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Is Target becoming the next Macy’s? · 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 Mark Vandetti.
1:10
Speaker 2: Chuck Mark Tucker with you here, and as we get
1:14
Speaker 2: things kicked off, stock's pairing their gains as we go
1:18
Speaker 2: through the day. The S and P five hundred, which
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Speaker 2: at one point today was up nearly sixty five points,
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Speaker 2: now up nineteen. The Dow is now off one hundred
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Speaker 2: and twenty points in the Nasdaq up about one hundred
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Speaker 2: and forty three and change, So a little bit of
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Speaker 2: intra day volatility continuing as stock's try to get off
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Speaker 2: the mat where they've been for the last few days.
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Speaker 2: I do always find an important to point out look
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Speaker 2: like this has not been any kind of major downturn
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Speaker 2: in the broader market. The S and P five hundred
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Speaker 2: as a whole is about four percent off all time
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Speaker 2: highs right now. That's not really notable in any way,
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Speaker 2: shape or form. Those kinds of things happened several times
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Speaker 2: a year, if not.
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Speaker 1: More, and.
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Speaker 2: The way things are being talked about feels different. But
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Speaker 2: ultimately I think there are two things going on there.
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Speaker 2: The first is if you look at the average SMP
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Speaker 2: five hundred stock, first of all, it didn't peak in October,
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Speaker 2: and second it's off more than ten percent from it's
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Speaker 2: fifty two week high. It's just the index has been
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Speaker 2: dragged higher by a small number of big names that
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Speaker 2: have rallied strongly. So if you own, you know, some
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Speaker 2: of these other stocks in large quantities, yeah, you can
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Speaker 2: be feeling more pain than the broader market, obviously. And
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Speaker 2: the other thing is, look, some of the recent pain
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Speaker 2: has been in the more AI centric areas, and so
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Speaker 2: that's kind of different from what we've seen the last
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Speaker 2: six months, and maybe people just feeling a little bit
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Speaker 2: on edge as a result. So you got mixed markets today,
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Speaker 2: but the S and P and Nasdaq still positive. Ten
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Speaker 2: year US Treasury down four tenths of a basis point
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Speaker 2: to four point one one seven. Bonds have been really
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Speaker 2: quiet over the last month or so, I suspect largely
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Speaker 2: because we've mostly been getting individual company earnings reports, and
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Speaker 2: the bond market, I feel, is just more conditioned to
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Speaker 2: respond to big macro reports, and that's not what earnings
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Speaker 2: reports provide you.
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Speaker 3: If you think about bond's interest rates as having a
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Speaker 3: real component driven by real forces, economies, productive capacity, how
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Speaker 3: we're operating relative to that government's need for debt financing
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Speaker 3: over time, and maybe other idiosyncratic factors there's that real component,
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Speaker 3: and then there's the nominal. Well nominal is the overall,
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Speaker 3: but there's the expected inflation component. So either one of those.
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Speaker 3: The real component moves slowly and is not particularly volatile,
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Speaker 3: it shouldn't because it reflects underlying economic forces I'll call them,
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Speaker 3: and then the expected inflation component can jump around. But
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Speaker 3: we haven't had a lot of inflation data to go on.
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Speaker 3: So if you're I don't know how fare, it's just
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Speaker 3: like we haven't had any data to go or any
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Speaker 3: data period.
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Speaker 2: Yeah, the tenure Treasury has been between four and four
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Speaker 2: and a quarter since the beginning of September.
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Speaker 3: Now, yeah, I'm willing to this just speculation, obviously, but
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Speaker 3: it seems right to me that that's probably a function
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Speaker 3: of the absence of of of government data.
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Speaker 2: It's kind of like it's, you know, the ten year
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Speaker 2: Treasury doesn't know what to do when Microsoft is like, yeah,
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Speaker 2: our earnings were good. Okay, what does that mean for
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Speaker 2: you know, growth and inflation. Yeah, it doesn't know what
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Speaker 2: to do with it. Whereas if you get a retail
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Speaker 2: sales report, it's, oh, like retail sales are in the toilet.
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Speaker 2: My yield should be lower because the ten years obviously
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Speaker 2: sentient and thinks about these things. Or hey, GDP blew
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Speaker 2: out top side and private investment is huge, Okay, ten
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Speaker 2: years got to move higher, like it's.
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Speaker 3: Yeah, those things which if the real rate component and
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Speaker 3: then the expected inflation component again.
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Speaker 2: And instead you get like you get markets. All the
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Speaker 2: bond people are like, okay, so target earnings were bad.
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Speaker 2: Why does this matter to us? Because like the bond
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Speaker 2: market doesn't know what to do with this, which does
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Speaker 2: bring me to, uh, you know, a segue of we
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Speaker 2: will talk about target earnings in just moment. But the
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Speaker 2: dollar index finding a little bit of strength day after
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Speaker 2: some recent weakness, up point four to five percent to
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Speaker 2: ninety nine to ninety. We've got gold also rallying today.
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Speaker 2: Find that interesting dollar up, gold up, that's not something
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Speaker 2: you always see. The price of gold up thirty dollars
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Speaker 2: and twenty cents an ounce, closing back in on forty
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Speaker 2: one hundred an ounce. And we got crude oil down
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Speaker 2: a dollar sixty three to fifty nine to eleven. This
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Speaker 2: on the back of some well a rumored piece plan
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Speaker 2: for Russia and Ukraine for like the eighth time this year.
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Speaker 2: And we'll see if it ends up coming to fruition
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Speaker 2: this time, let's talk a little bit about Target earnings.
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Speaker 2: Target reported before the bell. Quite honestly, they're just not
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Speaker 2: an important company to the broader economy at this point
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Speaker 2: in time. You just look at the numbers out there,
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Speaker 2: and yes, they still do one hundred billion dollars in revenue,
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Speaker 2: but that's been declining at about a two percent annualized
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Speaker 2: clip for the last couple of years. It's one where
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Speaker 2: the market cap of the company now reflects that shrinking
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Speaker 2: ice cube, that melting ice cube type situation where it's
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Speaker 2: only valued at thirty nine billion dollars. So it's not
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Speaker 2: important to the broader market. And I think the question
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Speaker 2: that investors are asking about Target now, since it is off,
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Speaker 2: you know, almost sixty almost seventy percent from its all
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Speaker 2: time high that it hit back in twenty twenty one,
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Speaker 2: the question investors are asking right now about Target is, hey,
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Speaker 2: are you going to become the next Macy's that we
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Speaker 2: have to watch out for in terms of you know,
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Speaker 2: store closures and sales of real estate and this and that.
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Speaker 2: Just because margins aside from that brief period in twenty
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Speaker 2: twenty one, margins have been on a slow and steady
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Speaker 2: decline since two thousand and seven. I mean, this is
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Speaker 2: almost a twenty year problem in the making, where margins
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Speaker 2: have declined from you know, almost nine percent down about
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Speaker 2: five percent on a trailing twelve month basis here, and
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Speaker 2: you just kind of look at it and say, yeah,
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Speaker 2: this is a company that has to figure some things
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Speaker 2: out in the coming years. It's not a bankruptcy risk
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Speaker 2: at the moment, but you could kind of see where
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Speaker 2: things go in five six years if they don't figure
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Speaker 2: out how do we improve our positioning?
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Speaker 3: And headwinds have been mild, right, this has.
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Speaker 2: Been a good environment for retailers.
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Speaker 3: Right what happens if the economy contracts it and inevitably
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Speaker 3: will and a sector sector conditions have probably not helped
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Speaker 3: Staples as a group here year to date through I
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Speaker 3: think right now, I say I think because I'm using
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Speaker 3: a third party data source, they don't time stamp it.
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Speaker 3: But consumer Staples, of which target is a part there
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Speaker 3: at S and P five hundred, constituent of that sector group,
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Speaker 3: is the only sector group in the s of the
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Speaker 3: twelve I think it is in the S and P
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Speaker 3: five hundred that's down to date, just out.
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Speaker 2: Of curiosity and I know you don't have the answer
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Speaker 2: to this, thank you. Why do Costco, Walmart and Target
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Speaker 2: end up in consumer staples but Amazon ends up in
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Speaker 2: consumer cyclical They sell all the same stuff, usually from
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Speaker 2: the exact same vendors.
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Speaker 3: Yeah, slightly more growth sensitive when measured in a statistical way,
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Speaker 3: i e. Growth goes up one percent, Amazon sales go
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Speaker 3: up by a little bit more than that, and Target
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Speaker 3: in the rest of the staples go up by a
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Speaker 3: little less than that. You're right, I don't know off
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Speaker 3: the top of my head. How how would they bring Yeah,
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Speaker 3: it's probably something like that.
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Speaker 2: You know. Another one that always just I kind of
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Speaker 2: wonder about Dollar General and Dollar Tree consumer staples, TJX
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Speaker 2: consumer discretionary. Yeah, why I'm not saying that they should
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Speaker 2: like I don't know which one they all should be in,
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Speaker 2: But there's just not that much difference between TJX and
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Speaker 2: you know, some of those other discounters. I know, the
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Speaker 2: margin of the discount is bigger, like Dollar Tree, you know,
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Speaker 2: hits a far lower price point than TJX. But okay,
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Speaker 2: Like you're a discount retailer that you know sells clothing
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Speaker 2: in some of your stores. Home goods has all kinds
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Speaker 2: of you know, other stuff like yeah, what what gives?
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Speaker 1: Why?
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Speaker 2: Why are these in different categories in the.
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Speaker 3: Sn If you look at S and P Global's website,
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Speaker 3: they're the arbiter of this stuff. They didn't invent the concept,
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Speaker 3: but they're they're recognized, I think, repository for this information,
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Speaker 3: at least the most commonly cited one. They give a
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Speaker 3: definition similar to the one I gave, and I was
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Speaker 3: sort of being fast and loose, but it's it's it's
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Speaker 3: based on sensitivity to economic growth, and you'd measure it
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Speaker 3: in a statistical way the way that I suggested.
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Speaker 2: So basically your answer is they're smarter than me, and
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Speaker 2: I should you know, go get my shinebox.
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Speaker 3: They're definitely not smarter than you, but they have the
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Speaker 3: data and the junior analysts to help them.
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Speaker 2: They probably smarter than me, you.
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Speaker 3: Know, depends on what domain you're talking about. It does
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Speaker 3: I know you're there as some math guys who you
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Speaker 3: know you wouldn't want change in your oil?
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Speaker 2: Well, I don't know about that.
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Speaker 3: How much did they charge?
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Speaker 2: Yeah, what's the price?
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Speaker 3: You know, at the right price, I don't care who
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Speaker 3: does If they pay me to you better just check your.
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Speaker 2: You know, I got Yeah, there's always there's always someone
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Speaker 2: who's willing to figure it out. Let's take a quick
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Speaker 2: break here. When we come back, we've got what do
10:27
Speaker 2: we have? We've got trivia, and then I want to
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Speaker 2: talk about Low's earnings after this. Low's up today, just
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Speaker 2: a couple of days after home Deep overported bad or
10:36
Speaker 2: not bad, but weaker than expected earnings. Low's coming out
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Speaker 2: and up about five percent. What gives? What's the difference
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Speaker 2: We'll discuss after this.
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Speaker 4: day in eighteen oh five, the Lewis and Clark Expedition
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Speaker 2: You more of a Merriwether Lewis fan or William Clark
12:44
Speaker 2: fan mark.
12:48
Speaker 3: I always thought of them as as both being indispensable.
12:52
Speaker 3: Of course, I have no idea what I'm talking about.
12:54
Speaker 2: Butter and Joey. You can't have one without the other.
12:56
Speaker 3: Oh no, I thoroughly enjoy just peanut butter. But I
12:59
Speaker 3: see what you're getting at. Yeah, you know, who was
13:01
Speaker 3: the senior of the.
13:02
Speaker 2: Two, Like, who really did the who ran the show?
13:06
Speaker 3: Yeah? Who was there? Like I was four years older, okay,
13:09
Speaker 3: so presumably more experienced Lewis.
13:11
Speaker 2: Interestingly, he died like five years after the expedition. He
13:15
Speaker 2: died really young, I think, like age thirty five or
13:17
Speaker 2: thirty six. Uncertain circumstances. I don't think they ever figured
13:21
Speaker 2: out it was a gunshot wound. No one ever figured
13:23
Speaker 2: out if it was from someone else or self inflicted,
13:27
Speaker 2: and so like kind of mysterious circumstances. Clark went on,
13:32
Speaker 2: I think he was the governor of a state. Yeah,
13:34
Speaker 2: he was the governor of Missouri. Well, not a state,
13:38
Speaker 2: it was the territory at that point. But he was
13:41
Speaker 2: the governor of Missouri Territory, you know, about a decade
13:44
Speaker 2: or so after he went on the expedition. So there's that.
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Speaker 3: Wow.
13:50
Speaker 2: Let's talk a little bit about Lowe's earnings. A day
13:53
Speaker 2: after Home Depot reported, you know, modestly disappointing numbers, Low's
13:57
Speaker 2: came out and had, you know, a nice little quarter.
13:59
Speaker 2: And so it's one where I don't know what you
14:04
Speaker 2: take from this other than Lose seems to have executed
14:07
Speaker 2: well in the quarter. Home Depot maybe lacking a little
14:09
Speaker 2: bit of execution, which is normally kind of the opposite
14:11
Speaker 2: of how these companies move. Generally, Home Depot you say, hey,
14:15
Speaker 2: they've got everything buttoned up and there. You know, they
14:17
Speaker 2: run a really tight ship, and you know, Lows can
14:19
Speaker 2: be a little bit more free flowing in terms of
14:22
Speaker 2: how they manage quarter to quarter. But look, this is
14:26
Speaker 2: a good quarter four Lows, and it's being rewarded by
14:29
Speaker 2: the market up about five percent today.
14:31
Speaker 3: Are there any I don't follow this sector or these
14:33
Speaker 3: stocks that closely, so pardon my ignorance, but are there
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Speaker 3: any meaningful differences in either customer base or geographic concentration
14:40
Speaker 3: or anything that would suggest that the two should that
14:42
Speaker 3: one could diverge dramatically other than just better, better management,
14:45
Speaker 3: better operations, that one could diverge dramatically from the other overtime,
14:48
Speaker 3: because I think of them as interchangeable.
14:50
Speaker 2: One signorant one difference you used to have was home
14:53
Speaker 2: Depot is a little bit more focused on the professional contractor.
14:57
Speaker 2: Lows bought a business called Foundation Building Materials earlier this
15:03
Speaker 2: year that does a lot more professional contractor business, so
15:06
Speaker 2: they kind of buffer that and bulk that up a
15:08
Speaker 2: little bit. They're generally pretty similar at this point.
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Speaker 3: Okay, so thank you.
15:15
Speaker 2: I don't know what would explain, you know, a key
15:18
Speaker 2: divergence there.
15:19
Speaker 3: Okay, so if they both but if you're looking for
15:22
Speaker 3: something that's indicative of what's going on with the broader
15:24
Speaker 3: economy and not something idios, it's not something specific to
15:27
Speaker 3: Lowser home Depots, we they probably both be reflecting it. Yeah,
15:31
Speaker 3: that's maybe what I was getting at.
15:32
Speaker 2: Yeah, we've got in video earnings after the bell. Look,
15:36
Speaker 2: we can talk about it, but ultimately they're expected to
15:39
Speaker 2: sell billions of dollars worth of semiconductors. Tell everyone they're
15:43
Speaker 2: going to continue to sell billions and maybe even trillions
15:45
Speaker 2: of dollars of them into the future. And you and
15:48
Speaker 2: I have no particularly insight into this, but.
15:51
Speaker 3: We do think, we think, we agree, maybe we don't
15:53
Speaker 3: that that's no longer the really interesting and important question
15:55
Speaker 3: for the economy. Yeah, they're gona a blowout quarter. Yeah, yeah,
15:58
Speaker 3: we know. Everybody is up to their eyeballs in debt
16:01
Speaker 3: to fund data centers, the hyperscalers, the so called hyperscalers. Anyway,
16:06
Speaker 3: they're throwing it.
16:06
Speaker 2: Go ahead, can we talk about that for a second,
16:08
Speaker 2: because there is something.
16:09
Speaker 3: Interesting thing you would save me.
16:11
Speaker 2: Yes, I'll say, their eyeballs in debt.
16:12
Speaker 3: Well, that's an exaggeration.
16:14
Speaker 2: No, no, no, no, I do want to talk about this
16:16
Speaker 2: because one of the things that you are seeing done
16:19
Speaker 2: in order to manage the appearance of debt levels is
16:23
Speaker 2: the use of a bunch of special purpose vehicles to
16:25
Speaker 2: get it off company balance sheets. The way this works,
16:28
Speaker 2: like you just anyone listening, you might hear this from
16:31
Speaker 2: time to time. The way it effectively works is, let's
16:34
Speaker 2: say that Meta wants to borrow ten billion dollars to
16:38
Speaker 2: go and build a data center, but they don't want
16:40
Speaker 2: to take out ten billion in debt, because if you
16:42
Speaker 2: keep doing that quarter after quarter, like eventually it hurts
16:44
Speaker 2: your credit rating. So what these companies do is they
16:47
Speaker 2: set up a separate corporation basically a shell, and they say, hey,
16:51
Speaker 2: who wants to put money into this at a yield
16:54
Speaker 2: of X in order to fund a data center construction.
16:57
Speaker 2: The special purpose vehicle gets funded, and then Meta says,
17:00
Speaker 2: we're going to pay why dollars a month or a
17:03
Speaker 2: year whatever the framework is to that company to lease
17:07
Speaker 2: the data center from them. So it appears on Meta's
17:10
Speaker 2: financial statements as an operating expense related to that lease,
17:14
Speaker 2: not as debt that's outstanding because the debt isn't technically
17:18
Speaker 2: metas so in this way, and we've seen this done
17:21
Speaker 2: and a number of times recently in recent history. Oracle
17:25
Speaker 2: had a big one of these. Meta has one that's
17:27
Speaker 2: ongoing with Blue Owl of all people like the company
17:30
Speaker 2: that's in the news for you know, having some questions
17:33
Speaker 2: about the private credit market right now. And so this
17:37
Speaker 2: is the mechanism by which these companies borrow a bunch
17:40
Speaker 2: of money in a lot of cases, but don't have it,
17:43
Speaker 2: you know, show up on their balance sheets. You also
17:45
Speaker 2: have companies that are now issuing bonds from their own
17:50
Speaker 2: company in recent weeks in order to do this as well.
17:53
Speaker 2: But when people talk about off balance sheet financing, this
17:57
Speaker 2: is typically the mechanism that it's used, which is set
18:00
Speaker 2: up a separate company, have people you know, lend that
18:03
Speaker 2: company money, and then the parent company not really the
18:07
Speaker 2: parent but the company that actually wants to operate the
18:10
Speaker 2: facility in this case, they will then say, okay, we'll
18:13
Speaker 2: lease that from the company and make payments to them,
18:15
Speaker 2: which then funds the debt payments.
18:17
Speaker 3: Actually, so the reason I was poo pooing in video's
18:22
Speaker 3: upcoming earnings report is that we know, I'm comfortable saying
18:26
Speaker 3: we know it's going to be great, and we know
18:27
Speaker 3: they're going to say tremendous things, but if credit dries up,
18:31
Speaker 3: the promise will not be realized. So I'm not sure
18:36
Speaker 3: it matters for the big questions that you might be asking,
18:39
Speaker 3: what's economic growth going to be next year, over the
18:41
Speaker 3: next five years, are the trends going to change? Is
18:44
Speaker 3: productivity going to pick up? Because that why is that important? Well,
18:47
Speaker 3: productivity is the main determinative standard of living over time.
18:49
Speaker 3: It's also a big driver of earnings and snock prices.
18:52
Speaker 3: And I'm just not sure that anything in Vidia tells
18:54
Speaker 3: us today will answer the question unless you own it.
18:57
Speaker 3: I don't want to diminish the importance of that if
18:59
Speaker 3: you do. And you know, as you said at the
19:01
Speaker 3: beginning of the first hour, they're the biggest component of
19:03
Speaker 3: the S and P five ponder, So it matters for everybody,
19:06
Speaker 3: but doesn't matter for the long term, I'm not sure.
19:08
Speaker 2: Take a quick break here. When we come back, we'll
19:12
Speaker 2: talk about whether investors are actually rotating from tech stocks
19:15
Speaker 2: to dividend paying stocks. And we've also got the trivia answer.
19:19
Speaker 2: We've got Wall Street Watch and just a bunch of
19:20
Speaker 2: other stuff, so make sure you stick around.
19:45
Speaker 1: Bringing the latest financial news straight to your radio every day.
19:49
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Word
19:54
Speaker 1: time now for Wall Street Watch. A complete look at
19:57
Speaker 1: what's moving market so far today right here on the
20:00
Speaker 1: Financial Exchange Radio Network.
20:03
Speaker 4: After rallying in earlier trading, markets are now pulling back
20:06
Speaker 4: slightly and are now mixed ahead of Nvidia's big earnings
20:10
Speaker 4: report to out after the closing bell and Video stock
20:13
Speaker 4: at the moment is up over two percent right now.
20:17
Speaker 4: The Dow is now down a quarter percent, or one
20:19
Speaker 4: hundred and ten points. SMP five hundred is up three
20:22
Speaker 4: tenths of a percent or nineteen points higher, NAZDAC up
20:25
Speaker 4: six tenths of one percent or one hundred and thirty
20:28
Speaker 4: four points. RUSTED two thousand now up only a quarter percent.
20:32
Speaker 4: Tenure Treasure Deealed is flat at four point one point
20:35
Speaker 4: one three percent, and crude oiled down over two percent lower.
20:38
Speaker 4: Trading a fifty nine dollars in thirty one cents a barrel,
20:42
Speaker 4: Target reported a decline in third quarter sales as the
20:46
Speaker 4: company saw shoppyes spending in shoppers hunting for value. Target
20:50
Speaker 4: also cut its annual profit outlook and said it would
20:53
Speaker 4: invest billions to upgrade stores to help lift sales. Target
20:56
Speaker 4: shares are now down about one percent. Meanwhile, Lowe this
21:00
Speaker 4: is up five percent after the retailer beat third quarter
21:03
Speaker 4: earnings expectations, where its online business helped offset weakness in
21:07
Speaker 4: the home improvement sector. Another retail in TJX, beat third
21:11
Speaker 4: quarter earnings and revenue estimates. The parent company to TJ
21:15
Speaker 4: Max and Marshalls, lifted its annual outlook again as it
21:18
Speaker 4: continues to win over inflation weary shoppers. Target shares are
21:22
Speaker 4: actually now down modestly. They were up earlier. Alphabet shares
21:26
Speaker 4: are jumping four percent one day after Google launched its
21:29
Speaker 4: updated Gemini AI model. Separately, Loop Capital upgraded the stock
21:33
Speaker 4: to buy from hold and upped its price target. And
21:36
Speaker 4: Constellation Energy stock is climbing about six percent after the
21:41
Speaker 4: company received a one billion dollar loan from the government
21:43
Speaker 4: to restart its Crane Clean Energy Center nuclear plants. I'm
21:49
Speaker 4: Tucker Silva and that is Wall Street Watch. And in
21:51
Speaker 4: the previous segment, we asked you the question what was
21:53
Speaker 4: the name of the Native American woman who joined the
21:56
Speaker 4: Lewis and Clark expedition as a guide and translator. That
21:59
Speaker 4: would be Sakajawea. Chuck from Newton, New Hampshire is our
22:03
Speaker 4: winner today, taking home the Financial Exchange Show t shirt.
22:06
Speaker 4: Congrats to Chuck and we play trivia every day here
22:09
Speaker 4: in the Financial Exchange. See complete contest rules at Financial
22:13
Speaker 4: Exchange Show. Dot Com got a piece here from Bloomberg.
22:18
Speaker 4: Rotation from Tech leads investors to dividend paying stocks like Yeah,
22:22
Speaker 4: who's the investor who goes, hey, I've been you know,
22:25
Speaker 4: really happy riding you know in video and broadcom for
22:28
Speaker 4: the last couple of years. You know what I need
22:30
Speaker 4: now dividends. Yeah, like that that investor doesn't really exist
22:35
Speaker 4: in any meaningful quantity. Furthermore, when you look at some
22:38
Speaker 4: of the highest dividend payers that are out there in
22:40
Speaker 4: the S and P five hundred, these are companies that
22:43
Speaker 4: are like trading horribly for the last year or so.
22:45
Speaker 4: You got Stanley Black Anddecker with a five percent dividend
22:48
Speaker 4: that's trading near it's fifty two week lows. Same thing
22:51
Speaker 4: when you look at Hormel Foods. You've got Verizon in
22:55
Speaker 4: a similar boat. You got Pfizer that is, you know,
22:58
Speaker 4: kind of just right in the middle of its fifty
23:00
Speaker 4: two week range. UPS is one of the highest dividends
23:03
Speaker 4: in the S and P. It's pretty close to a
23:05
Speaker 4: fifty two week low right now.
23:07
Speaker 1: I just.
23:09
Speaker 2: The facts don't really support this. Given what we've seen
23:13
Speaker 2: from how dividend payers have largely performed.
23:15
Speaker 3: They might instead be picking up the value effect. Tech
23:18
Speaker 3: has sold off, so large cap growth is sold off.
23:22
Speaker 3: Value has performed better, and dividend is high. Dividend yield
23:26
Speaker 3: stocks are uber value and the value is defined as
23:30
Speaker 3: relatively low price to book. I believe is the is
23:34
Speaker 3: the way Russell constructs their their value index. That's the
23:39
Speaker 3: that's the measure they use the largest one hundred paying
23:44
Speaker 3: the largest one hundred dividend payers as calculated by Dow Jones.
23:50
Speaker 3: They have an index, and you can, you know, buy
23:52
Speaker 3: investment products that are indexed to that that that attempt
23:55
Speaker 3: to replicate the performance of this index. That's like seventy
23:57
Speaker 3: percent value companies. So I think what's happening here is
24:00
Speaker 3: value overtaking growth. We've seen that year to date growth,
24:03
Speaker 3: large cap growth is down like four percent, large cap
24:06
Speaker 3: values down, you know, only one and a half or something,
24:08
Speaker 3: which is not unusual.
24:09
Speaker 2: In Wait, large cap you're saying down.
24:13
Speaker 3: Isn't large cap value down?
24:14
Speaker 2: How can large cap growth and value be down when
24:16
Speaker 2: the index is up as much as it is month
24:18
Speaker 2: to date?
24:19
Speaker 3: Right now?
24:20
Speaker 2: You said year to date?
24:21
Speaker 3: Oh, I'm sorry, month on my bad? Okay, thank you, Chuck,
24:24
Speaker 3: thank you.
24:24
Speaker 2: Sorry, I'm sending I'm going How could how can all
24:27
Speaker 2: of this be down still?
24:28
Speaker 3: And catch on your part? Thank you? Yep, month to day,
24:31
Speaker 3: Thank you. I was trying to refer to the most
24:34
Speaker 3: recent hiccup.
24:36
Speaker 2: That makes more sense, folks, Thank you. If you're trying
24:39
Speaker 2: to make sense out of what's moving in markets. You
24:42
Speaker 2: might be h worth might be worth your time to
24:44
Speaker 2: give Armstrong Advisory Group call. Armstrong Advisory Group works with
24:49
Speaker 2: families throughout the New England region, really throughout the country.
24:53
Speaker 2: There are a number of states that we are fully
24:56
Speaker 2: licensed to operate in and you can give us a
24:59
Speaker 2: call to help so that so we can help you
25:05
Speaker 2: take a look at your portfolio, your financial plan and
25:07
Speaker 2: see if it makes sense for where you are in
25:09
Speaker 2: your life, in your finances and figure out, hey, how
25:13
Speaker 2: do we finish twenty twenty five on a good note
25:16
Speaker 2: and then get ready to move into twenty twenty six.
25:19
Speaker 2: There's a lot moving in markets right now, some real
25:22
Speaker 2: questions about what things look like in twenty six. So
25:25
Speaker 2: if you want a second set of eyes on your
25:27
Speaker 2: portfolio or financial plan, call eight hundred three nine three
25:32
Speaker 2: four zero zero one. That number again is eight hundred
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25:40
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
25:42
Speaker 1: registered investment advisor. Nothing in the ad or in any
25:45
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
25:48
Speaker 1: your own financial tax into state planning advisors before making
25:51
Speaker 1: any investment decisions. Armstrong may contact you to offer Investment Advisory.
25:54
Speaker 2: Services CNBC flagging through the Office of Inspector General a
26:02
Speaker 2: new social security scam that is out there right now,
26:07
Speaker 2: and basically here's what is happening. Recipients get an email
26:14
Speaker 2: that has the subject line alert social Security Account Issues Detected,
26:20
Speaker 2: and then there's an attachment with fake letterhead that is
26:23
Speaker 2: supposedly from the Social Security Administration Office of the Inspector
26:26
Speaker 2: General that says that your Social Security number may be
26:29
Speaker 2: suspended within twenty four hours and that your case may
26:32
Speaker 2: be referred for criminal prosecution. So a couple things, and
26:36
Speaker 2: basically then says like call this number or you know,
26:39
Speaker 2: give us money in order to make sure that this
26:41
Speaker 2: doesn't happen. So a couple of things. The first is
26:47
Speaker 2: that generally this is not how the Social Security Administration
26:52
Speaker 2: communicates with you. They basically will not communicate with you
26:55
Speaker 2: in this fashion. The second is your Social secure number
27:00
Speaker 2: cannot be suspended.
27:03
Speaker 3: Look, Mark, I know you're kind of giggling, but look,
27:05
Speaker 3: I know I'm trying to suppress a chuck.
27:08
Speaker 2: There's plenty of stuff where like I have no idea
27:10
Speaker 2: how I go to the DMV to like try to
27:13
Speaker 2: change a cars registration, and I'm sitting there, and I
27:17
Speaker 2: feel like a complete idiot because I'm like, do I
27:19
Speaker 2: fill out this form or that form? And you know what,
27:24
Speaker 2: what's the difference between the title and the license and
27:27
Speaker 2: the registration? And honestly, I can't even answer all those
27:29
Speaker 2: questions neither. Like it's a I probably could if I, like,
27:32
Speaker 2: you know, had some assistance, but otherwise it's hard. So
27:36
Speaker 2: here's the thing. Your Social Security number cannot be suspended.
27:40
Speaker 2: Social Security will never send an email saying, hey, this
27:44
Speaker 2: is gonna happen, please call us and give us money
27:47
Speaker 2: in order to not suspend it. Uh. And generally again,
27:52
Speaker 2: anytime that you get a request from any organization asking
27:55
Speaker 2: for money, delete the email. Not delete it, but just
28:00
Speaker 2: like hold the email off to the side, hang up
28:03
Speaker 2: the phone, whatever it is that you do. Find the
28:05
Speaker 2: actual contact number for the organization on their actual website
28:09
Speaker 2: or outside letterheader notifications that you've received, you know, officially
28:13
Speaker 2: from them in the past, and call that number and
28:15
Speaker 2: see if it's legit. I probably have to do this,
28:18
Speaker 2: quite honestly, a dozen times a year. Most of the
28:22
Speaker 2: time it is something that's legit. But I'm just like
28:25
Speaker 2: hyper paranoid about this, and just like always looking for
28:27
Speaker 2: someone to scam me. So I'm very defensive about this,
28:31
Speaker 2: having had you know, a number of identity theft issues
28:35
Speaker 2: and things like that. My intenta are basically always up,
28:38
Speaker 2: but it's never so urgent that they need money right now.
28:43
Speaker 2: Number one and number two, just take a second and
28:46
Speaker 2: think before you act, because it can save you like
28:51
Speaker 2: thousands of dollars and a whole bunch of hassle if
28:55
Speaker 2: you just think through it. Because no one ever needs
28:57
Speaker 2: the money that quickly.
29:00
Speaker 3: Good advice like no one could advice.
29:01
Speaker 2: I mean, even if you're paying your mortgage, they give
29:03
Speaker 2: you like a fifteen day grace period, and that's that's
29:05
Speaker 2: a mortgage for a house. The Social Security Administration is
29:08
Speaker 2: not going to turn your solid Security number off if
29:10
Speaker 2: you don't pay them in eight minutes.
29:12
Speaker 1: Right.
29:13
Speaker 3: If you have some free time, though, you can call
29:14
Speaker 3: the number and you can tell them I'm trying to
29:16
Speaker 3: get some money into Russia. Could you maybe help me with.
29:19
Speaker 2: I don't think you should do that. No, I don't
29:21
Speaker 2: think you should know that.
29:22
Speaker 3: They'll hang up very quickly, and that's how you know
29:24
Speaker 3: their scam.
29:25
Speaker 2: I've had a buddy of mine who's actually gone through
29:28
Speaker 2: and basically he actually ended up working with the FBI
29:32
Speaker 2: to catch a whole phantom debt scam collection group. Like
29:37
Speaker 2: there have been articles that have been like published about this.
29:39
Speaker 2: It took like five or six years, but he basically
29:42
Speaker 2: would start like calling scammers back to like track down
29:45
Speaker 2: where they had gotten their scam materials from and ended
29:50
Speaker 2: up uncovering this whole group of phantom debt scammers that
29:54
Speaker 2: led up to this guy who had like stolen like
29:57
Speaker 2: not not stolen, but basically like defrauded people out of
30:00
Speaker 2: like millions of dollars. I guess he had some extra time.
30:06
Speaker 2: You know, I got a couple of kids. I can't
30:09
Speaker 2: really spend my evenings doing it.
30:10
Speaker 1: Yeah.
30:10
Speaker 3: I might have just paid him the five hundred bucks
30:12
Speaker 3: and saved myself to twenty hours.
30:14
Speaker 2: But no, he ended up working with the FBI to
30:17
Speaker 2: build a case against these scammers and got some of
30:20
Speaker 2: them thrown in jail. It's wild, that's incredible. Let's take
30:24
Speaker 2: a quatitisten when we return, We've got stack roulette after this.
30:30
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32:13
Speaker 2: Mark. What do you got for me for stack of roulettes?
32:17
Speaker 3: Can I talk about the trade deficit? Because the New
32:18
Speaker 3: York Times ran a story this morning sure about the
32:22
Speaker 3: trade deficit shrinking following the rollout of tariffs. Exports stayed
32:30
Speaker 3: the same in August, specifically, imports went down. The New
32:36
Speaker 3: York Times attributes this to tariffs. They say, well, they've
32:39
Speaker 3: changed patterns of trade. I was surprised that the New
32:42
Speaker 3: York Times made that statement, because it's wrong. Tariffs don't.
32:45
Speaker 3: And so I wanted to use this as I don't know,
32:47
Speaker 3: teachable moment, maybe for myself and for anyone who's interested
32:49
Speaker 3: in the suburbs.
32:50
Speaker 2: And the trade deficits still up here to date.
32:51
Speaker 3: And we're yeah, we're up like twenty something percent year
32:54
Speaker 3: over year, and that's actually that's a great point. The
32:57
Speaker 3: pattern of trade is not determined by tariffs. There are
32:59
Speaker 3: countries with high tariffs and a trade surplus, countries with
33:02
Speaker 3: high tariffs and a trade deficit, and just about everything
33:04
Speaker 3: in between. It's determined. And this is not This is
33:07
Speaker 3: not evident. You don't figure this out just using common sense.
33:11
Speaker 3: You have to be tauded, or at least I did.
33:13
Speaker 3: And it's not common sense. So I don't think anybody
33:15
Speaker 3: could figure this out on their own, other than the
33:16
Speaker 3: people that discover the concept. The patterns of trade are
33:19
Speaker 3: determined by relative productivity, wages, and most fundamentally, the trade
33:25
Speaker 3: deficits determined by savings. The less we save all else equal,
33:30
Speaker 3: the more we import. Those two things don't seem connected,
33:33
Speaker 3: but they are. And if you want to learn more
33:35
Speaker 3: about this subject, there's a great economic historian. His name
33:39
Speaker 3: is Doug Irwin. He teaches it Dartmouth, and he wrote
33:42
Speaker 3: a book called Free Trade under Fire. Now Irwin has
33:45
Speaker 3: his own opinion with respect to free trade. He thinks
33:48
Speaker 3: it's largely a good thing. But he presents a balanced,
33:51
Speaker 3: straightforward explanation of the idea of balance of trade. What
33:58
Speaker 3: drives trade deficits over time? And if trade deficits vex
34:01
Speaker 3: you how you can fix them, namely increasing savings. But
34:05
Speaker 3: check out Dugger wins free Trade under Fire. You can
34:08
Speaker 3: get it at Amazon, they get the digital version Google Books. Whatever.
34:11
Speaker 3: It's like ten bucks really worthwhile read if you're interested
34:14
Speaker 3: in this subject.
34:16
Speaker 2: Let's see, I'm want to talk a little bit about
34:18
Speaker 2: robotaxis shifting gears. Are you guys pro robotaxi or anti
34:23
Speaker 2: robotaxi or robotaxi neutral?
34:26
Speaker 4: Ultimately I'm pro, but it does give me pause?
34:30
Speaker 2: What's the actually? Hang on, marklet what's your pro robotaxi,
34:34
Speaker 2: anti or neutral?
34:36
Speaker 3: I'd like to see it rolled out on a wider scale.
34:39
Speaker 3: But good find I think it's I think it's fantastic.
34:42
Speaker 3: I think it's a great concept.
34:43
Speaker 2: Tucker, What's what gives your use? That that pause?
34:46
Speaker 3: Dying?
34:50
Speaker 2: Okay, give me more injury? What he did again?
34:59
Speaker 4: Like the I'm stuck? I cost a frobic.
35:02
Speaker 2: How is this different from driving in a car with
35:04
Speaker 2: a human?
35:05
Speaker 4: No? I think it's better, but I just don't know
35:08
Speaker 4: if it's there yet or not. That's all fair. I
35:10
Speaker 4: believe in the technology.
35:12
Speaker 3: It's just a pun.
35:13
Speaker 2: What if it's there yet? No? You said, oh fair?
35:17
Speaker 3: Another pun?
35:18
Speaker 1: Yeah?
35:18
Speaker 2: How fit? That's not a pun cab fair. Oh oh yeah,
35:22
Speaker 2: it's a stretch.
35:23
Speaker 3: Oh good, suck.
35:26
Speaker 2: It, Tucker, listen, arbiter of puns. Yeah, so I know.
35:31
Speaker 2: I I do think it's the question of okay, like
35:34
Speaker 2: is this here yet? But guys, I gotta tell you so, Like,
35:36
Speaker 2: I was driving into work this morning. It's five point
35:39
Speaker 2: forty five in the morning. I'm on one twenty eight,
35:42
Speaker 2: and there's a bunch of flashing lights. And the reason
35:44
Speaker 2: why is that an eighteen wheeler had rolled off into
35:46
Speaker 2: the meeting and they were trying to hoist it back
35:48
Speaker 2: onto the road. I don't know if like anyone was
35:51
Speaker 2: hurt or not, but like, obviously something went wrong and
35:55
Speaker 2: this truck was on the side of the road. Whenever
35:58
Speaker 2: we have, you know, traffic accidents with humans, they rarely
36:02
Speaker 2: make any kind of large news. This despite the fact
36:05
Speaker 2: that traffic accidents kill tens of thousands of people a
36:08
Speaker 2: year in the United States. What I do know is
36:12
Speaker 2: that hey, anytime that a Tesla slams into something with
36:17
Speaker 2: its autopilot on, we get a huge news thing about
36:22
Speaker 2: this is unsafe. And I'm not saying that autonomous driving
36:25
Speaker 2: is inherently safe or not. What I am saying is
36:29
Speaker 2: we need to get past the reporting of every single
36:34
Speaker 2: thing that goes wrong with autonomous vehicles, because if we're
36:37
Speaker 2: gonna be honest with us ourselves, we couldn't do our like.
36:41
Speaker 2: We couldn't possibly finish our show in two hours if
36:44
Speaker 2: we covered every traffic accident caused by some idiot who
36:48
Speaker 2: is texting while he should have been looking.
36:50
Speaker 3: At the road.
36:51
Speaker 4: I mean, in my commute in Chuck, traffic was horrendous
36:54
Speaker 4: in two circumstances because of a driver who clearly was
36:59
Speaker 4: not paying attention a straight road. It was a straight
37:01
Speaker 4: road the person in front of him twice And how
37:04
Speaker 4: many of those do you It's just like there's no turns.
37:08
Speaker 2: I know you were just texting and didn't see the
37:10
Speaker 2: person in front of you, So accidents. I don't know
37:14
Speaker 2: if autonomous vehicles are safer today generally, Like the literature
37:19
Speaker 2: that we have from WEIMO, who files these regular reports,
37:22
Speaker 2: is that they're significantly safer. But I do know we
37:27
Speaker 2: can't just be like the machine is bad and the
37:30
Speaker 2: person's good, because if we're gonna be honest with ourselves,
37:33
Speaker 2: there are a lot of really bad drivers out there,
37:35
Speaker 2: and we could save ourselves an awful lot of lives
37:39
Speaker 2: and insurance costs if we replace those bad drivers and
37:42
Speaker 2: time autonomous vehicles. Tucker's an efficiency person. First, I just
37:46
Speaker 2: want to pay less.
37:48
Speaker 3: But when you hear a number like that, any number,
37:50
Speaker 3: any context, you gotta ask, what's the rate? How many
37:53
Speaker 3: accidents per trip? Yes, that can be abused too, but
37:56
Speaker 3: it's good to.
37:57
Speaker 2: Know it can be. But you know, again, like this
38:01
Speaker 2: is where we need to get to if we're gonna
38:04
Speaker 2: have an honest conversation about autonomous driving. Is Hey, human drivers.
38:10
Speaker 2: The reason why we have auto insurance and the rates
38:14
Speaker 2: are what they are is because human drivers are not
38:17
Speaker 2: very good. We're pretty bad.
38:20
Speaker 3: I mean, you think so. I always marvel it. I
38:24
Speaker 3: marveled that there aren't more accidents.
38:26
Speaker 2: And it's not the lack of accidents, it's that we've
38:29
Speaker 2: built the cars to be really safe so fewer people
38:31
Speaker 2: get hurt. Interesting, you know, like that's that's where I
38:35
Speaker 2: tend to land. Is like you see these wrecks on
38:37
Speaker 2: like the highway, and it's like, oh, the person walked away,
38:39
Speaker 2: and you're like, I have no idea how they did.
38:43
Speaker 2: Let's take a quick break for the rest of the
38:44
Speaker 2: day and we'll be back tomorrow recapping in video earnings
38:49
Speaker 2: and the September jobs reports.