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Will companies win the return-to-office fight? · The Financial Exchange Show

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Face is the Financial Exchange with Mike Armstrong and Mark Fandetti.
1:14
Speaker 2: Good morning, and welcome back to the Financial Exchange on
1:18
a Tuesday. Here it's Mike Armstrong, Mark Fandetti and Tucker
1:22
Silva with you, and markets are mixed to start trading today,
1:25
although we started pre market trading all negative territory. The
1:28
Dow currently off thirteen points, basically flat for the day,
1:33
SMP up eight up a little bit more than ten percent,
1:36
and NASDAK currently up sixty nine points a third of
1:39
one percent ahead of earnings that will come after the bell.
1:43
Here will kick things off with alphabet reporting after the
1:46
market closes today. We saw the Case Shiller Home Price
1:51
Index come out this morning, measuring home prices in the
1:55
twenty biggest US metros.
1:58
Speaker 3: The good news is that the prices.
2:01
Speaker 2: Have slowed in terms of the increase, and we are
2:05
now hitting the slowest year over year increase in home
2:09
prices that you've seen since COVID. The bad news is
2:12
that home prices in that twenty major US metro market
2:15
we're up an additional five point two percent over the
2:18
last twelve months ending in August.
2:21
Speaker 3: Taking a look at some of.
2:23
Speaker 2: Those local markets here Boston up five and a half
2:26
percent from last year. Anything else in the Northeast that
2:31
makes up the top twenty, New York up eight point
2:33
one percent over the last twelve months. Some decreases or
2:39
slower ones here. If you take a look at Miami,
2:42
no Miami up five point one percent year over year,
2:46
Denver up only point seven percent, Atlanta up three point seven,
2:50
Tampa up one point seven. So this measured home prices,
2:54
I think in August is what they are looking at here.
2:58
But nonetheless, home prices still showing no relief in spite
3:01
of some states around the country tailing off a little bit.
3:05
Even Phoenix p another two point one percent year over year.
3:09
Taking a look at consumer confidence, we got a reading
3:11
on that this morning, a slight bounce back in October
3:14
after some pretty weak data points. The Conference boards consumer
3:18
confidence in Index increased in October to one hundred and
3:21
eight point seven. This is based on a number of
3:25
one hundred back in nineteen eighty five, end up ninety
3:28
nine points two back in September, so increase confidence on
3:32
the October reading there. And then, as we reported earlier,
3:35
the job openings and labor turnover survey. This is where
3:38
we get readings on how many jobs are being posted
3:42
out there, how many people are quitting, the quits rate,
3:44
how many people are getting hired fired, et cetera. And
3:48
I think the major story there was no significant change
3:51
from prior months, so I don't think really worth reporting
3:54
much on there, other than to say labor market seems
3:59
good but somewhat stalled in terms of where it is going.
4:03
Speaker 4: Look. I gave my stump speech in the last hour
4:05
about taking one or two economic data points and reading
4:09
too much into them or trying to interpret them without
4:12
an overarching framework, and how that can get you into trouble.
4:15
I won't repeat that other than to say we can
4:17
all chill out over any you chuck say this a lot.
4:20
It's just one, it's a common refrain. It's just one
4:24
data point, yep, so chill out. Nevertheless, that it does
4:27
point to, as you pointed out, Mike, some slackening and
4:29
yet bond yields, which measure, among other things, the strength
4:33
of the economy because stronger economies need more loans to
4:38
build stuff. Basically over simplifying a little, but that's the gist.
4:41
Bon yields are up today by a few ticks could
4:44
be random, but it's a continuation of the trend of
4:46
the last several weeks, as we talked about in the
4:48
last hour. Yeah, say's one of those weird even if
4:51
what if you knew beforehand that the number of job
4:54
openings was going to contract by four hundred thousand. That's
4:57
an estimate, by the way. Sure it could be plus
4:59
or mind as, I don't know what the error bands
5:00
are around that, but let's say it's two hundred thousand. Anyway,
5:02
it's probably significant. My point is, if you knew that beforehand,
5:06
I would have thought, well, wields will probably come in.
5:08
That points to some economics slowing. Nope, the opposite.
5:11
Speaker 2: In fact, the ten year Treasury now sitting at four
5:14
and a third percent, four point three to three percent.
5:16
That's bringing the wow, average thirty year fixed rate mortgage
5:21
you're gonna love to hear this back to seven percent.
5:24
According to Mortgage News data, that we are back to
5:26
seven percent on that thirty year fixed currently, and.
5:29
Speaker 4: Yet home prices just continue to grind upward. They do
5:33
up fifty percent before inflation, in the line with inflation
5:37
for sale four years twenty three percent including after inflation.
5:41
Real in the last four years, almost the real number
5:45
is unprecedented in such a short period of time outside
5:47
of the bubble.
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Speaker 2: Yep, pretty unprecedented here. But yeah again to repeat that,
5:52
the thirty year fixed rate mortgage, which had gotten down
5:56
recently into that low six range, back up now into
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mortgage news daily to seven percent.
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Speaker 4: And this is a source of huge voter does we
6:04
talked about the anomally the seeming paradox of low unemployment,
6:08
solid GDP growth, at least I did, coupled with low
6:12
consumer sentiment do these? Do people not know that, according
6:15
to these averages, the economies as good as it was
6:17
in the late nineties, almost as good as any period
6:20
in the last twenty five years? Do they not know this?
6:22
But a huge source of disenchantment is unaffordable.
6:25
Speaker 2: On affordable housing, high mortgage rates and comparative and high
6:29
mortgage rates are only important in recent context. I think, right,
6:33
high bind with a seven percent mortgage rate in the
6:36
context of nineteen eighty is nothing, But in the context
6:40
of the last decade, it's quite a high.
6:42
Speaker 4: With record high home prices, record devastating double whamming.
6:45
Speaker 2: But it's mixed, right, Like you know, you're not seeing
6:48
gas prices surge. That would be a sure fire nail
6:51
in the coffin of I think Democrat administrations. If you're
6:54
seeing gas prices at four bucks a gallon. Instead, you're
6:57
sitting here today at three dollars and thirteen cents per
7:00
gallon is the national average according to Triple A a
7:02
year ago, is sitting at nearly three dollars fifty cents,
7:05
and even across New England, you're seeing relatively affordable gas price.
7:09
Speaker 4: In real terms and inflation adjusted to Because there are
7:11
people screaming at the radio right now saying, wait a minute, buddy,
7:13
over three bucks. That's more than I've ever paid in
7:15
my life. But in real terms, once you adjust for inflation,
7:18
that's actually more modest than in the twenty tens, though
7:21
not as modest as in the late eighties and nineties.
7:23
Speaker 2: Even in nominal terms, we've all experienced times in the
7:26
last decade where prices have been well above.
7:28
Speaker 4: But that's probably a source of this enchantment too, and
7:30
high home prices. To come back to that thought, i'll
7:32
just finish it. I've heard, particularly younger people who are
7:35
priced out, say this is why I'm voting for change.
7:39
Whatever they think change happens to be, to which my
7:42
response usually I don't articulate it because it's not that
7:45
well thought out to tell you the truth. But you
7:46
want falling home prices? You want because that would require
7:50
presumably slower job growth. Yeah, I mean, because supply ain't
7:55
going to explode, right.
7:56
Speaker 2: I don't love housing prices where they are, But what's
7:59
the alternative. Yeah, but it's a sign of a healthy economy.
8:02
Speaker 4: Isn't that, Mike. And by the way, high interest rates,
8:05
to the extent that they're not due to inflation, which
8:07
the recent run up in the ten year yield that
8:09
we talked about in the last hour, it is due
8:11
to real forces, not inflation expectations. This is also potential.
8:15
It's possibly a sign of concern about the debt, though
8:17
I always am skeptical of that for reasons we talked about.
8:20
That's what people always point to when they can't point
8:22
to anything else. That's also not a bad sign. Low
8:25
interest rates are a sign of bad economic help. So
8:28
it's like a be careful what you wish for, I
8:31
guess is what I'm getting at. I'm not sure how
8:32
strongly I feel about that.
8:33
Speaker 3: We've talked about that before.
8:36
Speaker 2: If you're looking for cheap housing, beware because it probably
8:39
comes at the cost of millions of unemployed Americans.
8:42
Speaker 4: Yeah, or lower inflation for that matter. You want more disinflation,
8:45
you're probably gonna need recession.
8:47
Speaker 2: Yeah, you want grocery prices to go back to where
8:49
they were in twenty nineteen, Well, get prepared for eight
8:51
percent unemployment, I think is part of that message there.
8:55
We have a FED meeting coming up the day after
8:57
the presidential election. According to the Chicago Mercantile Exchange, expectations
9:02
are once again for a rate cut, this time in
9:05
the twenty five basis points range, bringing rates down to
9:08
the four and a half to four seven five range.
9:11
I guess my question for you not I'm not gonna
9:14
put you in the position of making yourself a FED share,
9:16
but reading the tea leaves here anything that you have
9:20
heard from public commentary from the Federal Reserve that would
9:23
dissuade from them from the path that they are on
9:26
based on this recent economic data.
9:27
Speaker 4: They're trying to get to this mythical but still important
9:32
neutral rate.
9:34
Speaker 3: Our star, Yeah, you could.
9:35
Speaker 4: The reason it's our star, if you're interested, is when
9:38
you do a model that what you solve for if
9:41
it's a steady this sounds technical, but it is. And
9:44
if it's a steady state value, if it's not going
9:46
to change apps in a big shock, you put a
9:48
star on it. So it's our star, there's why star,
9:50
and there's U star, there's It just means that's where
9:52
it's gonna stay.
9:53
Speaker 5: Now.
9:53
Speaker 4: The interest rates never stay still, yeah, but they're trying
9:56
to get to this magical neutral rate, Mike. Our star
9:59
is you put it that neither pushes growth up or down,
10:03
and that keeps inflation steady. It's sort of like, well, yeah,
10:07
I'm not gonna do the calorie analogy again because because
10:10
everybody's sick of it. But it's it's the magic number
10:13
that keeps everything stable, and they think that they're above
10:18
it right now, which retards growth. They don't want to.
10:21
They don't want to be breaking. They want they neither
10:24
want to their foot on the break nor the throttle
10:26
right now. So it's as if you didn't know where
10:29
the break and the throttle were and don't know what
10:31
position they're in today. But you do exert some amount
10:34
of control over both, and you're just trying to find
10:36
the right balance. It's an impossible, honestly, job.
10:39
Speaker 2: Let's take a quick break. When we come back. Dan
10:42
Griggs has joined us before is the president of Ocean
10:44
First Bank. I'm gonna be talking to us about state
10:46
of the economy, especially here in this New England and
10:49
Boston region. That's next here on the Financial Exchange.
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Speaker 2: Dan Griggs is the Boston president of Ocean First Bank
11:58
and joins us now to talk about state of the
12:01
local economy and just where things might be aheaded. Dan,
12:04
thanks for coming to appreciate it.
12:06
Speaker 5: Good morning, Mike. Good to be back.
12:08
Speaker 2: So I think that most New Englanders are painfully aware
12:11
of the state of the residential housing market, with prices
12:15
in the Boston region according to this morning's report up
12:18
an additional five percent compared to this time last year.
12:20
Speaker 3: I think it was actually five and a half percent.
12:22
Speaker 2: There's been some interesting stuff going on in the Boston
12:24
commercial real estate market, in particular. I've been paying attention,
12:29
but only kind of on the sideline to the negotiations
12:32
with the City of Boston on commercial real estate tax
12:36
compared to residential Can you give us a summary of
12:38
what's been going on there for what has been a
12:41
traditionally massive piece of the overall Boston tax revenue story.
12:45
Speaker 7: Certainly the crux of the issue is commercial property valuations
12:50
have gone down and at the current tax rate on
12:53
those commercial properties, that means less money for the City
12:57
of Boston.
12:58
Speaker 5: And so you have kind of three stakeholders in this.
13:01
You have the City of Boston, you.
13:03
Speaker 7: Have the property owners in business community in Boston, and
13:05
then the state and they all three need to kind
13:08
of come to agreement on who suffers the pain. And
13:12
my guess is it's a little bit of both, and
13:15
that the commercial property owners will residential maybe some and
13:20
the city either has to cut back on expenses or
13:24
tap into reserves. And so there's the negotiations are going on.
13:29
They're about half a percent to a percent away from
13:32
a green The state's been reluctant to approve the administration's
13:36
plan without consensus, and they don't have that yet, so
13:39
that is certainly continues to be a risk in the
13:41
City of Boston.
13:42
Speaker 2: We've been seeing some paralysis on the way on the
13:45
part of consumers, or at least when you ask them,
13:47
you know, ahead of the election, Hey, are you going
13:49
to be borrowing money? You're gonna be spending on this,
13:50
that or the other. You point out that you're seeing
13:54
a lot of high demand for loan requests on the
13:56
commercial and industrial fronts where you see high loan demand
14:01
right now. When you look at the Boston region.
14:03
Speaker 7: Certainly across our portfolio, distributors, wholesalers, retailers, we have hotelers
14:11
in our portfolio.
14:12
Speaker 5: Their revenues in average daily rates, room rates are.
14:15
Speaker 7: Up, seafood providers, sea store convenience stores, and then travel
14:19
and tourism is up. And we have companies that cater
14:23
to that market. And it's led certainly by Boston Local
14:27
International Airport, where the international travel is back to what
14:31
it was pre pandemic, and the national US travel has
14:37
remained strong.
14:40
Speaker 2: Dan When we take a look at interest rates right now,
14:43
and this is probably you know, what the average person
14:46
cares a lot about. You know, where a mortgage rate's
14:48
going to go? Where is the FED going to go?
14:51
A month ago, according to Chicago Mercantallic Exchange, the most
14:54
likely outcome by year end was for rates to be
14:57
three quarters of a percent lower than where they are
15:01
right now.
15:02
Speaker 3: If you take a look at those.
15:03
Speaker 2: Same stats today, it's you know, still pointing towards the
15:06
lower rates, but not quite as substantially as we were
15:09
thinking a month ago.
15:10
Speaker 3: What's driven the change in your mind? And where do you.
15:13
Speaker 2: Think we end the year in terms of you know,
15:16
interest rates that consumers actually face.
15:18
Speaker 7: So the answer the first part of the question, solid
15:21
economic activity is what's changed the market and the perception
15:25
of it. And I think unexpected are soft results in
15:30
that economic activity.
15:32
Speaker 5: Which this week is a big week.
15:33
Speaker 7: You have Q three GDP coming out tomorrow, the September
15:38
consumer consumption is coming out Thursday. Jobs report is coming
15:41
out Friday. All in the midst of this, Big Tech
15:44
is reporting this week as well. So again unexpected or
15:47
soft results in there. You might get one, you know,
15:50
a quarter point at most, it could stay level based.
15:53
Speaker 5: On the strength of the continuing economy.
15:56
Speaker 2: Where do you think that does to mortgage rates? Because
15:59
you know, obviously you have the Fed doing one thing.
16:02
But since the Fed cut rates in September, you've seen
16:04
the ten year treasury move up by sixty basis points.
16:07
According to Mortgage News Daily this morning, the thirty year
16:10
mortgage is now sitting back up at seven percent. You know,
16:14
not a ton of housing activity happening this time of
16:17
year anyway, especially around here. But as we head towards
16:21
year end, and folks, you know, think about re entering
16:24
that housing market and maybe selling or you know, upsizing
16:27
or downsizing. What does that do with mortgage rates sit
16:30
at seven percent and where do they go from here?
16:33
Speaker 7: They stay level for the time being, and you and
16:35
Mark we're talking about it though it's I don't think
16:37
it's the mortgage rates. It's the cost of housing is
16:40
being driven by availability in the sense that there isn't much,
16:44
particularly in strong markets in the Northeast.
16:47
Speaker 2: It's Dan Griggs from Ocean First Bank. He's the president
16:50
of the Boston region there joining us today to talk
16:53
about the state of commercial real estate mortgages FED here
16:56
on the Financial Exchange as we head into the head
17:00
strongly into the fourth quarter and a week ahead of elections. Dan,
17:02
thanks so much for joining us as always, really appreciate
17:04
it and look forward to talking again soon.
17:06
Speaker 5: Mike Pleasure, Thanks Mike.
17:07
Speaker 2: Just something interesting I'll point out on the Federal Reserve
17:10
and interest rates and where things may or may not
17:12
be heading according to CME, which you know is effectively
17:17
you know, a way to bet on where the FED
17:19
is going to land with rates by year end.
17:22
Speaker 3: Cargo Mercantile Exchange.
17:24
Speaker 2: These data points, they're saying a nearly seventy percent chance
17:27
that there are two more cuts this year, whether it's
17:31
Dan's own personal view or quite frankly, you know, there
17:33
there was a meeting in Saudi Arabia the Future Investment Initiative,
17:38
head of Goldman Sacks, Morgan Stanley, Standard Chartered, Carlisle Group
17:42
all were asked, hey, do you think there'll be two
17:44
rate cuts for the rest of this year? And not
17:47
a single one of them raised their hand. So just
17:49
a kind of interesting divergence that I'm noticing between you know,
17:53
people that I talked to in their expectations for where
17:55
rates go and actual you know markets, and their own
17:58
expectations on where we close out the year in terms
18:01
of interest rates.
18:02
Speaker 4: Yeah, ask us in December.
18:04
Speaker 3: Yeah, I'll let you know.
18:05
Speaker 4: They's supposed to be data dependent, right, there's nobody knows.
18:17
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18:40
Speaker 2: According to the company Castle Systems, which we've talked about
18:44
them a fair bit of the last four years. But
18:46
if you're not familiar, they handle security and badge technology
18:50
at a number of office spaces across the country. And
18:52
since the start of COVID, they've been tracking occupancy compared
18:56
to pre COVID levels.
18:58
Speaker 3: So just tape my word where.
19:00
Speaker 2: February of twenty twenty was one hundred percent occupancy, and
19:04
then they've been tracking it since then, and you got,
19:06
you know, in early March as low as like fifteen
19:09
percent of people going into the office compared to where
19:12
you were prior to. This does not measure the Boston area,
19:15
so I don't have any data there, but it measures
19:17
ten metro areas and then takes an average, and in
19:20
the week ending October twenty first, the average of these
19:26
ten metro areas was still less than sixty one percent
19:30
of pre COVID levels of occupancy. So we're barely over
19:33
half sixty point seven percent.
19:36
Speaker 3: In the lead.
19:37
Speaker 2: You had Austin at seventy one, then met than Houston
19:40
around the same area, Chicago, Dallas, New York all above
19:44
the national average, DC La, San Jose, San Francisco, and
19:49
Philly all below that national average, with Philly, for whatever reason,
19:53
having the lowest average occupancy at forty nine point six
19:57
percent of those pre COVID levels. Nonetheless, we have this
20:01
piece from the Wall Street Journal that Tucker, I swear
20:03
to God, how many times have you read this headline.
20:06
Speaker 1: Oh, endless Yeah.
20:08
Speaker 2: Quote, bosses are calling workers back to the office. That's
20:11
good news for landlords. I have read this story a
20:16
dozen times over the last twelve months, and we still
20:19
have Again, Like, I don't debate that this is better
20:23
news for landlords, but you are still only You're less
20:27
than two thirds of where we were in twenty twenty
20:30
prior to the COVID pandemic. So I don't think this
20:32
is going to be the striking blow that finally leads
20:36
to workers getting back to the office at the compelling
20:39
rates that office landlords would actually need.
20:41
Speaker 4: I think developers have already shifted to growing sectors. Yeah,
20:45
so office may have stabilized, and if you look at
20:47
the performance of sub indices of larger indices that track
20:51
publicly traded real estate trusts sort companies, office stabilized like
20:56
a year ago. In investors judgment.
20:58
Speaker 2: Yeah, I want to be clear by this. I think
21:00
it's heading for a bankruptcy or massive blow up. Investors
21:03
don't seem to I just I just you know, don't
21:06
see it coming back all that day.
21:07
Speaker 4: Even if there were another shoe to drop here, it's
21:09
about five percent. The office sector is of a widely
21:14
followed benchmark, the MSCI, which is Morgan Stanley's Research arm
21:19
Us rate, which is a real estate investment trust. That's
21:21
how you own real estate. And like your four oh
21:23
one K. Sure, I don't want to minimize its potential impact,
21:26
but it's now five percent. Was more, it's now a
21:29
little under five percent of this broad widely followed benchmark.
21:34
You could find problems with a single digit percentage point
21:38
sector in any broad market benchmark. So for individual investors
21:42
like us, for you listening and our clients, Mike, I mean,
21:45
it certainly doesn't warrant a shift in investment strategy unless
21:48
you're overexposed office elsewhere, like you have a building or something,
21:52
and even then you've probably started making that shift sure
21:54
to another use of that property years ago in anticipation
21:57
of these changing trends.
21:58
Speaker 2: Speaking of return to office, CEO of Starbucks Brian Nickel,
22:02
who's newly in the role, has sent out a bit
22:05
of a you know, shot across the bow of his
22:07
thirty five hundred corporate employees telling them to get back
22:10
to the office or be in danger of losing their job.
22:12
It's a bit ironic coming from Brian Nickel, given that
22:14
he has a pretty nice deal.
22:18
Speaker 3: He does need to commute to.
22:19
Speaker 2: The Seattle office from his California home, but he has
22:23
personal use of the private jet in order to do so,
22:25
and I don't think is in that office every day.
22:27
But nonetheless, joining the likes of Amazon, Dell, and other
22:30
companies who have said get back in the office or
22:33
face no promotion, lack of increase in wages, and very
22:39
few companies left that are saying, hey, we're fully comfortable
22:42
with the hybrid way of doing things.
22:45
Speaker 5: You know.
22:45
Speaker 2: For example, my wife's company, a big, big Boston area
22:49
finance company, increased it in September to fifty percent of
22:53
time in office now compared to the twenty five percent
22:56
where they were previously. So there's only one trend in
22:58
one direction, which is war time spent in office.
23:01
Speaker 4: Yeah, this was probably inevitable, as we talked about at
23:03
the time a couple of years ago, when this trend
23:06
was in.
23:06
Speaker 2: Full bloom, inevitable, inevitable, But I think a lot slower
23:10
than I'd guessed would take.
23:11
Speaker 4: Because the market has remained a labor market has remained
23:14
hot for longer than people expected, and it remains hot
23:17
even though it's cooled moderately in the past year or so.
23:20
Speaker 2: Folks, we are closing in on the end of the
23:23
month here. Thursday is Halloween, so I'll be taken off
23:26
pretty early from the office here to make sure I
23:30
can still see all the children running through the streets
23:32
by the time I get home. But it also means
23:35
that it is the last chance to get a copy
23:38
of our brand new guide from the Armstrong Advisory Group
23:41
on Social Security. It's all about social security and taxes,
23:45
and we approach it from a number of different perspectives.
23:47
But look, this is consistently our most popular guide of
23:51
the year because, quite frankly, it affects almost every single American.
23:56
Even if you aren't a person that works outside the home,
23:59
you still have things to worry about when it comes
24:00
to social security, such as spousal benefits. A big section
24:05
in this guide about the government pension offset and the
24:08
windfall Elimination provision. If you're not familiar with those and
24:11
you've worked in the public sector before, need to understand
24:14
how all of this affects things. But ultimately, what this
24:18
guide is all about is attempting to help you understand
24:22
how social security is just one more arrow in the
24:26
quiver of building out your financial plan, and that's how
24:29
it needs to be treated, not as this standalone item
24:32
of hey, how do I maximize my benefits over my lifetime?
24:35
But rather how do I help it plug some of
24:37
those holes that could appear in my financial plan if
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things don't go according to plan. Maybe markets performed terribly,
24:44
maybe we face higher inflation. Maybe I have a longer
24:48
or shorter life expectancy than I think. How do I
24:51
use social security for my scenario based on those changing things.
24:56
If you would like your copy of our new Guide
24:59
on Social Security, like I said, you can only get
25:01
it until the end of the month of October by
25:04
calling us at eight hundred three nine three four zero
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zero one. Again that's the number for the Armstrong Advisory Group.
25:11
And you can get a copy of our brand new
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Guide on Social Security by calling us at eight hundred
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three nine three four zero zero one.
25:19
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
25:22
registered investment advisor. Nothing in the ad or in any
25:24
Armstrong guide a specific financial, legal or tax advice. Consult
25:27
your own financial tax into state planning advisors before making
25:30
any investment decisions. Armstrong may contact you to offer investment
25:33
advisory services.
25:34
Speaker 2: It is approaching the noon hour, so naturally we're going
25:37
to start talking about food here on the show, because
25:39
that's the only thing on all of our minds. McDonald's
25:43
reported earning stock is flat for the day. Sales did rise,
25:47
though the restaurant remains somewhat pressured from the E Coli
25:51
outbreak that I think took place right at the end
25:55
of the reported quarter or not even during the reported
25:58
quarter that they're discussing here. The Chicago based restaurant operator
26:02
said it's overall revenue grew three percent during the quarter
26:05
compared with the same period last year, whereas net income fell.
26:09
They've been discounting a lot of items in order to
26:11
drive traffic, which I think seems to be working on
26:14
the traffic front, but obviously hurting net income overall. Go ahead, Mark, no,
26:20
finish the thought I was going to finish. My thought
26:22
being I know there's been a lot written about this
26:24
Z Colai outbreak. I don't think it matters one bit
26:27
for McDonald's. I think they will be perfectly fine here
26:29
and we'll recover fantastically because they're not going to have
26:33
this issue again for a very long period of time.
26:35
Speaker 1: Mike.
26:35
Speaker 4: Let's face it, some of the demand is, as we
26:38
like to say, inelastic, like you go there because it's affordable,
26:44
So some of us don't. Given what we want to
26:46
spend on the occasional lunch out, you really don't have
26:49
too many choices with respect to choices. By the way,
26:52
if they would just stop futzing with the darn menu,
26:56
it would be easier to rely on them consistently. You
27:01
introduce something it's a limited time thing, then they take
27:03
it away. The deals are getting all mixed and mashed
27:07
as a as a as you could tell I frequent
27:09
it this hits for me. I would appreciate more consistence now.
27:14
It couldn't just be the deals they're presenting me with
27:17
to an extent, they're personalized. Consistency would be good.
27:20
Speaker 2: Went on McDonald when going to McDonald Catholic. Okay, so
27:25
that that is a yes. I don't have the app,
27:27
but I did bring my kids to McDonald's the other
27:29
day and it was rather convenient to have my wife
27:31
just place the order, so I wasn't frantically asking them.
27:34
Speaker 4: Oh when they only just figured that one out. By
27:36
the way, it used to be, you had to be
27:37
present if you used your smartphone. Right now, you can
27:42
take another somebody else's code or just guess it a code.
27:45
I guess if you want to play McDonald's drive through roulette. Yeah,
27:48
that's yeah, AK forty seven or whatever. I didn't. I
27:51
didn't mean to pick that up because it's a gun,
27:52
but it just came to mind. You could pick up
27:54
somebody else dis order potentially.
27:55
Speaker 5: Ye.
27:57
Speaker 2: Look, I don't have as much an issue with the
27:59
rotating menu because they're always going to have the Big
28:01
Mac in the quarter pounder in this.
28:02
Speaker 4: But they don't always have the chicken Big Mac Mike, which,
28:05
by the way, is just two mcchickens. In case you
28:07
haven't figured this out, you can order make chicken for
28:08
two ninety nine, get an additional patty for a buck,
28:10
make your own, got it. If you're in a creative mood.
28:13
Speaker 5: You are this.
28:13
Speaker 4: This frustrates me too.
28:15
Speaker 3: Yeah, you are the expert on mcdonald'.
28:17
Speaker 4: Every menu combination. I suspect Tucker could give me a
28:20
run for my money. But if there's a menu combination,
28:22
so is a McDonald's frequenter.
28:23
Speaker 1: Yeah, I never go to McDonald's.
28:25
Speaker 3: You're going to say that a Coli outbreak doesn't bother
28:28
you one bit.
28:29
Speaker 5: I was.
28:30
Speaker 4: I was trying to haggle Marc. Hey, guys, it's not
28:32
looking you know. Yeah, you can load me up on
28:34
that E col I lettuce, extra onions.
28:36
Speaker 3: Use some onions? You given those away for free? Or
28:38
what's the stores?
28:39
Speaker 4: Put them in the microwave? Kill me call I, I'll
28:41
take it.
28:42
Speaker 3: I want to turn those into caramelized onions and I'll
28:43
be just fine here.
28:44
Speaker 4: It took me a week to build up E coal
28:46
I immunity, but once I did, back to the century.
28:50
Speaker 2: Yeah, a quick break when we come back, a bit
28:54
of stacker roulette here on the Financial Exchange.
28:57
Speaker 1: If you missed any of today's show, catch up whenever
28:59
you on our YouTube page. Find daily show segments and
29:03
full shows. Just go to YouTube dot com and search
29:05
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29:08
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29:13
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29:20
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29:32
Speaker 2: It is time for a little stackru. Let's here on
29:34
the Financial Exchange. I'm going to go to the Boston
29:36
Globe here with a piece from Scott Kurzner on migration
29:39
out of New England and how can we stem the tide?
29:42
And he comes up with five novel solutions. I guess
29:48
I'll go with. First, he wants a dashboard created on
29:51
data of college grads who stay versus leave, and some
29:57
sort of data dashboards so we can track exactly more
29:59
accurately who's leaving. Second, each state should hold a high
30:02
profile quote welcome event for incoming college freshmen. Think concerts,
30:06
movie screenings, food representatives. Third, startup summer the idea Here
30:14
is free office space for twenty five startup teams that
30:17
want to test out an idea over the course of
30:18
the summer somewhere in New England. Four I'm on board
30:23
with this one. Expand Northeastern's co op and encourage other
30:27
universities to do this. I think that's actually been one
30:29
successful program. And then fifth, we need to market and
30:32
communicate with college students in ways that grab their attention.
30:37
So let's start with the premise that you do believe that, hey,
30:40
people migrating out of New England is a problem, and
30:45
operating from that premise that New England should do something
30:48
about it. I really hesitate to say that any of
30:53
these are going to move the needle in any meaningful way.
30:55
Speaker 4: It's funny how people who don't work with data just
30:57
throw out these absurd It's like me throwing out to
31:01
a car dealer. Yeah, why can I get a milkshake
31:03
machine in this thing?
31:04
Speaker 7: You know?
31:05
Speaker 4: It's just like it's like a little kid. We need
31:07
a day. No offense to the report, I guess I
31:09
just stated it committed a great offense against this fellow.
31:11
Maybe he does work with data with all respect, but yeah,
31:15
no disrespect intended.
31:16
Speaker 3: Pass.
31:16
Speaker 4: I just get your head out of you butt. No,
31:18
so we need a data dashboard, Well, no, crap, we
31:20
need a data dashboard. You want to go gather it,
31:23
scrub it, maintain it. It ain't that easy. Go ahead, Michael.
31:26
Speaker 2: I mean furthermore, is the solution to keeping New Englanders
31:30
really to throw a bunch of concerts throughout New England?
31:32
Speaker 3: Is that? Really? Is that the best we got? How
31:36
about we fig like deal with some of the real problems.
31:38
Speaker 2: New England is one of the most expensive places in
31:42
the country and world to list see.
31:44
Speaker 4: You could tell you run a business, Mike, because you asked,
31:46
what's the problem cost and you identify a very specific
31:49
one cost of living, and that is the crux of it.
31:52
We've got great jobs, we've got great amenities, great healthcare,
31:56
great public education. But it's very darn expensive to live here.
32:00
So what are we going to do about just that?
32:02
All these other ideas are nice to haves.
32:05
Speaker 3: I mean, look, I don't get me wrong.
32:08
Speaker 2: Throwing a concert is a hell of a lot easier
32:10
than fixing our transit problems. So if we really think
32:13
it's going to move the needle, then I'm on board.
32:15
Throw however many concerts you want.
32:17
Speaker 4: But we can do both.
32:18
Speaker 2: I don't think that we are going to be able
32:20
to retain people by throwing a concert every once in
32:23
a while and saying, hey, stay here in New England please.
32:26
Speaker 4: The tower of the two exclusive are we fixing? Are
32:29
we fixing the commuter rail over at Great Woods? So
32:31
it's occupied? Like, I don't get why are those two
32:34
things not possible? We can do both?
32:36
Speaker 3: Yeah, again, we can.
32:37
Speaker 2: I just I look at the two of those, and
32:40
assuming that we have limited resources on where to spend money,
32:43
I would rather, you know, develop policies such as reforming
32:48
taxes so that we're not one of the most high
32:50
cost of living plus high high income tax states in
32:54
the country. I'd like to look at having a transit
32:57
system that services more of New England than just around Boston,
33:02
and you know, make it so maybe I can get
33:04
from Portland to Boston in fewer than five hours.
33:06
Speaker 4: Might actual prices if you make the urbs more accessible
33:09
to high income people.
33:10
Speaker 3: But yeah, it would drive up prices around Boston.
33:13
Speaker 2: It would drive up prices around Portland or Worcester or
33:15
other areas, but it might help out with prices around
33:18
one twenty eight. And quite frankly, if I'm a college
33:21
grad that's thinking about leaving, I care little a little
33:24
bit more about prices around one twenty eight than I
33:26
do about prices in.
33:28
Speaker 3: Worcester and Springfield.
33:29
Speaker 2: In all honesty, So again, I don't mean to completely
33:33
rip this to shreds, but.
33:35
Speaker 4: No, I have well intention. We're having fun with it.
33:37
I'm zeroing in on the let's do a data dashboard.
33:40
Do you know what's required to collect the data? Clean
33:43
the data, present the data, maintain the data. It's a
33:45
full time job.
33:46
Speaker 2: One point that I believe you know it is of
33:48
concern is the people leaving New England appear to be
33:51
younger people. It does not appear to be a bunch
33:53
of seventy five year olds we're saying, yeah, I'm out
33:55
of here. This is occurring with younger working Americans who
33:59
have a lot large career ahead of them, and it's
34:03
a real problem if you end up. No offense to
34:06
the state of Maine, but you know, if you're trying
34:08
to work on growth in economic development, you don't want
34:11
to have the oldest average population in the country. And
34:16
that is where some of the population. That's the demographic
34:19
that seems to be leaving the New England area. So
34:21
I don't debate that we should focus on that one.
34:23
I just think it's maybe not the best approach.
34:25
Speaker 3: What do you have for us, Mark, Mike?
34:26
Speaker 4: There are hundreds of billionaires in China. It always surprises
34:31
me when I come across a piece that talks about
34:32
a very wealthy person in a communist system, but it's
34:35
a reminder of me. There's an article in the Financial
34:37
Times today about the number of Chinese dollar billionaires. So
34:40
they convert their currency a one billionaires. Okay, yeah, yeah,
34:43
because who cares, because it's a silly currency, So let's
34:46
convert it to dollars. They have a rich list. Presumably
34:50
the state maintains this. They're interested. They were over nearly
34:54
twelve hundred billionaires dollar billionaires in China the end of
34:57
twenty one. That number has been cut by a few hundred.
35:00
It's just under eight hundred now. There is no point
35:04
here other than that asset values have fallen, and thus
35:07
so of the number of Chinese billionaires plus. The government
35:09
has been softly persecuting I don't mean physically, but softly
35:13
persecuting very wealthy people, throwing their weight around a bit.
35:17
But it's a reminder that China, though authoritarian in many ways,
35:21
is a sort of complicated mixed economy.
35:25
Speaker 3: Yeah, no doubt people can actually become rich there.
35:28
Speaker 4: The government can also take that away in the wave
35:29
of a hand, but.
35:30
Speaker 2: Very rapidly quick. Look around at markets here. The Dow
35:34
currently off seventy five points, one fifth of one percent,
35:37
SMP up six points to tenth percent, and NASDAK up
35:41
eighty nine points or one half of one percent. The
35:44
yield and the ten yure Treasury is sitting still at
35:46
four point three two percent, and oil falling further after
35:49
a big drop yesterday, down another seven tenths of a percent.
35:53
We'll be back at it tomorrow dissecting Alphabet's earning. So
35:57
tune in, folks, and have a great rest of your week.