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Could Mortgage Rates Really Hit 9%? · The Financial Exchange Show

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  Speaker 1: is The Financial Exchange with Chuck Zotta and Mike Armstrong.
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  Speaker 2: It's Chuck, Mike, and Tucker with you here. And as
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  Speaker 2: we kick into gear today, we've got U.S. stocks up
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  Speaker 2: modestly now. They were down a little bit in the
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  Speaker 2: early part of the session, but S & P 500
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  Speaker 2: up about a quarter percent. Dow is up about four-tenths
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  Speaker 2: of a percent. NASDAQ composite up a third of a percent.
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  Speaker 2: So a nice, easy move up in equities, which is
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  Speaker 2: always fun heading into the weekend. You want to ease
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  Speaker 2: into the weekend.
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  Speaker 3: You don't want to.
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  Speaker 1: Sure.
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  Speaker 2: You don't need to do that heading into the weekend.
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  Speaker 2: Tony Romo's not doing games anymore this year, so we
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  Speaker 2: don't get that anywhere else. You got the 10-year Treasury, unfortunately,
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  Speaker 2: continuing its sell-off. Now up another 5 basis points to 5.21%.
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  Speaker 2: That is going to very likely push mortgage rates north
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  Speaker 2: of 7.5%. Mortgage News Daily has the national 30-year fixed
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  Speaker 2: rate at 7.45% yesterday. Just to give you a sense
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  Speaker 2: of how quickly mortgage rates have moved here, it was
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  Speaker 2: just a month ago on the 26th of August that
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  Speaker 2: the national average for a 30-year fixed rate mortgage was 675,
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  Speaker 2: and now it's 746. So almost three-quarters of a percent
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  Speaker 2: move on mortgages in the last month. That is not
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  Speaker 2: going to make many sellers happy because buyers are not
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  Speaker 2: going to be able to pay the prices that they
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  Speaker 2: previously had. Could. The interesting thing to me is that
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  Speaker 2: with yields moving up today, and again, it's one day,
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  Speaker 2: so pump the brakes. Don't get all bent out of
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  Speaker 2: shape about it. Yields up, what we like to see
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  Speaker 2: is currency up as well, which is what the dollar's
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  Speaker 2: been doing this week. It's been yields up, dollar up.
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  Speaker 2: Today we got yields up, dollar down, and gold up.
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  Speaker 2: So that's the kind of thing where if you see that,
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  Speaker 2: it's like, okay, this isn't quite ideal. That's not what
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  Speaker 2: you want to see broadly.
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  Speaker 4: It insinuates concern about.
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  Speaker 3: the United States in some way, shape, or form. It does.
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  Speaker 4: It insinuates you are ditching dollars or dollar-denominated assets to
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  Speaker 4: buy hard assets like gold.
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  Speaker 2: And it's one day. Sure. So, like, forget about it
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  Speaker 2: in terms of, like, you know, worrying too much. But
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  Speaker 2: the reason why it matters is normally, if you have
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  Speaker 2: yields moving up, you want your currency to be up
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  Speaker 2: because it suggests that your higher yields are attracting more
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  Speaker 2: money from other currencies. If you have yields up but
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  Speaker 2: currency down, you look at it and you go... Well, gee,
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  Speaker 2: that's not how it's supposed to work. And so just
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  Speaker 2: something worth paying attention to. Again, it's one day. Don't
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  Speaker 2: freak out about it.
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  Speaker 4: If we do hit that 7.5% mark on the 30-year,
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  Speaker 4: last time we were there was April of 2024.
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  Speaker 3: It only happened for a day.
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  Speaker 4: The last time we were there for a sustained period
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  Speaker 4: of time was back in fall of 2023 when they
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  Speaker 4: remained over that.
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  Speaker 3: 7.5% mark for a good month or so. Yeah.
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  Speaker 2: Let's stick with mortgages for a little bit.
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  Speaker 1: Yeah.
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  Speaker 2: Um, there's a piece in Barron's how high can mortgage
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  Speaker 2: rates go? Does nine, how does 9% sound to you?
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  Speaker 2: And I know that sounds like crazy pants to most people.
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  Speaker 3: Hold on. I don't think so. Cause you know what?
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  Speaker 4: Seven and a half percent would have sounded insane to
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  Speaker 4: people back in 2021. So it, it doesn't sound that
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  Speaker 4: crazy pants to me.
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  Speaker 2: Well, I know it doesn't sound crazy pants to you,
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  Speaker 2: but to a lot of people, it does.
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  Speaker 1: Yeah.
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  Speaker 2: Uh, mortgage rates. The last time that we were at 9%,
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  Speaker 2: do you know when it was Michael?
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  Speaker 5: 97?
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  Speaker 3: 94.
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  Speaker 2: Very close. 97, we were actually down in the sevens
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  Speaker 2: right around now, right around where we are today. But 9%,
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  Speaker 2: the last time we got over there, late 94, early 95.
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  Speaker 3: In January, we were there as well.
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  Speaker 2: So it's been a while. I mean, 30 plus years
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  Speaker 2: since we've seen those. The path to getting to 9%
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  Speaker 2: mortgage rates. Let's talk about what it looks like. There
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  Speaker 2: are two different components that you can look at that
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  Speaker 2: determine where a mortgage rate ends up being. The first
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  Speaker 2: is the 10-year treasury. Because, and the reason why it's
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  Speaker 2: the 10-year, not the 30-year treasury, is most mortgages, people
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  Speaker 2: don't hold for 30 years. And so banks typically price
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  Speaker 2: off the 10-year because of the prepayment risk and refinancing
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  Speaker 2: and everything. So it's typically the 10-year. The second piece
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  Speaker 2: is the spread between the 10-year and the 30-year fixed-rate mortgage. Basically, hey,
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  Speaker 2: how much do banks need to get in terms of
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  Speaker 2: extra juice to lend to Mike Armstrong for 30 years
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  Speaker 2: instead of the U.S. government for 10? Because, listen, Mike
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  Speaker 2: might be a great credit risk, but random stuff happens.
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  Speaker 1: Sure.
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  Speaker 3: I don't know.
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  Speaker 2: Exactly.
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  Speaker 3: Precisely. You don't.
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  Speaker 2: So, ultimately, the U.S. government can always pay its debt
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  Speaker 2: off because it can print money. Mike, have you ever
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  Speaker 2: tried to print money?
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  Speaker 3: I don't know. That's my answer.
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  Speaker 2: The answer is no, you haven't, because I believe that
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  Speaker 2: that's a felony, and so you don't try to print
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  Speaker 2: your own money. So, if you look at, for the
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  Speaker 2: long term, going back, I have data that goes back
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  Speaker 2: to 1971, so it's 55 years of data. Long term,
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  Speaker 2: there is typically a 1.75% spread between the U.S. 10-year
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  Speaker 2: treasury and what the 30-year fixed rate mortgage is. So
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  Speaker 2: that means that all else being equal, if you were
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  Speaker 2: right there... hey, 10-year treasury right now is at five
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  Speaker 2: and a quarter. Interest rates should be, you know, mortgage
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  Speaker 2: rates should be at seven. So why are they at
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  Speaker 2: seven and a half instead? And this, I think, is
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  Speaker 2: a great conversation to have because the first thing people
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  Speaker 2: say is.
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  Speaker 3: Greedy banks.
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  Speaker 2: Those greedy banks are ripping you off. And look, they
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  Speaker 2: may well be ripping you off, but why would they
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  Speaker 2: choose now to rip you off more than normal? Again,
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  Speaker 2: as I like to say, Jamie Dimon didn't just wake
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  Speaker 2: up on this Tuesday and say.
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  Speaker 3: I like making money.
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  Speaker 2: Let's make some more money and get greedier. No, banks
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  Speaker 2: are always greedy. There's a baseline level of greed that's
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  Speaker 2: built in there. So it's not just that they're greedy
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  Speaker 2: because they're always greedy. If you look at the time
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  Speaker 2: periods in which the spread between mortgage rates and the
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  Speaker 2: 10-year blew out topside, Mike, tell me if any of
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  Speaker 2: these periods ring a bell to you when I'm talking
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  Speaker 2: about them. 1981.
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  Speaker 3: 1981. Crash.
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  Speaker 2: Recession.
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  Speaker 1: Yeah.
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  Speaker 2: Exactly. 1987.
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  Speaker 3: Flash crash. Correct.
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  Speaker 2: 2008.
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  Speaker 3: Yeah.
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  Speaker 2: Global economic crisis, right?
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  Speaker 5: 2022, 2023.
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  Speaker 2: High inflation.
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  Speaker 4: Yeah.
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  Speaker 2: Banks in certain situations will demand a higher spread on
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  Speaker 2: mortgages relative to treasuries because they're worried about something. In 2008,
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  Speaker 2: banks said, hey, I don't know if Jimmy's going to
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  Speaker 2: be able to pay his mortgage. And so, no, we're
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  Speaker 2: not just going to get one in three quarters percent.
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  Speaker 2: You've got to pay us three percent more than the
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  Speaker 2: treasury because I don't know what that's worth. And so
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  Speaker 2: I need you to take like a 10, 15 percent
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  Speaker 2: discount on that loan to get it to me. In 2022-23,
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  Speaker 2: we had crazy high inflation.
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  Speaker 3: Rates are going to move higher. I don't want to
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  Speaker 3: be stuck with this.
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  Speaker 2: If you're a bank, you're like, yep, I don't want
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  Speaker 2: to get stuck with this. And since then, they've been
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  Speaker 2: coming down. In fact, if you look this year, the
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  Speaker 2: spread got down to a low of around 1.8%, so
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  Speaker 2: almost the long-term average. That was in January of this year.
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  Speaker 2: Since then, it peaked this year at a spread, and again,
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  Speaker 2: this is looking backwards. It got up to around 2.15%
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  Speaker 2: in April, right when things were rear in their head
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  Speaker 2: and oil prices were going crazy again. And then over
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  Speaker 2: the course of the summer, it came back down into
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  Speaker 2: the 1.8s because things were looking better on the inflation
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  Speaker 2: front and so on and so forth. When we get
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  Speaker 2: the most recent rate, again, it's going to be around 2.5%,
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  Speaker 2: and that's because growth has picked up, inflation has picked up,
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  Speaker 2: and banks are saying, yeah, if there's a risk that
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  Speaker 2: this is what things look like longer term, we can't
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  Speaker 2: just get 7% on these loans. We've got to get 7.5%.
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  Speaker 2: You've got to remember, bankers, like actual bankers, the people
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  Speaker 2: who lend money, They're the most conservative business people in
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  Speaker 2: the world. It's like the investment bankers and everything, they
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  Speaker 2: don't do justice to what a banker really is. Bankers
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  Speaker 2: are all in the business of, hey, let me assess
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  Speaker 2: this risk. Are you going to be able to pay
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  Speaker 2: me back? Here's what the cost of money is to me.
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  Speaker 2: Here's what I'm going to make it for you in
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  Speaker 2: order to make something off that. And go on and
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  Speaker 2: have a great day. So to get to nine... to
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  Speaker 2: tie this back together, here's the path to nine. And
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  Speaker 2: it's not as crazy as you think. Ten-year treasury is
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  Speaker 2: at 525 right now almost. Ten-year goes to six, spread
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  Speaker 2: goes to three, you get 9% mortgage rates.
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  Speaker 3: How does that spread get to three?
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  Speaker 2: Higher inflation. Inflation. questions about the value of loans on
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  Speaker 2: the books in the residential side, I don't think there's
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  Speaker 2: much to stand on there. So the 3% spread is
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  Speaker 2: the tougher one to get to, but that's the path
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  Speaker 2: to 9% interest rates. Is it likely, in my opinion?
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  Speaker 1: No.
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  Speaker 3: But is it not outside the realm of possibility?
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  Speaker 2: Is it something where, like, in the next three years,
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  Speaker 2: would I price it at, like, a 10%, 15% possibility
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  Speaker 2: that you get there?
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  Speaker 3: Sure, I would.
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  Speaker 2: I think that's a reasonable place to be. Likewise, if
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  Speaker 2: you want the other side of it, I think there's
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  Speaker 2: maybe a 10% chance that you get back to five
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  Speaker 2: and a half on mortgage rates.
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  Speaker 4: I think people are continuing to question, why are we
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  Speaker 4: seeing rates go this high? It's hurting consumers to see
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  Speaker 4: rates this high, and I think you're going to once
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  Speaker 4: again see that from both the left and the right.
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  Speaker 4: You're already seeing it from the Trump administration. They clearly
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  Speaker 4: want rates lower, but you always hear this from you know,
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  Speaker 4: other parties as well because it's hurting people. The Times
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  Speaker 4: has a piece today, you know, quote, interest rates are
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  Speaker 4: creating hardships for millions of people in the United States
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  Speaker 4: and abroad. Domestic mortgage rates exceeding 7%. I just want
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  Speaker 4: to remind folks, Kevin Warsh said it himself. I don't
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  Speaker 4: remember the quote, so I'm going to paraphrase it. He
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  Speaker 4: is not raising interest rates because he is worried about
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  Speaker 4: the people who can afford to buy a home on
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  Speaker 4: a mortgage or the person who can invest in stocks
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  Speaker 4: or borrow money for their business. That's not why he's
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  Speaker 4: doing it. No, he is raising interest rates because he
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  Speaker 4: believes that the same people who cannot afford to buy
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  Speaker 4: a home or don't own one today who can't get, uh,
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  Speaker 4: any money to save, to cobble together, to rub two
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  Speaker 4: nickels together, to save into their 401k. Those people are
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  Speaker 4: being dramatically harmed by the pace of inflation over the
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  Speaker 4: last six years. And those are the people he is
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  Speaker 4: trying to adjust for. And frankly, I don't think that
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  Speaker 4: higher interest rates are hurting those folks all that much
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  Speaker 4: right now. And, uh, it's not going to work in
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  Speaker 4: the short term by raising interest rates a quarter.
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  Speaker 3: Of a point.
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  Speaker 4: But if you're wondering who is this really targeted to, yeah,
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  Speaker 4: it's combating inflation because those people have seen none of.
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  Speaker 3: The benefits over the last six years of this economy growing.
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  Speaker 2: Let's take a quick break here. When we return, we've
• 12:32
  Speaker 2: got trivia next.
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  Speaker 5: Let's do a little bit of Friday trivia here on
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• 14:05
  Speaker 2: Which Will Smith album is your favorite? Big Willie style
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  Speaker 2: or Millennium?
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  Speaker 5: I had Big Willie style. That was with Getting Jiggy
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  Speaker 2: Uh there are actually five uh will smith albums including
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  Speaker 5: Yeah, no one bought it.
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  Speaker 3: I mean.
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  Speaker 5: Big Willie style was awesome, though. Great album.
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  Speaker 2: Legitimately, you look at it and you're like, it shouldn't
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• 15:41
  Speaker 6: Yeah.
• 15:43
  Speaker 2: Uh, let's take a look at, uh, we talking Kevin
• 15:46
  Speaker 2: Warsh here. We talking, uh, chips, Michael. Um, what, what,
• 15:51
  Speaker 2: what are you, what are you doing?
• 15:53
  Speaker 4: I'm thinking, uh, I think we've done enough of fed
• 15:57
  Speaker 4: talk and Warsh and what might come next.
• 15:58
  Speaker 3: Okay. Let's go to chips.
• 16:00
  Speaker 2: Uh, actually I don't want to talk chips either. I
• 16:04
  Speaker 2: want to talk Oracle.
• 16:05
  Speaker 5: Okay.
• 16:05
  Speaker 1: That's fine.
• 16:06
  Speaker 2: Same ballpark.
• 16:07
  Speaker 3: They buy a lot of chips.
• 16:08
  Speaker 2: Quote, Oracle set out last year to lease a massive
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  Speaker 2: AI data center campus being built in New Mexico's Dona
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  Speaker 3: Good. How's it going?
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  Speaker 2: Now, Project Jupiter is mired in challenges over power supply
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• 16:45
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• 16:46
  Speaker 3: Nonetheless, they've delivered a... I still don't know how to
• 16:49
  Speaker 3: pronounce this word.
• 16:49
  Speaker 2: Force majeure.
• 16:50
  Speaker 3: Force majeure notice to the site's developer.
• 16:54
  Speaker 2: Who is none other than Blue Owl Capital... Who is
• 17:00
  Speaker 2: front and center with all of the private credit concerns
• 17:03
  Speaker 2: that bubbled up at this time last year. All roads
• 17:05
  Speaker 2: lead to Blue Owl. So, apparently... So, I'm trying to
• 17:11
  Speaker 2: understand this because it says that you had this hell
• 17:14
  Speaker 2: or high water term that the deal can't be terminated.
• 17:17
  Speaker 3: And yet you.
• 17:18
  Speaker 2: Oracle is... delivering a force majeure notice, but usually that's
• 17:23
  Speaker 2: not like you can't procure something. Usually it's like, hey,
• 17:27
  Speaker 2: an act of God happened, not just like we haven't
• 17:30
  Speaker 2: been able to get the permits.
• 17:32
  Speaker 3: Yeah, this doesn't seem like force majeure.
• 17:34
  Speaker 2: Oracle apparently can push back the date at which it
• 17:38
  Speaker 2: pays full rent by three years, but none of this
• 17:45
  Speaker 2: is great. And here's the thing.
• 17:47
  Speaker 4: How much Oracle stock is on the line to make
• 17:50
  Speaker 4: this Paramount deal happen?
• 17:53
  Speaker 2: Well, the Paramount deal is going to close.
• 17:54
  Speaker 1: I know.
• 17:54
  Speaker 2: It's done at this point. But, I mean, Oracle is
• 17:59
  Speaker 2: really trying to just do an end run around this
• 18:04
  Speaker 2: thing and just hope the numbers work on the back end.
• 18:06
  Speaker 2: Because here's the thing. For these other companies, if Microsoft's
• 18:09
  Speaker 2: data center plans go belly up, Microsoft can figure it out.
• 18:16
  Speaker 2: Oracle can't. Like, Oracle is one of the hyperscalers. They're
• 18:20
  Speaker 2: the only one that can't figure out how to deal
• 18:23
  Speaker 2: with this. Hence the hell or high water deal. If
• 18:26
  Speaker 2: these things go on.
• 18:27
  Speaker 5: Right.
• 18:27
  Speaker 2: It's why they had to accept those terms. It's like, well,
• 18:29
  Speaker 2: you're going to pay us no matter what.
• 18:31
  Speaker 1: Yeah.
• 18:31
  Speaker 2: And now it's like, oh, well, you mean, like, if
• 18:34
  Speaker 2: we're still here. So, I mean, again, like, Oracle's debt
• 18:38
  Speaker 2: has gone from $ 130 billion to $ 236 billion in the
• 18:39
  Speaker 2: last two years.
• 18:40
  Speaker 1: And.
• 18:45
  Speaker 2: The other piece that you have to remember, by the way,
• 18:46
  Speaker 2: they're going to have more issuance coming. As Oracle's debt
• 18:50
  Speaker 2: service becomes more expensive, the amount they're going to have
• 18:53
  Speaker 2: to pay on their debt that they now issue in
• 18:55
  Speaker 2: the future is going to be higher. So you potentially
• 18:58
  Speaker 2: get into a pretty gnarly place. Now, again, they're not
• 19:03
  Speaker 2: going out of business today or anything, but you really
• 19:05
  Speaker 2: got to watch this to see how it develops, because
• 19:08
  Speaker 2: they will be the canary in the coal mine. If
• 19:10
  Speaker 2: this starts to become a problem for hyperscalers, because they're
• 19:13
  Speaker 2: the ones that are most exposed.
• 19:15
  Speaker 4: Yeah, I mean, at least one bank that arranged the
• 19:17
  Speaker 4: New Mexico loans, they already sold off a portion of
• 19:19
  Speaker 4: that debt for less than 90 cents on the dollar.
• 19:23
  Speaker 1: Good.
• 19:23
  Speaker 3: Somebody's concerned.
• 19:24
  Speaker 2: Let's take a quick break. We've got the Trivia Answer
• 19:26
  Speaker 2: and Wall Street Watch next.
• 19:39
  Speaker 1: Bringing the latest financial news straight to your radio every day.
• 19:44
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:50
  Speaker 5: Time now for.
• 19:51
  Speaker 1: Wall Street Watch. Tracking the stocks, the data, and the
• 19:54
  Speaker 1: headlines driving markets so far today. Right here on the
• 19:57
  Speaker 1: Financial Exchange Radio Network.
• 19:59
  Speaker 5: Well, markets are modestly higher after a wild week for
• 20:02
  Speaker 5: the bond market. The Dow right now is up over 0.4%
• 20:05
  Speaker 5: or 220 points higher.
• 20:06
  Speaker 3: S & P 500 is.
• 20:09
  Speaker 5: Up just over a quarter percent, or 21 points higher.
• 20:12
  Speaker 5: NASDAQ is up about a third of a percent, or
• 20:14
  Speaker 5: 86 points up. Russell 2000 is dipping into negative territory,
• 20:19
  Speaker 5: mostly flat. 10-year treasury yield is up three basis points
• 20:22
  Speaker 5: at 5.196%. And crude oil down six-tenths of a percent,
• 20:25
  Speaker 5: trading at $ 94, while Brent is down about a third
• 20:27
  Speaker 5: of a percent, trading at $ 106 a barrel. Shares in
• 20:35
  Speaker 5: Akamai Technologies are jumping nearly 7% after the cloud computing
• 20:39
  Speaker 5: company agreed to a cloud services deal with Anthropic for $ 11. 6 billion. Meanwhile,
• 20:45
  Speaker 5: Costco is up over 2% after the wholesale company reported
• 20:49
  Speaker 5: a higher profit and rising sales in its fiscal fourth quarter,
• 20:52
  Speaker 5: citing continued spending from consumers despite sticky inflation. Elsewhere, the
• 20:57
  Speaker 5: Wall Street Journal reported that MGM Resorts is discussing a
• 21:00
  Speaker 5: bid to purchase Barry Diller's People, Inc., which owns a
• 21:04
  Speaker 5: roughly 27% stake in MGM. This comes after people withdrew
• 21:09
  Speaker 5: its own bid to buy the casino operator earlier this week.
• 21:13
  Speaker 5: MGM Resorts' stock is down by 3%, and Nike was
• 21:17
  Speaker 5: downgraded by Bank of America to underperform, expecting sales declines
• 21:23
  Speaker 5: from the second quarter through the rest of fiscal 2027.
• 21:27
  Speaker 5: Nike shares are down by about 1%. I'm Tucker Silva,
• 21:32
  Speaker 5: and that is Wall Street Watch. In the previous segment,
• 21:34
  Speaker 5: we asked you the Friday trivia question, who did Will
• 21:37
  Speaker 5: Smith slap at the Academy Awards a few years back? Well,
• 21:42
  Speaker 5: of course, B, Chris Rock. And Wade from East Providence
• 21:45
  Speaker 5: is our winner today, taking home a Financial Exchange Show t-shirt.
• 21:49
  Speaker 5: Congrats to Wade. We play trivia every Friday here on
• 21:52
  Speaker 5: the Financial Exchange. See complete contest rules at financialexchangeshow.com.
• 21:58
  Speaker 2: Mike, let's talk a little bit about minivans.
• 22:02
  Speaker 1: Yes.
• 22:03
  Speaker 2: Mike, as he likes to tell anyone who will listen,
• 22:07
  Speaker 2: which is all of you because you're listening.
• 22:08
  Speaker 3: And sometimes people who don't listen. I'll tell anyone.
• 22:12
  Speaker 2: Yeah, but if you tell someone who doesn't listen, did
• 22:16
  Speaker 2: you actually tell them?
• 22:17
  Speaker 3: Yeah, that's fair.
• 22:17
  Speaker 2: It's a real question.
• 22:19
  Speaker 3: A tree falls in the woods.
• 22:20
  Speaker 2: If a Mike falls in the forest and the grass
• 22:24
  Speaker 2: is higher than five feet, does it fall at all?
• 22:26
  Speaker 3: Well, you never see it again.
• 22:27
  Speaker 2: Yeah. Minivans. In 2022, we saw 154,000 of them sold
• 22:33
  Speaker 2: in the United States. Okay. 2026, we are on pace
• 22:38
  Speaker 2: for 280,000 minivans to be sold, almost double the number
• 22:43
  Speaker 2: from four years ago. It appears that Americans are catching
• 22:47
  Speaker 2: on to the sexy charms of the minivan form figure
• 22:52
  Speaker 2: and are saying, hey, we want more of that.
• 22:55
  Speaker 4: I gotta just say, like, it's just a lot of
• 22:58
  Speaker 4: money to pay to feel cooler than driving a minivan.
• 23:02
  Speaker 3: So I pulled up on Edmunds because I was curious.
• 23:05
  Speaker 4: So when I was shopping for a vehicle and why
• 23:07
  Speaker 4: we landed on a minivan, despite my wife's complaints and objections,
• 23:12
  Speaker 4: was that the only vehicle we found after looking at
• 23:15
  Speaker 4: them all that had the third row for our three
• 23:18
  Speaker 4: kids and could also fit all the stuff that we
• 23:22
  Speaker 4: have to bring everywhere, especially when our kids were really young,
• 23:24
  Speaker 4: think strollers and uh, you know, pack and plays two vehicles,
• 23:30
  Speaker 4: suburban or minivan. So I pulled the two of them
• 23:33
  Speaker 4: up like the 2026 models. And I just pulled the
• 23:36
  Speaker 4: 2026 Toyota Sienna. Cause that's what we own versus the
• 23:39
  Speaker 4: Chevy suburban. And the suburban is bigger by a fair bit.
• 23:42
  Speaker 4: It's like a foot and a half long. Um, so
• 23:44
  Speaker 4: the length is, uh, no, not that much. So the, the, yeah, actually, uh,
• 23:49
  Speaker 4: two feet longer, 226 versus 203, slightly taller too. But the,
• 23:55
  Speaker 4: the cargo capacity, uh, is 41.5 cubic feet for the Suburban, 33.5
• 24:00
  Speaker 4: for the Sienna.
• 24:01
  Speaker 1: Sure.
• 24:01
  Speaker 3: And then if you go want to.
• 24:03
  Speaker 4: Look at like a Chevy Tahoe, it's way less than
• 24:07
  Speaker 4: the minivan. So we landed on the minivan for that
• 24:10
  Speaker 4: reason and for the fact that the starting MSRP on
• 24:13
  Speaker 4: the most popular models for the Sienna and the Suburban
• 24:18
  Speaker 4: makes the minivan like 30 grand cheaper. And so, yeah,
• 24:22
  Speaker 4: I think what's happening is a bunch of middle-aged millennials...
• 24:26
  Speaker 4: finally growing comfortable enough to drive a minivan and realizing
• 24:30
  Speaker 4: that the, you know, the $ 30, 000 of extra SUV just
• 24:33
  Speaker 4: doesn't make them feel cool.
• 24:34
  Speaker 2: Well, I think.
• 24:37
  Speaker 1: So.
• 24:38
  Speaker 4: Also you're, you know, nine out of 10 of us
• 24:40
  Speaker 4: are not taking our Suburbans off-roading.
• 24:42
  Speaker 3: So that also helps.
• 24:43
  Speaker 2: A few things that I have, I have questions about
• 24:47
  Speaker 2: why is it only minivans that have sliding doors? Yeah,
• 24:53
  Speaker 2: they're awesome.
• 24:55
  Speaker 4: That was another added feature of having the minivan, is
• 24:57
  Speaker 4: I knew my kids' fingers weren't going to get crunched.
• 25:00
  Speaker 2: Now, minivans, one of the defining features, in my opinion,
• 25:03
  Speaker 2: is it's this low, flat floor, so you can basically
• 25:06
  Speaker 2: walk through it. You are seeing this replicated with a
• 25:09
  Speaker 2: lot of three-row EV SUVs, but those obviously come at
• 25:14
  Speaker 2: an even higher price point because of the difference in
• 25:16
  Speaker 2: price on EVs. But I guess, like, you look at it.
• 25:22
  Speaker 4: Yeah, the rear headroom is actually more in the minivan
• 25:25
  Speaker 4: than it is in the center.
• 25:26
  Speaker 2: Right, because you don't have, like, that big sloping, like,
• 25:28
  Speaker 2: down part in the back usually. So, yeah, I'm not
• 25:31
  Speaker 2: surprised that minivans are getting more popular. Whenever I've taken
• 25:36
  Speaker 2: the family on, you know, vacations where we've flown somewhere
• 25:39
  Speaker 2: a couple times now, and each time we rent a
• 25:42
  Speaker 2: minivan when we get there because it's just, again, the
• 25:45
  Speaker 2: easiest way to get around.
• 25:46
  Speaker 3: Awesome.
• 25:47
  Speaker 2: And my kids being as young as they are, the
• 25:49
  Speaker 2: nice thing is that they get in there like, oh,
• 25:52
  Speaker 2: dad got the cool car this time. And I'm like, yeah,
• 25:56
  Speaker 2: that's right. I'm training them so that when I eventually
• 25:59
  Speaker 2: get a minivan, they still think I'm cool. But I'm like, yeah,
• 26:02
  Speaker 2: dad got the coolest car. And there'll be a Corvette
• 26:05
  Speaker 2: next door. I'm like, you don't want that thing. Look
• 26:07
  Speaker 2: at how little it is. You want this minivan. That's
• 26:13
  Speaker 2: where it's at. So I'm doing my part, too.
• 26:15
  Speaker 3: There you go.
• 26:16
  Speaker 5: Leaving your IRA to your children may sound like the
• 26:19
  Speaker 5: obvious choice, but how they receive that money could have
• 26:23
  Speaker 5: important tax consequences. Cushing and Dolan has a new guide
• 26:26
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• 26:30
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• 26:34
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• 26:37
  Speaker 5: while they're still working and earning income, potentially creating a
• 26:41
  Speaker 5: larger tax bill. That's one reason why your IRA beneficiary
• 26:45
  Speaker 5: should be part of your overall estate plan. Who receives
• 26:49
  Speaker 5: the account, how they receive it, and the tax consequences
• 26:52
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• 26:56
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• 27:00
  Speaker 5: Beneficiary by calling 866-848-5699.
• 27:01
  Speaker 2: That's 866-848-5699.
• 27:01
  Speaker 5: Or you can request the guide From their website, LegalExchangeShow.com.
• 27:13
  Speaker 1: The proceeding was paid for and the views expressed are
• 27:15
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 27:17
  Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
• 27:21
  Speaker 1: Cushing and Armstrong do not endorse each other and are
• 27:23
  Speaker 1: not affiliated.
• 27:25
  Speaker 2: Good piece from the Wall Street Journal. Colleges once saw
• 27:28
  Speaker 2: high tuition as a sign of quality. Now they're slashing prices.
• 27:31
  Speaker 2: And yeah, like if you don't have... Here's the deal.
• 27:36
  Speaker 2: Supply and demand. The problem that colleges have right now
• 27:40
  Speaker 2: is that the supply of students is effectively fixed, at
• 27:46
  Speaker 2: least for like U.S.
• 27:47
  Speaker 1: Students.
• 27:47
  Speaker 2: You know what it is ahead of time because you
• 27:49
  Speaker 2: look at the births for this year and you say
• 27:51
  Speaker 2: that's how many potential U.S. students we have for 2044.
• 27:55
  Speaker 2: And OK, like here's how many are likely to go
• 27:58
  Speaker 2: to college. And this is the number. Now, you can
• 28:01
  Speaker 2: change things around the edges by, you know, figuring out, OK,
• 28:03
  Speaker 2: how many international students do we have that come? But
• 28:06
  Speaker 2: even that can change, obviously, based on government policy in
• 28:09
  Speaker 2: the interim. We've seen this the last.
• 28:10
  Speaker 3: Couple of years.
• 28:11
  Speaker 2: So if you set prices based on a certain level
• 28:15
  Speaker 2: of demand that you expect and that demand doesn't materialize,
• 28:19
  Speaker 2: in order to fill all of your seats, you have
• 28:21
  Speaker 2: one of two options. Either do nothing and you just
• 28:24
  Speaker 2: get a smaller number of students at the same prices,
• 28:27
  Speaker 2: or cut your prices and see if you can find
• 28:29
  Speaker 2: the sweet spot where you can still boost up revenue
• 28:31
  Speaker 2: without cutting things too far.
• 28:34
  Speaker 4: Yeah, I do wonder, it's not a luxury good. People
• 28:40
  Speaker 4: will factor in price. But I do wonder if there
• 28:43
  Speaker 4: are schools that are very hesitant to cut that price
• 28:45
  Speaker 4: tag because of, not because of the financials behind it,
• 28:47
  Speaker 4: but because of the image that it sends to potential students.
• 28:52
  Speaker 2: Why do we think that paying more gets you a
• 28:56
  Speaker 2: better education?
• 28:57
  Speaker 4: Let's be 100% honest. I don't think it should. I
• 29:00
  Speaker 4: don't think it does. But I do wonder if there's
• 29:02
  Speaker 4: some of that effect not dissimilar to a luxury handbag.
• 29:07
  Speaker 4: There's a reason they never put them on sale.
• 29:10
  Speaker 2: I don't think so. And the reason why I'll say
• 29:13
  Speaker 2: I don't think so is, do you know the market
• 29:16
  Speaker 2: that has been, like the college market that has been
• 29:21
  Speaker 2: seeing the greatest gains as far as enrollment over the
• 29:26
  Speaker 2: last decade?
• 29:28
  Speaker 3: Communities?
• 29:29
  Speaker 1: Nope.
• 29:31
  Speaker 3: Then no.
• 29:32
  Speaker 2: State schools in the southeast. They've done a tremendous job
• 29:36
  Speaker 2: recruiting people from the Northeast and from the West. saying, hey,
• 29:42
  Speaker 2: instead of going to expensive private school near where you are,
• 29:47
  Speaker 2: come down here, have a great time watching some football,
• 29:52
  Speaker 2: and it'll be, even with an out-of-state tuition, two-thirds or
• 29:56
  Speaker 2: half the cost of what it costs you to go
• 29:58
  Speaker 2: to the private school near you.
• 30:00
  Speaker 1: Yep.
• 30:01
  Speaker 2: And so I do think that price is a big,
• 30:03
  Speaker 2: big thing here. And colleges are waking up to that.
• 30:06
  Speaker 2: Whether it's too late or not is kind of something
• 30:09
  Speaker 2: that's answered. I think, again, just the demographics are saying, look,
• 30:13
  Speaker 2: it is too late. But there's still time for some.
• 30:16
  Speaker 2: And adjusting on price is very much going to be
• 30:19
  Speaker 2: something they need to consider. Let's take a quick break.
• 30:21
  Speaker 2: When we return, Paul LaMonica joins us next.
• 30:24
  Speaker 1: Hear the Financial Exchange every day from 11 to noon
• 30:27
  Speaker 1: on Sirius XM's Business Radio Channel 132. Keep it here
• 30:32
  Speaker 1: for the latest business and financial news and the trends
• 30:34
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• 30:37
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• 30:42
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• 30:57
  Speaker 1: This is the Financial Exchange Radio Network. Ladies and gentlemen,
• 31:02
  Speaker 1: the weekend.
• 31:11
  Speaker 2: As promised, we're now joined by Paul LaMonica from Barron's.
• 31:17
  Speaker 2: And we're talking a little bit about Meta. Paul, how
• 31:21
  Speaker 2: are you doing today?
• 31:21
  Speaker 3: I'm good, thanks.
• 31:23
  Speaker 6: How are you guys doing?
• 31:23
  Speaker 2: We're doing well. So Meta has had quite the week
• 31:27
  Speaker 2: this week. They closed last week at 665. They got
• 31:31
  Speaker 2: up to 779 yesterday. So it's like a 20% swing
• 31:36
  Speaker 2: in four days. They're back down a little bit today after...
• 31:39
  Speaker 2: you know, a move of that magnitude, but, uh, this
• 31:42
  Speaker 2: is all the, uh, I'm sorry. They named the product horribly.
• 31:46
  Speaker 2: Like Metamuse just sounds like Metamucil, but they, this is
• 31:49
  Speaker 2: all the Metamuse hype, correct? It, uh, certainly is.
• 31:54
  Speaker 5: Yes.
• 31:54
  Speaker 6: Muse, not to be confused with the, uh, the progressive
• 31:58
  Speaker 6: rock band either. What's really fascinating about this is that
• 32:04
  Speaker 6: Meta went from being criticized for not having a great
• 32:09
  Speaker 6: AI strategy to now being the market darling of consumer-led
• 32:15
  Speaker 6: AI to the point where People are starting to irrationally
• 32:20
  Speaker 6: think that everyone is going to be using Muse and
• 32:23
  Speaker 6: that they're going to be canceling all of these subscription
• 32:26
  Speaker 6: services as a result of all these stories about how
• 32:29
  Speaker 6: easy it is for Muse to go in and make
• 32:33
  Speaker 6: these kind of changes. I think it's a bit of
• 32:35
  Speaker 6: a knee-jerk reaction. So companies like AT & T, T-Mobile, Netflix...
• 32:42
  Speaker 6: insurers like Allstate Progressive, some of the travel companies booking
• 32:46
  Speaker 6: holdings in Expedia, might be a bit of an overreaction
• 32:49
  Speaker 6: to think that Muse is going to be a death
• 32:52
  Speaker 6: knell for all of these companies.
• 32:54
  Speaker 2: Feels kind of similar to the SaaSpocalypse, correct?
• 32:58
  Speaker 6: Yeah, similar to the SaaSpocalypse, similar to what happened with, obviously,
• 33:04
  Speaker 6: with DeepSeek, you know, and concerns about, you know, cheaper,
• 33:08
  Speaker 6: you know, Chinese AI services. You know, The thing that
• 33:12
  Speaker 6: I think people have to keep in mind is that
• 33:16
  Speaker 6: Muse and Facebook, excuse me, Meta, they're partnering with companies
• 33:22
  Speaker 6: as well. So Expedia, for example, is a firm that
• 33:26
  Speaker 6: has a partnership with Meta. That didn't stop the stock
• 33:30
  Speaker 6: from falling. Shopify, PayPal, Instacart, they all want to be
• 33:34
  Speaker 6: part of the Muse ecosystem as well. So Again, I
• 33:39
  Speaker 6: understand that Planet Fitness stock is getting hit pretty hard
• 33:43
  Speaker 6: because a lot of people may realize, oh, yeah, I'm
• 33:46
  Speaker 6: still paying for a gym membership.
• 33:48
  Speaker 2: That I never used.
• 33:49
  Speaker 6: Thanks, Muse, for canceling it for me. Again, I don't
• 33:53
  Speaker 6: think Muse is going to it's going to make it
• 33:56
  Speaker 6: easier for consumers to manage a lot of these pricey subscriptions. But,
• 34:00
  Speaker 6: you know, Rocket already has a service as well that's
• 34:04
  Speaker 6: somewhat similar that helps you, you know, and that's not necessarily,
• 34:08
  Speaker 6: you know, the end of all these, you know, membership-driven
• 34:11
  Speaker 6: subscription companies.
• 34:13
  Speaker 2: Isn't it also fair to say that, okay, if companies
• 34:16
  Speaker 2: start seeing their margins hit because, you know, Muse is,
• 34:19
  Speaker 2: you know, doing this and that for people, Companies aren't
• 34:23
  Speaker 2: just going to sit down and be like, oh, this
• 34:25
  Speaker 2: is fine. Like, we're not going to change. Like, they'll
• 34:27
  Speaker 2: adapt their service platforms to either take away those arbitrage
• 34:31
  Speaker 2: opportunities or make them more difficult.
• 34:34
  Speaker 6: Yeah, I think that that is definitely the case where
• 34:38
  Speaker 6: you will see companies react to Muse. But again, they're
• 34:41
  Speaker 6: also going to try and probably partner with Muse and
• 34:46
  Speaker 6: any other consumer AI agents that might come out to
• 34:49
  Speaker 6: try and compete with Meta. You would have to think
• 34:52
  Speaker 6: that firms like Alphabet and Google, as well as OpenAI, Anthropic,
• 34:59
  Speaker 6: maybe a little bit less on the Anthropic side because
• 35:02
  Speaker 6: they seem to be more corporate-minded and not as consumer-driven
• 35:06
  Speaker 6: as maybe OpenAI with ChatGPT is. But, you know, X,
• 35:10
  Speaker 6: you know, Elon Musk's company with Grok, they could potentially
• 35:14
  Speaker 6: get in this game as well.
• 35:16
  Speaker 2: So, you know, I think, again, it's probably.
• 35:19
  Speaker 6: An overreaction both to have Metastock rise significantly this dramatically,
• 35:25
  Speaker 6: as well as seeing all of these subscription companies fall
• 35:28
  Speaker 6: as sharply as they did. This is not to suggest
• 35:31
  Speaker 6: that they're not going to be hurt at all, but
• 35:34
  Speaker 6: probably not to the level that Wall Street is predicting.
• 35:38
  Speaker 6: It does seem like another cesspocalypse 2.0 all over again.
• 35:42
  Speaker 6: And we've seen how many software companies have rebounded because
• 35:45
  Speaker 6: there is this recognition that, oh, yeah, Salesforce is actually
• 35:49
  Speaker 6: going to be a participant in the AI revolution, not
• 35:53
  Speaker 6: a company that's going to be left behind.
• 35:55
  Speaker 2: Very good. Paul, appreciate you joining us today. Have a
• 35:58
  Speaker 2: great weekend and we'll catch up with you soon. Thanks
• 36:01
  Speaker 2: a lot. Have a good one, guys. That is Paul
• 36:03
  Speaker 2: LaMonica from Barron's. Mike, I want to talk about the
• 36:07
  Speaker 2: iced coffee discourse that's been permeating the interwebs this week.
• 36:11
  Speaker 3: Oh, yeah.
• 36:12
  Speaker 2: So there was a piece posted in the Wall Street
• 36:14
  Speaker 2: Journal a couple days ago about... Hey, like, you know,
• 36:17
  Speaker 2: there was a hiring manager who complained about, like, a
• 36:20
  Speaker 2: kid bringing a nice coffee into an interview and saying
• 36:23
  Speaker 2: it was unprofessional.
• 36:23
  Speaker 1: Sure.
• 36:25
  Speaker 4: Sparked this massive debate between recruiters. Somebody from Robert Half,
• 36:29
  Speaker 4: I saw, commented for a piece.
• 36:31
  Speaker 3: Like, lots of... People jump down this bandwagon.
• 36:34
  Speaker 2: I don't have crazy strong feelings on it. I lean
• 36:38
  Speaker 2: kind of towards the, hey, if it's not necessary for
• 36:42
  Speaker 2: the interview, don't bring it into the interview. Yeah, don't
• 36:44
  Speaker 2: bring anything into the interview. It's kind of where I
• 36:45
  Speaker 2: tend to land. You should be bringing yourself and maybe
• 36:47
  Speaker 2: a notepad or something like that. Other than that, don't
• 36:50
  Speaker 2: really bring anything unless you're asked to. But I also
• 36:54
  Speaker 2: want to, there's a piece in the Wall Street Journal
• 36:56
  Speaker 2: that talks about this. And, again, someone from Robert Halflake
• 36:59
  Speaker 2: chimed in on this. And I just want to talk
• 37:02
  Speaker 2: about this for a second. Quote, they need to set
• 37:04
  Speaker 2: people up for success and recognize that it has truly
• 37:07
  Speaker 2: been a full generation of workers that have not experienced
• 37:09
  Speaker 2: an in-person interview. And I got to say, like, that
• 37:16
  Speaker 2: hiring managers need to. I got to say, like, we're
• 37:20
  Speaker 2: freaking babying kids, man. And not even kids. Like, we're
• 37:24
  Speaker 2: babying adults now. Like, these are grown people who... Again, like,
• 37:31
  Speaker 2: asking them to not bring an iced coffee in or, like,
• 37:33
  Speaker 2: not even needing to... Like, I don't know. Like, people
• 37:36
  Speaker 2: will adapt to.
• 37:39
  Speaker 2: Let me rephrase this a different way. Do we ever
• 37:41
  Speaker 2: question anything in athletics if we say, hey, you need
• 37:45
  Speaker 2: to do this work and it'll make you faster, stronger,
• 37:47
  Speaker 2: better at this. And yet when we ask people to
• 37:51
  Speaker 2: do anything, any kind of like work for academics or
• 37:54
  Speaker 2: socially or whatever, it's like, oh no, that's going to
• 37:56
  Speaker 2: be too hard. But you ask someone like, hey, throw
• 37:59
  Speaker 2: 150 pitches and they'll be like, yes, this is going
• 38:02
  Speaker 2: to make me a better pitcher. You ask them to
• 38:04
  Speaker 2: not bring an iced coffee into a meeting and it's
• 38:06
  Speaker 2: like you shot their dog.
• 38:11
  Speaker 4: It's a fascinating debate in 2026. I'm glad we have
• 38:14
  Speaker 4: something light to talk about.
• 38:16
  Speaker 2: Quick break here for the entire weekend. Hope you all
• 38:18
  Speaker 2: have a great one. If you're in the Northeast like us,
• 38:20
  Speaker 2: stay dry. We'll see you on Monday.