Latest / The Financial Exchange Show / How did markets pull off back-to-back 20% annual gains?

Transcript

How did markets pull off back-to-back 20% annual gains? · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:03
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:08
Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:17
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
Speaker 1: this program do not endorse each other or their services.
0:26
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:28
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Mike Armstrong and Paul Lane, your exclusive look
0:39
Speaker 1: at business and financial news affecting your day, your city,
0:42
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends plus breaking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:53
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:57
Speaker 1: heroes by visiting dav five K Boston and making a
1:01
Speaker 1: donation today. This is the Financial Exchange with Mike Armstrong
1:06
Speaker 1: and Paul.
1:07
Speaker 2: Lane, Happy New Year, Welcome to twenty twenty five. Here
1:13
Speaker 2: at the Financial Exchange, it's Mike, Paul and Tucker with
1:16
Speaker 2: you on a shortened trading week Thursday, heading into the
1:21
Speaker 2: weekend here and the first trading day of twenty twenty five,
1:24
Speaker 2: with some little leftover optimism coming to markets, with all
1:28
Speaker 2: of them in the green for the start of twenty
1:31
Speaker 2: twenty five, at least, after closing out December on a
1:34
Speaker 2: fairly negative note, with all markets down in December, with
1:38
Speaker 2: a bit of a reverse Santa Claus rally, a little
1:41
Speaker 2: Santa Claus sell off heading into the end of the year,
1:44
Speaker 2: but tackling this week as we head into like I said,
1:47
Speaker 2: a shortened trading week ahead of a big week the
1:50
Speaker 2: second week of January. Friday of next week is when
1:52
Speaker 2: we will get that big jobs report for the month
1:55
Speaker 2: of December and a number of other economic data points.
1:59
Speaker 2: I think it's a good time to kind of reflect
2:01
Speaker 2: on twenty twenty four and what we saw, what was regular,
2:04
Speaker 2: what was irregular, and of course everything today being written
2:08
Speaker 2: about expectations for the coming new year, which, by the way,
2:12
Speaker 2: any of these stories that were printed in the first
2:15
Speaker 2: week of twenty twenty four were completely wrong. So take
2:18
Speaker 2: all of this with a grain of salt. Any forecast
2:21
Speaker 2: that you're seeing about twenty twenty five, and frankly, we
2:23
Speaker 2: won't be making any of them for markets for twenty twenty.
2:26
Speaker 3: Five because I think that's useless.
2:27
Speaker 2: I do generally think that trying to predict what markets
2:30
Speaker 2: are going to do on the first day of the
2:32
Speaker 2: year is a useless exercise, and any short term market
2:36
Speaker 2: predictions are just as such. But we did have the
2:39
Speaker 2: second year in a row of equity markets defined by
2:42
Speaker 2: the SMP five hundred increasing by more than twenty percent.
2:45
Speaker 2: You had the SMP close out the year I think
2:47
Speaker 2: without dividends up a good twenty three plus percent this year.
2:52
Speaker 2: That was after twenty four percent in twenty twenty three,
2:56
Speaker 2: and it marks the first time since the late nineties
3:00
Speaker 2: where that's done that on a back to back basis,
3:04
Speaker 2: and I think speaks to some optimism about where things
3:07
Speaker 2: are going over the next few years.
3:09
Speaker 4: Yeah, I think that's a good place to start.
3:11
Speaker 5: Is more so not sitting here saying this is what's
3:14
Speaker 5: going to happen in twenty twenty five. But I like
3:17
Speaker 5: the idea of sort of doing a bull and a
3:19
Speaker 5: bare case for this year, sort of laying out if
3:22
Speaker 5: everything goes right, how will things how could things potentially
3:26
Speaker 5: fair if everything goes wrong, or if these things go wrong,
3:28
Speaker 5: how does things potentially fair out? Like you mentioned twenty four,
3:33
Speaker 5: all the expectations going in was this idea of significant
3:36
Speaker 5: rate cuts, potential for recession. We sit here on the
3:39
Speaker 5: first day of twenty twenty five. You can convincingly say
3:42
Speaker 5: that that did not happen in terms.
3:44
Speaker 3: Of it was not a recession in twenty twenty four.
3:46
Speaker 5: The recession piece did not occur. In terms of rate cuts,
3:50
Speaker 5: we did see some of those, a lot of them
3:52
Speaker 5: sort of stuffed in the back half of the year,
3:55
Speaker 5: back quarter of the year where we came in with
3:58
Speaker 5: four rate cuts total a full percentage point in terms
4:01
Speaker 5: of the Fed Fund rate heading into twenty twenty five,
4:05
Speaker 5: I think, Mike, it is a good exercise to look at, Okay,
4:08
Speaker 5: you and I going back and forth on bull and
4:09
Speaker 5: bear case for for what sure, what markets could look
4:13
Speaker 5: like this year, not knowing where things are going to go,
4:15
Speaker 5: but sort of staying in those two different camps. You know,
4:19
Speaker 5: I'll start it from a bull perspective here in terms
4:22
Speaker 5: of what we would be looking for for the US
4:24
Speaker 5: economy heading into twenty twenty five. Here, unemployment has got
4:28
Speaker 5: to stay in and around four percent or so we
4:31
Speaker 5: had hit.
4:31
Speaker 2: We're at four two fourth three right now, So I
4:33
Speaker 2: think so long as it's under four and a half percent,
4:36
Speaker 2: we remain in a relatively calm economy.
4:39
Speaker 5: We had hit about three and a half or three
4:41
Speaker 5: point six percent at the ultimate low. Obviously over the
4:44
Speaker 5: course of twenty twenty four, that did creep up a bit.
4:47
Speaker 5: If we can stay, like you said, in around that level,
4:50
Speaker 5: that's something that will keep the economy in a good place.
4:53
Speaker 5: On inflation, another area where a tremendous amount of progress
4:56
Speaker 5: was made in twenty twenty four, Risks still loom out there,
5:00
Speaker 5: and there are areas of inflation reports that you could
5:02
Speaker 5: point to that perhaps there is some more sickiness than
5:07
Speaker 5: anticipated there. And of course the political policies that have
5:10
Speaker 5: been bantered about we'll talk about that a little bit too,
5:13
Speaker 5: and how they could impact things. But inflation has stuck
5:16
Speaker 5: on a headline basis around two and a half percent
5:18
Speaker 5: or so. A lot of that has come off the
5:20
Speaker 5: backs of a very low energy market from an oil
5:24
Speaker 5: price perspective. If you look at core PCEE, which serve
5:28
Speaker 5: core any of the core measures which strip out food
5:30
Speaker 5: and energy, that number is more like three point two
5:33
Speaker 5: or three point three percent. That needs to stay in
5:35
Speaker 5: and around that level, perhaps even progressing down even further.
5:39
Speaker 5: Those are two critical components of the economy still being
5:42
Speaker 5: in a good place. And then the last one that
5:44
Speaker 5: I sort of partitioned out was the consumer. The consumer
5:47
Speaker 5: has been truly the white night in this economic resiliency
5:52
Speaker 5: that we've seen over the course of the last couple
5:53
Speaker 5: of years. People have been getting out there and continuing
5:56
Speaker 5: to spend. That needs to continue. You need to see
5:59
Speaker 5: corporate earnings growth. And the last one that I'll add
6:01
Speaker 5: to the corporate aarnings growth is a lot of the
6:03
Speaker 5: stock market enthusiasm that we saw in twenty twenty four
6:06
Speaker 5: was based on the R and D spending from the
6:09
Speaker 5: biggest companies out there in the AI space, whether it
6:13
Speaker 5: is Google, Amazon, Meta, you know less so Apple on
6:19
Speaker 5: the AI side, but in video was the beneficiary of
6:22
Speaker 5: all those spending dollars. That needs to continue in place
6:25
Speaker 5: as well to really kind of keep that bolcase going.
6:27
Speaker 2: Not only the spending, but you need to start seeing
6:29
Speaker 2: some of the results, I think exactly. Yeah, you've had Microsoft,
6:33
Speaker 2: you've had in Vidio, others pour billions of dollars into
6:37
Speaker 2: research and development on artificial intelligence, and so do you
6:40
Speaker 2: start to see some payoff on those Do you start
6:43
Speaker 2: to see companies adopting the technology, paying for the technology,
6:46
Speaker 2: and using it to become more efficient. That's one of
6:50
Speaker 2: the critical pieces that's not really front and center to
6:53
Speaker 2: most people's views on the economy because you don't you
6:57
Speaker 2: don't see it every day.
6:58
Speaker 3: But productivity in.
7:00
Speaker 2: The United States has made the United States exceptional over
7:03
Speaker 2: the last few years. It is far surpassed what you
7:05
Speaker 2: have seen everywhere else in the world by and large.
7:07
Speaker 2: I'm sure there's some exceptions, but in the developed world,
7:10
Speaker 2: no country has seen the productivity gains of the United
7:13
Speaker 2: States have seen over the last few years.
7:15
Speaker 3: And so will you see that continue in some meaningful way?
7:19
Speaker 2: Because that's the holy grail, right If you can produce
7:22
Speaker 2: more stuff without working more hours. Yep, that's the holy grail.
7:26
Speaker 2: That's how a society develops. On the inflation side of things,
7:29
Speaker 2: to your point, in terms of practically speaking, what needs
7:34
Speaker 2: to happen there for the stars to align in inflation
7:36
Speaker 2: to go down. Like you mentioned, the last reading we
7:38
Speaker 2: got was for November, which was showing two point seven
7:41
Speaker 2: percent year over year inflation, helped out by a lot
7:46
Speaker 2: of lower energy prices. You know, energy prices over that
7:48
Speaker 2: same time period down three percent, gasoline down eight percent.
7:52
Speaker 2: And while we can strip that out, the fact of
7:55
Speaker 2: the matter is that low energy prices tend to down
8:00
Speaker 2: other prices as well, whether you're talking about food, whether
8:03
Speaker 2: you're talking about UH, you know, electricity generation or.
8:09
Speaker 4: Even good because of the transportation to get them there.
8:13
Speaker 2: And so should that reverse, then it can have this
8:15
Speaker 2: reverberating effect throughout the economy of prices going up. And
8:19
Speaker 2: so you're looking for a consumer that continues to spend,
8:22
Speaker 2: is still comfortable doing so, is uh is not getting
8:26
Speaker 2: into too much debt, but also you know, it does
8:30
Speaker 2: not spend to the level that we see inflation tick
8:33
Speaker 2: back up, and therefore the Fed react to those higher
8:35
Speaker 2: spending and higher inflation numbers. You want this, uh, this
8:40
Speaker 2: Goldilock scenario once again of consumers continuing to spend, but
8:45
Speaker 2: neither tariffs nor other who knows, geopolitical tensions in the
8:49
Speaker 2: Middle East or whatever it might be, sending prices to
8:52
Speaker 2: an uncomfortably high level again, because if you see that happen,
8:56
Speaker 2: even if even if it's it's you know, I don't
8:58
Speaker 2: think anyone goes into twenty twenty five expecting any sort
9:01
Speaker 2: of repeat of COVID era inflation levels. But you don't
9:07
Speaker 2: need nine percent inflation for this market to get very concerned, right,
9:11
Speaker 2: You don't even need three and a half percent inflation
9:14
Speaker 2: for these markets to get quite concerned. Because going into
9:18
Speaker 2: twenty twenty five, the expectation is that the FED is
9:21
Speaker 2: able to continue to cut rates to some degree that
9:25
Speaker 2: the expectation is that the inflation levels remain below three percent,
9:28
Speaker 2: and if they diverge elsewhere, you're.
9:31
Speaker 5: Gonna see evaluations take a huge They would take a
9:34
Speaker 5: huge hit in that scenario if there is a pivot
9:36
Speaker 5: in thinking that all of a sudden, we're not looking
9:39
Speaker 5: at cuts, but we'll look at how are they going
9:40
Speaker 5: to continue to buy?
9:41
Speaker 4: Battle how you're inflation? That would be what's.
9:44
Speaker 2: At stakeing let's take a quick quick break here. When
9:46
Speaker 2: we come back, I want to continue this conversation of
9:51
Speaker 2: bowl case versus bear case when it comes to the
9:53
Speaker 2: overall US economy and markets, and really just start setting
9:57
Speaker 2: the milestones for hey, how are we going to budge
10:00
Speaker 2: this economy in this administration? For twenty twenty five And
10:03
Speaker 2: then finally, I also do want to talk about just
10:06
Speaker 2: the last two years of market gains. How rare is
10:08
Speaker 2: what we saw recently and what should be expected out
10:11
Speaker 2: of markets in the future.
10:12
Speaker 3: Quick Break will be right back from the Financial Exchange.
10:15
Speaker 1: Well streamwatch a full update on the markets performance todate
10:19
Speaker 1: weekdays at ten thirty only here on the Financial Exchange
10:22
Speaker 1: Radio Network. Thankst us six one seven, three six two
10:26
Speaker 1: thirteen eighty five with your comments and questions about today's
10:29
Speaker 1: show and let us know what you think about the
10:31
Speaker 1: stories we are covering. This is the Financial Exchange Radio Network.
10:49
Speaker 6: This segment of the Financial Exchange is brought to you
10:51
Speaker 6: in part by the US Virgin Islands Department of Tourism.
10:55
Speaker 6: US Virgin Islands are Sant Croix, Saint Thomas and Saint
10:58
Speaker 6: John And if you act now, you can take advantage
11:01
Speaker 6: of a special promotion to San Croix, experience a vibe
11:05
Speaker 6: like no other, and get a two hundred and fifty
11:08
Speaker 6: dollars per person airline credit when you book a minimum
11:11
Speaker 6: five night's day at participating hotels. Go to visit USVI
11:17
Speaker 6: dot com and use code Vibe twenty twenty five to
11:20
Speaker 6: reserve your trip today. Take your next vacation to San
11:23
Speaker 6: Croix in America's Caribbean paradise the United States Virgin Islands.
11:27
Speaker 6: Go to visit USVII dot com and use code Vibe
11:30
Speaker 6: twenty twenty five to book your trip. That's visit USBI
11:34
Speaker 6: dot com and code Vibe twenty twenty five.
11:37
Speaker 4: Not good vibes for Tucker.
11:39
Speaker 2: Tucker's goett a little choked up. It's just very emotional
11:43
Speaker 2: through my.
11:43
Speaker 6: Back up, first, through my back up yesterday, so I
11:46
Speaker 6: have a hard time breathing.
11:48
Speaker 4: We back, Oh Jesus, car really.
11:50
Speaker 3: Mike, since since bet since about a week back.
11:56
Speaker 4: Okay, there's a car accident.
12:02
Speaker 2: So I asked the question before, which fortunately I know
12:05
Speaker 2: the answer to, because I was curious of just how
12:07
Speaker 2: rare these twenty percent plus or minus years that we've
12:11
Speaker 2: had of the last couple have been. And so I
12:14
Speaker 2: went and pulled some data on the composite that they,
12:19
Speaker 2: you know, created that it is designed to mimic the
12:22
Speaker 2: S and P five hundred going back to the nineteen twenties,
12:24
Speaker 2: and we have seen a lot of you know, twenty
12:27
Speaker 2: plus years just over the last decade.
12:29
Speaker 3: You saw obviously the last two.
12:31
Speaker 2: Twenty twenty one was over twenty percent, twenty nineteen was
12:34
Speaker 2: over twenty percent. So there's been quite a few of them.
12:37
Speaker 2: And so I was curious, like we all talk about how, yeah,
12:41
Speaker 2: the S and P five hundred long term, depending on
12:44
Speaker 2: what time period, you're looking at eight percent a year,
12:46
Speaker 2: ten percent a year more recently like twelve percent a year.
12:49
Speaker 3: So you know, what should we anticipate year to year?
12:52
Speaker 2: Because Goldman, Sachs and JP Morgan are all putting out
12:55
Speaker 2: ten percent forecast for twenty twenty five, which is about
12:57
Speaker 2: the safest thing you can do.
12:58
Speaker 4: It's just as like I don't have any So here's
13:00
Speaker 4: a number.
13:02
Speaker 2: So I took a look at it, and for the
13:03
Speaker 2: ninety seven calendar years that I was able to get
13:06
Speaker 2: data on, I was curious in how many of those
13:09
Speaker 2: did the S and P five hundred or like I said,
13:12
Speaker 2: the composite that didn't exist prior to I think nineteen
13:15
Speaker 2: seventy something that makes up the S and P five hundred,
13:18
Speaker 2: How many of those calendar years did the SMP go
13:21
Speaker 2: up by more than twenty percent or down by greater
13:23
Speaker 2: than twenty percent thirty four out of ninety seven.
13:26
Speaker 3: Years, about a little bit more than a third of
13:28
Speaker 3: the time.
13:29
Speaker 2: In fact, equity markets go up by more than twenty
13:33
Speaker 2: percent or down by more than twenty percent. And that's
13:36
Speaker 2: why I just I go back to you know, what
13:40
Speaker 2: people come to expect, and you know, we talked about
13:43
Speaker 2: it all the time. How you see people putting together
13:44
Speaker 2: forecasts saying, oh, yeah, flatline the markets, and my portfolio
13:48
Speaker 2: is going to grow at eight percent a year. And
13:50
Speaker 2: the fact of the matter is that almost never happens.
13:52
Speaker 2: And I think that's an important clarification for people to
13:55
Speaker 2: expect and anticipate, is yeah, years like this feel really good.
13:59
Speaker 2: Guess what, They're not uncommon, right, Nor is the opposite
14:03
Speaker 2: of the thirty four it's it can't be.
14:05
Speaker 5: I would feel like positive to negative it would be
14:08
Speaker 5: a heavier percentage on the positive stuff, of course. Yeah, yeah,
14:11
Speaker 5: I mean, how many do you like? There's probably no
14:13
Speaker 5: more than of negative years. And the S and P
14:17
Speaker 5: over a drop of twenty percent got to be.
14:19
Speaker 3: Count only six, ok, kind of only six.
14:22
Speaker 2: Going back to the nineteen twenties, where the calendar year
14:23
Speaker 2: has been great than twenty but there's been you know,
14:26
Speaker 2: twenty twenty two, for example, is not on this list
14:28
Speaker 2: because it right below the twenty five percent, but then
14:32
Speaker 2: it bounced back in the other direction and then finished
14:34
Speaker 2: the calendar year below that twenty percent threshold, and so
14:38
Speaker 2: it doesn't account for that either. But we all have
14:41
Speaker 2: this this number built in the back of our mind
14:44
Speaker 2: as oh, yeah, the market should do ten percent, they
14:46
Speaker 2: should do oh and they do twenty three percent. Wow,
14:48
Speaker 2: that must be incredibly rare. No, No, it's fairly common
14:51
Speaker 2: for things to happen like this. There tends to be
14:53
Speaker 2: a lot of momentum in one direction or the other
14:56
Speaker 2: when we talk about markets. But again, as we head
15:00
Speaker 2: to twenty twenty five, we talked about these bull and
15:03
Speaker 2: bear cases, and you know, I think where I have
15:06
Speaker 2: settled in, as you know, a very likely scenario here,
15:10
Speaker 2: which does not tell you which direction markets will go.
15:13
Speaker 2: But my general feeling is that this administration is very
15:18
Speaker 2: serious about a few things. Increasing tariffs on a number
15:23
Speaker 2: of different trading partners is one of them. They also
15:27
Speaker 2: seem very serious about cutting taxes. So I tend to
15:30
Speaker 2: think that those two items, along with deregulation, are likely
15:35
Speaker 2: to be front and center but quite frankly, I just
15:37
Speaker 2: don't know how to play out deregulation because I have
15:39
Speaker 2: no idea which industries will be most affected and how
15:42
Speaker 2: that will end up playing out. And so when I
15:46
Speaker 2: start to think about twenty twenty five, I tend to
15:49
Speaker 2: think that rates in the US are going to be
15:50
Speaker 2: higher than most of the rest of the world. I
15:54
Speaker 2: tend to think that taxes are going to be getting
15:57
Speaker 2: cut at the same time that other countries are going
15:59
Speaker 2: to have a tougher time doing so due to budget constraints.
16:02
Speaker 4: And I cut where taxes, yeah, I would just say
16:06
Speaker 4: voted back in at the same levels, right or in
16:09
Speaker 4: corporate I think.
16:10
Speaker 2: That we will certainly see a renewal of the Trump
16:13
Speaker 2: tax cuts, but I think that there will be further
16:15
Speaker 2: cuts because quite honestly, if they just renew where they were,
16:20
Speaker 2: there's no gain there, right, There's nothing to write home about.
16:23
Speaker 2: There's nothing to actually stimulate the economy in that case.
16:25
Speaker 2: And so if the administration wants to follow through on
16:28
Speaker 2: their pledges, I think they have to find somewhere else
16:30
Speaker 2: to cut.
16:32
Speaker 3: Beyond.
16:33
Speaker 2: And I don't know that it comes on the corporate side,
16:34
Speaker 2: but I think that generally speaking, you see them go
16:36
Speaker 2: lower somewhere on the tariff side of things. That's going
16:40
Speaker 2: to play to the price level, and it feeds into
16:43
Speaker 2: why I think rates are going to be higher for longer.
16:45
Speaker 2: Probably means a stronger US dollar, which works against the
16:48
Speaker 2: Trump administration and some of the trade and balanced questions.
16:51
Speaker 3: That they end up having for the future.
16:54
Speaker 2: But again, I don't think that that spells out a
16:56
Speaker 2: bear or bowl case for markets because I.
16:59
Speaker 3: Don't know where the inflation comes in.
17:01
Speaker 2: I think that's going to be an all important factor
17:04
Speaker 2: when it comes to how markets perform in twenty twenty five.
17:06
Speaker 5: Yeah, this is more of a big picture commentary less
17:09
Speaker 5: so me saying anything for twenty twenty five is it
17:12
Speaker 5: was interesting just sort of when you read these recap pieces.
17:15
Speaker 5: One of the things that stuck out to me is
17:17
Speaker 5: just the idea that we now feel as if we
17:21
Speaker 5: are in a period that we are cemented at higher
17:24
Speaker 5: rates than we were customed to over twenty fourteen to
17:27
Speaker 5: twenty twenty two. Looking at that period, the US ten
17:29
Speaker 5: year treasury never really hit three percent over that period
17:33
Speaker 5: of time, and it's just interesting to reflect back and
17:35
Speaker 5: see how long we've operated really at those extremely low
17:40
Speaker 5: level rates, and we're now in much more of a
17:42
Speaker 5: normalized rate period where you have the US ten year
17:44
Speaker 5: treasury sitting at four and a half percent and actually
17:47
Speaker 5: the ability to collect some money market interests things that
17:50
Speaker 5: we're not possible before.
17:52
Speaker 3: Yeah, I think it's just important.
17:54
Speaker 2: I think when you head into a new administration too,
17:56
Speaker 2: to figure out, Okay, what are the benchmarks we're going
17:58
Speaker 2: to judge this administration on. I'm sure a lot of
18:01
Speaker 2: people are gonna look at the stock market. I think
18:02
Speaker 2: that's a crappy indicator because it doesn't really tie to
18:05
Speaker 2: what the current president is doing I see the last
18:08
Speaker 2: two years. But nonetheless, I'm sure that we will use
18:11
Speaker 2: that as a benchmark. Unemployment is an easy one to
18:14
Speaker 2: look at. Wage gains are an easy one to look at.
18:16
Speaker 2: Tax rates are a really easy one to judge an
18:19
Speaker 2: administration on. I wonder what the other benchmarks are that
18:23
Speaker 2: people have in mind. You know, inflation is certainly one
18:26
Speaker 2: of them, Unemployments certainly one of them. We had Mark
18:29
Speaker 2: and I had come up with our own number of
18:31
Speaker 2: these when we were doing the show a few weeks ago,
18:34
Speaker 2: and people had texted in things like deregulation, which we
18:37
Speaker 2: had a really tough time. How do you put your
18:39
Speaker 2: numerically putting your arms around it right? Like is there
18:42
Speaker 2: more or less regulation? At the end of the Trump administration,
18:45
Speaker 2: Mark actually found the federal like registrar for regulations and said, okay,
18:50
Speaker 2: well here's the total pages. Maybe you can do it
18:52
Speaker 2: that way, like how many pages get cut out? But
18:56
Speaker 2: you know, I think anyone trying to judge how an
18:59
Speaker 2: administration you have to have a framework going in to
19:02
Speaker 2: say this is what I'm going to judge it by
19:04
Speaker 2: home prices would be another one that comes to mind,
19:06
Speaker 2: but I honestly don't know.
19:08
Speaker 5: Up or down can success to impact that Sometimes with
19:12
Speaker 5: GDP growth, it's unfair too because you're catching a tailwind
19:15
Speaker 5: or headwind just because of the timing of when you
19:17
Speaker 5: come into office. The one that you mentioned I do
19:21
Speaker 5: like because it is more of you know, the period
19:24
Speaker 5: of time that you're in.
19:25
Speaker 3: Let's take a quick break.
19:26
Speaker 2: When we come back, full market recap coming up with
19:28
Speaker 2: Wall Street Watch.
19:29
Speaker 3: That's next. Like us on.
19:42
Speaker 1: Facebook and follow us on Twitter at DFE show. Breaking
19:46
Speaker 1: business news is always first right here on the Financial
19:50
Speaker 1: Exchange Radio Network. Time now for Wall Street Watch, a
19:56
Speaker 1: complete look at what's moving market so far today right
19:59
Speaker 1: here the Financial Exchange Radio Network on.
20:02
Speaker 6: The first trading session of twenty twenty five, markets are
20:06
Speaker 6: in positive territory, albeit lowering the gains than at the
20:11
Speaker 6: opening bell.
20:12
Speaker 4: The Dow is now up by.
20:14
Speaker 6: Only sixty eight points, or about a tenth of a percent.
20:17
Speaker 6: SMP five hundred is up by over a quarter percent
20:20
Speaker 6: or fifteen points in the Nasdak up over a quarter
20:23
Speaker 6: percent as well, or fifty four points. Russe In two
20:26
Speaker 6: thousand is rallying up over one and a quarter percent
20:30
Speaker 6: so far today. Ten year Treasure reeled down by two
20:33
Speaker 6: basis points at four point five four percent, and crew
20:36
Speaker 6: to Oil up two and a quarter percent, trading at
20:38
Speaker 6: seventy three dollars in thirty three cent se barrel. Overall,
20:42
Speaker 6: for twenty twenty four, the SMP five hundred jump twenty
20:44
Speaker 6: three percent, the Dow climb thirteen percent, and the Nasdaq
20:48
Speaker 6: surged twenty nine percent for the year. This morning, Tesla
20:53
Speaker 6: shares down by six percent as investors digest the electric
20:56
Speaker 6: car makers new sales data from the fourth quarter. We're
20:59
Speaker 6: just south of four hundred and ninety six thousand vehicles
21:02
Speaker 6: were delivered, short of expectations of five hundred and fifteen
21:06
Speaker 6: thousand units. Meanwhile, shares and Synaptics are up by six
21:10
Speaker 6: percent after the semiconductor company announced a partnership with Google
21:14
Speaker 6: on EDGEAI. Through the collaboration, Google's machine learning core will
21:19
Speaker 6: be integrated on Synaptics Astros hardware Elsewhere. Goldman Sachs added
21:24
Speaker 6: both Uber and the Region Cruise line to its conviction
21:28
Speaker 6: buy list for January. Uber stock up by four percent,
21:31
Speaker 6: while Norwegian's shares are up by one percent. Jeffries upgraded
21:35
Speaker 6: Top Golf Calaway brands to buy from hold with a
21:38
Speaker 6: firm noted shares appear to be over sold and hiked
21:41
Speaker 6: its price target to thirteen dollars from eleven dollars per share.
21:45
Speaker 6: Top Golf Calaway shares are jumping by twelve percent on
21:48
Speaker 6: the news, and after retreating in the final days of
21:51
Speaker 6: twenty twenty four, Micro Strategy shares are rebounding by above
21:55
Speaker 6: five percent today as Bitcoin climbed back above that ninety
21:59
Speaker 6: six thousand dollars threshold. I'm Tucker Silvan, that's Wall Street Watch.
22:04
Speaker 2: I mentioned in that Tesla piece. Tucker, I mean, stock's
22:07
Speaker 2: still up a good fifty percent over the last twelve months,
22:10
Speaker 2: and what climbed like eighty percent after the Trump after
22:12
Speaker 2: the Trump election win. But yeah, the sales numbers are
22:16
Speaker 2: ultimately what's going to drive this thing forward or backward.
22:19
Speaker 2: They face far more competition today than they did even
22:23
Speaker 2: just a few years ago. It's still mainly competition from
22:27
Speaker 2: luxury car brands. You don't see a lot of demand for, say,
22:32
Speaker 2: you know, the Nissan leafs out there in terms of
22:35
Speaker 2: all electric vehicles.
22:36
Speaker 3: But I'll be very interested interested to see especially too.
22:41
Speaker 3: I've heard some grumblings.
22:42
Speaker 1: You know.
22:43
Speaker 2: Granted, we live in Massachusetts and so it's a fairly
22:48
Speaker 2: liberal state, and that's understating it quite a bit. But
22:52
Speaker 2: I do wonder with Elon Musk's attachment to the Trump
22:56
Speaker 2: administration if that affects sales in any way, shape or form.
22:59
Speaker 2: The big purchasers of these vehicles have been in states
23:03
Speaker 2: like California, like Massachusetts, and so my read into it
23:07
Speaker 2: is that a lot of them have been you know, liberal,
23:12
Speaker 2: and do you see that affecting sales in some way,
23:15
Speaker 2: shape or form. I'll do it's complete conjecture at this point,
23:18
Speaker 2: but if you've heard grumblings from neighbors and things like that,
23:20
Speaker 2: I'd be interested to know you can always text the
23:23
Speaker 2: show at six one, seven, three, six, two, thirteen eighty five.
23:27
Speaker 2: But moving on, let's move over to China, because almost certainly,
23:33
Speaker 2: in addition to the other pieces that we talked about,
23:36
Speaker 2: conflict and trade with China is going to be front
23:39
Speaker 2: and center of this Trump administration. We're only just beginning
23:43
Speaker 2: to see how that takes shape. There's a piece from
23:46
Speaker 2: the New York Times today about China hitting dozens of
23:48
Speaker 2: US companies with trade controls, which is largely just symbolic
23:53
Speaker 2: and irrelevant at this point. But one thing that does
23:56
Speaker 2: seem quite a bit different compared to the last Trump
24:00
Speaker 2: administration is just the overall general attitude towards China that
24:06
Speaker 2: has shifted. And I think that's largely a result of
24:09
Speaker 2: the Trump's Donald Trump's first administration of bringing that to
24:12
Speaker 2: the forefront of American policy and putting more of a
24:16
Speaker 2: focus on the trade tactics and the conflict with China.
24:21
Speaker 2: And what's different this time is you buy and large
24:23
Speaker 2: do not hear executives coming to Washington or going down
24:27
Speaker 2: tomorrow Lago and really petitioning the Trump administration to say,
24:30
Speaker 2: don't move forward with tariffs.
24:31
Speaker 3: They are a strategic.
24:32
Speaker 2: Partner, and I wonder how much of that is just
24:35
Speaker 2: an acknowledgment from the business community that China's not that
24:39
Speaker 2: strategic anymore, versus how much of it is just concerned
24:43
Speaker 2: about public backlash in regard to defending trade with China
24:48
Speaker 2: in this environment. You had commentary from the quote from
24:52
Speaker 2: Senator Tom Cotton the other day quote if you get
24:55
Speaker 2: in the ring on China's behalf, you should expect to
24:57
Speaker 2: be punched. So you know, how many executives are just
25:02
Speaker 2: staying quiet and playing this through the back channels instead
25:06
Speaker 2: of out in public.
25:07
Speaker 3: Is another question though, Oh.
25:08
Speaker 4: Why would you want to say anything?
25:10
Speaker 5: I mean, it's just to me from a strategic standpoint,
25:13
Speaker 5: and it would make no sense to speak out in
25:17
Speaker 5: favor of China at this point for fear of retribution
25:20
Speaker 5: from a political standpoint. Also, the other thing that's happened
25:23
Speaker 5: outside of the politics side of things, Mike, is I
25:26
Speaker 5: feel a lot of companies realized after twenty twenty. You know,
25:29
Speaker 5: think about Trump starts his first turn in twenty eighteen,
25:32
Speaker 5: twenty twenty in the supply chain crisis during COVID that
25:35
Speaker 5: they needed to diversify their supply chains and that the
25:38
Speaker 5: way that China was operating in terms of the way
25:41
Speaker 5: it handles COVID and also just its business policies in general.
25:44
Speaker 5: It seems as if more companies at least acknowledge the
25:47
Speaker 5: fact that they represent a national security risk in some senses,
25:51
Speaker 5: and that it's fickle how quickly that China can pivot
25:56
Speaker 5: as to how it treats a company. And that's why
25:59
Speaker 5: they would be less likely to come out and say,
26:04
Speaker 5: you know, they're so in favor of go one way
26:07
Speaker 5: or the other on it.
26:08
Speaker 2: Yeah, I'm just I guess I'm suspect of the Wall
26:10
Speaker 2: Street Journal's conclusion that you know, they're not outspoken because
26:14
Speaker 2: American businesses no longer see China as the land of opportunity.
26:19
Speaker 2: I tend to think that if you're a business out there,
26:22
Speaker 2: you are still in every single way thinking about how
26:25
Speaker 2: your product will sell in China, how your service might
26:29
Speaker 2: play in China, even if it's not as much of
26:31
Speaker 2: a focus. You know, we talk about how Starbucks has
26:33
Speaker 2: been struggling in China, general motors basically pulling out and
26:37
Speaker 2: writing off a large portion of their business there. It's
26:40
Speaker 2: a different approach today. But you can't tell me that
26:43
Speaker 2: Disney when they create a new movie or general motors
26:47
Speaker 2: when they create a new car, isn't thinking about, hey,
26:50
Speaker 2: will this work in China? Will I be able to
26:52
Speaker 2: approach this market in the same way.
26:54
Speaker 4: Oh, there's certainly they still need to think about it.
26:56
Speaker 5: But I think I play it on the other end, Mike,
26:58
Speaker 5: and look at it from the manufacturing side of things,
27:00
Speaker 5: where they are just so critical in many companies in
27:04
Speaker 5: terms of sourcing materials or sourcing any type of manufacturing.
27:08
Speaker 4: That you may not.
27:10
Speaker 5: To want to come out and publicly support them, but
27:13
Speaker 5: to get your product manufactured at the cheapest rate out there,
27:17
Speaker 5: you have decades of institutional knowledge in the manufacturing side
27:20
Speaker 5: that maybe it's not the land of opportunity, but it's
27:24
Speaker 5: still probably it still is convincingly the cheapest gain in
27:28
Speaker 5: town with the best economies of scale to get your
27:30
Speaker 5: product out. And we can talk about Vietnam and India
27:33
Speaker 5: and some of these other countries in Cambodia, but they
27:36
Speaker 5: don't get Apple.
27:36
Speaker 2: They don't have the Yeah, if you want the answer here,
27:39
Speaker 2: go look at Apples r reporting, Go look at estimates
27:42
Speaker 2: in terms of what portion of their products they still
27:45
Speaker 2: to this day manufacturer in China, And there's your answer now. Granted, uh,
27:49
Speaker 2: Tim Cook was incredibly successful during the Trump administration of
27:53
Speaker 2: lobbying that administration to get a bunch of carbouts, and
27:55
Speaker 2: they did. They were not subject to tariffs on Chinese product,
28:00
Speaker 2: on Apple products coming out of China, and that is
28:03
Speaker 2: largely I think as a result of Tim Cook CosIng
28:06
Speaker 2: up to the administration and looking for those carve outs.
28:10
Speaker 2: But they haven't moved much of their supply chain outside
28:12
Speaker 2: of China. They've talked about it, but they fully recognize
28:17
Speaker 2: that if they want to sell anything in China, and
28:19
Speaker 2: b if they want to be able to still deliver
28:21
Speaker 2: these phones at a reasonable costs they're still well made.
28:24
Speaker 2: There's nowhere in the world that they can do it.
28:26
Speaker 2: India they've tried, Vietnam they tried. They will continue to
28:29
Speaker 2: explore those, but by and large, go look at where
28:32
Speaker 2: Apple manufactures. It is still to this day, China. We'll
28:37
Speaker 2: be covering a little bit more too, because one of
28:38
Speaker 2: the big items China related will be the looming TikTok
28:42
Speaker 2: band that's due to go into place on January nineteenth,
28:45
Speaker 2: that I believe is now in the US Supreme Courts
28:49
Speaker 2: hands in terms of whether or not they delay that
28:53
Speaker 2: total ban that's due to go into place before Donald
28:55
Speaker 2: Trump takes office.
28:56
Speaker 3: Quick break.
28:57
Speaker 2: When we come back, who remembers little doc workers strike
29:01
Speaker 2: that was going into the election back in October and November. Well,
29:06
Speaker 2: guess what back up on the table. Raise your head
29:08
Speaker 2: if you forgot about that story, that's next here on
29:10
Speaker 2: the Financial Exchange.
29:12
Speaker 1: The Financial Exchange streams live on YouTube. Like our page
29:16
Speaker 1: and stay up to date on breaking business news all
29:18
Speaker 1: morning long. This is the Financial Exchange Radio Network. If
29:23
Speaker 1: you missed any of today's show, catch up whenever you
29:25
Speaker 1: want on our YouTube page. Find daily show segments and
29:28
Speaker 1: full shows. Just go to YouTube dot com and search
29:31
Speaker 1: for the Financial Exchange. This is your home for breaking
29:34
Speaker 1: business and financial news. This is the Financial Exchange Radio Network.
29:45
Speaker 3: Paul.
29:45
Speaker 2: At the end of last year, US DOC workers were
29:49
Speaker 2: attempting to negotiate it and ended up coming to a
29:51
Speaker 2: short term contract to avoid a strike that would have
29:55
Speaker 2: shut down the entire East Coast ports. We haven't seen
30:00
Speaker 2: a negotiation on this many of those ports in a
30:03
Speaker 2: very very long time, and should this not go forward,
30:07
Speaker 2: you have the East and Gulf Coast all ports hypothetically
30:11
Speaker 2: shutting down as a result of this. Which is responsible
30:14
Speaker 2: for about half of all the country's container volumes. This
30:18
Speaker 2: was kicked off until mid January, but guess what, it's
30:20
Speaker 2: it's early January now, so the negotiations are starting back up.
30:24
Speaker 2: Remind us what are the big sticking points here? What
30:28
Speaker 2: are workers looking for? And you know where are the
30:31
Speaker 2: likely likely hang ups going to be?
30:33
Speaker 5: So Back in October, the International long Shoreman's Association reached
30:36
Speaker 5: a tentative deal with ocean carriers and operators on a
30:40
Speaker 5: sixty two percent wage increase over a period of six years,
30:43
Speaker 5: But that was a tentative deal. The real hang up
30:46
Speaker 5: on the deal is outside of the wage increase piece,
30:49
Speaker 5: is the use of semi automated machines at port terminals
30:53
Speaker 5: for the next labor contract. The president of the union,
30:57
Speaker 5: Herald Daggett, has said that he won't accept a contract
31:00
Speaker 5: that allows for any degree of automation, which he sees
31:04
Speaker 5: as a threat to dock worker jobs. And I was
31:06
Speaker 5: just saying to Mike af Air, I'm certainly not ever
31:09
Speaker 5: in favor of putting people out of work who are
31:12
Speaker 5: doing really hard, important work for the US economy. But
31:16
Speaker 5: this idea that any business out there would turn their
31:19
Speaker 5: nose up at something that could make them more productive,
31:22
Speaker 5: more efficient, and less capital intensive. It's just spits in
31:26
Speaker 5: the face of capitalism in general. That's just not how
31:29
Speaker 5: you stay competitive in a market.
31:31
Speaker 3: It's a story as you know, as old as time.
31:33
Speaker 2: Right, you can go back to the Luodites and you know,
31:36
Speaker 2: breaking what are they found, like looms in terms of
31:40
Speaker 2: textiles and things like that, that they would go around
31:42
Speaker 2: and just destroy large manufacturing facilities. This is a story
31:45
Speaker 2: as old a time, as old as time. But the
31:48
Speaker 2: continued resolution of all of these has always been that
31:53
Speaker 2: technology goes into place, it makes workers more efficient, some
31:56
Speaker 2: of them lose their jobs, and in some cases people
31:59
Speaker 2: are are worse off because we haven't historically done a
32:03
Speaker 2: great job of retraining workers who lose.
32:06
Speaker 3: Their jobs due to automation.
32:08
Speaker 2: Right, Like, say what you want about all the productivity
32:11
Speaker 2: increases that I've been talking about, and you know, all
32:16
Speaker 2: of the positives that have come from a modernized US economy,
32:19
Speaker 2: but there have been large swaths of the American public
32:21
Speaker 2: that were left significantly worse off. When you know, manufacturing
32:25
Speaker 2: got modernized in the automobile sector, or you know, the
32:30
Speaker 2: rust belt has you know, lost thousands of American manufacturing jobs.
32:35
Speaker 3: And the reality.
32:37
Speaker 2: I think will be in this case that even if
32:39
Speaker 2: they do get any sort of short term agreement on automation,
32:42
Speaker 2: long term, you're not going to simply have us ports
32:47
Speaker 2: be the least efficient in the world, right, I mean,
32:50
Speaker 2: you're not going to have the most one of the
32:52
Speaker 2: most expensive places in the world to have labor also
32:56
Speaker 2: be one of the least automated ports in the world. Otherwise,
32:59
Speaker 2: guess what volume won't go through us ports If that's
33:02
Speaker 2: the case, if we become so inefficient and unloading and
33:05
Speaker 2: loading you know, containers from us ports, the stuff will
33:11
Speaker 2: go through Mexico, It'll go through Canada instead, because we
33:14
Speaker 2: will folve that far behind.
33:15
Speaker 3: Eventually.
33:16
Speaker 6: Hey, the calendar's turn and the cold is here to stay,
33:19
Speaker 6: So now's the perfect time to plan that getaway to
33:22
Speaker 6: the United States Virgin Islands. Act now and take advantage
33:26
Speaker 6: of a special promotion to Saint Croix, experience a vibe
33:30
Speaker 6: like no other, and receive a two hundred and fifty
33:32
Speaker 6: dollars per person airfare credit and a free hotel night
33:37
Speaker 6: when you book a five night minimum stay with any
33:40
Speaker 6: participating hotel before June thirtieth, twenty twenty five. Sant Croix
33:45
Speaker 6: is known for its incredible history and spectacular architecture, along
33:49
Speaker 6: with world class cuisine, incredible golf courses, and a wide
33:53
Speaker 6: variety of water sports. From the moment your arrival, fall
33:56
Speaker 6: naturally and rhythm with the heartbeat of the islands. There's
33:59
Speaker 6: no money to change, and travel from New England could
34:02
Speaker 6: not be easier. America's Caribbean paradise is waiting for you.
34:06
Speaker 6: Experience a vibe like no other on the island of
34:09
Speaker 6: San Croix. Go to visit USVII dot com and use
34:13
Speaker 6: the code Vibe twenty twenty five for more information in
34:17
Speaker 6: book your trip today. That's visit USVII dot com and
34:22
Speaker 6: code vibe twenty twenty five.
34:25
Speaker 2: If you happen to be listening to us. In Massachusetts,
34:27
Speaker 2: a number of new laws going into place in twenty
34:29
Speaker 2: twenty five. First off, an expanded child tax credit. In
34:33
Speaker 2: twenty twenty five, you'll be able to claim four hundred
34:36
Speaker 2: and forty dollars per dependent when you file your taxes
34:39
Speaker 2: in the Commonwealth if you operate a business in the
34:43
Speaker 2: state of Massachusetts. We'll be moving over to what pretty
34:47
Speaker 2: much every other state in the country uses, which is
34:49
Speaker 2: referred to as a single sales factor, which relies solely
34:52
Speaker 2: on the amount of a company's sales within the state. Previously,
34:55
Speaker 2: the state had been using calculations based on a three
34:59
Speaker 2: f factor equation of local employment, property holdings, and in
35:03
Speaker 2: state stales. So we'll be getting away from that antiquated
35:06
Speaker 2: way of doing things. There'll be a new rule going
35:08
Speaker 2: into place in October requiring any job posting in Massachusetts
35:13
Speaker 2: by employers with at least twenty five full time employees
35:16
Speaker 2: to disclose salary ranges in those job postings and protecting
35:20
Speaker 2: employees right to ask for salary ranges in the workplace.
35:24
Speaker 2: Many other states, including New York and Colorado, have gone
35:28
Speaker 2: this route as well, And importantly, I do not believe
35:31
Speaker 2: it just implies to Massachusetts employers, but rather any employer
35:35
Speaker 2: in the country who advertises a job in Massachusetts. Some employers,
35:39
Speaker 2: by the way, the way they've gotten around this is
35:42
Speaker 2: they've said, well, big ranges most certainly is.
35:45
Speaker 3: One of them.
35:46
Speaker 2: But the other thing they've done is they said, you know,
35:48
Speaker 2: remote job which can be performed anywhere but Colorado or
35:52
Speaker 2: New York, so they don't have to post the pay
35:55
Speaker 2: ranges in there, because yeah, they don't want to go
35:58
Speaker 2: about that. But anything else that caught your eye and try,
36:01
Speaker 2: I guess no circuses, no big animals in circuses. In Massachusetts,
36:05
Speaker 2: we became the eleventh state to enact a ban on
36:08
Speaker 2: using big cats and other exotic creatures in traveling shows
36:11
Speaker 2: when they come to Massachusetts.
36:13
Speaker 5: Yead To be clear, I still can have circuses, we
36:14
Speaker 5: just can't have circuses with elephants tigers.
36:16
Speaker 3: So just boring circuses.
36:18
Speaker 5: You're trying to tell me, Yeah, our kids will suffer
36:21
Speaker 5: greatly from that.
36:22
Speaker 3: Just a lot of clowns, perfect.
36:25
Speaker 5: Just what every kid wants to see. The zoos can
36:28
Speaker 5: still happen, though, to be clear, nothing's changed there. There's
36:31
Speaker 5: also a law striking down the long standing m CAST
36:35
Speaker 5: graduation requirement that used to be the case where your
36:39
Speaker 5: tenth grade m CAST you would need to pass that
36:41
Speaker 5: in order to obtain a high school diploma. That will
36:43
Speaker 5: no longer surprise.
36:44
Speaker 3: That that one passed. I don't really understand.
36:47
Speaker 2: You know, that was a voter referendum question that was
36:50
Speaker 2: on the ballot in Massachusetts, and it just seems strange
36:53
Speaker 2: to me to do away with a standard when you
36:55
Speaker 2: have pretty consistently what's great as one of the best
36:59
Speaker 2: education systems in the country. But nonetheless, I I know,
37:02
Speaker 2: I know Matt Damon was in Boston pushing on this
37:07
Speaker 2: one to do away with the standards.
37:09
Speaker 4: The pushback that I've heard on it and I'm not was,
37:15
Speaker 4: but was that does a very important job.
37:20
Speaker 5: Now she's I'm just saying like she's not as connected
37:23
Speaker 5: to as she once was. And she also worked in
37:25
Speaker 5: a community that wasn't as harm by very financially well resourced,
37:30
Speaker 5: but the country, the areas of the state that were
37:33
Speaker 5: financially more challenged oftentimes would have more difficulty keeping up
37:38
Speaker 5: with those standards. And also teachers felt that there was
37:41
Speaker 5: too much time spent around gearing towards just making sure
37:44
Speaker 5: someone passed the end cast. You know, the standardized test
37:48
Speaker 5: shift in general is reflected in colleges where there's less
37:51
Speaker 5: of a focus on that than there was previously. It
37:55
Speaker 5: just seems like the economic disparity piece was really more
37:58
Speaker 5: the reason for the pushback. I'm not saying and where
38:00
Speaker 5: another I have a stance on it, but that's the
38:02
Speaker 5: reason behind it.
38:03
Speaker 2: Markets remained in positive territory, had been bouncing around a
38:06
Speaker 2: fair bit, but still all positive. NASDAC leading the way,
38:09
Speaker 2: up four tenths of percent. We'll be back just after
38:12
Speaker 2: the Stay tuned, folks,