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Why is Europe afraid of Trump's second term? · The Financial Exchange Show

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This is the Financial Exchange with Mike Armstrong and Paul Lane.
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Speaker 2: Good morning, Welcome back to the Financial Exchange. We've got
1:16
markets broadly in the negative territory this morning, taken a
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bit of a breather over the last week after the
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last week's rallies. The Dow currently off one hundred and
1:24
forty one points a third of a percent, the SMP
1:27
down thirteen or one fifth of a percent, of the
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Nasdaq down twenty points or one tenth of a percent.
1:32
Russell two thousand, those smaller sized names that have seen
1:35
the biggest rally since the Trump win, down three quarters
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of one percent in early trading. You've got the yield
1:42
and the ten year treasury up to four point four percent.
1:45
Price for a barrel of oil here in the United
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States West Texas CREUD sitting at sixty eight dollars per barrel,
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and one area that's been getting a heck of a
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lot of attention since the Trump win, but has been
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you know, moving up since before for that as well.
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Bitcoin down seven tenths of one percent so far in
2:04
trading this morning. In terms of where that was sitting
2:07
prior to the election. You had bitcoin as low as
2:11
about sixty seven thousand dollars per coin prior to the election,
2:15
and seeing a tremendous rally since then. And for those
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scratching their head and looking for some expertise on what's
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been going on in the bitcoin market, I would say
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turn elsewhere, because neither of us are any substantial experts
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in that space. I hesitate to say that I have
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any firmer grasp as to why other than for speculation
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of the price somebody would own a bitcoin today compared
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to five years ago. But clearly there's a few things
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going on here. One, the cryptocurrency markets and exchanges in
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general are very likely to face a friendlier compliance and
2:57
regulatory environment than they did over the last four years.
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These companies have faced numerous lawsuits over the last few years,
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and more than anything else, I think this is an
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industry that is just craving a bit of guidance from
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regulators in terms of what the rules are. The SEC
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has attempted to take a dominant role in regulating the industry.
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They have been very hesitant to allow any sort of
3:22
products into the market. They have on multiple occasions now
3:25
been struck down by judges who have ruled against the
3:28
SEC in this space, and you're likely to have a
3:31
replacement at the top at some points during the Trump administration,
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likely which is going to have a more favorable view
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of the market in general. My main peace on all
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of this would be that the role that cryptocurrency in
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general seems to be playing is a volatility adder to
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a portfolio. We've talked about this over the last few
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months and years. Cryptocurrency in general, bitcoin more specifically has
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been trading very similarly to the tech sector, almost as
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like a leveraged tech sector play, right, Like when the
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NAS that goes up by one, this thing will go
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up by four percent. When it goes down by one,
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it'll it'll likewise go down substantially.
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Speaker 3: It's not one for one.
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Speaker 2: That doesn't happen all the time, but that has been
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a recent trend when it comes to cryptocurrency. And the
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argument that you know, an author from Bloomberg points out
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here is that it's pretty tough to square that investment
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performance with crypto's promise, and in crypto's promise has been, hey,
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we are going to be a safe and secure way
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to make financial transactions. The asset itself will retain its
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value even as governments inflate away their currencies or worse,
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the global economic system collapses. And if that's the place
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and space you're trying to dominate, one, I would expect
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to see more transactions occurring in bitcoin in that case,
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right you would see companies or governments exchanging wealth with cryptocurrency.
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That's not happening. Likewise, you might see just more general
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acceptance of it as a form of currency or a
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store of value. And that's not where it's playing either,
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And so I think there still remain very large questions
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as to practically speaking, what space does this occupy other
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than a tool for speculation.
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Speaker 4: I'm in agree with you. That's the first thing I
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come back to when I'm forced to make a comment
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on bitcoin, because, like you alluded to earlier, it is
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an area where I don't profess to have profound knowledge
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in the space. But I always circle back to the
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idea of its volatility that for those of you out
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there listeners who follow the market on a daily basis,
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I think many can agree that it can be volatile
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from time to time. In twenty twenty two, it was
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down eighteen percent, and a lot of people can get
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quite concerned when they see the value of fluctuation of
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their holdings. According to a sharp piece done in August,
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bitcoin is about five times more volatile than the S
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and P five hundred. So think about that, five times
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more volatile the S and P five hundred. So if
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you're adding it to your portfolio or your overall net worth,
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just it's something to keep in mind that this thing is,
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you know, close to five times more volatile than that
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of the overall market that we fall on a daily basis.
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And then there's all the other points you made as
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to what is its true use case and its value.
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It's something that has surged significantly because the results of
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the election, and I would agree lesser legislation going forward.
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But other than that, to me, it's just, hey, keep
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in mind if you're investing in it, it's really volatile.
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Speaker 2: And that's okay, yeah, right, Like it's okay to want
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to own things that are volatile. They can play a
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role in a portfolio. What again, what makes crypto in
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general unique right now is that there are other assets
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that fall into a similar category, right like gold is
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one of them, where hey, clearly a store of value,
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clearly more use cases than crypto.
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Speaker 3: But you know, that's not the main basis for where
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it trades.
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Speaker 2: The main basis for where it trades is that people
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like to speculate on the price of it and drive
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it up and down crypto. It's even a step further, right,
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there is no meaningful trade occurring in cryptocurrency. There are
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no countries other than do you remember which country accepted
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it as its formal currency and it was a complete
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and utter disaster. I was going to say Ecuador as well,
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but I don't think it was Ecuador, but nonetheless, it
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was a Latin American country that accepted it.
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Speaker 3: Yes, yeah, yeah.
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Speaker 2: There are no actual, you know, developed countries that have
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an economy that are accepting it as a form of
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payment in one way.
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Speaker 3: Shape or form.
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Speaker 2: And I don't think it's done a particularly job good
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job of showing that, hey, it's a good store of value.
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Go take a look at its performance. For instance, when
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we were talking about bank failure and other moments of
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seeming catastrophe, it has depreciated along with the overall stock market,
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and so look reaching all time highs. I don't confess
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to be any sort of expert on it, and did
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not have any you know foresight or forethought that it
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was going to appreciate to the extent it has. But
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big contributor to the Don Troup campaign again has been
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you know, uh, crypto Bros. If you will, and you know,
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pouring a lot of money into that campaign. And so
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I do expect friendlier policies from a Trump administration towards
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the industry.
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Speaker 3: As a whole.
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Speaker 2: And frankly, it's a mature enough industry at this point
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that a few a little bit more guidance and guidelines
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in terms of rules and regulations around it might be
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a positive things that you don't have the next Sam
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Bankman Freed popping up and running effectively a Ponzi scheme
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or a general fraud on the entire industry. That's that's exactly,
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by the way, what crypto is designed to prevent, right Like,
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the whole idea of a cryptocurrency in general is that, Hey,
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there's this public ledger, and I can see how many
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of these things exist at any point in time in
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the transactions that are occurring in them, and therefore I
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can track it down. And then you had one of
9:11
the biggest frauds and scams in history occurring with SBF
9:16
and FTX.
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Speaker 2: In dramatic over exaggeration of the day that New York
9:45
Times has a peace out today, Europe braces for Trump
9:49
quote worst economic nightmare has come true. So a Trump
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administration will be a bit of a challenge for Europe
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in a number of different perspectives. One, most govern moments
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of their have seen turnover, just like the United States
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has in response to poor economies and inflation. UK has
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flipped from a conservative to a liberal government. You've seen
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Germany just dissolve their own government in face of I
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think it's second year of recession that they are facing
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right now, and they were already facing a number of
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unique challenges. And then you do have this added complexity
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of what will Donald Trump mean for the war between
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Russia and Ukraine? What will Donald Trump mean for action
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in the Middle East that has led to a lot
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more immigration towards Europe over the last few years. And
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how do these policies really play out. Unlike in twenty
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sixteen there was a lot of there is a fair
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bit of uncertainty as to Okay, what was this man
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campaigning on versus what will actually be implemented. Today it's
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fairly clear what he wants to do and has a
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four year track record of what was done. And so
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for Europe again, I think there are some unique challenges.
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But on the other hand, if you can again I
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don't know which direction the Trump administration plans on going here,
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but you've already been taking steps to increase your defense
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spending and get kind of more in line with NATO
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targets when it comes to defense spending. If you can
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shore that up and at the same time present a
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united front against China, which most of Europe has been
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attempting to do over the last few years, I actually
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think a lot of our interests are ultimately aligned here
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between the United States and Europe, as they have been
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for decades past. But again, you do have an administration
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coming in here that will undoubtedly be less friendly and
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more demanding of that relationship with major countries in Europe,
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largely Germany and Germany. France and the UK are the
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ones that matter.
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Speaker 4: Germy is certainly in a difficult position, as you mentioned,
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heading into a second year of a recession. They've been
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mentioning that they're going to close some Volkswagen plants and
11:55
layoff employees there. Just the economic conditions in Germany aren't
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particularly strong at the moment, and they find themselves sort
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of in the middle between taking a side between the
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US and China.
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Speaker 2: And some of the evidence there that the German government
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last month vi to voted against the EU's plan to
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impose tariffs which we're going to be as high as
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forty five percent on evs coming from China. And the
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real reason there for anyone that doesn't have this context,
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Germany and China are massive trade partners. Germany has made
12:25
big inroads in terms of exporting their own vehicles to China.
12:28
That has fallen off a little bit recently, but it
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has been a massive investment both directions in terms of
12:35
infrastructure and technology in both the German and Chinese economies.
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And I'm sure they're concerned about.
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Speaker 4: This certainly, but this idea that it's the worst economic
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nightmares come true. As you mentioned before, a very large exaggeration.
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This is on the margins policy conjecture that we're talking
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about here that could potentially be negative, but I would
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not say I would go as far as a nightmare
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coming true.
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Speaker 2: The other one that's been written and asked quite a
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bit about that I think might be slightly over exaggerated
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here would be the relationship between j Powell and Donald Trump.
13:16
So the reason that this has come so much into
13:18
focus is not because Jerome Powell has been taking the
13:21
stage saying that he's ready to go duke it out
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with Donald Trump and the Octagon. It's not because Donald
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Trump has publicly stated since being elected that he wants
13:31
to fire Jerome Powell, but rather, on Thursday of last week,
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we had what I would describe as the least paid
13:38
attention to FED meeting of the year, where Jerome Powell
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was asked on two separate occasions about largely his role
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within the Federal Reserve and whether or not he will
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continue to lead the FED in in spite of a
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president who seems less than enthusiastic about him doing so.
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We have some evidence going to this back in twenty sixteen.
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Donald Trump appointed Jay Powell back in sixteen or seventeen,
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I don't actually recall, but it pointed to him to
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his term and his term will run out in twenty
14:12
twenty six and was asked on two separate occasions, hey,
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if Donald Trump asks you to step down, will you
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and do you believe Donald Trump can fire you? And
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it was a pretty resounding no from Jay Powell. And
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he again, in my view, is facing this pressure. And
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while I don't know that he substantially cares, you know,
14:33
as much about his own personal legacy, I think he
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cares very much about the Fed's independence and its legacy
14:40
to be able to resist political pressure.
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Speaker 4: It's important in you know, January twenty twenty six, as
14:45
you mentioned, is when his term is set to expire.
14:48
Any all indications that he'll continue to serve out that term.
14:53
But its independence has been something that has been to me.
14:57
It's a critical factor as to how they operate to
15:00
rate themselves from political influence, and Chairman Jerome Powell at
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this point in time has a very strong standing, I mean,
15:07
outside of Trump's views on him. From an overall market perspective,
15:13
they well respect they've navigated this quite well. I mean
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it's really hard. You could criticize when they started cutting
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rates and some of the bond purchasing perhaps lingering on
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for too long and twenty twenty two, But over the
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last twelve months, and we've talked about this on the
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show before, Mike, they've done a really good job getting
15:29
inflation to a reasonable level and not inflicting economic pain.
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The jury still remains out, but overall they've done a
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relatively strong job. So to me, it makes the most
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sense to finish out the term. I would find it
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unlikely he'd want to serve. Are you limited in the
15:45
federal Reserve to a certain amount of terms or.
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Speaker 2: I don't know, but I think he's spoken about the
15:51
fact that, hey, come twenty twice.
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Speaker 3: Is it to me that just.
15:54
Speaker 4: Makes the most sense to part ways at that point.
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Any idea of doing it sooner than that, or stepping
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down prior to that, to me, would cause more harm
16:04
than good.
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Speaker 2: Yeah, I think you could cause some volatility in rates
16:08
and volatility inflation should he be forced out early. That said,
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I think he makes the perfect scapegoat for Donald Trump
16:14
should things not go his way in the first year
16:16
of the presidency. Right if you see either inflation taking
16:19
off or growth getting hurt in twenty twenty five, j
16:24
Owl's right there. The easy guy to you line up
16:27
and say this is your fault. You're supposed to control inflation,
16:30
or this is your fault. You're keeping interest rates too high.
16:32
We need them lower. And you know it's going to
16:36
be I think a relatively successful pressure strategy. I don't
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think that Jay Powell is going to bend to it,
16:42
because if you're him, what do you carry. You're out
16:44
of there in twenty twenty six, and this is your legacy.
16:46
You're going to stick to your guns on it. But
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it does come at again an intriguing time for the
16:52
FED as well. So we had last two meetings to recap.
16:56
They've cut rates by a combined seventy five basis points
17:00
since September's meeting. There's another meeting that's going to occur
17:03
on December eighteenth. Right now, the Fed's target interest rate
17:07
is four and a half to four seven five. They
17:09
always target this, you know, quarter percent range. Right now,
17:14
bets are on that they're going to cut by another
17:17
quarter of a percent, but it's not substantially.
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Speaker 3: You've got you.
17:20
Speaker 2: Know, two thirds likelihood of a quarter cut, one third
17:23
likelihood that rates stay exactly where they are here, and
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when we get out to March, there's even less certainty
17:28
about all this. Generally an insinuation that rates will be lower,
17:32
but not substantially. And so the other piece about all
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this is, you know, Donald Trump was pretty aggressive on
17:40
the campaign trail of saying, hey, this is political. They're
17:42
cutting rates to favor the Biden administration. It's going to
17:45
likely coincide with a slow down in that rate cutting
17:48
path on the Fed. Based on the data that we
17:50
have right now, right like, based on where GDP is,
17:53
where the labor market is, where inflation is, come February
17:57
March timeframe, it might make sense for the Fed to, yeah,
18:00
we're not cutting anymore. And that's going to just add
18:03
fuel to the fire here of this conflict between the
18:06
President and Jerome Powell.
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Speaker 4: Could get contentious.
18:09
Speaker 2: Yeah, let's take a quick break.
18:19
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18:40
Speaker 2: CNBC reporting the credit card debt among retirees is jumping.
18:44
The share of retirees with credit card debt has risen, quote,
18:48
substantially since twenty twenty two. Come on, that's not helpful.
18:50
What does substantially mean like three percent or is it big?
18:54
In any case, credit card debt among retirees has jumped
18:58
since twenty twenty two. About sixty eight percent of retirees
19:01
had outstanding credit card debt in twenty twenty four. That's
19:04
up from forty percent in twenty twenty two and forty
19:07
three percent in twenty twenty. This tells me one thing.
19:11
Inflation has been rough, and you know when you get
19:14
people responding to surveys about how the economy sucks, this
19:17
is probably what they're talking about here is Hey, I
19:20
had no credit card debt prior to the pandemic, and
19:24
things have broken in a way where I've needed to
19:26
add credit card debt over the last few years. What
19:29
is alarming is that this is occurring again. The focus
19:32
group that they looked at was retirees. Folks that are
19:35
on a fixed income and don't have the ability to
19:38
go get that extra Well, I guess you have the
19:39
ability but oftentimes not the willingness to go get that
19:42
other job, to go pay this stuff down and be
19:45
done with it. I guess I have two questions for you, Paul.
19:50
One would be have you seen this? And then two.
19:54
One thing that I have noticed among while working with
19:57
clients of mine and just working with folks in general,
20:00
is an extreme hesitation to pull money away from investments
20:06
to pay down debt. Yes, and I don't know where
20:10
that comes from, but in many, many cases, it's pure
20:15
stupidity to avoid doing so.
20:18
Speaker 4: I've stumbled across that situation a couple times, where a
20:21
client sits very flush with a lot of cash in
20:23
the bank and then makes me aware that they are
20:26
sitting on a credit card balance of ten or twenty
20:29
grand while they have sufficient funds in the bank to
20:32
cover that debt. And I cannot reiterate enough, how Mike,
20:37
to your point financially stupid, that real decision is you
20:42
are now. Consumers are paying an average twenty three percent
20:45
interest on their balances as of August twenty twenty four,
20:49
up from what was seventeen percent in twenty nineteen, so
20:52
your credit card debt rate is much higher. And the
20:54
point I always make is compare the rates of return
20:57
you're generating from the money sitting in the bank, which, hey,
21:00
you're lucky to get four or five percent if you
21:02
have in high yield savings in a lot of other circumstances,
21:05
if you're sitting at Bank of America, you're getting zero.
21:08
So the delta, the differential between paying Chase or whoever
21:13
you have that credit card debt with twenty three percent
21:15
versus the zero percent you're collecting and the bank, to
21:18
me is it's mind blowing. There should actually never be
21:21
a case to do that. I understand maintaining liquidity, so
21:24
that is first and foremost, but if you have excess savings,
21:27
there's no better way that you could pay off credit
21:31
card debt. No investment professional is going to tell you
21:33
that they can reliably generate twenty three percent every single year,
21:37
or if they do, then they're gonna be next to
21:39
Sam Banking Freed pretty soon in the jail cell if
21:42
they're doing that. So it is just something that I'd
21:45
like to hammer over and over again that you are
21:48
only doing a service to those credit card companies by
21:51
paying them that level of interest.
21:52
Speaker 2: Yeah, and it doesn't just apply to credit cards, right,
21:55
like I've been having the same argument because for years
21:57
homeag Rea lines of credit, we're so cheap. But you know,
22:00
for people that have just kind of ignored them, they've
22:03
you know, suddenly surged to seven eight nine percent. And
22:06
same story, like, you know, can you reliably generate seven
22:09
eight nine percent from a balanced portfolio of stocks and
22:13
bonds this year?
22:14
Speaker 3: Yeah?
22:15
Speaker 2: But you know in other years oftentimes not, And it
22:19
comes down to that same point. The other psychological piece
22:22
to this, though, Paul, that I think definitely exists, is
22:25
when people think about their four h one k or
22:28
any other bucket of investment, they just kind of look
22:30
at it as a bucket, and oh, my bucket grew
22:33
this year. Honestly, for you know, for a fairly defensive investor,
22:37
you might have been up twenty percent this year through
22:39
this year, and so the temptation is to look at
22:42
that and say, well, hey, I am keeping pace with
22:44
my credit card or you know, I don't want to
22:47
tap that out because look how well it's done over
22:49
the last few years.
22:50
Speaker 3: And you're and you're right about that.
22:52
Speaker 2: But that's when it comes to dissecting things a little
22:54
bit because for most people, again for most people they're
22:57
not one hundred percent invested in the stock market unless
22:59
they're quite young and aggressive. And you go take a
23:02
look at those different pieces, right, I mean, yes, the
23:04
stock market has returned more than thirty percent this year,
23:07
the bond market's flat. If you're a balanced, more conservative investor,
23:12
you likely have a lot of money invested in something
23:14
that in a good year might do three or four
23:17
percent per year while you're sitting there paying credit card
23:21
interest at twenty percent or home ec reline interest at
23:24
seven or eight percent. And that's the piece here where
23:28
it comes down to really dissecting and getting into the
23:30
details there. And I know folks have, because I've met them,
23:34
have been hesitant to say, oh yeah, you know, I
23:36
was always told never tap this money, No, don't touch it,
23:39
just wait until this time or that time. But my
23:43
compelling piece would be when you have a bunch of
23:46
debts sitting out there, that time might be now, that
23:50
that time might be now to go and attack that.
23:52
And of course you have to do it in a
23:54
way where you can convince yourself that it's not going
23:56
to just happen again six months from now. And that's
23:59
definitely important piece here. And you know, Hey, you know,
24:02
it doesn't make any sense to pay off your credit
24:04
card debt and then just land in the same spot
24:06
a year from now. You do have to make the
24:08
lifestyle changes too. But my message to folks would be,
24:13
if you're trying to evaluate your mortgage, if you're trying
24:17
to evaluate maybe a car loan you have, or a
24:20
credit card as we've pointed out, and you do have
24:22
investment savings as well, and you're saying yourself, I just
24:25
don't know if I can justify pulling it out and
24:27
paying the taxes, for example, in order to pay this
24:29
stuff off, you need to put a mathematical approach behind it.
24:33
You need to really do the math and figure out
24:35
what will lend you in the better position for the
24:38
long term holding onto that debt and using it as
24:41
a deduction and carrying that mortgage or that line of credit,
24:45
or are you better off long term by just saying, Hey,
24:47
I'm gonna bite the bullet, I'm gonna pay the taxes
24:49
and I'm gonna be done with this debt payments that
24:51
I can truly save for my future. These are the
24:54
types of issues that financial advisors from Armstrong Advisory Group
24:57
get into with their clients almost on a day basis.
25:00
I was literally discussing this exact topic yesterday. If you
25:04
are facing questions like this and don't feel like you're
25:06
getting the answers you need to properly evaluate that decision
25:09
making process, please call the Armstrong Advisory Group phone numbers
25:13
eight hundred three nine three four zero zero one. We
25:16
have clients and customers that we meet with across the country,
25:19
across the globe. We can meet with you in person
25:21
in the New England area. We can talk to you
25:23
over the phone via Zoom, whatever's most convenient for you,
25:25
but get started by calling us at eight hundred three
25:29
nine three four zero zero one.
25:33
Speaker 1: Proceeding was paid for by Armstrong Advisory Group, a registered
25:36
investment advisor. Nothing in the ad or in any Armstrong
25:38
guide a specific financial, legal or tax advice. Consult your
25:41
own financial tax into state planning advisors before making any
25:44
investment decisions. Armstrong may contact you to offer investment advisory services.
25:48
Speaker 2: Stepping away from the bad news and more towards some
25:51
good news in the retirement space, We've got some rule
25:54
changes coming in twenty twenty five that are going to
25:56
make things a more complicated, but be more beneficial for retirees,
26:01
for savers. So let's start to cover these from the
26:04
basics to the complicated. First off, starting in twenty twenty
26:08
five four toh one K employee deferral limits, they're going
26:11
to bump up from twenty three thousand up to twenty
26:13
three thousand, five hundred. Catchup contributions if you're over fifty
26:18
will remain at seventy five hundred dollars, So if you
26:21
are in that fifty plus group, then you can hypothetically
26:24
put up to thirty one thousand dollars in your four
26:26
oh one K. Now here's the complicated, weird stuff.
26:31
Speaker 3: If you are.
26:32
Speaker 2: Sixty, sixty one, sixty two, or sixty three, then you
26:37
have some new benefits for you. You have now a
26:41
higher catchup contribution for that specific age group only those
26:44
four years where you can now contribute an additional eleven thousand,
26:48
two hundred and fifty in twenty twenty five, as opposed
26:51
to the seventy five hundred that you were previously given.
26:55
I have no idea why or how they chose workers
26:58
sixty to sixty three years years old, Why that demographic
27:01
as opposed to any other, I actually don't know yet
27:06
if any four to one K providers are prepared to
27:08
deal with this heavier catchup contribution, just because by the
27:11
way the IRS allows it doesn't mean that the plan
27:14
is going to be prepared to implement that. So that's
27:17
an important consideration and something to ask your four oh
27:19
one K provider before you go through with all this.
27:23
My main takeaway this is not going to change anything
27:26
for anybody other than you know, wealthy savers dramatically. It
27:31
is going to help out financial advisors like you and me, Paul,
27:34
because they've continued to make these things so darn complicated
27:36
that no one can figure it out other than CPAs
27:39
and people that look at it every day. But yeah,
27:42
just one more item to be able to sock a
27:45
little bit more away into that four oh one K.
27:47
Speaker 4: To your point, fourteen percent of employees defer the maximum
27:50
amount into their forum K plans in twenty twenty three,
27:53
according to a Vanguard's twenty twenty four How America Saves
27:57
report based on fifteen hundred plans and five million participants,
28:01
so a real strong sample size there that only fourteen
28:05
percent of the country that is maxing out those levels. There,
28:08
so important tibid to know, but like you said, not
28:11
going to have a wide impact.
28:13
Speaker 2: But you know, if you are, you know, close to
28:16
retirement in that high tax bracket and you know, trying
28:19
to cut down on that tax bill, it can be
28:22
a successful strategy for you.
28:24
Speaker 3: So definitely something to look into.
28:25
Speaker 2: Let's take a quick break here when we come back,
28:28
a little bit of stack Roulette.
28:29
Speaker 3: That's next.
28:31
Speaker 1: Find daily interviews and full shows of the Financial Exchange
28:34
on how are YouTube page. Get cut up on anything
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and everything you might have missed. This is the Financial
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Exchange Radio Network. Text does six one seven, twenty six
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to two one three eight five with your comments and
28:47
questions about today's show. This is the Financial Exchange Radio Network.
28:55
Speaker 6: This segment of the Financial Exchange is brought to you
28:58
apart by the US Virgin Islands Department of Tourism. The
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dot com.
29:32
Speaker 3: Paul, what do you have for us here?
29:33
Speaker 4: For stack Roulette, Iceland is pioneering a shorter workweek. From
29:38
twenty twenty to twenty twenty two, to fifty one percent
29:40
of the workers in the country had accepted the offer
29:43
to work shorter hours, including a four day workweek, for
29:47
the same level of pay in last year.
29:49
Speaker 2: It seems like a rather self interested choice here, Paul.
29:52
I'm interested to hear your conclusion last year.
29:54
Speaker 4: Ice your thoughts, Mike. Last year, Iceland log economic growth
30:00
in most European countries, and its unemployment rate was one
30:04
of the lowest in Europe. Apparently, according to a researcher
30:08
from all the and I quote, this study shows a
30:11
real success story. Shorter working hours have become widespread in
30:14
Iceland and the economy is strong across a number of indicators.
30:19
Speaker 3: This is useless, not the study itself.
30:22
Speaker 2: They should do the study, but this is not a
30:24
useful exercise in measuring things. What else contributed to Iceland's
30:29
outsized economic growth. I'm guessing the only thing that was
30:33
different about Iceland was not that they went to a
30:36
four day work week as opposed to a five day
30:38
work week.
30:39
Speaker 3: I'm interested in the results.
30:41
Speaker 2: I'm interested to see how productive the country was in general,
30:44
But just saying hey, we grew at five percent and
30:47
that was the second fastest growth rate among rich European
30:50
countries does not really tell me anything in terms of
30:53
whether or not this was successful.
30:55
Speaker 4: They are set to slow down economic growth in twenty
30:58
twenty four and the following year, so to give the
31:01
full context the story, as you're mentioning, they're seeing softening
31:05
domestic demand and accelerating growth and tourism spending. So the
31:09
five percent growth that I experienced in twenty twenty three
31:12
likely not to be the case for twenty four and
31:16
twenty five in terms of economic growth. No, it's something
31:19
that I think in London they've done and they've done
31:22
this as well, So it's just always an interesting one
31:25
to kick around, but not something that is all that
31:28
practical in my mind.
31:30
Speaker 3: I think, well, there's a few things that have me
31:32
hesitate about. One.
31:33
Speaker 2: If I'm in this study, I'm working my ass off
31:36
in those four days, because you know what, I want
31:38
these results to look fantastic. Right, If I'm in this study,
31:42
I am going to be putting in fifteen hours a
31:44
day for four days a week in order for productivity
31:47
look great, because I want this thing locked in forever.
31:49
And so I would actually expect that, you know, those
31:52
who are participating in a four day work week study
31:55
are seeing a little bit of boost to not only
31:57
like the measurable things like productivity and output, but how
32:01
you respond to surveys about quality of life and things
32:03
like that. You're going to get this immediate boost from
32:06
four day work week. Whether or not you will see
32:09
any sort of long term drop in productivity, I think
32:13
is another question. Right. You can imagine, for instance, Paul,
32:16
how a generation from now, when your kids enter the
32:20
labor force, if it has been a four day work
32:22
week their entire time growing up, then it's not going
32:25
to be the same boost to them because it's nothing.
32:27
It's not something extra, right, it's just what you've been
32:29
raised on. Likewise, you know, we didn't grow up in
32:32
the eighteen hundred, so we didn't know what it was
32:34
like working a six day work week, and only haven't
32:36
off the Sabbath. It's a different frame of reference and
32:40
frame of mind. Look, I think that what's I think
32:45
crucial and important to me would be if companies want
32:50
to attract the best talent, then one of the things
32:53
they need to do is look at their work arrangements
32:56
and make them flexible. And we've done that pretty substantially
33:00
over the last few years. Nobody in a white collar
33:03
job works exactly the same way they did in twenty nineteen.
33:06
Almost all of them have a much more different flexible
33:08
arrangement than they had previously, and I think that's likely
33:12
here to stay, whether or not certain industries are going
33:16
to move to a four day work week. I just
33:18
have a tough time buying it. I don't see how
33:21
it's going to work long term when I just the
33:24
number of business that I can think of that could
33:26
turn to their customers and say, hey, we know you're
33:28
working on Fridays, but we're not, and we want you
33:31
to still pay us the same amount. It's tough cell, tough, tough,
33:35
tough cell. Here's another tough sell red Lobster. The new
33:39
CEO is in there trying to drag this thing out
33:41
of bankruptcy. And make sure they don't have to close
33:43
all their stores. And here's what they're betting on, a
33:47
millennial makeover. I've got some bad news for the new CEO,
33:52
who is a millennial, is thirty five years old. His
33:55
name is de Mola Adam Malikan. I wasn't gonna go
33:58
anywhere near mo Lekin Adam Alekn.
34:02
Speaker 6: I think that's a sure that sounds good.
34:04
Speaker 2: Uh, millennials aren't the cool generation anymore.
34:08
Speaker 3: That's what I did.
34:08
Speaker 4: Do a double take on the headline.
34:10
Speaker 3: It's millennis eight to forty three years old. We haven't
34:12
even heard of the term riz.
34:14
Speaker 2: It's it's not going to be a successful strategy here.
34:18
If you want to appeal to the young hip generation,
34:21
then you got to get away after those like eighteen
34:24
to twenty five year olds to design your restaurant after.
34:27
What are millennials going to bring to the table here
34:30
other than a bunch of screaming kids. That's gonna be
34:32
me If I go to a red lobster as a
34:34
bunch of yelling kids who want to, you know, stick
34:37
their noses on the lobster tank and name every lobster
34:40
in there. That's not the environment that you're looking for
34:42
if you're looking for a hip new restaurant concept.
34:46
Speaker 4: Really interesting to say that you need the millennials. A
34:48
lot of business owners are not really pointing in that direction.
34:52
You're either skewing young or older that we're kind of
34:55
that middle generation where I mean, it depends what you're
34:57
going after. But from the restaurant's perspective.
35:00
Speaker 6: Work millennial, like five o'clock millennial, looking to go out
35:04
with coworkers millennial, but millennial with kids.
35:07
Speaker 3: At least millennials have money, you know.
35:09
Speaker 2: That's that's what you can say about gen Z is like,
35:12
you know, post work millennial having a drink at Red Lobster.
35:15
Speaker 3: Wow, I don't know.
35:17
Speaker 6: I just renamed the restaurant.
35:19
Speaker 2: It's just tough because we don't have any Red Lobsters
35:21
here in New England. I think the closest one that
35:24
we have is like Albany or Syracuse, so it's pretty
35:27
darn far away. But I have just I don't know
35:29
what you can do to turn this around, And because
35:34
you are such a specific brand, I don't know, like
35:38
I would easily select going for a post work drink
35:43
at a TGI Friday's over a Red Lobster. I did
35:48
see some exciting news in the restaurant industry though, and
35:51
I'll try and get the actual reporting on this. I
35:54
saw a report that a ground Round is going to
35:56
open a single Massachusetts restaurant.
35:58
Speaker 3: That's confirmed.
35:59
Speaker 2: Yeah, confirmed, all right, like it, Thank Shrewsbury. I will
36:03
be I'll be first in line on opening day to
36:06
go check out the revisit rather the famous ground Round restaurant.
36:11
Stock's taking a bit of a breather today off of
36:14
rally mode, with the dow off half a percent as
36:17
we close out the show today. We'll be back tomorrow
36:19
with this eight thirty am CPI report, so tune in
36:22
for their latest reading on inflation.
36:24
Speaker 3: Have a great rest of the day, folks,