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Tariffs keep defying expectations on the right and left · The Financial Exchange Show

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Speaker 1: Zada and Mike Armstrong.
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Speaker 2: Chuck, Mike and Tucker with you here on a thirday
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Speaker 2: and quite honestly, weeks over.
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Speaker 3: Put it in the bank. You can move on. There's
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Speaker 3: no more interesting economic data coming out the rest of
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Speaker 3: the week. There are no more interesting earnings coming out
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Speaker 3: the rest of the week. We're done here.
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Speaker 4: You can get some interesting tariff announcements.
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Speaker 3: Whatever, like, honestly, no, you, I'm sorry you can't get
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Speaker 3: interesting terriff.
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Speaker 4: Announcements trying to give people a reason to tune in.
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Speaker 3: Non they can tune into us. I'm just saying you
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Speaker 3: can put this one in the books. At this point,
1:46
Speaker 3: there's nothing interesting happening in the next thirty six hours
1:51
Speaker 3: so far as you know, at least that's scheduled to happen. Yeah, obviously,
1:56
Speaker 3: you know, unscheduled things happen all the time. That's called life.
2:00
Speaker 3: But is anyone really getting all geared up to see
2:04
Speaker 3: what Planes All America Pipeline does with their earnings report tomorrow?
2:10
Speaker 3: I'm not is anyone getting all geared up to be like, Ooh,
2:15
Speaker 3: I wonder what the Baker Hughes rig Count's gonna be tomorrow.
2:19
Speaker 4: I'm not.
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Speaker 3: I pay attention to it, but usually like two weeks
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Speaker 3: after and I'm like, oh, I wonder what happened with that? Ye,
2:26
Speaker 3: these are not market moving things. No one wakes up
2:28
Speaker 3: in the morning and says, huh, under Armour reports tomorrow.
2:33
Speaker 3: Wonder how that's gonna affect the S and P five hundred. Hint,
2:36
Speaker 3: it won't. Honestly, don't even know if under Armor's in
2:39
Speaker 3: the S and P five hundred. Don't think it is.
2:41
Speaker 3: It's only one and a half billion dollar company.
2:43
Speaker 4: So dear God, they've fallen.
2:45
Speaker 3: They really have it. It's tough for a company that
2:48
Speaker 3: was once you know, kind of this up and coming
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Speaker 3: apparel brand that now has kind of come and gone
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Speaker 3: a little bit. Like that's just kind of where they
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Speaker 3: are in any case. Top two stories today we are
3:00
Speaker 3: talking about tariffs. Obviously, today is the date that the
3:04
Speaker 3: new higher tariff rates kick in that were specified last week.
3:08
Speaker 3: To this point, market's responding, not even with a shrug,
3:12
Speaker 3: but basically saying, don't matter. Does it matter to us?
3:15
Speaker 3: You got the Dow up fifty points, the S and
3:17
Speaker 3: P's up twenty five, Nasdaq up one hundred and eighty three,
3:20
Speaker 3: So markets are pretty much saying one of two things. A.
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Speaker 3: This isn't going to matter. B this isn't going to stick.
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Speaker 4: Yeah, anything that was shipped by midnight last night and
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Speaker 4: arise to US ports before October is apparently subject to
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Speaker 4: the lower pre today tariff rate, but anything shipped after
3:40
Speaker 4: today will be subject to those higher rates. What's been
3:44
Speaker 4: interesting to me about all this, and I think frankly
3:47
Speaker 4: why we have not We've not seen the big promises
3:51
Speaker 4: on the right or the left when it came to tariffs,
3:54
Speaker 4: and the criticisms and applause for them right on the
3:58
Speaker 4: proponents for tar side, it was going to bring a
4:03
Speaker 4: bunch of American manufacturing back. It was going to raise
4:08
Speaker 4: income so much that we you know, we would do
4:11
Speaker 4: away with deficits, revenue so much, raise revenue so much
4:14
Speaker 4: rather that we could do away with income taxes and
4:18
Speaker 4: reduce deficits. And you know, those were always outlandish promises.
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Speaker 4: But we have not seen those promises to this point.
4:26
Speaker 4: But to be fair, we also have not seen the
4:28
Speaker 4: criticisms of these tariffs come to pass at this point. Either.
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Speaker 4: We have not seen mass unemployment, We have not seen
4:34
Speaker 4: shortages and stores. We have not seen huge inflation on
4:39
Speaker 4: really any major products, and I think that by and
4:43
Speaker 4: large has to do with the implementation of this stuff.
4:46
Speaker 4: So one, I think it's fair to say, yeah, Mike,
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Speaker 4: we haven't seen any of those things yet, give it time. Two,
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Speaker 4: this is I heard it compared to the Swiss cheese
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Speaker 4: of tariff policy. Right, there are big hole. I've got
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Speaker 4: Swiss on my sandwich today. By the way, little Turkey
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Speaker 4: Swiss coming at you in a couple hours. Perfectly planned.
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Speaker 4: But there are so many gaps in these policies. And
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Speaker 4: I've you know, we've seen it over and over. Now,
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Speaker 4: look like, hey, we're going to slap these tariffs on
5:16
Speaker 4: but when it comes to products that are really necessary
5:19
Speaker 4: or important to a specific industry or a specific cohort,
5:24
Speaker 4: we're going to put waivers on them. And so whether
5:26
Speaker 4: that's iPhones being made in China, whether that is likely
5:30
Speaker 4: to be European wine that is going to maybe receive
5:34
Speaker 4: some waivers, whether it's Brazilian orange juice and planes or
5:38
Speaker 4: Chilean copper. There's been these exemptions put in place to
5:42
Speaker 4: make sure the pain points are not so great on
5:44
Speaker 4: the American public. And I don't know, I tend to
5:48
Speaker 4: think we're going to see more of that yeah.
5:50
Speaker 3: I mean if you you know, go through it, and
5:52
Speaker 3: the Brazil one, I think is you know, kind of
5:54
Speaker 3: the classic case where okay, Brazilian tariffs are you know,
5:58
Speaker 3: moving up to fifty percent, and you sit there and say, okay, like,
6:02
Speaker 3: you know, we import a decent amount from Brazil. They're
6:05
Speaker 3: one of the twenty largest trading partners in the US.
6:07
Speaker 3: They're not a China or Mexico or Canada, but it's
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Speaker 3: still something where I think it's like sixty billion dollars
6:13
Speaker 3: in imports and you say, okay, like this is you know,
6:16
Speaker 3: a meaningful relationship here, and then you go through and
6:20
Speaker 3: you look at the exemptions that end up going into
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Speaker 3: place on them, and you say, okay, out of the
6:29
Speaker 3: ten largest imports from Brazil, we've exempted seven of them
6:33
Speaker 3: from these tariffs. And so it's actually hitting a pretty
6:36
Speaker 3: narrow subset of those items there. And this messages with
6:40
Speaker 3: kind of what we've seen all along, and also dovetails
6:43
Speaker 3: nicely into this piece talking about the semiconductor tariffs, which
6:49
Speaker 3: President Trump yesterday said he would impose a one hundred
6:52
Speaker 3: percent tariff on all chips coming into the United States.
6:56
Speaker 4: And literally no one has any idea what that means.
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Speaker 3: No, we're not sure if this means like within a computer,
7:01
Speaker 3: So like if you if you you know, if Dell
7:03
Speaker 3: manufactures a computer in Taiwan and imports it into the US,
7:09
Speaker 3: is the chip tariff separately or is it only if
7:12
Speaker 3: Dell is bringing the chips in to make stuff here,
7:14
Speaker 3: like it's we're not entirely sure. But also you've got
7:17
Speaker 3: a bunch of exemptions out there already being reported that
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Speaker 3: Apple's exempt from this, in video is exempt from this,
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Speaker 3: Samsung is exempt from this, sk Heinex is exempt from this.
7:30
Speaker 3: Who's left what are we? You know, you kind of
7:33
Speaker 3: look at this and you say, okay, so what is
7:35
Speaker 3: the actual implementation? Is it just is it worse for
7:40
Speaker 3: automakers where hey, we've got hundreds of chips that go
7:43
Speaker 3: into cars, and if you need to buy them and
7:47
Speaker 3: bring them into the country, you're paying one hundred percent
7:49
Speaker 3: tariff on those Because if it is, the estimates that
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Speaker 3: you've now seen are five ten thousand dollars in additional
7:55
Speaker 3: cost per vehicle, right, which I would prefer not to
7:58
Speaker 3: pay obviously, But.
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Speaker 4: Every time something like that has been reported, it ends
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Speaker 4: up being exempted, exempted, And so I think that it's
8:06
Speaker 4: something where i've I've kind of can can we make
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Speaker 4: a policy live right now? What kind of policy? Why
8:14
Speaker 4: don't you go ahead and I'll let you know whether
8:16
Speaker 4: or not we can do it.
8:16
Speaker 3: Okay, you tell me if we can do this or not.
8:19
Speaker 3: I don't want to do any more reporting on tariffs
8:21
Speaker 3: until they're actually implemented.
8:22
Speaker 4: Yeah. We've said that a few times because because.
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Speaker 3: Otherwise, especially when you're like a chicken with our head
8:27
Speaker 3: cut off and doesn't feel great to me.
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Speaker 4: Yeah, and we have said this a number of times
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Speaker 4: because you get the earlier report, Oh my god, one
8:36
Speaker 4: hundred percent semiconductor tariffs or fifty copper terraffs, So what
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Speaker 4: is that going to do? Think about all the downstream impacts,
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Speaker 4: and then weeks go by, everybody else looks at all
8:49
Speaker 4: the downstream stream impacts, realizes how big of a catastrophe
8:52
Speaker 4: it would be, and they completely changed the the UH
8:57
Speaker 4: rules of the road. So I'm with you that, especially
9:00
Speaker 4: reporting on day one things is not useful and if
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Speaker 4: we want to wait until implementation, that's fair. But going
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Speaker 4: into detail hypotheticals of what do these giant semiconductor or
9:13
Speaker 4: Brazilian teriffs mean for the American public so far has
9:17
Speaker 4: not been useful because every time it's looked meaningful and
9:21
Speaker 4: looked like it would be a pain point, they've been changed,
9:23
Speaker 4: they've been waved, they've been exempted.
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Speaker 3: The other thing that I want to talk about is
9:28
Speaker 3: it relates to these semiconductor tariffs, and I get at
9:30
Speaker 3: a little bit of a stick in my craw about
9:32
Speaker 3: this in your wear? A stick in my craw?
9:35
Speaker 4: Got it?
9:37
Speaker 3: Apple? Yesterday, Tim Cook goes to the White House and
9:40
Speaker 3: pledges an additional one hundred billion dollars of investment in
9:44
Speaker 3: the United States. This on top of a five hundred
9:46
Speaker 3: billion dollar commitment that he made earlier this year. Mike,
9:50
Speaker 3: do you know what Apple's capex worldwide is for the
9:53
Speaker 3: last four years? Total? Half that forty six billion dollars? Okay,
10:02
Speaker 3: so not even a tenth of it? Yeah, Where what
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Speaker 3: does this six hundred billion mean? Does it include things
10:09
Speaker 3: like stock buybacks? Does include dividend?
10:11
Speaker 1: Like?
10:11
Speaker 3: What is actually in there? Because the idea that Apple
10:16
Speaker 3: is going to spend six hundred billion dollars anywhere doesn't
10:22
Speaker 3: actually make sense.
10:25
Speaker 4: So they're going to increase their cap x twelve x
10:30
Speaker 4: is what this announcement would imply. Is that is that approximately, right.
10:37
Speaker 3: Mike, Even if like go through and let me just
10:40
Speaker 3: I'm looking at the Apple's income statement for the last quarter.
10:44
Speaker 3: The ninety four billion dollars in operating revenue Okay, okay,
10:49
Speaker 3: fifty billion dollars cost a good sold, Okay, So obviously,
10:53
Speaker 3: like that's you know, Apple's biggest expense operating expenses are
10:57
Speaker 3: in DSGNA depreciation, all that stuff, fifteen billion dollars. Ultimately,
11:04
Speaker 3: Apple ends up making in net income twenty three billion
11:08
Speaker 3: dollars for the quarter. You know, they did about one
11:10
Speaker 3: hundred billion dollars last year in you know profit. Where
11:16
Speaker 3: are you gonna get six hundred billion dollars from?
11:18
Speaker 4: Well, if you spread it out over three decades, you'll
11:21
Speaker 4: get there.
11:21
Speaker 3: This is what I'm like, I'm starting to get a
11:24
Speaker 3: little bit frustrated with some of this because look, when
11:26
Speaker 3: it comes to like the Gulf States, you can say, Okay,
11:29
Speaker 3: the Saudis actually have trillions of dollars that they can
11:34
Speaker 3: you know, deploy and and this is believable Apple, as
11:38
Speaker 3: much as you can point to, hey, they've got a
11:40
Speaker 3: bunch of money that's you know, sitting on their balance sheet. Sure,
11:43
Speaker 3: I see that they've got, you know, fifty five billion
11:45
Speaker 3: dollars on their balance sheet. Okay, I buy that, It's
11:48
Speaker 3: not six hundred billion. And the numbers just don't make
11:53
Speaker 3: sense as far as how they could possibly do this
11:57
Speaker 3: over any meaningful timeframe. So like, this is now starting
12:03
Speaker 3: to feel a little dog and pony showy to me
12:06
Speaker 3: in terms of this now it was it was the
12:07
Speaker 3: first time too. By the way, here here's the thing
12:09
Speaker 3: it worked for Tim Cook. Apple stock before yesterday was
12:13
Speaker 3: flat for the last two years. It was it one
12:14
Speaker 3: hundred ninety six in July of twenty three. It was
12:16
Speaker 3: a two oh one yesterday. It's now after being up
12:20
Speaker 3: five percent yesterday and another two and a quarter percent today, Hey,
12:24
Speaker 3: you're up almost you know, eight percent in two days.
12:27
Speaker 3: It worked, Like, I don't blame Tim Cook for being like, yeah,
12:32
Speaker 3: I got to do something to help. Maybe maybe I
12:34
Speaker 3: can get a little bit of help from the administration.
12:36
Speaker 3: Of course, like makes total sense. But the idea that
12:40
Speaker 3: Apple's going to invest six hundred billion dollars doesn't make
12:42
Speaker 3: sense because their total capex worldwide last year was twelve billion,
12:49
Speaker 3: and they're not suddenly going to say, gee, you know what,
12:52
Speaker 3: we're going to increase our capex from twelve to one
12:54
Speaker 3: hundred and fifty billion dollars in order to do this
12:56
Speaker 3: in the next four years. They don't have the money
12:59
Speaker 3: to do that. They would actually be unprofitable if they
13:03
Speaker 3: did that. If there's one thing I know about Tim
13:05
Speaker 3: Cookie likes profit and apples. Okay, in pairis take a
13:11
Speaker 3: quick break. When we return, let's talk a little bit
13:14
Speaker 3: about what's going on with US auto companies.
13:17
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13:21
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13:24
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13:29
Speaker 1: Text does six one seven twenty six to two one
13:32
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13:56
Speaker 3: All right, let's talk a little bit about what's going
13:57
Speaker 3: on with the auto sector. I don't know if either
14:01
Speaker 3: of you happened to, uh, take a look at the
14:04
Speaker 3: Mannheim used Vehicle Value Index. I did, we not, Charlie, Oh,
14:09
Speaker 3: but what do you do with your life?
14:10
Speaker 4: Though? I mean we were paying pretty close attention to
14:13
Speaker 4: it back in twenty twenty two when there were no cars.
14:16
Speaker 4: But yes, I haven't looked at it since.
14:17
Speaker 3: So the Manheim Used Vehicle Value index for July fell
14:22
Speaker 3: from a reading of two oh eight point five down
14:24
Speaker 3: to two oh seven point four, which is interesting. Again
14:27
Speaker 3: if you're talking about, you know, things that people have,
14:30
Speaker 3: you know, worried about heading into the summer. It's okay,
14:34
Speaker 3: you've got these auto tariffs, they might push up prices.
14:38
Speaker 3: You know, you're gonna see the average car go up,
14:40
Speaker 3: you know, anywhere from like two thousand to three thousand
14:43
Speaker 3: dollars is kind of what we've we've.
14:45
Speaker 4: Heard and where I mean, can you give me some
14:47
Speaker 4: context for that index? I know it declined month of
14:49
Speaker 4: a month, but where were we Do you have context
14:52
Speaker 4: for a few years ago? Uh?
14:54
Speaker 3: Yeah? So, like peak used vehicle value was in December
14:59
Speaker 3: of twenty one one and January of twenty two, where
15:01
Speaker 3: it was running at two fifty seven.
15:03
Speaker 4: Got it.
15:03
Speaker 3: By the end of twenty two it was down to
15:05
Speaker 3: two nineteen. So prices fell fifteen sixteen percent over the
15:09
Speaker 3: course of twenty two and then another ten percent and
15:12
Speaker 3: twenty three and basically we're flat last year.
15:14
Speaker 4: Yeah.
15:14
Speaker 3: And by the way, normally, like if you look at
15:18
Speaker 3: used vehicle prices from like twenty ten to twenty eighteen,
15:23
Speaker 3: they went up about ten percent during that time, so
15:25
Speaker 3: about one percent of year is typically what you would see,
15:28
Speaker 3: and used vehicle price movement got it. This year. They're
15:31
Speaker 3: also basically flat. They haven't really budged. End of last year,
15:34
Speaker 3: you were a two four point eight, you're a two
15:36
Speaker 3: o seven four, so you're up about one percent through
15:39
Speaker 3: the first seven months. It hasn't been anything catastrophic. It's
15:41
Speaker 3: basically been fine. And a couple things that you can
15:45
Speaker 3: read into this. First, we did see this index move
15:48
Speaker 3: up significantly in April. Remember that this was on the
15:52
Speaker 3: back of a bunch of people trying to buy used
15:54
Speaker 3: vehicles and new ones before tariffs potentially went into effect,
15:58
Speaker 3: and so there was a bunch of demand that got
15:59
Speaker 3: pulled forward. There still is some evidence out there that
16:02
Speaker 3: demand is a little bit sluggish on the margins, and
16:05
Speaker 3: so if you have sluggish demand as a dealer, you
16:09
Speaker 3: might say, Okay, maybe I don't want to spend as
16:12
Speaker 3: much on used vehicles wholesale because I don't know if
16:16
Speaker 3: I'm going to be able to sell them for as
16:18
Speaker 3: much as i'd like to. So it could be some
16:20
Speaker 3: kind of temporarily weakened demand just because a lot of
16:24
Speaker 3: people bought cars in February, March, and April and now
16:28
Speaker 3: don't need them right now. So that's that's part of it.
16:31
Speaker 4: Yeah.
16:32
Speaker 3: The other thing that we're seeing from automakers is by
16:36
Speaker 3: and large, they're trying to hold on pricing right now
16:40
Speaker 3: while eating the cost of tariffs, and it's showing up
16:42
Speaker 3: in their earnings that way.
16:44
Speaker 4: There are some companies where we point to to say, okay,
16:46
Speaker 4: like look at a tariff impact for producing widgets or
16:49
Speaker 4: golf balls or whatever it might be, And you say, okay, yeah,
16:52
Speaker 4: when you add in all the marketing costs and all
16:54
Speaker 4: the other things, you know, the tariff impact itself isn't
16:57
Speaker 4: going to be what breaks the camels back. When you
16:59
Speaker 4: talk about these automakers, I mean General Motors in the
17:03
Speaker 4: last quarter.
17:04
Speaker 3: Twenty nine percent profit reduction because of tariff costs.
17:07
Speaker 4: I mean it's huge. It ate up like all of
17:10
Speaker 4: their profit in the most recent quarter just the tariffs alone.
17:13
Speaker 4: And so you look around here and you say, okay,
17:16
Speaker 4: how long are they going to hold the line on that?
17:18
Speaker 4: How long are investors going to allow them to hold
17:21
Speaker 4: the line on that? And what does it do? I'm
17:24
Speaker 4: with you that I don't think American consumers are terribly
17:28
Speaker 4: excited about seeing car prices go up two three thousand dollars.
17:34
Speaker 4: But I definitely don't think shareholders of these companies are
17:38
Speaker 4: excited to see them just sit there and say, yeah,
17:41
Speaker 4: we'll just take a massive cut to our profit margin,
17:43
Speaker 4: and that is what it is.
17:46
Speaker 3: So I think the hope that automakers have is that
17:52
Speaker 3: tariffs are lower in the future that they than they are.
17:54
Speaker 4: Today, especially for Canada and Mexico.
17:57
Speaker 3: Right, And there are a couple different ways they can
17:58
Speaker 3: get there. First, you have, you know, some agreements with
18:00
Speaker 3: Canada or Mexico where the auto rates get lowered, similar
18:03
Speaker 3: to what we saw with Japan and the EU. So that's,
18:06
Speaker 3: you know, one possibility. The other one is, hey, you've
18:10
Speaker 3: got the Court of Appeals, the Federal Circuit Court of
18:14
Speaker 3: Appeals that had the hearing last week on the appeal
18:17
Speaker 3: of the constitutionality of the tariffs. There's a chance you
18:21
Speaker 3: could end up with a lot of these tariffs being
18:22
Speaker 3: struck down. Ye, And I'm sure, look, there's a pretty
18:25
Speaker 3: good chance. I would assume it ends up getting appealed
18:28
Speaker 3: to the Supreme Court, but I don't know how they
18:30
Speaker 3: end up ruling, And so ultimately, if you're an automaker,
18:35
Speaker 3: part of your calculus right now is some combination of, Hey,
18:39
Speaker 3: maybe these tariffs can get negotiated lower in the coming months,
18:43
Speaker 3: or maybe they end up not you know, being able
18:46
Speaker 3: to go into effect. And two things happen then, By
18:49
Speaker 3: the way, the first is that great, we don't have
18:52
Speaker 3: to you know, pay these on future vehicles and parts.
18:54
Speaker 3: The second part, well, the previous tariffs have to be refunded, right,
18:58
Speaker 3: and that means all that it comes back over to us,
19:01
Speaker 3: and great, we actually we did the right thing by
19:03
Speaker 3: not moving pricing. I don't know where this is going
19:06
Speaker 3: to end up, but that could be. How they're thinking
19:08
Speaker 3: about it, at least for now, is hey, let's just
19:10
Speaker 3: buy some time, see what things look like at the
19:12
Speaker 3: end of the year, and then we can assess from there.
19:14
Speaker 4: Yeah, but I don't know. I mean, it's an absence
19:18
Speaker 4: of change. I would expect production cuts quite honestly, because
19:22
Speaker 4: I don't think demand is there for higher price cars.
19:25
Speaker 3: We'll see, we'll see. Let's take a quick break, and
19:29
Speaker 3: when we return, it's Wall Street.
19:31
Speaker 1: Watch Like us on Facebook and follow us on Twitter
19:44
Speaker 1: at TFE show. Breaking business news is always first on
19:49
Speaker 1: the Financial Exchange radio network. Time now for Wall Street.
19:54
Speaker 1: Watch a complete look at what's moving market so far
19:57
Speaker 1: today right here on the Financial Exchange. Inge radio network.
20:01
Speaker 5: Markets in mixed territory after reciprocal tariffs and several countries
20:05
Speaker 5: went into effect at midnight. The tech sector also seeing
20:08
Speaker 5: a boost from chip makers after President Trump unveiled a
20:12
Speaker 5: one hundred percent tariff on imported chips, but not for
20:14
Speaker 5: companies building in the US. Right now, the Dow is
20:18
Speaker 5: off by nearly three tenths of one percent, or one
20:21
Speaker 5: hundred and twenty points. SMP five hundred is up by
20:25
Speaker 5: nearly two tenths of one percent or eleven points. Nasdaq
20:28
Speaker 5: is up by over six tenths of one percent, or
20:31
Speaker 5: one hundred and thirty eight points. Russell two thousand is
20:34
Speaker 5: edging about a tenth of a percent higher. Ten year
20:37
Speaker 5: treasure real is flat at four point two two seven percent,
20:41
Speaker 5: and crude oil off about a quarter percent today, trading
20:45
Speaker 5: just above sixty four dollars a barrel. President Trump took
20:49
Speaker 5: to truth social this morning, calling for Intel CEO Lip
20:53
Speaker 5: Boot Tan to resign immediately. Tan was named Intel CEO
20:57
Speaker 5: back in March. Intel shares are down by three percent. Meanwhile,
21:01
Speaker 5: Apple adding to its gains from yesterday and is up
21:04
Speaker 5: another two percent today after the tech chine announced to
21:07
Speaker 5: extra one hundred billion dollars in US manufacturing commitment. Sticking
21:11
Speaker 5: with Apple related news, where Corning shares are up over
21:15
Speaker 5: one percent after Apple said it would expand its partnership
21:18
Speaker 5: with the Precision glass maker as part of its US push.
21:22
Speaker 5: Another Apple partner in Rare Earth Minor MP Materials, also
21:26
Speaker 5: seeing gains of over five percent. Elsewhere, Eli Lilly sharer
21:30
Speaker 5: sinking fourteen percent after the drug maker said its experimental
21:34
Speaker 5: weight loss pill help people lose up to twelve percent
21:37
Speaker 5: of body weight, a bit less than Wall Street expected,
21:41
Speaker 5: Door Dash shares arising over one percent after the food
21:43
Speaker 5: delivery app swung to a profit and posted better than
21:47
Speaker 5: expected quarterly revenue lift posted revenue and disappointment trips or
21:53
Speaker 5: Disappointing Trips data. However, that stock is climbing over two
21:57
Speaker 5: percent higher. And Airbnb logged high earnings and sales in
22:01
Speaker 5: the previous quarter, but said it expects pressure on margins
22:05
Speaker 5: in the coming quarters due to investments in new businesses.
22:09
Speaker 5: Airbnb shares are down by seven percent. I'm Tucker Silvan
22:13
Speaker 5: that is Wallstree.
22:14
Speaker 3: Watch, Mike, I've got some breaking personal news. Actually hit me.
22:22
Speaker 3: I got a text from Linda Jackson, a recruiter at Amazon,
22:25
Speaker 3: just now. Oh no, Yeah, my resume has been recommended
22:29
Speaker 3: by several online recruitment agencies. Uh huh, and after an
22:33
Speaker 3: initial review, they've decided to interview me for the information
22:37
Speaker 3: system's manager position.
22:39
Speaker 4: Wow, it's probably completely remote.
22:41
Speaker 3: I can work only twenty to sixty minutes daily and
22:44
Speaker 3: still earn two hundred to five hundred dollars a day,
22:47
Speaker 3: and I also get fifteen to twenty days of paid
22:50
Speaker 3: annual leave. I don't know if that has to be
22:51
Speaker 3: taken in twenty minute increments because I only work twenty
22:54
Speaker 3: minutes a day. Send me that link, bro, But I
22:57
Speaker 3: can reach out to them via WhatsApp as long as
22:59
Speaker 3: I'm twenty five years or older, which they should know
23:02
Speaker 3: if they've actually read my resume that I'm twenty one right.
23:07
Speaker 3: So this is just a nice little reminder that, hey,
23:10
Speaker 3: if you get text messages from corporalzig at gurblgurble dot whatever,
23:16
Speaker 3: it's not actually the Amazon recruiter, and don't respond to them,
23:20
Speaker 3: even if you want to tell them to, you know,
23:23
Speaker 3: take their ball and go home. Yeah, it's uh, because
23:26
Speaker 3: then you'll just get ten more of those people coming through.
23:29
Speaker 4: So I did make that mistake earlier this year. I
23:31
Speaker 4: think I talked about it on air where I couldn't
23:34
Speaker 4: help myself and just led them along for ten minutes,
23:36
Speaker 4: and then my phone did not stop ringing every three
23:41
Speaker 4: minutes for a month and a half.
23:44
Speaker 3: Yeah, So in any case, beware, just a little reminder.
23:47
Speaker 3: Lots of scams out there, and the Amazon recruiter won't
23:51
Speaker 3: ask if you're twenty five and over though, but to
23:53
Speaker 3: be clear you took the job, well, yeah, I can
23:56
Speaker 3: do it during breaks of the show. I mean it's
24:00
Speaker 3: like we're good there. Piece in the Bloomberg talking about
24:04
Speaker 3: the labor market, specifically as it relates to the FED.
24:07
Speaker 3: Three Federal Reserve policymakers voice concerns about the US labor
24:10
Speaker 3: market on Wednesday that pointed towards a potential interest rate
24:13
Speaker 3: cut in September. So this is on the back of
24:15
Speaker 3: the weaker than expected jobs report that came out last Friday.
24:20
Speaker 3: I also want to discuss in this context the jobbles
24:25
Speaker 3: claims numbers from this morning. Initial jobs claims up very
24:28
Speaker 3: modestly from two hundred nineteenenty two twenty six not much
24:32
Speaker 3: of a story. They's nothing there again until initial jobbles
24:34
Speaker 3: claims get over two hundred and sixty thousand for three weeks.
24:38
Speaker 3: Don't even talk to me about, you know, anything in
24:40
Speaker 3: initial jobbles claims. It's just not a problem. Continuing jobles claims, though,
24:44
Speaker 3: bumped up a little bit more than expected, back to
24:46
Speaker 3: one point nine seven four million. This represents a five
24:48
Speaker 3: point two percent year over year increase, which is a reacceleration.
24:53
Speaker 3: And this is something that we had watched in late
24:55
Speaker 3: May and early June as it was rising, and then
24:58
Speaker 3: it kind of fell the last few weeks, and we say, okay,
25:01
Speaker 3: this is there's nothing to see here, but this is
25:03
Speaker 3: a new cycle high for continuing jobbles claims, and it's
25:07
Speaker 3: one week, so let's not overreact to it. But now
25:10
Speaker 3: it's kind of okay, let's monitor this over the next
25:12
Speaker 3: few and see how it develops through August, because this
25:17
Speaker 3: number is something that does matter in the context of
25:19
Speaker 3: the broader unemployment rate, and we need to pay attention
25:23
Speaker 3: to it to see if anything's happening.
25:25
Speaker 4: Here, and you know, feeds right into the narrative that
25:28
Speaker 4: we've been talking about when it comes to the jobs market,
25:30
Speaker 4: which is not a lot of layoffs, not a lot
25:33
Speaker 4: of hires, really tough to find a job if you're not.
25:36
Speaker 3: Working, it is, it's just kind of sagnant. It's it's
25:41
Speaker 3: so what do you do as a FED official here?
25:43
Speaker 2: Right?
25:43
Speaker 4: I mean, you have this story where three new feti fish. Already,
25:46
Speaker 4: you've had Waller and Bowman calling for a cut. This week,
25:51
Speaker 4: you've got Mary Daily, Lisa Cook, and Neil Cashcari voicing
25:55
Speaker 4: concerns about the labor market. So you're developing more of
25:58
Speaker 4: a uh, maybe not, but more of a quorum here
26:01
Speaker 4: broadening out the idea that the FED should be cutting.
26:03
Speaker 4: And I certainly don't think there's anybody there that is
26:06
Speaker 4: on the opposite side of that. There's nobody there saying
26:08
Speaker 4: that they should hike rates. But I think J. Powell
26:11
Speaker 4: has been pretty firmly in the camp of I'm not
26:14
Speaker 4: sure about this job weakness data, and we need to
26:19
Speaker 4: pay attention to that unemployment rate, which to be clear,
26:23
Speaker 4: hasn't been moving.
26:24
Speaker 3: No, it hasn't been moving because of demographic shifts in
26:28
Speaker 3: the labor market coupled with shifts in the immigration environment
26:32
Speaker 3: to lower immigration at this point, So I think you
26:36
Speaker 3: try to walk through this, and this is not how
26:40
Speaker 3: the FED would do it, but I'm going to just
26:42
Speaker 3: like walk through if I were sitting on the FED, yep,
26:48
Speaker 3: where am I going to have the least regret from
26:50
Speaker 3: a policy perspective? And again, to be clear, this is
26:53
Speaker 3: not how the FED would do it, nor really how
26:56
Speaker 3: they should do it, but it's how I would, which
26:57
Speaker 3: is why I'm not on the FED. Other than that,
27:00
Speaker 3: I'm other than being unqualified, I'm you know, fine, if
27:06
Speaker 3: I cut rates and inflation goes to the moon, not
27:13
Speaker 3: to nine percent, but let's say I cut rates and
27:15
Speaker 3: inflation goes back up to five or six. How much
27:18
Speaker 3: you got four from here? Honestly, headlines got a decent
27:22
Speaker 3: chance of getting into the high threes anyways, So like
27:24
Speaker 3: you might be there. If I cut rates and inflation
27:29
Speaker 3: goes to five or six, but I save the labor market.
27:34
Speaker 3: How does that compare with me not cutting rates and
27:39
Speaker 3: inflation stays under four but unemployment goes to six? Which
27:46
Speaker 3: one of those scenarios do I prefer? It's really like,
27:51
Speaker 3: if I'm being one hundred percent honest, if you asked
27:54
Speaker 3: me five years ago, I would say cut rates.
27:58
Speaker 4: Yep.
28:00
Speaker 3: In the context of the experience we went through in
28:02
Speaker 3: twenty twenty I'm sorry twenty twenty two that made it
28:05
Speaker 3: really clear to me that we really hate inflation around here,
28:11
Speaker 3: and even if it saves jobs, we're not really comfortable
28:16
Speaker 3: with inflation as the mechanism in order to do so,
28:21
Speaker 3: I land on okay, all else being equal in that scenario,
28:25
Speaker 3: I don't cut now. The thing that we are seeing
28:29
Speaker 3: is some labor market weakness that suggests it's more imminently
28:33
Speaker 3: worsening to a problematic level than where inflation could be going. Inflation. Look,
28:39
Speaker 3: you could have a case where inflation gets into the
28:41
Speaker 3: three and a half to four range, and yes it's problematic,
28:45
Speaker 3: but as long as it's not going to five or six, okay,
28:47
Speaker 3: maybe you can squeak by. When you get unemployment moving up,
28:52
Speaker 3: you say okay, like yeah, once it gets moving, it
28:55
Speaker 3: usually keeps moving. And so this is why I've said,
29:00
Speaker 3: since I don't know, since we saw that weakness in
29:04
Speaker 3: continuing claims called it late May early June, like yeah,
29:07
Speaker 3: like the FED could be justified in cutting here, and
29:10
Speaker 3: I don't think anyone would blame them, is it, you know,
29:13
Speaker 3: the perfect move? No, there's no perfect move. When you
29:16
Speaker 3: have inflation rebounding a little bit, yeah, and labor market weakness.
29:20
Speaker 3: But ultimately, given what they've talked about, I think they
29:24
Speaker 3: probably err on the side of cutting, and I think
29:27
Speaker 3: there's a compelling case that they should be cutting at
29:29
Speaker 3: the next meeting.
29:30
Speaker 4: I was going to say, unless the unemployment rate goes
29:33
Speaker 4: down in the what's that this September, the August August numbers, Yeah,
29:38
Speaker 4: that'd be the only contact I think where the Fed
29:40
Speaker 4: stays where they are. If the unemployment rate stays at
29:43
Speaker 4: four to two or goes up, I think they're cutting,
29:45
Speaker 4: and markets seem to think so. The Chicago mercotalks change
29:48
Speaker 4: pricing in a ninety three percent likelihood of a rate
29:51
Speaker 4: cut in September.
29:52
Speaker 3: Here's just another like tough scenario just to consider it.
29:54
Speaker 3: And again this is just talking about kind of an
29:56
Speaker 3: extension of what the Fed's facing. Let's say we have
30:00
Speaker 3: a month, Mike, where there are one hundred thousand jobs
30:02
Speaker 3: that are lost. I'm not saying we will or won't,
30:04
Speaker 3: but let's say that we have one. I mean, it
30:06
Speaker 3: wouldn't be shocking.
30:07
Speaker 4: We've had twenty five thousand created for the last couple
30:10
Speaker 4: of months.
30:10
Speaker 3: Like that's thirty five thousand. Okay, let's say that there's
30:14
Speaker 3: a month where there's one hundred thousand jobs lost. But
30:17
Speaker 3: let's say that because more people are retiring and there
30:22
Speaker 3: are fewer non US citizens in the United States, what
30:26
Speaker 3: if the unemployment rate drops from four to two to
30:28
Speaker 3: four to one at the same time that you lose jobs.
30:30
Speaker 4: What happens is what do year zoo?
30:32
Speaker 3: You're screwed, right, Like this is the very like this
30:36
Speaker 3: is a real challenge here because on the thing the
30:39
Speaker 3: FED looks at is the unemployment rate. The Fed. Here's
30:45
Speaker 3: the other reason why this whole kurf fluffle about like
30:47
Speaker 3: job revisions is kind of just a red herring. The
30:50
Speaker 3: FED doesn't look at non farm payrolls. They do not
30:54
Speaker 3: look at that, partly because it gets revised on a
30:56
Speaker 3: regular basis, whereas the unemployment rate does not. Right, and
31:00
Speaker 3: so the FED looks at the unemployment rate. If you
31:04
Speaker 3: have an economy where the unemployment rate is going down,
31:07
Speaker 3: even if employment is falling because a fewer people that
31:10
Speaker 3: could be in the workforce, I don't know what the
31:13
Speaker 3: FED does there, and I don't know that anything they
31:15
Speaker 3: could do would be useful. Agreed, that's stagflation, Like, I
31:20
Speaker 3: don't know what to do in that scenario.
31:22
Speaker 4: Yeah, because well, let's hope you don't get there. It'd
31:25
Speaker 4: be really bad, it would be quite dodgy. So we'll
31:29
Speaker 4: just have to see what we get.
31:30
Speaker 3: But we're at this demographic event horizon right now where
31:34
Speaker 3: there are more boomers retiring each day than there are
31:37
Speaker 3: gen zers coming into the workforce, and so it's something
31:42
Speaker 3: that you just have to have in the back of
31:43
Speaker 3: your mind. Like you could see a month with negative
31:45
Speaker 3: job growth but the unemployment rate falls, and I don't
31:49
Speaker 3: know what you do there. I don't know what you do.
31:53
Speaker 3: Let's take a quick break when we come back a
31:55
Speaker 3: little bit more on the labor market, specifically the youth.
32:00
Speaker 3: What are we gonna do with all the youth youth unemployment.
32:03
Speaker 3: It's a major problem in the United States right now.
32:06
Speaker 3: We'll fill you in on that when we return.
32:09
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32:27
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32:34
Speaker 5: That was a great time to register for the DAV
32:37
Speaker 5: five K, taking place Saturday, November eighth at Fort Independence
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32:53
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32:57
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33:03
Speaker 3: President Trump to sign order easing path for private assets
33:06
Speaker 3: in four to one K I'll quote here. President Donald
33:09
Speaker 3: Trump will sign executive order Thursday. The aims to allow
33:12
Speaker 3: private equity, real estate, cryptocurrency, and other alternative assets, and
33:15
Speaker 3: four to one k's major victory for industries looking to
33:18
Speaker 3: tap some of the roughly twelve point five trillion held
33:20
Speaker 3: in those retirement accounts. The order will direct the Labor
33:23
Speaker 3: Department to reevaluate guidance around alternative asset investments in retirement
33:27
Speaker 3: plans subject to the ARISA Act of nineteen seventy four.
33:31
Speaker 4: So I know we in America are always on the
33:34
Speaker 4: more is better train, and you know, as excited as
33:38
Speaker 4: I am to have forty different jellies to choose from
33:41
Speaker 4: when I go to the grocery store, I'm just not
33:43
Speaker 4: sure it applies to four oh one K plans. In fact,
33:47
Speaker 4: I would argue that one of the best retirement plans
33:50
Speaker 4: out there the Thrift Savings Plan, which has like nine
33:54
Speaker 4: different options to choose from. If if that is pretty
33:59
Speaker 4: darn strong. But in either case, it does appear that
34:02
Speaker 4: four to one ks are going to get opened up
34:04
Speaker 4: to a whole bunch of new possible investments, from variable
34:08
Speaker 4: annuities to crypto potential investments. Private equity might be in
34:14
Speaker 4: there in the future. It's not going to happen overnight,
34:17
Speaker 4: but I would just urge everyone to proceed with a
34:20
Speaker 4: lot of caution when it comes to these new choices
34:23
Speaker 4: because they are very unlikely to behave a lot like
34:28
Speaker 4: the other investments in your four oh one K. And
34:30
Speaker 4: I can't tell you how many times I hear people
34:33
Speaker 4: primarily making a decision about what to invest in their
34:36
Speaker 4: four oh one K based purely on what it did
34:38
Speaker 4: last year, and that can lead to some bad decisions
34:42
Speaker 4: when you are investing in something that could have as
34:45
Speaker 4: much volatility as some of these types of investments that
34:48
Speaker 4: they're talking putting in there. And so it goes back
34:50
Speaker 4: to a very core fundamental understand how you are investing,
34:53
Speaker 4: be able to explain it to a sixth grader, and
34:58
Speaker 4: that's going to become more challenging with your four one.
35:00
Speaker 4: If you have questions about how these changes could affect you,
35:03
Speaker 4: please call the folks at Armstrong Advisory Group. We spend
35:07
Speaker 4: a lot of time with clients and their workplace retirement plans,
35:11
Speaker 4: understanding them, evaluating them, and just making them part of
35:16
Speaker 4: the overall plan. The numbers eight hundred three nine three
35:19
Speaker 4: for zero zero one for the Armstrong Advisory Group again,
35:22
Speaker 4: you can reach us at eight hundred three nine three
35:25
Speaker 4: four zero zero one.
35:27
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
35:29
Speaker 1: registered investment advisor. Nothing in the ad or in any
35:32
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
35:35
Speaker 1: your own financial, tax into state planning advisors before making
35:38
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
35:41
Speaker 1: advisory services.
35:42
Speaker 3: Peace from Bloomberg. Opinion by Connor sen Youth is losing
35:46
Speaker 3: two experience in the job market. And what this really
35:51
Speaker 3: gets at is that look, with how companies are evaluating
35:56
Speaker 3: their hiring right now, you can you to see challenges
36:02
Speaker 3: for new college grads and by the way, new high
36:05
Speaker 3: school grads getting into the labor market successfully right now.
36:10
Speaker 3: And so ultimately I think that this is something where
36:15
Speaker 3: it's different from prior tech cycles simply because look, during
36:20
Speaker 3: the tech bubble, one of the big things that we
36:21
Speaker 3: saw was a huge increase in hiring. Companies were hiring
36:25
Speaker 3: left and right during the tech bubble, and we cover
36:28
Speaker 3: the story last week or maybe the week before about
36:31
Speaker 3: how a lot of even startups now are finding that
36:34
Speaker 3: they're trying to run even leaner with lower headcount because
36:38
Speaker 3: they find that that makes them more attractive to VC
36:41
Speaker 3: because they're saying that they can do stuff with AI
36:43
Speaker 3: instead of with headcount.
36:44
Speaker 4: Heck, even publicly trade companies are getting rewarded correctly.
36:48
Speaker 3: And so I think that when we look at this,
36:51
Speaker 3: it's something that again, whether it's AI, whether it's overall
36:56
Speaker 3: you know hiring trends, whether it's demographics, that there are
36:58
Speaker 3: a few different things working now against you know, folks
37:02
Speaker 3: in their twenties trying to get jobs that some of
37:05
Speaker 3: them are likely cyclical and they're going to a bait
37:08
Speaker 3: over the next year or so. Some of them might
37:10
Speaker 3: be a more secular trend that goes on for, you know,
37:12
Speaker 3: an extended period of time. But I gotta tell you,
37:16
Speaker 3: having talked with an awful lot of people that either
37:20
Speaker 3: are in their twenties or that interact with people in
37:23
Speaker 3: that demo a lot. Think you know, professors, hiring managers,
37:27
Speaker 3: things like that, there's a real fear of people from
37:31
Speaker 3: people in their twenties, that this is how they like
37:35
Speaker 3: their labor market's going to be. And the one thing
37:37
Speaker 3: I would caution them on is part of that could
37:40
Speaker 3: be just because look, when you're twenty three and you've
37:43
Speaker 3: been in the labor market for a year, it's all
37:45
Speaker 3: you know. But ultimately a year is a really short
37:47
Speaker 3: period of time and things rarely stay that way forever.
37:51
Speaker 3: So but might it.
37:51
Speaker 4: Require some reinvention on one sales part? Yeah, yeah, yeah,
37:55
Speaker 4: I might.
37:55
Speaker 3: I could. It could take a quick break here, and
38:00
Speaker 3: when we return the good news, we still got a
38:03
Speaker 3: lot more to get to. And so you're stuck with
38:06
Speaker 3: us for another hour here on the financial exchange