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Why is Wall Street worrying about renters and younger borrowers? · The Financial Exchange Show

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Face is the Financial Exchange with Mike Armstrong and Mark Fandetti.
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Speaker 2: Welcome back to the Financial Exchange. Taking a look around
1:23
here at markets heading into the eleven o'clock hour of
1:26
the show. Here we've got the Dow, SMP, and NASDAK
1:29
all in negative territory but making some improvements on earlier trading.
1:33
Dow off one hundred and twenty one points a quarter
1:35
of a percent, SMP similarly percentage y sixteen points, and
1:39
then the NASDAK briefly flashed flat for the day but
1:43
currently down seven and a half points or point zero
1:48
four percent. Bond markets selling off, still continuing their trudge upwards.
1:54
Briefly we had ten year yields up over four point
1:57
two percent. They're currently sitting down at point one nine percent.
2:02
Oil prices up again today up two percent. Seventy two
2:06
dollars per barrel on West Texas crued here and I
2:12
had a big pause at the beginning of show that
2:13
Mark Fandaddy and Tucker are probably looking at me. But
2:16
some breaking stuff that flashed across my thing here from
2:20
CNBC is that the former Abercrombie CEO Mike Jeffers has
2:24
been charged with sixteen counts of sex trafficking and interstate prostitution.
2:29
So anyway, that's what gave me a whole bunch of pause.
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Speaker 3: I'm surprised their catalogs used to be so wholesome.
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Speaker 2: Jeez, geez my god.
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Speaker 3: I like that just goes to show you never know.
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Speaker 2: Let's move on here, So I'm gonna categorize this as
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my pick for dumb piece of the of the week.
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America's economy looks strong, So why is Wall Street worrying
2:53
about renters and younger borrowers? Mark?
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Speaker 3: Last time I checked, you went Jimmy glick on that.
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Speaker 1: So where.
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Speaker 3: I can't get nearly that high? Well, God bless you.
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Uh such a.
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Speaker 2: Good call, Mark, I forgot about Jimminy Klick. First of all,
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is the economy some homogeneous units where every person is
3:17
exactly the same and everyone is yes, Is this some
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commune where we all share in the spoils of the
3:25
fabled US economy? Or are we all slightly different people
3:29
who are experiencing different things and therefore people should be
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worried about some people's ability to pay back their loans? Like,
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what are we talking about here? Of course, there are
3:41
still pockets of the economy that don't look so good,
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even when unemployment is at near all time lows and
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inflation is coming down. What are we even talking about here?
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Speaker 3: I mean I had a conversation. You have them too,
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and I will many you feel this way with a
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couple of people over the weekend telling me how bad
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the economy was, sure, and then you counter with what
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it might suck. I am not gonna dispute their lived
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experience and their subjective perception, but by any I heard that.
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I remember this during the nineteen eighties eighty four Reagan's
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up for reelection, I had a teacher that was hammering
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him endlessly because things in his little pocket of the
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world were bad. Lived in an industrial town, for example.
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Similarly in the Midwest, that's when the name rust belt
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came into common use. Nineteen eighty four, we now know,
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was a pretty damn good record breaking in fact, a
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year by any measure, we've had a pretty damn good
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considering the economy's potential past say twenty four months. Whether
4:33
you look at unemployment now, inflation has been a problem,
4:36
it's come down. I'd lay the blame for that mostly
4:38
on the fed, of course, but spending has played a role,
4:41
as we talked about in the last hour, but might
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by any objective measure, this is as good as it gets,
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given how fast the labor force is growing, and how
4:48
fast productivity is growing, and how fast we think it
4:51
can grow.
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Speaker 2: So to the point of this article, are there people
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out there I'm not even in a paint the worst
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case scenario. Are there people out there who are say,
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teachers who have only gotten you know, ten percent combined
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total income increased over the last five years, don't own
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a home and are sitting on a bunch of credit
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card debt. Yeah, probably in their economic experience recently, probably
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sucks because their income has been eaten away by inflation
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to the tune of whatever we've seen combined inflation over
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five years, like twenty five percent.
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Speaker 3: Since the beginning of COVID roughly.
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Speaker 2: Yeah, yeah, yeah. So if your income's only been up
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ten percent and you don't happen to own a home
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during this period of time, I'm guessing your experience sucks.
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I'm guessing you are really frustrated by how this economy
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is going, and I'm guessing lenders out there are particularly
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concerned about your ability to continue to pay off your
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credit card debt. That's totally normal. On the other hand,
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these you know continued, I don't know, angry expletives that
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I get every time I tell people that the economy
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is doing well also frustrate me because if you're going
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to objectively take a you know, step back and say, oh,
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this economy is terrible right now.
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Speaker 3: Like, what are measure? You gotta give me an objective measure, Mike, Yeah,
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you gotta give me an objective measure, like saying, well,
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that's one last week, by the way I look at it. Actually,
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that's not what the scoreboard says, which is what we
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all rely on. I'm sorry to report. Yeah, you do
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need to get a little bit better grounded in common vocabulary.
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I'm not going to tell you how to think about
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the economy. You have a right to say it stinks.
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So what you don't have a right to say is
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that the growth has been slower than average, So because
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it has not been with an unemployment is bad because
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it's not. It's low, and yes, that includes people working
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more than one job and any other scenario you can concoct.
6:37
Labor economists actually think about those things. Sure, and tariffs,
6:40
which both candidates are embracing a slower growth future, is
6:44
not the solution. Making America more like Ohio is not
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the solution.
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Speaker 2: The economy is objectively, by most measures, close to as
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good as it gets right now. By most measures, markets
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are at all time highs. Unemployment is I don't know,
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bottom decile of all time unemployment rates, bottom quartile, I
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don't know, somewhere in that general range.
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Speaker 3: But have been considered a miracle.
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Speaker 2: Inflation likewise bottom quartile of all observations that we've ever seen.
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And so I'm open to people criticizing the economy and
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sharing their lived experience, which, like I just painted, for
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lots of people, probably around half of them, their incomes
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have not kept up with inflation. If you don't own
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a home, then it's not great. But by just sitting
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here and criticizing everything that happens, my perspective is you
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stand to miss out on what has been measurably one
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of the best periods of time ever for making wage gains,
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for making asset value gains. You know, any asset that
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you owned for the last five years has made a
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tremendous amount of money. And if you just threw your
7:53
hands up and said everything sucks, then you've probably missed
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out on a whole bunch of that.
7:57
Speaker 3: But there are long term trends that people are away
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and that they have a right to seek solutions to,
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or seek changes in the constellation of laws and regulations
8:09
and whatever else that will change those trajectories. For example,
8:12
the average wage growth did slow down a lot starting
8:16
around the beginning of this century, or mainly after the
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Great Procession, and it hasn't It hasn't increased at the
8:23
pace that say it has historically, if the twentieth century
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is your perspective on historical experience. So by many measures,
8:31
the wealthiest have gotten wealthier to faster clip than those
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in the middle.
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Speaker 2: YEP, that's an issue. So they're an objective complaint about
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the state of the economy.
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Speaker 3: I agree, And what you can do is redistribute if
8:41
if you want an immediate solution, can redistribute some income.
8:44
Higher taxes for wealthy. I'm not a favor of them personally.
8:46
My favorite income tax rate is zero. That's just me
8:50
as an old fashioned economic conservative. The solution to this
8:53
is not higher tariffs, which both candidates one more than
8:55
the other, but both candidates are proposing or more regulations
8:59
or pointing your figure, you're a if you finger at this.
9:01
Speaker 2: Or that, have about twenty five thousand dollars for everybody
9:03
that wants to buy their first.
9:04
Speaker 3: No stupidest idea. I think I've heard along those lines. Yeah, honestly,
9:09
I will do nothing for supply probably.
9:11
Speaker 2: Yeah. So again, this is just another article that I
9:15
just found particularly useless. But yes, I can describe the
9:19
economy as good and also acknowledge that there are millions
9:22
of people out there who are struggling and not doing
9:25
well financially. I fully understand all of that, but by
9:28
any objective measure, that does not exclude this economy from
9:31
being a quote unquote good economy. Just sucks for much
9:36
if you look at nothing else.
9:37
Speaker 3: Just look at the stock market. It's not a perfect,
9:42
perfectly a singular measure of our welfare, but it does
9:47
reflect the feelings of hundreds of millions of investors about
9:52
the prospects for US growth.
9:55
Speaker 2: Let's take a quick break here. When we come back,
9:58
going to have a little bit trivia for your next
10:00
the financial exchange, and then I'm not sure we're going
10:02
to see a huge amount of housing transaction activity, but
10:05
will we see an uptick on home borrowing next year?
10:08
That's next on the Financial Exchange.
10:11
Speaker 1: Breaking business and financial news first throughout the day only
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We're prohibited dine in only More candy trivia here for
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you on the show. The nineteen eighty two hit film
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ET introduced a candy that suspiciously looked like Eminem's Steven Spielberg.
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The director of ET, originally wanted M and MS to
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play an important role in the movie, but was rebuffed
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by Mars Candy. While looking for an alternative. Spielberg agreed
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to a deal with Hershey to feature their relatively new
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candy triviy question today, which candy does Elliott use to
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entice et? Once again? Which candy does Elliott use to
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Speaker 2: Man Ben is going to pull this one out, no problem.
12:01
Ontly seven more candy themes trivia questions to go.
12:04
Speaker 3: Yeah, that was a big deal. I was a fat kid,
12:06
and that was a big deal.
12:07
Speaker 2: I never I never saw it. I never saw a
12:09
huge culturally, never seen it. Mark any pending home projects
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to be done. I know you had some AC installed there.
12:18
I had a heat pump installed last year.
12:20
Speaker 3: Surrendered to the pressure from environmentalists and had a heat
12:24
pump put in. What was a no brainer because after
12:26
the right after the rebate, it was the same price
12:29
as a whole house AC.
12:30
Speaker 2: Unit and the state of massachus is going to let
12:33
you borrow the money for no interest.
12:34
Speaker 3: Which I did aim in is like fifty bucks a month,
12:37
but I figured.
12:38
Speaker 2: Why wouldn't you. I'm not going to charge you anything, And.
12:40
Speaker 3: So far, so good. The heat's not as intense. I'm
12:42
sure you've noticed this and others. Okay, well you would
12:46
notice if you had a split or a full house
12:48
unit put in. The heat's not quite as intense, but
12:50
it gets the job done.
12:51
Speaker 2: So any pending home improvements that was your initial question. No, okay,
12:56
I've got a garage door that seems to be uh
13:00
stopping halfway up or down about a third of the
13:03
time that I use it. So that's so old that
13:08
I don't have an optical sensor on it, which is
13:10
probably not great for a guy with three kids. But nonetheless,
13:14
front door is rotten out in parts. Need to replace that.
13:17
And then I've got a pool deck that needs to
13:19
be worked on and replaced at some point too. And
13:22
my question is so I've got a home equity line
13:25
of credit that I have never borrowed against, but just
13:28
have in the event of an emergency at I think
13:31
it's prime prime plus zero. So I'm sitting at I
13:34
believe eight percent right now, and I'm wondering if there
13:39
is a rate at which mark I know you don't
13:41
have projects on the list, but you know, there's a
13:43
rate at which I would probably consider using that home
13:47
equity line of credit or that borrowing to do improvements
13:50
on my home that I really would like to be
13:52
able to enjoy over the next few years. But it's
13:55
certainly not anywhere near eight percent. That would be definitely
14:00
an item that I'm not willing to If you itemize
14:02
is that, yes, you can deduct that, you can deduct
14:05
that interest you might be less. Yeah, if you're specifically
14:09
using it for home improvements and you you know, have
14:12
enough things to itemize your deductions on, then us you
14:14
could do that. But nonetheless, I think you're still probably
14:16
ending up at a very very high interest rate. But
14:19
that that is a question that some are asking as
14:22
we head into twenty twenty five here with like I mentioned,
14:25
rates on thirty year mortgages bouncing back up to that
14:28
six point eight percent range. I'm unsure that you're going
14:31
to see a lot of housing transaction activity. I think
14:34
you'll see more than you did last year, merely because
14:36
there are now seven states with more homes for sale
14:39
than there were back in September of twenty nineteen. But
14:43
my sense would be that at if you have rates
14:46
that are approaching seven percent, I don't think housing volume
14:50
is going to tick up a whole lot. But I
14:53
do wonder about the renovations. You know, things have been
14:55
put off for a while, and if you're finally just
14:57
settling in and saying, Okay, I thought that I've be
15:00
able to sell this home and move into a bigger
15:01
one over the last several years, it's clearly not happening.
15:03
Maybe you are going to be willing to put on
15:05
that adu or that that you know, bedroom over the
15:10
garage that you've been waiting on over the last several years,
15:13
waiting to see how this housing market shakes up.
15:14
Speaker 3: Yeah, the growth and home equity lines of credit according
15:18
to the Federal Reserve, and this is a quarterly series,
15:20
so it's a little bit stale. It's like six months stale.
15:22
At this point, we're waiting for an update. It's been
15:24
flat now for several.
15:26
Speaker 2: Quarters, so sorry, home equity line of credit balances.
15:29
Speaker 3: Yeah, home equity lines is the way it's defined, and
15:32
I'm looking at year over year growth or other ways
15:35
obviously to display the data to get it whatever answer
15:42
you're looking for. But yeah, it's been several quarters since
15:45
we've seen expansion there so and this is before inflation,
15:48
so after inflation, it's been negative over the past several quarters.
15:52
Speaker 2: Yeah, I mean to make this big picture about the economy,
15:55
it can't spell the higher the interest rates are, I
15:57
think that probably spells bad news for the likes of
16:00
Home Depot and Lows as they try and yeah, make
16:03
a significant amount of their sales to homebuilders. Right if
16:07
you do not have that transaction volume happening, by almost
16:10
by default, you have less in the way of housing
16:13
construction and renovation activity compared to just people borrowing money
16:17
and renovating. You know, the amount of money I would
16:19
probably have to spend if I sold my house and
16:21
then bought a new one and decided to renovate it,
16:23
compared to the minor updates I want to be making
16:25
to my own home right now, they don't really compare,
16:29
and so I don't know. I was pretty optimistic going
16:33
into the spring housing season, but now with rates where
16:35
they are outside of the you know, an unforeseen recession,
16:39
I'm not sure that we get a tremendous amount of
16:41
housing activity. Good news if you still own your home,
16:45
as it might hold value a little bit better than
16:47
I thought it would. Retailers are grasping for holiday mid
16:53
magic amid the raucous US elections. So we've talked a
16:56
fair bit about you know what I'm gonna call choice
16:59
paralysis of the election, and I've voiced my opinion that
17:02
I just don't understand it. I don't really get why
17:05
you would avoid buying a house, or buying a car,
17:08
or buying a mattress because there is an election coming up.
17:11
But one thing that I think certainly is real. You know,
17:16
you watch TV, maybe a little bit less than I do, Mark,
17:19
but I don't see as many car commercials and mattress
17:21
commercials as I did this time last year. And I
17:24
think that's mostly because Trump, Paris and local politicians are
17:28
bidding up the price of all the advertiser all the
17:30
advertising spots right now, and so I think some holiday
17:34
retailers are maybe a little bit concerned about this season,
17:38
which is also a shorter than last year holiday shopping
17:41
season because of where Thanksgiving falls.
17:43
Speaker 3: So is that borne out by research the fact that
17:48
spending in certain categories, because I don't think there's any
17:51
reliable effect that you pick up in overall spending. But
17:56
do we see this every four years that people? Sorry,
18:01
I probably should have looked at that before we started
18:03
the show.
18:04
Speaker 2: I have a question, no data. It logically would make
18:06
sense if there's fewer ads for stuff out there, like
18:09
I definitely whether there are actually fewer ads out there
18:12
or whether I'm just distracted by politics. I definitely feel
18:17
like this year I am paying far less attention to
18:21
retail ads than I was this time last year, No
18:24
doubt in my thought about that, No doubt in my mind.
18:26
I'm definitely there, and so I would expect a decrease
18:28
in sales. I don't know if there actually has been one.
18:31
I will say that Bjay's Christmas trees are already out
18:34
there on Sunday. Those have been out for I don't
18:37
know how long. They're right next to all the Halloween candies.
18:39
So they are definitely trying to push this stuff earlier
18:42
and earlier.
18:42
Speaker 3: But but you know, Mike, if tariffs are going up,
18:45
like Trump wins, tariffs go.
18:47
Speaker 2: Up, it much gets Christmas trees now it might make yeah, to.
18:50
Speaker 3: The extent that you buy. I don't know how you
18:51
determine what they're going to cover in advance, even he
18:54
doesn't know. He doesn't know what and to what extent.
18:56
But you know they're going to solve all our problems.
18:58
So it would be hard to actually plan based on that.
19:01
But there's one rash it out.
19:03
Speaker 2: I personally think holiday shopping sales are going to be
19:05
through the roof this year. I know they're they're anticipating
19:07
like two and a half to three and a half
19:08
percent growth. I think it's going to be bigger. Adobe's
19:12
put out a forecast on their expectations for online sales,
19:15
which last year at least was a really spot on forecast,
19:18
and it's basically supposed to double is their forecast compared
19:21
to last year for online retail at least. So we
19:24
will see if that actually plays out. But I just
19:27
think the consumers in pretty good shape. Quick Break, our
19:30
trivia winner is up next.
19:41
Speaker 1: Bringing the latest financial news straight to your radio. Every day.
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20:06
Speaker 4: Trivia question today was which candy does Elliot use to
20:10
entice et that would be Reese's Pieces. Hershey invented Reese's
20:15
Pieces in nineteen seventy eight. Reese's Pieces got its big
20:18
break when Eminem's refused to appear in the film Et Winter.
20:23
Today of the Financial Exchange Show Teacher with Stefan from Dover,
20:27
New Hampshire and is also registered to win a one
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hundred dollars gift card two Applebee's, which we'll give away
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on Friday. Show and Trivia is brought to you by
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apple Bee's. Enjoy half price lanet appetizers after nine pm
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and join Club Applebee's to enjoy exclusive deals and specials.
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You'll get a free appetizer just for signing up. Now
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that's even good. In the neighborhood void, we're prohibited dine in only.
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Speaker 2: Who owns these two companies. Okay, so Reese's p Rece's
20:53
as a brand is owned by Hershey's, Yes, and as
20:55
is owned by Mars.
20:56
Speaker 3: You know, Elliott got lucky. I don't know if you
20:58
guys have seen the movie, but I have feeds this thing.
21:01
What if it had been toxic to him? Like you
21:02
don't feed that to your dog, that alien would have
21:05
dropped dead fifteen minutes into the movie. And and you're out.
21:08
At the time, movies were like five bucks, so you
21:10
wouldn't have been as even an inflation adjusted terms wouldn't
21:13
been more concerned about el Sucker would have killed over.
21:17
Speaker 4: I'm concerned about the child being.
21:19
Speaker 3: Traumatized by the alien dropping dead.
21:23
Speaker 2: No, I'm by that.
21:23
Speaker 4: Adorable alien harming the child.
21:27
Speaker 3: Oh in like retaliating.
21:28
Speaker 2: Well, I mean, let's you did have teeth. Let's just
21:30
assume that, you know, if an alien is capable of
21:33
getting to Earth, that they are capable of taking down
21:36
a child. This one, this one wasn't he would have
21:39
given could barely ride in the basket of a bicycle.
21:42
But you know, nonetheless, I have my own suspicions about
21:46
the reality of that movie. Muhammad al Arian has a
21:49
piece today why the West should be paying more attention
21:53
to the gold price rise for anyone not following gold
21:58
is I believe sitting at all times highs has moved
22:01
up with yeahenomenally cryptocurrencies, stock prices, all sorts of different
22:06
asset values that have been shooting to nominally highest all
22:11
time highs, and Elarian's saying that we should be paying
22:14
a little bit more attention to it because it seems
22:16
to have decoupled from their historical influencers like interest rates, inflation,
22:20
and the dollar. I don't know, Mark, My take has been, Look,
22:25
I just I have no idea what motivates people to
22:28
buy gold. I don't really see where it has value
22:31
and why I should be tracking it. It has not
22:33
been a great long term investment until very recently, and
22:38
so I've just never really formed much of an opinion
22:40
about where it's going to go, what those influence ares,
22:43
and why I should care. What's the case that Mohammad
22:46
makes here, And I don't know what's your take on
22:48
the recent trends moveld.
22:49
Speaker 3: There are plenty of big institutional investors like pension funds
22:52
and the endowments that colleges manage, the paytuition and other
22:55
things that use gold as a diversity.
22:56
Speaker 2: They do, they absolutely allocate it's a.
22:58
Speaker 3: Legit asset class. We often say yeah. We often say, well,
23:02
it's not. Stocks are generative their acclaim on earnings, which
23:06
grow because the economy grows. Gold has no yield, but
23:10
it's got uses. Obviously, it's got industrial uses, and it's
23:13
got interesting insurance are hedging uses, which is why sophisticated
23:18
investors don't pooh pooh it, as my initial reaction might
23:23
suggest a long term investor should. By that, I mean
23:26
they invest in it for a reason. So, Mike, you
23:29
point out that it's in an all time high, I said, nominally.
23:32
By that, I meant not adjusting for inflation, adjusting for inflation.
23:34
I'm sorry, I don't have the value in today's dollars
23:37
of gold compared to nineteen eighty, but I'd be surprised
23:39
if it was worth half as much. So stocks have
23:42
absolutely trounced it. Not surprising their generative. They're attached to
23:45
economic growth. Gold is not. But there's a role. If
23:48
you think, for example, that the next ten years will
23:51
be characterized by very low returns for traditional asset classes,
23:55
you think they will be characterized by unusually high volatility
23:58
caused by political or some other turmoil, gold might be
24:01
a natural place to flock. There's some evidence for gold
24:05
is turmoil insurance.
24:06
Speaker 2: There has been. Yeah, it's not a great the correlation
24:09
to the S and P five hundred over the last
24:11
twelve months. I think it has just been the piece
24:12
that's fascinated me. Right, Like USSMP index gained about thirty
24:15
five percent in the last twelve months, as did gold,
24:18
with very few divergences, and so I don't know what
24:21
to make of that. I know, you know, it's become
24:23
immensely more popular with costco selling bars and things along
24:27
those lines. And you know, I have no real viewer
24:32
outlook on it other than to say, you know, up
24:35
at all time highs and become extremely correlated to stocks
24:39
of recent And that's that's curious to me because they
24:42
are very clearly, very different asset classes.
24:45
Speaker 3: Fast and loose correlation calculations can be misleading because two
24:48
things can move up due to a common time trend.
24:51
Speaker 2: Sure they're both just going up.
24:52
Speaker 3: So they look like they're correlated. Yeah, and they're not
24:55
for fundamental reasons. But like I said, Mike, if you're
24:58
looking for a diversifier, it's probably more sound than say
25:02
some crypto currency which is unproven. I'm not saying that
25:06
there are plenty of sophisticated investors who say own crypto
25:09
as well, but I guess I draw the line philosophically.
25:13
Gold for what it's worth.
25:14
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25:16
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26:20
Speaker 2: According to data from nerdwallet, twenty eight percent of shoppers
26:24
who used credit cards have not paid off the presence
26:28
that they purchase for their family and friends' last holiday
26:32
shopping season, and CNBC goes through a few outlines of
26:36
steps you can take if you're falling into this category
26:39
without feeling like the grinch. And so I'm just gonna
26:42
let I'm just gonna be the grinch for this subset
26:45
of holiday shoppers. If you are still paying off the
26:51
interest and debt from last holidays shopping expenses, take the
26:58
credit card, run it through the shredder, and never use
27:01
one again. That is the only reasonable explanation and outcome
27:08
that you can have to carrying a credit card balance
27:11
for twelve months. Hate to say it, nobody likes that
27:15
I'm going to be the grinch here, but if you
27:16
are carrying a credit card balance for twelve month time period,
27:20
that means that you are spending well above your means,
27:23
or you are addicted to the debt, and the only
27:26
advice that I have for you is that you are
27:28
in a financial emergency and you should cut that thing
27:30
up and never use it again in your life, and
27:33
probably the lifestyle requires some dramatic changes to spending. If
27:36
that's been the case, I recognize emergencies come up. I'm
27:39
not talking about that. I'm talking about somebody who put
27:42
their holiday shopping list on their credit card and then
27:45
couldn't pay it off for a twelve month time period. Yeah,
27:48
that's my only advice that I have. It's one area
27:50
where I used to be completely on the opposite end
27:54
of the spectrum here when it comes to another famous
27:56
financial guy with the radio show Dave Ramsey, who has
28:00
basically said, like, never use a credit card, I disagree
28:03
there because I use a credit card every month and
28:05
I've never carried a balance, and I've had one since
28:08
I was eighteen years old. But for anyone that's carried
28:14
a balance for any period of time, I'm coming to
28:16
his solution, which is you should just never have a
28:18
credit card because it breeds addiction. It is a just
28:23
the worst possible financial outcome for somebody's carrying a credit
28:26
card balance. Yeah, I don't think it's I don't think
28:29
it should be any more complicated than that. There's all
28:31
these other conversations about like you know, hey, here's how
28:34
to have the conversation with family. Just No, the conversation
28:37
with the family is we haven't been able to pay
28:40
off last year's Christmas presents, so we're not doing that again.
28:43
We're not spending another seven one, seven hundred and seventy
28:46
eight dollars on average on Christmas. That's according to Deloitte's
28:49
Holiday retail survey of how much they expect consumers to
28:52
pay on average. So there's my grinchy personal finance tip
28:59
of the day. If you are carrying a credit card
29:00
balance for a year, cut the thing up and never
29:03
use it again.
29:04
Speaker 3: They'll continue to get credit because banks see them as
29:08
a risk worth taking. They know a certain percentage of
29:10
them will default. And maybe some people read that as
29:12
an sorry, you're talking about like these borrowers, they may
29:15
have one in every two of those cases might end
29:18
up in default. Yeah, and in a few years their
29:20
record will be clean and they'll be able to do this.
29:22
I sort of blame banks for aiding and a betting
29:25
that behavior. Sometimes people view banks as an authority figure,
29:29
like they viewed mortgage lenders as an authority figure. And hey,
29:31
if the lenders said I qualify, I must be able
29:34
to afford this. There's a little wishful thinking on both sides,
29:37
is my point. But the financial services industry bear some
29:41
of the blame here.
29:42
Speaker 2: I mean, I don't know. We're all adults, we know
29:46
how credit cards work. We know that the bank is
29:48
trying to make money. Here, I blame the person.
29:52
Speaker 3: Yeah, I just think it takes you know, two to
29:54
tan go.
29:54
Speaker 2: Yeah. I'd like, you know, again, if banks go out
29:57
there and come up with a bunch of misleading advertising
29:59
about how their products work, I'm all on board. You know,
30:02
then there to blame in this case. Nobody doesn't. You know,
30:05
there's very few people that they are marketing credit cards
30:07
today to today that have no idea that you have
30:09
to pay the money back or else you face like
30:10
a twenty plus percent interest rate. So I'm going to
30:13
place ninety five percent of the blame on the person
30:15
doing the borrowing. Let's take a quick break here. When
30:17
we come back, stack Roulette, this is your home.
30:22
Speaker 1: For the most comprehensive coverage of the economy and the
30:25
trends on Wall Street. This is the Financial Exchange Radio Network.
30:30
Find daily interviews and full shows of the Financial Exchange
30:33
on How Are YouTube, Paige get cut up on anything
30:35
and everything you might have missed. This is the Financial
30:38
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30:39
Speaker 5: Network favorite cast.
30:55
Speaker 2: Fast casual restaurant not fast casual, sit down restaurant chain
31:01
talk about.
31:01
Speaker 4: What you we know what you mean? I mean, I
31:04
don't really go to these places.
31:05
Speaker 2: But Cheesecake Factory up there for you?
31:06
Speaker 4: R No, cheese in't been there? You're I mean, I
31:10
guess like Chili's, I guess I don't.
31:12
Speaker 2: Yeah, Mark, do you have one McDonald's count No, you
31:16
gotta have you gotta have a server, Chipotle server.
31:20
Speaker 3: I'd say probably Chili's because it's close.
31:22
Speaker 2: Okay, I would go yard House. That's probably up there
31:24
for me.
31:25
Speaker 4: See, I don't put that in the category though. But
31:28
is that like a massive, massive chain?
31:31
Speaker 2: Yeah?
31:32
Speaker 4: I know, all right, I'll.
31:35
Speaker 2: Get Nonetheless, an activist investor is hitting up cheesecake Factory
31:41
to consider a breakup. So I had no idea about
31:44
this until this article in twenty nineteen. Cheesecake Factory acquired
31:48
Fox Restaurant Concepts, which owns a few different brands. There's
31:54
Culinary Dropout, There's Flower, Flower Child, something along those lines.
32:00
Basically a bunch of restaurants that we don't get here
32:02
in the Northeast because that's just kind of what happens.
32:06
North Italia is the third one. Flower Child and Culinary Dropout,
32:09
which is a gastro pub known for its petzel bites
32:12
and fried chicken, and they just acquired them in twenty nineteen.
32:16
This activist investor saying, hey, you should really spin this
32:18
thing off and go do something else with it. I
32:21
don't know. When it comes to Cheesecake Factory, I do,
32:26
I don't know. I think the idea of acquiring one
32:28
of these smaller, newer brands made a lot of sense
32:31
because in my mind, at least, Cheesecake Factory is falling
32:35
into that same somewhat tired category of these sit down
32:40
restaurants that just have a reputation for mass produced food,
32:44
like it not too dissimilar from a Chili's or one
32:47
of these other restaurant companies, And I don't know that
32:50
it really sticks out in my mind as anything other
32:53
than one of those big chain restaurants that I go
32:56
to a shopping mall to dine. So that's all I've
33:00
out on it. I'm not sure that.
33:02
Speaker 3: Menu, ambiance menu is what they should do.
33:06
Speaker 2: Yeah, the menu, that's basically you know, the first testament
33:09
is how two honestly is how they have traditionally defined
33:16
themselves over the cheesecake factory. And I'm not sure that's
33:19
doing it for me anymore. Stock's done pretty well this year, though,
33:21
so I can't I can't complain there.
33:23
Speaker 3: To innovate in that space. I'm not just stalling because
33:26
I don't have anything. It's it's hard to I do.
33:29
Speaker 2: Yeah, you're stall because you don't have any no.
33:30
Speaker 3: Idea, Mike, I have it right here. Thanks to Tucker's
33:33
careful curation of a Morning news Walmart to offer prescription delivery,
33:39
challenging Amazon. This is from Bloomberg. I think it doesn't matter.
33:43
They're all the same. Consumers can get drugs, as we know,
33:48
delivered from various.
33:50
Speaker 2: Yeah, Amazon was a pill pack they acquired several years ago.
33:53
I'm forgetting the name of the company that they acquired
33:56
years ago, drug delivery, but it was one of those.
33:59
And now Walmart art stepping up their game a little.
34:02
I mean, they already have the pharmacies in the stores.
34:04
I'm guessing this is a very complicated series of life.
34:07
Speaker 3: Much like Kamala Harris Mike. I'm not taking any questions
34:09
on this. I have no depth here, so nope, nope, nope,
34:12
no questions. It's gonna I'm just gonna read from a
34:14
teleprompter here basically, would you any reservations, any misgivings about.
34:19
Speaker 2: None whatsoever prescription diction. To me, this is not a
34:22
threat to Amazon, though, this is a continued Keller. I mean, yeah,
34:26
it's going to eat up a little bit of Amazon's business.
34:28
To me, this is the real threat is to CVS,
34:31
CVS and Walgreens, which have been attempting to still get
34:36
people into their you know, into their stores to pick
34:38
up their prescription drugs, as well as realizing they need
34:40
to do delivery in some markets as well. Walmart's stepping
34:44
in here and saying we will deliver your prescription alongside
34:46
your groceries is just another nail in the coffin for
34:49
some of these big pharmaceutical chains.
34:50
Speaker 4: I think you know what annoys me though, Like with
34:53
the CVS's of the world, Like I there was This
34:56
happened twice in the past, like two years. I went
34:58
to go pick up a prescription. I asked the doctor.
35:00
I was like, oh, is it going to be ready?
35:02
On my way home. They're like, yes, it's in. It's
35:05
going to be.
35:05
Speaker 2: Ready, the doctor or the pharmacist, the doctor.
35:08
Speaker 4: So do know, because they just all fit in, you
35:10
don't know. They just whatever happens with the enter button.
35:15
After that point, I trust them.
35:17
Speaker 3: I'm just try and get you more irritated.
35:19
Speaker 4: But then you go to CVS. You waan the line
35:22
for twenty twenty five minutes.
35:23
Speaker 2: Yeah, I've been there.
35:24
Speaker 4: And then you go up to the window and they're like, yeah,
35:26
it's going to be another half hour.
35:28
Speaker 2: Yeah, I don't pick up this prescription.
35:30
Speaker 4: I'm good. Never went and picked it up.
35:32
Speaker 3: Was this for anxiety, Tucker, No, it wasn't.
35:34
Speaker 4: It should be, though, that's a whole nother conversation. No.
35:37
I had this thing with like my eyes a couple
35:39
of weeks ago, and I just never got it because
35:41
I didn't want to wait. Yeah, I assure themselves miraculously.
35:44
Speaker 2: So to be fair, I do not have any ongoing
35:48
prescriptions that I need delivered regularly, and so I don't
35:51
have the CVS app. But you're right, Tucker, I've experienced
35:55
that before, and there should be a very simple way
35:58
on an app on your phone to say, hey, I'm
36:00
here to pick up my prescription, and then it gives
36:03
you a status update like okay, great, it'll be ready
36:05
in twenty minutes or That doesn't seem all that challenging
36:08
to me, and I don't believe that that exists in
36:10
any normal way. But yeah, I mean Walmart stepping into
36:13
this game, I think continues to yeah, pose a challenge
36:18
to Amazon in a new way that they didn't have
36:20
a few years ago. But really, where I get worried
36:23
about businesses is those local pharmacies who are I mean,
36:27
CVS just changed their CEO last week. They are clearly
36:31
in the midst of a reshuffle at those places. And
36:34
my only expectation is for far fewer of those actual
36:36
pharmacies in local markets. I can tell you that there
36:39
is no need for my town to have two CVS's,
36:44
a Walgreens and then at least two more private pharmacies,
36:48
maybe a few more than that in a town we.
36:50
Speaker 3: Were there CEOs who are generously compensated, what were they thinking?
36:55
See sometimes, yes, Sam, in terms of overbuilding. They build
36:59
these las I live in rent them. They built this lavish, massive.
37:04
Speaker 2: I think, like many other retailers, they didn't see just
37:07
how popular online shopping would be. I don't think they're
37:10
unique in it.
37:11
Speaker 3: The internet coming at that point.
37:12
Speaker 2: Huh yeah, but no serious, you know, like, take a
37:15
look at Macy's, take a look at Serious. They're all
37:16
in that same category.
37:17
Speaker 3: And I never were stuck with it. That was legacy stuff.
37:19
These guys leaned into physical expansions.
37:22
Speaker 2: CVS's most recent issues, though, haven't been so much about that.
37:25
Their most recent issues have been massive bets on Medicare
37:28
and then the government pulling the rug out.
37:29
Speaker 3: Fixed costs or fixed costs. You saddled yourself with those?
37:32
Did you never think you'd make a bad bet elsewhere
37:34
or need to tighten your belt and then not be able?
37:36
You know, you can't do anything about these fixed costs.
37:38
Speaker 2: Taking a look around here at markets, we still have
37:41
things slightly in negative territory, but like I said, some
37:44
improvement from earlier trading. DW currently off seventy points, a
37:49
little bit more than a tenth of a percent, the
37:51
S and P off thirteen points about one fifth of
37:54
one percent, and the Nasdaq off now twelve points less
37:57
than one tenth of percent. Yield on the ten year
38:00
me reasury back up over four point two percent as
38:03
of the close the show closing in on the eleven
38:05
o'clock sorry noon hour. An oil price is still up
38:08
oh now over two and a half percent, bring us
38:10
up over seventy two bucks a barrel. That's all the
38:12
time we have. We'll be back at it tomorrow here
38:15
on the Financial Exchange for another earnings round up.