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Most important earnings report this week is... · The Financial Exchange Show

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Speaker 1: donation today. This is the Financial Exchange with Chuck Zada,
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Speaker 1: and Mike Armstrong.
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Speaker 2: Chuck, Mike and Tucker here in what is going to
1:12
Speaker 2: be one of the busiest weeks of news and data
1:18
Speaker 2: for the economy that we have seen in quite some time.
1:23
Speaker 3: Here's what we have on tap this week.
1:25
Speaker 2: Today at ten thirty am. Nothing huge, but we do
1:28
Speaker 2: get the Dallas FED Manufacturing Index. And the only reason
1:30
Speaker 2: that I point that out is just because we get
1:33
Speaker 2: a number of these. There's the Philly Fed, the Richmond Fed,
1:35
Speaker 2: New York Fed, Chicago Fed does one for this as well,
1:38
Speaker 2: and it just again, you usually don't pay a ton
1:42
Speaker 2: of attention to these, but given the fact that these
1:46
Speaker 2: do include some you know, details where they you know,
1:50
Speaker 2: they give some quotes about what businesses are seeing, you
1:53
Speaker 2: like to hear, just because anecdotes eventually become data when
1:56
Speaker 2: you have enough of them.
1:58
Speaker 4: And Texas especially being the massive trade partner of Mexico.
2:01
Speaker 4: I think sure Texas is the largest export state in
2:05
Speaker 4: the country. I believe in a lot of that stuff
2:07
Speaker 4: trades between between the United States and Mexico, and so
2:11
Speaker 4: that will be interesting.
2:12
Speaker 2: So we kick off with that today. Tomorrow is where
2:15
Speaker 2: we really kind of get into high gear. We get
2:17
Speaker 2: Case Shiller home price in the FHFA Home Price Index.
2:20
Speaker 2: Both of those are out at nine am Tomorrow. Ten
2:23
Speaker 2: am we get job openings the Jolts Report for March.
2:26
Speaker 2: Again this is, you know, two months backward looking since
2:28
Speaker 2: we're almost into May, but again still interesting just to
2:32
Speaker 2: see what's developing in that series.
2:35
Speaker 3: Wednesday, can I give another Tuesday data if you want.
2:38
Speaker 4: We'll probably have the results of the Canadian election, which
2:40
Speaker 4: I would normally say is completely irrelevant, but Trudeau has
2:43
Speaker 4: been in office for a decade and there's quite a
2:45
Speaker 4: bit of tension between the United States and Canada right now,
2:47
Speaker 4: so I don't know. He's also not on the ballot, correct, Yeah,
2:51
Speaker 4: but you know there's there's a member of his party
2:53
Speaker 4: that's on the ballot that's being painted as Trudeau two
2:56
Speaker 4: point zero by his opponent. There's a lot of tension
2:59
Speaker 4: between the Nights States in Canada right now. I don't
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Speaker 4: think I'll tell you anything about the US economy, business,
3:04
Speaker 4: or markets, but certainly we'll be telling in terms of
3:07
Speaker 4: next stage in the relationship with Canada.
3:09
Speaker 2: Wednesday we get ADP Employment Report, which no one pays
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Speaker 2: a ton of attention to, but it still happens, and
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Speaker 2: someone's going to talk about it. So I noted here
3:17
Speaker 2: we get GDP for Q one, again kind of backwards
3:21
Speaker 2: looking not so much, you know, not as relevant as
3:24
Speaker 2: it normally would be, but still a major report included
3:28
Speaker 2: in there. We get Employment cost Index. Also, this is
3:30
Speaker 2: one of those rare double dips that we get on Wednesday,
3:34
Speaker 2: where we get GDP and PCE data on the same day.
3:38
Speaker 2: Normally they're separated by a day, but for some reason
3:42
Speaker 2: the calendar lined up and they both get reported on
3:44
Speaker 2: the same day.
3:45
Speaker 3: So we're going to be getting that.
3:47
Speaker 2: Other things that we're going to be getting on Wednesday
3:49
Speaker 2: for economic data, the Treasury Department is going to be
3:52
Speaker 2: announcing their quarterly refunding announcement, basically saying, hey, what.
3:56
Speaker 3: Kinds of bonds and bills are you planning on issuing
3:58
Speaker 3: this quarter?
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Speaker 2: And always interesting just to see if they change the
4:01
Speaker 2: mix at all, given you know what we've seen in
4:03
Speaker 2: treasury markets over the last six to eight weeks. Thursday
4:07
Speaker 2: we get weekly jobless claims and ism manufacturing. Friday we
4:12
Speaker 2: get the jobs reports. So that's just what we have
4:14
Speaker 2: in terms of economics data. Now earnings then we turned
4:19
Speaker 2: to corporate earnings. Not much today you generally don't see
4:22
Speaker 2: many major reports on mondaysday Fridays. I don't know why
4:25
Speaker 2: it is that no one wants to report on a Monday.
4:30
Speaker 2: Is there any reason for it other than didn't want
4:33
Speaker 2: to look at it over the weekend.
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Speaker 4: I think it probably has a lot to do with
4:36
Speaker 4: office space the movie. Yes, somebody, what is it that?
4:43
Speaker 3: Okay, yeah, they did.
4:46
Speaker 2: That's because no one orders pizza on Monday. They did
4:48
Speaker 2: it on Friday, orders pizza, so Tuesday. When's the last
4:54
Speaker 2: time you ordered a pizza on Monday? When not a
4:56
Speaker 2: few drinks?
4:56
Speaker 5: I don't keep track of the days I order pizza. Check,
4:59
Speaker 5: but I'm gonna order one later now.
5:01
Speaker 2: Just a yeah, I appreciate that, so do just Domino's'.
5:06
Speaker 2: So on Tuesday. You've got Visa, Coca Cola, booking holdings.
5:11
Speaker 2: Those are kind of the big ones I'm looking at,
5:13
Speaker 2: along with Honeywell is going to report as well.
5:16
Speaker 4: Yeah, there's some drug companies reporting, but I'm interested in
5:18
Speaker 4: the booking holdings because of what we've see in on
5:19
Speaker 4: the airline side of that.
5:20
Speaker 2: Normally I wouldn't really mention them, but it's okay, Like,
5:23
Speaker 2: what are you seeing from travel trends? Is there any
5:25
Speaker 2: meat on that bone as far as you know, convincing
5:29
Speaker 2: shifts that you are seeing in actual behavior and activity. Wednesday,
5:33
Speaker 2: a couple of big tech guys, Microsoft and Meta are
5:36
Speaker 2: the headliners. You've also got Qualcom, Caterpillar, ADP reporting, so
5:41
Speaker 2: again the significant, big ones with the potential to move markets. Thursday,
5:45
Speaker 2: a couple more big tech companies, Apple and Amazon. And
5:48
Speaker 2: then you've also got Eli, Lilly, MasterCard, McDonald's Southern Company.
5:53
Speaker 2: So like you, you've got a number there. And remember
5:56
Speaker 2: this week I said MasterCard and Visa report, Hey, what
5:59
Speaker 2: are they seeing as far as consumer spending trends? Anything
6:01
Speaker 2: new that they can tell us about what's going on McDonald's, Hey,
6:05
Speaker 2: what are you seeing? We saw Chipotle give some you know,
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Speaker 2: kind of weak guidance last week.
6:09
Speaker 3: Yep.
6:10
Speaker 2: As far as hey, we're seeing some shifts and how
6:12
Speaker 2: you know consumers are approaching This is McDonald seeing the
6:15
Speaker 2: same thing?
6:16
Speaker 3: Or is this the first.
6:17
Speaker 2: Sign of Chipotle having execution problems in the post Brian
6:22
Speaker 2: Nichol phase now that he's moved on to Starbucks.
6:25
Speaker 4: Yeah, that could be interesting. The Domino's earnings report, by
6:29
Speaker 4: the way, this morning, which I put in a I
6:31
Speaker 4: don't put Chipotle McDonald's in the exact same category. I
6:34
Speaker 4: do put Dominoes in McDonald's in a similar category. Domino's
6:38
Speaker 4: earnings not terrible, but they did not see same store
6:40
Speaker 4: sale growth here overy year, and I just found that
6:42
Speaker 4: interesting in compelling a couple.
6:44
Speaker 2: Other ones that are a little bit smaller but also
6:46
Speaker 2: I think notable. I mentioned Starbucks actually reports on Tuesday
6:49
Speaker 2: as well, So are they seeing the same thing that
6:51
Speaker 2: Chipotle is or did Brian Nichol just take his magic
6:53
Speaker 2: from Chipotle and you know now he's over at Starbucks
6:56
Speaker 2: and all is well? There other ones on Tuesday. I'm
7:00
Speaker 2: curious about ups. What the heck are you seeing in shipping?
7:05
Speaker 2: Tell me what you are seeing in shipping. Other ones
7:10
Speaker 2: that are just kind of interesting to me. You've got
7:14
Speaker 2: PayPal reporting, so I kind of lump them in there
7:16
Speaker 2: with the credit card companies.
7:17
Speaker 3: They're smaller. Obviously, MasterCard comes on Thursday.
7:20
Speaker 2: By the way, Yes, also on Tuesday, you've got Royal
7:24
Speaker 2: Caribbean and Hilton Worldwide, so it gives you a little
7:26
Speaker 2: bit more color on travel. GM reports on Tuesday as well.
7:30
Speaker 2: These are not, you know, the biggest companies, but they
7:33
Speaker 2: still do matter. Somewhat other ones that are you know,
7:38
Speaker 2: kind of quiet ones that I want to just see
7:41
Speaker 2: what's going on. MetLife reports on Thursday, and I'm just
7:46
Speaker 2: really interested in what MetLife is seeing on the insurance
7:50
Speaker 2: side of things. Obviously, like we don't have that many
7:53
Speaker 2: you know, pure play insurance carriers that are out there
7:55
Speaker 2: that are big companies.
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Speaker 3: These are just.
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Speaker 4: Spaking of wildfire and all the other losses that have
8:01
Speaker 4: been out there, or what's your interest in the insurance space.
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Speaker 2: So I think the big thing when you look at
8:05
Speaker 2: like the areas that MetLife operates in, obviously, like the
8:10
Speaker 2: big one is you know, in that term life space,
8:12
Speaker 2: like it's it's a big one. But they also do
8:15
Speaker 2: have you know, some smaller auto and home insurance lines. Yeah,
8:17
Speaker 2: I'm really interested to see if they're giving any guidance
8:20
Speaker 2: as to what's going on not with wildfires in that stuff,
8:23
Speaker 2: but more someone's gonna ask the question, hey, post tariff,
8:26
Speaker 2: how are you dealing with rates to make sure that
8:28
Speaker 2: you don't get hit the same way you did after
8:30
Speaker 2: big jumps in price in twenty twenty one and twenty two.
8:35
Speaker 2: What are they gonna tell us about what's going on
8:37
Speaker 2: on that side?
8:37
Speaker 3: Of it.
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Speaker 4: I used to have an auto policy through MetLife. I
8:39
Speaker 4: think we changed, but I know we changed, but I
8:42
Speaker 4: used to have an auto policy there, and given the
8:44
Speaker 4: repair costs that you are quite possibly going to see
8:48
Speaker 4: what are you doing?
8:49
Speaker 2: So, you know, that's when I don't want to when
8:50
Speaker 2: like the other big ones that are out there, Progressive
8:52
Speaker 2: is publicly traded, so I don't see them on the calendar,
8:55
Speaker 2: but when they do, I'd be curious about them as well.
8:59
Speaker 2: But just an absolutely jammed week where there's gonna be
9:04
Speaker 2: no shortage of stuff to talk about, even before we
9:06
Speaker 2: get to hey, is there anything new happening with trade?
9:11
Speaker 2: Is there a trade deal today? Is there a trade like?
9:13
Speaker 2: You know, you got that stuff going on too obviously, So.
9:16
Speaker 4: To be clear, I mean, if we would normally just
9:18
Speaker 4: be talking about four Microsoft, Meta, Apple, and Amazon represent
9:22
Speaker 4: nine plus trillion dollars of market capitalization between the four
9:26
Speaker 4: of them, they have been The entire tech sector has
9:29
Speaker 4: been struggling more this year in the face of concern
9:32
Speaker 4: about economic slowdown, and so do they have any guidance
9:36
Speaker 4: for us? That's that's what we've been seeing in the
9:39
Speaker 4: few companies that have reported earning so far is very
9:42
Speaker 4: little in the way of guidance on the future, which
9:46
Speaker 4: you can understand in this environment, Will these behemoths have
9:50
Speaker 4: any clearer of a picture for us?
9:52
Speaker 5: Yeah, if you had to rank them, what's the most
9:55
Speaker 5: important this week for you guys in terms of like
9:58
Speaker 5: economic and earnings every thing. That's the number one thing
10:01
Speaker 5: you're looking at this way, And.
10:02
Speaker 2: We're not talking about like, you know, we reach a
10:04
Speaker 2: trade deal with Mars.
10:05
Speaker 5: To just just all the stuff you just listed.
10:09
Speaker 3: Most important. One.
10:13
Speaker 5: Jobs isn't important.
10:15
Speaker 4: I just think you I think you would have seen
10:18
Speaker 4: the weakness show up elsewhere in the jobs report were
10:21
Speaker 4: it going to show up.
10:21
Speaker 3: So I don't think Friday is gonna tell us much
10:23
Speaker 3: on jobs. That doesn't mean it's not important. Doesn't mean
10:26
Speaker 3: it's not important.
10:27
Speaker 4: But I if you see a massive miss, then sure,
10:31
Speaker 4: But I just don't think you're going to. So I'm
10:32
Speaker 4: not that concerned about the jobs report.
10:38
Speaker 3: Yeah, that's a tough one.
10:39
Speaker 2: If I'm having to pick one thing, I can't pick two.
10:45
Speaker 2: I have to pick one. Fine, No, two is kind
10:47
Speaker 2: of wishy wash. You just like like grow up like
10:50
Speaker 2: own it.
10:51
Speaker 3: Microsoft.
10:53
Speaker 2: Oh, I was like, okay, Microsoft, I was gonna say
10:56
Speaker 2: it was between Microsoft and Apple.
10:58
Speaker 3: Amazon.
10:59
Speaker 2: Here's what they're gonna tell you. People have been buying
11:02
Speaker 2: a crap ton of stuff because they're nervous about tariffs.
11:05
Speaker 2: And like, there's gonna be no surprise on Amazon because
11:07
Speaker 2: we see it in all the weekly credit card data
11:09
Speaker 2: and stuff like that.
11:10
Speaker 3: And there should be no guidance either.
11:11
Speaker 2: No, it's just gonna be like people, there's gonna be
11:14
Speaker 2: a ton of activity from Amazon.
11:16
Speaker 3: Apple.
11:16
Speaker 2: I was looking at and I'm like, okay, Like, obviously
11:18
Speaker 2: they have, you know, the supply issues with China, so
11:20
Speaker 2: that's like kind of a big thing. How are they
11:22
Speaker 2: adapting there given you know, their size, scale and everything.
11:26
Speaker 2: But Microsoft, the reason that I put them out there
11:29
Speaker 2: is the thing that was starting to waver even before
11:32
Speaker 2: any of the tariff stuff. The thing that was starting
11:34
Speaker 2: to waver was, Hey, is AI still gonna grow the
11:38
Speaker 2: way that people were hoping it would And what's happening
11:41
Speaker 2: with capex?
11:42
Speaker 3: There? Are you maintaining that?
11:44
Speaker 2: Is this still an area where you're gonna be increasing
11:46
Speaker 2: your capex fifty to eighty percent a year?
11:49
Speaker 3: That is the the big one that I want to see.
11:53
Speaker 2: Yeah, So I put Microsoft first and Domino's Pizza a
11:57
Speaker 2: close third.
12:00
Speaker 3: That for a Monday like it. Let's take a quick
12:01
Speaker 3: break here.
12:02
Speaker 2: When we come back, we will talk a little bit
12:04
Speaker 2: about trade given that, hey, we went through another weekend
12:08
Speaker 2: still no discussed progress on anything between US and China.
12:13
Speaker 2: We'll give you the lay of the land on that
12:15
Speaker 2: trade conflict when we return.
12:19
Speaker 1: Tara Fever's in high gear. We've got the latest on
12:22
Speaker 1: what might be next and how long it might last.
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13:18
Speaker 2: So uh pe in Bloomberg Trump trying to tearff set
13:21
Speaker 2: to unleash supply jolt on the US economy. And this
13:24
Speaker 2: makes the case that basically you did have a lot
13:28
Speaker 2: of companies that tried to front run tariffs and build
13:31
Speaker 2: up some inventory anywhere from you know, depending on the product,
13:34
Speaker 2: the specific niche like all that stuff. You know, usually
13:38
Speaker 2: you heard conversation of, hey, we tried to buy like
13:40
Speaker 2: one to four months of inventory as the standard, with
13:44
Speaker 2: you know, a couple months being you know, kind of
13:46
Speaker 2: the middle of that background. I think that ultimately it
13:51
Speaker 2: still varies based on you know, the size of the
13:53
Speaker 2: company and weather companies had the capital to be able
13:55
Speaker 2: to do so, because definitely with some smaller companies, especially
13:58
Speaker 2: ones that might be newer and not have significant cash reserves,
14:01
Speaker 2: they might not have been able to build up inventory
14:04
Speaker 2: in the same way. And so what this piece talks about,
14:07
Speaker 2: and this has been discussed in a few other areas,
14:09
Speaker 2: is that look, to this point, you haven't really seen
14:12
Speaker 2: much in terms of disruption, and the reason why is
14:16
Speaker 2: that any goods that are on US store shelves right now,
14:20
Speaker 2: they were purchased, they were made probably back in December
14:28
Speaker 2: or January. They then get on a boat, you know
14:31
Speaker 2: in China or Vietnam or Thailand, they you know, carry
14:34
Speaker 2: their little suitcases onto that boat and they say, you know,
14:37
Speaker 2: I'm sure if those are.
14:38
Speaker 3: Oars or what they were that you were miming over here.
14:41
Speaker 3: It's very much. It's two x two. It's to Noah's
14:43
Speaker 3: Ark situation.
14:43
Speaker 2: You know, you get like the wireless headphones coming on board,
14:47
Speaker 2: then you get the Wi Fi adapters like it's like that.
14:52
Speaker 2: And they then spend anywhere from about sixteen to thirty
14:56
Speaker 2: days generally on a boat heading to the United States
15:00
Speaker 2: fits the West coast, anywhere from about forty to fifty
15:03
Speaker 2: days if it's heading to.
15:04
Speaker 3: The East coast.
15:05
Speaker 2: They get off there, they have you know, usually a
15:08
Speaker 2: three to seven day trip that they take on a
15:12
Speaker 2: train or on a eighteen wheeler. And then they finally
15:18
Speaker 2: get onto store shelves. But like you do the math out,
15:20
Speaker 2: and it's generally somewhere between like a thirty five and
15:23
Speaker 2: sixty day process to get stuff from China onto store shelves.
15:27
Speaker 4: Sure, I was at tractor supply over the weekend, yes yesterday,
15:30
Speaker 4: I get anything fun a dog bowl.
15:33
Speaker 5: You went to tractors supply to get a dog ball.
15:36
Speaker 3: I did. It's a big dog.
15:37
Speaker 4: I was dropping a kid off at a at a
15:40
Speaker 4: birthday party and there's a tractor supply right next door,
15:42
Speaker 4: and so I needed a dog ball. And you know what, tractory,
15:45
Speaker 4: big dog, very respectable pet. Pet supplies two or three
15:50
Speaker 4: Allies aisles.
15:51
Speaker 2: In any case, it's something where if you are talking about,
15:55
Speaker 2: you know, the potential for product shortages, even accounting for
15:59
Speaker 2: companies that might not have built up inventories beforehand, they
16:02
Speaker 2: probably don't start showing up until mid May sporadically and
16:07
Speaker 2: mid June to early July in terms of you know,
16:11
Speaker 2: any kind of real issues. So that's what this is
16:13
Speaker 2: talking about. What you are starting to see now is
16:15
Speaker 2: for companies that still deal with importing stuff from China,
16:21
Speaker 2: you do have a situation where it's starting to become
16:24
Speaker 2: apparent very quickly right now, that these tariffs are.
16:28
Speaker 3: Adding significant costs. Either of you guys hang out on
16:33
Speaker 3: Reddit at all. Once in a while, you're in there.
16:35
Speaker 2: Like occasionally mostly when someone like shows me something interesting,
16:38
Speaker 2: I'm like, oh, let me dig around here and see
16:39
Speaker 2: what's going on. So Ali Express is a company that
16:44
Speaker 2: is an online retail service based in China they're owned
16:47
Speaker 2: by Ali Baba, and the premise of it is very
16:49
Speaker 2: similar to a shiner timu, where hey, they direct ship
16:52
Speaker 2: stuff from China in order to undercut prices of stuff
16:56
Speaker 2: that is made elsewhere.
16:58
Speaker 4: Like on Amazon, same style wrecked not necessarily branded, usually
17:03
Speaker 4: off brand names or no brand names.
17:05
Speaker 2: Or copycats that simply can't be prosecuted because they're made
17:08
Speaker 2: in China. And like, you see a ton of that stuff.
17:12
Speaker 2: So if you go over to the reddit for Ali
17:14
Speaker 2: Express right now, what you see are a ton of
17:18
Speaker 2: people that are posting pretty much the tariffs which are
17:24
Speaker 2: being added as a line item by Ali Express to
17:27
Speaker 2: all of the stuff they have. So as an example,
17:29
Speaker 2: I'm over there right now and there is a it's
17:33
Speaker 2: a one sub one gigahertz transceiver for something or other.
17:38
Speaker 2: The subtotal on it is sixty six dollars and ninety
17:41
Speaker 2: eight cents, and then in the additional charges section it's
17:44
Speaker 2: one hundred and sixteen dollars and nineteen cents because of
17:48
Speaker 2: the tariffs that are being added. There there's someone else where,
17:53
Speaker 2: like again you kind of like go through this, there's
17:56
Speaker 2: another one here where it's a like it's a like
18:01
Speaker 2: toddler sweater and it's five point fifty seven with an
18:05
Speaker 2: eight dollars and twenty nine cent charge added on top
18:08
Speaker 2: of it, and ten dollars for shipping. So a five
18:09
Speaker 2: to fifty seven item becomes twenty five dollars and the
18:12
Speaker 2: person's like, no, I'm not buying this, actually like this,
18:15
Speaker 2: this doesn't make sense. So this is what you're starting
18:19
Speaker 2: to see on like the direct shippers from China.
18:21
Speaker 3: Yeah, Teno and Shan are filing the same exact thing.
18:23
Speaker 4: They are many many items where the cost of import
18:26
Speaker 4: is now more than the cost of the item.
18:28
Speaker 2: Yes, And so basically where this is heading is and
18:34
Speaker 2: this is from you know, people that actually I trust
18:38
Speaker 2: in these areas, is Hey, if these if this this
18:42
Speaker 2: level of China tariff is still in place, probably by
18:45
Speaker 2: the end of this week, and very certainly if it's
18:47
Speaker 2: still in place by Mother's Day, you start running into
18:49
Speaker 2: problems because now you really have like an almost thirty
18:52
Speaker 2: day period from the implementation on April ninth, where these
18:56
Speaker 2: have been in place and companies either haven't been shipping
18:59
Speaker 2: stuff to the US, worshipping reduced volumes because they don't
19:01
Speaker 2: know what the demand will be, or prices starting to
19:05
Speaker 2: rise as companies say, yeah, we got to bring this
19:07
Speaker 2: in in order to replenish inventory, and we need to
19:10
Speaker 2: figure out how the pricing is gonna work on it.
19:13
Speaker 3: Let's talk a little bit more about this after the break,
19:15
Speaker 3: because there's a fund here to talk about.
19:17
Speaker 4: There's this narrative that, hey, if this just returns to normal,
19:22
Speaker 4: or if we cut tariffs, then everything's gonna be fine.
19:25
Speaker 4: It might be fine, but I want to talk about
19:26
Speaker 4: what we expect in a few months. Regardless.
19:29
Speaker 3: Quick break, Wall Street watches next.
19:42
Speaker 1: Like us on Facebook and follow us on Twitter at
19:45
Speaker 1: TFE show. Breaking business news is always first right here
19:49
Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
19:54
Speaker 1: Stream watch a complete look at what's moving market so
19:57
Speaker 1: far today right here on the Financial Exchange Radio Network.
20:02
Speaker 5: Markets are mixed territory and relatively quietest Wall Street brass
20:06
Speaker 5: for a significant week ahead that includes new data on inflation,
20:10
Speaker 5: economic growth, and the labor market. Furthermore, we'll see first
20:14
Speaker 5: quarter earnings from four of the Magnificent seven companies, Amazon, Apple, Meta,
20:20
Speaker 5: and Microsoft, in addition to other major names outside of tech,
20:25
Speaker 5: including Visa, Coca Cola, and Eli Lilly. Right now, the
20:28
Speaker 5: Dow up by one hundred and ten points about a
20:31
Speaker 5: quarter percent. Highre SMP five hundred is flat, and the
20:35
Speaker 5: Nasdaq is down a quarter percent. Russell two thousand is
20:38
Speaker 5: up by thirteen points, just over two thirds of a
20:41
Speaker 5: percent higher, Tenure Treasure Reil down by one basis point,
20:44
Speaker 5: now at four point two five percent, and crude oil
20:47
Speaker 5: down one percent on the day trading, It's sixty two
20:51
Speaker 5: dollars in thirty eight cents a barrel in video, pulling
20:54
Speaker 5: back by two percent after The Wall Street Journal reported
20:57
Speaker 5: this morning that Huawei Technologies is gearing up to test
21:01
Speaker 5: its newest AI processor, which the Chinese company hopes could
21:05
Speaker 5: replace some higher end Nvidia products. Meanwhile, Domino's Pizza Pizza
21:10
Speaker 5: posted a higher profit and revenue in the first quarter
21:13
Speaker 5: as the pizza chain continued growth in international same store
21:17
Speaker 5: sales helped offset declines it at its US locations. Dominoes
21:23
Speaker 5: is up by over third of a percent Elsewhere. Boeing
21:26
Speaker 5: up by over two percent after Bernstein upgraded the aircraft
21:30
Speaker 5: maker to outperform from market perform, where the firm said
21:34
Speaker 5: Boeing should be on a much firmer path than in
21:36
Speaker 5: twenty twenty three as it recovers from the twenty twenty
21:39
Speaker 5: four Alaska Airlines controversy in two seven thirty seven max
21:43
Speaker 5: plane crashes prior to that. Sticking with the aircraft sector,
21:47
Speaker 5: where Airbus is up by two percent after the European
21:50
Speaker 5: company struck a deal to buy some factories that make
21:53
Speaker 5: airbus parts from Spirit Aerosystems. The US company is in
21:58
Speaker 5: the process of being bought by Boeing and on Holding
22:01
Speaker 5: shares are up over three percent after the athletic shoe
22:04
Speaker 5: retailer was upgraded by City to buy from Neutral, saying
22:09
Speaker 5: the company is one of the best positions in its
22:11
Speaker 5: sector for navigating current uncertainty and could likely pass down
22:16
Speaker 5: cost increases if necessary. I'm Tucker Silva, and that's Wall
22:20
Speaker 5: Street watch Mike. Before we talk more about US and China.
22:24
Speaker 2: I noted during our open that the one piece of
22:27
Speaker 2: data that we had this morning was the Dallas FED
22:29
Speaker 2: Manufacturing Index.
22:30
Speaker 3: Indeed, came out at ten thirty this morning.
22:33
Speaker 2: The previous reading was minus sixteen point three, the forecast
22:37
Speaker 2: was from minus seventeen. It came out at minus thirty
22:40
Speaker 2: five point eight. Double Like, that's as puky as you
22:43
Speaker 2: can get on a data series like this, and so
22:47
Speaker 2: basically what that is telling you is that manufacturers based
22:50
Speaker 2: in the Texas, Oklahoma, Arkansas, Louisiana region are telling you
22:56
Speaker 2: that things are looking really, really bad with their business
23:00
Speaker 2: during the month of April, which I don't find surprising,
23:03
Speaker 2: but for those listening out there right you know, manufacturers
23:07
Speaker 2: are supposed to be one of the main benefactors of
23:10
Speaker 2: this tariff policy.
23:11
Speaker 4: The problem is twofold. One, they are very likely seeing
23:16
Speaker 4: a reduction in demand from consumers because they are consumers
23:19
Speaker 4: are across the board telling us they don't want as
23:21
Speaker 4: much stuff. And two, these manufacturers, anyone that manufactures anything
23:26
Speaker 4: complicated in the United States, which Texas does some complicated manufacturing,
23:31
Speaker 4: they import stuff from all across the world in order
23:34
Speaker 4: to do so. Right, even if you are really doing
23:37
Speaker 4: your best to just use US products, maybe you're getting
23:40
Speaker 4: to ninety percent US sourced. And if any of that
23:43
Speaker 4: manufacturing requires rare earth materials, forget about it right now.
23:47
Speaker 2: Yeah, I let me, I'll read through just what we
23:51
Speaker 2: actually have in here. And basically the way that they
23:53
Speaker 2: do this the Dallas fed one. Just so everyone understands,
23:57
Speaker 2: they ask the all the you know, manufact xturing companies
24:00
Speaker 2: in their area to say, hey, are you seeing an increase,
24:04
Speaker 2: no change, or a decrease relative to the previous month,
24:09
Speaker 2: and so that's what it's measuring. So production came in
24:12
Speaker 2: at five point one, and how do they get to
24:15
Speaker 2: that Again, it's basically the difference between the percentage reporting
24:17
Speaker 2: an increase and the percentage reporting a decrease. So twenty
24:21
Speaker 2: six percent of manufacturers in their area reported an increase,
24:25
Speaker 2: twenty one point two reported a decrease. That's how you
24:28
Speaker 2: get the five to one to fifty two percent said
24:30
Speaker 2: no change. Fine capacity utilization minus three point eight, So
24:34
Speaker 2: you had more companies reporting a decrease in capacity utilization,
24:38
Speaker 2: the big ones. And this is where like the stuff matters.
24:41
Speaker 2: New orders came in at minus twenty fourteen percent of
24:44
Speaker 2: companies reported in increase in orders, thirty four percent reported
24:48
Speaker 2: a decrease. Thirty four percent is a big chunk reporting
24:51
Speaker 2: a decrease growth rate of orders?
24:54
Speaker 3: Are orders growing faster slower?
24:56
Speaker 2: Minus twenty two nine point four percent reporting faster growth,
24:59
Speaker 2: thirty one point five for slower growth. So even amongst
25:02
Speaker 2: ones that still reported an increase, you had a subset
25:05
Speaker 2: that was saying, hey, it's growing more slowly. Shipments and
25:08
Speaker 2: delivery time both coming in negative as well. The other
25:11
Speaker 2: ones that are gonna matter, and this is where you
25:13
Speaker 2: get the concern about their two concerns. One is just
25:17
Speaker 2: general stagflation. The other one that I have that no
25:19
Speaker 2: one seems to want to pick up on is margins
25:21
Speaker 2: for companies. If you have new orders down, you can
25:26
Speaker 2: deal with that if your prices are coming down. The
25:29
Speaker 2: prices paid index here came in at forty eight point four.
25:31
Speaker 2: Fifty four point six percent of companies in this index
25:35
Speaker 2: reporting price increases from their suppliers, six point two percent
25:40
Speaker 2: reporting price decreases, the remaining thirty nine percent saying no change,
25:43
Speaker 2: but a huge move up there. Prices received for finished goods.
25:47
Speaker 2: This is the other thing you could say, Okay, my
25:49
Speaker 2: price is upper, fine, but if I could, you know,
25:51
Speaker 2: pass no more?
25:52
Speaker 3: Yeah, great.
25:54
Speaker 2: Remember, prices paid for raw materials came in at forty
25:56
Speaker 2: eight four, prices received for finished goods came in at
25:58
Speaker 2: fourteen to nine. So I can pass some of it on,
26:02
Speaker 2: but not all of it. Margins, it's a problem. Employment
26:06
Speaker 2: minus three point nine hours worked minus six point four,
26:10
Speaker 2: capital expenditures minus point four. This is data where you
26:14
Speaker 2: look at it, and the question on this is going
26:16
Speaker 2: to be over the next couple months. Does the soft
26:19
Speaker 2: data turn into hard data that is also slowing.
26:23
Speaker 4: Because this is soft data, it is entirely service data. Yeah,
26:26
Speaker 4: it's also and it sounds like a manufacturing number, sounds
26:30
Speaker 4: like hard data, it's not. It's surveys of managers in
26:33
Speaker 4: manufacturing companies in the Dallas area or the Texas area.
26:38
Speaker 4: But it's not telling you anything about their sales. It's
26:40
Speaker 4: not telling you anything about their actual profits. But it's
26:44
Speaker 4: telling you a lot of pessimism by manufacturers who Again,
26:48
Speaker 4: the goal is to make these companies the beneficiary of
26:51
Speaker 4: this type of policy, but so far it has not
26:54
Speaker 4: turned out that way.
26:55
Speaker 2: So let's get back to US China. I know you
26:57
Speaker 2: said you had a couple other things to touch on here.
26:59
Speaker 3: I have a question.
26:59
Speaker 4: So in your mind, yeah, what would be if you
27:03
Speaker 4: are on the like forget about the whole negotiation because
27:06
Speaker 4: that's too complicated to give me a scenario. But if
27:08
Speaker 4: you are looking at the China tariff negotiations, the China
27:12
Speaker 4: trade war negotiations, and you are looking for a reduced
27:15
Speaker 4: cost of tariff reduced tariff cost, what do you think
27:19
Speaker 4: is a reasonable best case scenario for you you know
27:22
Speaker 4: your target, or you are some board game maker, Like,
27:25
Speaker 4: what's a reasonable area for you toll?
27:28
Speaker 3: The best case?
27:28
Speaker 4: Short term, we're talking best case, not likely, it's reasonable,
27:32
Speaker 4: best case, Like, don't give me zero percent because I
27:34
Speaker 4: don't twenty five.
27:35
Speaker 3: Yeah, I was gonna say, like absolute best case would be.
27:38
Speaker 4: It goes to the same number that everybody else is facing,
27:41
Speaker 4: which is ten. I think that's very unlikely. I don't
27:43
Speaker 4: think that's even reasonable. Yeah, so if you are facing
27:47
Speaker 4: a twenty five percent teriff, let's assume we get there
27:50
Speaker 4: in a week, what is in your mind? What does
27:53
Speaker 4: that do to everybody? As we're looking out there for
27:56
Speaker 4: items on the shelves, like, how does that affect me
28:01
Speaker 4: person who shops at the local grocery store, the tractor supply, Walmart, Target.
28:07
Speaker 3: Et cetera. For dog bulls for dog bulls. Yes, yes, exclusively.
28:11
Speaker 2: So there's a few different areas. And I'll obviously the
28:13
Speaker 2: caveat is I'm not mister supply chain.
28:17
Speaker 3: That's you know, I.
28:18
Speaker 2: It's I'm learning this from other people that spend their
28:22
Speaker 2: lives in it.
28:22
Speaker 3: But I'm not the supply chain.
28:25
Speaker 4: I bribe my groceries at Kia dealerships too. They got
28:29
Speaker 4: good muffins there, cond vetting machines. Yeah, so let's let's
28:32
Speaker 4: talk groceries first. I think there's probably minimal disruption there.
28:36
Speaker 3: I agreed.
28:38
Speaker 2: I don't think one of the things on my Bingo
28:40
Speaker 2: card is any meaningful disruption to groceries because our groceries
28:45
Speaker 2: don't come from China. You can make a case that, hey,
28:48
Speaker 2: some of the parts that go into you know, the
28:50
Speaker 2: machinery that's used in farming and stuff like that. Yeah,
28:54
Speaker 2: there's obviously Chinese components that that are there, and if
28:57
Speaker 2: you have any shortage there, it.
28:58
Speaker 3: Could you know, play into it.
28:59
Speaker 2: But again, I think the other piece that you have
29:02
Speaker 2: to remember we do import a decent amount of food
29:05
Speaker 2: as well, most of it from South America. Yeah, and
29:08
Speaker 2: South American tariffs is ten percent. Sure, it's gonna have
29:11
Speaker 2: an impact at the margins and this and that, and
29:12
Speaker 2: prices probably move up, but I'm not really expecting shortages
29:17
Speaker 2: of food.
29:17
Speaker 4: A great an example in the grocery store item I have.
29:20
Speaker 4: I know somebody who manufactures a product that he sells
29:24
Speaker 4: to bottling manufacturers in the United States that requires a
29:27
Speaker 4: rare earth component in order to actually seal the bottles
29:30
Speaker 4: on like soda that's going to take a while to
29:33
Speaker 4: play through to the grocery store.
29:35
Speaker 3: If that actually has a real impact. There's rare earth
29:37
Speaker 3: in my soda.
29:38
Speaker 4: No, there's rare earth in the machine that seals your soda.
29:42
Speaker 4: Cant soda bottle. Oh yeah, interesting yeah, interesting, it's magnets.
29:47
Speaker 3: Yeah, how do they work? Yeah?
29:50
Speaker 2: Anyways, uh so I think on the grocery side, probably
29:54
Speaker 2: some modest price increases. This messhes with a lot of
29:57
Speaker 2: the projections I've seen, which is, yeah, it's it's gonna
30:00
Speaker 2: be uncomfortable because modest still probably means grocery prices moving
30:04
Speaker 2: up depending on you know, the good and the time
30:07
Speaker 2: and this and that two to five percent.
30:09
Speaker 4: Yeah, but that could be offset by egg prices coming down,
30:12
Speaker 4: which they are correct.
30:13
Speaker 2: Or you know, I don't know, Hey, China's not buying
30:15
Speaker 2: much porks now there's a pork surplus, and your bacon's cheap.
30:18
Speaker 2: You know, like you can't really predict like exactly how
30:22
Speaker 2: that's gonna all flow. On the side of consumer goods,
30:27
Speaker 2: if you have again like a step down to again
30:30
Speaker 2: best case scenario twenty five percent tariff within.
30:33
Speaker 3: The next you know, by the end of this week.
30:35
Speaker 2: You probably have some sporadic things that are still missing
30:37
Speaker 2: here and there, because again you've had three to four
30:39
Speaker 2: weeks of lower shipping. You got a bunch of people
30:43
Speaker 2: working in China. They gotta get back into the factory,
30:45
Speaker 2: they've been out, they got to get things.
30:46
Speaker 3: Spooled back up.
30:47
Speaker 2: You gotta get all your container ships you know, figured out,
30:50
Speaker 2: and so those costs are gonna go up. So you
30:52
Speaker 2: probably have some sporadic disruptions price hikes coming through, but
30:58
Speaker 2: it's it's nothing that is huge disruptive. It's probably a
31:02
Speaker 2: modest inconvenience. And in some cases you're like, gee, it's
31:05
Speaker 2: gonna take me like three extra months to get the
31:08
Speaker 2: chairs that I wanted because they were made in China
31:10
Speaker 2: or something like that. But it's it's not crazy.
31:14
Speaker 3: Where you get to.
31:15
Speaker 2: The bad situation is if we're still sitting here after
31:19
Speaker 2: Mother's Day, Like if we go another two and a
31:20
Speaker 2: half weeks here and you still don't have any movement,
31:24
Speaker 2: and now you're full month of one hundred and forty
31:27
Speaker 2: five percent tariffs.
31:29
Speaker 3: I mean, think of it this way.
31:30
Speaker 2: If someone took your business and said, hey, I'm gonna
31:34
Speaker 2: take ten percent of your time in the given year
31:39
Speaker 2: and grind it to a halt, and you still got
31:41
Speaker 2: to figure out how to make your numbers good good
31:44
Speaker 2: luck is like, it's just gonna be a mess. Now
31:49
Speaker 2: the the middle case and where this probably ends up
31:51
Speaker 2: whe where all the signs are pointing now, probably some
31:55
Speaker 2: kind of you step down in the next couple of
31:58
Speaker 2: weeks to a forty sixty five percent, you know, teriffyrate,
32:03
Speaker 2: still high prices. You're still gonna have some issues in
32:06
Speaker 2: some things won't be able to be imported as easily.
32:09
Speaker 2: But it's not the worst or best case. But none
32:12
Speaker 2: of us have any idea. This is a game of chicken,
32:14
Speaker 2: and you can't predict exactly what's gonna happen there.
32:17
Speaker 4: May I make a post COVID public service announcement. Don't
32:21
Speaker 4: buy all the toilet paper. Ninety nine percent of toilet
32:23
Speaker 4: paper is made in the US. Don't go buying all
32:24
Speaker 4: the toilet paper. It's not necessary.
32:27
Speaker 2: Yeah, but what about the really good Chinese toilet paper?
32:31
Speaker 4: Yeah, you know, Yeah, it's not a toilet paper issue
32:34
Speaker 4: problem people, it is what is it with the TV?
32:38
Speaker 5: Like?
32:39
Speaker 3: What is it? Don't know? So I don't either.
32:42
Speaker 2: Let's take a quick break here when we come back.
32:46
Speaker 2: What do I want to talk about here? No, I
32:47
Speaker 2: don't want to do that one. Oh yeah, let's talk
32:49
Speaker 2: about how consumer behavior is actually changing on this based
32:52
Speaker 2: on how they think prices may change in the future.
32:54
Speaker 2: What do people think inflation is going to be and
32:57
Speaker 2: how is that affecting their spending.
32:58
Speaker 3: Right after this, the.
33:00
Speaker 1: Global trade war has royal markets and a recession could
33:03
Speaker 1: be next. Keep it here for breaking business news and
33:06
Speaker 1: complete market updates. On the Financial Exchange Radio Network, The
33:11
Speaker 1: Financial Exchange is now available on your Alexis smart speaker
33:15
Speaker 1: has to play the Financial Exchange and catch up on
33:17
Speaker 1: anything you might have missed. This is the Financial Exchange
33:21
Speaker 1: Radio Network.
33:27
Speaker 2: Piece in the Wall Street Journal, inflation fear is making
33:31
Speaker 2: some people spend more and others less.
33:34
Speaker 3: Well.
33:35
Speaker 2: Gee, thanks, that's really useful. Appreciate that Wall Street Journal. Basically,
33:39
Speaker 2: what you have here is, look, if people are concerned
33:41
Speaker 2: that prices are going to rise, there are some people
33:43
Speaker 2: that front run that, saying, Okay, I want to get
33:46
Speaker 2: ahead of those price increases see cars, which by the way,
33:49
Speaker 2: can also lead to price increases see used cars. On
33:52
Speaker 2: the other hand, you have people who might be saying, wow,
33:55
Speaker 2: these tariffs are going to get negotiated down. I'm not
33:56
Speaker 2: going to do anything, and so I'll wait or people
33:58
Speaker 2: who say I don't have the budget to front run
34:01
Speaker 2: tariffs and so I can't do that.
34:03
Speaker 4: Yeah, Besson had a comment I think over the weekend
34:05
Speaker 4: about consumer spending and his point was, you know, I
34:08
Speaker 4: listened to this off data. I get that people are pessimistic,
34:11
Speaker 4: but they keep on spending. And my counterpoint to Scott
34:15
Speaker 4: Besson would be, this is always what consumers do. Consumer
34:20
Speaker 4: spending is not any sort of leading indicator. You would
34:23
Speaker 4: might kind of think it would be like, hey, you know,
34:25
Speaker 4: I'm worried about the economy, I'm going to pull back
34:27
Speaker 4: my spending. Go take a look at the O eight recession,
34:29
Speaker 4: which the O eight recession actually began at the end
34:32
Speaker 4: of two thousand and seven. If you you know, mark
34:34
Speaker 4: the tape on that that's where it started. Consumer spending
34:37
Speaker 4: was increasing four or five percent year over year. You
34:40
Speaker 4: didn't get negative until December of two thousand and eight.
34:45
Speaker 2: Because if people have money, they will spend it like
34:47
Speaker 2: it's it's the fourth law of thermodynamics.
34:50
Speaker 4: You only start seeing spending dip down once the job
34:53
Speaker 4: loss has occurred. So again, some of this stuff is
34:57
Speaker 4: not a leading indicator. We've seen how mesm over the
35:00
Speaker 4: last few years, for example, did not lead to a recession.
35:03
Speaker 4: But you can't look at the actual spending and say, oh, oh,
35:08
Speaker 4: you know, consumers are still spending like crazy, so there
35:10
Speaker 4: is no recession. No history would tell us that consumers
35:13
Speaker 4: keep on spending right until they can't anymore.
35:16
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36:24
Speaker 3: Piece in the Boston Globe.
36:25
Speaker 2: Massachusetts needs more affordable housing, study says lots of it.
36:28
Speaker 3: I'll quote here.
36:29
Speaker 2: According to a new report this week, the state has
36:31
Speaker 2: only enough affordable housing for thirty two percent of the
36:34
Speaker 2: six hundred and fifty two thousand low income renter households
36:36
Speaker 2: who need it. In other words, four hundred and forty
36:39
Speaker 2: one thousand families in Massachusets to qualify for affordable housing
36:42
Speaker 2: can't access it, and that housing needs to be built.
36:44
Speaker 2: So here, here's the deal. If you could build four
36:48
Speaker 2: hundred and forty thousand units of housing in Massachusetts, it
36:51
Speaker 2: doesn't matter if it's affordable or not. It's going to
36:54
Speaker 2: make housing more affordable. We just don't do that. Yes,
36:58
Speaker 2: and I'm not convinced that people who have the ability
37:02
Speaker 2: to make these decisions actually want to build more housing.
37:06
Speaker 3: Who are the people that are capable of making these decisions?
37:09
Speaker 5: Uh?
37:09
Speaker 2: Well, so, I I would say, people who vote inside
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Speaker 2: the one twenty eight loop.
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Speaker 4: Yeah, yeah, I mean need them where we broadcast this
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Speaker 4: program from just had to vote on this exact subject.
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Speaker 4: It wasn't about affordable housing. It was not about building
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Speaker 4: you know, rent controlled units or anything like that. It
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Speaker 4: was very merely, do you want to open up zoning
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Speaker 4: to allow for multifamily along a big corridor of the
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Speaker 4: town near public transit? And the answer was a fairly
37:45
Speaker 4: resounding no. And you know, I talked to people from
37:49
Speaker 4: town that the main conclusion was, we don't want the traffic,
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Speaker 4: we don't want the burden on the school systems.
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Speaker 3: We're worried about this, that or the other.
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Speaker 4: But people, while they say they want more affordable housing,
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Speaker 4: we go talk to people who actually own homes, and
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Speaker 4: I don't believe them.
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Speaker 3: Yes, yeah, I think that's fair. You want more affordable housing,
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Speaker 3: build housing, It doesn't matter what.
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Speaker 2: Build more housing and it will become more affordable. It's
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Speaker 2: kind of like cars. If you build more of them,
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Speaker 2: the used cars get more affordable. We saw this a
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Speaker 2: few years ago. Quick Break here, Hour two coming up
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Speaker 2: in just a little bit