from now rather than what's going to look like
17:59
Speaker 2: ninety days from now, I think is helpful, but quite honestly,
18:02
Speaker 2: I don't know that going to twice a year actually
18:04
Speaker 2: changes that. So my arguments for go to twice a
18:08
Speaker 2: year are mainly why not, rather than oh, it's going
18:11
Speaker 2: to be revolutionary. I just don't think we get all
18:13
Speaker 2: that much other than media sensationalism and you know, more
18:20
Speaker 2: ads for CNBC and Bloomberg by doing quarter of the
18:22
Speaker 2: earnings reports. That's the main factor that I think is
18:25
Speaker 2: the benefit is, Hey, you know, media gets to cover
18:29
Speaker 2: the quarter of the earnings reports. It's something to talk about,
18:31
Speaker 2: it's exciting. Analysts all over, you know, are busier during
18:36
Speaker 2: earning season, and so that's who I think the main
18:39
Speaker 2: benefactors of all this are, not the investors themselves, not
18:43
Speaker 2: the companies who are reporting quarterly. I think primarily if
18:46
Speaker 2: I look at the beneficiaries, it's stock analysts who get
18:49
Speaker 2: to write reports every quarter. It's TV analysts who get
18:52
Speaker 2: to cover this, radio anasts like ourselves who get to
18:54
Speaker 2: cover it every ninety days. And quite honestly, I just
18:56
Speaker 2: don't think that's a good enough excuse for why you
18:58
Speaker 2: should have to do it every quarter. I just don't
19:01
Speaker 2: think we lose anything.
19:03
Speaker 3: Yeah, ultimately, no loss, no gain really with this.
19:07
Speaker 2: If your business changes mid quarter, there's nothing that would
19:09
Speaker 2: prevent you from coming out to the general public and saying, hey,
19:12
Speaker 2: we had a revolutionary new thing and we're going to
19:14
Speaker 2: tell you about it our cornera earrings report. But just
19:16
Speaker 2: so you know, we're revising our expectations up or down
19:19
Speaker 2: on our business and so you don't lose much. I
19:22
Speaker 2: don't think by going to twice a year. Feel free
19:24
Speaker 2: to tell me why I'm wrong. But first we're gonna
19:26
Speaker 2: take a break and go to Wall Street Watch next.
19:39
Speaker 1: Bringing the latest financial news straight to your radio. Every day.
19:44
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:50
Speaker 1: Time now for Wall Street Watch a complete look at
19:53
Speaker 1: what's moving market so far today. Right here on the
19:56
Speaker 1: Financial Exchange Radio Network.
19:58
Speaker 4: Market's pulling back slight lee as the Fed begins its
20:01
Speaker 4: two day monetary policy meeting today. All Street's also reacting
20:05
Speaker 4: to better than expected retail sales report for the month
20:09
Speaker 4: of August, where retail sales increase zero point six percent,
20:13
Speaker 4: higher the estimates of zero point two percent. Right now,
20:17
Speaker 4: the Dow is down by four tenths of one percent,
20:19
Speaker 4: SMP five hundred down nearly two tenths of one percent,
20:23
Speaker 4: Nasdaq is dipping into negative territory, down about a tenth
20:27
Speaker 4: of a percent. Russell two thousand is down nearly seven
20:30
Speaker 4: tenths of one percent, Tenure Treasure reeled up one basis
20:33
Speaker 4: point now at four point zero four five percent, and
20:37
Speaker 4: crude oil up one and a half percent higher, trading
20:40
Speaker 4: right around sixty four dollars a barrel. Oracle up over
20:44
Speaker 4: one percent after CBS News reported that the cloud Infrastructure
20:47
Speaker 4: Company is among several firms that would enable TikTok to
20:51
Speaker 4: continue operations in the US if a framework deal between
20:55
Speaker 4: the US and China is finalized. Meanwhile, after surpassing three
21:00
Speaker 4: trillion dollars in market cap for the first time yesterday,
21:02
Speaker 4: shares in Google parent company Alphabet dipping into negative territory
21:06
Speaker 4: today Elsewhere, Shares in arcade and restaurant chain David Buster
21:11
Speaker 4: is sinking almost seventeen percent now after it logged another
21:14
Speaker 4: quarter of declining same store sales. Novo Nordis said its
21:19
Speaker 4: experimental once weekly weight loss injection drug help patients reduce
21:23
Speaker 4: their weight by eleven point eight percent after sixty eight weeks.
21:27
Speaker 4: That stock is up nearly three percent. Chipotle up over
21:31
Speaker 4: one percent after the Burrito chain authorized an additional five
21:35
Speaker 4: hundred million dollars for stock buybacks and more. News this
21:39
Speaker 4: morning from Tesla after US auto safety regulators open an
21:44
Speaker 4: investigation into whether some of the company's electrically powered vehicle
21:48
Speaker 4: doors are defective. This comes after the stock jumped over
21:52
Speaker 4: three percent yesterday following news that CEO Elon Musk purchased
21:57
Speaker 4: about one billion dollars worth of Tesla's stock. Tesla up
22:01
Speaker 4: about two percent today. I'm Tucker Silva and that is
22:05
Speaker 4: Wall Street Watch. And in the previous segment we asked
22:09
Speaker 4: you the trivia question, which movie did Robert Redford win
22:12
Speaker 4: Best Director for at the Academy Awards. That would be
22:16
Speaker 4: Ordinary People. Ellen from Charles DWN, mass is our winner today,
22:19
Speaker 4: taking home the Financial Exchange Show T shirt. Congrats to Ellen,
22:23
Speaker 4: and we play trivia every day here in the Financial Exchange.
22:26
Speaker 4: See complete contest rules at Financial Exchange Show dot com.
22:30
Speaker 2: New York Times has a piece no Longer Young and
22:32
Speaker 2: now laid Off, Five ways to protect your finances. I've
22:37
Speaker 2: been thinking about the subject a lot for some reason.
22:39
Speaker 2: I think probably because of the Massachusetts unemployment scenario that
22:42
Speaker 2: we were discussing earlier. But I think The New York
22:45
Speaker 2: Times does a good job of at least accurately identifying
22:48
Speaker 2: a serious problem for folks in their personal finances, which
22:51
Speaker 2: is when you lose your job over the age of fifty,
22:55
Speaker 2: it is critically important to have a plan like one.
23:01
Speaker 2: Agism is going to play out big there, and you
23:04
Speaker 2: are going to have a tougher time finding that job
23:06
Speaker 2: in almost every career path that you can find compared
23:10
Speaker 2: to somebody in their thirties. And it sucks. It's unfair,
23:13
Speaker 2: but that is the reality that I think anybody who
23:15
Speaker 2: has been in that position has faced. Is Yeah, when
23:18
Speaker 2: you're fifty five years old, you have a whole bunch
23:20
Speaker 2: of skill sets, but they're oftentimes unique to your previous company,
23:24
Speaker 2: and if they're no longer willing to employ you, then
23:26
Speaker 2: everybody else is going to look at you with suspicion,
23:29
Speaker 2: will they be good at our latest software that we
23:31
Speaker 2: just rolled out, will they be able to pick up things?
23:33
Speaker 2: And how much are they going to be looking for
23:35
Speaker 2: in wages? So that is the scenario that I think
23:37
Speaker 2: people face when they are looking at a layoff in
23:39
Speaker 2: that age demographic. What is the Times layout in terms
23:43
Speaker 2: of strategies here to help protect yourself. Welle.
23:45
Speaker 3: Good point that they make is typically with a severance
23:48
Speaker 3: package that you may get from a former employer, it
23:51
Speaker 3: may be a lump sum payment that you receive, you know,
23:53
Speaker 3: typically a certain week, number of weeks of pay depending
23:57
Speaker 3: on how many years you've been at the company, and
23:59
Speaker 3: so what they at all, Yeah, what they advise in
24:03
Speaker 3: that lump sum scenario. Some it's paid gradually over time.
24:06
Speaker 3: But if you do receive that lump sum, not blowing
24:09
Speaker 3: at all, as if it's some windfall that you need
24:12
Speaker 3: to go out and have a you know, two month
24:15
Speaker 3: vacation or something like that. I mean, if you have
24:17
Speaker 3: the financial means to do it, by all means, go
24:20
Speaker 3: for it. But I think it's that combination of managing
24:22
Speaker 3: that appropriately. If truly you're finding yourself tight and with
24:26
Speaker 3: limited emergency saving funds, obviously you want to make sure
24:30
Speaker 3: you use that severance very prudently, just like you were working,
24:34
Speaker 3: and also avoid money take taking money from your four
24:37
Speaker 3: one K if you are under the age of fifty
24:40
Speaker 3: nine and a half. If you take money from your
24:42
Speaker 3: four on K, not only are you going to pay
24:44
Speaker 3: income taxes, but you're also going to pay a ten
24:47
Speaker 3: percent early withdrawal penalty, So looking for other sources that
24:51
Speaker 3: you can draw from if the severance package isn't enough
24:54
Speaker 3: to cover you is important. Going to regular investment accounts,
24:58
Speaker 3: emergency savings funds, or or worst case scenario, if you
25:02
Speaker 3: have a roth I array, there is some ability to
25:04
Speaker 3: pull back some of your contributions as long as it's
25:07
Speaker 3: been open for five years.
25:08
Speaker 2: There is, by the way, a special exception there if
25:11
Speaker 2: you separate from your job and have a four oh
25:13
Speaker 2: one K, there's a special rule that might allow you
25:15
Speaker 2: to take distributions at fifty five instead of fifty nine
25:18
Speaker 2: and a half. So these rules do get pretty complicated.
25:21
Speaker 2: The four oh one K, you know, honestly like that
25:24
Speaker 2: that could take a long time to think about all
25:26
Speaker 2: of the different effects there. Like there's fees that are
25:30
Speaker 2: oftentimes covered by your employer while you're working there that
25:33
Speaker 2: might not be covered once you're separated from service. You
25:36
Speaker 2: could have companies stock in your four oh one K.
25:38
Speaker 2: What do you do about that? Health insurance though, is
25:42
Speaker 2: like the very first one that comes to mind for me, Paul,
25:44
Speaker 2: whenever I talk to somebody pre sixty five who loses
25:48
Speaker 2: their job, that's the first one that I go to
25:50
Speaker 2: is Okay, what are we doing here? So you know,
25:53
Speaker 2: Cobra is the first thing that you get. You do
25:55
Speaker 2: get usually access to cobra.
25:57
Speaker 3: But it's startling how expensive that is for folks because
26:00
Speaker 3: oftentimes your employer has been covering seventy eighty percent of
26:02
Speaker 3: that cost. Now you're covering one hundred and twenty percent
26:05
Speaker 3: of it on your own.
26:06
Speaker 5: So it's significant.
26:08
Speaker 2: So you know, at that stage looking at other employee
26:11
Speaker 2: insurance options, maybe you you were covering the insurance and
26:14
Speaker 2: your spouse wasn't, but hey, what does my spouse's coverage
26:17
Speaker 2: look like at that stage? Can I get something there?
26:19
Speaker 2: Can we get can we get covered? Or ultimately do
26:21
Speaker 2: we need to you know, turn to the health insurance
26:25
Speaker 2: marketplace Obamacare? Do we need to go get something there
26:27
Speaker 2: in order to make ends meet here? I'm startled by
26:31
Speaker 2: how many times I see people just forego it in
26:34
Speaker 2: their fifties and say, eh, I'll roll the dice on this,
26:37
Speaker 2: and man, like, you know your one hospital ride there
26:41
Speaker 2: from being bankrupt at that stage, and be really careful
26:44
Speaker 2: before you go and make that type of.
26:45
Speaker 3: It's just want to revise one hundred two percent of
26:47
Speaker 3: the toll premium for Cobra not one.
26:49
Speaker 2: Twenty yeah uh so. Long story short, Losing your job
26:54
Speaker 2: at any point in time is complex and emotional and
26:59
Speaker 2: difficult in the best of times. Having it happen when
27:03
Speaker 2: you are over the age of fifty makes it that
27:06
Speaker 2: much more difficult if you're trying to prepare for your
27:10
Speaker 2: eventual retirement and worried about what I've been discussing. When
27:13
Speaker 2: it comes to the Boston area labor market, I'd like
27:16
Speaker 2: to invite you to one of two special events that
27:19
Speaker 2: we're putting on. This is an event sponsored by the
27:22
Speaker 2: Financial Exchange and Armstrong Advisory Group. We're hosting two live
27:27
Speaker 2: broadcasts of this show combined with two seminars from the
27:31
Speaker 2: Armstrong Advisory Group on two separate dates in October. The
27:35
Speaker 2: first one is going to be October ninth. It's at
27:37
Speaker 2: the Margaritaville Resort on Cape cod The second one is
27:41
Speaker 2: October sixteenth in Chestnut Hill at the Showcase super Lux.
27:45
Speaker 2: Again live broadcast of this show, and then we're talking
27:48
Speaker 2: about this market, this economy, and the seemingly changing position
27:53
Speaker 2: we are facing when it comes to this. We'll be
27:56
Speaker 2: taking questions from the audience excuse me live during the
27:59
Speaker 2: show as well as after during that seminar. So join
28:02
Speaker 2: us for lunch, join us for the broadcast, and just
28:05
Speaker 2: join us for an interesting and enjoyable time. We've done
28:08
Speaker 2: a few of these in the past. They're always great events,
28:10
Speaker 2: but they do sell out. If you would like to
28:13
Speaker 2: reserve your spot, please call now at eight hundred three
28:15
Speaker 2: to nine three for zero zero one. The whole event
28:18
Speaker 2: is free to attend again that number eight hundred three
28:21
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28:24
Speaker 2: a whole bunch of more information right on our website.
28:26
Speaker 2: It's right on the front front page there at Armstrong
28:29
Speaker 2: Advisory dot com.
28:31
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
28:34
Speaker 1: registered investment advisor. Nothing in the ad or in any
28:37
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
28:40
Speaker 1: your own financial, tax into state planning advisors before making
28:42
Speaker 1: any investment decisions. Armstrong make contact you to offer investment
28:46
Speaker 1: advisory services.
28:48
Speaker 2: The newest face of long term unemployment is now the
28:50
Speaker 2: college educated. We've talked about this trend line for a
28:53
Speaker 2: while now, especially newer grads, we are seeing that unemployment
28:57
Speaker 2: rate tick up. They are having a tougher time finding
29:00
Speaker 2: new work than previous grads at least over the course
29:03
Speaker 2: of the last ten to fifteen years. It is one
29:05
Speaker 2: of the weaker hiring markets for college grads that we've
29:08
Speaker 2: seen since the Great Recession. And I just kind of
29:11
Speaker 2: want to hypothetically play this out for a moment. So
29:15
Speaker 2: we seem to have a growing population of unemployed or underemployed.
29:24
Speaker 2: And by underemployed, I say, you know, people that have
29:26
Speaker 2: jobs but want to be working more hours or want
29:28
Speaker 2: to be working in a different area of the economy.
29:31
Speaker 2: Yet the wealthiest ten percent continue to expand spending there.
29:36
Speaker 2: We saw that this morning in the retail sales report.
29:38
Speaker 2: Spending isn't dropping off. AI development is continuing at a
29:43
Speaker 2: breakneck pace because Google and Microsoft and others have boatloads
29:47
Speaker 2: of cash that they're working on spending on innovation and
29:49
Speaker 2: research and development. It spells a really confusing economy. I
29:54
Speaker 2: guess is where I'm landing, Like, I don't know what
29:56
Speaker 2: the stock market does in that scenario. I don't know
29:58
Speaker 2: what the real estate market does in those scenarios, right, Like,
30:01
Speaker 2: all of that would logically mean higher unemployment rate. But
30:06
Speaker 2: if all of the assets, all the stocks are owned
30:09
Speaker 2: by that top ten percent or a significant portion of
30:11
Speaker 2: them are. I don't know that it actually spells a
30:14
Speaker 2: terrible stock market scenario. It might just spell a really
30:17
Speaker 2: uncomfortable economy. It's really really tough to navigate all of
30:22
Speaker 2: this and try and come up with, Okay, what does
30:24
Speaker 2: this all mean for me a twenty five year old,
30:29
Speaker 2: You an investor at forty five, and you the CEO
30:32
Speaker 2: of a publicly traded company two years from now? It's
30:36
Speaker 2: could you see a scenario where we hit five percent
30:38
Speaker 2: unemployment and yet the stock market's reaching all time highs?
30:41
Speaker 2: I would say maybe I would not said.
30:44
Speaker 3: That before, but with all the data on spending and
30:47
Speaker 3: just the concentration of spending power in the higher income
30:52
Speaker 3: death siles, I'd be more open to the possibility than
30:55
Speaker 3: I would have been two or three years ago. Where
30:57
Speaker 3: it's just.
30:58
Speaker 2: Five percent is probably extreme because at that level, like
31:01
Speaker 2: you do have eventually spending pulling back. But you know,
31:06
Speaker 2: it's just a strange position to be in right now
31:09
Speaker 2: where growth is slowing in every area. But AI, however,
31:15
Speaker 2: that AI span is so big that it could float
31:18
Speaker 2: this thing forward for a few more quarters years or
31:21
Speaker 2: more quick break when we come back. Stack roulette is next.
31:26
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31:29
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31:33
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32:07
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32:42
Speaker 2: Time for a bit of stacker Let What do you
32:44
Speaker 2: have for us, Paul, I'm.
32:45
Speaker 3: Going off script a little bit, Mike. Here, this is
32:49
Speaker 3: Lucking Coffee is now taking on Starbucks. Lucking Coffee. You
32:53
Speaker 3: guys might remember listeners out there. It's the largest coffee
32:57
Speaker 3: chain out of China, and they became all right infamous
33:01
Speaker 3: during the pandemic where they had all sorts of accounting
33:05
Speaker 3: Was it accounting issues?
33:06
Speaker 2: Mike? Yeah, it involves the company defrauding investors by fabricating
33:10
Speaker 2: over three hundred million dollars in sales, that's what it was,
33:13
Speaker 2: then inflating expenses to appear more profitable and grow faster.
33:17
Speaker 2: So yeah, oops, not supposed to do that, it turns out.
33:21
Speaker 3: Now, as of mid September, Luckin has opened five coffee
33:24
Speaker 3: locations in New York City. They operate their stores without
33:28
Speaker 3: cashiers and customers must place orders on their mobile app.
33:33
Speaker 3: They're not priced that much price different than what Starbucks is,
33:38
Speaker 3: but basically they do flood their customers with coupons in
33:43
Speaker 3: the app from anywhere of thirty to fifty percent off.
33:47
Speaker 3: Perhaps what got them in trouble before on the sales
33:50
Speaker 3: numbers is all the coupons that they offer. But they're
33:53
Speaker 3: really trying to make a inroads in the United States,
33:58
Speaker 3: all sorts of shoes. They went public on the Nasdaq
34:02
Speaker 3: in twenty nineteen, and then they fell from grace after
34:05
Speaker 3: that a crowning fraud schine listing twenty two, they were
34:08
Speaker 3: delisted yeap, but they're back baby, Yeah.
34:13
Speaker 2: I want to have the coffee taste.
34:14
Speaker 3: I was just wearing the same thing myself.
34:16
Speaker 2: I'm trying to think this through. Like I guess I
34:19
Speaker 2: would feel more comfortable downloading a Chinese based app for
34:25
Speaker 2: buying coffee than I would with having TikTok on my phone.
34:30
Speaker 2: But neither of them give me the warming cozies. No,
34:33
Speaker 2: I'm sure I have to share my location. You're gonna
34:35
Speaker 2: have my bank account information. Why do I need to
34:38
Speaker 2: give you my address and Social Security number to buy
34:40
Speaker 2: a cup of coffee? This seems a little weird, but
34:42
Speaker 2: nonetheless time I'm sure it'll be fine.
34:44
Speaker 5: Hey, Starbucks is weep They're week They're ripe for the teake.
34:46
Speaker 2: Yeah yeah, okay, star Wars, this is what happens when
34:49
Speaker 2: you blow through leaders like it's wildfire, and then I
34:53
Speaker 2: can't get tracked together. So we will. We will see
34:55
Speaker 2: if they can do so, and put up a put
34:58
Speaker 2: up a wall against Luck and Offee coming into their territory.
35:02
Speaker 2: I don't see any of them trying to replace Duncan.
35:04
Speaker 3: I just I was just thinking that I don't think
35:07
Speaker 3: the Massachusetts contingency will will switch over there.
35:11
Speaker 2: They don't have a good read on us Bostonians and
35:13
Speaker 2: how much we love a Duncan, So good luck next time,
35:16
Speaker 2: I guess is the answer on that front. To make
35:19
Speaker 2: America affordable, we need to start with cars. That's that's
35:23
Speaker 2: a piece by Henrietta Moore and Arthur k And I
35:26
Speaker 2: don't think that they are saying that we should have
35:31
Speaker 2: a policy of making cars cheaper. I don't think that.
35:34
Speaker 2: I think they're just accurately identifying just how crazy expensive
35:39
Speaker 2: cars are and how bad we are as Americans at
35:42
Speaker 2: evaluating that financial decision, rather than when I first read,
35:47
Speaker 2: I was like, so are you saying we need to
35:48
Speaker 2: elect public officials that are going to make cars cheaper?
35:51
Speaker 2: Because that's not really how capitalism works generally. But here's
35:56
Speaker 2: what they do point out is that a new car
36:00
Speaker 2: on average cost nearly forty nine thousand dollars. We then
36:04
Speaker 2: go and finance those cars over seven years at interest
36:07
Speaker 2: rates higher than six percent and so we're left with
36:13
Speaker 2: an affordability issue in this country when it comes to
36:15
Speaker 2: transportation that is getting a bit ludicrous. And I would
36:20
Speaker 2: once again say here that we have no one to
36:23
Speaker 2: blame but ourselves, no one to blame about ourselves on this.
36:27
Speaker 2: I am fascinated by Americans car buying fascination why we
36:34
Speaker 2: need basically a robot on wheels these days and how
36:38
Speaker 2: expensive that is to afford, and then ensure is just
36:41
Speaker 2: nuts to me. But it's not General Motors in Tesla
36:45
Speaker 2: that is forcing all of us to go buy these vehicles.
36:48
Speaker 2: You can buy a really cheap Kia for a lot
36:52
Speaker 2: less than forty nine thousand dollars, or frankly, you can
36:56
Speaker 2: buy a Honda that's really cheap for a lot less
36:59
Speaker 2: than forty nine thousand dollars. But guess what, we don't
37:01
Speaker 2: do that. So, yeah, it would be great if we
37:06
Speaker 2: could make cars cheaper, but again, when companies try and
37:11
Speaker 2: roll them out and sell them, nobody wants to buy them.
37:15
Speaker 2: Honda rolled out the Fit a number of years ago,
37:17
Speaker 2: an outrageously cheap car, and nobody bought it. They discontinued it.
37:21
Speaker 2: In the United States, Toyota rolled out the Yaris back
37:24
Speaker 2: in the like two thousands, it was this tiny, really
37:27
Speaker 2: cheap car that probably would have done very poorly in
37:29
Speaker 2: the snow. But again they discontinued in the US because
37:32
Speaker 2: nobody buys these small cheap cars. Instead, we want giant SUVs,
37:37
Speaker 2: and you know, that's fine likes. That's what we want
37:40
Speaker 2: to buy, and that's what the car makers make a
37:42
Speaker 2: ton of money on, and that all works. But this
37:45
Speaker 2: is a problem of our own doing it.
37:49
Speaker 3: Of all the problems, the housing market is probably the
37:53
Speaker 3: first place to start, but I get what they're going
37:55
Speaker 3: for on the headline thing. You know, the cars is
37:58
Speaker 3: the next place to go. The good argument ours is
38:00
Speaker 3: that they're gonna it's a depreciating asset too. That's the
38:02
Speaker 3: other thing to mention. You're borrowing money for something that's
38:04
Speaker 3: gonna be worth less down the road. So I get
38:06
Speaker 3: that point for sure. It doesn't make a whole lot
38:08
Speaker 3: of sense.
38:08
Speaker 2: Markets are slightly down for the day. We've got a
38:11
Speaker 2: FED meeting tomorrow, so tune in, have a great rest
38:13
Speaker 2: of your day, folks, and we will catch you on
38:15
Speaker 2: the financial exchange. Then