Latest / The Financial Exchange Show / New data shows the American consumer won't be slowed down

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New data shows the American consumer won't be slowed down · The Financial Exchange Show

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Speaker 2: As we continue through the week. We've got some additional
1:16
economic data this morning, a whole bunch actually that we're
1:19
gonna get to. We've got more earnings that have come
1:22
out as well, and more expected this afternoon. And we
1:28
continue to see markets despite you know, different concerns out
1:33
there that market participants may have, hey continuing to hold
1:38
pretty steady at this point despite those concerns. Mike, I
1:42
think I'd like to start with some of the economic
1:44
data that we got this morning, if that is acceptable
1:48
to you.
1:49
Speaker 3: Yeah, retail sales and jobless claims kicking in at eight
1:52
thirty am and contributing to I think that dampening of
1:57
any fears about the state of a imminent recession.
2:01
Speaker 2: Let's talk about jobless claims just because I think we
2:03
can glean a little bit more from this than the
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retail sales report. So jobbles claims is Mike noted out
2:07
at eight thirty am the number came in at two
2:10
hundred and forty one thousand for the week. That compares
2:14
to two hundred and sixty thousand last week, and also
2:17
below expectations of two hundred and sixty thousand this week,
2:20
continuing claims basically identical to last week. It was one
2:24
point eight six seven million this week, one point eight
2:26
five eight million last week. When you look at the
2:29
non seasonally adjusted number, which look, ultimately that's the number
2:33
that I don't want to say it's the one that
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actually matters, because look, there's a reason why you do
2:38
seasonal adjustments, Like you don't want to make it look
2:40
like you're going into a recession every January when everyone
2:44
lays off their temporary help for the holidays.
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Speaker 4: Sure, but you.
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Speaker 2: Can glean some trends from what's actually going on under
2:50
the hood with the non seasonally adjusted numbers. And if
2:54
you remember, if you happen to be listening, last week,
2:56
we went through on a state by state level and
2:58
we were like, hey, is this jump just because of
3:01
the hurricanes or is it something else? And we found
3:04
that pretty much most of these jumps that we saw
3:07
were in hurricane impacted states. There were a couple that
3:10
confused us. I remember we talked about Michigan, where like,
3:12
why did Michigan jobles claims go up by like nine thousand,
3:15
and we didn't really have an answer for that. I
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still don't have an answer for that. I haven't, you know,
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been able to come up with anything satisfactory. But here's
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what we saw in terms of where the decrease came from. Mike,
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Florida jobless claims dropped by thirty five percent. Okay, it's
3:29
a pretty strong sign that most of it was hurricane related.
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North Carolina dropped by twenty percent. Same thing, Kentucky by
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forty percent. Michigan, we still don't know what happened there,
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but they dropped back down by fifty percent. I still
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have no idea what was going on in Michigan the
3:44
week of October fifth. Ohio down by thirty five percent.
3:50
And so like you kind of go through the list
3:52
of the different states and you say, okay, like a
3:56
lot of the big jumps that we saw at least
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partially reversed, which makes sense that they're not necessarily back
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to their baseline. I mean, again, North Carolina is going
4:04
to be rebuilding roads for quite literally years as a
4:07
result of this. But you look at the numbers here,
4:11
and I think, at least for me, two things. Number one,
4:15
you just give some initial comfort. Hey, what we suspected
4:19
was the case is actually the case, and the opposite
4:23
of what I said last week, which is, hey, doesn't
4:25
matter why the number goes down. The number of claims
4:27
going down is a good thing, regardless of the reason.
4:31
Speaker 3: Yeah, we can agree there, and we've talked about length
4:34
about this, but this is the first place you will
4:38
see an uptick in the unemployment rate. You'll get that
4:41
here before just about anywhere else. And in spite of
4:45
all concerns, it continues to just show very little in
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the way of filing for unemployment. We'll see where that changes,
4:53
but at this stage, like I just don't think it's
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a youthful, useful exercise to guess as to whether or
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not it's going to go up. If it's going to
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show up, it'll show up here. And to this point,
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in spite of you know, big tech companies talking about layoffs,
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it just hasn't shown up in the jobless claims. And
5:13
until it does, I don't think you can paint much
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of a picture of recession's turn over.
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Speaker 2: Now to the retail sales data, which came in better
5:20
than expected as well headline number point four percent growth
5:23
for the month versus point three expected. The x auto
5:27
number Again, cars are big ticket items, and you know
5:30
when someone decides to purchase a car, it can really
5:33
skew the overall numbers here. So you ended up with
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a point five percent x auto compared to expectations of
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point one. So the initial READI you look at this,
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you're like wow, like, look at all that consumer spending.
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But remember the first hurricane that came through Helene. It
5:50
was right at the tail end of September. You had
5:53
a whole bunch of people stocking up on stuff throughout
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the Southeast in preparation for that hurricane. There are absolutely
6:00
this is something. Bank of America came out with a
6:01
note yesterday on this very topic, saying, look, don't be
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surprised if you get a big beat on retail sales
6:08
because of all of the stocking up that people did
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in the Southeast before Helene. It was just it was
6:15
something where you just saw, you know, people buying up
6:18
all kinds of stuff. And so if you look at
6:21
where the gains were in the retail sales report, I
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think that it gives you some idea of okay, like
6:28
what what's actually going on here? As an example, furniture
6:31
and home furniture stores Mike, do you go out and
6:33
buy a couch right before a hurricane? No?
6:35
Speaker 4: No, don't be able to get a free water logged
6:38
one just a week later.
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Speaker 2: Correct. Furniture and home furnishing stores down one point four percent.
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Electronics and applying stores, Mike, you sit there, say, hey,
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hurricanes coming time to buy the new TV? Same story?
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Probably not down three point three percent. Building material and
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garden supplies, Okay, like you start to, you know, say, yeah,
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maybe we need like some sand bags and stuff like that,
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you know, board up the house with some plywood one
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point two percent. Grocery stores up one percent. Sure, you're
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buying a whole bunch of extra food. Like totally clicks. Uh,
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let's see miscellaneous store retailers.
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Speaker 4: What the heck is that?
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Speaker 2: Literally? Convenience stores Yeah, up four percent year over year,
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up seven point eight So half of the miscellaneous store
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retailer's growth for the last year was thrown into one month.
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It kind of clicks, like when you when you think
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about what you're seeing here. So overall, I think the
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picture is one where sure you can you can look
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at this retail sales report and say it's strong, but
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I think it's also skewed strong buy some one off factors,
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and it's it's not to say that like that should
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be you know, saying, okay, like throw out everything, because
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look clearly like it could have been worse than this, obviously,
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But I don't know that you can necessarily tell a
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ton about this. And this is something that we're gonna
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be saying about a lot of data. In this case,
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I kind of look at and I go, well, this
7:56
looks too strong. I'm not sure that you can glean
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that that much from it. A couple of weeks we'll
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get the October jobs report. It's probably gonna look awful,
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and I'll say, look, you're probably not gonna be able
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to tell that much from that either. Either way, I
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think it's hurricane related impacts that are making the data
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tough to read. But there's nothing in here that is
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inherently a red flag. If if you had had a
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really weak retail sales report on the back of you know,
8:19
all this pre hurricane stock up, then I think you
8:22
could be like, yeah, there's a problem here, But this
8:25
in and of itself, I don't think really says a ton. Yeah.
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Speaker 3: I mean, even if you strip out the hurricane impact
8:29
my guess is this would probably still be slightly positive. Sure,
8:34
that's kind of where you land on it. And yeah,
8:36
when you talk about the jobs report that's going to
8:39
come out, what like a day before the election.
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Speaker 4: Same story.
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Speaker 2: There quite literally two business two trading days before the election.
8:46
Speaker 3: So that'll be out, and you know, if it's bad,
8:49
then you're gonna write it off. The only scenario where
8:52
I look at it and say it could have an
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impact to I guess my overall view on the state
8:56
of the economy would if it's would be if it's
8:58
gangbuster good. Right, If you have two hundred and fifty
9:02
thousand jobs created on the and the unemployment rate dip further,
9:05
then you gotta scratch your head and be like, what's
9:07
what what are we entering into here, because that would
9:11
be immensely surprising given the job loss around the likely
9:15
job loss around the hurricane.
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Speaker 2: Right, you start getting you start getting more, you know,
9:20
jobs numbers where it's like, hey, man, the economy is
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accelerating now, and that's the thing that starts to throw
9:26
into question. Hey, after maybe the next cut or two,
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does the FED do anything else?
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Speaker 4: Right? Where is that neutral rate?
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Speaker 2: Really? You know, like maybe we're maybe we're we still
9:37
are a long way from neutral. Actually, it's just in
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the other direction, you know, Like I'm not saying that's
9:42
likely or that that's what I expect. Sure, but like
9:45
if you get the next jobs report printing, as you said,
9:47
two hundred and fifty thousand jobs again for back to
9:50
back months and no downward revisions, kind of sit there
9:53
and you scratch your head and you're like, well, we
9:56
didn't see this coming, you know, what, what do we
9:59
do with this?
9:59
Speaker 4: Right?
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Speaker 2: Let's take a quick break here. When we come back,
10:02
talk about how treasury yields are being impacted by the
10:06
data that we've gotten this morning, because we are seeing
10:09
some moves in interest rates as a result of this,
10:11
and so we'll fill you in on that when we return.
10:14
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10:46
Speaker 2: Mike. Before we get into the impact that this morning's
10:49
economic data has had on treasury rates, I just want
10:52
to wish everyone out there a happy two year anniversary.
10:57
Speaker 4: Of the bullmarket.
11:00
Speaker 2: No, this is the two year anniversary of Bloomberg Economics
11:04
two years ago today, indicating that their economics model had
11:09
predicted a one hundred percent chance of recession in the
11:12
next twelve months. Okay, Yeah, when your model is predicting
11:18
anything with one hundred percent certainty, it means it needs
11:22
to happen or you don't have a very good model.
11:25
Speaker 3: Yeah.
11:25
Speaker 2: I agree there, So I just you know, and again
11:29
this was this was something that was published in Bloomberg.
11:31
Everyone talked about. It is all like recession is certain,
11:34
and this is why making investment decisions based on reading
11:38
stuff sounds smart. But be careful what you're reading, man, Right, you.
11:45
Speaker 3: Think about that? That was almost exactly. I mean, when
11:48
did the market's bottom in October of twenty twenty, like four.
11:51
Speaker 2: Days later than that, Like it was like the twenty
11:53
first or twenty second, I can't remember exactly when, but
11:55
it was literally just so like the S and P
11:59
five hundreds up sixty seven percent since that day, like
12:03
give me it.
12:03
Speaker 3: I'm like only ninety nine point nine percent certain that
12:06
I'm not currently living in the Truman Show. Like being
12:10
one hundred percent certain of anything is just ridiculous to me, right, Like,
12:14
can you be curious?
12:15
Speaker 4: Like Ted Lasso said.
12:18
Speaker 2: Well, there's some things that I think we can be
12:19
certain about, like if I drop the ball that I'm holding,
12:23
it will fall. Sure beyond that kind of hard to
12:26
find certainty in in any you know, in anything. Right, Yeah,
12:30
let's let's talk a little bit about treasury yields, another
12:33
place that no one can find any certainty. You got
12:35
the tenure at four point h nine percent, up seven
12:38
basis points today. This on the back of some of
12:40
the stronger economic data that we had. Remember when the
12:42
FED started cutting interest rates, tenure was about three to six.
12:46
So you got this nice counterintuitive thing going on. Hey,
12:49
the FED starts cutting interest rates, that means mortgages are
12:51
gonna go lower, Right, No, No, In fact, actually, if
12:54
you look at Mortgage News daily right now, the thirty
12:57
year fixed rate mortgages average nationally is it's six point
13:00
six three percent. That is up from six point one
13:02
two percent on the sixteenth of September, just before the
13:08
FED started cutting rates.
13:10
Speaker 3: This is going to be once again an ugly spring
13:13
housing market. I don't I don't really see how prices
13:19
don't fall this spring with rates where they are again.
13:21
It you know, we are what five months out, so
13:24
a lot can happen in five months. I recognize that.
13:27
But if the trend continues and we enter spring housing
13:30
market with rates in the six and a half percent range.
13:37
Speaker 2: There's two different kinds of ugly that we're going to see.
13:40
The first is if you look at the northeast and
13:44
the West Coast, you're basically going to see continued low
13:48
volumes because inventory still hasn't recovered there. It's just inventory
13:52
comes out, it still moves fairly decently. There's just not
13:56
much of it because so many people are mortgage locked.
13:59
When you look at what is going on right now
14:01
in Florida and Texas and Arizona in places like that,
14:06
those areas that now have excess inventory compared to twenty
14:10
nineteen and twenty eighteen, you are already starting to see
14:14
significant price cuts, and on a state level, those prices
14:18
are going to start dropping fairly quickly over the next
14:22
twelve to eighteen months. If mortgage rates continue to stay
14:25
in this range.
14:26
Speaker 3: Yeah, of course it's going to be a regional As
14:28
you know, real estate is hyper local. But look, most
14:33
of our listeners are listening here from New England and.
14:36
Speaker 2: Some from the West Coast.
14:38
Speaker 3: Yeah, I'll forget about if you're there too, and I
14:40
should take a look at housing inventories there. But across
14:43
New England, best case scenario, you're still looking at half
14:47
the inventory that we saw this time in twenty nineteen,
14:51
and with rates at six and a half percent, that's
14:53
not going to change much at all.
14:55
Speaker 2: Yeah. The fascinating thing is that on a national level,
14:58
if you look at inventory. I was taking a look
15:00
at this yesterday actually, and if you look at where
15:04
we stand right now, and this is data from Mike
15:07
Simonson at all Altus Research, seven hundred and thirty two
15:10
thousand single family homes that are available now at this
15:14
point in the year. You compare that to twenty seventeen
15:16
through twenty nineteen, like the last three normal years that
15:19
we saw in the housing market, and that's only about
15:22
fifteen to twenty percent below those levels. Like this is
15:25
the closest that we've been in you know, five years
15:28
to normal inventories and it's probably another two years before
15:32
we close that gap completely. Yes, it is gonna be regional,
15:36
but regional tent trends tend to spread as you you know,
15:39
kind of move out. The reason being, Hey, let's say
15:41
that you you know, sell your house in Florida and
15:44
decide to move to I don't know where.
15:48
Speaker 3: Where's the next hot place gonna be, Mike Tennessee, now Columbus, Ohio.
15:54
Speaker 2: I could see. I could see Ohio being like a
15:56
thing great, love it. So you say, hey, I'm moving
16:02
from Florida to Tulsa. But I took a twenty percent
16:04
haircut in order to sell Florida between you know, fifteen
16:08
percent on the price and then five to the agent. Okay,
16:12
I don't have as much to take to Tulsa. That
16:14
means that that market then starts to slow in terms
16:17
of its price growth and things like like this is
16:19
what we see it expands outward. So I think overall
16:24
the housing picture is, Hey, it's not going to be
16:27
the tailwind that you want it to be in the
16:30
spring unless you get you know, you've kind of recesssation before. Yeah,
16:36
the case is, hey, we need rates in the high
16:37
fives in order for housing to do what we want
16:39
it to do. The only way you get rates in
16:41
the high fives is by getting the recession that no
16:44
one wants.
16:44
Speaker 3: Millions of people lose their jobs, then you get rates
16:46
in the high fives. By the way, taking a look
16:48
at Oregon real estate, I wasn't aware of this, but
16:51
as of September inventory levels there ninety one percent of
16:55
twenty nineteen levels.
16:57
Speaker 4: So not as bad as here in the New England area.
17:00
Speaker 2: So that's what's going on with treasury yields. You've got
17:03
them continuing to move up right now other things Again,
17:07
just like in terms of other things that this ends
17:10
up impacting clearly, Look, it does impact the overall US
17:14
budget in terms of interest outlays and things like that.
17:17
If the FED can't cut as aggressively, then you end
17:21
up with, you know, maintaining these higher levels of interest expense.
17:24
So this is something that factors into annual deficits and
17:28
the overall fiscal situation of the US. I'm not saying
17:31
that like this is gonna be the straw that breaks
17:33
the camel's back, but again, it's something else that you know,
17:36
you do pay attention to on this stuff. And as
17:39
some of those intermediate term rates rise, not the ten year,
17:42
but you take a look at you know, the two
17:44
year and three year and things like that that potentially
17:48
impacts things such as CD rates and stuff like that.
17:51
It's not to say that you see, you know, a
17:53
huge move up, but again you take a look at
17:56
the two year treasuries as an example, which right now
17:58
is at three point nine eight five percent. If you
18:02
go back a month or so, it was it three
18:03
and a half. And so if you take a look
18:06
at CD rates in a lot of cases they might
18:08
be about a quarter percent higher than they were on
18:10
two year CDs. You know, relative two a month ago.
18:14
Is that a huge deal? Now it's quarter percent? But
18:17
I don't know, I could. It's better than the alternative,
18:20
right if you're if you're someone looking for yield, it's
18:22
it's better than that, you know, two year CD going
18:25
you know, down another quarter percent? Am I wrong? Yeah?
18:28
Speaker 4: With you? It would it be a right with your chuck.
18:29
Speaker 3: If I rounded out the UH listing count data for
18:31
the rest of New England, here go for it. So
18:34
Maine fifty one point four percent of twenty nineteen listings UH,
18:38
Massachusetts fifty four and a half percent, of twenty nineteen levels,
18:42
Rhode Island only forty one point six Connecticut, as we've
18:45
talked about before, twenty eight point six percent of September
18:50
twenty nineteen listing count New Hampshire forty eight point five percent,
18:54
and Vermont forty two point six percent. So when I
18:57
say we live in a very localized iron here, these
19:01
are among the worst numbers for housing inventory compared to
19:05
twenty nineteen levels that you see nationally.
19:08
Speaker 2: By the way, Mike, one other just quick note if
19:11
you want an interesting contraindicator on the US economy, I
19:14
don't know if you saw the latest cover of The Economist.
19:17
Now it is a rocket with dollar bills wrapped around it,
19:22
so it's like a dollar bill rocket, and it's titled
19:25
the Envy of the World, America's Economy. Ooh, I know, spicy.
19:30
Take a quick break here. When we come back, we've
19:32
got a little bit of Wall Street Watch, and then
19:34
we're talking online shopping.
19:42
Speaker 1: Like us on Facebook and follow us on Twitter. Act
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TFE show breaking business news is always first right here
19:50
on the Financial Exchange Radio Network. Time now for Wall
19:55
Street Watch, a complete look at what's moving market so
19:58
far today right here, Financial exchange radio.
20:01
Speaker 5: Network markets are modestly impositive territory as Wall Street reacts
20:07
to weekly jobless claims and retail sales data for the
20:10
month of September, whereas sales increase zero point four percent,
20:14
slightly better than estimates of zero point three percent. Right now,
20:18
the Dow is up by a quarter percent s and
20:20
P five hundred also up by just over a quarter
20:23
percent at a NASDAC up nearly half a percent or
20:27
seventy eight points. RUSS two thousand is pulling back by
20:29
about a third of a percent. Ten year Treasure reeled
20:32
up by seven basis points now at four point zero
20:35
eight percent, and crude oil is up by two thirds
20:39
of a percent, trading just below seventy one dollars a barrel.
20:42
Shares in Taiwan Semiconductor surging by over twelve percent after
20:46
the world's largest contract chip maker posted a record net
20:50
profit in the third quarter. Other chip stocks, including Nvidia,
20:53
AMD and ARM are also seeing gains as a result
20:57
of the impressive quarterly results. Meanwhile, The Financial Times is
21:01
reporting that Uber explored a potential takeover bid for Expedia.
21:06
The report noted that Uber's interest in the online travel
21:09
company was at an early stage Uber shares down by
21:13
two percent, while Expedia shares are at by over four percent. Elsewhere,
21:17
a Lucid group down by sixteen percent after the electric
21:21
ev maker guided for a significantly wider quarterly loss and
21:25
announced a public offering of nearly two hundred and sixty
21:28
two point five million shares of its common stock shares,
21:32
and CSX down by five percent after the Real Road
21:36
Companies quarterly revenue and earnings missed analysts expectations, and after
21:41
today's closing bell, we'll see anticipated third quarter earnings from
21:46
Netflix that stock down by one percent. Ahead of that,
21:50
I'm Tucker Silva and that's Wall Street Watch.
21:52
Speaker 3: Hey, if you're going to be on Cape cod next
21:54
week on Thursday, October twenty fourth, we'll be doing a
21:57
live broadcast of this show The Financial Exchange from the
22:00
Double Tree Resort and Suites. That's Thursday, October twenty fourth,
22:04
and Hyenas, we'll be doing a live seven R at
22:08
the end of the show from the Armstrong Advisory Group
22:10
with the free lunch and talking to folks about really
22:13
whatever's on their mind. Last time we did this, it
22:15
was a lot of fun. I got a lot of
22:17
questions from folks that were able to answer live at
22:19
that seminar, back and forth conversations with people just about
22:23
the state of the economy, our viewpoint on where markets
22:25
are right now, the upcoming presidential election. In addition, down
22:29
the Cape, Ed Lambert, host of the Morning show on WXTK,
22:32
is going to be joining us, providing his thoughts on
22:34
the upcoming election as well as some questions that he has,
22:37
so if you would like to join us again, it's
22:40
a live broadcast of the Financial Exchange followed by a
22:43
free lunch from the Armstrong Advisory Group, and you must
22:46
sign up ahead of time. I think we have I
22:51
know we have a lot of people signed up already,
22:53
and you must make reservations. It's again Thursday, October twenty fourth,
22:57
at the Double Tree Resort and Suites.
22:59
Speaker 4: On High End US.
23:00
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23:33
Speaker 2: Adobe Analytics saying that they expect US holiday online sales
23:38
to grow eight point four percent yuro over year to
23:41
a record two hundred and forty point eight billion dollars.
23:45
Last year, online shopping during the holiday season grew at
23:47
an annual pace of four point nine percent, So basically
23:50
they're saying, hey, people want to shop online this year
23:54
to avoid all the hassle and maybe find the better deals.
23:57
Speaker 3: I don't exactly have a track record for Adobe on this,
23:59
but I did take a look, and their prediction for
24:01
last year in October was four point eight percent. Came
24:05
in at four to nine, so pretty darn accurate. I
24:07
wish I had a longer track record of their predictions here.
24:10
I think twenty twenty two they were pretty far off
24:13
from what I saw. I think they predicted two and
24:15
a half. We came in at like five. But nonetheless,
24:18
Adobe coming out here and saying that it is going
24:20
to be a solid year for the online holiday shopping season,
24:26
which quite honestly, at this stage, it's not like we're
24:28
seeing a massive migration from in store to online on
24:33
a year to year basis, so speaks positively for what
24:36
could be a pretty big spending year, and quite honestly,
24:41
I think that kind of lands with my own expectations.
24:43
I know people are cash strapped, I know people are
24:45
putting a lot on the credit cards, but we actually
24:47
saw credit card balances outstanding balances come down a little
24:50
bit over the last couple of months, surprisingly, and so
24:53
I will not be shocked if this is a gangbuster
24:55
year for holiday shopping sales.
24:57
Speaker 2: It's yeah, it does. I kind of have that vibe. Actually,
25:01
I don't know why, but it just feels. I don't know,
25:08
maybe I can't.
25:10
Speaker 3: I've just already been humming Christmas tunes and so he's
25:13
in the holiday shopping mode, we know. But but honestly, Chuck,
25:17
you completed all your shopping in like September, maybe maybe July.
25:22
Speaker 2: I I'm actually a little bit behind this year. I
25:24
have like two more things and then I'm done. But yeah,
25:28
my general rule of thumb is if you haven't finished
25:31
your holiday shopping season by labor day, you're doing it wrong,
25:35
and are your.
25:36
Speaker 5: Kids still everybody on earth is doing it wrong because
25:38
no one does that correct.
25:40
Speaker 2: Just I just wanted to let all of you know
25:43
that you're doing it wrong.
25:44
Speaker 3: And your kid, kids and wife are still happy with
25:47
you picking out stuff from the from the exchange section
25:50
of the dump every year.
25:52
Speaker 2: It's it's fine. I mean, look the bananas that I
25:54
picked in March. They're a little brown now, but it'll
25:58
be fine. It's not a real problem.
26:00
Speaker 3: I actually met a family who had a hell had
26:04
a Christmas tradition of every year they would all give
26:07
each other gifts, but they had to be pulled from
26:10
that like free exchange section of the dump, and and
26:14
I like that tradition.
26:16
Speaker 2: Honestly imagine it all ended up back there.
26:18
Speaker 3: But yeah, well, I mean, every listen, it's asher to
26:23
ashers dump to dump, right Like That's that's the saying,
26:26
I believe.
26:27
Speaker 2: So that's what we have going on with the holiday
26:31
online shopping. I believe it was yesterday we covered the projections.
26:34
I forget who it was from, but for like the
26:37
general holiday season, I think it was like three and
26:39
a half to four percent growth that they were expecting there,
26:42
so again, still kind of a more normal clip than
26:45
you know. I think it was like twenty twenty one,
26:47
when all the stimulus money was floating around. It was like, Hey,
26:49
we're gonna see like ten percent growth in online in
26:51
like overall shopping. It's like, okay, let's let's let's get
26:54
back to normal a little bit.
26:55
Speaker 3: Everybody gets a car with a giant bow on it.
26:58
We were talking about the giant to Tucker.
27:00
Speaker 2: Did you we were trying to find if you could
27:03
buy just the bows but not the car.
27:05
Speaker 4: Yeah, I'm sure you.
27:06
Speaker 2: Can, Tucker. Did you ever find more? I know you
27:09
found the Etsy one for like was it like one
27:12
hundred and odd?
27:13
Speaker 1: Yeah?
27:13
Speaker 2: Yeah, I was looking for a cheaper bow than that.
27:16
Speaker 5: Party City has one for fifty five dollars.
27:19
Speaker 2: That that feels more my speed.
27:20
Speaker 3: I would say that there's an SNL skit about this,
27:24
and probably my favorite skit over the last decade, where uh,
27:28
I forget, the actor buys his wife a car and
27:31
then it comes out that he's unemployed, has a drinking problem,
27:34
she's been cheating on him, and it's just a Again,
27:36
I don't see a lot of great SNL skits these days,
27:39
but that was that was up there with it.
27:41
Speaker 2: For me, I want to talk a little bit about
27:43
this piece from Bloomberg, and it's I'm trying to reconcile
27:48
all the different things that are yeah, problematic here. Uh,
27:53
it's totally haven't worked in the same place for ten years?
27:56
Joined the club. And what it notes is that, based
27:58
on data from the start of this year, about thirty
28:03
point two percent of workers, according to data from the
28:06
Bureau of Labor Statistics, have been in the same place
28:10
for ten years or more. And it starts off it's like, look,
28:15
that doesn't make you a rarity. But then it's like, hey,
28:19
it's down from a decade ago, but it's pretty much
28:21
where things stood over the last like forty years. So
28:24
I'm trying to reconcile that at first with the headline
28:27
because it's like, well, I was expecting a bigger shift there.
28:31
And then it talks a little bit about how, hey,
28:34
each age group is seeing new lows in terms of
28:39
the percentage of people that have been there for ten
28:43
years or more. Some I'm kind of going through and
28:46
I'm like, okay, so like in the twenty to I'm
28:49
sorry the thirty to thirty four age group in nineteen
28:52
eighty three, sixteen point nine percent of workers in that
28:55
in demo had been at their employer ten years or more.
28:58
Today it's nine point four for forty to forty four.
29:01
It's gone from thirty eight point one down to twenty
29:03
nine point eight. For fifty to fifty nine, it's gone
29:06
from fifty nine to three down to forty nine point five.
29:09
And I think the only thing that I can take
29:13
away in order to reconcile all of this is that
29:16
the workforce has been aging. Even though within individual demographics
29:22
you've been seeing a decline in the percentage of people
29:25
that are working at one place ten years or more.
29:28
Because the workforce has been aging, we've kind of been
29:31
moving up those curves into you know, new demographics more rapidly,
29:36
and so that's been what's keeping things the same. Is
29:39
that the way to read this, mic.
29:40
Speaker 4: I guess yeah.
29:41
Speaker 3: I mean, it's trying to It seems to me like
29:44
it's trying to make an argument that workers don't stay
29:47
at the same employer as long as they used to,
29:51
which would be that would make sense to me as
29:53
an overall narrative, But then when you look at the
29:55
actual data, it doesn't really play out that way, And
29:57
the main reason why it doesn't play out that way
29:59
is because the average worker is a lot older than
30:02
it was forty years ago, and the older workers seemingly
30:06
stay with their employer for longer, but still not as.
30:10
Speaker 2: Much as they did forty years ago.
30:11
Speaker 3: Yeah, like you know, there's compelling evidence, right, it makes
30:14
sense that if you are working in the twenty twenties,
30:16
you wouldn't stay with the same employer for the same
30:18
amount of time as you would in the nineteen eighties.
30:20
When you got a pension. There's a big incentive to
30:23
stick around and be it the same employer because your
30:25
pension kept growing and if you left after before ten years,
30:28
oftentimes you wouldn't be eligible for it. And so that
30:31
makes sense to me. We're seeing that with younger workers,
30:35
but overall, surprisingly enough, Yeah, the average the average worker
30:40
is sticking around with their employers just as long as
30:42
they used to in the eighties and nineties, mainly because
30:46
the average worker is a lot.
30:46
Speaker 4: Older these days.
30:48
Speaker 2: Let's take a quick break here. When we come back,
30:50
we'll do a little bit of FED talk right after this.
30:53
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That's visit USVII Mike.
32:01
Speaker 2: There is a piece today in Bloomberg it's titled FED
32:05
is stuck on six week data cycle when investors want
32:08
to forecast, and it tries to make the point that, hey,
32:11
because the Fed is talking about how data dependent it is,
32:13
it's causing volatility in interest rates.
32:16
Speaker 3: Your thoughts, Well, let's give an example that I think
32:19
actually backs up this story. So the Federal Reserve meeting
32:25
this summer where they right before they began cutting rates.
32:29
I think that was July meeting, if I'm not mistaken, Chuck.
32:35
The jobs report was coming out a day later, and
32:38
at the time, they drove home that data dependence argument
32:42
that hey, we're going to wait to see the data
32:44
and we're not sure what we're going to do yet,
32:47
and they decided not to cut rates at that meeting.
32:50
Jobs report comes out the next day and clearly influences
32:53
some board members to feel that they might be behind
32:56
the eight ball on cutting rates, and so at the
32:58
next meeting they cut rate by fifty basis points, and
33:01
Drome Powell acknowledges in that next press conference that, hey,
33:04
if we had that jobs report at the time of
33:06
the last meeting, then we may have decided to cut
33:09
rates at the time. And I think that speaks to
33:12
what's being described here as hey, the Fed's very data dependent,
33:16
rather than seemingly providing an outlook on where the economy
33:21
is going, just instead saying we'll wait and see what
33:23
the data says. The question is is that wrong? Is
33:27
that the incorrect approach? You know, A fifty basis points cut,
33:31
I think is exactly the volatility and rates that they're
33:34
describing here, though.
33:35
Speaker 2: I guess here's the look. The short term Fed funds
33:40
rate is not a place where volatility matters. And what
33:45
I mean by that is, Okay, if someone's offsides on
33:48
the short term Fed funds rate, it's not something that
33:52
should have a major impact on their overall portfolio. Being
33:58
off sides on like hey, hey, where do long term
34:01
rates need to go? That that's a much more impactful
34:03
thing because of how duration impacts the price movement of
34:07
bonds and things like that. But here's the other point
34:10
that I'll come back to on this, And I only
34:12
have data going back to nineteen sixty two on this,
34:15
but that's basically like modern FED data. I mean, it's
34:17
true again.
34:18
Speaker 3: It was its only nineteen sixty two. Check like si,
34:21
I have sixty two years with the data. I have
34:23
sixty two years of data on this, Mike. During that time,
34:27
what is the average range that the ten year US
34:30
Treasury has traded in over a year? Like, what's the
34:34
spread from the lowest it's traded to the highest?
34:36
Speaker 4: The average range?
34:38
Speaker 2: Average?
34:40
Speaker 4: Thirty five basis points.
34:41
Speaker 2: One point five nine percent? What's the median so middle
34:45
fifty fiftieth percent, seventy one point four to two?
34:50
Speaker 4: Wow?
34:50
Speaker 2: Do you know where we are this year? One four
34:56
one point oh seven? Like, this has been a year
34:59
that is in like the bottom third of volatility for
35:03
the ten year treasury in terms of the range that
35:05
it's traded in. So this is the kind of piece
35:08
that bothers me because it's like, Hey, the Fed's causing
35:11
all this volatility in markets? Mark? Has there been Mark? Mike,
35:16
has there been a ton of volatility in equity markets
35:20
this year?
35:20
Speaker 4: No, it's been straight line up.
35:22
Speaker 2: We had one dip that almost hit ten percent, one
35:25
that hit almost five and other than that, it's been
35:30
really really chill man, you know, like it's it's just
35:33
been chill on the bond side of things. Yeah, you've
35:36
had some wiggles back and forth. I'm not gonna debate that,
35:40
but my point is every year has wiggles back and forth,
35:44
and the overall magnitude of you know, the can was
35:48
the market significantly wrong in either direction? The answer is
35:52
not as much as it normally is.
35:54
Speaker 3: Yeah, I just yeah. My overall conclusion was, what exactly
35:58
are we lacking? The Fed not putting out a more
36:02
solid statement on where they think the economy is going?
36:05
Like has any Fed ever been any good at that historically?
36:08
My guess would be probably not reliably so, and so
36:13
I don't really take much of it. I do take
36:16
an issue with the FED misinterpreting data like they did
36:19
in twenty twenty two and not raising rates when they
36:21
clearly should have in twenty twenty one. But for them
36:26
to say, look, it's a weird economy right now, we're
36:28
not sure where it's going to go, and we're gonna
36:29
listen to the data, rather than saying this is exactly
36:32
what we think is going to happen under these sets
36:34
of circumstances.
36:34
Speaker 4: Than being proven wrong, I'll take the first scenario, thank
36:37
you very much.
36:38
Speaker 2: If you look at the years where the tenure Treasury
36:41
is traded in the tightest range nineteen sixty four, it
36:44
only ranged fourteen basis points from smallest to largest. Just
36:48
just why strange boring years, saying to me nineteen sixty two,
36:52
thirty five basis points, sixty three sixty five. Again, the
36:55
sixties were kind of just a calm like economic deck, Like,
36:59
there wasn't that much going on in terms of massive
37:02
economic disruption in either way. Sure you had a lot
37:05
of social stuff going on, but economically it was just
37:08
kind of boring. Twenty seventeen, President Trump's first year in office,
37:12
another year where the market just went straight up for
37:15
the whole year, basically really calm. Nineteen seventy two, that
37:20
you know, period between seventy one and seventy three. I
37:22
know that sounds dumb, but again those were the two
37:24
big like oil and gold shocks, So that's why I
37:27
bracketed there. Hey, there was kind of this calm in between,
37:29
oh five, twenty eighteen, twenty twenty one, twenty fifteen. Mike,
37:34
there's there's three years there, the last three that I
37:36
rattled off, they're all in the last decade, and two
37:39
of those, by the way, eighteen and twenty one. Powell
37:42
was in office for those too. So for all the
37:44
stuff that we rag on Jay Powell about which mostly
37:47
was like in the last couple of years, like this year,
37:49
I think we've said, hey, he's been doing pretty well recently.
37:53
I think there's a case that Powell can make that
37:56
as much as we might complain about how the Fed
37:58
communicates and everything, they've actually reduced overall, you know, volatility
38:04
in the bond market during his tenure year. There is
38:08
it a result of him or just the environment he's in,
38:11
I don't know, but there's a case to be made
38:14
that maybe what they're doing is actually working if you
38:16
look at it in terms of managing volatility. Let's take
38:19
a quick break here. We got hour two coming up
38:21
in a little bit on the Financial Exchange.