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Trying to time this market could lead to pain · The Financial Exchange Show

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  Speaker 2: Good morning, and welcome back to the Financial Exchange if
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  Speaker 2: you're just tuning in. Markets have turned a positive corner
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  Speaker 2: so far and Tuesday trading, with the Dow, SMP, and
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  Speaker 2: NAZDAK all strongly in positive territory. The Dow currently up
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  Speaker 2: nearly one thousand points two point six percent, SMP one
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  Speaker 2: hundred and forty points or two point eight percent, and
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  Speaker 2: the NASDAC ripping up five hundred ten points or about
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  Speaker 2: three and a quarter percent in early trading so far.
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  Speaker 2: At last look. Interest rates were also moving up on
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  Speaker 2: this news, meaning bond selling off, yielding a ten year
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  Speaker 2: treasury sitting at four point two one two percent, Oil
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  Speaker 2: which had been taking it on the chin recently not
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  Speaker 2: making much of a recovery here. Price of oil sitting
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  Speaker 2: right now West Texas crewed at sixty dollars and ninety
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  Speaker 2: three cents a barrow, only up about a third of
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  Speaker 2: a percent in our trading. Gold, which has been just
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  Speaker 2: all over the place up as well today about one
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  Speaker 2: point six percent to threeenty twenty two dollars in ounce.
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  Speaker 2: That seems to have covered at Paul anything that I
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  Speaker 2: missed in terms of markets going on today, and by
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  Speaker 2: the way overseas markets very much to the upside as
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  Speaker 2: well from what I briefly saw there across Asia as well.
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  Speaker 2: On again just potential rumors of negotiations of these tariffs
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  Speaker 2: which are due to be implemented and in forced tomorrow.
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  Speaker 3: No, nothing further to cover there.
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  Speaker 2: In terms of the effect on thirty year mortgages, as
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  Speaker 2: I think that's probably most front and center to people
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  Speaker 2: out there today when looking at interest rates. The thirty
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  Speaker 2: year fixed rate mortgage according to Mortgage News Daily as
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  Speaker 2: of yesterday, still sitting at six point eight two percent.
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  Speaker 2: Really not seeing much of a move downward there on mortgages.
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  Speaker 2: As we are fully into that spring housing market as
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  Speaker 2: we speak here, I will be interested to see interested
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  Speaker 2: to see what does develop there, specifically around pricing. Again
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  Speaker 2: in the New England area, housing is no real story
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  Speaker 2: there because there's still no homes for sale. But when
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  Speaker 2: you go take a look at Florida, Texas other parts
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  Speaker 2: of the country, the inventory levels there could lead to
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  Speaker 2: again not significant price drops, but it wouldn't be surprising
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  Speaker 2: to see prices drop here and there. And we'll see
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  Speaker 2: what happens with mortgage rates in response to everything regarding
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  Speaker 2: tariffs and recession concerns. Wall Street Journal has a piecet today,
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  Speaker 2: how far does the market have to fall before it's
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  Speaker 2: time to buy? I mean today? Apparently the answer was
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  Speaker 2: however much it fell yesterday because markets are rising today.
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  Speaker 2: But that's not a terribly satisfactory answer, And so I
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  Speaker 2: think it's always useful to kind of take a look
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  Speaker 2: at different numbers in terms of let's just talk about
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  Speaker 2: the S and P five hundred here for a moment,
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  Speaker 2: in terms of how pricey is it? So the current
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  Speaker 2: price earnings ratio on the S and P five hundred
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  Speaker 2: is sitting around twenty five five, just to give you
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  Speaker 2: a sense. Back in January, close to market highshe we
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  Speaker 2: were sitting at more like thirty. Back in twenty twenty one,
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  Speaker 2: we were closer to forty. And you know, back during
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  Speaker 2: the pre dot com bubble, if I can go that
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  Speaker 2: far back. Yeah, according to this data that I have,
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  Speaker 2: back in February of two thousand and two, the PE
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  Speaker 2: ratio and the S and P five hundred was sitting
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  Speaker 2: close to forty seven. So valuations have fallen, they haven't
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  Speaker 2: exactly fallen to levels that I think many people consider
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  Speaker 2: historical opportunities to buy right if we think about the
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  Speaker 2: Great Recession, for example, down in twenty eleven, the you know,
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  Speaker 2: S and P five hundred price earnings ratio is sitting
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  Speaker 2: below fourteen. We're still close to double that rate. There's
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  Speaker 2: a lot of different ways to measure this. Obviously, you
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  Speaker 2: can look at price to book value, earnings yield on
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  Speaker 2: the S and P five hundred, but they're all, you know,
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  Speaker 2: basically telling you similar things here, which are Yeah, valuations
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  Speaker 2: have gotten more reasonable over the course of the last week,
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  Speaker 2: but we're not exactly in bargain buying territory, bargain buying
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  Speaker 2: territory or recession territory, right, we are not in the
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  Speaker 2: level that prices typically get to in a market that
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  Speaker 2: is pure, you know, pre recession, and so you know,
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  Speaker 2: there's still some I think question marks. Hey, what do
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  Speaker 2: we see here? You had comments from Larry Fink, CEO
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  Speaker 2: of Black Rocky yesterday as well as many other CEOs saying, hey,
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  Speaker 2: either we're right on the verge of recession, or in
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  Speaker 2: Larry Fink's case, saying he thinks we're already in recession
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  Speaker 2: as of yesterday and we just don't know it yet. Look,
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  Speaker 2: all of this is heavily dependent on frankly, what does
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  Speaker 2: or does not happen between now and tomorrow on the
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  Speaker 2: implementation of these tariffs.
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  Speaker 3: April ninth th Yeah, again, all this is is speculation.
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  Speaker 3: No one really knows where the exact bottom is. But
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  Speaker 3: I would sort of piggyback on the skepticism from some
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  Speaker 3: of the CEOs out there, just because I was having
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  Speaker 3: a conversation with the Clientye. So, you know, we haven't
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  Speaker 3: seen some of the economic data negative prints that people
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  Speaker 3: are projecting. We haven't seen negative GDP growth or anything
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  Speaker 3: like that, and perhaps that doesn't occur, but you're seeing
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  Speaker 3: a lot of negative sentiment out there, and if we
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  Speaker 3: were to get economic reports that were to point to
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  Speaker 3: weak and slowing economy growth, then perhaps you could see
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  Speaker 3: further sell off. But again it's all speculation.
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  Speaker 2: We've been mentioning that the economic data that we are
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  Speaker 2: getting is not terribly relevant. I still feel that way.
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  Speaker 2: On Thursday of this week, we'll get the initial jobless claims,
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  Speaker 2: but they are going back a couple of weeks and
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  Speaker 2: probably don't tell us anything post tariff implementation, So we've
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  Speaker 2: got to wait a few weeks before initial jobless claims
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  Speaker 2: start to signify much of anything. We will get a
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  Speaker 2: CPI read on Thursday, that would normally be probably the
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  Speaker 2: only thing we're talking about. It's also they're going to
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  Speaker 2: be the second day of tariff implementation on recipient tariffs,
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  Speaker 2: so pretty irrelevant in terms of the read that we
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  Speaker 2: get on CPI. I think the only thing it might
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  Speaker 2: matter for is the direction that j Powell takes this
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  Speaker 2: economy going forward, because he was asked on Friday of
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  Speaker 2: last week, Hey, tariff implementation, recession concerns clearly market pressure.
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  Speaker 2: Where does the FED go next? And his answer was
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  Speaker 2: nowhere for now, because the risk to inflation is just
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  Speaker 2: too high with implementation of tariffs. So we will we
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  Speaker 2: will see if that sets anything up Friday, we get
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  Speaker 2: the producer price index. But yeah, I really Chuck mentioned
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  Speaker 2: this yesterday or maybe last week on the program, and
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  Speaker 2: it's it's probably going to be at the earliest late April,
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  Speaker 2: more like May or June time.
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  Speaker 3: That's why I was projecting May or June before you
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  Speaker 3: even put a grain of salt to any of the reports.
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  Speaker 3: I mean, what's the point of covering it with the
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  Speaker 3: seismic changes that we've seen front of policy front? You know,
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  Speaker 3: it's it's hard to dive too much into the details
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  Speaker 3: with what's looming.
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  Speaker 2: This is Paul's pitch to not do radio for the
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  Speaker 2: next two months. I think that's what I'm hearing right now. No,
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  Speaker 2: I'm planning on taking a vacation. This is my back
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  Speaker 2: end to that.
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  Speaker 3: Al I'm always always happy to be in the seat.
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  Speaker 2: In any case. That's kind of what we are staring
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  Speaker 2: down here of the next few days. Here, markets very
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  Speaker 2: much in positive reaction mood to the even just semblance
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  Speaker 2: of hints of negotiations, is my takeaway. But I think
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  Speaker 2: the other key message here, folks, is don't try and
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  Speaker 2: attribute too much to single day moves in the stock market.
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  Speaker 2: And yesterday was the perfect lesson in that we had
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  Speaker 2: markets that I think at one point were up something
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  Speaker 2: like four percent off of the previous off of Friday's close.
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  Speaker 2: It lasted for some fifteen minutes. We're not seeing that today.
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  Speaker 2: Markets have been in positive territories since the open, up
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  Speaker 2: over about two percent, but we have given up a
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  Speaker 2: lot of it just in the last you know, fifteen
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  Speaker 2: minutes of my speaking. But I think the key messages
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  Speaker 2: if you try and attribute too much to the day
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  Speaker 2: to day moves of this new story or that new story.
• 8:56
  Speaker 2: One those new stories can be refuted by the White
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  Speaker 2: House and told that they're news, in which case, Okay,
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  Speaker 2: I just bought into a fake news story that was
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  Speaker 2: nothing Burger. The other piece would be this stuff. You know.
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  Speaker 2: Sometimes markets just go up, sometimes they just go down.
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  Speaker 2: There's not always a story to count towards all that,
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  Speaker 2: and it's not always a story that's going to last.
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  Speaker 2: The statistic that I hate because of how painful it was,
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  Speaker 2: but love in terms of an example here, the NASDAC
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  Speaker 2: during the dot com bust had I think five separate
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  Speaker 2: rallies of ten percent or more during the overall downturn
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  Speaker 2: on its way to bottoming. So these things can give
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  Speaker 2: you very false signals in short timeframes, and it's important
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  Speaker 2: to take that longer term view.
• 9:43
  Speaker 1: There's only one show that follows Wall Street's continued volatility,
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• 10:03
  Speaker 2: All the while, behind the scenes with everything terrif related,
• 10:06
  Speaker 2: there are also competing tax bills making their way through
• 10:09
  Speaker 2: the Senate and the House. As a reminder, they are
• 10:12
  Speaker 2: passing these tax bills or attempting to through the process
• 10:15
  Speaker 2: of budget reconciliation. Why they need to do that is
• 10:18
  Speaker 2: because they don't. Republicans don't have large enough majorities in
• 10:21
  Speaker 2: either the House or the Senate to pass these bills
• 10:25
  Speaker 2: without facing all sorts of issues. And then the Senate
• 10:29
  Speaker 2: in order to pass a bill through without facing what
• 10:33
  Speaker 2: is that process by which you just stand there and
• 10:37
  Speaker 2: delay a bill filibuster philbeuster that one, thank you, you
• 10:40
  Speaker 2: need sixty votes. They don't have it in the House.
• 10:42
  Speaker 2: They only have a very slim majority of two twenty
• 10:45
  Speaker 2: to two thirteen. And look, these bills are controversial even
• 10:51
  Speaker 2: among Republicans. There are so many competing interests here. But
• 10:55
  Speaker 2: for the moment, the main piece of this that seems
• 10:58
  Speaker 2: to be quite controversial is just how much these bills
• 11:02
  Speaker 2: would run up the deficit further over the course of
• 11:05
  Speaker 2: the next decade. Now, most Republicans seem to be on
• 11:07
  Speaker 2: board with the idea that hey, you know, running up
• 11:11
  Speaker 2: the deficit by a couple trillion dollars for these tax
• 11:13
  Speaker 2: bills over the next ten years is reasonable because there
• 11:16
  Speaker 2: might be enough business activity or tariffs to offset some
• 11:20
  Speaker 2: of that. Facts aren't in evidence in that, but they've
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  Speaker 2: justified that to say, hey, look, if we have the
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  Speaker 2: model here where it runs up the deficit by extra
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  Speaker 2: two trillion dollars of the next ten years, that's probably
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  Speaker 2: okay because we'll see all this new revenue from business
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  Speaker 2: activity and wages and all these good things. Again, facts
• 11:39
  Speaker 2: are not in evidence in that, but that is the
• 11:42
  Speaker 2: message that they've been sending. The problem is that in
• 11:46
  Speaker 2: these bills there's quite a bit of divide as to
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  Speaker 2: what's acceptable. So the House version, which is passed in
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  Speaker 2: late February, did call for big tax cuts totaling somewhere
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  Speaker 2: in the range of four trillion dollars. However, it also
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  Speaker 2: called for spending cuts of one and a half trillion
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  Speaker 2: dollars over a decade, largely from medicaid. The Senate package
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  Speaker 2: that was passed or that's being worked through, I don't
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  Speaker 2: actually know if it's passed, looks at those same four
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  Speaker 2: trillion dollars in tax revenues. Actually it's more like five
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  Speaker 2: trillion dollars in tax cuts. In the Senate version, only
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  Speaker 2: four billion dollars in spending cuts over the course of
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  Speaker 2: a decade that is very far away. Those two bills
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  Speaker 2: are four billion versus four trillion is excuse me, four
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  Speaker 2: billion versus what do we say, one and a half
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  Speaker 2: trillion dollars in cuts? Is a very significant divergence here,
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  Speaker 2: and so I suspect it still gets done. You know,
• 12:43
  Speaker 2: the method here has typically been you get a call
• 12:46
  Speaker 2: from the President that says, either work through this bill
• 12:50
  Speaker 2: or I'm going to run somebody against you in the
• 12:52
  Speaker 2: next election, and you're not going to be terribly happy.
• 12:54
  Speaker 2: And that you know, that got Johnson the House vote,
• 12:57
  Speaker 2: the speaker vote, and it's worked generally pretty well to
• 13:00
  Speaker 2: get House Republicans in line. But so far there's been
• 13:04
  Speaker 2: some pretty harsh words from House Republicans on the idea
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  Speaker 2: of these tax packages and what it actually would mean
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  Speaker 2: for deficits. And you know, frankly, I think they, you know,
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  Speaker 2: with that slim of a majority, these these House Republicans
• 13:20
  Speaker 2: are going to have questions to answer when they go
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  Speaker 2: back to their districts and try and win those close
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  Speaker 2: races and going to them and saying, hey, you know,
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  Speaker 2: I just increased deficits by another two three trillion dollars
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  Speaker 2: is going to be tough. Representative Andy Oliz from Tennessee,
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  Speaker 2: for example, was quoted saying, make no mistake, the Senate
• 13:39
  Speaker 2: Budget Resolution is everything but America first. So I don't
• 13:44
  Speaker 2: know how close these are to actually getting done. Oftentimes
• 13:47
  Speaker 2: you don't really know until they are passed. I also
• 13:50
  Speaker 2: don't see a lot of reporting on what the priorities
• 13:52
  Speaker 2: are going to look like. We've seen everything from the
• 13:54
  Speaker 2: salt cap removal to no tax on tips, no tax
• 13:58
  Speaker 2: on tips, social Security changes over time, changes increasing the
• 14:03
  Speaker 2: top marginal tax bracket. Like, I genuinely am not entirely
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  Speaker 2: certain where all this goes. But the piece to me
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  Speaker 2: that both the House and the Senate seem to be
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  Speaker 2: working through or focusing on, is the Medicaid side of things.
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  Speaker 2: And I want to, I guess I want to think
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  Speaker 2: about that as it affects our lives and the financial
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  Speaker 2: advisory world for a moment here, Paul, because look, most
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  Speaker 2: most people with assets don't interact with medicaid much at all.
• 14:29
  Speaker 2: But when you talk about actually, let me let me
• 14:32
  Speaker 2: ask you this question. See if you can get on
• 14:34
  Speaker 2: the same page when you think about the average American
• 14:37
  Speaker 2: retiree what would you consider to be the biggest threat, Well,
• 14:41
  Speaker 2: quite unlikely, but the biggest threat to the success of
• 14:43
  Speaker 2: their financial strategy when they retire.
• 14:45
  Speaker 3: Long nursing homestay.
• 14:46
  Speaker 1: Yeah.
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  Speaker 2: Yeah, So long term care expenses in this country, and
• 14:50
  Speaker 2: especially here in the Northeast are just outrageous. If you're
• 14:54
  Speaker 2: not familiar the cost of a full blown nursing home
• 14:58
  Speaker 2: in New England, I've seen anywhere from fifteen to twenty
• 15:01
  Speaker 2: thousand dollars a month. I've seen higher than that too,
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  Speaker 2: But you know, I know somebody personally who's in one
• 15:07
  Speaker 2: in southern New Hampshire and they're shelling out fifteen grand
• 15:09
  Speaker 2: a month for nursing home care. Why that is at
• 15:13
  Speaker 2: least in part. You know that fifteen thousand dollars I
• 15:16
  Speaker 2: don't think really represents the cost of delivering that care
• 15:20
  Speaker 2: every month. But the problem for these nursing home facilities
• 15:22
  Speaker 2: is that a large portion of the residents on average,
• 15:26
  Speaker 2: are on Medicaid, and Medicaid does not reimburse fifteen thousand
• 15:31
  Speaker 2: dollars a month. They reimburse substantially lower than that. I've
• 15:35
  Speaker 2: just been kind of pondering what this could mean because
• 15:37
  Speaker 2: they one and a half trillion dollars in spending cuts
• 15:40
  Speaker 2: if most of them are concentrated in Medicaid. For an example,
• 15:44
  Speaker 2: in twenty twenty three, the United States budget accounts it
• 15:47
  Speaker 2: about six hundred and ten billion dollars went to Medicaid,
• 15:49
  Speaker 2: so six point one trillion dollars over a decade. If
• 15:52
  Speaker 2: we extend out twenty twenty three one and a half
• 15:54
  Speaker 2: trillion dollars, that'd be like a quarter of that budget.
• 15:57
  Speaker 2: I would assume that there are cuts to all sorts
• 15:59
  Speaker 2: of programs in that case, including the nursing homestays, and
• 16:02
  Speaker 2: so logically, just following that through all the way to
• 16:06
  Speaker 2: its logical end, I would think what happens is people
• 16:11
  Speaker 2: who are in nursing homes on Medicaid stay there, but
• 16:16
  Speaker 2: Medicaid reimburses even less, and therefore the cost of a
• 16:21
  Speaker 2: nursing home for the person who can afford to private
• 16:24
  Speaker 2: pay goes HIRER to account for that loss and subsidized cost. Yeah,
• 16:29
  Speaker 2: or there's a broken system. I'm not saying this is good, bad,
• 16:32
  Speaker 2: or indifferent. I'm just saying that this is a system
• 16:34
  Speaker 2: that does not function terribly.
• 16:36
  Speaker 3: Or there's a tremendous shakeup in senior housing where there
• 16:39
  Speaker 3: isn't as much widespread care for those people because they
• 16:42
  Speaker 3: just are unwilling to continue to accept the subsidized Medicaid payments.
• 16:47
  Speaker 2: Yeah, I mean you could have, right. The other response
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  Speaker 2: would be the nursing homes going out of business.
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  Speaker 3: Or creating a split of like, hey, we're only going
• 16:53
  Speaker 3: to take people who.
• 16:54
  Speaker 2: Private pay yeah, yeah, right right, yeah, I genuinely don't. Again,
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  Speaker 2: this is very early on.
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  Speaker 1: Sure.
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  Speaker 2: The Medicaid cuts in particular, they've been pretty popular right
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  Speaker 2: among House and center Republicans, So I think that that
• 17:08
  Speaker 2: is probably a piece of this overall pie. And if
• 17:12
  Speaker 2: it happens, you know what are the tax cuts? Those
• 17:14
  Speaker 2: are the things that are going to be most important
• 17:16
  Speaker 2: to the markets in the economy. But just one thing
• 17:19
  Speaker 2: that we've been seeing over and over again in our
• 17:21
  Speaker 2: job as financial advisors that I just I'm curious as
• 17:24
  Speaker 2: to how it all plays out in the long term
• 17:26
  Speaker 2: care insurance industry space too, Like how does that get
• 17:29
  Speaker 2: affected by all of this is very very interesting too.
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  Speaker 2: Shaking faith in US safe havens is a dangerous game.
• 18:10
  Speaker 2: It's an opinion piece from Jonathan Levine from Bloomberg Today,
• 18:13
  Speaker 2: and I want to talk about the importance of US
• 18:17
  Speaker 2: debt in particular as a safe haven and what that
• 18:21
  Speaker 2: means in particular. He gives a few examples, but he's
• 18:25
  Speaker 2: absolutely right that the United States has for a very
• 18:29
  Speaker 2: long time been a safe haven during times of uncertainty.
• 18:33
  Speaker 2: So when financial crises hit, international investors, but investors of
• 18:38
  Speaker 2: all sorts pour into the United States treasury market because
• 18:42
  Speaker 2: it is a highly liquid because we issue so much
• 18:46
  Speaker 2: debt in this country, because we've been running deficits since
• 18:48
  Speaker 2: the Clinton era, and b because we always pay our debts.
• 18:55
  Speaker 2: Those two features really drive people towards that safety move
• 18:59
  Speaker 2: when things get hairy. And you saw that Thursday and
• 19:03
  Speaker 2: Friday last week too, right, You saw the yield on
• 19:05
  Speaker 2: treasuries sky or excuse me, rock it down. The price
• 19:10
  Speaker 2: on treasuries move up because people were moving for that
• 19:14
  Speaker 2: safe haven. Let's not get into whether or not these
• 19:19
  Speaker 2: tariff talks are potentially going to weaken that position as
• 19:22
  Speaker 2: a safe haven yet. But let's talk about why that's
• 19:24
  Speaker 2: so critically important here, Paul, Like, what what does that
• 19:28
  Speaker 2: give us in terms of a special advantage be seen
• 19:30
  Speaker 2: as the global currency, the currency to trade in, and
• 19:34
  Speaker 2: the place to flee to when things get rough. It
• 19:37
  Speaker 2: loves for a couple of things.
• 19:38
  Speaker 3: I mean, one is for our continued ability to just
• 19:41
  Speaker 3: print money sort of endlessly here, to continue to raise debt,
• 19:46
  Speaker 3: and also to be able to raise that debt at
• 19:49
  Speaker 3: a low interest rate. I mean, if Greece were to
• 19:52
  Speaker 3: try to go and do this and raise the type
• 19:54
  Speaker 3: of debt that we are looking to raise, obviously I'm
• 19:56
  Speaker 3: pointing that I was a far extreme to the other end,
• 19:59
  Speaker 3: they would be unable do it. And in times of
• 20:01
  Speaker 3: war and strife, the ability to raise money cheaply is
• 20:05
  Speaker 3: a huge advantage. And you pair that together with you know,
• 20:09
  Speaker 3: military strength and the ability to continue to raise more capital.
• 20:12
  Speaker 3: It positions you well from a global perspective to have
• 20:15
  Speaker 3: those two things going hand in hand.
• 20:17
  Speaker 2: Now, on the surface, tariffs don't really directly have anything
• 20:22
  Speaker 2: to do with that, right, I mean, on the surface,
• 20:24
  Speaker 2: you take a look at that, and you know, what
• 20:25
  Speaker 2: would weaken the US as a safe haven asset, the
• 20:28
  Speaker 2: treasury as a US safe haven asset. Well, if Congress
• 20:32
  Speaker 2: actually defaults on treasuries, as they've threatened to do a
• 20:35
  Speaker 2: couple of times like that would be catastrophic. Potentially, if
• 20:38
  Speaker 2: they said, oh, yeah, we're going to not pay the
• 20:41
  Speaker 2: interest or not pay the principle back on these specific
• 20:44
  Speaker 2: loans or any portion of them, that would definitely call
• 20:47
  Speaker 2: into question the idea of the US as a safe
• 20:49
  Speaker 2: haven asset. And we have that debate every couple of
• 20:51
  Speaker 2: years when we reach the spending limits, and so far, universally,
• 20:55
  Speaker 2: Congress has done what I think is the smart thing
• 20:57
  Speaker 2: and continued to pay the interest on those days. But
• 21:01
  Speaker 2: the other piece is kind of technical. So we've talked
• 21:04
  Speaker 2: about this a little bit, but trade imbalances, I just
• 21:09
  Speaker 2: want to want to talk about that for a moment.
• 21:11
  Speaker 2: And you know, China is a huge one, right. We
• 21:13
  Speaker 2: buy way more stuff from China than they buy from US,
• 21:17
  Speaker 2: so massive trade imbalance. And what that technically means is
• 21:21
  Speaker 2: a whole bunch of dollars going over to the Chinese market,
• 21:27
  Speaker 2: US dollars going to China, and then China decides what
• 21:30
  Speaker 2: do we do with those on a limited basis, Chinese
• 21:32
  Speaker 2: companies go and buy stuff from American manufacturers, farmers, things
• 21:37
  Speaker 2: along those lines. They go buy some stuff, but clearly
• 21:39
  Speaker 2: not a lot of it. By and large, they sit
• 21:41
  Speaker 2: on a whole bunch of US treasuries. What that, in
• 21:45
  Speaker 2: turn does is make it cheaper for US to borrow
• 21:48
  Speaker 2: because the Chinese are net buyers of United States treasuries.
• 21:51
  Speaker 2: And so this is one of those potential downstream impacts
• 21:55
  Speaker 2: that if you go and do tariffs on one country
• 21:58
  Speaker 2: here or there, probably has no effect. But if you
• 22:02
  Speaker 2: roll out tariffs on all countries at the same time
• 22:05
  Speaker 2: and dramatically reduce the number of dollars going from US
• 22:10
  Speaker 2: households over to those other countries, and maybe you are
• 22:15
  Speaker 2: maybe you're not paired with the financial crist at the
• 22:16
  Speaker 2: same time, there will be a smaller group of buyers
• 22:20
  Speaker 2: of that US government's debt. Now, again, this is where
• 22:24
  Speaker 2: it gets so complicated. Does it get offset by American
• 22:26
  Speaker 2: domestic buyers of that debt because they are now selling
• 22:29
  Speaker 2: goods to the domestic markets. Do some of those jobs
• 22:32
  Speaker 2: go from China to Canada and Mexico instead, and therefore
• 22:35
  Speaker 2: the net purchases stay the same. I don't know, but
• 22:39
  Speaker 2: that's what we're talking about when we talk about this
• 22:41
  Speaker 2: threat to the safe haven status. I don't think there's
• 22:43
  Speaker 2: much of a threat to Hey, US isn't going to
• 22:45
  Speaker 2: pay you back. There is a threat to Hey, there's
• 22:48
  Speaker 2: just gonna be fewer dollars floating around there to go
• 22:50
  Speaker 2: and buy this stuff if tariffs stay in place.
• 22:52
  Speaker 3: Yeah, and the more debt you run up to also,
• 22:55
  Speaker 3: it becomes reputational base too, Mike. I mean, ultimately, if
• 22:59
  Speaker 3: the reputation for the US to take on too much
• 23:02
  Speaker 3: data and not be able to pay it back, then
• 23:03
  Speaker 3: you're going to further increase interest rates, and that just
• 23:06
  Speaker 3: makes the cycle more and more challenging. Oh, you gift
• 23:08
  Speaker 3: to borrow at high.
• 23:09
  Speaker 2: Rates annual deficits for being run at sixty seven percent
• 23:12
  Speaker 2: of the GDP is a terrible idea and the best
• 23:14
  Speaker 2: of times, and we shouldn't do it. But the only
• 23:16
  Speaker 2: reason we've been able to do it is because of
• 23:18
  Speaker 2: this safety and status, and losing that would be extraordinarily problematic.
• 23:24
  Speaker 2: Oh that's me, Hi, Tucker.
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• 24:31
  Speaker 2: The Fed must resist repeating past mistakes. It's another week,
• 24:34
  Speaker 2: so mohammadel Arian is out there producing another piece criticizing
• 24:37
  Speaker 2: the federal serve in the poor job that they've done
• 24:39
  Speaker 2: in his opinion. But his piece here is very clearly
• 24:45
  Speaker 2: a it's not shot across the bow because he has
• 24:47
  Speaker 2: no control over the FED. But it's another criticism of
• 24:51
  Speaker 2: what the FED did back in twenty twenty one, in
• 24:53
  Speaker 2: twenty twenty two, which was, in his view, move far
• 24:57
  Speaker 2: too slowly to control inflation. And so his message this
• 25:01
  Speaker 2: time is, hey, j Hey, Federal Reserve. I'm sure you're
• 25:04
  Speaker 2: nervous about these tariffs and the risk of recession and
• 25:08
  Speaker 2: you know, potentially rising unemployment, But don't be tempted to
• 25:13
  Speaker 2: cut interest rates at the same time that you're going
• 25:15
  Speaker 2: to have the application of tariffs and potentially higher inflation,
• 25:19
  Speaker 2: lower tax rates. You know, there are a lot of
• 25:22
  Speaker 2: open questions that could dramatically move the story on both
• 25:26
  Speaker 2: inflation and employment over the next just few weeks, forget
• 25:30
  Speaker 2: about the next year or several months. Like we have
• 25:35
  Speaker 2: the broad implementation of tariffs going in place tomorrow, we
• 25:38
  Speaker 2: have the Senate in the House working through a tax bill.
• 25:40
  Speaker 2: We have the negotiation of potential tariff deals being struck
• 25:44
  Speaker 2: between certain countries and the United States. I don't know
• 25:48
  Speaker 2: how the Federal Reserve would be able to digest all this.
• 25:50
  Speaker 2: I suspect that their answer is going to be wait
• 25:54
  Speaker 2: and see, which is exactly what I would do, which
• 25:56
  Speaker 2: probably does not make the President terribly happy. On Friday
• 25:58
  Speaker 2: of last week, he was putting out there that the
• 26:00
  Speaker 2: Fed should be cutting immediately. In any case, the FED
• 26:04
  Speaker 2: funds rate right now sits at four and a quarter
• 26:07
  Speaker 2: to four and a half percent. The next meeting doesn't
• 26:10
  Speaker 2: occur till May seventh, so they do have some time
• 26:12
  Speaker 2: here to figure all of this out. There's only about
• 26:15
  Speaker 2: a one in three chance right now, a little bit
• 26:16
  Speaker 2: less than a one and three chance that the Fed
• 26:18
  Speaker 2: actually cuts those rates at that next meeting. So we
• 26:21
  Speaker 2: will see how it plays out, and we'll get some
• 26:23
  Speaker 2: more commentary from Fed officials in terms of how they
• 26:26
  Speaker 2: are thinking about the risk of recessions on the economy
• 26:30
  Speaker 2: over the course of the next few weeks. What a
• 26:31
  Speaker 2: fun job. Yeah no, no, not great, Bob. Let's take
• 26:35
  Speaker 2: a quick break when we come back. But if stack
• 26:37
  Speaker 2: roulette here on the Financial Exchange.
• 26:40
  Speaker 1: The Financial Exchange streams live on YouTube, Like our page
• 26:44
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• 26:46
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• 27:13
  Speaker 2: All right, Paul, last three days, all we've talked about
• 27:16
  Speaker 2: is Ben Terrish, what do you have for us for
• 27:18
  Speaker 2: stack real life?
• 27:19
  Speaker 3: You know, I was thinking going to segments. We didn't
• 27:21
  Speaker 3: talk about a single company in this show at all.
• 27:24
  Speaker 2: Yeah, I think I mentioned Apple at one point I
• 27:26
  Speaker 2: was eating an apple. Maybe that's what it was. Yeah,
• 27:29
  Speaker 2: never mind, Sorry.
• 27:30
  Speaker 3: What I've got is fake job seekers are flooding US
• 27:34
  Speaker 3: companies that are hiring for remote positions. Tech CEO says,
• 27:37
  Speaker 3: So basically what's going on here is there are a
• 27:42
  Speaker 3: numerous attempts out there from remote jobs for tech positions
• 27:47
  Speaker 3: to be influx with resumes of fake people out there
• 27:51
  Speaker 3: who are looking to become hired by the particular company.
• 27:55
  Speaker 3: And it's not an employee, this is not any person
• 27:57
  Speaker 3: that's tied to it, but it's using gener of AI
• 27:59
  Speaker 3: to have someone that would come for a fake job
• 28:03
  Speaker 3: candidate become hired within a company and then try to
• 28:05
  Speaker 3: infiltrate that company and install malware on their systems. To
• 28:10
  Speaker 3: think of this, process. So there was an example here
• 28:13
  Speaker 3: where a startup called Prindrop Security posted a recent job opening.
• 28:19
  Speaker 3: One candidate stood out, which was a Russian coder named Ivan,
• 28:23
  Speaker 3: of course, who had all the right qualifications for senior
• 28:25
  Speaker 3: engineering role. But when they went to do the interview,
• 28:28
  Speaker 3: they noticed that his facial expressions were slightly out of
• 28:31
  Speaker 3: sync with his words during a remote interview. What they
• 28:34
  Speaker 3: were doing is using gender of AI to develop this
• 28:38
  Speaker 3: fake candidate who was a using deep fake software and
• 28:42
  Speaker 3: other tools to get a bid to hire get hired
• 28:45
  Speaker 3: by this tech company out there. So another thing it's
• 28:49
  Speaker 3: to worry about is, you know, fighting off not only
• 28:52
  Speaker 3: hackers and cybersecurity concerns, but having someone infiltrate your company
• 28:57
  Speaker 3: who is not actually a person, but some trying to
• 29:00
  Speaker 3: infiltrate it for cybersecurity concerns.
• 29:03
  Speaker 2: Man, maybe AI should just do all of our jobs.
• 29:06
  Speaker 2: Got to deal with this garbage now on top of it,
• 29:09
  Speaker 2: Where I genuinely think we're heading with some of this
• 29:12
  Speaker 2: stuff is to a point where companies and individuals just
• 29:18
  Speaker 2: entirely stop trusting what they see on parts of the Internet,
• 29:22
  Speaker 2: Like I gotta be honest, Like if I'm conducting an
• 29:25
  Speaker 2: interview with somebody these days, I'm more than willing to
• 29:28
  Speaker 2: do it via zoom. But if I don't meet that
• 29:31
  Speaker 2: person in person, I'm going to be checking all sorts
• 29:34
  Speaker 2: of references. I'm going to be doing social media background jacks.
• 29:36
  Speaker 2: I'm gonna be doing a lot of things that I
• 29:38
  Speaker 2: wouldn't have done for a candidate that came in person.
• 29:41
  Speaker 2: Wouldn't it be interesting?
• 29:42
  Speaker 3: The peendum just swung where they just required that it
• 29:45
  Speaker 3: had to be in person meetings, you know, going forward,
• 29:48
  Speaker 3: because there's so many of these scan attempts that it
• 29:50
  Speaker 3: just reverts back the other way that No, I need
• 29:52
  Speaker 3: to see you in person, Mike to believe that you are.
• 29:55
  Speaker 2: We're getting there. Yeah, we're getting close to that. I
• 29:57
  Speaker 2: think about h Fidelity. Actually, Fidelity Investments has a security
• 30:03
  Speaker 2: system in place where you can use your voice as
• 30:06
  Speaker 2: your password, right, and so you can, you know, call
• 30:11
  Speaker 2: up and rather than needing to type something into the
• 30:14
  Speaker 2: you know, to your to your dial phone and and
• 30:18
  Speaker 2: corresponding letters to the digits or anything like that, it's
• 30:22
  Speaker 2: just they have you repeat a few phrases and they
• 30:24
  Speaker 2: verify your intonation and voice against you know, previous recordings,
• 30:28
  Speaker 2: and they say, oh, this person's verified that technology cannot
• 30:32
  Speaker 2: last much longer.
• 30:33
  Speaker 3: Right, you'd be much better with security questions that only
• 30:37
  Speaker 3: you would know.
• 30:39
  Speaker 2: And but like you know, especially for somebody really wanted,
• 30:43
  Speaker 2: I'm guessing they could get an AI system pretty well
• 30:45
  Speaker 2: trained on my voice, because I mean, you just go
• 30:48
  Speaker 2: to all the hours upon hours of well Tucker does
• 30:51
  Speaker 2: it every show? You can quote me on that. I
• 30:53
  Speaker 2: don't know, I don't know quote me on that. So
• 30:57
  Speaker 2: the ability for somebody to you know, imitate my voice,
• 31:00
  Speaker 2: I just really wonder that tech group, within such a
• 31:03
  Speaker 2: massive organization like Fidelity, how they are approaching something like this.
• 31:07
  Speaker 2: And maybe there's something on the technological side that they
• 31:09
  Speaker 2: have that makes that impossible. But does it pair with
• 31:12
  Speaker 2: the text code multi factor? I'm sure if you're I'm
• 31:16
  Speaker 2: sure if you're doing certain risky transactions, it does. But
• 31:19
  Speaker 2: for this it was a general question, Oh yeah, sure, yeah,
• 31:21
  Speaker 2: give me my account balance and and and some stuff
• 31:25
  Speaker 2: like that. And no, there's nothing like that. So yeah,
• 31:28
  Speaker 2: interesting stuff here. Another text came in earlier. You mentioned
• 31:32
  Speaker 2: that even given all the volatility the markets lately, it
• 31:36
  Speaker 2: might not be considered low enough to buy yet. That
• 31:40
  Speaker 2: was a piece from the Wall Street Journal I believe
• 31:42
  Speaker 2: it was. My question is, can you explain by the dip?
• 31:45
  Speaker 2: I currently contribute bi weekly to my four oh one K,
• 31:47
  Speaker 2: and my are my contributions considered buying the dip? I
• 31:51
  Speaker 2: think is what they meant to say in the text.
• 31:54
  Speaker 2: So I guess the term by the dip. You know,
• 31:57
  Speaker 2: there's no definition to it. It is the general idea
• 32:01
  Speaker 2: that investors pile into stocks when they go down, and
• 32:05
  Speaker 2: that mentality of wait till it goes down and then
• 32:08
  Speaker 2: buy the dip, because historically, no matter how ugly it's gotten,
• 32:12
  Speaker 2: whether it's great depression or great recession, with stocks off
• 32:15
  Speaker 2: fifty five percent from their highs, they've always eventually rebounded.
• 32:19
  Speaker 2: The problem is, oftentimes you buy the dip when it's
• 32:21
  Speaker 2: down ten and it continues down another forty, and you're
• 32:24
  Speaker 2: left feeling rather foolish your actions on the four to
• 32:27
  Speaker 2: one K. What I love about the features of a
• 32:30
  Speaker 2: four to one K is when you are contributing money
• 32:33
  Speaker 2: through a payroll provider like that, you typically designate a
• 32:37
  Speaker 2: certain percentage of your salary, and so so long as
• 32:40
  Speaker 2: your salary is fixed, what you're doing is you're buying
• 32:42
  Speaker 2: a certain dollar amount into a account. Every two weeks
• 32:46
  Speaker 2: or whatever whatever your payroll is. And so if you
• 32:49
  Speaker 2: think about how that happens, your dollar amount is fixed.
• 32:53
  Speaker 2: So if the markets go down, you are buying fewer shares.
• 32:58
  Speaker 2: If the markets go up, assuming don't change your investment
• 33:00
  Speaker 2: lineup in there, you are buying fewer shares. So that's
• 33:03
  Speaker 2: dollar cost averaging. It's not buying the dip necessarily, right.
• 33:07
  Speaker 2: Buying the dip would be saying, hey, I'm jacking up
• 33:09
  Speaker 2: my four oh one k contributions to front load them
• 33:12
  Speaker 2: here because the markets are down. But that's one of
• 33:15
  Speaker 2: the great features of a four to oh one k
• 33:17
  Speaker 2: is It kind of automatically takes care of that for
• 33:19
  Speaker 2: you by saying, hey, if markets are cheaper, I'm going
• 33:21
  Speaker 2: to buy more shares. If it's there more expensive by
• 33:24
  Speaker 2: fewer and manages that way.
• 33:26
  Speaker 3: Yeah, dollar cost averaging is great because you're not subject
• 33:29
  Speaker 3: to market timing. It's not like a situation where you inherit,
• 33:32
  Speaker 3: you know, a couple hundred thousand dollars and you have
• 33:34
  Speaker 3: to make a pointed purchase to invest fully in the market.
• 33:38
  Speaker 3: It is more advantageous. I mean, it's great to be
• 33:40
  Speaker 3: in that posie in the first place, but it's more
• 33:42
  Speaker 3: advantaged if you can create a recurring monthly savings plan
• 33:45
  Speaker 3: A four one K is an example of that, or
• 33:47
  Speaker 3: a regular investment account putting in five hundred dollars a
• 33:50
  Speaker 3: month every month. That way, if you pick the top
• 33:53
  Speaker 3: of the market and it plunges from there, okay, you
• 33:55
  Speaker 3: only committed your first five hundred there, but then you're
• 33:57
  Speaker 3: buying all the way down, so that ten to be
• 34:00
  Speaker 3: a little bit more appearing for building wealth. And even
• 34:03
  Speaker 3: Warren Buffett will echo that, invest in the FS and
• 34:06
  Speaker 3: P five hundred, but continue to buy in over time
• 34:09
  Speaker 3: because there is the chance out there that you invest
• 34:13
  Speaker 3: at the wrong time and it can take longer to
• 34:15
  Speaker 3: show a positive return out than that depending when you
• 34:17
  Speaker 3: buy in.
• 34:18
  Speaker 2: Yep, so you buying the dip is a form of
• 34:21
  Speaker 2: market timing in some ways. It's not necessarily a bad thing.
• 34:25
  Speaker 2: It can be a good strategy. But that's part of it.
• 34:27
  Speaker 3: Is is valuation based too. We talked about that a
• 34:30
  Speaker 3: little bit. You know, people will look for are you
• 34:32
  Speaker 3: buying things cheaply? And there are multiple different ways to
• 34:35
  Speaker 3: look at and no one is perfect, whether it's price
• 34:37
  Speaker 3: earnings ratio.
• 34:38
  Speaker 2: And be careful about those two things. Right now too,
• 34:41
  Speaker 2: because you know, any sort of measure of valuation is
• 34:44
  Speaker 2: at least part reliant on what the company is forecasting
• 34:48
  Speaker 2: or currently doing for earnings, right and when you have
• 34:51
  Speaker 2: something like tariffs being implemented that could literally entirely reshape
• 34:56
  Speaker 2: your earnings projection, those measures of priced earnings are buy default,
• 35:02
  Speaker 2: very unknown right now, right like Apple is the example
• 35:05
  Speaker 2: I keep going back to. But they're earnings over the
• 35:07
  Speaker 2: most recent quarter compared to what those would look like
• 35:10
  Speaker 2: if they faced one hundred percent tariffs on iPhones coming
• 35:13
  Speaker 2: from China or having to relocate all that to India
• 35:17
  Speaker 2: or the United States. Who knows what those earnings are
• 35:20
  Speaker 2: going to look like over the next twelve months. Those
• 35:22
  Speaker 2: projections are out the window at the moment until they
• 35:25
  Speaker 2: get some certainty around tariffs. DOO, S and P, NASDAK
• 35:29
  Speaker 2: all in positive territory here as we head towards the
• 35:32
  Speaker 2: twelve o'clock hour, DOO currently up eight hundred and eighty
• 35:35
  Speaker 2: five points two and a third percent, S and P
• 35:37
  Speaker 2: one hundred and twelve two and a quarter percent, and
• 35:39
  Speaker 2: the Nasdaq up three hundred and sixty four points, or
• 35:42
  Speaker 2: two and a third of a percentage point. We'll be
• 35:45
  Speaker 2: right back at it tomorrow on the actual effective date
• 35:48
  Speaker 2: of these announced tariffs. Stay tuned, everybody, have a great
• 35:51
  Speaker 2: rest of your day. We'll be back at it in
• 35:52
  Speaker 2: twenty two hours.