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Markets Rebound, Oil Volatility, and What Could Drive the Next Rally · The Financial Exchange Show

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1:12
Speaker 2: Well, markets have turned as we head into the eleven
1:14
Speaker 2: o'clock hour here, we started the day with futures off
1:17
Speaker 2: old about a one and a half percent on the
1:20
Speaker 2: S and P five hundred. They've since rebound to almost flat.
1:23
Speaker 2: They they did turn positive briefly. As we speak. We've
1:26
Speaker 2: got the Dow off seventy four points a little bit
1:28
Speaker 2: more than a tenth of a percent, SMP down five points,
1:31
Speaker 2: about a tenth, and the Nasdaq down thirty points a
1:34
Speaker 2: little bit more than a tenth of a percent. Here,
1:36
Speaker 2: oil continues to be the move of the day. It
1:39
Speaker 2: was up eleven percent, now up about eight point eight percent.
1:43
Speaker 2: Reacting to President Trump's address to the nation last night
1:47
Speaker 2: on the state.
1:47
Speaker 3: Of the war in Iran.
1:49
Speaker 2: Highlights in my opinion from that speech where you know,
1:53
Speaker 2: a focus on the next couple of weeks being a
1:56
Speaker 2: very heavy action set of weeks, and then I don't
2:01
Speaker 2: think it was an offhand comment. I think it was
2:03
Speaker 2: a very deliberate comment about the President's view on the
2:05
Speaker 2: straight of horror Mooz, the lack of necessity for the
2:09
Speaker 2: United States economy to have traffic flowing there, which I
2:12
Speaker 2: think is up for debate, and the call on other
2:16
Speaker 2: nations to work with to work to reopen the Straight
2:19
Speaker 2: and find some means of doing so.
2:23
Speaker 3: The scenarios there, though.
2:25
Speaker 2: Are are just a big question to me, right I
2:29
Speaker 2: At the moment, Iran continues to have the ability clearly
2:34
Speaker 2: to threaten traffic enough to prevent ships from navigating the Strait.
2:40
Speaker 2: They've also, on a very extremely limited basis, had enough
2:44
Speaker 2: influence to collect effectively bribes or tolls from ships that
2:48
Speaker 2: do want to navigate the Strait, and the idea has
2:53
Speaker 2: been raised a few times of you know, Iran effectively
2:55
Speaker 2: becoming a toll taker in the straight of Horror Mooz,
2:58
Speaker 2: which I don't think is a scenario the US, China
3:01
Speaker 2: or countries in the Middle East would be comfortable with.
3:04
Speaker 2: And so the status quo right now, I mean, the
3:08
Speaker 2: most likely scenario with the United States, we're just just
3:10
Speaker 2: say we're done here, we're exiting the Middle East, and
3:14
Speaker 2: we're not you know, focusing on striking Iran anymore. The
3:18
Speaker 2: status quo would be I think Irn blocking traffic or
3:22
Speaker 2: collecting tolls on traffic trying to navigate the Straight. And
3:24
Speaker 2: I don't see that really as a scenario that anybody,
3:27
Speaker 2: including President Trump in the United States is comfortable with
3:29
Speaker 2: and so I just have a lot of remaining questions.
3:32
Speaker 2: And as we've said for the last several weeks, what
3:34
Speaker 2: matters is not words. What matters is do does traffic
3:38
Speaker 2: navigate the straight of horror moves? Because without it, oil
3:41
Speaker 2: prices remain elevated, fertilizer prices, aluminum prices and everything else
3:45
Speaker 2: that goes into it probably remain elevated too, and it's
3:50
Speaker 2: going to be difficult to have a positive market environment
3:54
Speaker 2: with that ongoing. But some optimism over this the course
3:58
Speaker 2: of this week as we head into the second quarter,
4:00
Speaker 2: about what could ultimately happen in Iran, in the Middle
4:04
Speaker 2: East and the straight up Horbouz.
4:06
Speaker 4: Stunning, the turnaround that we've seen in the short opening
4:09
Speaker 4: of trading in the last hour and a half where
4:10
Speaker 4: we opened down over one percent and now we sit,
4:13
Speaker 4: you know, relatively flat on the day.
4:15
Speaker 3: Yeah.
4:15
Speaker 2: Other news of the week, we've had a number of
4:18
Speaker 2: key data points come out this week. We had the
4:20
Speaker 2: Jolts Report on Tuesday, the job openings, labor turnover survey.
4:23
Speaker 2: Not an immense change there, and it was all measuring
4:25
Speaker 2: data from prior to the events in Iran. It was
4:28
Speaker 2: measuring data from February, but you know, reconfirmed that the
4:32
Speaker 2: churn in the labor market remains quite low, reminiscent of
4:36
Speaker 2: levels of turnover that we were seeing in the early
4:39
Speaker 2: twenty tens when the labor market was in a far
4:42
Speaker 2: different position than it is now. We also got data
4:45
Speaker 2: on retail sales for the month of February which turned
4:48
Speaker 2: up more than anticipat I think it was a six
4:50
Speaker 2: tens of percent bump. But again, February data, not March.
4:54
Speaker 2: March data on ism manufacturing was in fact surprisingly positive
4:58
Speaker 2: and showed expansion in the manufacturing sector. The weekly Job
5:03
Speaker 2: Claims report came out at eight thirty am this morning
5:06
Speaker 2: showed a little bit over two hundred thousand weekly claims
5:08
Speaker 2: for unemployment, not a concerning level there. And then tomorrow
5:13
Speaker 2: we will have the all important Unemployment Report and Jobs Report,
5:16
Speaker 2: where the BLS tells us not only what was the
5:18
Speaker 2: pace of hiring for the month of March, but what
5:20
Speaker 2: do they estimate the unemployment rate to be for the
5:23
Speaker 2: month of March. So some pretty key data points, but
5:26
Speaker 2: none of them so far I think, have been dramatic
5:29
Speaker 2: enough to rattle markets much, if any were going to
5:33
Speaker 2: it would be tomorrow's jobs report. In my opinion that
5:35
Speaker 2: that is the one that gets the most attention and
5:38
Speaker 2: frankly is the data point that the FED probably cares
5:41
Speaker 2: most about when it comes to the pace of the
5:43
Speaker 2: labor market, which is that rate of unemployment that has
5:46
Speaker 2: been slowly turning back up over the course of the
5:49
Speaker 2: last six months. In terms of catalysts, all right, so
5:55
Speaker 2: you know, there's clearly some threats to markets as we
5:58
Speaker 2: entered twenty twenty six. That was before or Iran. There
6:02
Speaker 2: was the threat of what we talked about in private credit.
6:05
Speaker 2: There's been an unraveling there a lack of confidence in
6:07
Speaker 2: those types of investments from investors that we are seeing
6:10
Speaker 2: displayed from the massive redemptions from Blue Owl overnight.
6:14
Speaker 3: We have the.
6:17
Speaker 2: General looming concern about AI that is morphing into different ideas.
6:21
Speaker 2: It started off with, you know, are these companies really
6:23
Speaker 2: worth what we think they are? Has now morphed more
6:25
Speaker 2: into what companies are going to be disrupted or made
6:29
Speaker 2: extinct by AI? And then most recently, we have the
6:32
Speaker 2: threat of a commodity price shock from the war in Iran.
6:35
Speaker 2: If there's a catalyst to be for an upturn in
6:38
Speaker 2: markets in twenty twenty six.
6:39
Speaker 3: I view IPOs as one of those, right, I throw.
6:42
Speaker 4: The labor marketing as a concern too, just on the shurfield.
6:45
Speaker 2: Yeah, slow down in the labor market growth could lead
6:48
Speaker 2: to problems too.
6:49
Speaker 3: And you know what we're seeing.
6:52
Speaker 2: We haven't seen many IPOs yet, and I think many,
6:56
Speaker 2: many potentially potential companies to go public would hesitate to
7:01
Speaker 2: do so. With the market volatility that we're seeing right here,
7:03
Speaker 2: it could kind of throw a wrench into things. But
7:07
Speaker 2: the IPO that we're talking about for SpaceX, if it
7:10
Speaker 2: does go off, the Granddady of the market could be
7:13
Speaker 2: a record.
7:13
Speaker 1: Right.
7:13
Speaker 2: We're talking about a company that could have a market
7:16
Speaker 2: capitalization approaching two trillion dollars. That's the projected valuation there.
7:22
Speaker 2: And then there's a bunch of other smaller companies that
7:25
Speaker 2: still could have a lot of market impact because of
7:27
Speaker 2: the excitement around them.
7:28
Speaker 3: Right.
7:28
Speaker 2: If you're concerned about AI disrupting a whole bunch of companies,
7:32
Speaker 2: then it stands to logic that you might get a
7:34
Speaker 2: little bit excited about a company, a little known company
7:36
Speaker 2: called open AI or Anthropic that has talked about maybe
7:39
Speaker 2: going public in twenty twenty six or twenty twenty seven,
7:42
Speaker 2: and so I obviously both of us get asked all
7:46
Speaker 2: the time, like, what's the what's the downside? You know,
7:50
Speaker 2: what is making investors nervous? I think that part is clear.
7:53
Speaker 2: I always like to look at, Okay, what could resolve
7:56
Speaker 2: those concerns. One of them would be some some acceptable
8:02
Speaker 2: conclusion to the war in Iran that results in traffic
8:06
Speaker 2: flowing again, and I don't think any of us know.
8:07
Speaker 3: What that looks like.
8:09
Speaker 2: Another one would be a bunch of investor excitement about
8:12
Speaker 2: newly public companies that are doing new and interesting things
8:15
Speaker 2: that you currently can't really invest in.
8:18
Speaker 4: I wonder if it's just the war, and I rent
8:20
Speaker 4: the only one. Like I read something yesterday we cover
8:22
Speaker 4: in the show that it's a single variable market where
8:25
Speaker 4: it just seems like every single day we get up
8:27
Speaker 4: and look in the market and all that is discussed
8:30
Speaker 4: or cared about is whether oil flows through the Strait.
8:34
Speaker 4: And maybe it's too much prisoner of the moment to
8:36
Speaker 4: say that, but it feels like at this point in time,
8:39
Speaker 4: for the next four to six weeks, that seems like
8:41
Speaker 4: the only focus.
8:43
Speaker 3: I agree. I do think it is a single variable market.
8:46
Speaker 3: For the moment.
8:48
Speaker 2: But I don't think it's fair to say that if
8:50
Speaker 2: it resolved itself, everything looks hunky dory.
8:53
Speaker 1: No. Yeah.
8:54
Speaker 2: I think that's the piece that we have to keep
8:56
Speaker 2: in mind, is there were some looming issues out there
9:00
Speaker 2: we were talking about that were pressuring markets prior to
9:03
Speaker 2: all this. Right, the Microsoft isn't down?
9:05
Speaker 4: What's Microsoft twenty five percent? I want to twenty five
9:09
Speaker 4: to thirty five? Twenty five to thirty percent, I would
9:12
Speaker 4: say year to date.
9:13
Speaker 3: Yeah, let's let's take a quick beak so as we
9:15
Speaker 3: can call it. Right.
9:16
Speaker 2: Yet, Microsoft is not down twenty two percent today because
9:19
Speaker 2: of the war in Iran.
9:20
Speaker 4: You're to date?
9:21
Speaker 3: You're to date? Y? Yeah?
9:22
Speaker 2: Yeah, they are down, by the way, Yeah, twenty eight
9:26
Speaker 2: percent of the last six months.
9:28
Speaker 3: In Vidia?
9:28
Speaker 2: Right, in Vidia hasn't lost six and a half percent
9:31
Speaker 2: this year because of the war in Iran. Right, That
9:33
Speaker 2: is not what's driving those companies. And so there's clearly
9:36
Speaker 2: some underlying fundamentals going on with other areas of the
9:38
Speaker 2: market that don't involve her on.
9:41
Speaker 3: But for the moment, I'm with you.
9:42
Speaker 2: The only thing that's going to take up any oxygen
9:44
Speaker 2: in the room is the war in Iran. And you know,
9:49
Speaker 2: probably more important than the facts of the war is
9:52
Speaker 2: the traffic that will or will not navigate the straight
9:55
Speaker 2: up hoorm moves.
9:55
Speaker 4: Yeah, I wish we could go back to talking about
9:58
Speaker 4: Microsoft and Nvidia. A little fatigue here, but we carry on.
10:02
Speaker 2: Let's take a quick break here then, and when we
10:05
Speaker 2: come back, we're playing a little bit of trivia here
10:08
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Speaker 5: Time for trivia here on the Financial Exchange, and on
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Speaker 5: Sunday morning, millions of children will devour Cadbury cream eggs.
11:26
Speaker 5: The cream egg in its current form was introduced in
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Speaker 5: nineteen sixty three. Initially known as Fries cream eggs, they
11:35
Speaker 5: were renamed Cadbury's Cream Eggs in nineteen seventy one. So
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Speaker 5: our trivia question today, what is the filling in Cadbury
11:42
Speaker 5: cream eggs made from?
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Speaker 4: Once again?
11:44
Speaker 5: What is the filling in Cadbury cream eggs made from?
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Speaker 4: Once again.
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12:13
Speaker 3: I've never had one is a ground rabbit.
12:15
Speaker 5: I have to check that one.
12:17
Speaker 3: It sounds right, Sorry, what was it?
12:21
Speaker 4: It was Fries before Cadbury sounds way better than fries.
12:25
Speaker 5: That's why they changed.
12:26
Speaker 2: Much much more British the US Office French. The US
12:33
Speaker 2: Office vacancy rate has not recovered.
12:37
Speaker 3: And I'm not entirely surprised here. And when we talked
12:41
Speaker 3: about COVID trends that would.
12:43
Speaker 2: Play out and wouldn't play out, obviously, a bunch of
12:45
Speaker 2: people left the cities of our of our nation. New
12:48
Speaker 2: York City, Boston all experienced massive out migration, and some
12:54
Speaker 2: areas around those cities are still feeling the impact of that.
12:56
Speaker 2: Like you go look at Connecticut's real estate market, for example,
12:59
Speaker 2: and that's been a last trend. But ultimately people moved
13:02
Speaker 2: back to New York City. What has been a longer
13:05
Speaker 2: lasting trend. And I think about it even Paul our
13:07
Speaker 2: Within our own fairly small, twenty five person company, in
13:11
Speaker 2: twenty nineteen, we at Armstrong had zero fully remote employees.
13:18
Speaker 3: Yeah, we had none.
13:21
Speaker 2: As of twenty twenty six, we have two that are
13:25
Speaker 2: full time remote. Sorry, three full time remote employees and
13:31
Speaker 2: on average, what would you I don't have a real guess,
13:33
Speaker 2: but I think on average, our staff probably works a
13:38
Speaker 2: third of the time remote now.
13:40
Speaker 4: At least twenty five Yeah, that's twenty five, twenty to
13:43
Speaker 4: twenty five percent.
13:44
Speaker 2: Now, now you know, our office hasn't made dramatic changes
13:47
Speaker 2: like other companies have. But my wife works for a company,
13:49
Speaker 2: for example, where her required schedule, and it's required in
13:55
Speaker 2: this way both that you have to be in the
13:58
Speaker 2: office and you can't be in the office during these times,
14:00
Speaker 2: but one week on, one week off, and unless you
14:03
Speaker 2: get an exemption from the higher ups, that's your schedule.
14:05
Speaker 2: You have an office to report to during those periods
14:08
Speaker 2: of time. But most people don't have a desk. Yeah,
14:12
Speaker 2: Like you're on one week, you go find a spot
14:14
Speaker 2: that's going to be open, and then you're off the
14:16
Speaker 2: next week and somebody else is working from that same spot.
14:19
Speaker 2: You don't keep files at the desk. You don't do
14:20
Speaker 2: any of that, stuy, And I would I don't know
14:24
Speaker 2: because I'm not intimately familiar with the real estate holdings
14:27
Speaker 2: of the company, but I would imagine it allows that
14:28
Speaker 2: company to dramatically cut their really expensive real estate exposure
14:33
Speaker 2: all across the nation that they have because this is
14:35
Speaker 2: a large, a big, large employer that holds tens of
14:38
Speaker 2: thousands of employees. And so I think we've settled on
14:41
Speaker 2: a model that works for most companies and most employees.
14:47
Speaker 2: But it's also one that necessitates a lot less office space.
14:50
Speaker 4: It does, and all of a sudden you start to scrutinize,
14:53
Speaker 4: Like you mentioned those leases that you're up against. It
14:55
Speaker 4: seems like office space has taken the trend to where
14:59
Speaker 4: malls went eventually, which is like if you think of
15:02
Speaker 4: the light sizing, the Nittig Mall now, which is nearby
15:06
Speaker 4: our location, is much more focused on experiential sort of
15:11
Speaker 4: shopping and less so just packing a bunch of stores
15:14
Speaker 4: in there.
15:14
Speaker 1: Here.
15:14
Speaker 2: It's not anchored by the Seers and Macy's anything exactly.
15:17
Speaker 4: It's like, you know, Level ninety nine, there's like a
15:19
Speaker 4: game place there. There is you know, uh, there's there's
15:23
Speaker 4: all sorts.
15:23
Speaker 3: Of Rusters Busters, car dealership.
15:27
Speaker 4: Like this, the Patel's stuff I was telling you guys
15:29
Speaker 4: about on show, like that tennis. Yeah, there's like a
15:33
Speaker 4: court there, like, so more reasons for people to go
15:36
Speaker 4: there and do things and then perhaps shop on top
15:38
Speaker 4: of it. I'm with office space. It's this idea of
15:41
Speaker 4: that you're kind of either at the top where you're
15:43
Speaker 4: in class A office space that does have all those
15:46
Speaker 4: amenities surrounding it, or you're looking to cut down and
15:49
Speaker 4: be more of a hybrid approach where you shrink your
15:51
Speaker 4: office space and build it somewhere that is maybe more
15:55
Speaker 4: convenient and accessible to go to. Like there's no reason
15:58
Speaker 4: it feels like to be in a maje your metapolicity
16:00
Speaker 4: and have like B class office space. Either go out
16:03
Speaker 4: to the burbs and be located where close to your
16:07
Speaker 4: employees are you be on the top end of things.
16:09
Speaker 2: Yeah, so it continues to reshape the market. It wasn't this,
16:13
Speaker 2: you know, there were concerns about what dramatic you know,
16:17
Speaker 2: reshaping of the commercial real estate market could look like.
16:20
Speaker 3: But I do see.
16:21
Speaker 2: I mean, just down the street from us, there used
16:23
Speaker 2: to be this big car dealership. They demoed it several
16:28
Speaker 2: years ago and it's been sitting empty since then. Yeah,
16:30
Speaker 2: because you know, from what I hear, you know, the
16:34
Speaker 2: town obviously has restrictions on what they want to go
16:36
Speaker 2: into that space and what they had assumed there would
16:39
Speaker 2: be demand for medical space or biolab space. Here in
16:43
Speaker 2: the Boston area, demand's just not there, and so it's
16:47
Speaker 2: been an interesting twist. But I see why companies are
16:50
Speaker 2: doing it. And yeah, I mean I you know, personally
16:54
Speaker 2: looking at our even our own business put a lot
16:56
Speaker 2: less focus on the importance of that physical offer space.
17:00
Speaker 3: Then I had a decade ago and I.
17:03
Speaker 4: Did think that bendulum was going to swim back a
17:05
Speaker 4: little bit harder. In office. I think we had arguments
17:08
Speaker 4: about this post pandemic, and JP.
17:11
Speaker 3: Morgan Chase did it right.
17:12
Speaker 2: You know, their employees are one hundred percent in office
17:14
Speaker 2: and they seem to see the need for it.
17:17
Speaker 4: Amazon pushed it to There's been some big companies out there. Well,
17:21
Speaker 4: they've kind of used it as a way to get
17:23
Speaker 4: people out the door. But it does feel like the
17:25
Speaker 4: more you talk to people, many companies have at least
17:29
Speaker 4: that kind of twenty percent wiggle room on one day
17:32
Speaker 4: of the week to be remote. That's fairly common.
17:34
Speaker 2: Nursing is the surefire new path to American prosperity. It
17:38
Speaker 2: seems hard to imagine that they're wrong about that. But
17:40
Speaker 2: when people are looking for that AI insulated job, they
17:46
Speaker 2: tend to be turning towards nursing, and you know, for
17:49
Speaker 2: some it can mean dramatic increases in incomes six figure
17:53
Speaker 2: incomes depending on where you're going, or if you're willing
17:55
Speaker 2: to be a traveling nurse high six figure incomes, it's
17:58
Speaker 2: not high, but multi six figures in some cases, if
18:02
Speaker 2: you're willing to just relocate all over the place as
18:05
Speaker 2: a traveling nurse. The questions I have are not about
18:09
Speaker 2: nurse like I think it's pretty clear to me that
18:12
Speaker 2: as the boomers continue to get.
18:13
Speaker 3: Older, we will need more nurses. That part, to me,
18:19
Speaker 3: is just kind of inevitable.
18:21
Speaker 2: I don't think robotics is going to develop fast enough
18:25
Speaker 2: to counteract that effect.
18:26
Speaker 4: It's funny I was listening to a podcast yesterday on
18:28
Speaker 4: AI and robotics and that they didn't agree. No, no,
18:31
Speaker 4: That was the last thing that they pointed to was
18:33
Speaker 4: that healthcare workers and childcare workers would be the last
18:36
Speaker 4: thing that gets replaced by robotics because of the physical
18:40
Speaker 4: nuance that you need to work with those folks is
18:43
Speaker 4: not going to be something that a robot is going
18:45
Speaker 4: to pick up very quickly. Nor do you have the
18:48
Speaker 4: intrusting of people transitioning that care to robots.
18:52
Speaker 2: Even with all that, though, Like the one thing that
18:55
Speaker 2: I keep on my mind is the care of elders
18:59
Speaker 2: is going to necessitate, necessarily change over the course of
19:02
Speaker 2: the next twenty years because there are going to be
19:05
Speaker 2: so many more that need long term end of life care.
19:09
Speaker 2: Then we have the capacity to provide at even in
19:11
Speaker 2: reasonable rate right now. Right like nursing homes now cost
19:16
Speaker 2: fifteen thousand dollars a month, imagine what they cost when
19:18
Speaker 2: you have a fifteen percent surge in the population.
19:20
Speaker 3: That needs them.
19:21
Speaker 2: Right, things are going to have to change there. And
19:23
Speaker 2: I don't know how it's going to happen, but I
19:25
Speaker 2: just can't imagine how it's going to shift over the
19:27
Speaker 2: next few years.
19:28
Speaker 3: Quick break.
19:29
Speaker 2: When we come back full market recap with Wall Street Watch,
19:31
Speaker 2: We'll got.
19:32
Speaker 6: Back bringing the latest financial news straight to your radio.
19:45
Speaker 6: Every day it's the.
19:46
Speaker 1: Financial Exchange on the Financial Exchange Radio Network. You know,
19:52
Speaker 1: full whoa Street Watch treking the stocks, the dato in
19:56
Speaker 1: the headlines, driving markets so far today right here on
19:59
Speaker 1: the Financial li Exchange Radio Network.
20:01
Speaker 5: Seeing some volatility out there if markets have staged a
20:05
Speaker 5: strung rebound following an earlier selloff. Last night, President Trump
20:09
Speaker 5: escalated the conflict with a run and an address to
20:12
Speaker 5: the nation indicating over the next two to three weeks
20:14
Speaker 5: a run would be hit extremely hard, Oil surging higher
20:17
Speaker 5: as a result. Right now, the Dow is down only
20:20
Speaker 5: two tenths of a percent, SMP five hundred now down
20:23
Speaker 5: only six points, in the Nasdaq down about two tenths
20:26
Speaker 5: of a percent, Russell two thousand up about half a percent,
20:30
Speaker 5: ten Your Treasure Reel down one basis point at four
20:32
Speaker 5: point three zero three percent, and oil jumping ten percent higher,
20:37
Speaker 5: trading around one hundred and ten dollars a barrel. More
20:41
Speaker 5: concerns mounting in the private credit space after Blue Owl
20:44
Speaker 5: Capital saw a huge increase in redemption request in the
20:47
Speaker 5: first quarter, with investors seeking to withdraw roughly five point
20:51
Speaker 5: four billion dollars from two of its flagship funds. Blue
20:55
Speaker 5: Oil stock is down over one percent. Meanwhile, Tesla reported
20:59
Speaker 5: about three hundred and fifty eight thousand vehicle deliveries in
21:02
Speaker 5: the first quarter, below street expectations, marking one of the
21:06
Speaker 5: worst sales quarters in years. Tesla stock is taking a
21:10
Speaker 5: four percent hit. Elsewhere, bed Bath and Beyond is agreed
21:13
Speaker 5: to acquire storage in organization retailer The Container Store for
21:18
Speaker 5: one hundred and fifty million dollars. Shares in bed Bath
21:21
Speaker 5: and Beyond down about five percent on that news. And
21:24
Speaker 5: as a reminder, markets will be closed tomorrow in observance
21:28
Speaker 5: of Good Friday. However, we'll still get the March Jobs
21:31
Speaker 5: report due out tomorrow morning at a thirty. I'm Tucker
21:36
Speaker 5: Silva and that is Wall Street Watch. And on the
21:37
Speaker 5: previous segment we asked you the trivia question what is
21:40
Speaker 5: the filling in Cadbury cream eggs made from? I'll be
21:44
Speaker 5: fond Tina from Springfield, mass is our winner today taking
21:48
Speaker 5: on my Financial Exchange Show T shirt. Congrats to Tina.
21:52
Speaker 5: We play trivia every day here on the Financial Exchange.
21:55
Speaker 5: See complete contest rules at Financial Exchange Show dot com.
22:00
Speaker 2: Piece in the Wall Street Journal, there's a piece about
22:04
Speaker 2: five twenty nine plans otherwise known as college savings plans,
22:08
Speaker 2: and those college savings plans have changed a fair bit
22:10
Speaker 2: of the last few years, which I think is worth mentioning.
22:13
Speaker 2: But this guy the interview, who is very well informed
22:18
Speaker 2: about retirement and tax advice and all the above. He's
22:23
Speaker 2: the head of retirement research for Prudential Financial and doesn't
22:27
Speaker 2: save any of his money into five twenty nine plans
22:29
Speaker 2: in spite of the fact that he's got three four kids,
22:32
Speaker 2: a bunch of kids that are growing. And he makes
22:34
Speaker 2: some interesting points, but his main conclusion is that the
22:40
Speaker 2: college savings plan, in his mind, was too restrictive for
22:44
Speaker 2: his own circumstances, and so he doesn't use it now.
22:49
Speaker 2: His circumstances are probably different than the average person. He
22:53
Speaker 2: and his wife, when they finished graduate school were faced
22:58
Speaker 2: with four hundred thousand dollars of buying student loans. So
23:04
Speaker 2: one with that perspective, you might, you know, think, hey,
23:06
Speaker 2: maybe I want to help my kids out with.
23:08
Speaker 3: Student loans a little bit.
23:09
Speaker 2: But what he found was, hey, you know, by the
23:11
Speaker 2: time we actually got those student loans paid off, there
23:15
Speaker 2: wasn't much of a runway to be able to get
23:18
Speaker 2: into five twenty nine plans and get the tax free
23:22
Speaker 2: growth that you would want. Can you help listeners kind
23:25
Speaker 2: of understand why that might be the case. Right, if
23:27
Speaker 2: you're starting to save in a five to twenty nine
23:29
Speaker 2: plan at age fifteen for your kid, what's the real
23:32
Speaker 2: opportunity and the opportunity cost of going with that route.
23:35
Speaker 4: Yeah, so let's say you hypothetically were able to put
23:38
Speaker 4: ten thousand bucks into a five to twenty nine account.
23:41
Speaker 4: The reason that I'll often tell clients that it's not
23:43
Speaker 4: that worth considering when you do have, for example, a
23:46
Speaker 4: fifteen year old who's three years away from enrolling at college,
23:49
Speaker 4: is that the biggest benefit to a five to twenty
23:51
Speaker 4: nine is the the tax free growth. You want that
23:54
Speaker 4: ten grand to be able to compound to hopefully grow
23:57
Speaker 4: to twenty thousand to forty thousand, when you only have
24:00
Speaker 4: three years to do that before you could potentially start
24:03
Speaker 4: to access the money to pay for tuition expenses. You
24:06
Speaker 4: can't anticipate that you will receive that amount of growth,
24:09
Speaker 4: So all of a sudden, that ten grand growing to
24:13
Speaker 4: twelve thousand dollars let's say over that three year period,
24:15
Speaker 4: and even that's a pretty good rate of return. That
24:18
Speaker 4: two grand being tax free to you is not nearly
24:21
Speaker 4: as great of a benefit as it is for funding
24:24
Speaker 4: a five twenty nine for my daughter who's a year
24:26
Speaker 4: old and she has seventeen years to let it grow
24:29
Speaker 4: on a compound base.
24:30
Speaker 2: I bring this up too, right, If you're ten thousand
24:33
Speaker 2: instead turns to eight thousand, you can't claim a loss
24:36
Speaker 2: on those funds within a five to twenty nine plan,
24:38
Speaker 2: whereas you can in an investment account. What's interesting is
24:41
Speaker 2: then they then go to talk about his twin brother,
24:44
Speaker 2: who just say, you have a frame of reference of
24:47
Speaker 2: how these people are not like you and I. He's
24:49
Speaker 2: putting nearly seven hundred thousand dollars into five twenty nine
24:52
Speaker 2: plans for his three young children, and his brother doesn't
24:54
Speaker 2: really think he's wrong about it. It just is a
24:56
Speaker 2: differing circumstance. I fully recognize that most of Americans cannot
25:00
Speaker 2: afford to put seven hundred.
25:02
Speaker 4: It's probably the biggest balance I've heard of in five
25:04
Speaker 4: twenty nine.
25:04
Speaker 2: That's not the balance, that's where he's put in invested.
25:07
Speaker 4: I thought that was this total he's putting.
25:09
Speaker 2: Nearly seven hundred thousand dollars into five twenty nine is
25:12
Speaker 2: maybe they misquoted that, but that is a tremendous amount
25:16
Speaker 2: of funding into five twenty nine plans. Ultimately, what you
25:19
Speaker 2: can understand this all comes down to is how you
25:21
Speaker 2: prioritize funding for your own retirement versus funding for your
25:28
Speaker 2: kid's college plans or your kid's future. And oftentimes we
25:32
Speaker 2: are faced with those decisions of, hey, you know, how
25:35
Speaker 2: much should I be putting into this versus one you know,
25:38
Speaker 2: some other goal, or maybe it's for my grandkids. Hey,
25:40
Speaker 2: how do how do I prioritize the best way to
25:43
Speaker 2: fund my grandchildren's future? In other cases like that, what
25:47
Speaker 2: you need to know about college savings plans is they
25:50
Speaker 2: are somewhat restrictive, but those restrictions have dropped dramatically over
25:55
Speaker 2: the course of the last ten years. The college savings
25:58
Speaker 2: plans can now be used for pre college tuition. They
26:01
Speaker 2: can be used for things other than tuition that are
26:04
Speaker 2: associated with costs of attending school. If funds are not used,
26:08
Speaker 2: they can in some cases be converted into roth iras
26:11
Speaker 2: for the same beneficiary. There are a lot of ins
26:13
Speaker 2: and outs of this, but fundamentally, what a lot of
26:16
Speaker 2: families face is how much of our kids college are
26:20
Speaker 2: we committing to pay for and what is the best
26:22
Speaker 2: way to fund that based on where we are in life?
26:25
Speaker 2: And as you're seeing from this Wall Street Journal piece,
26:28
Speaker 2: there is no right blanket answer for all families. It
26:31
Speaker 2: is heavily dependent on where you are in life, how
26:34
Speaker 2: old your kids are, and what your ultimate goals are.
26:37
Speaker 2: But it is such a common question that I'm sure
26:39
Speaker 2: you face as much as I do Paul with clients
26:43
Speaker 2: with young kids. How do I prioritize my own retirement
26:46
Speaker 2: versus making sure that my kids don't have to graduate
26:49
Speaker 2: and pay off hundreds of thousands of dollars worth of
26:52
Speaker 2: student loans. If you have questions about how to fund
26:55
Speaker 2: your financial future and your kids financial future, are grandkids
26:59
Speaker 2: financial future? Give the folks at Armstrong Advisory Group a call.
27:02
Speaker 2: We're well equipped to talk about this and other types
27:05
Speaker 2: of savings vehicles, and we can spend time with you too.
27:08
Speaker 2: The numbers eight hundred three nine three for zero zero one.
27:12
Speaker 2: There is a lot of question There are a lot
27:14
Speaker 2: of questions and confusion about the subject of retirement versus
27:18
Speaker 2: college savings. And if you have questions too, free number
27:21
Speaker 2: to give us a call eight hundred three nine three
27:24
Speaker 2: for zero zero one.
27:26
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
27:28
Speaker 1: registered investment advisor. Nothing in the ad or in any
27:31
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
27:34
Speaker 1: your own financial tax into state planning advisors before making
27:36
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
27:40
Speaker 1: advisory services.
27:41
Speaker 2: Extreme volatility in the mortgage market is causing some consternation
27:47
Speaker 2: among applicants and some concern about what to do next.
27:52
Speaker 2: You are seeing that volatility really on a day to
27:56
Speaker 2: day basis, almost like you're seeing it in the stock market.
27:59
Speaker 2: But leading up to the events in Iran, you had
28:03
Speaker 2: the thirty year mortgage rate going for less than six percent,
28:06
Speaker 2: and plenty of people were locking themselves into those mortgages.
28:11
Speaker 2: I was actually speaking with somebody who works in the
28:14
Speaker 2: building that we're in. His son, I think, was buying
28:17
Speaker 2: a place locked his mortgage rate in at around six percent,
28:21
Speaker 2: and then is now having to sell off a whole
28:23
Speaker 2: bunch of equities to be able to fund the mortgage
28:26
Speaker 2: at the downturn of the stock market, and so is
28:29
Speaker 2: balancing those two things. But we saw those mortgage rates,
28:33
Speaker 2: which were below six percent in mid February, surge to
28:37
Speaker 2: a high recently of six and two thirds percent. Over
28:42
Speaker 2: the last two days they've come cratering back down to
28:44
Speaker 2: six four or five. But I think the salient point
28:48
Speaker 2: here as a potential purchaser of a home is that
28:52
Speaker 2: it's really difficult to make any sort of long term
28:55
Speaker 2: decisions when mortgage rates are fluctuating by half percent in
28:58
Speaker 2: a few weeks.
29:00
Speaker 4: It is it's just another variable that really doesn't help
29:02
Speaker 4: the spring housing market at all. It just leads to
29:04
Speaker 4: sort of more hesitancy.
29:06
Speaker 2: I think it's going to lead to paralysis, right yeah,
29:08
Speaker 2: I think. I think owners of homes that are looking
29:10
Speaker 2: to sell are going to say, I don't know if
29:12
Speaker 2: I want to list right now. You know, how are
29:16
Speaker 2: people going to feel about buying a home when you know,
29:19
Speaker 2: obviously the mortgage rate is top of mind for people,
29:22
Speaker 2: but you know what, like gas prices and stock market volatility,
29:26
Speaker 2: also leads to nervousness. And then on the buyer side,
29:29
Speaker 2: you're sitting there saying, Okay, this week, I have half
29:32
Speaker 2: a million dollars worth of buying power. Next week, I've
29:34
Speaker 2: got four hundred and fifty. How do I put a
29:36
Speaker 2: bid in on a home and know that I can
29:40
Speaker 2: actually afford the payments or afford the down payments with
29:43
Speaker 2: these future payments that'll have to make at a rate
29:46
Speaker 2: of sixty six versus six two.
29:48
Speaker 4: And the rates such a focus because so many of
29:50
Speaker 4: those homeowners who are sitting on existing homes are still
29:53
Speaker 4: probably locked in at those lower levels that we saw
29:56
Speaker 4: in the pandemic period, where they're sitting at three or
29:58
Speaker 4: four percent.
29:59
Speaker 2: Yeah, I think the cycle logical impact of a rate
30:01
Speaker 2: with a five on it versus a six was pretty big.
30:04
Speaker 4: It is.
30:04
Speaker 2: It only lasted a week. But you know, if we
30:07
Speaker 2: can get back down there, I'd be optimistic. But we
30:09
Speaker 2: just don't have a ton of time to see rates
30:13
Speaker 2: shoot back down here in time for the spring housing market.
30:16
Speaker 3: So we will see.
30:17
Speaker 2: Let's take a quick break here when we come back.
30:20
Speaker 2: Stack Roulette is next.
30:21
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30:51
Speaker 5: Hey, if you've got questions about markets, business, the economy,
30:55
Speaker 5: I don't know life, well, you can submit your question
30:59
Speaker 5: to our Money Matters mail bag for the guys. All
31:02
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31:15
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31:20
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31:22
Speaker 2: Time for better stack roulette. Here, Paul, what do you
31:24
Speaker 2: have for us this morning?
31:26
Speaker 4: Robot taxis stop traffic in Chinese city, stranding travelers. So
31:32
Speaker 4: there is this program Apollo Go, which is self driving
31:35
Speaker 4: cars that is run by bay Do that recently had
31:40
Speaker 4: hundreds of cars stopping in moving traffic on Tuesday evening
31:45
Speaker 4: in Wuhan, China, stranding passengers and blocking other vehicles. And
31:50
Speaker 4: it just brings up the whole conversation regarding Automas vehicles,
31:54
Speaker 4: which to be clear for our listeners here, we have
31:56
Speaker 4: them in the United States two through Weaimo, and my
32:00
Speaker 4: Mike's been in one.
32:00
Speaker 2: It's Phoenix Stupid Games, Win Stupid Prizes, folks, It's.
32:04
Speaker 4: Phoenix, austin San fran La. That I believe that Waimo
32:09
Speaker 4: is in maybe another state in the city.
32:12
Speaker 3: That in Boston.
32:13
Speaker 2: The other day, I was driving down because they're testing out.
32:16
Speaker 2: They're testing in Boston, and so there's somebody driving the Waymo,
32:19
Speaker 2: but it was very clearly a Waymo vehicle with the
32:21
Speaker 2: giant cameras on top of it. Yeah, there will be
32:24
Speaker 2: these types of disruptions if we're going to try and
32:26
Speaker 2: make autonomous vehicles drive people.
32:29
Speaker 4: My wife and I were out to dinner and I
32:30
Speaker 4: just brought this up sort of casually. I just said,
32:32
Speaker 4: you know, our kids, maybe they won't need to really
32:34
Speaker 4: drive as much because they're three four years old. And
32:38
Speaker 4: I said, there's already drays cars out there. And she
32:41
Speaker 4: was like, what are you talking about? Their drivers cars
32:43
Speaker 4: out and I'm like, yeah, like there's a company that
32:45
Speaker 4: has autonomous vehicles that are just driving people around. She's like, well,
32:48
Speaker 4: that's not safe. I don't know if I get in
32:49
Speaker 4: that the whole thing starts following out. I'd like to
32:52
Speaker 4: give it a try, is my my short response to it,
32:55
Speaker 4: but I don't know if i'd suit up for. And
32:58
Speaker 4: to be clear, they can't do this yet, like a
32:59
Speaker 4: cross country.
33:00
Speaker 2: Yeah, I mean right now if you go get in one,
33:02
Speaker 2: you can get one at the Phoenix Sky Harbor Airport
33:05
Speaker 2: and it can take your place, but it can't go
33:06
Speaker 2: on the highway, you know. Like it's very very cautious
33:10
Speaker 2: in terms of it's driving. And yeah, it is pretty cool,
33:14
Speaker 2: but like I said, it does stupid things Like I
33:16
Speaker 2: was getting picked up at a hotel once using one
33:19
Speaker 2: and it decided to drive down the So it's a
33:24
Speaker 2: big hotel with a conference center. There's a conference going on,
33:27
Speaker 2: and so there's a there's like a back alleyway where
33:29
Speaker 2: they load and unload all the stuff for the conference,
33:32
Speaker 2: like all.
33:33
Speaker 3: The giant.
33:35
Speaker 2: Stages and everything, and there are a bunch of people
33:38
Speaker 2: unloading it all decided to drive down that alleyway and
33:41
Speaker 2: was navigating through people, like carrying parts of a stage
33:45
Speaker 2: to dumb old.
33:46
Speaker 3: Me, right, you know, like, OK, here are go into
33:48
Speaker 3: my driverless car.
33:49
Speaker 2: And so, yeah, they do stupid things sometimes because they
33:53
Speaker 2: are robots that don't know that they shouldn't drive down
33:55
Speaker 2: an alleyway.
33:56
Speaker 5: On a smaller scale, did you guys see the delivery
33:58
Speaker 5: robot going down the sidewalk? And I want to say
34:02
Speaker 5: with Chicago, but that thing, oh no, no, it crashed
34:07
Speaker 5: the part of Chicago crashed through the glass, right, Yeah,
34:10
Speaker 5: yeah it was. It went right through the glass with
34:12
Speaker 5: the thing moving. It went right through the glass of
34:15
Speaker 5: a bus stand. Yeah, just the videos out there and
34:18
Speaker 5: the glass just shatters all over the side.
34:20
Speaker 3: Oh gosh, that was the kind of robot stories that
34:23
Speaker 3: I need. Yeah, look it up.
34:25
Speaker 2: I'll have to take a look at that one. I
34:27
Speaker 2: want to go back to talking about old people. So
34:30
Speaker 2: can we all agree that if you're over the age
34:32
Speaker 2: of eighty, we can call you old people without anybody
34:34
Speaker 2: getting offended?
34:35
Speaker 1: Or is that fair?
34:36
Speaker 4: Yeah, that's fair.
34:37
Speaker 2: If you feel otherwise, feel free to text the show
34:39
Speaker 2: with your anger so they probably will feel six thirteen
34:41
Speaker 2: eighty five called the show.
34:42
Speaker 3: Then I guess.
34:45
Speaker 4: To take.
34:47
Speaker 2: In twenty twenty five, according to the Brookings Institute, there
34:50
Speaker 2: were fourteen point seven million people over the age of
34:54
Speaker 2: eighty here in the United States. The same in Suit
34:57
Speaker 2: estimates that by twenty forty five there will be twenty
35:01
Speaker 2: nine point four million Americans over the age of eighty.
35:06
Speaker 2: We are going to double the eighty plus population in
35:10
Speaker 2: the United States over the course of the next twenty years.
35:13
Speaker 2: I think I'm gonna quit and go get a nursing degree.
35:15
Speaker 4: Guys, I feel like the wheels are turning on that
35:17
Speaker 4: you've been You've been sitting on this for the second
35:20
Speaker 4: half of the show. You're ready to start a new business.
35:22
Speaker 2: I think I might be, And the business is just
35:26
Speaker 2: me spending the next three years getting a nursing degree,
35:29
Speaker 2: because how are we possibly going to care for a
35:35
Speaker 2: doubling of the population of people over the age of eighty.
35:38
Speaker 5: Robots, I don't think maybe, yeoh, totally that's happening.
35:44
Speaker 3: I maybe I huminoid robots. You are so far away from.
35:48
Speaker 4: It, right, it's far.
35:52
Speaker 5: I think it's closer than anything.
35:53
Speaker 2: Yeah, we will see it, because I will tell you
35:56
Speaker 2: this that if this happens over the next twenty years
36:00
Speaker 2: and we don't, you have one of two solutions, either
36:03
Speaker 2: robotics or a massive influx of migrant labor to care
36:06
Speaker 2: for older people.
36:07
Speaker 3: In this country. If you don't get one of those
36:09
Speaker 3: two things, the monthly.
36:11
Speaker 2: Cost of one of those nursing homes, I don't know,
36:14
Speaker 2: Like if the population is going to double, the cost
36:17
Speaker 2: is going to nearly double, or just.
36:19
Speaker 4: Parents moving back in.
36:21
Speaker 2: Yeah, some sort of formula here is not going to work.
36:24
Speaker 2: It's going to break down here because the flood of
36:27
Speaker 2: baby boomers I think the first ones just started turning
36:30
Speaker 2: eighty this year or maybe last year, and our infrastructure
36:38
Speaker 2: is not set up to deal with that right now,
36:40
Speaker 2: and so there will have to be some interesting solutions
36:44
Speaker 2: that come out there. I've heard everything from you know,
36:47
Speaker 2: allow care providers to live rent free in people's homes,
36:51
Speaker 2: to just different types of care scenarios. But the amount
36:55
Speaker 2: of healthcare needed to keep people over the age of
36:57
Speaker 2: eighty healthy and independent is expensive, and we are we
37:03
Speaker 2: are not set up to handle in this country right now.
37:05
Speaker 3: With the demographic shift that's.
37:06
Speaker 5: Going going to see a big increase in multi generational
37:10
Speaker 5: living too.
37:12
Speaker 2: Yeah, you'd have to, you'd have you probably have to
37:15
Speaker 2: if you're if you're gonna go this route.
37:16
Speaker 3: I mean, right, what's that you put them up?
37:19
Speaker 4: Your parents?
37:20
Speaker 3: Oh right, I told them the second they start to go,
37:22
Speaker 3: it's right to the nursing home. Yeah. Like the moment I.
37:26
Speaker 2: Detect like you forgot my birthday this year, I think
37:30
Speaker 2: we might need to check you guys in.
37:32
Speaker 4: But if they called you yet today, uh happy birthday?
37:36
Speaker 5: Yeah, happy birthday.
37:37
Speaker 3: You know, thank you.
37:38
Speaker 2: But yeah, this is a massive demographic shift and we
37:43
Speaker 2: will see how it's prepared for. But I think even
37:46
Speaker 2: at these current costs, the idea that we're going to
37:49
Speaker 2: be able to afford a society to care for our
37:52
Speaker 2: aging population is going to be a.
37:53
Speaker 3: Wild formula to try and fix.
37:55
Speaker 4: Maybe with the demand, the supply gets created and businesses
37:57
Speaker 4: start to sprout up to take care of the elderly,
37:59
Speaker 4: to cash in.
38:00
Speaker 2: Yeah, Dow, SMP, and NASDAK are all down as we
38:04
Speaker 2: close out the show, but very slightly and much less
38:07
Speaker 2: than when we started the show.
38:08
Speaker 3: At ten am.
38:10
Speaker 2: Dow off one hundred and thirteen points, SMP down six,
38:13
Speaker 2: and Nasdaq down thirty two.
38:14
Speaker 3: Markets are closed tomorrow, but we will.
38:16
Speaker 2: Have an eight thirty am jobs report, so we'll be
38:19
Speaker 2: back at it then. Have a great afternoon, everybody,