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Will the stock rally stall out after the Fed's rate cut? · The Financial Exchange Show

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Speaker 1: a donation today. This is the Financial Exchange with Chuck
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Speaker 1: Zada and Mike Armstrong.
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Speaker 2: Kicking things off here. It's Chuck, Mike and Sucker with you.
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Speaker 3: And we've got.
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Speaker 2: A busy, busy week this week that we're gonna be
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Speaker 2: digging through. Not too much today, today's pretty quiet. We
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Speaker 2: got New York Empire State Manufacturing Index data at eight thirty.
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Speaker 3: It's not overly important.
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Speaker 2: It wasn't particularly good data, but I just I don't
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Speaker 2: think that there's any meaningful fund signal that you can
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Speaker 2: take from it.
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Speaker 3: Not that funds what we're about here, But occasionally I
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Speaker 3: think we're all about fun, Chuck, not all about fun,
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Speaker 3: he said in a tie voice. Zero fun, sir.
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Speaker 2: Tomorrow, we've got retail sales data, so gonna be interested
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Speaker 2: to see what consumer spending looked like for the month
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Speaker 2: of August. Also coming out tomorrow, we're gonna be getting
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Speaker 2: NHB Housing Market Index this for the month of September,
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Speaker 2: So I think it'll interesting to see.
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Speaker 3: Hey, we've had lower.
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Speaker 2: Rates kicking in over the last couple of weeks. Does
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Speaker 2: that spark a little bit more buyer traffic? Does it
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Speaker 2: spark a little bit more optimism for builders? Or do
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Speaker 2: they still remain downbeat the way they've been, you know,
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Speaker 2: for much of the last year or so.
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Speaker 3: I've got the Import Price Index. I don't think it's
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Speaker 3: something that we generally track, but if you're looking for
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Speaker 3: evidence of foreign suppliers of goods maybe discounting things or
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Speaker 3: lowering prices in order to maintain or keep market share
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Speaker 3: in the US with tariffs, that could be some evidence
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Speaker 3: of that if it shows up anywhere in those reports.
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Speaker 2: Wednesday, big one, We've got the EIA gasoline stocks weekly change, Yes,
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Speaker 2: and everyone's going to be focused on that. Also, a
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Speaker 2: little known bank called the Federal Reserve A two PM's
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Speaker 2: going to announce what they're doing with interest rates.
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Speaker 3: They also the good news about this FED meeting.
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Speaker 2: They also are going to be giving us their Summary
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Speaker 2: of Economic Projections, the step which tells us what they
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Speaker 2: expect inflation, growth, interest rates to be over the next
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Speaker 2: couple of years. So that'll be informative, I think. And
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Speaker 2: we're also gonna get building permits and housing starts on Wednesday. Thursday,
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Speaker 2: another week of weekly jobless claims and Philly Fed manufacturing index.
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Speaker 2: And then we finished things off on Friday with the
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Speaker 2: Baker Hughes oil rig count, which always a good way
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Speaker 2: to finish a week, Michael, Thursday of last.
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Speaker 3: Week, we did see a good uptick, not a good uptick,
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Speaker 3: but a pretty big uptick in initial jobless claims. There's
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Speaker 3: been some data pointed at Texas that we pointed out
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Speaker 3: on Thursday of last week where you saw that jump.
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Speaker 3: Texas did acknowledge they've been having issues with fraudulent claims
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Speaker 3: for unemployment, but did not definitively say that that's what
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Speaker 3: caused them to spike. You also had this is the
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Speaker 3: reading over Memorial excuse me, labor Day holiday, so some
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Speaker 3: weird seasonal stuff. So we'll be looking for some evidence here.
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Speaker 3: Was that a weird one time type thing, or do
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Speaker 3: we have the start of a new trend here? Those
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Speaker 3: jobless claims last week came in at two hundred sixty three,
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Speaker 3: which was above all expectations.
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Speaker 2: And given all the noise, I suspect that that's a
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Speaker 2: one time move into that range. If it's not, and
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Speaker 2: we see similar readings in the coming weeks, then that becomes,
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Speaker 2: you know, signed that the labor market has taken a
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Speaker 2: turn for the worst. But that's not what we have
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Speaker 2: in you know, in the data thus far. And we're
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Speaker 2: just gonna have to see how things go there.
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Speaker 3: So let's talk a little bit about this data point
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Speaker 3: that really matters, the what you say, gasoline, Yes, the
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Speaker 3: EIA gasoline stocks and I'm joking. The Federal Reserve meeting
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Speaker 3: is the one that matters here. And for those that
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Speaker 3: haven't been paying attention, widely anticipated that they're going to
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Speaker 3: kick off a new rate cutting cycle with a twenty
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Speaker 3: five basis point cut. I do think it's generally expected
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Speaker 3: that they continue that with future cuts as well, Chuck,
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Speaker 3: and they are I think we should can textualize that
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Speaker 3: because they are doing this at a time when in
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Speaker 3: inflation is running. Where are we sitting on core CPI
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Speaker 3: right now for the last twelve months? Yeah, let's go there. Yeah,
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Speaker 3: So if you take a look.
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Speaker 2: At now, I'll give you a few different inflation numbers,
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Speaker 2: just because I think it's useful to you know, contextualize.
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Speaker 2: If you will get headline CPI it's at two nine core?
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Speaker 2: Is it three to one? Uh PC headline is a
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Speaker 2: two six core?
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Speaker 3: Is it two nine? And for the Producer Price Index
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Speaker 3: headline is a two six core? Is it two eight?
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Speaker 2: So you're generally call it two and three quarters to
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Speaker 2: three and a quarter pretty consistent with right around three
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Speaker 2: percent core inflation, I think is the fair way to look.
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Speaker 3: At it, which is not world ending inflation. It's a
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Speaker 3: lot lower than what we were dealing with two twenty
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Speaker 3: twenty two, a lot lower than we were dealing for
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Speaker 3: most of the seventies and early eighties, but is a
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Speaker 3: fairly significantly higher inflation rate than what we became used
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Speaker 3: to throughout all of the nineties, twenty and twenty tens.
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Speaker 3: And yet the Fed is pushing for a rate cut
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Speaker 3: here on concerns about the labor market. Is that your
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Speaker 3: read too, yes.
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Speaker 2: And the other piece is that core inflation has accelerated
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Speaker 2: in the last few months as well. At the end
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Speaker 2: of the May data, it was running at two seven seven.
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Speaker 3: It's now at three one pint one. So you've seen
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Speaker 3: an uptick in core inflation over the last few months
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Speaker 3: that has been notable. And why this matters is not
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Speaker 3: because three percent inflation in and of itself is awful.
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Speaker 3: The nineteen nineties were a period where inflation averaged pretty
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Speaker 3: close to three percent YEP, and it was one of
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Speaker 3: the best economic decades that we've seen, But it was
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Speaker 3: also one where much of the inflation that we saw
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Speaker 3: during the nineteen nineties came during a couple of little
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Speaker 3: bursts where he had higher oil prices and things like
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Speaker 3: that at the outset of the decade because of you know,
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Speaker 3: the outbreak of the Gulf War and things along those lines.
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Speaker 3: And so if you look at core inflation and during
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Speaker 3: that time and again I think this is this is
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Speaker 3: kind of where the meat is on the core inflation
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Speaker 3: number and why it matters. So if you again looking
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Speaker 3: at the nineteen nineties and say where was core inflation
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Speaker 3: during that time period, I'm just getting the average here
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Speaker 3: just so that i can make sure that I'm speaking
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Speaker 3: appropriately about this. Nineteen nineties core inflation was three to
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Speaker 3: two two, so it was hotter during that time. But
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Speaker 3: all of that was basically.
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Speaker 2: Stuck in the first couple of years simply because again,
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Speaker 2: even when energy prices, you know, go up, it spills
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Speaker 2: into other parts of the economy. Plus he had some
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Speaker 2: stuff going on, you know, with housing in this and that,
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Speaker 2: So most of it was nineteen ninety to ninety two. Effectively,
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Speaker 2: core inflation in the nineties wasn't above three percent at
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Speaker 2: any time after nineteen ninety three. You were generally trending
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Speaker 2: down By the end of the nineties, core inflation was
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Speaker 2: running at one point eight eight percent for the prior
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Speaker 2: twelve months, and it wasn't even above two and a
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Speaker 2: half from ninety seven onward. So I think that when
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Speaker 2: we look at it, most people, when we talk about
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Speaker 2: the nineteen nineties and how great of an economic decade
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Speaker 2: it was, we don't say, Man, ninety one was the year.
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Speaker 2: We're talking like ninety five to two thousand, and during
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Speaker 2: that time, core inflation was under three percent the entire time.
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Speaker 2: It briefly came back above for you know, a couple
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Speaker 2: months in mid ninety five, but that's it. So I
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Speaker 2: think that when we're trying to figure out, you know,
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Speaker 2: what this means, the danger of core inflation running at
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Speaker 2: three percent is not that inflation runs at three percent,
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Speaker 2: but hey, are you going to have energy prices falling
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Speaker 2: ten percent year over year like they've had for the
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Speaker 2: last year in perpetuity?
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Speaker 3: Is that going to be what you see? Probably not.
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Speaker 2: Energy prices tend to be kind of mean reverting. They
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Speaker 2: go up for a little bit. You have you know,
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Speaker 2: supply that comes offline because people aren't you know, doing
9:06
Speaker 2: as many doing as much drilling, and then prices go
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Speaker 2: up the next time there's an increase in demand, and
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Speaker 2: then you get more drills in the ground, and it's
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Speaker 2: it's this cycle back and forth.
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Speaker 1: Right.
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Speaker 2: So the concern with core inflation running at three percent is, hey,
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Speaker 2: if energy price is next to your move up ten
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Speaker 2: percent instead of down ten which again I don't know
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Speaker 2: where they're gonna go. No one knows where oil prices
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Speaker 2: will be. But now all of a sudden, you got
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Speaker 2: headline inflation. Instead of running you know, two nine, now
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Speaker 2: it's running three six, three seven.
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Speaker 3: And hey, how do we you know, feel about inflation
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Speaker 3: accelerating closer to four percent?
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Speaker 1: Right?
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Speaker 2: That's why you don't want to have core inflation running
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Speaker 2: that hot. It's because the headline number never stays in
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Speaker 2: a straight line. And when you have those wobbles because
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Speaker 2: of food and fuel, hey, four percent inflation starts to
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Speaker 2: feel uncomfortable in a hurry.
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Speaker 3: So you gotta be off concerned about the labor market
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Speaker 3: if you're going to cut into that, you do.
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Speaker 2: And here's the thing, I think that you can justify
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Speaker 2: cutting in this environment because there are signs that the
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Speaker 2: labor market is decelerating faster than inflation is accelerating.
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Speaker 3: Yep. But you got to.
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Speaker 2: Have you know, your hand on the rudder and say, hey,
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Speaker 2: I got to turn quickly if the economy turns, because
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Speaker 2: otherwise I'm going to be behind the eight ball, and
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Speaker 2: inflation comes back the second that the labor market turns,
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Speaker 2: and the second oil prices start moving up again, I
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Speaker 2: got to be in front of that.
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Speaker 3: And it's especially difficult given I guess usually using the
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Speaker 3: same comparison there, how poorly they were guiding that ship
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Speaker 3: back in early twenty twenty two, when they were faced
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Speaker 3: with a very different scenario in a lot of ways,
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Speaker 3: but a lot of the same fundamental issues. It was
10:52
Speaker 3: an easier question to address.
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Speaker 2: Then Yeah, and they got it wrong, and they were
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Speaker 2: still too slow to start raising rates.
10:58
Speaker 3: Then, so again, if you want to, you know, the
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Speaker 3: the the.
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Speaker 2: Whole pattern from the Jerome Powell fed, Hey, we're gonna
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Speaker 2: we're gonna be dubbish at the first sign of problems
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Speaker 2: in the economy, but when it comes to inflation, we're
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Speaker 2: not gonna respond necessarily as quickly. That That's kind of
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Speaker 2: what we have in evidence at this point. Now, let's
11:23
Speaker 2: take a quick break. When we return, let's talk a
11:27
Speaker 2: little bit about uh Morgan Stanley and JP Morgan. They're
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Speaker 2: trying to tell you what they think the stock market's
11:32
Speaker 2: gonna do next. We'll tell you if that's useful information
11:36
Speaker 2: or not.
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12:49
Speaker 2: Morgan Stanley and JP Morgan see stock rally stalling after fedcut.
12:54
Speaker 2: That is the headline from Bloomberg. I'll now quote here
13:00
Speaker 2: strategist from Morgan Stanley, JP Morgan, Chase and Oppenheimer Asset Management.
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Speaker 2: How does Oppenheimer get left out of the headline, poor guys?
13:08
Speaker 3: What gives They're only including companies whose names.
13:11
Speaker 2: The guy had one movie made about him a couple
13:13
Speaker 2: of years ago, and now no one cares.
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Speaker 3: You have to have the name Morgan in your company
13:18
Speaker 3: name in order to be included in the Bloomberg. Also,
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Speaker 3: I don't think it was the same Oppenheimer.
13:22
Speaker 4: Was it trying to confirm now stand by.
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Speaker 3: I would imagine that it was named after him. No,
13:30
Speaker 3: we're gonna name a fun company.
13:31
Speaker 2: What do you think we should go with Oppenheimer? It's
13:35
Speaker 2: a little bit long thought. He's very smart, you know. Anyways,
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Speaker 2: So they're basically saying, look, you might start to see
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Speaker 2: more caution coming into the market, and.
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Speaker 3: To which I say, useless information.
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Speaker 2: Why now I'm not saying it will or won't. Because
13:52
Speaker 2: here's the thing.
13:53
Speaker 3: Also, a more cautious tone replacing the bullish mood. Hasn't
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Speaker 3: it cautious tone all year? Yeah? And that could mean
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Speaker 3: literally anything, right, Like stocks have rallied twelve and a
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Speaker 3: half percent through September, So our view is that they
14:05
Speaker 3: won't be as optimistic as they're worse for the first
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Speaker 3: nine months.
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Speaker 2: Tell me how a caution tone trades? What does that
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Speaker 2: mean for price action?
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Speaker 3: So the only thing that could make them have egg
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Speaker 3: on their face with this story is if equities rally
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Speaker 3: another twenty percent into the year end. Otherwise every other
14:24
Speaker 3: market outcome they could say, told you.
14:26
Speaker 2: So someone has to look, there's a million people out
14:30
Speaker 2: there who look at all this stuff. Now someone's got
14:34
Speaker 2: to be keeping track of who's actually good at these
14:36
Speaker 2: predictions are not?
14:39
Speaker 3: But like, what does this prediction even mean? Right? If
14:41
Speaker 3: I'm to take a look at this and say were
14:43
Speaker 3: they right or wrong? What is the benchmark by which
14:46
Speaker 3: they are right or wrong? I don't know. And here's
14:49
Speaker 3: the other just why you can't. But you can't build
14:51
Speaker 3: the database of all this stuff because anything other than
14:53
Speaker 3: market's rallying twenty percent by year end would mean that
14:56
Speaker 3: they're right under this.
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Speaker 2: And what does this mean? So this is from Morgan's
15:00
Speaker 2: Stanley's Michael Wilson. Near term risk is centered on the
15:02
Speaker 2: tension between lagging weak data labor data, and the fed's
15:05
Speaker 2: response that may not meet markets. Still, he recommended buying
15:10
Speaker 2: any dips, and his most bull scenarios, he's the S
15:13
Speaker 2: and P five hundred climbing nine percent to seventy two
15:15
Speaker 2: hundred points by mid twenty twenty six. So like, what
15:18
Speaker 2: what are we even doing here?
15:20
Speaker 3: Actually? I don't know. That story wasn't worth the paper
15:24
Speaker 3: that Tucker printed it on, but it was worth us
15:27
Speaker 3: talking about it.
15:28
Speaker 2: Yeah, uh, in Vidia China, there's some some meat too
15:33
Speaker 2: that that goes beyond whatever you know, Morgan Smith said.
15:37
Speaker 3: So China declared them as it declared that they violated
15:42
Speaker 3: antitrust law based on this agreement that they inked with
15:46
Speaker 3: the Chinese government back in twenty twenty, which I didn't remember.
15:49
Speaker 3: They bought a company called Melanox Technologies that's an Israeli
15:52
Speaker 3: American firm that they bought back in twenty twenty in
15:55
Speaker 3: order to get over the hump of anti trust concerns
15:57
Speaker 3: with each country's regulator. They signed stuff with China saying, no,
16:01
Speaker 3: we'll continue to make sure you get semiconductor chips and
16:04
Speaker 3: you know, a good supply of them, which has obviously
16:06
Speaker 3: not been possible given that the last two presidents have
16:09
Speaker 3: heavily restricted the export of semiconductors to China.
16:13
Speaker 2: So the question, whenever you're talking about anything related to
16:18
Speaker 2: China and their regulatory apparatus, is.
16:23
Speaker 3: The right way to phrase it.
16:25
Speaker 2: Is why are why is the Chinese government doing this now?
16:31
Speaker 2: And what do they want from someone?
16:34
Speaker 3: Because we are they shaken down?
16:35
Speaker 2: Yes, because the Chinese government could regulate anyone in everyone
16:39
Speaker 2: on any particular day, but they choose to do so
16:41
Speaker 2: in very clear ways. The best example of this, Jack
16:45
Speaker 2: Ma a few years ago came out and criticized the
16:48
Speaker 2: Chinese Communist Party. A couple weeks later, Hey, guess what
16:52
Speaker 2: you have to cancel? You know some IPOs. We're going
16:55
Speaker 2: to conduct a bunch of investigations of Ali Baba and
16:59
Speaker 2: make things very very difficult for you. So when China's
17:03
Speaker 2: doing this, I think that there are a couple different
17:05
Speaker 2: ways that I can potentially read it. The first is
17:10
Speaker 2: there's now a clear chip on the table between China
17:13
Speaker 2: and the US in terms of, hey, you give us
17:16
Speaker 2: something that we want, maybe we'll make this anti trust
17:19
Speaker 2: you know, investigation go away, as opposed to while we're
17:23
Speaker 2: just telling our companies not to buy in video chips.
17:25
Speaker 2: This could be the thing that eventually green lights you know,
17:28
Speaker 2: the buying at some point. Maybe other things that you
17:33
Speaker 2: can read into this, Hey, and Vidia is clearly, you know,
17:38
Speaker 2: being touted as something that like an entity that's pretty
17:44
Speaker 2: close to the US government right now. I mean, how
17:46
Speaker 2: many times have you seen Jensen Huang and President Trump
17:49
Speaker 2: together in the last three months. It's more than a handful,
17:53
Speaker 2: like it's quite often. And so what message is this
17:58
Speaker 2: sending about? Hey, are are we going to try to
18:00
Speaker 2: make things more difficult for companies that are more closely
18:03
Speaker 2: aligned with President Trump? Like I think that that could
18:08
Speaker 2: be a reasonable way to read this as well. And
18:12
Speaker 2: this also comes on the back now of China pushing
18:15
Speaker 2: for the President to come and visit China in a
18:19
Speaker 2: state visit that they can obviously, you know, very tightly
18:21
Speaker 2: control the optics of and everything. And yes, I still
18:26
Speaker 2: look at this quite honestly, and I say the Chinese
18:29
Speaker 2: government hasn't.
18:30
Speaker 3: Really bent on anything this year.
18:33
Speaker 2: You know what's going to be the thing that gets
18:35
Speaker 2: any kind of deal over the hump And does the
18:37
Speaker 2: Chinese government actually stick with it instead of just signing
18:40
Speaker 2: it and then you know, reneging on it. This all
18:44
Speaker 2: filters into this broader conversation in my opinion.
18:47
Speaker 3: Yeah, there are some other things that don't. I know
18:49
Speaker 3: that the President tweeted on a hint or I don't
18:52
Speaker 3: know what platform he used, but he hinted at a
18:54
Speaker 3: deal with TikTok that's going to be announced sooner than later.
18:58
Speaker 3: But quite honestly, the main two things that matter right
19:03
Speaker 3: now between the United States and China are semiconductors and tariffs,
19:08
Speaker 3: and the two are interest and rarers. I'll put that
19:11
Speaker 3: in the conversation as well. Yeah, yeah, three, yeah, yeah.
19:13
Speaker 3: If they want to really turn the screws, then rres
19:16
Speaker 3: matter quite a bit. And so we can talk about
19:19
Speaker 3: distractions like TikTok, but it doesn't matter. What matters are
19:23
Speaker 3: those three and will estate visit have any effect on them?
19:27
Speaker 3: Quick break here when we come back, it's Wall Street.
19:30
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Speaker 1: Act TFE show. Breaking business news is always first right
19:47
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Speaker 1: Wall Street watch a complete look at what's moving markets
19:55
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20:00
Speaker 4: Markets are starting a FED meeting week in positive territory
20:03
Speaker 4: as investors eagerly await the Central banks likely quarter point
20:09
Speaker 4: interest rate cut at the conclusion of their meeting on Wednesday.
20:14
Speaker 4: Right now, the Dow is up a quarter percent, or
20:18
Speaker 4: one hundred and eighteen points higher, SMP five hundred is
20:21
Speaker 4: up about half a percent, or thirty two points higher,
20:24
Speaker 4: Nasdaq up seven tenths of one percent, Russell two thousands
20:27
Speaker 4: up two tenths of one percent, ten year treasure Reel
20:30
Speaker 4: down one basis point at four point zero four seven percent,
20:35
Speaker 4: and crude oil up about one percent. Hire today training
20:38
Speaker 4: at sixty three dollars and forty one cents a barrel,
20:41
Speaker 4: According to Treasury Secretary Scott Bessint, the US in China
20:45
Speaker 4: have reached a framework deal for social media platform TikTok.
20:50
Speaker 4: President Trump and Chinese President Jijiping will meet on Friday
20:54
Speaker 4: to discuss their terms. Meanwhile, a new filing with the
20:57
Speaker 4: SEC revealed Tesla's CEO, Elon Musk, purchased about one billion
21:02
Speaker 4: dollars in the ev makers stock, marking his first purchase
21:06
Speaker 4: of the stock in the open market since February of
21:10
Speaker 4: twenty twenty. Tesla stock is jumping over five percent higher
21:13
Speaker 4: on that news. Another matrix tech name in Nvidia, making
21:17
Speaker 4: headlines after China's antitrust regulator said a preliminary investigation showed
21:23
Speaker 4: the chip maker violated the country's anti monopoly law and
21:27
Speaker 4: it would conduct a further investigation, and Nvidia's stock is
21:31
Speaker 4: down over one percent. Separately, China said it launched probes
21:35
Speaker 4: into certain US analog chip imports. Shares in Texas Instruments
21:39
Speaker 4: down two percent on that news. However, analog devices and
21:42
Speaker 4: on semiconductor are seeing modest gains at the moment. The
21:46
Speaker 4: Wall Street Journal report of that agriculture company Corteva is
21:49
Speaker 4: moulding a breakup that would separate its seed and pesticide
21:53
Speaker 4: businesses into two separate companies. That stock is down about
21:58
Speaker 4: four percent in with its four four percent gained today.
22:02
Speaker 4: Alphabet officially surpassed three trillion dollars in marketcap for the
22:06
Speaker 4: first time in its history. I'm Tucker Silvan. That is
22:10
Speaker 4: Wall Street Watch.
22:12
Speaker 2: Mike piece from the Wall Street Journal headline is wharpool
22:16
Speaker 2: tells US authorities its rivals could be evading tariffs. And
22:22
Speaker 2: this is interesting to me more because I think it's
22:25
Speaker 2: a bad look for Wharpool than any anything else. So
22:29
Speaker 2: the appliance maker Warpool is stirring up a new trade dispute,
22:32
Speaker 2: telling the Trump administration that its overseas competitors could be
22:35
Speaker 2: evading hefty tariff bills by undervaluing their imports.
22:38
Speaker 3: Okay.
22:39
Speaker 2: A Wall Street Journal review of the data shows that
22:42
Speaker 2: garbage disposals from China dropped from an average of twenty
22:44
Speaker 2: one dollars over the first five months of the year
22:46
Speaker 2: to nine dollars in June and then less to eight
22:49
Speaker 2: in July. Gas ranges from Thailand more than half to
22:52
Speaker 2: one seventy five. The one that seems really crazy, washing
22:55
Speaker 2: machines from South Korea sank from eight hundred and thirty
22:57
Speaker 2: eight dollars to seventy three dollars. Okay, So let's let's
23:02
Speaker 2: look at this, and I'm gonna look at this through
23:04
Speaker 2: the context of people I know that run businesses where
23:09
Speaker 2: they import a lot of stuff from Asia, and in
23:14
Speaker 2: the cases that I know where I've got you know,
23:16
Speaker 2: three four buddies who work for companies that do this,
23:19
Speaker 2: and this is like directly related to you know, how
23:21
Speaker 2: they run their business. In every single instance they said that, Hey,
23:30
Speaker 2: whether we were looking to you know, replace goods that
23:33
Speaker 2: were made in China with ones in Vietnam, or whether
23:35
Speaker 2: we were sticking with, you know, a Chinese supplier, in
23:38
Speaker 2: every single instance they said their supplier came back with
23:43
Speaker 2: a better offer on price than where they originally were
23:46
Speaker 2: because the supplier agreed to help them eat some of
23:49
Speaker 2: the cost of the tariff in doing so. Yep, So
23:52
Speaker 2: one would expect that if companies are doing that in
23:54
Speaker 2: large numbers, import prices come down. Import prices would come down. Yes,
24:00
Speaker 2: are they necessarily coming down this much? I have absolutely
24:04
Speaker 2: no idea. The one that seems kind of insane to
24:07
Speaker 2: me is the front load washers from South Korea. How
24:09
Speaker 2: they you know, fell over ninety percent.
24:11
Speaker 3: Yeah, seems unlikely. Seems a little bit unlikely.
24:14
Speaker 2: But could I see, you know, as part of you know,
24:17
Speaker 2: a Chinese company trying to figure out, Hey, we got
24:21
Speaker 2: to keep these garbage disposals flowing to the United States.
24:24
Speaker 2: Are we gonna cut our price by a half and
24:26
Speaker 2: the state's gonna subsidize us to make.
24:28
Speaker 3: Up the difference.
24:29
Speaker 2: Possibly, Yeah, I could see that as absolutely being possible
24:32
Speaker 2: and not fraud, but just China once again figuring out
24:36
Speaker 2: how to dump goods to maintain market share while not actually,
24:40
Speaker 2: you know, working by market principles.
24:41
Speaker 3: I could see that absolutely being the case. Remember, too,
24:44
Speaker 3: if you make garbage disposals, you might not only make
24:46
Speaker 3: garbage disposals. So you might say, Okay, we source these
24:50
Speaker 3: components from other countries, So we're going to take a
24:52
Speaker 3: big loss on these garbage disposals because they're all from China,
24:55
Speaker 3: Whereas we can cut prices only ten percent on this
24:58
Speaker 3: other competing product and therefore or still maintain the contract
25:02
Speaker 3: with XYZ company to supply all of their different appliances
25:07
Speaker 3: that go into a home. So it's probably both. But
25:09
Speaker 3: why do you think it's such a bad look for
25:11
Speaker 3: Whirlpool other than they clearly can't compete with these companies
25:15
Speaker 3: and haven't been able to for a little while.
25:16
Speaker 2: Now, Well, here's the way that I look at it. So, look,
25:20
Speaker 2: there's definitely some trade fraud that happens. I have no
25:23
Speaker 2: doubt about it, of course, and it could take any
25:26
Speaker 2: number of different forms where I guess I'm going on
25:30
Speaker 2: this is look that there's no company in the world
25:34
Speaker 2: that is one hundred percent correct about how they do everything,
25:37
Speaker 2: even if they're not intentionally doing something wrong. Every company
25:41
Speaker 2: has something where it might be a little oversight or
25:43
Speaker 2: this and that or whatever. All I know is that
25:46
Speaker 2: wor Warlpool's competitors, you better believe are gonna be on
25:49
Speaker 2: the horn to US regulators saying, hey, check out what
25:52
Speaker 2: Warlpool does. Is you know, how's Warlpool treating their workers
25:55
Speaker 2: at this facility or how you know, like they're going
25:57
Speaker 2: to be trying to bring up something. And so that's
26:01
Speaker 2: why I think that this is potentially like it doesn't
26:04
Speaker 2: solve the problem actually if there is one, and it
26:08
Speaker 2: potentially puts Whirlpool, you know, with other companies saying, hey,
26:13
Speaker 2: who are you to like call us out for problems
26:16
Speaker 2: like go manage your own backyard.
26:18
Speaker 3: So Whirlpool does produce about eighty percent of their US
26:21
Speaker 3: bound appliances domestically. They are the last remaining one who
26:26
Speaker 3: does so as far, the last large one that does
26:29
Speaker 3: sure Ge is now owned by Chinese Base. I don't
26:32
Speaker 3: know how to pronounce that company. Actually I see their
26:34
Speaker 3: applians at all over air. I R h A I
26:37
Speaker 3: E R No. I'm not really sure how you pronounce it.
26:40
Speaker 3: But Samsung and Lerg obviously make up like all of
26:43
Speaker 3: the washer dryer market and based in Korea, and so Whirlpool,
26:46
Speaker 3: which also owns a few other brands, is the last major.
26:51
Speaker 3: I think they owned Maytag and a couple others. There's
26:54
Speaker 3: not a whole lot of domestic producers of this type
26:57
Speaker 3: of equipment, and so there I suppose trying to defend
27:03
Speaker 3: their business. But quite honestly, if you still can't compete
27:05
Speaker 3: with these tariffs in places, regardless of how they're cheating them, yeah,
27:10
Speaker 3: it's not a great look.
27:13
Speaker 2: Look, Ge Appliances came out and said we value competition
27:15
Speaker 2: to believe it's good for us consumers. But this attack
27:17
Speaker 2: from Wharpool looks like frustration over their own lagging performance.
27:22
Speaker 2: It does kind of feel a little sour crapy.
27:24
Speaker 3: Yeah, it does. Take a quick break. When we come back,
27:28
Speaker 3: we're talking gold right after this.
27:31
Speaker 1: Text does six one seven three six two one three
27:34
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28:07
Speaker 3: All right, let's talk a little bit about gold. I
28:11
Speaker 3: love gold, Thank you gold member.
28:15
Speaker 2: It's yellow, it's heavy, and it's now having its best
28:20
Speaker 2: rally since nineteen seventy nine in a single year.
28:23
Speaker 3: Yeah, sure, is up thirty nine percent, out paces anything
28:28
Speaker 3: we saw during COVID during the Great Recession. Typically when
28:33
Speaker 3: I hear people talk about gold, and I think sometimes
28:37
Speaker 3: it's not always properly attributed, But typically when I hear
28:41
Speaker 3: about people investing in gold, it's as an inflation hedge
28:46
Speaker 3: or as a catastrophe hedge. Is that fair when you
28:50
Speaker 3: talk to people about their investments in the shiny yellow metal?
28:54
Speaker 3: I think so? So, what about this year is contributing
28:58
Speaker 3: to a thirty nine percent rally? Inflation, while elevated as
29:02
Speaker 3: we talked about, compared to where I think we were
29:04
Speaker 3: comfortable in the twentyands and twenty tens in mid nineties,
29:09
Speaker 3: is not too much of an issue. I think you
29:12
Speaker 3: could talk about increase global tensions in this day and age,
29:16
Speaker 3: given that we are, you know, still navigating through a
29:20
Speaker 3: pretty complex trade war. But what what should we attribute
29:23
Speaker 3: this rally to.
29:24
Speaker 2: So I think that when when we look at this,
29:28
Speaker 2: it's important to understand whether this is something that is
29:35
Speaker 2: unique to the US or something that's happening globally. Here
29:40
Speaker 2: in the United States. Whenever we talk about the price
29:42
Speaker 2: of gold, we talk about it in dollar terms.
29:43
Speaker 3: YEP.
29:44
Speaker 2: So if the price of gold were rising in dollar
29:48
Speaker 2: terms but falling elsewhere in yen terms, or in rupee terms,
29:54
Speaker 2: or in euro terms, you'd say, Okay, this is a
29:56
Speaker 2: story about the US dollar and it's weakness and the
30:00
Speaker 2: lack of trust in the US.
30:01
Speaker 3: Dollar, and the dollar has fallen this year.
30:04
Speaker 2: However, here's what I have to say about that. In
30:08
Speaker 2: gold in terms of Australian dollar terms, has gone from
30:11
Speaker 2: around forty two hundred up to fifty four hundred this year.
30:14
Speaker 2: In euros it has gone from around twenty five hundred
30:18
Speaker 2: to three thousand this year. In yen it's gone from
30:21
Speaker 2: around four hundred thousand to five hundred and twenty five thousand.
30:23
Speaker 2: In rupees it's gone from around two hundred and twenty
30:26
Speaker 2: thousand to two hundred and ninety thousand. In yuan it's
30:29
Speaker 2: gone from about nineteen thousand to twenty five thousand. The
30:34
Speaker 2: point that I make is when you look at all
30:35
Speaker 2: of the major worldwide currencies, gold has gone up in
30:40
Speaker 2: value against each of them. Yes, so it's not something
30:45
Speaker 2: where people are specifically looking at the United States and
30:47
Speaker 2: saying bad by gold.
30:51
Speaker 3: It is very much.
30:53
Speaker 2: Hey, there's a demand for this hard currency because I
31:00
Speaker 2: I think that when we talk about you know, you
31:01
Speaker 2: mentioned it as like catastrophe insurance. I think the three
31:06
Speaker 2: things that I see right now out there costco. Sorry,
31:12
Speaker 2: the three things that I see out there right now
31:14
Speaker 2: that could potentially relate to this. Number One, countries around
31:17
Speaker 2: the world don't care about their deficits. You look at
31:21
Speaker 2: what the EU has announced on this stuff, with China's
31:23
Speaker 2: announced on this, with the US IS and everyone's basically printed, baby,
31:28
Speaker 2: we'll figure it out. So that's number one. Number two,
31:32
Speaker 2: You've got some real geopolitical concerns with some hot shooting
31:40
Speaker 2: wars this year, whether you're talking about the continuation of
31:43
Speaker 2: Russia Ukraine, whether you're talking about the India Pakistan stuff
31:47
Speaker 2: that flared up for a little bit, whether you're talking
31:48
Speaker 2: about Israel Iran. There's some real concern on that side
31:53
Speaker 2: of things. And finally, kind of in a related note,
31:57
Speaker 2: there's just this rush out there for natural resources of
31:59
Speaker 2: all types right now. True, Like it's just you can
32:04
Speaker 2: feel it, like just as this constant drumbeat of what's
32:08
Speaker 2: going on, whether it's rare earth, whether it is uranium,
32:12
Speaker 2: whatever it is out there, it's this drum beat that's
32:15
Speaker 2: just going. And so I think these three things are
32:18
Speaker 2: kind of feeding into gold getting bid up across all currencies.
32:23
Speaker 3: And it's you know, if.
32:24
Speaker 2: Someone tries to be like, well, this is the US
32:26
Speaker 2: because of tariff policy, No, no, because.
32:29
Speaker 3: If it were the US because of tariff policy.
32:31
Speaker 2: Gold wouldn't be going up in euro terms or yen
32:33
Speaker 2: terms and stuff like that in the same way.
32:35
Speaker 3: Yeah, it can't just be that. It can be a
32:37
Speaker 3: contributing factor. And sure, I think certainly there's more uncertainty.
32:41
Speaker 3: Certainly there's more uncertainty. I think there's more uncertainty about
32:44
Speaker 3: the US's strategic relationships with a bunch of countries. Like
32:48
Speaker 3: I mean, two years ago, I can't couldn't have imagined
32:52
Speaker 3: the tensions between the US, Canada and Mexico, the US
32:55
Speaker 3: and India. Those relationships look a lot different than they
32:59
Speaker 3: did just a few years ago. And so I think
33:01
Speaker 3: that's a contributing factor, But you're right, were it all
33:04
Speaker 3: that you would see the dollar weakening and that being
33:07
Speaker 3: the only thing correct. Folks want to talk to you
33:10
Speaker 3: about the upcoming live broadcasts of this show along with
33:14
Speaker 3: the seminars from Armstrong Advisor Group. Chuck's gonna be there,
33:16
Speaker 3: I'm gonna be there. We're doing two of these events,
33:19
Speaker 3: one down at the Margaritaville Resort on Cape cod that's
33:21
Speaker 3: October ninth. Following that, we're doing the showcase super Lux
33:25
Speaker 3: and Chestnut Hill on October sixteenth. If you have not
33:28
Speaker 3: yet reserved your seat, please do so now. The numbers
33:31
Speaker 3: eight hundred three nine three four zero zero one. If
33:34
Speaker 3: you've never been to one of these types of events,
33:36
Speaker 3: or even if you have, you'll get to sit down
33:39
Speaker 3: chat with us. We do the entire show and chat
33:42
Speaker 3: with folks in between breaks about you know, what it
33:44
Speaker 3: is we're covering and what it might mean, but if
33:46
Speaker 3: you have questions about what twenty twenty five, the rest
33:49
Speaker 3: of twenty twenty five and twenty twenty six might mean
33:51
Speaker 3: for your financial scenario between inflation. While we were just
33:55
Speaker 3: talking about surrounding gold and really the main big topics
34:00
Speaker 3: that are dominating the conversation this year between AI trade
34:06
Speaker 3: and the US position in the world going forward. Please
34:10
Speaker 3: tune in and book your seat at one of these
34:12
Speaker 3: two events. Again the details here. We are going to
34:16
Speaker 3: be doing this first at the Margaritaville Resort down on
34:19
Speaker 3: Cape Cod It's on October ninth. Following that showcase super
34:22
Speaker 3: Lux and Chestnut Hill on October sixteenth. Join us for launch,
34:26
Speaker 3: catch a broadcast of the show, and then we'll be
34:28
Speaker 3: talking to you after the fact. But space is going
34:32
Speaker 3: to be limited here. That number, once again is eight
34:34
Speaker 3: hundred three nine three for zero zero one. You can
34:38
Speaker 3: reserve your spot too by going to Armstrong Advisory dot
34:41
Speaker 3: com slash events, but once more eight hundred three nine
34:45
Speaker 3: three four zero zero one.
34:47
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
34:50
Speaker 1: registered investment advisor. Nothing in the ad or in any
34:52
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
34:55
Speaker 1: your own financial tax into state planning advisors before making
34:58
Speaker 1: any investment decisions. Strong make contact you to offer investment
35:01
Speaker 1: advisory services.
35:04
Speaker 2: New York Times piece they had money problems, they turned
35:06
Speaker 2: to chat GPT for solutions.
35:08
Speaker 3: Do they make money off chat GPT? No, they chat
35:14
Speaker 3: GPT had some interesting suggestions as to how they might
35:18
Speaker 3: clean up their money problems, though some of them very reasonable,
35:21
Speaker 3: others awfully strange.
35:23
Speaker 2: It's another thing where, hey, you can probably be directionally
35:29
Speaker 2: accurate in most cases with the advice that you get,
35:34
Speaker 2: but if you're not a subject matter expert, you won't
35:37
Speaker 2: know where it's telling you something that's wrong with a
35:39
Speaker 2: whole lot of confidence behind it.
35:42
Speaker 3: So I'm really I honed in on one story here
35:46
Speaker 3: with a Jennifer Allen from Clayton, Delaware, who had racked
35:50
Speaker 3: up some twenty three thousand dollars worth of credit card
35:54
Speaker 3: debt and decided to make a thirty day challenge to
35:57
Speaker 3: ask GPT how she could improve of her situation every day.
36:03
Speaker 3: One of the I guess, presumably this is a suggestion
36:06
Speaker 3: from CHATCHPT, was that she donate plasma for eighty dollars.
36:11
Speaker 3: That's good. She recovered seven hundred dollars from her state's
36:14
Speaker 3: uncleaned property registry. Fantastic. The one that I had a
36:19
Speaker 3: tough time figuring out was who suggested she sell a
36:23
Speaker 3: fresh watermelon with her debt total tattooed on it, and
36:27
Speaker 3: then subsequently who paid fifty one dollars for said watermelon.
36:31
Speaker 3: How do you tattoo a watermelon? I would assume the
36:34
Speaker 3: same way you tattoo a person.
36:36
Speaker 2: How much do you have to pay the tattoo artists
36:37
Speaker 2: to do it? Was it more than the fifty one
36:39
Speaker 2: dollars she got?
36:40
Speaker 3: You know, she's a realtor, so I assume she doesn't
36:42
Speaker 3: also tattoo people. But maybe maybe it's she already had
36:47
Speaker 3: the supplies, or maybe she just used a marker. I'm
36:50
Speaker 3: not sure, but that sure is inventive. So again, I.
36:55
Speaker 2: Think that, like most things, you can get some good
36:58
Speaker 2: advice from a systems and some that is just not
37:05
Speaker 2: useful and not good. The other thing that I'll say,
37:08
Speaker 2: after using the most recent version of chat GPT for
37:11
Speaker 2: what's it been out for the last month or so.
37:12
Speaker 3: I'm not sure.
37:13
Speaker 2: Yeah, honestly, it's really annoying, Like it just it's after
37:18
Speaker 2: everything that you ask you, it's like, do you want
37:20
Speaker 2: me to help you figure out how to do this
37:22
Speaker 2: and this and this in addition to this? No, I
37:24
Speaker 2: just want you to shut up and answer my questions.
37:26
Speaker 2: Don't talk to her like that. You're gonna you're gonna
37:29
Speaker 2: end up the first one.
37:30
Speaker 3: Killed in the AI.
37:31
Speaker 2: Right, listen, when the robots come for us, and I
37:33
Speaker 2: know they will like, what are you gonna do?
37:36
Speaker 3: You know? Honestly, South Park had a pretty good episode
37:38
Speaker 3: about this. Here is one of the problems with AI
37:41
Speaker 3: bias is that it just wants to give you the
37:43
Speaker 3: answer that you want, yes, and so it's, you know,
37:48
Speaker 3: going to reaffirm everything you say if you ask it
37:51
Speaker 3: for you know, hey, what do you think of this
37:52
Speaker 3: business idea or this plan that I have, or this
37:55
Speaker 3: way of paying off debt. The main thing it's gonna
37:57
Speaker 3: try and do is make you happy, just like social
38:00
Speaker 3: media in a lot of.
38:01
Speaker 2: Ways, just as tell me the positives of tattooing watermelons.
38:04
Speaker 2: It could be a practice medium for artists. It's cost
38:06
Speaker 2: effective and accessible, would be the right. It's a biodegradable canvas.
38:10
Speaker 2: It's a conversation starter.
38:13
Speaker 3: Yeah, no, you're dumb, Chuck. Quick break. A lot more
38:17
Speaker 3: to cover in the second hour of the Financial Exchange.
38:19
Speaker 3: We'll be right back