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The Fed’s New Boss Has Wall Street Guessing · The Financial Exchange Show

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Speaker 1: donation today. This is the Financial Exchange with Chuck Zada,
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Speaker 1: and Mike Armstrong.
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Speaker 2: And it is Chuck, Mike and Tucker with you, and
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Speaker 2: we got markets mixed as we kick things off here,
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Speaker 2: the s and P up nine cute little points about
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Speaker 2: a tenth of a percent. The Dow is down one
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Speaker 2: hundred and fifty seven, about a third of a percent,
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Speaker 2: and then as that can posit up ninety four about
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Speaker 2: a third of a percent. So no major movement across
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Speaker 2: the indices right now. And honestly, there's a pretty bad
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Speaker 2: week of economic data, and by bad, I just mean
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Speaker 2: boring week of economic data out there, not too much
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Speaker 2: in the way of interesting earnings, and so I'm just
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Speaker 2: not sure that you're gonna get you know, anything, you know,
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Speaker 2: really conclusively, hey, like we're going up or hey we're
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Speaker 2: going down.
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Speaker 3: Like I'm just not sure that's coming this week.
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Speaker 2: Just it feels like maybe some chop as we get
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Speaker 2: towards next week. Which again, if you want to take
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Speaker 2: this week to be like, hey gotta go weave the garden,
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Speaker 2: or hey gotta go rotate the tires, or hey would
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Speaker 2: rather be golfing or boating or fishing, like, got it,
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Speaker 2: this is a good week to do that stuff because
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Speaker 2: next week, next week, I gotta tell you we are
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Speaker 2: pretty loaded. We've got a FED meeting next Wednesday. We
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Speaker 2: got PCE data on Thursday, Jobbles claims next Thursday as well. Again,
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Speaker 2: I'm looking out a week, uh, and then from an
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Speaker 2: earnings perspective, next week is pretty exciting as well when
2:39
Speaker 2: you look at some of the names that are out there, Visa,
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Speaker 2: Coca Cola, Boeing, we got Microsoft, we got Meta, we've
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Speaker 2: got Apple, we've got Amazon. Like next, next week's the
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Speaker 2: week to show up. This week, get your ducks in
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Speaker 2: a row, make sure everything's taken care of. That way
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Speaker 2: you can be ready to go.
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Speaker 3: Next week.
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Speaker 4: That's it. We will have Alphabet reporting. Is there a
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Speaker 4: four point two trillion dollar company, one of the top
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Speaker 4: three spenders in artificial intelligence? Full stop? And so you
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Speaker 4: know there could be something to glean there in terms
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Speaker 4: of the ROI, in terms of how they're doing with
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Speaker 4: their own semiconductor designs, and we will see. But to
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Speaker 4: your point, a lot more news coming out next week,
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Speaker 4: and all of the earning stuff this week could be
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Speaker 4: very much overblown by what we are seeing out of
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Speaker 4: a run.
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Speaker 2: Mike, what percentage of Americans do you think know what
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Speaker 2: company Alphabet is?
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Speaker 3: The parent of.
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Speaker 4: Percentage of American adults know over or under fifteen percent.
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Speaker 3: Over, I'd go under. No, I thank you, I'd go over.
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Speaker 4: So I'm short, I'm going to go under. I think
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Speaker 4: it depends how you phrase the question. If you phrase
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Speaker 4: the question as name the company that alphabet is the
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Speaker 4: parent company of, yes, I think you'd get some guesses.
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Speaker 4: If you just asked, what does alphabet do, you'd get
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Speaker 4: under fifteen.
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Speaker 2: Well, they make the letters, and the letters make the words,
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Speaker 2: and the words make the language.
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Speaker 4: Yeah.
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Speaker 3: Uh.
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Speaker 2: Tenure Treasury is up four basis points to four point
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Speaker 2: five eight percent. Dollar Index following suit upo point two
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Speaker 2: three percent to one hundred point eight point five. Crude
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Speaker 2: Oil West Text Intermediate up another twenty cents of barreled
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Speaker 2: eighty two sixty nine. This on the news that the
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Speaker 2: whothies those are the the here's the thing, you say, like, ye,
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Speaker 2: many rebels, and I gotta be honest, like you just
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Speaker 2: don't think it doesn't sound like the most sophisticated group,
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Speaker 2: Like you just kind of picture like, oh, it's just
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Speaker 2: like a bunch of guys like running around. No, they
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Speaker 2: control half of Yemen and get a bunch of ballistic
4:51
Speaker 2: missiles shipped in from Iran, so they're actually, you know,
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Speaker 2: pretty sophisticated. They've announced that they are putting an embar
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Speaker 2: go on Saudi Arabian maritime transport through the Red Sea.
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Speaker 2: What that means exactly, no one really knows, but it
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Speaker 2: potentially is a significant escalation in that. One of the
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Speaker 2: reasons why oil prices haven't gone as high as you know,
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Speaker 2: people feared that they could have, was because Saudi Arabia
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Speaker 2: was able to pump an additional three to four million
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Speaker 2: barrels of oil through a pipeline that was already sending
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Speaker 2: you know, three million barrels a day into the western
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Speaker 2: part of Saudi Arabian and then exit through the bottom
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Speaker 2: of the Red Sea, and great, you got some oil
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Speaker 2: out that way.
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Speaker 4: To be clear, we might not know what it means
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Speaker 4: for oil output, but what it means practically is that
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Speaker 4: they're going to try and shoot a bunch of rockets
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Speaker 4: and drones at the tankers going through the Red Sea.
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Speaker 2: But we don't know if they're going to target Saudi
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Speaker 2: Arabian tankers or any tankers making.
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Speaker 3: Port in Saudi Arabia.
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Speaker 2: Great, So that's like the open question I think as
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Speaker 2: to how aggressively they're going to try to police this thing.
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Speaker 4: So that's what we've got going on there.
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Speaker 2: Triple a national average for gas prices unfortunately back about
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Speaker 2: four dollars a gallon for the first time a little
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Speaker 2: bit crossing four overnight, up another scent, and so we'll see,
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Speaker 2: you know, kind of where things go on that side,
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Speaker 2: uh piece in the Financial Times, the new Fed boss
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Speaker 2: is tight lipped.
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Speaker 3: That might upset the markets. So here here's the thing.
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Speaker 2: I think there there are three general views about Kevin
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Speaker 2: Warsh right now. Uh that that that someone can have.
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Speaker 2: And I'm not saying that any of these are right.
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Speaker 2: Actually no one of them's right to or wrong.
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Speaker 4: Uh, not telling you what to think, but two of
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Speaker 4: your opinions are now two of your opinions are wrong
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Speaker 4: in mind is right, Like, that's that's what it is.
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Speaker 2: On one side, you have the people that are like, well,
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Speaker 2: it's just gonna be, you know, whatever President Trump wants
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Speaker 2: it to be, and you know, he's just a stooge
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Speaker 2: and a toady. And I think that view is completely
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Speaker 2: laughable because I can't imagine that the president would have
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Speaker 2: wanted worsh to come in and be like, yeah, we're
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Speaker 2: gonna try to stamp out inflation like it just I
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Speaker 2: don't really see that as being, you know, sure what
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Speaker 2: the president would would have wanted, like right away. The
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Speaker 2: second view is the one which is like, wow, like
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Speaker 2: worsh is the best effort. And granted I've told Mark
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Speaker 2: Fandetti this on the air, so I'm not just totally
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Speaker 2: throwing him under the bus.
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Speaker 4: But last week we were talking about him and he
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Speaker 4: was like, oh, like, he's amazing.
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Speaker 2: He's amazing, He's amazing, And I'm like, Mark, he hasn't,
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Speaker 2: like nothing's happened yet, it's been a month, like and
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Speaker 2: this gets me to what I think is the right view,
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Speaker 2: which is, hey, ultimately, warsh is gonna try something different,
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Speaker 2: and the market's gonna judge him based on whether or
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Speaker 2: not he's actually good at it.
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Speaker 4: Like that, that's what it is.
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Speaker 2: If he does a good job managing monetary policy, markets
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Speaker 2: won't be upset. If he does a bad job, markets
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Speaker 2: will be upset, no different from any other Fed chief.
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Speaker 2: We don't have to make it into like something more
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Speaker 2: than that. If he says nothing but executes policy efficiently, great,
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Speaker 2: Like it's gonna be fine. If he says nothing but
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Speaker 2: makes a series of catastrophic policy a mistake, markets won't
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Speaker 2: be fine.
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Speaker 4: Also, what he has said about his tight lipped policy
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Speaker 4: is that he wants to get away from some of
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Speaker 4: the features that the previous FED was doing in terms
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Speaker 4: of forecasts and publicly talking about their direction of policy.
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Speaker 4: Is there anything that would prevent Kevin Walsh from pivoting
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Speaker 4: that a bit if inflation hit five percent or if
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Speaker 4: the stock market dropped forty percent, No, of course not.
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Speaker 3: He's not mandated to be quiet like he's saying.
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Speaker 4: And I'm quite certain that if the economy was in
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Speaker 4: free fall, he, like every FED president over the course
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Speaker 4: of the last two and a half decades, would be
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Speaker 4: talking to the press and reassuring the public that they
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Speaker 4: have things under control. And so I'm understanding of why
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Speaker 4: the media is trying to portray this as some giant
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Speaker 4: shift in policy. It's really not. And will again judge
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Speaker 4: somebody by their actions, not by what they say or
9:01
Speaker 4: don't say. I also want.
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Speaker 2: To talk about what forward guidance is and what it isn't,
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Speaker 2: because there's been a lot of chatter about, oh, like
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Speaker 2: Kevin Worsch wants to get rid of like forward guidance,
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Speaker 2: and that means that, like, we're not going to hear
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Speaker 2: anything about what the FED thinks. Forward guidance is not
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Speaker 2: what the FED thinks. It specifically refers to, here is
9:23
Speaker 2: what we are going to do in the future. And
9:27
Speaker 2: there are different forms that forward guidance can take. It
9:29
Speaker 2: can be specifically saying like at the end of a
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Speaker 2: FED meeting statement, you know we raised rates you know
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Speaker 2: this meeting, and we'll take additional action at the next meeting.
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Speaker 2: It can be viewed as the dot plot. Hey, here's
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Speaker 2: where we think inflation is going to be. Here's where
9:42
Speaker 2: FED policy is going to be, telling you what the
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Speaker 2: FED thinks they're going to do. From a policy perspective,
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Speaker 2: forward guidance is not, hey, here's how we think the
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Speaker 2: economy is doing. Here's how we think the economy might do.
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Speaker 2: Here are some of the things that might cause us
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Speaker 2: to change our mind. That is not forward guidance. Forward
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Speaker 2: guidance specifically refers to this is what FED policy is
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Speaker 2: going to be in the future. And so I think
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Speaker 2: it's important to understand that. So I am very much
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Speaker 2: of the opinion Hey wars has said and done all
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Speaker 2: the right things to this point in my opinion, I
10:17
Speaker 2: think it's way too early to judge whether he's a
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Speaker 2: success or not because he hasn't been tested, not even once,
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Speaker 2: and it's been a month. You know, how many people
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Speaker 2: in your life have you known for a month where
10:31
Speaker 2: you're like, oh, they're pretty cool, and then after you
10:34
Speaker 2: know a couple of months, you're like, well, that's actually
10:36
Speaker 2: kind of starting to wear on me a little bit.
10:39
Speaker 2: Not sure that I enjoy the toenails being clipped next
10:43
Speaker 2: to the cheese grater. You know, maybe this isn't gonna
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Speaker 2: work out.
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Speaker 4: Is this something that you've said about others or that
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Speaker 4: others have said about you.
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Speaker 2: I'll leave that up to the audience to decide. Let's
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Speaker 2: take a quick break and when we come back we will. Uh,
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Speaker 2: let's talk about.
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Speaker 4: Leverage. Can we talk about leverage? Leverage? Yeah, I want
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Speaker 4: to talk about leverage and volatility.
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Speaker 3: Mark, we can talk about those when we come back next.
11:10
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11:49
Speaker 4: We got a piece in barons here.
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Speaker 2: It's titled volatility as climbing in a new margin rule,
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Speaker 2: maybe adding fuel, Mike, what's what's the rule?
11:59
Speaker 4: So there's a dot Com era rule that previously restricted,
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Speaker 4: So we got to talk about margin first. Margin is
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Speaker 4: the ability to borrow on your investment portfolio up to
12:10
Speaker 4: a certain percentage. And generally the borrowing that regulators can
12:15
Speaker 4: get concerned about is using the funds to buy more securities, because,
12:19
Speaker 4: as you can imagine, if you're borrowing money to buy
12:21
Speaker 4: more stock and then stock collapses, then you might not
12:24
Speaker 4: have enough money to pay back the institution that you
12:28
Speaker 4: borrowed from. So they put in a bunch of rules
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Speaker 4: around how this works, in terms of how much you're
12:32
Speaker 4: allowed to borrow, when the institution needs to call your loan,
12:36
Speaker 4: and all sorts of different things. One of them was
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Speaker 4: that for high frequency traders, they restricted margin access to
12:44
Speaker 4: those who had account balances over twenty five thousand dollars.
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Speaker 4: Last month they replaced that rule with a new rule
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Speaker 4: about you know, how they trade, and new regulations put
12:54
Speaker 4: into place and this piece is about that change and
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Speaker 4: maybe blaming it for what could be future stock market volatility.
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Speaker 4: But they start with a premise check, which I'm unsure
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Speaker 4: is true, is has volatility been climbing and over what
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Speaker 4: time period?
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Speaker 2: So it depends on what you are looking at. Sure,
13:16
Speaker 2: if you are looking at the S and P five
13:20
Speaker 2: hundred as a whole, it's actually been pretty calm recently. Yeah,
13:25
Speaker 2: if you are looking at the components of the S
13:28
Speaker 2: and P five hundred single stocks, they are now realized
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Speaker 2: one month volatility is now at the same level it
13:36
Speaker 2: was at back last April when stocks were crashing because
13:41
Speaker 2: of tariff concerns and this and that. So what you
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Speaker 2: have is a case where single stock volatility is off
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Speaker 2: the charts high. Index volatility is pretty low right now.
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Speaker 2: And the reason why is what we call dispersion. The
13:57
Speaker 2: stocks that have been going up five percent a day
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Speaker 2: are offset by the one that are going down five
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Speaker 2: percent a day, and so you're just kind of chopping
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Speaker 2: around on the index.
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Speaker 3: More or less.
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Speaker 4: Here's what This change in the rule doesn't concern me
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Speaker 4: overly much. We'll see in a few months if it
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Speaker 4: ended up being a bad move and things start breaking.
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Speaker 4: I doubt they will. What concerns me is whenever we
14:16
Speaker 4: have a tough time measuring just how much borrowed funds
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Speaker 4: are in the market, and I sense that we have
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Speaker 4: a tough time measuring it right now. So it used
14:25
Speaker 4: to be that the amount of margin debt out there
14:30
Speaker 4: compared to the market cap was a pretty good measurement
14:32
Speaker 4: to this stuff. And you can go track that at
14:34
Speaker 4: the Saint Louis FED It's in a nice little chart here.
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Speaker 4: We can see that it's considerably higher than in any
14:39
Speaker 4: time in history, but that it spikes at other times
14:41
Speaker 4: of market exuberants. Twenty twenty one, right before the Great
14:46
Speaker 4: Recession crash, right before the dot com bubble, all peaks
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Speaker 4: in margin debt. Sure what this doesn't measure are all
14:55
Speaker 4: of the new financial products that have been created in
14:57
Speaker 4: the last few years, such as index funds or ETFs
15:01
Speaker 4: rather that target a single stock with three times leverage,
15:06
Speaker 4: for example.
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Speaker 2: And the way they do that is not through the
15:09
Speaker 2: use of margin, but rather through the use of options, right,
15:11
Speaker 2: which doesn't create any borrowing, It just creates the ability
15:15
Speaker 2: to leverage up using I don't want to get too
15:19
Speaker 2: much into the weeds on and everything, but basically using
15:22
Speaker 2: the natural fact that, hey, when you're buying an option,
15:26
Speaker 2: it gives the ability to purchase exposure without committing your
15:28
Speaker 2: entire pot of money to get that exposure.
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Speaker 4: So I think it's unclear.
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Speaker 2: Exactly how much leverage is in the system other than
15:40
Speaker 2: a lot, and if there is any kind of sustained downturn,
15:45
Speaker 2: investors are going to have some real pain associated with that. Now,
15:50
Speaker 2: there is no correlation between hey, when leverage gets to X,
15:54
Speaker 2: that's when things break.
15:56
Speaker 3: So like, I don't know if we're like close to
15:59
Speaker 3: a problem or not.
16:00
Speaker 2: But what I do know is just like when the
16:01
Speaker 2: problem materializes after the fact, people go, oh, of course
16:05
Speaker 2: it was because of X, Y or Z, And what
16:07
Speaker 2: I can tell you is, yeah, there are some things
16:09
Speaker 2: to be concerned about, But I don't know that like
16:12
Speaker 2: that means that this is the time when it becomes
16:15
Speaker 2: a problem or not.
16:16
Speaker 4: But I think two rules of thumb that I find
16:18
Speaker 4: very useful when investing. One, if you're going to invest in,
16:24
Speaker 4: especially a ETF that you know a lot of these
16:28
Speaker 4: have exploded over the last few years, one be able
16:31
Speaker 4: to explain to yourself or ideally to an eleven year
16:34
Speaker 4: old what it is that you're investing in, and that
16:37
Speaker 4: goes pretty much across the board.
16:38
Speaker 3: Yes.
16:39
Speaker 4: Two, be suspicious of anything that was created within the
16:43
Speaker 4: last like three years, right, like if it didn't exist
16:46
Speaker 4: three years ago. Like not to say yeah, just in general,
16:49
Speaker 4: like a new investment that only has existed as an
16:53
Speaker 4: investment for the last three years. It does not mean
16:56
Speaker 4: don't do it. It just means that you'd need to
17:00
Speaker 4: understand what it is more in depth than say, something
17:04
Speaker 4: that has thirty years of a track record.
17:06
Speaker 3: Fair.
17:07
Speaker 2: Yeah, I think I think there are two reasonable rules
17:09
Speaker 2: to follow along those lines. While we're talking about it. Uh,
17:14
Speaker 2: do you remember before SpaceX iPod?
17:17
Speaker 4: I do remember the days before SpaceX ip Yes?
17:19
Speaker 2: And do you remember that we talked about Hey, like,
17:21
Speaker 2: typically when you look at the volatility associated with IPOs,
17:29
Speaker 2: it tends to be high. We went through a list
17:30
Speaker 2: of I think it was either twenty or thirty big
17:32
Speaker 2: IPOs in the last you know, fifteen twenty years, and
17:37
Speaker 2: we said, look, even the ones that are good on average,
17:40
Speaker 2: they have a first year drawdown where the average and
17:42
Speaker 2: median is around fifty five percent. SpaceX as of right
17:46
Speaker 2: now is trading it one hundred and twenty two dollars
17:48
Speaker 2: a share. It got down as low as one hundred
17:50
Speaker 2: and twenty. Today it had reached a peak of two
17:52
Speaker 2: twenty five, which means SpaceX has gone through a forty
17:57
Speaker 2: seven percent draw down already, not since the IPO, but
18:01
Speaker 2: from the peak.
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Speaker 4: Yep, Does that mean it's over. No.
18:05
Speaker 2: Some of the companies went through like ninety to ninety
18:07
Speaker 2: five percent drawowns. Others you know, didn't even go through
18:11
Speaker 2: something like this. But this is again when we talk about,
18:14
Speaker 2: you know, the dangers of IPOs. Hey, if you can't
18:18
Speaker 2: stomach seeing your investment cut in half at some point,
18:23
Speaker 2: then investing in IPOs is not for you, because that
18:25
Speaker 2: tends to happen. Now, SpaceX from here could go right
18:28
Speaker 2: back to two twenty five. It could go down to sixty.
18:30
Speaker 2: I have no idea what it's going to do, but
18:33
Speaker 2: I just found this instructive and we'll see where it
18:37
Speaker 2: ends up going here.
18:39
Speaker 4: What do you got to We were talking about Alphabet
18:41
Speaker 4: in the last segment to the owner of Google, and
18:45
Speaker 4: I theorized that if you ask the question the right way,
18:48
Speaker 4: meaning Alphabet is the parent company of who, you would
18:51
Speaker 4: get fifteen percent plus of people that knew the answer
18:53
Speaker 4: We've got a texture in that says that they agree
18:55
Speaker 4: with Chuck. Ask everyone at Fenway tonight what company Alphabet owns,
18:58
Speaker 4: and he bets that five five percent of people know.
19:01
Speaker 4: You can always text into the show at six one
19:04
Speaker 4: seven three, six two thirteen eighty five.
19:07
Speaker 2: I'll tell you what this evening, I happen to be
19:10
Speaker 2: going to a showing of The Odyssey.
19:13
Speaker 4: Oh, I've got a great idea. Just interrupt the movie
19:15
Speaker 4: throughout and ask everybody their thoughts.
19:17
Speaker 2: Not throughout one by one. No, no, no, I can
19:20
Speaker 2: I get a show a hand.
19:22
Speaker 4: Just stand at the front of the theater. Everybody listen up.
19:26
Speaker 4: It'll only take a second. I'm not mad, Damon, but
19:28
Speaker 4: he knows the answer to this question.
19:30
Speaker 3: Here we go again.
19:32
Speaker 4: Let's take a quick break.
19:34
Speaker 1: We're back in a bit, bringing the latest financial news
19:40
Speaker 1: straight to your radio. Every day. It's the Financial Exchange
19:44
Speaker 1: on the Financial Exchange Radio Network. Tell you now full
19:49
Speaker 1: wool Street Watch, tracking the stocks, the data, and the
19:53
Speaker 1: headlines driving markets so far today right here on the
19:56
Speaker 1: Financial Exchange Radio Network.
19:58
Speaker 5: Markets are mixed to begin the wee, with the energy
20:00
Speaker 5: sector garnering attention with the escalation and attacks between the
20:04
Speaker 5: US and ran over the weekend, leading to more uncertainty
20:08
Speaker 5: with oil. Right now, the Dow is down about two
20:11
Speaker 5: tenths of one percent, SMP five hundred is up about
20:14
Speaker 5: a third of a percent, NASDAC up two thirds of
20:17
Speaker 5: one percent, RUSS two thousand is mostly flat, dipping into
20:21
Speaker 5: negative territory tenure. Treasureeled is up four basis points at
20:26
Speaker 5: four point five to nine percent, and oil is hesitating
20:30
Speaker 5: on me It is down about two tenths of one percent,
20:33
Speaker 5: trating it eighty two dollars a barrel. Microsoft announced it
20:37
Speaker 5: will deploy AMD Helios racks and it's a zero data centers,
20:41
Speaker 5: joining Meta, OpenAI and Oracle slated to ship later this year.
20:45
Speaker 5: AMD's Helios RAX system is its most competitive move against Nvidia. Yes,
20:50
Speaker 5: AMD up by three percent. Sticking with tech, where Alphabet
20:54
Speaker 5: shares are up by three percent on the heels of
20:56
Speaker 5: a report from the Information that the Google parent company
21:00
Speaker 5: developing a server chip designed to optimize its Gemini AI
21:04
Speaker 5: model by as soon as twenty twenty eight. Domino's up
21:07
Speaker 5: by one percent despite the pizza chain posting a second
21:10
Speaker 5: quarter earnings miss, the company reported a slightly better than
21:13
Speaker 5: expected revenue, where its CEO said it had meaningful order
21:16
Speaker 5: count and growth in both its delivery and takeout business,
21:20
Speaker 5: and SpaceX down by one percent after the Rocket Company
21:23
Speaker 5: announced it is moving its launch attempt for its Starship
21:26
Speaker 5: Rocket to Thursday after boarding last week's mission due to
21:30
Speaker 5: engine issues. I'm Tucker Silvan. That is Wall Street.
21:33
Speaker 3: Watch PC here from Bloomberg.
21:36
Speaker 2: Americans pull back on retirement savings as everyday expenses climb.
21:43
Speaker 2: Survey published by NFP.
21:47
Speaker 3: Who's NFP doesn't say? We should? Just know it's good?
21:52
Speaker 2: Survey published by NFP reported forty six percent of working
21:55
Speaker 2: adults say they were deprioritizing or unable to save for
21:58
Speaker 2: retirement because how using car payments, health care the other day,
22:02
Speaker 2: every everyday expenses are taking priority over long term retirement planning.
22:08
Speaker 4: Separate survey by Schroeders found that twenty seven percent of
22:11
Speaker 4: the fifteen hundred people they surveyed reduced their contributions to
22:15
Speaker 4: workplace retirement plans. So look, plainly on the surface, not
22:21
Speaker 4: good news if Americans are actually reducing retirement savings, not
22:26
Speaker 4: only not only because it's bad for retirement, but you
22:30
Speaker 4: have to do some work to do this right. Like
22:33
Speaker 4: it's it's it's not like it's spending money on the
22:36
Speaker 4: credit card.
22:37
Speaker 2: It's a process. It's not like not deciding to save
22:41
Speaker 2: in the first place. You know that twenty seven percent
22:44
Speaker 2: that's reducing you have to say, you know what, I
22:48
Speaker 2: can't make ends meet. I've got to go somewhere and
22:50
Speaker 2: change the amount of money that I'm saving in a
22:52
Speaker 2: negative fashion.
22:53
Speaker 4: Right, So like that that to.
22:56
Speaker 2: Me is more concerning than the forty six percent that
22:58
Speaker 2: say they were deprioritiz unable right to say it for retirement.
23:03
Speaker 4: Just for the first one's a feeling. The second one
23:05
Speaker 4: is an.
23:05
Speaker 2: Action, right, the second one is something concrete, and the
23:08
Speaker 2: other piece is Again, if you look at this from
23:11
Speaker 2: just an income.
23:12
Speaker 3: Perspective, there is a.
23:16
Speaker 2: There's a decent chunk of the US population that, through
23:20
Speaker 2: programs such as solid Security, basically ends up offsetting their
23:23
Speaker 2: income that they were earning previously during their lifetime. And
23:27
Speaker 2: so you don't have as many concerns about that group
23:30
Speaker 2: to begin with. I'm not saying it's good that they
23:31
Speaker 2: were making that little, but just that it's not as
23:35
Speaker 2: concerning that twenty seven percent is concerning to me, and
23:40
Speaker 2: it is something that I think should be Again, I
23:44
Speaker 2: feel like we say this like every year, just a
23:45
Speaker 2: real wake up call that, hey, there are some real
23:47
Speaker 2: problems with you know, kind of how everyday Americans are
23:53
Speaker 2: able to manage through these levels of inflation and things
23:56
Speaker 2: like that.
23:56
Speaker 4: So I'm simultaneously willing to say that this in the
23:59
Speaker 4: act as a bad news story. It speaks to the
24:02
Speaker 4: stresses that Americans are under from a financial perspective of
24:05
Speaker 4: just paying for the basics on an individual basis. This
24:10
Speaker 4: is a question that you know, financial advisors feel pretty frequently, like, oh, sure, hey,
24:16
Speaker 4: forget about the basic expenses. Hey, my kid's going to college.
24:19
Speaker 4: I contribute ten percent to my retirement account. How much
24:23
Speaker 4: of my you know, like, I'm planning on paying for
24:25
Speaker 4: a good chunk of my kids college. Should I pull
24:28
Speaker 4: back on retirement savings in order to do that? In
24:30
Speaker 4: order to borrow less money? Hey, I'm starting I'm thinking
24:34
Speaker 4: about starting Social Security, but I would need to, you know,
24:40
Speaker 4: if I wanted to lay it, I'd need to start
24:41
Speaker 4: pulling money out of my investment bucket. Which one's better?
24:45
Speaker 4: And in many cases, decreasing the retirement savings actually can
24:50
Speaker 4: be the logical decision, right, Like, Hey, otherwise I'm gonna
24:53
Speaker 4: have to borrow money at nine percent in order to
24:55
Speaker 4: fund this cost, and so I'm going to go about
24:58
Speaker 4: doing that where it can. That's concerning is when what
25:02
Speaker 4: these people are saying that, Hey, I'm deprioritizing saving not
25:05
Speaker 4: because I've got this big expense coming but because my
25:09
Speaker 4: basic stuff, my housing, my car payments, my health insurance
25:12
Speaker 4: have gotten to an unfavorable and uncontrollable level. And that's
25:18
Speaker 4: when you have to take some serious hard looks at
25:20
Speaker 4: your overall financial scenario. But in of itself, the mere
25:24
Speaker 4: act of saying, hey, I'm decreasing my retirement savings can
25:27
Speaker 4: actually be the right call, and it's in fact what
25:32
Speaker 4: financial advisors help their clients through all the time. Right, Hey,
25:37
Speaker 4: I've got this expense coming up, I could borrow, I
25:39
Speaker 4: could get a mortgage, or I could use this investment portfolio.
25:43
Speaker 4: When you take into account all the taxes and everything else,
25:46
Speaker 4: what's the right way to go on all of this?
25:49
Speaker 4: If that is the type of guidance you might be
25:53
Speaker 4: looking for at your stage of life, I'd encourage to
25:55
Speaker 4: kick the tires and talk to the folks at Armstrong
25:57
Speaker 4: Advisory Group about what it is that we you do
26:00
Speaker 4: to assist our clients with not their giant financial questions,
26:04
Speaker 4: their day to day financial questions that they find really
26:08
Speaker 4: helpful to have a second set of eyes on. The
26:11
Speaker 4: number for the Armstrong Advisor Group is eight hundred three
26:14
Speaker 4: nine three for zero zero one. Again eight hundred three
26:18
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26:21
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
26:23
Speaker 1: registered investment advisor. Nothing in the ad or in any
26:26
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
26:29
Speaker 1: your own financial tax and to state planning advisors before
26:31
Speaker 1: making any investment decisions. Armstrong make contact you to offer
26:34
Speaker 1: investment advisory services.
26:37
Speaker 4: Five cups of coffee a day is fine for most
26:38
Speaker 4: no adults. Heart Association says, Chuck doesn't drink any coffee,
26:42
Speaker 4: so he's just full of This does make me feel
26:44
Speaker 4: a lot better about myself. I drink a very strong
26:47
Speaker 4: cup of coffee the second I wake up. It's probably unhealthy.
26:51
Speaker 4: How soon you're supposed to wait?
26:53
Speaker 5: About ninety minutes.
26:54
Speaker 4: I don't do that.
26:55
Speaker 3: Yeah, yeah, no, most people don't.
26:56
Speaker 4: I have a glass of water.
26:57
Speaker 3: Mike does ninety seconds.
26:59
Speaker 4: The second. However long it takes me to grind my
27:01
Speaker 4: beans and heat my water, is how long it takes
27:03
Speaker 4: before I have my first cup of coffee. Then I
27:06
Speaker 4: generally have a shot of espresso about a half an
27:09
Speaker 4: hour before the show in order to keep up with
27:11
Speaker 4: Chuck's energy, even though he doesn't consume any caffeine and
27:15
Speaker 4: no one needs the And that's pretty much my entire
27:20
Speaker 4: caffeine consumption. So I'm well under the five I would
27:23
Speaker 4: assume that, you know, once you start adding in, you know,
27:26
Speaker 4: the dunk and regular type of coffee with heavy cream
27:29
Speaker 4: and sugar. It's not quite the same heart effects, but
27:33
Speaker 4: five cups a day is quite a high.
27:36
Speaker 5: Eight ounce cups. Oh well, so one of these mugs
27:39
Speaker 5: I have here is I believe twelve ounces, so.
27:42
Speaker 3: An eight ounce cup.
27:44
Speaker 2: Yeah, I'm just trying to think of this in terms
27:46
Speaker 2: I understand a standard beer can.
27:49
Speaker 3: A standard beer can is twelve ounces, So this is
27:53
Speaker 3: two thirds of a beer of coffee.
27:55
Speaker 4: Yeah, okay, I'm just the exact Well, actually, when you
28:00
Speaker 4: take into account how much actual coffee is in a
28:03
Speaker 4: dunk in Regular, that's uh, you know, that's about one cup.
28:07
Speaker 4: The problem is that half of it's cream and sugar.
28:10
Speaker 4: So okay.
28:12
Speaker 2: The average person is awake well like sixteen hours in
28:16
Speaker 2: a day, probably a little bit more. You're probably not
28:20
Speaker 2: drinking a cup of coffee within like four to five
28:24
Speaker 2: hours of.
28:25
Speaker 3: Sleep, right, most people do.
28:27
Speaker 4: I don't know how how many of this works.
28:29
Speaker 5: If I if I go out to I'm one of
28:31
Speaker 5: the people of like I go out to eat. I'll
28:33
Speaker 5: get like a cappuccino or coffee after dinner, okay, And
28:37
Speaker 5: I have no problem going to sleep, no problem.
28:39
Speaker 4: But there are a full bottle of wine during dinner.
28:43
Speaker 4: They're off setting. Run of those cases where they offset it. True, Michael,
28:47
Speaker 4: you know they used to sell those in a can.
28:49
Speaker 2: It was called four loco, and then they realized, oh,
28:52
Speaker 2: this was killing idea.
28:54
Speaker 4: So it's basically like five cups of this. That's a lot.
28:58
Speaker 4: It's like a cup every three hours. It's a bit
29:00
Speaker 4: of coffee.
29:00
Speaker 5: I don't it's linked to a lower risk of heart disease,
29:03
Speaker 5: heart failure, stroke, and type two diabetes.
29:05
Speaker 3: According to the AHA statement.
29:07
Speaker 4: Maybe I should start doing this.
29:08
Speaker 5: Yeah, you're missing out, man, although I don't. I do
29:12
Speaker 5: not want to see you on coffee.
29:13
Speaker 3: Actually is your energy would be more really high.
29:19
Speaker 4: By the way, a dunk in large hot coffee is
29:21
Speaker 4: twenty ounces more than that. I'm not sure large cold
29:26
Speaker 4: is thirty two.
29:27
Speaker 2: I don't think i'd want to see myself coming off
29:29
Speaker 2: of coffee. I feel like that would be really, really
29:33
Speaker 2: tough for me.
29:33
Speaker 4: I'm just gonna say that you are of the age
29:36
Speaker 4: where you can just skip it now, right, I've won, yep,
29:40
Speaker 4: unless you're gonna go back and get your doctorate. I
29:42
Speaker 4: don't think you need caffeine in your life.
29:44
Speaker 3: Why would you get my doctorate require.
29:46
Speaker 4: It'd just some long nights.
29:49
Speaker 3: Oh no, I don't do those. Yeah, I don't do those.
29:51
Speaker 3: I do days.
29:52
Speaker 2: I'm very much a day shift person at this point.
29:55
Speaker 2: Let's take a quick break. When we return, let's do
29:58
Speaker 2: a little bit of stack roulette.
30:00
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30:07
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31:02
Speaker 2: Do you mind if I start Michael play Chuck Peace
31:05
Speaker 2: in the Wall Street Journal? Nolan's The Odyssey proves Hollywood's
31:08
Speaker 2: top directors are franchises.
31:10
Speaker 3: Now. So, uh, The Odyssey, which I am going to see.
31:13
Speaker 2: Tonight, very excited about it, by the way, Uh is
31:18
Speaker 2: a movie about you know, Odysseus taking a ten year journey.
31:22
Speaker 1: Huh.
31:24
Speaker 2: So it's not exactly you know, like top of mind.
31:27
Speaker 2: I don't I wonder how many Americans have actually read
31:30
Speaker 2: The Odyssey. I know that it's like existing ip, but
31:33
Speaker 2: you know, I just I don't know that that many
31:35
Speaker 2: have actually read it or like all the way through,
31:37
Speaker 2: aside from you know, like significantly shortened versions.
31:41
Speaker 4: So here here's I guess my two questions.
31:43
Speaker 2: Number one, I do think that at least this is
31:47
Speaker 2: you know, something that sure it's different from you know,
31:50
Speaker 2: other like normal IP movies that are kind of big
31:52
Speaker 2: in the summer, But Christopher Nolan is not like uniquely
31:56
Speaker 2: now proving that people turn out for directors that they've
31:59
Speaker 2: heard of. There's a reason why Steven Spielberg has had
32:03
Speaker 2: the career that he's had. There's a reason why.
32:07
Speaker 4: Uh yeah, is that the argument that this is a
32:09
Speaker 4: new thing.
32:10
Speaker 2: No, it's it's not. There's a reason why, like JJ
32:13
Speaker 2: Abrams had the career he had, Tim Burton, James Cameron,
32:18
Speaker 2: Like you can go through, you know, a pretty long
32:20
Speaker 2: list Ron Howard, like you can go through you know,
32:24
Speaker 2: famous directors historically and you're like, oh, yeah, sure I
32:28
Speaker 2: get it. You know, like you know Coppola directed that.
32:31
Speaker 2: Of course, like I'm gonna go see it.
32:32
Speaker 4: Sure. It's not that every one of them was gold.
32:36
Speaker 4: They've all made some hot garbage. But even the hot
32:39
Speaker 4: garbage people showed.
32:40
Speaker 2: Up for You could actually make a case that Nolan's
32:42
Speaker 2: never made a garbage movie. No, He's made He's made
32:46
Speaker 2: things that like haven't like made a ton of money.
32:49
Speaker 2: But when you talk about like his filmography, yeah, it's
32:52
Speaker 2: basically Memento, Insomnia, The Batman, trilogy, inception, Uh, Interstellar, Dunkirk, Tenant,
32:59
Speaker 2: Open Tier.
33:00
Speaker 3: Onestly, like the wonder.
33:02
Speaker 4: What the worst rotten Tomato score is. It's probably Tennant Tenant.
33:05
Speaker 4: It's probably Tenant, which I haven't seen it.
33:07
Speaker 2: I've seen twice now at home, Like I didn't go
33:10
Speaker 2: see it in theaters. Uh, just part of it was
33:12
Speaker 2: like it came out in twenty twenty.
33:13
Speaker 3: It was like is it out? What theaters are?
33:15
Speaker 2: Like?
33:15
Speaker 3: It was just a mess?
33:17
Speaker 1: Uh.
33:17
Speaker 2: But Tenant's hard to get into because the whole premise
33:20
Speaker 2: of it is that I get you can spoil it
33:24
Speaker 2: now it's been six years, no.
33:26
Speaker 4: Premise of it what I want to see it.
33:28
Speaker 2: There's some stuff in the movie that moves backwards, and
33:31
Speaker 2: so it's kind of hard to keep track of the timeline.
33:33
Speaker 5: Occasionally I heard that the it was hard to understand.
33:36
Speaker 5: People like must put on subtitles. That's what I heard.
33:40
Speaker 4: At least I don't know.
33:42
Speaker 2: I mean, I think it's fine, just make it loud
33:45
Speaker 2: like whatever, it's who cares in any case, Like there's
33:49
Speaker 2: no stinkers in the whole bunch.
33:52
Speaker 4: But I don't think that.
33:53
Speaker 2: Like Nolan is like uniquely positioned, is like, oh he's
33:57
Speaker 2: a director that people will go see that's something. They're like, No,
33:59
Speaker 2: Like you heard Steven Spielberg was making something for the
34:01
Speaker 2: last forty years. You're like, chut, check that out. It'll
34:04
Speaker 2: probably be pretty good. Or oh, hey, like Ron Howard's
34:08
Speaker 2: doing a movie on you know, Apollo thirteen. Maybe I'll
34:10
Speaker 2: go see that. It sounds pretty good, or hey, did
34:13
Speaker 2: you hear that? Like you know Todd Phillips, the guy
34:16
Speaker 2: who did uh, you know, The Hangover. Hey, he's making
34:20
Speaker 2: a movie about the Joker. What do you think that's
34:22
Speaker 2: gonna be? Like, you know, like, yeah, it's not uncommon
34:26
Speaker 2: to have like a star director.
34:29
Speaker 3: You know. You go through like Bills is own following, Yeah, like.
34:33
Speaker 2: It's it's kind of funny actually, Like you look through
34:35
Speaker 2: like the top ten directors by gross and this this
34:37
Speaker 2: is not adjusted for inflation. But it's Spielberg, it's James Cameron.
34:42
Speaker 2: Uh do you know who number three is?
34:44
Speaker 1: Yeah?
34:45
Speaker 4: No, clue?
34:46
Speaker 3: Uh? Anthony and Joe Russo do you know who they are?
34:49
Speaker 1: No?
34:49
Speaker 2: They did like Avengers Endgame in that stuff, So basically
34:52
Speaker 2: all of their grosses from like two movies, which is
34:55
Speaker 2: just fascinating.
34:56
Speaker 4: This isn't inflation adjusted, is it?
34:58
Speaker 2: No, but it's still like they did like seven bill
35:00
Speaker 2: million dollars from like pretty much two movies, Like most
35:03
Speaker 2: of it's from there, Uh, Peter Jackson mostly from Lord
35:05
Speaker 2: of the Rings. And then you got the one that's
35:09
Speaker 2: really funny on this list actually is Michael Bay. Not
35:11
Speaker 2: because he's like not an accomplished director or anything like that,
35:16
Speaker 2: but more just Michael Bay. The thing that like he's
35:20
Speaker 2: known for is just churning out like action movies every
35:23
Speaker 2: two years for like twenty five years straight basically, And
35:27
Speaker 2: it's it's just kind of funny that that's a career
35:30
Speaker 2: that's up there with Steven Spielberg, like Tim Burton, JJ Abrams,
35:35
Speaker 2: Robert Zemeckis, Like, you really can't.
35:37
Speaker 4: Like you're gonna tell me that Wes Anderson doesn't have
35:39
Speaker 4: a franchise type following of course he doesn't, like, yeah.
35:42
Speaker 2: Isn't since Wes and Paul Thomas, Yeah, you know, but
35:46
Speaker 2: to say that, Yeah.
35:47
Speaker 4: I want to talk about housing and the crisis and
35:50
Speaker 4: our you know, weekly piece about how to fix it?
35:52
Speaker 4: Which crisis build more housing? Uh, the affordability crisis. So
35:57
Speaker 4: I want to talk about that affordability crisis because I
35:59
Speaker 4: constantly see on social media and other places and articles
36:03
Speaker 4: talking about the lack of affordability in housing today, and
36:07
Speaker 4: I don't think there's much debate that it's pretty darn pricey.
36:10
Speaker 4: The median home price in Q four of twenty twenty four,
36:14
Speaker 4: I'll get to why I'm going there was four hundred
36:17
Speaker 4: nineteen thousand dollars, which was up from a decade prior
36:20
Speaker 4: at a level of two hundred and ninety nine thousand dollars. Okay,
36:24
Speaker 4: big increase, right when you factor in income though, I
36:29
Speaker 4: want to point this out here, So I pulled the
36:31
Speaker 4: median income. You mean incomes haven't been flat over that time.
36:34
Speaker 4: They have not been flat over that time. So the
36:36
Speaker 4: median income in twenty twenty four was eighty three thousand,
36:39
Speaker 4: seven thirty, meaning that home was almost exactly five times
36:43
Speaker 4: the median income medium homesale medium median income sure a
36:48
Speaker 4: decade ago in twenty fourteen, you're at five and a half.
36:52
Speaker 4: So what does that practically mean? It practically means that
36:54
Speaker 4: homes actually became, from a price only perspective, more affordable
36:58
Speaker 4: today or in twenty twenty four compared to twenty fourteen.
37:01
Speaker 4: This ignores mortgage rates and ignores insurance rates, all sorts
37:05
Speaker 4: of things that go into affordability too. In two thousand
37:08
Speaker 4: and four, you are still higher than where you are
37:11
Speaker 4: now compared to median income. You've got to go back
37:14
Speaker 4: to the nineties and the eighties to a point where
37:17
Speaker 4: you can find that, yeah, very clearly, based on median
37:20
Speaker 4: income and median home price, homes were substantially cheaper than
37:26
Speaker 4: where they are right now. In ninety four is four
37:29
Speaker 4: times median income. In eighty four it was three and
37:31
Speaker 4: a half times median income. That's not people aren't going
37:35
Speaker 4: to like that message. I recognize that, you know, millennials
37:39
Speaker 4: and gen Z's listening are telling me that I'm crazy
37:41
Speaker 4: that home prices are higher than they've ever been. We
37:44
Speaker 4: do need to build more houses, But I want to
37:48
Speaker 4: frame it this way that, yeah, houses are crazy expensive
37:51
Speaker 4: because incomes have gotten pretty darn high, and we're crappy
37:55
Speaker 4: about you know, creating smart zoning laws that allows for construction.
37:58
Speaker 2: Yeah, and if you're comparing anything to house in the
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Speaker 2: early eighties, you're comparing it to fifteen percent mortgage rates,
38:03
Speaker 2: and so yeah, of course home prices couldn't be as high.
38:07
Speaker 2: We're gonna take a quick break for the whole rest
38:10
Speaker 2: of the day. I hope everyone has well the great
38:14
Speaker 2: rest of the day, and we're gonna see tomorrow on
38:16
Speaker 2: the Financial Exchange