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What you need to know about Bitcoin passing $100,000 · The Financial Exchange Show

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Speaker 1: Veterans Development Corporation. This is the Financial Exchange with Chuck
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1:13
Speaker 2: Chuck, Mike and Tucker with you excuse me?
1:16
Speaker 3: Are you okay? No? Was that a duck.
1:22
Speaker 4: Man that went down the wrong pipe? Jack, Mike and
1:25
Speaker 4: Tucker with you here. And as we kick off our
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Speaker 4: show today, we'll start with a little bit of a
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Speaker 4: talk on Jay Powell's talk that he gave yesterday at
1:35
Speaker 4: the New York Times Deal Book Summit. This was uh,
1:41
Speaker 4: a little bit less explosive than last year when Elon
1:44
Speaker 4: Musk told advertisers to go f themselves.
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Speaker 3: Oh I forgot about that.
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Speaker 2: Yeah. This was where that happened, was at the deal
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Speaker 2: Book Summit.
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Speaker 4: So Jay Powell did not tell all Americans, you know,
1:58
Speaker 4: similar thoughts, but instead the quote that the New York
2:03
Speaker 4: Times leads with here, we wanted to send a strong
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Speaker 4: signal in cutting rates in September that we were going
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Speaker 4: to support the labor market if it continued to weaken.
2:12
Speaker 4: The economy is strong, and it's stronger than we thought
2:14
Speaker 4: it was going to be in September.
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Speaker 3: Your thoughts, Mike, Well, if that doesn't sum up I
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Speaker 3: think just about every major market participant and economists since
2:25
Speaker 3: twenty twenty two. That pretty much well defines it for me, is, hey,
2:29
Speaker 3: we've been pleasantly surprised by how resilient and strong this
2:32
Speaker 3: economy is over the last couple of years. So I
2:38
Speaker 3: guess that lines up with their actions, is Hey, we
2:40
Speaker 3: thought that this was going to get pretty ugly. We
2:42
Speaker 3: were relying on things like the Psalm rule, and so
2:44
Speaker 3: we went with a big rate cut in September. He
2:47
Speaker 3: goes on further to say that, in so many words,
2:53
Speaker 3: that the Central Bank can afford to be more cautious
2:56
Speaker 3: when it considers lowering interest rates going forward. So I
3:00
Speaker 3: think there's a couple pieces to this one. It still
3:05
Speaker 3: appears to me that Jerme Powell and the Federal Reserve
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Speaker 3: is more than willing to cut rates and cut rates
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Speaker 3: rapidly in the face of economic weakness, but they simply
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Speaker 3: do not see it right now.
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Speaker 4: And it matches up with the economic data that we've
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Speaker 4: been seeing. The Feds not, you know, sitting there off
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Speaker 4: in the corner being like, oh, like, here's what we
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Speaker 4: see and no one else is seeing the same thing.
3:24
Speaker 4: If you take a look at the Atlanta Fed's GDP
3:27
Speaker 4: NOW model, which is a now cast, which basically says, hey,
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Speaker 4: through this part of the quarter, how fast has GDP
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Speaker 4: been growing? And granted, you know, we haven't gotten a
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Speaker 4: ton of data yet, we basically have all the October
3:40
Speaker 4: data is in. We're starting to get some November data.
3:43
Speaker 4: But remember quarter is how many months?
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Speaker 3: Mike three?
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Speaker 2: There you go, yeah, And.
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Speaker 4: So you know, we're less than a third, We're less
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Speaker 4: than halfway through all of the data that's been collected.
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Speaker 4: But the latest update to GDP now which came three
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Speaker 4: days ago on Monday, has GDP currently clocking in it's
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Speaker 4: somewhere around three point two percent for the quarter, so
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Speaker 4: continuing to be pretty robust and in fact accelerating over
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Speaker 4: the last month of data that we've seen. This matches,
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Speaker 4: you know, what we've seen since we've been getting this data.
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Speaker 4: So I think in trying to you know, look at
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Speaker 4: this and hey, what is the FED going to do,
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Speaker 4: it seems pretty clear to me, based on the messaging
4:26
Speaker 4: we've gotten in the last week from other FED members,
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Speaker 4: they are going to most likely cut at their December
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Speaker 4: meeting in about two weeks. Beyond that, I think it
4:35
Speaker 4: is very much an open question as to exactly where
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Speaker 4: they go and quite honestly, depending on how twenty twenty
4:45
Speaker 4: five develops. I don't think it's unreasonable to say that
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Speaker 4: there is the possibility of either cuts or hikes depending
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Speaker 4: on exactly how things play out tomorrow.
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Speaker 3: Chuck. At eight thirty am. We have a jobs report
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Speaker 3: this morning. We got initial jobless claims which came in
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Speaker 3: not overly concerning question, few chucks. So expectations according to economists,
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Speaker 3: according to market Watch, is for two hundred and fourteen
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Speaker 3: thousand jobs created, unemployment rate ticking up to four point
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Speaker 3: two percent from the current four point one percent. Yeah,
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Speaker 3: is there a job creation number that changes the Fed's
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Speaker 3: mind one hundred k Sorry, I mean towards not cutting
5:27
Speaker 3: rates at the next meeting.
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Speaker 2: Oh, where they wouldn't cut in December? Yeah? Uh yeah,
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Speaker 2: three hundred and seventy two thousand. Yeah.
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Speaker 3: I was at like the four to five hundred thousand
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Speaker 3: jobs created range, which I think is pretty tough for
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Speaker 3: us to see at this next report. So you're saying,
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Speaker 3: if it's one hundred thousand or under, then they are
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Speaker 3: changing their tune about the strength of this economy.
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Speaker 2: I am. And the reason why is the October job's report.
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Speaker 2: Remember when it came out.
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Speaker 4: This was immediately after hurricanes Helene and Milton the southeastern
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Speaker 4: part of the United States, and the data collection for
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Speaker 4: this was messy, and hurricanes have this effect just because
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Speaker 4: again you have to actually collect the data from somewhere.
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Speaker 4: It's not just that, Hey, we published the report of
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Speaker 4: like how the job's picture is.
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Speaker 2: No, you have to ask people. That's how they go
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Speaker 2: about doing this.
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Speaker 4: And so we said at the time, look, this is
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Speaker 4: a bad report, but you don't really know what it
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Speaker 4: is because it's unclear how much of this is due
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Speaker 4: to the hurricanes, and it's unclear how much of it
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Speaker 4: is due to actual economic weakness. So we basically said, look,
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Speaker 4: you give this one a pass.
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Speaker 3: By the way, the data on that twelve thousand jobs
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Speaker 3: created in the month of October was.
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Speaker 4: Which is bad, Like if you have twelve thousand jobs
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Speaker 4: created each month, and remember there are wide ara bans
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Speaker 4: on this. So just because the government says twelve thousand, hey,
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Speaker 4: upon you know further revision, it could be minus one
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Speaker 4: hundred thousand, it could be plus one hundred and ten,
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Speaker 4: like there's a wide range of where it might actually be.
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Speaker 4: But twelve thousand, if if we accept that as a baseline,
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Speaker 4: it is not good.
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Speaker 2: It's it's it's not.
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Speaker 4: Enough to keep the keep the unemployment rate down. The
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Speaker 4: unemployment rate would be growing in that case, just because
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Speaker 4: the labor force is growing faster than that. So the
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Speaker 4: premise with this report coming in around two hundred thousand is, hey,
7:20
Speaker 4: we got a bad report in October. The November one
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Speaker 4: is going to make up for that because it'll correct
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Speaker 4: for the hurricane plus show the normal job growth. So
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Speaker 4: you'd expect something probably one seventy five to two fifties
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Speaker 4: the range I'm guessing if you looked at the actual
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Speaker 4: distribution of economist projections, it's probably between like one seventy
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Speaker 4: five and two fifty is where you'd expect this to
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Speaker 4: come in.
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Speaker 2: So I think that if you were to get.
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Speaker 4: Something that came in at one hundred thousand, which is
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Speaker 4: kind of where like job growth has been overall, now
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Speaker 4: you've got a two month average of you know, fifty k,
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Speaker 4: which is slow, and that's something that to me says, Okay,
7:59
Speaker 4: you're going full bore for a cut in December, and
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Speaker 4: if the data, if the December data is bad, which
8:06
Speaker 4: will get in early January, you're queuing up another cut
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Speaker 4: for the end of January pretty quickly as well.
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Speaker 3: Yeah, I would agree. There other stuff that was brought
8:14
Speaker 3: up with drum Powell. He was once again asked and
8:16
Speaker 3: probably will be asked every single time he speaks between
8:20
Speaker 3: now in the end of his term, as to whether
8:22
Speaker 3: the Trump administration will break with norms and chip away
8:25
Speaker 3: at FED independence, and he has continued to not really
8:32
Speaker 3: well stand pretty strong on it, I think, is the answer.
8:34
Speaker 3: He gave an emphatic no, said that the FED was
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Speaker 3: created by Congress, Congress would need to be the ones
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Speaker 3: to enact changes to that independence, and pretty emphatically defending
8:44
Speaker 3: the Federal Reserves independence as significantly different than any government
8:50
Speaker 3: agency out there. You know, you're talking about new government
8:52
Speaker 3: appointments for the SEC and things like that, and very
8:55
Speaker 3: clearly pointing out that this is not that this is
8:59
Speaker 3: not a government agency, and he won't be, you know,
9:03
Speaker 3: making any changes in the face of that supposed threat
9:07
Speaker 3: to his independence. I'm not sure how real it actually is.
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Speaker 4: So again, we're gonna have to see what the data
9:13
Speaker 4: shows tomorrow, because I think this is kind of the
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Speaker 4: the kickoff again for like what the FED can do
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Speaker 4: going forward, just because look, we said in October, you
9:21
Speaker 4: have to throw out any of the data from that
9:23
Speaker 4: month related to employment, and even a lot of the
9:26
Speaker 4: other stuff we talked about retail sales. How he had
9:28
Speaker 4: a lot of stuff frontloaded there because people stocking up
9:31
Speaker 4: for hurricanes and things. So we're starting to get back
9:34
Speaker 4: to more normalized data, but even the November stuff is
9:38
Speaker 4: gonna be somewhat skewed in the other direction. So the problem,
9:42
Speaker 4: as we noted, is one where hey, you you were
9:47
Speaker 4: approaching a pretty critical juncture for the FED heading into
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Speaker 4: the fall, and now we've got kind of this two
9:53
Speaker 4: month gap where the data isn't going to be as
9:56
Speaker 4: reliable as we'd like it to be because of SEVI,
10:00
Speaker 4: your weather disruptions in a heavily populated part of the country.
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Speaker 4: I mean, you talk about that west coast of Florida
10:06
Speaker 4: and up through North Carolina. Those are some of the
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Speaker 4: fastest growing areas of the country, and you've got, you know,
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Speaker 4: a number of big cities that were impacted, and so
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Speaker 4: we don't have the most reliable data at a time
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Speaker 4: where we'd like to have it, and so that's it's
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Speaker 4: not ideal, but hey, this is the job Jay Powell
10:25
Speaker 4: has chosen and as such, he has to make decisions
10:29
Speaker 4: when faced with imperfect data, and that's why they give
10:33
Speaker 4: him the purple tie.
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Speaker 2: Oh that's a gift, you know. I don't know.
10:39
Speaker 3: It would be very funny thing to pass on from
10:41
Speaker 3: fed chair to fed chair and awkward for Janet yelling.
10:45
Speaker 4: I think would be fantastic. I think would be absolutely fantastic.
10:50
Speaker 4: Let's take a quick break here. When we come back,
10:53
Speaker 4: Bitcoin crossing one hundred thousand dollars per coin overnight, we'll
10:58
Speaker 4: talk about what it means means after this.
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11:57
Speaker 4: Mike Big news overnight with bitcoin crossing the one hundred
12:02
Speaker 4: thousand dollars mark and then some rising to over one
12:05
Speaker 4: hundred and three thousand dollars early today.
12:09
Speaker 2: The catalyst on this appears to.
12:11
Speaker 4: Be the fact that the Trump administration or the incoming
12:15
Speaker 4: Trump administration, has made their selection for who they want
12:19
Speaker 4: to nominate for the head of the SEC, and it
12:24
Speaker 4: is Paul Atkins. What can you tell us about mister Atkins?
12:27
Speaker 3: So, he was an SEC Commissioner under President George W.
12:30
Speaker 3: Bush quite some time ago. Over the last several years,
12:35
Speaker 3: he has been working for a big company in the
12:39
Speaker 3: financial services industry. Potomac Global Partners is a financial services
12:43
Speaker 3: consulting firm, and he's been spending the last several years
12:46
Speaker 3: advising banks, investment firms on all sorts of regulatory and
12:50
Speaker 3: compliance matters, but more recently on the subject of crypto
12:56
Speaker 3: and digital assets, and so generally looked at as a
13:01
Speaker 3: conservative voice on this front in favor of less regulation.
13:06
Speaker 3: When it comes to a lot of these things and
13:10
Speaker 3: called by one who do you get called by? This
13:14
Speaker 3: former SEC lawyer who runs the Healthy Markets Association described
13:18
Speaker 3: him as quote the godfather of Republican capital markets policy,
13:22
Speaker 3: which again, I think if you're to look at and
13:25
Speaker 3: understand the capital Republican capital markets policy, it would be
13:30
Speaker 3: very clearly lesser regulation, fewer rules, and adequate disclosure, but
13:38
Speaker 3: not a whole bunch of heavy handed oversight.
13:41
Speaker 4: Can we also just talk about kind of what's going
13:43
Speaker 4: on in the cryptospace in general right now, because it's
13:47
Speaker 4: been very bubblicious recently in terms of what we've been
13:53
Speaker 4: seeing and on some of this stuff, like there is
13:57
Speaker 4: an interesting case on a lot of like the meme
14:01
Speaker 4: coins and stuff like that, like all the stuff that's
14:03
Speaker 4: just complete crap with no like no actual business plan
14:08
Speaker 4: and no plan to figure out how to make money
14:09
Speaker 4: in any way, shape or form down the road.
14:12
Speaker 2: There's an interesting.
14:13
Speaker 4: Case actually that the SEC probably shouldn't be touching.
14:17
Speaker 2: Some of that stuff. And and here here's where you
14:21
Speaker 2: get there.
14:22
Speaker 4: It's we've talked about this a little bit before in
14:25
Speaker 4: terms of what's known as the Howie test, and the
14:29
Speaker 4: premise of the how we test. It stems from a
14:33
Speaker 4: case with someone by the name of Howie, and it
14:36
Speaker 4: basically looks at, okay, is something a security or not?
14:41
Speaker 4: And there's four criteria that needs to meet in order
14:44
Speaker 4: for it to be a security. It has to be
14:45
Speaker 4: an investment of money in a common enterprise with an
14:48
Speaker 4: expectation of profit to be derived from.
14:50
Speaker 2: The efforts of others.
14:51
Speaker 4: And the interesting case on some of this stuff for
14:55
Speaker 4: it not being a security, I'm not saying it is
14:58
Speaker 4: or isn't. But if you look at this, when you
15:00
Speaker 4: put any money into one of these coins, yes, it's
15:03
Speaker 4: an investment of money. So it clears the first part
15:05
Speaker 4: of the how we test correct yep, in a common enterprise.
15:09
Speaker 4: I think it kind of gets back to like, what
15:11
Speaker 4: is the definition of the word enterprise? Like does that
15:15
Speaker 4: mean that it has to actually be doing something or
15:16
Speaker 4: does it just mean that it's in something together?
15:20
Speaker 3: Yeah, I think you could stretch it to say in
15:22
Speaker 3: something together. At which point at which point a cryptocurrency
15:26
Speaker 3: meets that test of pretty much anyone of them does?
15:28
Speaker 4: Maybe, But if that's the case, then doesn't invest doesn't
15:31
Speaker 4: like buying baseball cards meet that criteria? And do you
15:33
Speaker 4: really want the SEC investigating baseball cards.
15:36
Speaker 3: No, likely not, probably not.
15:38
Speaker 2: Right with the expectation of profits.
15:40
Speaker 4: Sure, someone investing in, you know, a cryptocurrency of any
15:43
Speaker 4: kind probably thinks, in some cases misguidedly, that there's going
15:48
Speaker 4: to be profits. So it meets that one to be
15:51
Speaker 4: derived from the efforts of others. And this is the
15:54
Speaker 4: one where I think there's a real question because some
15:56
Speaker 4: of these Again, Mike, do you know how bad it's
15:59
Speaker 4: gotten in the crypto space these days in terms of
16:02
Speaker 4: like just how unwritten, just just how memi it is
16:07
Speaker 4: these days.
16:09
Speaker 3: No, I try not to follow it too much, so.
16:13
Speaker 4: I gotta fill you in because we're seeing just absolutely
16:15
Speaker 4: wild stuff. So the derogatory term for a lot of
16:18
Speaker 4: these meme coins is s coins. Where S is you know,
16:21
Speaker 4: fill in the blank. Yeah, it was either last week
16:26
Speaker 4: or the week before, someone literally started a cryptocurrency called
16:31
Speaker 4: s coin, and the premise of it was that he
16:36
Speaker 4: was going to literally stay on a toilet until it
16:40
Speaker 4: reached a certain value. And that was pretty dumb. That
16:44
Speaker 4: was the entire premise of it. So in this case,
16:48
Speaker 4: when you look at this, you can't reliably say, in
16:50
Speaker 4: a lot of these cases that any profit on these
16:53
Speaker 4: could be derived from the effort of others because there
16:55
Speaker 4: are no efforts.
16:55
Speaker 2: That are actually being undertaken in a lot of cases.
16:58
Speaker 4: And so when you're talking about something that is just
17:01
Speaker 4: so useless and whatever, you kind of say, look, are
17:05
Speaker 4: we going to like, is there a reasonable case that
17:08
Speaker 4: we should be trying to protect people from this stuff?
17:12
Speaker 2: Maybe not.
17:13
Speaker 4: It's more the ones where, hey, there's an actual business
17:16
Speaker 4: that you know someone's trying to run. And I know
17:18
Speaker 4: this is almost counterintuitive, but if someone's doing something so
17:22
Speaker 4: dumb that you know it's dumb and you can tell
17:24
Speaker 4: as opposed to hey, we're gonna try to run a
17:27
Speaker 4: legitimate enterprise, do you really want if someone is telling
17:31
Speaker 4: you upfront it's dumb, does the SEC need to be involved?
17:34
Speaker 2: I guess is that the case that you can try
17:36
Speaker 2: to make?
17:36
Speaker 3: Yeah, I think that's a fair test there, Chuck. But
17:41
Speaker 3: I struggle with how you would apply the Howie test
17:44
Speaker 3: to bitcoin but not some of these other ones, well,
17:48
Speaker 3: you know, like other than the lack of seriousness attached
17:51
Speaker 3: to them.
17:51
Speaker 4: Well, I think it is the lack of seriousness because
17:54
Speaker 4: if there's no effort that's being made to actually make
17:56
Speaker 4: a profit on these other than just trading them, Like
18:00
Speaker 4: what are you actually investing in? Is the question that
18:05
Speaker 4: that you would you would get on this, Like Mike,
18:07
Speaker 4: if if your friend came to you and said, hey,
18:12
Speaker 4: give me one hundred dollars because I'm gonna go I'm
18:15
Speaker 4: gonna go look at birds and I want one hundred
18:17
Speaker 4: dollars while I look at birds, do you call the
18:20
Speaker 4: SEC when he doesn't give that back?
18:22
Speaker 3: No, So, just.
18:24
Speaker 4: Because and I'm not saying that this is or isn't,
18:27
Speaker 4: I'm just trying. I'm just trying to wrap my head
18:29
Speaker 4: around where the SEC should actually be involved in this.
18:34
Speaker 4: And there is like a case to be made. Hey,
18:35
Speaker 4: if something is so dumb that you just know it's
18:38
Speaker 4: dumb to begin with, is that like an.
18:41
Speaker 2: SEC issue or is it more just Hey, there's.
18:45
Speaker 4: Like a criminal fraud complaint and it just goes to
18:48
Speaker 4: local law enforcement. Yeah, I don't have jurisdictional It can
18:53
Speaker 4: still be illegal. But who has the jurisdiction is what
18:56
Speaker 4: I'm trying to get around.
18:57
Speaker 3: Right, Yeah, it's a fair question.
18:59
Speaker 4: If you're steals one hundred dollars from you, you call
19:02
Speaker 4: the police, not the SEC. And I guess that's kind
19:05
Speaker 4: of the case. Like if someone. If you give someone
19:09
Speaker 4: one hundred dollars online and they run off with who
19:12
Speaker 4: do you call ghostbusters? Really, it's just because there's so
19:20
Speaker 4: much dumbness going around right.
19:22
Speaker 3: Now, and to fund the SEC adequately to control all
19:26
Speaker 3: of it would be ridiculous.
19:28
Speaker 4: So I don't know what the answer is, but I'm
19:29
Speaker 4: just trying to mentally wrap my head around all this.
19:32
Speaker 4: Let's take a quick break on this. When we come back,
19:34
Speaker 4: we got Wall Street Watch.
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Speaker 1: here on the Financially Exchange Radio Network.
20:01
Speaker 5: Markets are mostly quiet as Wall Street awaits tomorrow's pivotal
20:06
Speaker 5: jobs report for the month of November. Right now, the
20:10
Speaker 5: Dow is down by ninety one points, SMP five hundred
20:13
Speaker 5: is off by only five points, in the Nasdaq down
20:16
Speaker 5: by three points. Russell two thousand is off by about
20:19
Speaker 5: a half a percent, or thirteen points. Ten year treasure
20:22
Speaker 5: eealed up by two basis points at four point two
20:25
Speaker 5: to one percent, and crude oil up four tenths of
20:29
Speaker 5: a percent. Just below sixty nine dollars a barrel. Several
20:33
Speaker 5: crypto stocks are seeing gains after Bitcoin topped one hundred
20:37
Speaker 5: thousand dollars for the first time. Micro Strategy shares are
20:40
Speaker 5: up by about half excuse me, by about one percent,
20:43
Speaker 5: while Coinbase shares are up by two percent. Meanwhile, shares
20:47
Speaker 5: in Dollar General down by four percent after the dollar
20:51
Speaker 5: store chain posted mixed third quarter results where it saw
20:54
Speaker 5: hurricanes disrupt its business and continued to see customers remain
20:58
Speaker 5: cash strapped. Another discount retailer, and five Below raised its
21:02
Speaker 5: fiscal twenty twenty four guidance following strong Black Friday sales.
21:07
Speaker 5: The company also named a new chief executive after a
21:10
Speaker 5: six month search. Five Blow stock is up by twelve percent.
21:15
Speaker 5: American Airlines picked City Group as its sole credit card
21:19
Speaker 5: provider after months of negotiations. Investors hope the deal will
21:23
Speaker 5: jolt American to catch up with more profitable competitors. American
21:27
Speaker 5: shares up by eight percent. Elsewhere, Disney lifted its annual
21:31
Speaker 5: dividend by thirty three percent to one dollar a share.
21:35
Speaker 5: This comes after the media giant provided a bullish earnings
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Speaker 5: outlook last month and also saw another huge blockbuster film
21:42
Speaker 5: in Mwana II during the Thanksgiving opening weekend, Disney shares
21:47
Speaker 5: are actually down by half a percent, and American Eagle
21:50
Speaker 5: Outfitters forecast at a larger than expect to drop in
21:54
Speaker 5: sales for the holiday quarter and trimmed its annual sales outlook,
21:58
Speaker 5: sending shares an American Eagle down by thirteen percent. I'm
22:04
Speaker 5: Tucker Silva and that's Wall Street Watch, Mike.
22:06
Speaker 4: We got a piece here from the Journal of Wall Street.
22:10
Speaker 4: It's titled DOJ's Big ideas include ending remote work and
22:14
Speaker 4: daylight savings change. So this is the Department of Government
22:17
Speaker 4: Efficiency that is being headed up by Elon Muskin, Vivic
22:21
Speaker 4: Roberts Swami. They are going to be meeting with House
22:25
Speaker 4: and Senate Republicans today talking about the efforts to reduce
22:30
Speaker 4: costs and things like that. What are these six items
22:33
Speaker 4: outlined in this piece or at least where do you
22:35
Speaker 4: want to start?
22:36
Speaker 3: I want to start on the most confusing one. How
22:40
Speaker 3: does eliminating daylight savings time save the government any money
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Speaker 3: at all?
22:46
Speaker 2: I don't know.
22:48
Speaker 3: I can't think of a single penny that can be
22:49
Speaker 3: saved by the US government saying no more daylight savings time.
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Speaker 4: Let's see okay. So I ducked a go to it
23:00
Speaker 4: just now.
23:03
Speaker 3: I tell you over at duck duck.
23:04
Speaker 2: Go okay from Yahoo Finance.
23:06
Speaker 4: This is a piece that was published in November of
23:09
Speaker 4: twenty eighteen. It says it's estimated the day savings time
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Speaker 4: costs to the US at least four hundred and thirty million
23:16
Speaker 4: dollars annually. This is according to a two thousand and
23:19
Speaker 4: eight report by the Independent Institute. Actually No, that's by
23:23
Speaker 4: Chimurr and Economics and Analytics. The Independent Institute says that
23:28
Speaker 4: the cost for changing cocks is as high as one
23:30
Speaker 4: point seven billion, and that says so widest changing cocks
23:33
Speaker 4: cost money. The study concluded that sending the cocks forward
23:36
Speaker 4: can lead to an increase in heart heart attacks, workplace
23:39
Speaker 4: injuries in the mining and construction sectors, and increase cyber
23:42
Speaker 4: loafing that reduces productivity for people who typically work in offices.
23:46
Speaker 3: So, but no does costs.
23:47
Speaker 4: It doesn't appear there's any government cost to daylight savings.
23:51
Speaker 3: Furthermore, currently this is regulated by the states. Arizona, for instance,
23:56
Speaker 3: decides that they don't want to participate in daylight savings,
23:58
Speaker 3: so they don't. Illinois and Indiana have different time zones
24:04
Speaker 3: depending on which part of the state you are in,
24:06
Speaker 3: and parts of Northwest Indiana, for example, say hey, we're
24:10
Speaker 3: gonna be on Chicago time because we want to be
24:12
Speaker 3: on Chicago time. I don't get that one, but nonetheless
24:16
Speaker 3: we can do that aside it actually.
24:18
Speaker 4: Is, so there might be like states that override it.
24:22
Speaker 4: But the Uniform Time Act of nineteen sixty six was
24:26
Speaker 4: signed into law and it doesn't require that states observe
24:32
Speaker 4: daylight savings time, but individual states may exempt themselves observe
24:35
Speaker 4: standard time year round by passing a state law that
24:38
Speaker 4: would override it, which is what those states have done.
24:41
Speaker 3: Again, if I were the dose trying to save money
24:45
Speaker 3: on save government money, I would stop spending time talking
24:47
Speaker 3: about this one. But nonetheless, other.
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Speaker 4: Areas, I know something fascinating about Ara. Okay, this is
24:53
Speaker 4: actually fascinating in Arizona. I'm looking at it now. So Arizona,
24:58
Speaker 4: the state of Arizona, does not serve daylight savings time. Indeed,
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Speaker 4: Right Navajo Nation, which does occupy land throughout the northeastern
25:07
Speaker 4: corner of the state, does observe daylight savings time. But
25:13
Speaker 4: the Hopey Reservation, which is entirely enclosed by Navajo Nation
25:17
Speaker 4: does not.
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Speaker 3: Oh so it's a time zone within a time zone
25:22
Speaker 3: within a time zone.
25:23
Speaker 2: Yes, it's inception for time zones.
25:26
Speaker 3: So here's one that I think. Actually, you know another
25:29
Speaker 3: one where you think, why would that save government money
25:32
Speaker 3: on the surface, but actually would do so? And I
25:35
Speaker 3: can get behind this one hypothetically, the end remote work
25:38
Speaker 3: for federal employees. Just say, universally, this is not going
25:42
Speaker 3: to be allowed without you know, specific exemptions and exceptions.
25:45
Speaker 3: Why would that help you cut on spending? Well, forget
25:49
Speaker 3: about you know whether or not people are efficient or
25:51
Speaker 3: more efficient or less efficient from home. Just get rid
25:54
Speaker 3: of all that. If you require everyone to come back
25:56
Speaker 3: to the office five days a week, you'll have a
25:58
Speaker 3: bunch of government employees that quit.
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Speaker 4: So the issue on this one is do you know
26:03
Speaker 4: which agency has.
26:04
Speaker 2: The highest rate of remote work? No v A. It's
26:10
Speaker 2: it's huge for telehealth benefits yep.
26:12
Speaker 4: And so that's where you could potentially run into some
26:15
Speaker 4: issues just because you would not be able to provide
26:17
Speaker 4: the level of care to veterans that you want to.
26:19
Speaker 3: Yeah, that'd be a problem.
26:21
Speaker 4: So in theory, like there are other places where sure
26:24
Speaker 4: like you could you could potentially end it in you know,
26:27
Speaker 4: other agencies. But the other question that you have then is, look,
26:31
Speaker 4: if we have all this extra space that we're not using,
26:35
Speaker 4: isn't the easier way to cut cost to get rid
26:38
Speaker 4: of that space in the overhead could be You know,
26:42
Speaker 4: I'm not saying either one's right or wrong, but it's
26:45
Speaker 4: often just not as black and white I think there.
26:47
Speaker 3: Yeah, I think you know, there are more than just
26:49
Speaker 3: cost issues when it comes to remote work for federal employees.
26:52
Speaker 3: I think about cybersecurity, which, as most people know, our
26:55
Speaker 3: government is not great at protecting. So yeah, there are
27:00
Speaker 3: issues there. But yeah, to your point, will it definitely
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Speaker 3: cut overall government spending? Maybe maybe not generally reducing the
27:09
Speaker 3: federal workforce would certainly do so if you can put
27:11
Speaker 3: that one off, there's a call to cut regulations. I
27:17
Speaker 3: suppose as a kind of knock on effect. If yeah,
27:19
Speaker 3: you cut the total number of regulations, would you need
27:22
Speaker 3: fewer people to enforce the existing ones?
27:27
Speaker 2: Maybe?
27:28
Speaker 4: Potentially, yeah, you would. So these are the things that
27:31
Speaker 4: are gonna be talked about. Well, we'll see what actually
27:33
Speaker 4: happens when it gets down to brass tax In terms of, hey,
27:36
Speaker 4: how are you gonna be you know, building the budget.
27:38
Speaker 4: What are you trying to look for on that side
27:40
Speaker 4: of things. That's where this is ultimately going to end
27:43
Speaker 4: up mattering like Elon Muskin, Vivic Robert Swami can't go
27:47
Speaker 4: in and just be like, we're getting rid of you.
27:50
Speaker 4: You and you like you don't even work for the government.
27:52
Speaker 4: You like, that's not really how any of this works.
27:55
Speaker 4: But it's gonna be. We're gonna see where they decide to,
27:59
Speaker 4: you know, size the potential cuts that they're putting in,
28:03
Speaker 4: and I think we'll know more over the next couple
28:05
Speaker 4: months here.
28:05
Speaker 2: Yep.
28:06
Speaker 4: So that's kind of where things stand on that side
28:10
Speaker 4: of things. Just take a quick break. When we come back,
28:12
Speaker 4: we're gonna go across the pod. Well that's more of
28:16
Speaker 4: a British that. What's did either of you take French
28:20
Speaker 4: in high school? We what's the word for ocean in French? Donno,
28:26
Speaker 4: We're gonna go across the dunno after this and talk
28:29
Speaker 4: about what's going on in France with the French government
28:33
Speaker 4: and a bit of a pickle at the moment.
28:37
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29:07
Speaker 4: Mike, can you give us a French summary of what's
29:09
Speaker 4: going on in France right now?
29:11
Speaker 3: No?
29:12
Speaker 2: Okay? So here's the deal.
29:15
Speaker 4: Because France has a different governmental setup than we do.
29:19
Speaker 4: It's a parliamentary system, and so the prime minister lost
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Speaker 4: a no confidence vote earlier this week. The Prime Minister,
29:27
Speaker 4: Michael Barnier, is not someone who most of us listening
29:31
Speaker 4: have heard of. We're much more familiar with Emmanuel Macrone,
29:34
Speaker 4: who is the president. Those are different roles because against
29:38
Speaker 4: a parliamentary system and it's different. But basically Parliament voted
29:42
Speaker 4: this week that there is no confidence in the legislature. Effectively,
29:47
Speaker 4: McCrone stays in his job pretty much until he like
29:51
Speaker 4: until the next election, which is not going to happen
29:53
Speaker 4: until next July, or until he steps down where pressure
29:57
Speaker 4: is going to grow pretty strongly for him to do so.
30:00
Speaker 4: Here this is the first successful no confidence vote in
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Speaker 4: the French legislature in over sixty years.
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Speaker 3: So coalition of the far left in the far right
30:11
Speaker 3: that really led this thing.
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Speaker 2: It is interesting.
30:13
Speaker 4: Interesting, it is And basically if you're wondering like how
30:15
Speaker 4: this happened, the premise of it is really simple. The
30:20
Speaker 4: party that's aligned to the right, which is run by
30:22
Speaker 4: Marine Le Penn, did not have any power in the
30:26
Speaker 4: current government. The far left had during the elections that
30:31
Speaker 4: were happening this summer, had aligned with kind of a
30:35
Speaker 4: center left block in order to get candidates into office
30:40
Speaker 4: and form a coalition that could could govern. They felt
30:44
Speaker 4: kind of screwed, rightfully so by the by McCrone who
30:48
Speaker 4: went back on you know, a whole bunch of things
30:50
Speaker 4: that he said he was going to do for them.
30:51
Speaker 4: And so they said, okay, fine, you're not gonna help us.
30:53
Speaker 4: We're not gonna help you anymore. We're you know, we're
30:57
Speaker 4: voting to dissolve the government effectively. So this also again
31:02
Speaker 4: just this is a wild year politically, Like it's again
31:05
Speaker 4: just stuff that you haven't really seen a whole lot of.
31:09
Speaker 3: Uh.
31:09
Speaker 4: The three month old government in France is the shortest
31:12
Speaker 4: tenured in modern French history. Who so again, what we're
31:17
Speaker 4: seeing is not something that happens very often, and so
31:21
Speaker 4: the question now is, look, where does France go on this,
31:24
Speaker 4: and what does it mean for French politics and the
31:28
Speaker 4: economy going forward, what does it mean for the euro
31:30
Speaker 4: and the Eurozone. And I continue to say, look, we
31:34
Speaker 4: are seeing these not to go back to the spring
31:38
Speaker 4: of twenty twenty because like quite honestly it sucked.
31:42
Speaker 2: But when you're seeing the outbreak of.
31:44
Speaker 4: A disease, what you see are these little pockets that
31:49
Speaker 4: pop up in it. And you see it with anything.
31:51
Speaker 4: If you have kids at school, Hey, the third grade class,
31:55
Speaker 4: you know, we've got you know, a cold that's running
31:57
Speaker 4: through there. And then you get a case that pops
31:59
Speaker 4: up with the same greaters because they played together at recess,
32:02
Speaker 4: and a couple more cases there, and then someone in
32:05
Speaker 4: fourth grade you know, comes down with the case and
32:07
Speaker 4: a couple there, and then all of a sudden you
32:10
Speaker 4: reach this critical mass and you just see everyone gets
32:13
Speaker 4: sick at once. This is kind of what we're seeing
32:17
Speaker 4: geopolitically at the moment.
32:20
Speaker 3: I mean, where I just think about the last week.
32:22
Speaker 3: You've got the the in South Korea, you had Yun
32:27
Speaker 3: calling for martial law, which was overturned quickly. You've we
32:30
Speaker 3: had a great time covering that yesterday we've had massive
32:33
Speaker 3: turnover of many governing parties across the developed world.
32:37
Speaker 4: And look at what's going on in Syria right now, okay,
32:41
Speaker 4: that the Syrian government is being overrun by again a
32:45
Speaker 4: coalition that doesn't really get along very well. You basically
32:48
Speaker 4: have like the remnants of ISIS and al Qaeda fighting
32:51
Speaker 4: alongside Kurtis rebels to get rid of Asad right now.
32:55
Speaker 4: Like again, you get all kinds of weird stuff going on.
32:58
Speaker 4: But to this point, you look at all of this
33:01
Speaker 4: and none of it has you know, fortunately gone to
33:06
Speaker 4: large scale you know, international conflict.
33:09
Speaker 2: Even when you talk about like Israel.
33:10
Speaker 4: And Iran, they've lobbed some stuff back and forth with
33:13
Speaker 4: each other, but it hasn't been in any kind of
33:15
Speaker 4: continuous flow. And so you've got these things that are
33:19
Speaker 4: just popping up here, popping up there. But man, like
33:23
Speaker 4: I I hope I am wrong, but it feels like
33:30
Speaker 4: you're seeing these pockets popping up. And the one thing
33:34
Speaker 4: that you are continuing to see everywhere, the center of gravity,
33:39
Speaker 4: the center of everything kind of it can't hold. It's
33:44
Speaker 4: everything is kind of being overrun slowly. And then you
33:48
Speaker 4: just kind of you're kind of just waiting for that
33:51
Speaker 4: next shoe to drop here. And I if you've bet
33:54
Speaker 4: on geopolitical risk being a problem for the last ten
33:57
Speaker 4: to twenty years, it's it hasn't been a good bet
34:01
Speaker 4: for you because it largely hasn't paid off. And I'm
34:05
Speaker 4: worried that we've been lulled into a false sense of
34:07
Speaker 4: complacency that like the last ten to twenty years is
34:10
Speaker 4: the norm and some of these things might, you know,
34:13
Speaker 4: get out of hand.
34:14
Speaker 2: And I hope I'm wrong, but it.
34:17
Speaker 4: Feels a little bit dodgy with some of the stuff
34:19
Speaker 4: that we are seeing right now.
34:21
Speaker 2: And we'll see where it goes.
34:23
Speaker 4: But France is just kind of the latest there in
34:25
Speaker 4: terms of yeah, like nothing seriously has gone wrong here,
34:29
Speaker 4: but man, you're seeing some unprecedented stuff and you don't
34:32
Speaker 4: really know how things are going to go from here.
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35:33
Speaker 4: Mike, do you want to talk China or do you
35:36
Speaker 4: want to talk tax cuts?
35:38
Speaker 3: I think we should talk tax cuts because this kind
35:40
Speaker 3: of fits into some a trend that we've been discussing
35:43
Speaker 3: over the last several weeks. But it's a piece. Here
35:46
Speaker 3: is this from the Times, Yes, basically making the argument
35:50
Speaker 3: and calculations from the CBO that cutting taxes, or at
35:55
Speaker 3: least keeping the tax rates where they were after the
35:57
Speaker 3: Trump the first Trump tax cuts is not likely to
36:01
Speaker 3: have a significant impact on the growth of the economy.
36:03
Speaker 3: And I find it interesting and compelling only, Chuck, because
36:07
Speaker 3: you and I have concluded kind of the same thing.
36:08
Speaker 3: We've talked about the same thing here, which is the
36:11
Speaker 3: economy is in such a different place today compared to
36:14
Speaker 3: where it was in twenty sixteen that if you just
36:17
Speaker 3: implement the same policies from Trump one point zho in
36:21
Speaker 3: Trump two point ozho, you should not expect the same
36:25
Speaker 3: exact results here. Now, I think to go and say,
36:29
Speaker 3: like this, like this piece does that, Oh you know,
36:32
Speaker 3: raising taxes also won't have any impact at all. I
36:35
Speaker 3: find that a little bit tougher to believe. I think
36:37
Speaker 3: most people would look at it and say, look, yeah,
36:40
Speaker 3: it's not likely to move the needle significantly to the upside.
36:42
Speaker 3: But raising them is going to have some impact somewhere.
36:48
Speaker 3: Is probably also true. But it runs right into our
36:53
Speaker 3: overall theory, which is, hey, the Trump administration is going
36:56
Speaker 3: to need to do something if they're going to deliver
36:58
Speaker 3: on their economic promises, and doing so without a tail
37:01
Speaker 3: risk of inflation. Is going to be challenging.
37:03
Speaker 2: Yeah.
37:03
Speaker 4: The other place where this feeds in We talked about
37:06
Speaker 4: this is touch yesterday. But on the inflation side, the
37:09
Speaker 4: reason that headline inflation is in the mid twos right
37:12
Speaker 4: now on CPI is because we've had fallen gas prices.
37:15
Speaker 4: Gas prices have fallen twelve point two percent as their
37:18
Speaker 4: contribution to CPI this year, and so that has headline
37:22
Speaker 4: CPI coming in at two six as opposed to core at.
37:24
Speaker 2: Three to three. Well, what happens if you have higher
37:27
Speaker 2: oil prices next year?
37:28
Speaker 4: Like, let's say that again, oil moves from seventy bucks
37:31
Speaker 4: a barrel to seventy eight, and now you've got this
37:34
Speaker 4: headwind where okay, core inflation is still at three to three,
37:37
Speaker 4: but headlines at four. What does the Fed do in
37:40
Speaker 4: that situation when they've cut interest rates, when they've cut
37:43
Speaker 4: the Fed funds rate to four two five, right, Like,
37:46
Speaker 4: is there pressure then for them to start raising rates again?
37:48
Speaker 4: And how does that impact things from a budgetary perspective?
37:51
Speaker 4: So there's there's some real tail risk in looking at
37:57
Speaker 4: the incoming administration saying oh, it's just gonna be the
37:59
Speaker 4: exact same as it was in the first time around.
38:02
Speaker 2: For markets and for the economy.
38:05
Speaker 4: It's a fundamentally different situation they're entering into, and I
38:08
Speaker 4: think you need to expect them to behave differently as well,
38:12
Speaker 4: given the overall situation that we're in right now.
38:16
Speaker 2: Let's take a quick break.
38:17
Speaker 4: We got hour two coming up in just a little bit.