Latest / The Financial Exchange Show / Wall Street wants more big rate cuts. Fed officials don't agree.

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Wall Street wants more big rate cuts. Fed officials don't agree. · The Financial Exchange Show

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by Veterans Development Corporation. This is the Financial Exchange with
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Chuck Zatda and Mike Armstrong.
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Speaker 2: Chuck, Mike and Ben with you, and as we kick
1:15
off our show this Friday, there are one and a
1:18
half trading days left in September and stocks are still
1:22
up for the month, with the S and P five
1:24
hundred in the green pretty significantly. Might I add as
1:29
we head towards the close of the month, Thus this
1:33
is your daily reminder that will continue through Monday that
1:38
despite the bad four days to start the month, it
1:41
was not in fact indicative of September being a horrible
1:45
month for stocks.
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Speaker 3: And you want to take bets on how many times
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Chuck brings up that same point in the month of October.
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Speaker 2: I'm about September. I mean done, No, no, what September
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is done? I'm done going. Once September is done, I'm done.
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But as you can tell this, m a trick them
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into doing it in October. This one is really grinded,
2:05
my gears. It has been basically since that piece was
2:07
published on September ninth. Yeah, and now as we sit
2:11
here on September twenty seventh, and the S and P
2:13
five hundred has made new all time highs multiple times
2:17
this week. I'm sorry to say that you can't judge
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a month by.
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Speaker 3: Its first four days, nor can you judge it a
2:24
year by its first four days, as they did on
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the first four days of January of this year, where
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they said, well, so goes January, so goes the year,
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and we were sitting here like, guys, it's January fourth.
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Speaker 2: But you can't say the January has been bad yet.
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It wasn't bad yet.
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Speaker 3: So I think the overall message is one that we've
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reiterated one or two times before, which is use exercise
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caution when listening to anybody about their prognostications about where
2:53
the markets are going to go anytime in the future,
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near or far.
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Speaker 2: Let's talk a little bit about data that we were
3:00
received this morning, the Personal Consumption Expenditures Price Index, the
3:05
Fed's preferred measure of inflation. We received that data at
3:10
eight thirty this morning, and what we saw was that
3:12
the headline PCE price index came in at point one
3:15
percent for the month, in line with expectations. Year over year,
3:19
declined further to two point two percent. The core PCE
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data came in at point one percent a little bit
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better than expected, which was point two and for the year,
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because it was replacing a lower value from last year,
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actually bumped up slightly from two point six to two
3:38
point seven percent. But basically all of that hotness was
3:42
in the first quarter of this year, and other than that,
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we continue to see a picture where the rate of inflation,
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meaning that the changes that we are seeing in prices
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are simply not a concern for the Federal Reserve at
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this point, nor should they be anything that is really,
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you know, causing policy makers anywhere in the US to fret.
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The six month annualized core PCE is down to two
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point four, three month annualized core PCE down to two
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point one, and so there's nothing in the inflation data
4:19
right now suggesting any meaningful inflation pressure that would be
4:24
caused for concern when it relates to how the FED
4:27
might conduct monetary policy here.
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Speaker 3: Yeah, certainly seems that way, especially from the Fed's preferred
4:31
gage of inflation, the highest. So we have two measures
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of inflation, as we frequently talk about CPI and PCE.
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They measure different things, but generally point in the same direction.
4:41
Usually the highest reading we're getting on any of these
4:45
inflation measures on a year over year basis is now
4:47
three point two percent. That's as close to waiving the
4:52
mission accomplished on inflation banner as you get. No, not
4:55
mesased accomplished on self landing, but like that is well
4:58
within the Fed's comfort change. And when you even look
5:01
at the more recent data, it's even more compelling. Now
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looking at the trends on CPI, I will note a
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slight uptick over the last four months on inflation there,
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specifically the core data. You've gone from zero point one
5:15
percent month of a month in June to zero point
5:17
three percent in August. But with what we're seeing in
5:20
the energy markets right now with oil, I think.
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Speaker 2: On sorry I pulled Canada by mistake.
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Speaker 3: Oh yeah yeah, different measures.
5:29
Speaker 2: Yeah, I'm like, these are not my measures here. Uh yeah.
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The only one that's been even, you know, somewhat warm
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was the August one.
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Speaker 3: Right before that was zero point two and zero point one,
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which is nothing too really right home about. In None
5:44
of these at measures have been even remotely concerning since
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spring of this year, and so I don't know, I
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have a very difficult time being convinced that inflation is
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going to be again anyone that is, you know, pushing
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their views on this past the end of this year,
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I think has no light to stand on. But for
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the rest of this.
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Speaker 2: Year, you didn't even say six months.
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Speaker 3: Yeah, I guess. And you know, you get into fall
6:10
of next year, summer of next year, could you see
6:12
policy coming out that's so stimulative plus at robust housing
6:16
market that we're dealing with inflation again? Sure, but that's
6:19
not gonna be the Fed's fault.
6:20
Speaker 2: Right, you know, exactly like you you look at how
6:22
things can change, and what happens next summer and next
6:25
fall is not a result of what the FED is
6:27
doing right today. You know, if if you have Harris
6:31
win the presidency and you get you know, a free
6:34
car for every home, okay, Like that could be inflationary.
6:37
If you see Trump win the presidency and they're eight
6:40
hundred percent tariffs on everything imported from Mars, okay, like
6:45
there could be problems. But like this is not where
6:48
we are right now, and so it's just not worth
6:52
thinking about what you know, policy changes may or may
6:57
not happen nine months from now with a government that
7:01
we don't know the composition of today.
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Speaker 3: So overall reports slightly beat expectations did not really. I
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think there was only possible downward pressure on markets based
7:13
on this report had they missed to that upside, and
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given that they came basically in line with expectations, it
7:19
did nothing to disrupt markets. So far early trading, you've
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got markets very slightly positive, with the Dow up a
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full half a percent in early trading here, and so yeah,
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general takeaway seems to be what we anticipated, which is
7:33
this inflation report and the rest of them for the
7:35
rest of the year are likely to be kind of nothing.
7:37
Speaker 2: Burgers piece and barons today to Wall Street wants more
7:41
big rate cuts. FED officials don't agree. And look, of
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course Wall Street wants more big rate cuts because big
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rate cuts mean number go up. That's the basic math
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from Wall Street folks. And the question that is out there,
7:54
and this is an interesting one to watch, is look,
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where do need to get to in advance of the
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spring housing season in order to get housing to a
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place where it's creating enough economic activity to either a
8:11
averter recession if we haven't seen one by then, or
8:14
b pull us out of one if we happen to
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go into one in the next you know, three to
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four months, and.
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Speaker 3: It's like guessing where the neutral rate is.
8:23
Speaker 2: I just it's like it look earlier this year, thirty
8:28
year fixed rate mortgage was at seven and a quarter
8:30
in the spring the last it was eight and a quarter.
8:33
So you're down like two percent from the peak. The
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question is where where do you need to get to
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your it's six ' one in change right now. Is
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that enough? Maybe maybe you need to get down to
8:44
like five seven, Maybe you need to get down to
8:46
five to five. But here's here's the tough part in
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terms of how the FED has to figure out where
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to cut rates to. The first is, okay, where do
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we think that you know, mortgage rates need to because
8:57
the FED doesn't control them directly. But that's really what
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we're talking about in terms of the most immediate thing
9:03
that you see in terms of how FED policy affects
9:06
the economy. It's mortgage rates come down and people start
9:09
borrowing again. That's like very simply what they're looking at. Yeah,
9:13
there's more, but that's the biggest thing, right.
9:15
Speaker 3: I Mean, the same thing applies to businesses who aren't
9:17
taking out mortgages per se, but that those rates really
9:21
carry truth throughout the economy.
9:22
Speaker 2: But here's the part that's tough. And here's again you
9:28
look at this and you're almost like, does the Fed
9:29
end up lucking into a soft landing just by virtue
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of how all these things balance out. Let's say that
9:36
the economy is not going into recession, as an example,
9:40
no matter how much the FED pushes on that string
9:42
to cut rates, if they cut rates by a couple percent,
9:45
but the economy is doing fine. The long end of
9:48
the curve, ten year treasuries and things like that, they
9:51
tend to sell off and those interest rates go up
9:53
because hey, growth is fine and we're not concerned about recession.
9:57
And the long end is where mortgages are affected. So
10:00
if there is no recession, the long end moves up,
10:04
and maybe you end up slowing the economy more because
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thirty year fixed rate mortgage goes back to six and
10:09
a half and next to your spring housing season looks
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kind of lackluster. Again. Yeah, on the other hand, you say, okay,
10:17
if you know we need more cuts, well you know
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how do we get that. Well, we might get those
10:21
through recession, but then you're going through a recession to
10:24
get there, and the economy kind of goes in the
10:27
toilet in order to get them. So it's it's this
10:30
really tough spot that the FED might be in where
10:33
maybe the economy needs five and a half percent mortgage
10:36
rates to get the juice needed to avoid recession, but
10:40
the only way to get five and a half is
10:42
through recession that ends up pricing in more cuts.
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Speaker 3: Right like that, that could be where you end up
10:47
catch twenty two. There. Look, we've talked about this before.
10:51
When inflation was ripping at seven, eight percent or even
10:54
five percent, what the FED needed to do was blatantly offvious.
11:00
Speaker 2: Yeah, they needed to go down the Appalachian Trail and hike.
11:04
Speaker 3: This point in time is a lot trick here, and
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so far the results have been I would argue the
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results have been surprisingly solid thus far in terms of
11:16
the rate, in terms of the Fed's navigation of this
11:18
over the last year. We will see if it sticks. Yeah.
11:23
Speaker 2: Look, twenty twenty four is the first time in about
11:24
two and a half years that I think you can
11:26
look at the FED and say, hey, they've done a
11:28
good job this year. Now, the twenty three they were
11:33
okay ish towards the end, but against actually no, they
11:37
were okay ish in the middle. The front end. They
11:40
had the whole blow up of Silicon Valley Bank, which
11:43
you know fed you know, audits had shown, hey, there's
11:47
some problems here before. So they kind of smega on
11:49
their face then, and then they took that victory lap
11:51
in December, right before inflation bumped up again. So twenty
11:56
three was like a C plus. Twenty two in my opinion,
12:00
was D minus ish d you know somewhere, and it
12:05
wasn't as bad as it could be, but it was.
12:07
It was pretty bad this year again. Still you've got
12:11
one more quarter pending in terms of grading them out
12:14
first nine months of the year, as like, let's be honest,
12:20
they've been good this year, and we'll have to see
12:23
how the year finishes up. But so far they've been good.
12:26
Now if this whole thing splats on its face, then
12:28
then look, then they've got a problem because it becomes
12:31
clear that they should have moved sooner. But to this point,
12:35
tough target, Pretty darn good. That good job that they've done.
12:38
And this is from a group that we are typically
12:40
pretty critical of. So this is regarding a group we're
12:44
typically pretty critical of. Quick break here when we come back,
12:48
that's enough interest rate talking, you think, right, let's talk
12:51
about these two stock market sectors that need to be
12:53
treated with caution right after this.
12:57
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14:00
Speaker 2: Like which two sectors need to be treated with caution
14:08
well let's first define this as according to Jeffrey Rubin,
14:13
the president and director of research at Westport, Connecticut based.
14:19
Speaker 3: BRINYI sure ber any associates who I know you're intimately
14:24
familiar with, right, this isn't the first time you've ever
14:26
heard of them. I don't know anything about these people.
14:30
I have no idea where this comes from. And they're
14:33
telling you that they are cautious about technology and the
14:36
energy sector, likely weeks after they've already done something about
14:40
it with their own managed assets. I don't know what
14:43
type of assets they manage, and YadA, YadA, YadA. I
14:47
guess my question would be who on earth should listen
14:51
or care about this? No one, But I think it
14:54
would be only if you are literally having your money
14:58
managed by these people, or if you have some inner
15:03
connection to jeff Ruben that he's telling you about these
15:05
trades at the same time he's telling his clients about them,
15:08
then okay, maybe you can pay attention in those cases. Otherwise,
15:11
this is useless information.
15:15
Speaker 2: Nobody should pay to do with this. I don't even
15:17
know what you do with this. It's a technical trader.
15:19
He's you know, looking at trends. But again, think about
15:24
why somebody like this would be publishing data in what
15:28
is this market watch? The answer is because he wants
15:31
the public to see and hear about it. Maybe it's
15:33
just because he wants to make a name for his firm,
15:36
so that could be, Hey, you know, I want my
15:37
name out there as being cited in an article. Maybe
15:40
it's because he wants to see a shift in the
15:44
trends and paying attention to the trade that he is
15:47
talking about will actually benefit him or his clients in
15:50
some way. But I seriously have no idea what to
15:54
do with this information. Yeah, it's you can file this
15:58
one under the care category of don't make any changes
16:03
to your investment portfolio based on how you emotionally feel
16:06
after reading one piece of investment drivel.
16:08
Speaker 3: Ben I think already knows this, but I'll bring this
16:11
up for our listeners. We don't tease these articles as
16:15
a means of just making fun of Ben and Tucker
16:17
when they put an article in here that makes no sense, Like,
16:21
that's not what we're doing here. What we're doing here
16:23
is trying to caution people about the fact that a
16:26
good chunk of what you read in publications like the
16:30
Wall Street Journal, like CNBC like MarketWatch, and there are
16:35
dozens other seeking alpha whatever it might be, is almost
16:39
completely useless information for ninety nine percent of investors.
16:44
Speaker 2: And there's one really good question that can make you
16:47
a better reader of anything, not just investment related pieces,
16:50
but anything. Why am I reading this now? Because pieces
16:55
don't just get published in major publications for no reason.
17:00
They're not just sitting there like, hey, we got to
17:03
publish something, which.
17:04
Speaker 3: We sometimes day after July fourth, Yes, but no, you
17:11
gotta find something.
17:12
Speaker 2: But no one's barbecue, No one's reading anything then, you know, like.
17:17
Speaker 3: You've ever tried to do a financial news show on
17:19
July third or July fifth? Let me tell you, Yeah,
17:22
December twenty sixth is a close third there. Yeah, and
17:27
I'm trying to think of other like slowest financial news
17:30
days of the year.
17:33
Speaker 2: Yeah, December thirtieth slash thirty first is usually right up there, Yeah,
17:36
right up there. But you know, July fourth week and
17:41
Christmas New Year's generally there's nobody there.
17:45
Speaker 1: No.
17:45
Speaker 2: First of all, half the stories that we cover then
17:47
are just from three weeks ago anyways. True, Yeah, don't
17:50
tell people that doesn't matter. No one's listening then, anyways,
17:55
they're not listening then uh, let's see, so that is
17:58
what's going on with these two stock market sectors that
18:02
who is it Jeffrey Rubin thinks you need to be
18:06
treating with? And here's the other piece that I always
18:09
come back to on this as well. Let's say that
18:12
you are listening to Jeffrey Rubin because you just you're
18:16
just doing it like that.
18:17
Speaker 3: Your neighbors, cousins, that's your thing, you know, Okay?
18:22
Speaker 2: Is Jeffrey Rubin going to publish the piece when it's
18:25
all clear to buy these are? Like? Are you going
18:27
to be waiting for the other side of the trade.
18:29
Speaker 3: That's why I pointed out, like, the only reason this
18:30
might matter to you is if you're literally his client
18:33
or his next door neighbor. Who's who's going to tell
18:35
all this stuff to every time? Because otherwise what what
18:39
if he never publishes something else? Do you just have
18:42
to permanently be cautious about energy and technology? I guess so,
18:45
you know what what if I don't even want to
18:49
speculate about you know what that could be like?
18:52
Speaker 2: Is it for years?
18:53
Speaker 3: For decades?
18:55
Speaker 2: It's just read these things critically and understand them for
19:00
what they are, which is further material that tries to
19:06
get people to do things to their portfolios without fully understanding,
19:10
because ultimately the money that's made is in the flow,
19:14
not in the actual buying and selling of these securities.
19:19
They get talked about in financial media. Let's take a
19:21
quick break here. When we come back, we got Wall
19:23
Street Watch and then we're talking Open AI.
19:41
Speaker 1: Like us on Facebook and follow us on Twitter at
19:43
TFE show. Breaking business news is always first right here
19:48
on the Financial Exchange Radio Network. Time now for Wall
19:53
Street Watch. A complete look at what's moving markets so
19:56
far today right here on the Financial Exchange Radio New
20:00
Work Now.
20:01
Speaker 4: Markets are in mixed territory. The Dow Jones is up
20:03
three hundred and fifty points, the SMP five hundreds up
20:07
thirteen about fourteen points, and the Nasdaq is down seven
20:11
point eight points. Bristol Myers squibstock is up nearly two
20:15
percent after the US FDA approved Kobenfe as a treatment
20:20
for schizophrenia for adults. It marks the first new type
20:24
of treatment for the mental disorder in several decades. US
20:28
listed shares of the Danish healthcare company Novo Nordisk are
20:31
down three percent after JP Morgan said to expect a
20:34
lower sales figure than Wall Street expects for the third quarter.
20:38
The bank said that is due in part to its
20:39
weaker than typical forecast for Blockbuster weight loss drug we Goviy.
20:44
Costco wholesale shares are down one and a half percent
20:47
after the company missed expectations for fiscal fourth quarter revenue.
20:51
Revenue came in at seventy nine point seven billion dollars
20:55
below an analyst estimate average of seventy nine point nine
20:59
seven billion. Costco was hurt by cautious consumer spending on
21:03
price serier items, as well as falling gasoline prices. Super
21:07
Micro Computer shares are up three point eight percent, adding
21:11
to their twelve Excuse me down three point eight percent.
21:14
I don't even know. I'm gonna skip that one because
21:15
I miswrote it. Dollar General shares are up one percent
21:18
after City downgraded Dollar General to sell from neutral, saying
21:22
Walmart's increasing dominance in retail, especially on pricing, has the
21:26
Dollar store quote on the wrong side. I am ben
21:30
Kitchen and that was Wall Street Watch, Mike.
21:33
Speaker 2: We got a couple pieces here on Open Ai, this
21:37
one from the Wall Street Journal. Turning Open Ai into
21:40
a real business is tearing it apart. And one from
21:43
CNBC Sam Altmanntel's open ai staff. There's no plan for
21:46
him to receive a quote giant equity stake in company.
21:49
Speaker 3: Yeah, just ninety percent. That's not giant. I'm just kidding.
21:53
There's there's no doubt that gets happening percent.
21:55
Speaker 2: So here is what's happening is open Ai on Wednesday
22:00
announced that they were going to be trying attempting to
22:03
transition their corporate structure to a for profit entity with
22:07
a separate arm that could be you know, that's a nonprofit.
22:11
This is different from the current structure where there's a
22:14
nonprofit that then has a captive for profit entity underneath,
22:17
which is kind of also weird.
22:20
Speaker 5: Ye.
22:21
Speaker 2: In any case, you've now had, you know, following this
22:24
another departure. We touched on this after it happened, but
22:28
chief technology officer Mira Murradi, who again chief technology officer
22:33
at tech company, kind of a big person, and she
22:38
along with two other high ranking open ai executives, departed
22:42
immediately after this. And so you're in a situation where
22:48
you've lost a number of co founders of the company.
22:50
I mean again, here here are the co founders of
22:53
the company. Sam Altman, still there, Elon Musk gone, ensuing
22:57
Sam Altman il. Yes, it's Gever gone, Greg Brockman gone.
23:02
Trevor Blackwell, I don't know if he's still there at No,
23:07
he's gone. Who else do we have? Vicky Chung, I
23:11
don't know if she's still there. Andre Carpathy gone. Let's
23:16
see is this guy here? Yeah? This, I don't know.
23:23
Wat check Zaremba is still there. But again, you've lost
23:27
like half of your founders now in the last twelve months,
23:31
and it really again the questions that you have on
23:35
this in terms of what it means for Open AI,
23:38
I think are relatively straightforward. One option is, hey, these
23:44
people are seeing that there are some problems with the
23:46
roadmap ahead, and despite all of the optimism about AI,
23:49
they're getting out before things go bad. The other is, hey,
23:54
we don't agree with this change in structure and we
23:57
want to go somewhere else because you know, we fundamentally
23:59
don't believe this should be a for profit enterprise. Okay,
24:02
it's fine too, and I think it basically has to
24:07
be one of those two things that's that's going on.
24:10
Speaker 3: Yeah, and it can be a combination of those like
24:12
I signed up to work for a non for profit
24:15
in this space, I believe it should remain as such.
24:17
And also this twist over to a for profit entity
24:21
is going to be a disaster and you know, run amuck.
24:25
But there's no other explanation that's really available there no,
24:30
And you know, I've been trying to think of other
24:33
more complicated reasons why you would go from non for
24:36
profit to for profit, but the only one that's available
24:39
to me is because you want to personally make more money, right, yes, right,
24:44
Like I'm trying to rack my brain like is there
24:46
something you really can't accomplish as a non for profit?
24:49
Speaker 2: My answer is no, Like, there's nothing there. The only
24:53
difference is the profit piece. That's why one has not
24:56
for profit in its title. In the other half was.
24:59
Speaker 3: Racking my brain like maybe there's some sort of investment
25:01
you can't make or this that, But the answer seems
25:04
to be no. The only reason you do this is
25:08
because you recognize that there is a tremendous value to
25:12
this company, and money talks, as it always does. You
25:18
might have formed this thing with the best of intentions
25:20
in mind, but at this stage you're kind of envious of,
25:28
you know, all the other companies that are making a
25:30
boatload of money on really practically speaking, the product that
25:35
you first brought to market. And that's what's got to
25:37
be getting under the skin of at least Sam Altman
25:40
and some of these others, is, hey, we pretty much
25:44
we didn't invent this, but we were the first company
25:46
to market with a usable product, and we make in
25:49
their minds, no real money on it, which is not true.
25:54
They've made millions of dollars on it, but we would
25:57
have made, you know, substantially larger amounts with a four profidentity.
26:01
Speaker 2: So that's where where things stand on this. Again. I
26:04
don't know how this is all going to play out.
26:06
I don't know that anything is inherently wrong here, but
26:09
it is notable. When you see this level of C
26:12
suite departures and high ranking executives departing in a relatively
26:16
short period of time, you say, Okay, what's going on here?
26:21
What do they know that I don't And I don't
26:23
know what the answer is.
26:24
Speaker 3: Yeah. Now, there are other examples, like Tesla we've talked about,
26:28
saw a wave of executives depart in relatively short order,
26:32
including what was it, Chuck, their chief accounting officer, at
26:35
one point in the late.
26:37
Speaker 2: Three chief accounting officers in a very short period of time.
26:39
Speaker 3: You're left kind of scratching your head like, huh, is
26:43
there something going on here behind the scenes that is untoward?
26:46
That was what was racking through my brain, is is
26:49
someone cooking the book somewhere at Tesla if you've got
26:51
three chief accounting officers departing and you gave it five years,
26:55
And the real answer was closer to this company nearly
26:59
went bank rather than they were doing something false. Yeah,
27:02
And you know that's not the exact comparison here to
27:07
open AI, because there's no concern whatsoever at this point
27:10
about accounting your regularities. But you're left asking the same question, Hey,
27:15
is there something untoward happening at this company? Is there
27:17
something illegitimate or something lawsuit worthy? Or is it merely
27:25
a disagreement on the on the direction of the company.
27:27
And that's the concerning part that I think you should have.
27:31
Speaker 2: Chinese stocks have surged the last couple of days following
27:35
the announcement of stimulus measures from the People's Bank of
27:38
China and the Chinese government, and the trading activity was
27:42
so frenetic that you had a bunch of trading delays
27:47
as people were trying to place large volumes of trades
27:50
on the Shanghai Stock Exchange in response to these actions.
27:56
Speaker 3: Best I think it was best week that they've seen
27:58
in over a decade on you know, on Chinese it's
28:03
been crazy, and you know, i'd be quick to critique this,
28:06
but we have seen a number of issues at major
28:11
trading platforms across the United States on heavy volume days
28:14
as well, So I'm not sure this is anything unique
28:18
other than a massive surgeon trading over the last few
28:23
really last five days in China.
28:24
Speaker 2: Yeah, I think that's fair. And the other question that
28:27
is going to be present with China in this is, hey,
28:31
we've had a couple of false starts before where China
28:33
has you know, promised stimulus and this and that and
28:37
it's kind of fizzled out. Is this going to fizzle
28:40
similarly or is this a different setup than what we
28:45
have seen the past few times that China has tried
28:48
to revive its economy in the last few years. We're
28:51
not going to know that for three to six months,
28:54
but at least initially a whole bunch of activity here,
28:57
and remember, Chinese markets are going to be closed October
28:59
first through October seventh, in observance of Golden Week. It's
29:02
a huge week of you know, traveling basically all kinds
29:06
of celebration across China during that time. So you're not
29:09
gonna have markets open after Monday for an entire week,
29:13
and so we're not really gonna know how this ends
29:15
up shaking out. Even in the short term. Once we
29:18
get through Monday, there just aren't going to be more
29:21
trading opportunities until mid October. Let's take a quick break here.
29:27
When we return, Uh, let's talk. We got to cover
29:32
this story from Fidelity about let's do it freaking idiot
29:38
customers who are committing fraud and it's going to end very,
29:42
very badly for these customers when they see how the
29:45
law is thrown at them. So we'll discuss that when
29:48
we return.
29:50
Speaker 1: This is your home for the most comprehensive coverage of
29:53
the economy and the trends on Wall Street. Face is
29:56
the Financial Exchange Radio Network. Missed one our shows. Catch
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up anytime by asking your Alexis Smart speaker to play
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the Financial Exchange. This is the Financial Exchange Radio Network.
30:12
Speaker 4: This segment of the Financial Exchange is brought to you
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in part by the US Virgin Islands Department of Tourism.
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dot com.
30:47
Speaker 2: Mike, let's talk about this story from Well, it's not
30:51
from Fidelity, it's it's involved about Fidelity. This is a
30:54
Wall Street Journal exclusive that Fidelity who aget you're not
31:00
familiar with them. They are one of probably the two
31:02
largest brokerage houses in the world.
31:04
Speaker 3: We're broadcasting in New England. If you're listening to us
31:06
in Portland, Oregon, I'll excuse you, but there's nobody in
31:09
New England.
31:09
Speaker 2: This is why I think again. Look Mike, there are
31:12
people in this article that haven't heard of Fidelity. Well, Mike,
31:17
I'm just telling you, not everyone knows who Fidelity is. Okay, Okay,
31:22
there are a lot of people don't even know who
31:23
we are. And they're like, why am I listening to
31:24
these idiots? And we're like, I don't know, Like we're
31:27
just here anyways. So there are a bunch of people
31:30
who decided on to go on TikTok and write about
31:35
what basically amounts to a check kiting scheme. What they
31:38
were doing is they were taking checks from their bank account,
31:44
writing them for amounts that were larger than the amount
31:46
they had in their bank account, depositing them to Fidelity,
31:50
and then either using ATMs that they can access their
31:53
Fidelity accounts on or through a checkbook or other service
31:57
that they have from Fidelity, then falsely sending the funds
32:01
from that Fidelity account to themselves so that they could
32:04
have quote free money. This is illegal and check kiting,
32:09
and like, how does anybody not realize that this is fraud?
32:13
Because these people are morons. I'm sorry, I very rarely
32:17
call people like names, but these are actually the dumbest
32:20
people in the world. Because not only did they do this,
32:23
they then went on TikTok and talked about how this
32:26
was the way for them to take the bank's money,
32:29
join us or be broke. On a September eighth, TikTok
32:33
post titled Fidelity question mark is super imposed on a
32:37
video of a young man urging viewers to send him
32:39
a direct message. I know this isn't a bank account,
32:41
but we can make eighty K and Fidelity is quote
32:45
a dead ass investing bank. Now, like, how stupid are
32:51
you to commit fraud and then post about and then
32:55
post about it on social media. So when I first
32:57
read the story, I was thinking with the hashtag Fidelity
33:00
boys with a Z.
33:02
Speaker 3: Yeah. When I first read this story, I was thinking, Okay,
33:05
Russian people, Russian hackers posing as US citizens, depositing fake
33:12
checks and just morons. No, just like nineteen year old idiots,
33:15
just morons. Now, Fidelity and other brokerage firms out there,
33:21
there is a reason all of the banks have moved
33:24
towards taking like fourteen days to clear checks. Like when
33:28
I go deposit, I had a big refund check from
33:32
the IRS. Recently, I went to Positive Bank of America
33:35
and it was like a twenty day hold on the
33:37
money for them to confirm that it wasn't fraud. So like,
33:40
this is a little bit on you, Fidelity for you know,
33:43
having policies that do allow you to deposit a check
33:45
and then move the money like I don't know the
33:47
same or next day, But my god, these people are idiots.
33:51
Don't commit check.
33:52
Speaker 2: Fraud, right, wait, first and foremost don't commit check fraud.
33:56
And then beyond that, don't know actually do write about
34:01
it on social media, but we can find you because
34:03
you're just like this stuff is what ruins the financial
34:07
system is when people lose trust.
34:09
Speaker 3: Really, because these people are such easily findable idiots, that's
34:13
not gonna ruin anything.
34:14
Speaker 2: Here's the thing. You remember playing Monopoly as a kid, Mike,
34:17
Sure you know you get to that community chess card
34:20
bank er in your favorite collect fifteen dollars, ten dollars. Ye,
34:23
that's not a real thing. There is never a bank
34:24
error in your favor. They will find it. They're good
34:27
at figuring this stuff out.
34:29
Speaker 5: You're not just gonna be able to take Fidelity for
34:33
a ride for eighty thousand dollars, Like what.
34:38
Speaker 3: What what are you thinking?
34:40
Speaker 2: Do you think they're just gonna be like, oh, I
34:41
wonder where this money went. We won't be able to
34:43
figure it out.
34:45
Speaker 5: Like, no, they're gonna know it was you. You can't
34:50
just take eighty thousand dollars from the bank.
34:52
Speaker 2: You're an idiot.
34:55
Speaker 3: Oh boy, I just yeah, there's there's no money. And
35:01
I don't know how anyone looks at this and says, oh,
35:04
that doesn't seem like fraud that I'm gonna end up
35:05
in prison for let's go for it. You will never
35:09
have a bank account again.
35:10
Speaker 2: Fidelity boys more like Fidelity unbankable.
35:16
Speaker 3: So this is a rough transition, but we are approaching
35:21
the end of the month here, and the end of
35:23
the month means that it is towards the end of
35:25
the period of time where you can get a hand
35:28
on your copy of our new guide from the Armstrong
35:30
Advisory Group for the month of September. It's all about
35:34
required minimum distributions, and we intentionally do it, you know,
35:38
towards the back half of the year here, because we
35:41
know people are new to our mds or maybe new
35:44
in the near future and trying to figure out, hey,
35:46
is this based on my age, my birthday? You know,
35:50
what does it matter if I've got a spouse of
35:53
a different age. What if I'm an inheriting an IRA?
35:57
How of the rules changed over the years. We know
36:00
you may have questions about required minimum distributions, and this
36:03
guide's all about answering those questions for you, and you know,
36:07
largely making sure that these new rules that have been
36:10
put in place over the years play to your favor
36:13
rather than working against you and creating a big tax
36:17
scenario down the road. Again, our brand new guide for
36:20
the month of September, which is only available until Monday
36:23
because that's the last day of September, is about required
36:26
minimum distributions and you can get it by calling the
36:29
Armstrong Advisory Group at eight hundred three nine three four
36:33
zero zero one. Again, that's our RMD Guide Required Minimum
36:37
Distributions and you can get a copy by calling eight
36:39
hundred three to nine three four zero zero one.
36:43
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
36:45
registered investment advisor. Nothing in the ad or in any
36:48
Armstrong guide a specific financial, legal or tax advice. Consult
36:51
your own financial tax into state planning advisors before making
36:54
any investment decisions. Armstrong may contact you to offer investment
36:57
advisory services.
36:58
Speaker 3: Can we just I can't get over the story.
37:01
Speaker 2: I wanted to go back to it a couple things.
37:04
First of all, why do banks actually allow people to
37:09
access funds prior to the check clearing. There's there's no
37:15
reason to do so.
37:17
Speaker 3: Well, I think it's a selling point for a lot
37:20
of places of hey, you need cash now anymore.
37:24
Speaker 2: Secondly, this, by the way, I was poking around on
37:27
it check kitting. If you look at like the different
37:29
statutes that apply to it, you can be subject to
37:33
a fine of up to a million dollars, in imprisonment
37:35
of up to thirty years enjoy and you're not going
37:39
to get eighty thousand dollars from Fidelity. I'm sorry.
37:42
Speaker 3: And you're also not a minor because you can't open
37:44
an account at Fidelity as a minor.
37:46
Speaker 2: Other things that are interesting. Why do we have checks
37:50
at this point?
37:54
Speaker 3: Yeah, it's a it's a it's a pretty reasonable question
37:57
in this day and age. I mean, I guess the
37:59
answer because it costs like twenty five bucks to wire
38:01
money around. But it's everyone.
38:05
Speaker 2: In their grandmother's got venmo. Now everyone's got to sell.
38:08
Everyone's got this in that here. Yet I know those
38:10
systems aren't perfect. Either, but you can't do this with
38:12
those because if the money isn't there, the bank won't
38:15
send it. Actually, let's take a quick break. We got
38:18
more financial exchange coming up in a bit