Latest / The Financial Exchange Show / How long can the US economy's 'goldilocks' moment last?

Transcript

How long can the US economy's 'goldilocks' moment last? · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:02
is hosted by employees of the Armstrong Advisory Group, a
0:05
registered investment advisor. All opinions expressed are solely those of
0:08
the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
or anyone else. Investments can lose money. This program does
0:14
not offer any specific financial or investment advice. Please consult
0:17
your own financial, tax, and estate planning advisors before making
0:20
any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
this program do not endorse each other or their services.
0:25
Armstrong and Money Matters Radio do not compensate each other
0:28
for referrals and are not affiliated. This is The Financial
0:34
Exchange with Chuck Zada and Mike Armstrong, your exclusive look
0:39
at business and financial news affecting your day, your city,
0:42
your world. Stay informed and up to date about economic
0:46
and market trends plus breaking business news every day. The
0:50
Financial Exchange is a proud partner of the Disabled American
0:53
Veterans Department of Massachusetts. Help us support our great American
0:57
heroes by visiting DAV five k dot com and making
1:00
a donation today. The DAV five K Boston is presented
1:04
by Veterans Development Corporation. This is the Financial Exchange with
1:08
Chuck Zada and Mike Armstrong.
1:13
Speaker 2: Chuck, Mike and Tucker kicking off another week for you here,
1:18
and a week that is going to have some important
1:21
data as well in the back half of the week.
1:23
Quite honestly, first half of the week as far as
1:25
economic data and earnings, there's nothing there. It's kind of
1:30
dead as far as what we see from a data perspective,
1:34
unless like, hey, the NFIB Business Optimism Index comes out
1:38
tomorrow at six am. Yeah, a lot of people very
1:43
closely followed there. But look, you do have CPI coming
1:46
out on Thursday, You've got Federal Reserve meeting minutes on Wednesday,
1:51
you get another round of jobless claims Thursday. Friday, you
1:54
get PPI and consumer sentiments. So there's some stuff in
1:57
the back half of the week. And then by the way,
1:58
we're right into earning seas and as we do have
2:01
a couple of the banks kicking off on Friday with
2:03
JP Morgan and Wells Fargo before we get into next week.
2:08
I guess if you're looking for other things this week,
2:10
just as far as we can regularly scheduled items Tesla
2:14
on Thursday does have its Robotaxi Day, so that is
2:17
going to be something that certainly gets a whole bunch
2:21
of attention. We'll see how it ends up going to
2:23
do you guys know where they're hosting that Nevada Tucker
2:29
Any guesses for where they're hosting it, Rhode Island, great idea,
2:34
but no, they're going to the Warner Brothers studio in California.
2:39
Speaker 3: Huh. Okay left and coming back. Huh.
2:42
Speaker 2: I guess I don't know what to make of it.
2:44
Speaker 3: Couldn't find anywhere in Texas where you're headquartered to do it.
2:47
Speaker 2: I don't know what to make of it. But yes,
2:49
they're gonna be on the lot at Warner Brothers and
2:53
they're gonna be doing that there. So that's on Thursday
2:55
as well, obviously first half of the week. Things that
2:58
people are still going to be watching two kind of
3:01
geopolitical items. The first is everyone's still you know, kind
3:04
of looking around like, hey, is there going to be another,
3:07
you know, another shoe to drop as far as the
3:10
Israel Iran situation. So that's something that I think people
3:13
are watching pretty closely. And the other piece is Chinese
3:16
markets have been closed for the last week now in
3:18
observance of Golden Week, and they are going to reopen tomorrow.
3:22
And remember, prior to that closing, Chinese markets were just
3:25
surging on the back of, you know, a whole bunch
3:28
of Chinese stimulus being thrown at the problem. And so
3:31
that's something that I think is worth monitoring in the
3:33
first half of the week, you know, even though there's
3:36
not a ton of economic data that is going to
3:40
be showing up.
3:41
Speaker 3: So I guess I'll close.
3:42
Speaker 4: Out the non economic, non geopolitical big news this week
3:48
would be Hurricane Milton, barreling towards Florida and the West coast,
3:54
and if the trackers are right, that'll hit Wednesday night
3:57
into Thursday morning. Is the anticipate for the Tampa Bay area.
4:02
Speaker 2: Has the potential to be an absolutely devastating storm if
4:06
the worst case scenarios are realized. There is and again
4:11
I was born into a family that had a little
4:14
bit of a meteor meteorological tilt to it, so I,
4:19
you know, I pay attention to these kinds of things.
4:22
There is some fairly meaningful windshere that's currently happening right
4:25
along kind of that central Florida area. That does have
4:28
the potential to knock that storm down and make it,
4:31
you know, less impactful before it gets to land. But
4:37
the models that we're seeing are looking pretty bad. And
4:42
I'm someone who's spent quite a bit of time in
4:44
that Tampa Bay Saint Pete area, and it has the
4:48
potential to be, quite honestly, like the worst storm the
4:52
area's ever seen. One of the most redeeming things about
4:54
Tampa Saint Pete is never been hit by a hurricane.
4:57
The you know, if you look at how the hurricanes
5:00
typically formed, it's kind of tucked into this area that
5:02
makes it hard to hit. But this one has the
5:05
potential to cause some real problems there. So I'm sure
5:08
we'll be paying attention to that and watching it over
5:10
the next couple of days as we go. UH piece
5:13
today from Bloomberg. It's by Claudia Sam, who the Soam
5:17
rule is named after. The Sam Rule, Remember is the economic.
5:25
Speaker 3: What did J.
5:26
Speaker 2: Powell call it? It was not circumstance, but like the
5:33
it's a it's a feature that we've seen in previous
5:36
recessions where if the three month average of unemployment rises
5:40
by half a percent above the lowest that unemployment has
5:44
been in the last year, you have a recession that
5:47
is imminent.
5:47
Speaker 3: It's a coincident indicator.
5:49
Speaker 4: Yeah, that's It's not what joun Powell called it, but
5:52
it's a coincident indicator that has during every modern recession
5:57
since the nineteen sixties accurately defined the period of time recession.
6:02
Speaker 3: I won't say that it leads into recession.
6:04
Speaker 4: It just in every single recession that has occurred since
6:08
the nineteen sixties, the SAM.
6:10
Speaker 3: Rule has been triggered.
6:11
Speaker 4: And as we made a big deal of back in August,
6:13
it got triggered based on the data in July.
6:16
Speaker 2: And so Claudy has got a piece out in Bloomberg
6:19
today and basically what it outlines is, look, yes, there
6:23
was a strong jobs report in September. We talked about
6:26
it on Friday. But ultimately, when you look at the
6:29
underlying trends, there are still things that need to be addressed,
6:32
as far as the fact that, hey, you've kind of
6:36
got this situation right now where employers aren't really hiring
6:41
very much, but they're also not letting people off. It's
6:44
just become a stagnant labor market. More than anything else.
6:48
Speaker 4: It kind of it feels like the housing market in
6:50
some ways right now, with the state of the labor market,
6:53
you've got companies that don't want to let go of
6:56
their employees, but they're also seemingly pretty hesitant to ramp
7:00
up hiring to a higher degree.
7:02
Speaker 2: It's kind of like, well, if one of my employees
7:04
does leave, I'm not necessarily going to backfill the role,
7:07
but I'm not going to push them out. It is
7:09
kind of where I think we are right now. And
7:12
the danger in this is that a lower velocity jobs
7:15
market requires just has it has a problem where if
7:20
you're not creating that many jobs on a monthly basis,
7:24
you get dangerously close to stall speed. And some of
7:26
the underlying data is still suggesting that we could be
7:29
in a pretty dodgy place within the next three to
7:32
six months. We haven't seen improvement in those underlying metrics,
7:36
even though we got a good jobs report on Friday.
7:40
So some basically points out, look, you're still going to
7:44
need additional help from the Fed here, because one month
7:48
does not, you know, make a labor market. We know this.
7:51
It's an old flemishaying one month does not a strong
7:53
labor market make. And so I think that when we
7:58
look at the picture here of the overall labor market,
8:03
it's one in which it's approaching a very dangerous point still,
8:10
even though we're not seeing it in those headline numbers.
8:13
Speaker 4: Yeah, I mean, look, the point that I think I
8:16
would make right now is for most people, the jobs
8:21
market seems fine right now. For those that are unemployed,
8:24
it probably feels pretty ugly. And there's a number of
8:26
reasons behind that. But you know, one stat that Claudia
8:30
Sam brings up in her piece here is the pace
8:32
of hiring as a percentage of total employment. It's reaching
8:37
levels that we haven't seen since twenty thirteen. At that
8:40
point in time, unemployment rate was sitting at seven percent.
8:42
So the pace of hiring in the overall labor market
8:46
is quite slow. And when you go and look back
8:48
historically it changes in the unemployment rate, most of it
8:53
historically has come from just the pace of hiring rather
8:56
than the pace of firing.
8:58
Speaker 3: It's not been so much. Yes, we all remember big.
9:01
Speaker 4: Points in time when the unemployment rate moved up substantially
9:05
because of massive layoffs, eight being a big one, twenty
9:09
twenty being another big one. But on average, that doesn't
9:12
explain a lot of the swings in unemployment. A lot
9:14
of it just comes from a growing population and a
9:18
labor market that frequently in the past hasn't kept up,
9:21
and so that's what she brings up here, and in
9:25
the article itself they call it this labor market twilight
9:29
zone because quite frankly, it is a bit different this time.
9:33
It does look and feel a lot different this time
9:35
in the labor market than I think most any other
9:38
time in US history.
9:40
Speaker 2: So that's where we stand at the moment. Mohammed el Arian,
9:43
who previously was the chief executive officer of PIMCO, who
9:48
at the time I think was the largest bond mutual
9:52
fund operator in the world. He's also been the chief
9:56
Economic Advisor at Alliance and basically is you know, thought
10:01
of as a pretty good authority on the overall economy,
10:04
but specifically on rates and bonds, and over the last
10:07
four years especially, has spent a lot of his time.
10:12
Speaker 3: Evaluating and criticizing the Federal serve.
10:14
Speaker 4: He's been very skeptical at times about their policies, as
10:17
have we.
10:17
Speaker 2: And he makes a point here which is again I
10:21
don't know that it is the point for right now necessarily,
10:25
but it's one that has served people well over the
10:27
last twenty one months, which is this economy for the
10:32
last almost two years has had one consistent story to it,
10:37
and that is that it's been stronger than people wanted
10:41
to give it credit for at every juncture. And it
10:45
is possible that we're just seeing evidence of that again.
10:47
Though again you've got, you know, some other things that
10:50
have lined up against it now. But ultimately, betting against
10:55
the US economy for the last two years and saying hey,
10:57
recession is imminent has generally gone really really bad for you. Now,
11:03
it doesn't mean that that'll be the case forever, because
11:05
nothing is forever. Frankly, quite honestly, that has been the
11:10
case since O eight. If you just look at you know,
11:15
American exceptionalism in its economy and just say, hey, at
11:19
any point since two thousand and eight, did you bet
11:22
against the United States in favor of betting on another
11:25
country's market or economy?
11:28
Speaker 4: The answer is you. I mean, you know, I'm sure
11:30
we can find specific examples. You know, did some country
11:33
in South America perform better for an extended period of
11:35
time over the US. Sure, I'm certain that there's that
11:37
that's the case. But when you look at it of
11:40
US versus Europe, versus China versus pretty much anywhere else
11:43
in the developed world has been Has there been a
11:45
better place to bet than the United States?
11:47
Speaker 3: And the answer is largely, but no.
11:49
Speaker 2: I feel like this part of the cycle has just
11:51
been people have been much more for recession, almost like
11:55
it's been out there. It's like, yeah, oh, the tenure treasure,
11:58
the yield curve just in vert, here comes the recession.
12:02
A Silicon valley bank just failed, Here comes the recess.
12:05
Like it's been one thing after another.
12:06
Speaker 4: Agreed, But I think that there was a lot of
12:08
that in twenty eleven through twenty fifteen too.
12:11
Speaker 2: I think that if we have the economy sucked then,
12:13
like to be fair, they like the economy was really
12:16
bad then, and there were times where the US was
12:21
within a hair's breath of like going into a really
12:23
bad spot. We haven't really been that close to recession
12:27
since the first half of twenty two, yeah, I mean
12:31
other than that, like that, there hasn't been anything that's
12:33
gotten that close and it has been well, this is
12:36
gonna be What does US in makes you sound smart
12:40
at parties, but generally bad investment strategy. Let's take a
12:45
quick break here when we come up, talk about how
12:48
the bond market is handling the latest rise in interest
12:51
rates and what it means going forward.
12:53
Speaker 1: The Financial Exchange streams live on YouTube. Like our page
12:58
and stay up to date on breaking business news All
13:00
morning Loan. This is the Financial Exchange Radio Network. Miss
13:05
any of the show. The Financial Exchange Show podcast is
13:08
available on Apple, Spotify, and iHeartRadio. Hit the subscribe button
13:12
and leave us a five star review. This is the
13:15
Financial Exchange Radio Network.
13:19
Speaker 5: This segment of The Financial Exchange is brought to you
13:22
in part by the US Virgin Islands Department of Tourism.
13:25
The US Virgin Islands are Saint Croix, Saint Thomas, and
13:27
Saint John. Summer is over, so now's the time to
13:31
start looking at a fabulous holiday vacation, and there's no
13:34
better place than the US Virgin Islands. Enjoy perfect weather,
13:37
world class dining, incredible beaches and a vibrant nightlife. No
13:41
passport is needed, and there's no money to exchange. Take
13:44
your next vacation in America's Caribbean paradise the United States
13:48
Virgin Islands. Go to visit USVII dot com to book
13:51
your trip. That's visit USVII dot com.
13:55
Speaker 2: Couple pieces from the bloomy Berg about what's going on
13:58
in the US bond market right now, and it's kind
14:04
of wild where we are. So on the back of
14:06
Friday's bumper jobs report, you get the tenure treasury moving
14:10
up about I think it was thirteen basis points on
14:12
the day today thus far it's up another four and
14:17
a half. And you also had four mortgages, the thirty
14:21
year fixed rate mortgage nationally the average according to Mortgage
14:24
News Daily up over a quarter percent to six point
14:27
five to three, up twenty seven basis points on Friday
14:31
following that, and it makes sense why it blows out
14:36
more than just what the tenure did, because here's if
14:39
you are a company that's making a mortgage loan, there
14:42
are two things that concern you. Potentially, will someone not
14:47
pay this loan back? And will inflation go higher? And
14:51
will I be able to sell this mortgage if I
14:53
need to or choose to sure? And this is why
14:57
one of the most important metrics is in the mortgage
15:01
market is the spread between the ten year Treasury and
15:06
the thirty year fixed rate mortgage. Historically, if you look
15:09
at it and I have the data going back to
15:12
nineteen seventy one, so I've got fifty three years of
15:15
data here. Fifty three year average is that the thirty
15:19
year fixed rate mortgage is about one in three quarters
15:21
percent above the ten year treasury. We're at two and
15:24
a half, were at two two seven as of the
15:27
last number that I have after this, it's gonna be
15:29
like two four. Yeah.
15:31
Speaker 3: Yeah.
15:32
Speaker 2: So you look at this and you say, okay, why
15:34
you know, when is this blown out and when is
15:36
this spread widened? Historically a couple different times. The first
15:40
is two thousand and eight, where it blew out to
15:41
almost three percent. The reason then wasn't because of high inflation.
15:45
It's because the collateral sucked. No one knew what houses
15:49
were worth, and so it was like, nope, I need
15:52
to get really paid on this mortgage in case I'm
15:54
stuck with it because that house is not worth what
15:57
you think it is.
15:57
Speaker 3: And turned out you got stuck with it.
16:00
Speaker 2: Recently, starting in April of twenty two, you've had this
16:04
you know, blowout to the top side again between about
16:06
two and a quarter and three percent higher, and this
16:09
time it's been because of inflation. Hey, inflation's running you
16:13
know seven eight nine percent and twenty twenty two. No,
16:16
I'm not just gonna be happy getting you know, call
16:20
it five and a half on a mortgage. You better
16:22
pay me seven because I'm nervous about where inflation is.
16:25
I gotta get paid on this loan. They then, you know,
16:29
the these this spread peaked out north of three in
16:32
the middle of twenty twenty three, and subsequently you know,
16:37
it's come back down into the low to mid twos
16:39
because the inflation puzzle has kind of dissipated. So if
16:43
you get a hot jobs report, first thing that banks think,
16:46
especially they see the tenure going up. They're like, we
16:49
gotta make sure we don't get burnt by inflation again.
16:52
We're gonna raise rates faster because we don't want to
16:55
get hurt if there's a rebound here. Now I don't
16:57
think that's what's actually happen at the moment, but you
17:01
can see why banks would react that. But you can
17:02
see why banks would. So you've got this situation in
17:06
the bond market now that we haven't really had to
17:08
worry about all year, where hey, interest rates are starting
17:11
to tick up a little bit in the long end,
17:13
and things are looking a little bit dodgy out there.
17:16
And so if everyone you know, piled into long bonds
17:20
because it was the guy was the black Rock guy,
17:22
like chief strategist who was like, this is the golden
17:24
age for fixed income. It's like, okay, I guess you
17:27
didn't live through the eighties or nineties because that was,
17:29
you know, pretty good for fixed income. But you know,
17:32
you get everyone all bold up on hey, lower rates
17:34
are coming, and I won't lie. It would be kind
17:37
of interesting if you just got rug pulled on this
17:39
and it's like, oh, get rates are either not moving
17:43
or hey, they start ticking back up a little bit.
17:45
Speaker 4: I want to talk a little bit about terminology and
17:49
a phrase that's been tossed around a lot, and is
17:52
tossed around in this article two of the landing, the
17:55
soft landing, the hard landing, no landing now is what's
17:58
being described. What did you do check the hard go
18:01
around or something like that.
18:02
Speaker 2: Yeah, we did, we did that one already.
18:06
Speaker 4: The point that we've gotten to in the way media
18:08
describes all this stuff I view as really inadequate, and
18:12
we've tried to solve that. You and I chuck by
18:14
I think putting some timelines on this stuff and you
18:17
can go pull the tape from like January of this year.
18:20
What we basically said is, look, if you want to
18:21
have a soft landing, what that means to us is
18:25
that by year end, mortgage sorry inflation nor unemployment increases
18:30
over four and a half percent.
18:31
Speaker 2: Were close.
18:33
Speaker 4: It looks like we might get that, But I think
18:36
it's important to understand that even if we do.
18:39
Speaker 2: You don't stay there forever.
18:40
Speaker 4: Yeah, it constantly evolves, and so we might get there
18:44
right by by January. We might know that, Hey, you know,
18:46
by our definition, we reached a soft landing in the
18:49
fourth quarter of twenty twenty four, and we might be saying.
18:53
Speaker 3: At that exact point in time.
18:54
Speaker 4: And by the way, it doesn't look like it's going
18:55
to stay here for very long because this risk factor
18:57
is playing out. And so I think the point that
19:01
I would make is you will never see financial media
19:04
describe anything as a soft landing here unless it's maybe
19:07
twenty years out and somebody's looking back at it in
19:10
the you know, in the twenty forties, when they're looking
19:12
at all this stuff. Because the economy constantly evolves, changes,
19:17
and there is no landing for the economy.
19:20
Speaker 2: Do you known't you get after the soft landing.
19:23
Speaker 3: What's that chuck?
19:24
Speaker 2: The tepid gate change. That's what's coming next for the
19:27
US economy. After this quick break, Wall Street watches next.
19:38
Speaker 1: Like us on Facebook and follow us on Twitter at
19:40
TFE show. Breaking business news is all ways first right
19:44
here on the Financial Exchange Radio Network. Time now for
19:49
Wall Street. Watch a complete look at what's moving market
19:53
so far today right here on the Financial Exchange Radio Network.
19:57
Speaker 5: After notching it's fourth straight winning week mark, It's today
20:00
are in negative territory slightly as Wall Street continues to
20:04
react to his stellar September jobs report on Friday and
20:07
assess if the Fed main fact pull off a soft landing.
20:10
Speaker 2: Right now, the.
20:11
Speaker 5: Dow is down by about a third of a percent,
20:13
or one hundred and twenty eight points. S and P
20:16
five hundred down about a quarter percent or fifteen points.
20:20
The Nasdaq down by third of a percent as well.
20:22
Russell two thousand is off by half a percent. Ten
20:25
year treasureil back up above four percent, up four basis
20:29
points today today now at four point zero two percent,
20:33
and crude oil is up nearly two percent higher, trading
20:36
just below seventy six dollars a barrel. Fives are up
20:39
by four percent after The Wall Street Journal reported that
20:42
activist investor Starboard Value has taken a roughly one billion
20:46
dollar stake in the pharmaceutical giant and wants the company
20:49
to make changes to turn its performance around. Elsewhere, Apple
20:54
was downgraded by Jeffries to hold from buys, saying near
20:57
term expectations for the iPhone sixteen in seventeen are too
21:01
high after weaker than expected initial demand. The Jeffreys analysts
21:05
noted that a Apple's AI capabilities leading to an accelerated
21:09
smartphone replacement cycle is a premature catalyst. Apple down by
21:13
two thirds of a percent. Wells Fargo downgraded Amazon to
21:17
equal weight from overweight, citing slowing growth and competition from Walmart.
21:22
Amazon down by two and a half percent. And on
21:25
the economic data front, this week, we'll get a look
21:28
at FED meeting minutes on Wednesday afternoon, as well as
21:31
the Consumer Price Index on Thursday morning. We'll also have
21:35
the official kickoff to third quarter earning season, where Delta
21:38
will report on Thursday morning and banks including JP, Morgan Chase,
21:42
and Wells Fargo will post their results. Then I'm Tucker Silvan.
21:46
That's Wall Street Watch.
21:48
Speaker 2: Mike, A couple other notes, just on the bond market.
21:50
If we have time, which we do. Two years ago,
21:57
the yield curve inverted, meaning that the two year yield
22:01
was higher than the ten year yield. Okay, about a
22:05
month ago, the yield curve uninverted, mean that the two
22:10
year yield was back below the ten year. Both of
22:14
these were acclaimed by people at the time to be
22:16
signs of imminent recession.
22:18
Speaker 4: Yeah, and historically the two to ten year yield inversion
22:21
has been one of those relatively reliable, though imperfect, recession indicators.
22:28
Speaker 2: Mike, what does it mean when the two year tenure
22:32
yield yield reinverts a second time? Because it did this
22:39
morning briefly for about an hour. What do we do
22:43
with that? You don't know, Like, we must have to
22:48
do something.
22:50
Speaker 4: I think you stack it in your pile of potential
22:53
recession indicators. And look, I'm open to the idea that, hey,
22:57
the two ten year yield inversion we saw in twenty
23:02
twenty two didn't end up being relevant because the craziness
23:06
of COVID stimulus.
23:08
Speaker 2: Re inverts and then reinverts and then reunin Like, what
23:11
do I do with all these mics?
23:13
Speaker 4: I don't know what you do with all of them
23:14
other than to say, it's been a pretty weird economy.
23:17
But I don't think we should entirely throw them out.
23:20
And you know, could you convince me that, hey, the
23:23
past two years was every recession indicator broken, and now
23:28
some of them are going.
23:29
Speaker 3: To start working again.
23:30
Speaker 4: Sure you could convince me that there are logical reasons
23:33
why people look at the two ten year yield curven
23:35
version and say that is a reliable sign for recession.
23:39
It speaks to behavior of investors and speaks to concern
23:43
about the long term. None of that stuff, you know,
23:45
all that stuff remains true. It just didn't work this
23:48
time around.
23:48
Speaker 2: Also, the ten year US treasury back above four percent now,
23:52
so it is at four point oh two as we
23:54
sit here at the moment, pretty sharp move up, you know,
23:57
about half percent in the last what two weeks or
24:01
so now, And again you just wonder, you wonder a
24:06
couple of things. Are individuals caught off guard? Like? But
24:08
the other piece in the part that you know can
24:10
kind of break markets in the short term is, hey,
24:12
how many hedge funds levered up thinking that rates were
24:15
heading down as the economic data was getting worse and
24:18
how much pain is there in hedge fund world where
24:20
they're offsides, you know, and leveraged to it, not just
24:24
owning you know, the ten year treasury outright or something
24:26
like that. Piece from the Wall Street Journal date it's
24:30
titled how long can the US economies goldilocks Moment last? Well,
24:35
a few interesting things here just as we kind of
24:39
go go through here and try to digest, you know,
24:44
what's what's going on the first so kind of jokingly
24:48
I said that after the soft landing, you end up
24:51
with the tepid gate change. And this wasn't just a
24:55
throwaway remark, like if you're trying, if you're trying to
25:00
actually name where the US economy is heading.
25:03
Speaker 3: Only in airport terminology by the way.
25:05
Speaker 2: Yes, only using air airplane and airport terminology, the I
25:09
guess tepid wouldn't be right, because you know, it's been
25:12
hard versus soft, so this would be kind of the
25:18
the softest gate change is where we're heading. And by
25:21
that you've been on a plane. To anyone who's been
25:24
on a plane, you're sitting there, you land, and then
25:27
you're saying, okay, you know, great, we were finally here,
25:29
like we made it to you know, to Peka, and
25:33
we're we're ready.
25:33
Speaker 3: To always I always to peak.
25:36
Speaker 2: I just I love the place, man, I just I do. Great,
25:41
we made it here. Let's let's get off the plane.
25:43
And you sit and you wait, and you wait some
25:48
more anywait, And finally the pilot comes on and says, uh,
25:51
excuse me, passengers, we're just waiting for uh, there's a
25:55
plane in our way at our gate right now. It
25:57
seems they're still pulling out and we're just getting getting
26:00
ready for them to move that equipment and then we'll
26:01
have you out as soon as possible. Appreciate you flying
26:04
with us today, and you know, have a good day,
26:06
and like that. That's you know, you're okay, great, we're
26:09
waiting for this plane to you know move, and and
26:11
then he waits the morn, Well, we've actually found another
26:13
gate here. We're gonna be you know, heading to gate
26:15
fourteen instead of thirteen. And I appreciate your patience, Thank
26:17
you so much. This is where the US economy is
26:21
going after this if if we end up getting the
26:25
soft landing in that hey, there's no movement in the
26:28
labor market.
26:29
Speaker 3: It's kind of waiting around.
26:30
Speaker 2: You're just kind of sitting there. It's not doing anything.
26:35
You're kind of like poking it with a stick. And
26:37
it might just be that way for a while, where hey,
26:39
it's really slow. It's not bad because it's not falling apart,
26:44
but you're just okay. You might have like a six
26:47
month period afterwards where you're just kind of stuck in
26:50
neutral and nothing's happening in that that, which which could
26:53
be great.
26:53
Speaker 3: By the way, right, there were large swaths of time
26:56
during the late twenty tens when you and I found
27:00
ourselves not needing to discuss the Federal Reserve every single day.
27:05
Speaker 2: No, it's it's fine. Now, this would be kind of unusual,
27:08
and that the labor market doesn't normally just sit somewhere.
27:15
But again, this has been a business cycle where all
27:17
kinds of stuff has been broken, and so I do
27:19
think we have to acknowledge that this is a possibility. Sure,
27:22
you could still get like, you know, something that ends
27:24
up worse you know, or better, depending on how things go.
27:28
But I think there is a possibility that hey, so
27:31
many companies are just sitting there saying, well, we don't
27:33
really have a ton of extra demand right now, so
27:35
we don't need to hire like crazy, but we like
27:38
all of our employees and we're still profitable, so we're
27:41
not really trying to get rid of anyone. That could
27:44
be an equilibrium that sticks around for a couple quarters here.
27:47
Speaker 4: So what does that mean for I guess different and
27:50
obvious groups of people. I think what it might mean
27:52
for the unemployed or the recent college grads is a
27:57
relatively challenging had relatively challenging labor market.
28:01
Speaker 3: Uh.
28:02
Speaker 4: For the individual that doesn't own a home, I think
28:06
it could be an extremely challenging housing market for an
28:08
extended period of time.
28:10
Speaker 2: Or his rates just stay in the load to mid
28:11
sixes and not really much further exactly, you could have
28:15
mortgages not moving and none of the required pressure to
28:18
force people to sell their homes other than you know,
28:21
the only real pressure that I would see would be
28:23
the aging baby boomer population. Who is you got the
28:26
five d's of housing, divorce, death, dandelions, no diamonds. Yeah,
28:33
the font's a little small diapers and conditioner. That doesn't
28:36
even start with a D.
28:39
Speaker 3: Downsizing.
28:39
Speaker 2: Downsizing, Oh, okay, that's the thing.
28:41
Speaker 4: But yeah, if you're in a housing or in a
28:45
labor market rather, that's not bouncing around a whole lot.
28:48
That could mean that, you know, people are perfectly happy
28:51
where they are, but are not moving or not relocating
28:54
for jobs and are not forced to sell their homes
28:57
out of a need for relocation. And for investors, I
29:02
don't know the answer. For the investors, that comes back to,
29:05
you know, you're no longer than relying on the FED
29:08
to boost your returns. You're you're looking for probably what
29:13
we've been talking about all of the last couple of years,
29:15
which is where is the productivity increase coming from?
29:18
Speaker 2: And look, I still think this is probably an edge
29:21
possibility of Hey, maybe there's like a five to ten
29:23
percent chance that you end up with this. But again,
29:28
you look at the world probabilistically when you're trying to
29:31
figure out, hey, where's the economy going four or five
29:34
months ago, Hey, is the economy heading into recession by
29:36
a year end? Probably not. There's maybe you know, a
29:39
twenty percent chance sure by you know, early September. Hey,
29:43
like we're getting up there. It's kind of a coin
29:45
flip the last you know, a couple of weeks. Now, okay,
29:48
maybe you know you've seen things, you know, get a
29:51
little bit better as far as the economy. So maybe
29:54
there's only you know, a forty percent chance of recession
29:57
in the next few months or so. Like this is
29:59
how you kind of of evolve your views over time.
30:02
And again, no one knows where the economy is going
30:07
to be in three, six, twelve months. And the other
30:09
thing is it doesn't stay there for very long. It
30:11
tends to be in motion. But I do wonder if
30:15
there's maybe just a period of stagnation that's coming. That's
30:17
not not bad in that hey, you know, like the
30:21
the economy does nothing, but it's just the labor market's
30:25
a little bit stale. There's not much movement. It's just
30:28
not a very dynamic economy, even though it hasn't fallen apart.
30:31
And then afterwards, you know, you kind of get move
30:33
in one direction or another. But yeah, i'd buy it. Well,
30:36
we'll see where things go. Let's take a quick break here.
30:38
When we come back, let's see I want to talk
30:43
a little bit about insurance claims related to Hurricane Helene.
30:47
I think there's something that we need to cover on this,
30:50
and so let's talk about that when we return.
30:53
Speaker 1: Text US six one, seven, three six, two thirteen eighty
30:56
five with your comments, and questions about today's show. Us
31:00
know what you think about the stories we are covering.
31:02
This is the Financial Exchange Radio Network, breaking business and
31:07
financial news first throughout the day, only here on the
31:11
Financial Exchange Radio Network.
31:23
Speaker 2: All right, Mike, we got a piece from the Wall
31:25
Street Journal to title homeowners hit by Helena or in
31:27
for an insurance claim shock. And the big thing is
31:31
that when you look at how homeowners insurance policies have
31:35
evolved over the years, a number of them have carved
31:37
out significant exclusions, specifically for hurricanes, just because insurers have
31:43
gotten absolutely wrecked by hurricanes in the past few years
31:46
in particular, And so unless there is specific coverage on
31:52
your policy, it's not a guarantee that your current homeowner's
31:55
insurance is going to necessarily cover all of the damage
31:59
caused by Helene in the event that you had some. Yeah.
32:02
Speaker 4: Unfortunately, every time something like this swings through you hear
32:05
a lot of stories of people misunderstanding their insurance policies
32:09
and what they feature.
32:11
Speaker 3: You know, common one.
32:12
Speaker 4: Over the last few years, as premiums have gone up
32:14
and up, a really easy way to stabilize that premium
32:18
increase has been something relatively dangerous which is, let's bump
32:22
up our deductible. And so you know, maybe a standard
32:27
deductible on a homeowners insurance policy might be five thousand dollars,
32:30
you see them up to fifteen to twenty thousand dollars
32:33
in some cases in order to really save on that premium.
32:35
And then you get hit with a situation like this
32:38
where maybe you had some flooding or you know, something
32:41
caused by an actual covered claim and oh, yeah, it's
32:45
ten thousand dollars worth of damage, but guess what your
32:47
deductibles like twelve? So do you even file a claim?
32:50
Probably not in those cases, but other things. Most home
32:55
insurance policies don't cover flooding. And so again, if you
33:00
have something where yes, a hurricane came through, but the
33:04
damage wasn't you know, wind or hail or any of
33:07
that related or you know, trees falling on the house.
33:10
If the damage was because of a storm surge that
33:13
you know flooded your home, or a river that over
33:15
you know, went over its banks, and you don't have
33:18
separate flood coverage, you may not get anything for at
33:23
least a portion of that. The insurance might still say, yeah,
33:26
your roof was wrecked by the wind. So we're gonna
33:28
give you twenty thousand dollars for a new roof, but
33:31
it doesn't matter if you have, you know, eighty thousand
33:33
dollars in remediation that you have to do across the
33:35
house because the whole thing was flooded.
33:37
Speaker 3: Yeah.
33:38
Speaker 4: Do you think this is starting to change purchasing behavior?
33:43
I mean, I know it is in Florida, but that's
33:45
kind of an extreme example. Like across the country. Now,
33:49
you know Zillow, redfin, these listing platforms are starting to
33:53
put out flood risk scores on properties.
33:55
Speaker 3: That they list. Do people actually look at that stuff?
34:00
Speaker 4: Do they care when they are looking at properties today
34:03
to a higher degree than they did twenty years ago?
34:05
Speaker 3: Do you think.
34:07
Speaker 2: It probably depends on the person who's I mean you're
34:10
talking like in the aggregate.
34:11
Speaker 4: Yeah, I mean, because you know, for a long time,
34:13
I think this was really just really relegated to Florida
34:16
where people were worrying about this stuff. And perfect example,
34:20
I know somebody personally who moved down to very close
34:24
to Asheville. Yeah right, you know, ground zero of a
34:28
lot of the stuff that has happened of the last
34:29
few days. I can tell you firsthand that the last
34:32
thing on their mind was flooding risk for their area.
34:35
They're up in the mountains, they so you know, certainly
34:38
in some of the low lying areas, you could see
34:40
how that could happen. But they specifically avoided Florida for
34:44
a number of reasons, including the hurricane patterns. And I
34:48
don't know that there's many places in the country that
34:50
don't have some type of risk when it comes to
34:52
environmental disaster.
34:54
Speaker 5: Spases generally serve as the beneficiary to your IRA or
34:57
life insurance policy, but naming your state the beneficiary has
35:01
quite a few benefits. Cushing and Dolan are experts in
35:04
elder law, and they can help you protect your assets
35:07
from probate and the nursing home. By naming your estate
35:10
as a beneficiary, you can avoid the probate process, lessen
35:13
the chance of creating any income tax issues on your rmds,
35:18
and enjoy enhanced estate tax reduction. Call Cushing and Dolan
35:22
right now at eight six, six, eight four, eight five,
35:25
six nine nine and ask for their brand new guide
35:28
called why name You're in a State in IRA beneficiary?
35:32
Learn about these benefits and others, and provide peace of
35:35
mind for you and your family during your retirement years
35:39
that number again eight six six eight four eight five
35:42
six nine nine, or we can request it from their
35:45
website legal exchange show dot com.
35:48
Speaker 1: The proceeding was paid for and the views expressed are
35:50
solely those of Cushing and Dolan. Cushing and Dolan and
35:53
or Armstrong Advisory may contact you offering legal or investment services.
35:56
Cushing and Armstrong do not endorse each other and are
35:58
not affiliated.
36:00
Speaker 2: Like, are you pro or anti giant skeleton?
36:06
Speaker 3: So long as it's just a decoration? Very pro? What
36:09
do you mean?
36:10
Speaker 2: So long as it's just like it's a real twelve
36:14
foot skeleton, like giants are real?
36:17
Speaker 3: Any of that? I'm out.
36:18
Speaker 2: I just wanted to clarify. So obviously, these these twelve
36:22
foot skeletons that Home depot Cells and now a couple
36:24
other companies that they are selling them as well. They're
36:27
they're popping up everywhere. And look, they were originally kind
36:29
of a cute novelty where you're like, oh, I a
36:31
goog get that that thing's huge, Like isn't that amazing?
36:34
And now you see them on every block and you're
36:35
kind of all right, like it's fine.
36:37
Speaker 3: Less original, no got it.
36:38
Speaker 2: The thing I never understand are people that you know complain.
36:42
Just as an example that the Wall Street Journal has,
36:44
you know, this piece on how some people's neighbors are
36:48
complaining about them in anonymous hoa complaint that I also
36:52
love this one family name, there's the Big Old bone Ski.
36:55
Great name. Complain that the Big Old Bone Ski was
36:57
bringing down property values. No, it's not. You're a freaking
37:01
like it's a skeleton in someone's yard. That's not. No
37:06
one's gonna be like, you know what, I really want
37:08
to live here, but someone's got a giant skeleton in
37:11
the yard. I'm not okay with that. I'm gonna pay.
37:14
Speaker 3: Less, I would agree.
37:16
Speaker 5: How long are they leaving it up for this? If
37:19
it's a thing. No, that's stupid.
37:21
Speaker 4: I'm gonna criticize you exactly, but I'm not gonna write
37:25
you a strongly worded letter.
37:26
Speaker 3: But you know that's that's.
37:28
Speaker 2: The You really have nothing better to do than write
37:33
someone a letter about a giant skeleton in their front yard.
37:37
Speaker 3: Chock, Have you met the general population?
37:39
Speaker 2: I know this?
37:40
Speaker 3: This is like, have you met any of your neighbors?
37:42
Speaker 2: This is ridiculous, though, it's just it's a it's a giant.
37:46
Speaker 4: We received anonymous letters from a neighbor a few years
37:50
ago complaining about a new fence that a neighbor was
37:52
putting up.
37:54
Speaker 5: How do you complain about a fence.
37:56
Speaker 2: Yeah, it wasn't tall enough.
37:59
Speaker 1: That's weird.
38:00
Speaker 4: Ah, of course people are whining about this.
38:03
Speaker 2: I don't know.
38:05
Speaker 3: My kids love them. I'm all four.
38:06
Speaker 2: Yeah.
38:07
Speaker 3: Yeah, we have a we have a ten foot inflatable ghost. No.
38:10
I take it down on November first, but you know what,
38:12
that's fine whatever.
38:14
Speaker 2: I'm gonna get three of these next year and stack
38:17
them on top of one of them. Yeah, it's a
38:19
thirty six foot skeleton tower. U break. More financial exchange
38:22
coming up.