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Oil Jumps, Mortgage Rates Rebound — Is the Inflation Fight Back On? · The Financial Exchange Show

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1:03
Speaker 1: This is the Financial Exchange with Chuck Zada and Mike Armstrong.
1:11
Speaker 2: Chuck, Mike, and Tucker with you here and as we
1:14
Speaker 2: kick off the week and the month of March, top
1:18
Speaker 2: story is obviously the conflict in the Middle East and
1:22
Speaker 2: the potential impact on markets. Obviously you talk about the
1:27
Speaker 2: markets that people are watching most closely, equities, bonds, currencies,
1:32
Speaker 2: and energy, and clearly what we're seeing here some big
1:35
Speaker 2: moves in oil today, and so that's kind of where
1:39
Speaker 2: we'll start off.
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Speaker 3: Right now.
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Speaker 2: We've got West Texas intermediate up about six and a
1:44
Speaker 2: half percent, Brent crude up seven and a half percent.
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Speaker 2: So again it's not a one to one extrapolation, but
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Speaker 2: as of yesterday, TRIPAA national averageur gas prices closed at
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Speaker 2: two ninety nine and seven tenths. You're probably getting at
1:58
Speaker 2: least into the three ten, three twenty range this week,
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Speaker 2: and obviously we've got the potential for things to move
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Speaker 2: from there. The big things that are going to determine
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Speaker 2: how this conflict impacts financial markets and the economy.
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Speaker 3: As a whole.
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Speaker 2: The duration of it, If it's over tomorrow, then I
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Speaker 2: don't think you have any major impact. The scope of it.
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Speaker 2: Does it stay limited in terms of the geography that
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Speaker 2: it occupies, or does it spill over into.
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Speaker 3: More of the Middle East.
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Speaker 2: Unfortunately, right now, you've at least got Iranian attacks that
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Speaker 2: are targeting basically every one of the Gulf countries at
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Speaker 2: this point. I've seen attacks in Oman, the UAE, Bahrain, Kuwait.
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Speaker 2: I mean like pretty much. You go down the list
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Speaker 2: and you've got, you know, something that's happened there. So
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Speaker 2: the scope of it is you know, expanding somewhat. And
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Speaker 2: the other piece is going to be the magnitude. Hey,
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Speaker 2: I are these you know, kind of one off little
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Speaker 2: thing or do you see you know, a deepening conflict
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Speaker 2: in these regions that are being affected. That's something that
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Speaker 2: we'll have to monitor as well. At this point, there
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Speaker 2: are no ships that are transiting the Strait of Hormuz,
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Speaker 2: not because Iran has you know, actually blockaded or blocked it,
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Speaker 2: but the mere threat of it is enough that insurers
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Speaker 2: have pulled policies and basically won't insure ships carrying billions
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Speaker 2: of dollars worth of.
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Speaker 3: Oil through there.
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Speaker 2: And so those ships the companies that operate them are saying, gee,
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Speaker 2: it's probably bad business for us to operate uninsured in
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Speaker 2: a place where you know, we could potentially be sunk
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Speaker 2: and so you have ships piling up on both sides
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Speaker 2: of the strait at the moment.
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Speaker 3: How about the.
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Speaker 4: Context of just geopolitical events generally, because the lessons from
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Speaker 4: the last frankly quarter century for investors when it comes
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Speaker 4: to concerns about geopolitical conflict fade. It has been faded
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Speaker 4: to the background. It's not going to matter now. You know,
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Speaker 4: the Russian invasion of Ukraine did have some market impact.
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Speaker 4: You can argue that it led to higher inflation and
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Speaker 4: some and you know, misinterpretation by Federal Reserve officials. So
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Speaker 4: I don't think you can fade it entirely. But that
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Speaker 4: seems to be the lesson that investors are taking today,
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Speaker 4: at least equity market investors are taking today. Yeah, oil
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Speaker 4: prices could be higher, they could be there for longer.
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Speaker 4: Maybe that could lead to higher inflation, and perhaps this
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Speaker 4: means the Fed can't cut rates in the same way.
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Speaker 4: But what does it mean for equity prices according to
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Speaker 4: investors today, Nearly nothing.
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Speaker 2: And I think in general it's usually best to completely
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Speaker 2: ignore equity prices the day that anything is happening. We
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Speaker 2: saw this back in twenty twenty two, where on the
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Speaker 2: day of Russer's invasion of Ukraine. Equity prices rose four
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Speaker 2: percent from the bottom to the top over the course
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Speaker 2: of that day, going from a two percent to coline
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Speaker 2: to a two percent gain from the prior close, and
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Speaker 2: ultimately market's still trended down over the remainder of that year.
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Speaker 2: You could say it was because of other things than
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Speaker 2: the conflict, But again, how the market responded on the
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Speaker 2: day of the conflict was not ultimately an accurate driver
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Speaker 2: of what was going to happen over the next twelve months.
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Speaker 2: You could even see a similar parallel here. Hey, maybe
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Speaker 2: a Middle Eastern conflict is not a major driver of
5:19
Speaker 2: market action for the next twelve months, But you've got
5:23
Speaker 2: concerns about private credit, you've got concerns about AI capex.
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Speaker 2: That could be And so again I think what equity
5:32
Speaker 2: markets do on any one particular day, it's not really
5:35
Speaker 2: a useful parometer of what they're going to do in
5:38
Speaker 2: the future. So with that in mind, you do have
5:41
Speaker 2: equity markets that are actually mixed today. At the moment,
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Speaker 2: the Nasdaq composite is now squeaked into the green up
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Speaker 2: fifteen points, a little less than a tenth of a percent.
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Speaker 2: S Andp's only down nine points, Dow is off eighty
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Speaker 2: four points, so not too much movement there on the surface,
5:57
Speaker 2: where you do have a bunch of movements in the
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Speaker 2: bond market, and bonds are doing something that is technically
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Speaker 2: called puking uh. And you've got the tenure treasury up
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Speaker 2: eight point eight basis points to four point zero five percent.
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Speaker 2: This is happening at the same time that the dollar
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Speaker 2: is getting bid up by now one point one percent.
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Speaker 3: So the interesting thing that you're seeing.
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Speaker 2: Is that, again, like you've got risk off being signaled
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Speaker 2: I'm sorry, not risk off being signaled. You've got not
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Speaker 2: even it's not risk on, it's just inflation on, in
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Speaker 2: my opinion, being signaled by the bond market at the
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Speaker 2: same time that the dollar index is saying risk off.
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Speaker 2: And then you've got all kinds of weird undercurrents that
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Speaker 2: are happening as well. Again, I think everyone globally, remember
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Speaker 2: these are global markets that we talk about here. In
6:48
Speaker 2: many cases, what's happening in precious metals today is nothing
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Speaker 2: short of a spectacular reversal that you're seeing. Just looking
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Speaker 2: at silver as an example, Silver this morning at one
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Speaker 2: point was up about six percent trading at ninety six
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Speaker 2: dollars an ounce it's now down over ten percent from
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Speaker 2: there down to eighty six, and change gold has had
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Speaker 2: like a four percent intra day reversal as well. So
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Speaker 2: everyone's kind of scrambling trying to figure out what this means.
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Speaker 2: And the ultimate answer is like, no one really knows
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Speaker 2: anything on day one right now, and people are just
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Speaker 2: trying to sort through, you know, oh, like how do
7:27
Speaker 2: I protect myself from this and that? And there's no
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Speaker 2: coherent message other than investors are trying to scramble to
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Speaker 2: where they think is a safe place to be.
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Speaker 4: For the last week or so, you've seen thirty year
7:38
Speaker 4: mortgage rates dipping underneath that key six percent benchmark. When
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Speaker 4: we get data for this week, which will be over
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Speaker 4: the course the next few days, you can assume that
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Speaker 4: they will those rates will bump back up. They tend
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Speaker 4: to trend towards the ten year treasury very closely, so
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Speaker 4: we will see where that goes. It also just makes
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Speaker 4: me think of the dominant narratives for twenty twenty. And
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Speaker 4: obviously the dominant narrative has been going into this year
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Speaker 4: all about artificial intelligence, but I think there has been
8:07
Speaker 4: an undercurrent of confidence that inflation will remain muted and
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Speaker 4: rates will come down.
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Speaker 3: Would you would you say that is the overall narrative right, Like.
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Speaker 4: Depend not necessarily on everybody agreeing on the same timeline,
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Speaker 4: but I do think that there has been a narrative
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Speaker 4: baked into markets that hey, inflation is going to stay
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Speaker 4: under three percent and rates will continue to come down.
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Speaker 4: If not this spring, then maybe late summer or fall.
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Speaker 4: This is an interesting potential diverting path from that overall narrative,
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Speaker 4: so we'll have to see how it develops. I'm not
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Speaker 4: saying that disinflation can't continue, but a key component of
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Speaker 4: the disinflation we've seen for the last couple of years
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Speaker 4: has been help from energy prices. If that reverses in
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Speaker 4: a longer than two week trend, then you can call
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Speaker 4: that narrative into question a bit.
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Speaker 3: Well. Even before that, though, we got a PPI.
9:02
Speaker 2: Reading on Friday that was a little bit colliente, and
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Speaker 2: I think that the other piece on it look PPI
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Speaker 2: Producer Price Index. No one really knows how to read it,
9:13
Speaker 2: to be honest, like, I think most people read it wrong.
9:16
Speaker 2: But what's interesting from a market point of view is, hey,
9:20
Speaker 2: you can project the objects that pass through there into PCE,
9:24
Speaker 2: which the FED watches, and most of the pastor items
9:28
Speaker 2: came in hot to the point where most of the
9:29
Speaker 2: major investment banks now are saying that core PCE is
9:33
Speaker 2: going to be somewhere between point four and point five
9:36
Speaker 2: for the month now, which is hot. This is before
9:40
Speaker 2: anything was happening in energy. You couple that with this morning.
9:44
Speaker 2: We haven't talked about it at all. Ism manufacturing.
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Speaker 3: Did you see it? Nope, No, I'll get distracted by
9:50
Speaker 3: I know a little bit distracted.
9:52
Speaker 2: I happen to see it. And one of the components
9:54
Speaker 2: in the ISM Manufacturing survey is prices paid. Higher numbers
9:59
Speaker 2: gener on the way it works, higher numbers mean that
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Speaker 2: more respondents are seeing that category increasing. Prices paid were
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Speaker 2: expected to come in at a level of fifty nine
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Speaker 2: point five. The prior reading was fifty nine. They came
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Speaker 2: in at seventy point five. Now that was before anything
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Speaker 2: energy related. So it's telling you that manufacturers are seeing
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Speaker 2: more broad based upward pricing pressure right now than they
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Speaker 2: previously were. So I am a big believer in Look
10:31
Speaker 2: for the last forty years, you had to wait for inflation.
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Speaker 3: To print before you got worried about it.
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Speaker 2: Sure, I still do believe that because I can't tell
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Speaker 2: you how many people got headfaked in the twenty tens
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Speaker 2: about all inflation's coming because of this and that, and
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Speaker 2: it never came in the twenty tens.
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Speaker 3: I do think you have to.
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Speaker 2: Watch with you know, kind of a quicker response now
10:50
Speaker 2: than previously. And even though for the last you know,
10:54
Speaker 2: six seven months, I've been saying that the unemployment side
10:56
Speaker 2: of things is the bigger concern. If you get a
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Speaker 2: couple months of hot inflation here with this backdrop, then
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Speaker 2: you better watch out on what's going on with bonds
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Speaker 2: and that side of the ledger, because you could have
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Speaker 2: some real problems there depending on how things develop.
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Speaker 3: Let's take a quick break.
11:16
Speaker 2: When we come back, we've got trivia, and then we're
11:19
Speaker 2: gonna hear. Well, we're not gonna hear from him, but
11:22
Speaker 2: Lloyd Blankfine wrote a book, and The Financial Times tried
11:27
Speaker 2: to make a piece out of it, while also talking
11:29
Speaker 2: about why he thinks there's an elevated risk of a
11:32
Speaker 2: financial crisis. So we'll cover that jumble of ideas after this.
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Speaker 5: the Financial Exchange and this week, the third largest retailer
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Speaker 2: So Woyd blank Fine is the former CEO of Goldman
13:55
Speaker 2: Sachs Uh. In fact, he ran Goldman sachs leading into,
13:59
Speaker 2: during and after the financial.
14:01
Speaker 3: Crisis and so on. Yes, not the lesser one, the
14:05
Speaker 3: great one.
14:06
Speaker 2: And so Lloyd is pretty well versed to be able
14:09
Speaker 2: to speak on financial crisis since his bank was you
14:14
Speaker 2: know the.
14:14
Speaker 3: Cause of one of one, one of them. It's again
14:18
Speaker 3: like not the only cause but he was a cause, like.
14:20
Speaker 2: His bank absolutely contributed to it, and so he's got
14:25
Speaker 2: a book coming out, which led the Financial Times to
14:27
Speaker 2: interview him about the book.
14:28
Speaker 3: In passing, he also then.
14:31
Speaker 2: Said, quote, you know, I would be very aggressively marking
14:35
Speaker 2: the market, making sure people sell certain things even if
14:37
Speaker 2: they're liquid, just trying to make sure that you could.
14:40
Speaker 2: He says, the lack of a major shakeout since two
14:42
Speaker 2: thousand and eight means people aren't as scared and have
14:44
Speaker 2: gotten more complacent. I'm not saying it's gonna happen tomorrow
14:47
Speaker 2: what direction it comes from, but when something goes off,
14:50
Speaker 2: you're gonna find all the assets that have been carried
14:52
Speaker 2: at prices that can't be realized in the market. And again,
14:58
Speaker 2: in case you can't tell, like I'm not like a
14:59
Speaker 2: huge Goldman socks or Lloyd Blankfine fan, it's just like.
15:04
Speaker 3: I'm not. But here's the thing.
15:08
Speaker 2: It's is it Warren Buffet to Charlie Munger as the saying,
15:11
Speaker 2: you know, when the tide goes out, you see you
15:12
Speaker 2: swimming naked. Yes, it's basically what blank Fine's saying. Yeah,
15:16
Speaker 2: and what you're starting to see quite honestly, bunch of
15:21
Speaker 2: naked people. Okay, last week alone, there were no fewer
15:26
Speaker 2: than three different private credit funds that either had to
15:30
Speaker 2: sell assets way cheaper than they had listed them or
15:33
Speaker 2: that had to take big right downs and start putting
15:35
Speaker 2: new gates up. And I gotta tell you, it's starting
15:39
Speaker 2: to look kind of grim on the private credit side
15:42
Speaker 2: of things, because it's just like again Jamie Diamond said, Hey,
15:48
Speaker 2: like there's rarely only one cockroach. I'm just throwing a
15:51
Speaker 2: lot of metaphors out there. We're seeing a few cockroaches
15:53
Speaker 2: now like that. They're popping up left and right. And
15:57
Speaker 2: the problem for the average person listening is not that
16:00
Speaker 2: you likely own a private credit fund, because most likely,
16:03
Speaker 2: if you're listening, you're like, Chuck, I don't even know
16:04
Speaker 2: what private credit is. And that's fine, But somebody you
16:07
Speaker 2: know does, and someone you know does. And the other
16:10
Speaker 2: piece is there's a pretty good chance that whoever underwrites
16:15
Speaker 2: your life insurance owns a whole bunch of private credit
16:18
Speaker 2: in their investment portfolio.
16:20
Speaker 4: So back to the blank find piece for just a
16:22
Speaker 4: moment here, and I don't want to spend much more
16:23
Speaker 4: time on it. Can Lloyd Blankfind give an interview without
16:28
Speaker 4: talking about the potential for financial crisis and what he
16:31
Speaker 4: would do in the event, because I mean, you ran
16:34
Speaker 4: Goldman Sachs during the Great Financial Crisis. I don't know
16:37
Speaker 4: that you can give an interview without talking about a
16:39
Speaker 4: financial crisis. In fact, it might be irresponsible of you
16:44
Speaker 4: not to. So I don't know that I should take
16:45
Speaker 4: anything whatsoever about Lloyd blankfind talking about you know, how
16:49
Speaker 4: long it's been that there's complacency. I think he would
16:52
Speaker 4: have given a similar interview in twenty fifteen, twenty.
16:56
Speaker 3: And twenty twenty five. I don't think he would have no.
16:58
Speaker 2: No, And look, maybe I'm just remember financial crisis is
17:03
Speaker 2: a very specific type of economic event. Not every recession
17:08
Speaker 2: is a financial crisis. A financial crisis is hey, the
17:11
Speaker 2: financial system has problems with it that prevent it.
17:14
Speaker 3: From working properly. Yeah, And I think you.
17:18
Speaker 2: Have some signs of, you know, hey, there could be
17:20
Speaker 2: some problems there right now in that private credit space,
17:23
Speaker 2: like it's it's pretty gnarly. What's what's happening there? When
17:27
Speaker 2: you look at the big publicly traded asset managers. I mean,
17:33
Speaker 2: I'm just looking year to date, but Blackstone's down twenty
17:37
Speaker 2: six percent year to date, not black Rock, who you know,
17:40
Speaker 2: turns a bunch of ETFs and you know, mutual funds.
17:43
Speaker 2: But Blackstone down twenty five percent year to date, KKR
17:47
Speaker 2: down thirty percent year to date, Apollo Global down twenty
17:51
Speaker 2: six percent year to date, Arias Management down thirty percent.
17:55
Speaker 2: Like these companies that are getting bludgeted because no one
17:57
Speaker 2: believes that the value of what they own is worth
18:00
Speaker 2: what they've said it is, and.
18:04
Speaker 3: It keeps running the gamut.
18:05
Speaker 4: Last year it was because of fraud, this year it's
18:08
Speaker 4: because of software.
18:10
Speaker 2: And here's what it is, quite honestly, Like, there's probably
18:14
Speaker 2: a bunch of this stuff. Not probably, there was a
18:17
Speaker 2: bunch of this stuff that was written back in twenty
18:21
Speaker 2: one twenty two in a very different interest rate environment.
18:24
Speaker 2: And now as they're trying to ref you know, companies
18:26
Speaker 2: that they might either own in their private equity portfolios
18:29
Speaker 2: or that they've lent to or trying to you know,
18:31
Speaker 2: refinance the loans that they have, they're saying, no, this
18:34
Speaker 2: math doesn't work, and no one wants to own the stuff. Yeah,
18:38
Speaker 2: and so like it, it feels like there's something kind
18:41
Speaker 2: of gross in there. We still don't know.
18:42
Speaker 3: How big it is. We still don't know how the
18:45
Speaker 3: problem is.
18:46
Speaker 4: We should make it easier for banks to buy it. Oh,
18:52
Speaker 4: that seems to be one of the solutions right now
18:54
Speaker 4: coming from some areas of the Federal Reserve. Is Hey,
18:57
Speaker 4: let's drop some of the regulations that make it so
18:59
Speaker 4: that private credit it has to do all this instead
19:01
Speaker 4: of banks. Let's let banks do more of it. And
19:04
Speaker 4: or boy, that has that seemed like the wrong reaction
19:06
Speaker 4: at the wrong time.
19:06
Speaker 2: Why don't we stuff the private credit in your four
19:08
Speaker 2: oh one k? Yep, that's the other solution, you know,
19:11
Speaker 2: not from the right, well from some yes, let's find
19:13
Speaker 2: another backholders kind of like what it feels like. And
19:15
Speaker 2: I said that when we started talking about trying to
19:17
Speaker 2: stuff private credit into four oh one k. Aris Capital
19:21
Speaker 2: Management does not want to deal with your four oh
19:23
Speaker 2: one k, So why are they wanting to deal with
19:26
Speaker 2: your four oh one k. Let's take a quick break.
19:29
Speaker 2: When we come back, we get the trivia answer in
19:31
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Speaker 1: look at what's moving market so far today. Right here
19:58
Speaker 1: on the Financial exchange, radio network.
20:00
Speaker 5: Equity markets are seeing a modest sell off as Wall
20:03
Speaker 5: Street assesses the conflict in the Middle East after the
20:06
Speaker 5: US and Israel attacked Iran over the weekend, sending oil
20:10
Speaker 5: prices in bond yield tire. Right now, the Dow is
20:12
Speaker 5: down nearly six tenths of one percent, or two hundred
20:15
Speaker 5: and seventy seven points, SMP five hundred down about half
20:19
Speaker 5: a percent, NASDAC down about a third of a percent,
20:22
Speaker 5: Russell two thousand is up about a quarter percent, Tenure
20:26
Speaker 5: Treasure Reel jumping eight basis points now at four point
20:29
Speaker 5: zero four eight percent, and crude oil up nearly six
20:34
Speaker 5: and a half percent higher, trading at seventy one dollars
20:36
Speaker 5: and twenty five cents a barrel. Several major oil producers,
20:39
Speaker 5: including Exon Mobile and Chevron, and seeing slight gains in
20:43
Speaker 5: reaction to that increase in oil prices. Defense stocks including
20:47
Speaker 5: Lockheed Martin, Northwarpe Crumbing are also seeing gains of about
20:50
Speaker 5: two to four percent. Travel sector taking a hit due
20:53
Speaker 5: to higher oil prices and disrupted global travel. Delta, American
20:57
Speaker 5: Airlines United all shedding anywhere between three and five percent,
21:01
Speaker 5: while Expedia and Booking holdings are down about one to
21:04
Speaker 5: two percent. Cruise operators including Norwegian and Carnival are also
21:08
Speaker 5: taking a hit of about seven to ten percent outside
21:12
Speaker 5: of the Middle East, and Vidia announced this morning it
21:14
Speaker 5: is investing a combined four billion dollars in Lamentum incoherent
21:18
Speaker 5: to companies developing of photonics technologies. Separately, the Wall Street
21:24
Speaker 5: Journal also reported that in Vidia plans to unveil a
21:26
Speaker 5: new processor specially tailored to help open AI and other
21:30
Speaker 5: customers build faster, more efficient tools and video. Stock is
21:34
Speaker 5: up by about two percent and shares in Berkshire Hathway
21:38
Speaker 5: down about four percent after the conglomerate reported a two
21:41
Speaker 5: and a half percent drop in quarterly profit and a
21:44
Speaker 5: thirty percent decline in operating earnings. I'm Tucker Silva and
21:48
Speaker 5: that is Wall Street Watch. In the prior segment, we
21:50
Speaker 5: asked you the trivia question, what is Costco's private label brand? That,
21:54
Speaker 5: of course be Kirkland. George from Danvers, Mass is our
21:57
Speaker 5: winner today, taking home a Financial Exchange Show T shirt.
22:00
Speaker 5: Congrats to George. We play trivia every day here on
22:04
Speaker 5: the Financial Exchange. See complete contest rules at Financial Exchange
22:08
Speaker 5: Show dot com.
22:10
Speaker 2: Piece in the New York Times. Four ways to enjoy
22:13
Speaker 2: your savings in retirement without going broke, books, walks, camping,
22:23
Speaker 2: tang and never ending possible at all of garden.
22:26
Speaker 3: Yeah, yeah, that's the way to do it.
22:28
Speaker 4: What are they actually happening here, Well, they talk about
22:30
Speaker 4: a few things, and then I'll incorporate a recent conversation
22:34
Speaker 4: I had.
22:34
Speaker 3: I think it's relevant.
22:35
Speaker 4: But aligning your spending with your life face So they
22:40
Speaker 4: accurately point out that the first decade, sometimes the first
22:43
Speaker 4: decade and half of your retirement oftentimes is the most expensive.
22:46
Speaker 4: Why you're healthy, you want to do all these things
22:48
Speaker 4: that you've been holding off on. So it often involves
22:51
Speaker 4: a lot of travel, and that stuff gets expensive. And
22:56
Speaker 4: so if you are in a sort of set it
23:00
Speaker 4: and forget it mode where you're just saying, okay, what
23:03
Speaker 4: was the old asset allocation advice?
23:06
Speaker 3: Right?
23:06
Speaker 4: You take one hundred, subtract your age, and that's how
23:09
Speaker 4: much you should have in stocks. If you are using that,
23:11
Speaker 4: that may or may not get you to the right
23:13
Speaker 4: place in this environment. In fact, there's an argument where,
23:16
Speaker 4: depending on how you're set up, maybe you should actually
23:18
Speaker 4: get a little bit more aggressive once you're passed in
23:21
Speaker 4: terms of your investments once you're past that big spending
23:25
Speaker 4: stage of early retirement giving yourself a paycheck. So here
23:30
Speaker 4: is what is actually meant by this, and it goes
23:33
Speaker 4: to a conversation I had recently. A good financial advisor
23:37
Speaker 4: will spend time with you explaining where it makes sense
23:41
Speaker 4: to take money out of your buckets. Right you might
23:45
Speaker 4: have some cash, you might have a retirement account, a
23:48
Speaker 4: jointly held account with your husband or wife, and a
23:52
Speaker 4: good financial advisor will tell you, okay, well, based on
23:54
Speaker 4: what you need and your taxes, right now, this is
23:58
Speaker 4: where you should pull it, and yeah, maybe you should
23:59
Speaker 4: delay Social Security and do this instead.
24:01
Speaker 3: Sure.
24:03
Speaker 4: A great financial advisor, though, will spend a lot of
24:05
Speaker 4: time on the psychology of that, because there is for
24:10
Speaker 4: a lot of folks, And I had this conversation with
24:13
Speaker 4: somebody just last week, this psychological boundary of oh, man,
24:17
Speaker 4: am I really going to spend my life savings that
24:21
Speaker 4: I have in an FDIC insured bank account to satisfy
24:24
Speaker 4: my everyday living expenses? And then will I actually spend
24:27
Speaker 4: on the things that I want to or will I
24:29
Speaker 4: just have a miserable lifestyle because I'm terrified of spending
24:32
Speaker 4: that money and so giving yourself a retirement paycheck of
24:36
Speaker 4: literally depart even if it's just moving money from one
24:40
Speaker 4: account to another and then putting that money back into
24:42
Speaker 4: your bank account on a weekly or monthly basis, just
24:45
Speaker 4: like a paycheck, can have a real beneficial impact on
24:49
Speaker 4: your willingness and ability to spend. And I see this
24:51
Speaker 4: especially with uh, you know, frankly, a bunch of Yankees
24:56
Speaker 4: in the Northeast who learned from their Great Depression era
24:58
Speaker 4: of parents that they just don't spend money. And so
25:02
Speaker 4: there can be some strategies here that still take advantage
25:05
Speaker 4: of important tax considerations while playing to the psychological aspect
25:12
Speaker 4: of retirement, because a lot of it does end up
25:15
Speaker 4: being psychologically. You have to be comfortable with what your
25:18
Speaker 4: plan looks like and how it's going to develop to
25:21
Speaker 4: actually enjoy yourself in retirement.
25:24
Speaker 3: I know this stuff's complicated.
25:26
Speaker 4: I know we spend a lot of time talking about
25:27
Speaker 4: the tax benefits of strategies like delaying Social Security and
25:31
Speaker 4: doing Wroth conversions. From firsthand experience, here, what is at
25:36
Speaker 4: least equally important is having a good and thorough explanation
25:42
Speaker 4: and a comfort level with what you're spending is allowed
25:45
Speaker 4: to be and how you're going to do it.
25:48
Speaker 3: It's just so critically important.
25:50
Speaker 4: And if you're not getting that today, if you feel
25:53
Speaker 4: as though you don't have a coherent plan for what
25:58
Speaker 4: am I supposed to be spending, what am I allowed
25:59
Speaker 4: to be spending? And do I feel comfortable spending that
26:04
Speaker 4: money in retirement, I urge you to build out that
26:07
Speaker 4: plan and get some trusted advice so that you can
26:09
Speaker 4: feel comfortable with your strategy. The phone number if you
26:12
Speaker 4: want to chat with somebody at the Armstrong Advisory Group
26:14
Speaker 4: who focuses on this type of planning every day is
26:18
Speaker 4: eight hundred three nine three for zero zero one. You
26:22
Speaker 4: can check us out at Armstrong advisory dot com. Book
26:25
Speaker 4: a time for us to call you back if you're
26:26
Speaker 4: busy right now. But that number again, eight hundred three
26:29
Speaker 4: nine three for zero zero one.
26:31
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
26:34
Speaker 1: registered investment advisor. Nothing in the ad or in any
26:36
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
26:39
Speaker 1: your own financial tax into state planning advisors before making
26:42
Speaker 1: any investment decisions. Armstrong make contact you to offer investment
26:45
Speaker 1: advisory services.
26:48
Speaker 2: Let's see, I want to cover this piece on streaming. Sure, yeah,
26:52
Speaker 2: we could do that.
26:54
Speaker 3: I don't know.
26:55
Speaker 2: So it's titled you know, streaming is going to cost more,
26:58
Speaker 2: that's the price of mergers or Hey, streamers dramatically under
27:03
Speaker 2: price their product for years trying to get you to
27:05
Speaker 2: sign up for them, and now they're raising them to
27:06
Speaker 2: try to make them profitable. And the ones that are
27:09
Speaker 2: going through mergers are gonna have to raise their prices
27:11
Speaker 2: more because they've taken on a bunch of debt in
27:13
Speaker 2: order to do so, and so they got to figure
27:16
Speaker 2: out how to cover the cost of that debt.
27:18
Speaker 3: Yeah.
27:18
Speaker 4: Netflix didn't merge with anybody. They've been driving their price
27:20
Speaker 4: up through the roof for the last five years. Yeah,
27:24
Speaker 4: nothing new.
27:26
Speaker 3: I did see.
27:27
Speaker 2: I need to find the exact quote from Ted sarandis
27:31
Speaker 2: the Netflix co CEO.
27:34
Speaker 3: He had one on.
27:35
Speaker 2: The I'm losing out on the Warner Brothers Discovery deal
27:42
Speaker 2: where I'm gonna paraphrase it just because I'm sure I
27:45
Speaker 2: bookmarked it somewhere, but I can't find the bookmark. But
27:49
Speaker 2: they asked him like, oh, like, what do you think
27:50
Speaker 2: about this? Is this going to make it like harder
27:52
Speaker 2: for you to get you know, the content that you want,
27:55
Speaker 2: and he basically he said Paramount had to lever up
27:59
Speaker 2: like six or seven times in order to pay for
28:02
Speaker 2: Warner Brothers Discovery. We're pretty sure they're gonna need revenue
28:05
Speaker 2: in order to offset that, and we're happy to buy
28:07
Speaker 2: their content from them when they're ready to talk.
28:10
Speaker 4: Yeah, Frankly, a lot of this deal was starting to
28:13
Speaker 4: look and feel a lot like I.
28:16
Speaker 2: Said that the loser of it might end up coming
28:18
Speaker 2: out ahead when it's all sad and die. Yeah, it
28:20
Speaker 2: felt like that at the end, And in particular, the.
28:23
Speaker 4: More and more I looked at it, the more and
28:24
Speaker 4: more Netflix just seemed like they were bidding on a
28:27
Speaker 4: studio lot in Hollywood, which I'm not gonna say is unimimportant,
28:32
Speaker 4: but I'm just not sure.
28:33
Speaker 3: How relevant that is in twenty twenty six. Yeah, it's fair.
28:38
Speaker 2: I mean, look, both these companies clearly thought it was
28:41
Speaker 2: important enough to bid a lot of money on it.
28:43
Speaker 3: Yep.
28:45
Speaker 2: All I know is that large media mergers generally haven't
28:49
Speaker 2: gone well in the last twenty five to thirty years.
28:53
Speaker 2: You know, there have been a few that have been
28:55
Speaker 2: successful here and there. But the other piece, like if
28:58
Speaker 2: we just want to talk about anyone who's tried to
29:01
Speaker 2: buy anything with the name Warner attached to it since
29:03
Speaker 2: two thousand, it's gone badly, you know, starting with Aol
29:10
Speaker 2: Time Warner, continuing through AT and T and and I
29:13
Speaker 2: think it was Warner Brothers at the time. Like it's
29:17
Speaker 2: it's generally gone badly if you've tried to do anything
29:20
Speaker 2: with a Warner.
29:21
Speaker 1: Yeah.
29:21
Speaker 4: The biggest successes have probably been on the Disney side,
29:24
Speaker 4: right their acquisitions of.
29:27
Speaker 3: They bought Star Wars for four billion dollars in.
29:29
Speaker 4: Strvel for like Star Wars Marvel and then what was
29:31
Speaker 4: the other studio that they bought. This was multiple decades
29:34
Speaker 4: ago now, but with a little hopping lamp Pixar, Pixar
29:38
Speaker 4: thank you.
29:38
Speaker 3: Yeah, I mean.
29:41
Speaker 2: Right when you when you somehow convinced George Lucas to
29:44
Speaker 2: give you all of the IP for four billion dollars
29:46
Speaker 2: and then you can recoup that in like two movies.
29:49
Speaker 3: Oh yeah, that that probably was a good deal for you. Yeah.
29:51
Speaker 3: This you're paying, you know, one hundred billion dollars for
29:55
Speaker 3: a lot of IP, lot of IP. But it's a
29:59
Speaker 3: one hundred billion dollar Yeah, it's a lot of money. Yep.
30:02
Speaker 3: Let's take a quick break when we come back we'll
30:05
Speaker 3: do a lot of stack Roulette.
30:06
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30:10
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30:18
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30:21
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30:24
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30:39
Speaker 3: Mike, what do you got for stack Roulette?
30:41
Speaker 2: For me?
30:42
Speaker 3: AI? And fast food? Burger King?
30:45
Speaker 4: So we're gonna We're gonna start off with how some
30:49
Speaker 4: of these fast food companies thought they were going to
30:51
Speaker 4: be able to use AI, which was to have it
30:54
Speaker 4: actually take the orders, which I think is still being
30:56
Speaker 4: tested out in some cases, but it was really you know,
31:00
Speaker 4: into some bad results, including creative people screwing with the AI,
31:04
Speaker 4: such as asking, you know, ordering a million cups of
31:08
Speaker 4: water to you know, which is a funny, funny prank,
31:12
Speaker 4: but you know, the ad got I don't know what
31:14
Speaker 4: to do and would fail in a number of cases.
31:17
Speaker 4: So instead we are moving towards monitoring.
31:20
Speaker 3: Now.
31:20
Speaker 4: We reported this in the case of some call centers previously,
31:25
Speaker 4: and now it's being moved to fast food as well.
31:28
Speaker 4: But a lot of call centers are now utilizing AI
31:31
Speaker 4: to monitor every single call that goes into that call center,
31:35
Speaker 4: not replace the human, but provide instantaneous feedback on every
31:39
Speaker 4: single call. And having listened to some interviews with people
31:42
Speaker 4: who work in those environments, it was the case where
31:44
Speaker 4: you know, hey, you would get these performance reviews maybe
31:47
Speaker 4: twice a year, a manager would listen in to maybe
31:50
Speaker 4: five percent of your calls and give you some feedback
31:53
Speaker 4: on them. Today, you are getting monitored by an AI
31:56
Speaker 4: for every single second that you're on the phone and
31:58
Speaker 4: constantly provided feed for how you could have pronounced something differently,
32:02
Speaker 4: said please, thank you, the tone of the conversation, and
32:05
Speaker 4: ultimately a fire or promotion decision being made based on
32:09
Speaker 4: that AI feedback that you get.
32:12
Speaker 3: Burger King now doing the same thing with their.
32:15
Speaker 4: Own order takers, effectively an AI chatbot and monitoring system
32:20
Speaker 4: that will sit on the line listening to those calls
32:23
Speaker 4: and determining, Hey, did you say please, did you say
32:26
Speaker 4: thank you? What was the tone of the conversation you
32:29
Speaker 4: had with the customer as they were going through the
32:31
Speaker 4: drive through. And if this sounds dystopian and sucky, it is,
32:36
Speaker 4: And I don't think it's going to change. I think
32:38
Speaker 4: ultimately AI systems will probably replace a lot of these
32:42
Speaker 4: human beings, both in call centers across the globe and
32:47
Speaker 4: in terms of order takers. But in the interim, it's
32:50
Speaker 4: just making those jobs probably crappier. From the every day perspective.
32:55
Speaker 3: Oh, I do too.
32:56
Speaker 4: I hate it, but I think it is a logical
32:59
Speaker 4: step for where AI is going to go, and so
33:01
Speaker 4: if you are in this space, it is going to
33:02
Speaker 4: make your job so much worse.
33:05
Speaker 2: So it's been about twenty years since millennials started making
33:10
Speaker 2: their introduction to the workforce, which means is now time
33:15
Speaker 2: to crap on an entirely new generation of young people
33:17
Speaker 2: that are making their way into the workforce. Good piece
33:20
Speaker 2: in the Wall Street Journal, a new Lost Generation? Why
33:24
Speaker 2: Gen Z is unprepared for the workplace? And look, here's
33:29
Speaker 2: the deal. As a proud no but as a proud millennial,
33:37
Speaker 2: I feel that I have to, you know, take up
33:40
Speaker 2: the mantle of the kids are all right, okay, because
33:44
Speaker 2: this piece gets written about every generation that has ever
33:47
Speaker 2: come into the workforce for different reasons. With millennials, it
33:51
Speaker 2: was oh, they're lazy, Oh they job hop every year,
33:55
Speaker 2: they can't stick around like you heard all these things
33:59
Speaker 2: with the hippies again, like.
34:02
Speaker 4: Ronials were the trophy generation. Yeah, like they need to
34:04
Speaker 4: be rewarded for everything they do.
34:06
Speaker 2: You need to be rewarded, Yeah, Like the parents and
34:08
Speaker 2: millennials weren't the ones who gave us those trophies, by
34:10
Speaker 2: the way, No I demanded them.
34:11
Speaker 3: Okay, I know I came in sixth place.
34:14
Speaker 2: Our parents, by the way. The baby boomers, they were
34:17
Speaker 2: the hippies, bless you, Tucker.
34:19
Speaker 3: Uh. The hippies when they came in the.
34:21
Speaker 2: Work goes, Oh, their hair's too long, they stink like
34:26
Speaker 2: you know, all the things about the hippies and all that.
34:29
Speaker 3: So yes, I get it.
34:31
Speaker 2: Twenty two year olds aren't always like one hundred percent
34:35
Speaker 2: prepared for the workforce. But you weren't prepared at twenty
34:39
Speaker 2: two either. And I know I know a lot of
34:41
Speaker 2: people listening to be like, no, I was mature.
34:43
Speaker 3: I did.
34:44
Speaker 2: It's funny you weren't perfect as a twenty two year
34:46
Speaker 2: old like you. Everyone can look back at stuff they
34:48
Speaker 2: did when they were twenty two in the workplace and
34:50
Speaker 2: be like, yeah, probably could have handled that differently. I
34:54
Speaker 2: know a number of things that I look back at
34:55
Speaker 2: I'm like oh, I kind of sucked back then, Like
34:58
Speaker 2: I was pretty bad at this and I wish I
35:00
Speaker 2: had gotten better, but I did.
35:01
Speaker 4: Don't look back at yourself fifteen to twenty years later
35:04
Speaker 4: and cringe a little bit at some of the things
35:05
Speaker 4: you said and did, then there's something wrong with you.
35:08
Speaker 3: That said.
35:09
Speaker 4: There is like interesting stuff that I think is different
35:11
Speaker 4: about every generation. I think some of the things you
35:13
Speaker 4: brought up about millennials is accurate, right, Like they did
35:16
Speaker 4: job hop.
35:17
Speaker 3: More than other generations.
35:18
Speaker 4: I think it was mainly because of the state of
35:21
Speaker 4: the labor market and the fact that our pensions no
35:23
Speaker 4: longer existed. But sure like it was a number of
35:26
Speaker 4: different things that were different. They were also shaped by
35:28
Speaker 4: watching their parents go through the Great Financial Crisis and
35:30
Speaker 4: seeing them lose their jobs and developing a mistrust of
35:34
Speaker 4: the companies that hired them in the first place. So
35:36
Speaker 4: when I look at gen Z, there's some other interesting stuff.
35:39
Speaker 4: They are shaped by COVID, going through education and being
35:44
Speaker 4: stuck at home for two years. They are very much
35:48
Speaker 4: shaped by a digital upbringing. They were given phones at
35:52
Speaker 4: a very young age. They don't do quite as well
35:56
Speaker 4: as interacting with each other face to face.
35:59
Speaker 3: The other piece that I have.
36:01
Speaker 4: Heard from parents of kids in this generation and I'm
36:05
Speaker 4: now seeing confirmed, is some statistics on relationships, romantic relationships specifically,
36:11
Speaker 4: and some data that's been cited that young people a
36:15
Speaker 4: little more than half fifty six percent of them make
36:18
Speaker 4: it to adulthood having had a romantic relationship, compared to
36:21
Speaker 4: about three quarters for previous generations. And I find that
36:24
Speaker 4: piece to be fascinating because I have heard that from
36:27
Speaker 4: other parents of teenagers that like, they just aren't dating,
36:32
Speaker 4: they aren't going and doing things face to face, and
36:36
Speaker 4: they don't seem to be showing an interest in that,
36:40
Speaker 4: which is fascinating because obviously, you know, anyone listening today
36:43
Speaker 4: who was in that three quarters, I think it's safe
36:45
Speaker 4: to say that your teenage years were somewhat defined by
36:48
Speaker 4: relationships like that. Sure changed who you were, changed how
36:52
Speaker 4: you behaved, changed how you interacted with other people. And
36:55
Speaker 4: so I find all of that stuff very interesting. But
36:57
Speaker 4: to your point, that does not make gen Z unemployable.
37:01
Speaker 4: It just makes them different than you.
37:02
Speaker 2: No, it doesn't make them unprepared for the workplace any
37:06
Speaker 2: more than any other generation was when they first showed
37:09
Speaker 2: up at work. Sure, you know, like everyone has to
37:11
Speaker 2: learn how to actually work, just like you know, we
37:16
Speaker 2: oft to learn how to walk, we often learn how
37:18
Speaker 2: to talk.
37:19
Speaker 4: Like you and enjoyed teasing that gen Z kid who
37:22
Speaker 4: is going to run laps around you when it comes
37:25
Speaker 4: to using artificial intelligence in the workforce, Yes, because you
37:28
Speaker 4: know that they are just like the millennial ran laps
37:30
Speaker 4: around you when it came to yes, uh, you know
37:33
Speaker 4: resizing PDFs.
37:37
Speaker 3: It's just the reality. How do you do that? I
37:39
Speaker 3: still can't figure it right, Like, how do you do that? Actually?
37:43
Speaker 3: How do I export this? It's just there.
37:47
Speaker 4: So yeah, every generation is a little bit different and
37:50
Speaker 4: they will be relentless.
37:51
Speaker 2: They teased the ants from that like state farm, commercial explore,
37:57
Speaker 2: Export explore.
37:59
Speaker 3: I can't at this pdapp anyways.
38:04
Speaker 2: As we wrap things up here, the S and P
38:06
Speaker 2: has now turned one point positive, so we got two
38:09
Speaker 2: out of three green for the day here, and we
38:13
Speaker 2: will continue to keep the update and see where markets.
38:16
Speaker 3: Go as we move through the week. We're done for
38:20
Speaker 3: the day.
38:21
Speaker 2: We will see you tomorrow on the Financial Exchange