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What is Trump's biggest economic threat? · The Financial Exchange Show

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Speaker 2: Friday here on the Financial Exchange is Chuck, Mike and
1:13
Speaker 2: Tucker with you, And basically it's it's been a fairly
1:19
Speaker 2: uneventful week overall through yesterday. We're still only part way
1:24
Speaker 2: through today. But ultimately, you take a look at the
1:28
Speaker 2: S and P five hundred standard and pores five hundred,
1:31
Speaker 2: that is, and if you look at it, you know,
1:35
Speaker 2: as of last Friday, yes to be closed at sixty
1:39
Speaker 2: two thirty eight. Before today, you know, it was basically
1:42
Speaker 2: hanging out right around sixty three thirty so maybe up
1:45
Speaker 2: like one and a half percent, largely on Mondays, you know,
1:47
Speaker 2: big reversal of Friday's sell off, and then we just
1:50
Speaker 2: kind of treaded water the last few days. Today you're
1:53
Speaker 2: back up a little bit as well, about three quarters
1:56
Speaker 2: of a percent, and so we'll see where this finishes.
1:59
Speaker 2: We've had a couple of these days this week where
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Speaker 2: the morning started off well and then we slid through
2:03
Speaker 2: the rest of the day. So yes, yeah, we'll see
2:06
Speaker 2: how this this week evolves here. But ultimately you take
2:10
Speaker 2: a look at your major indices, and the S and
2:13
Speaker 2: P five hundred still within sniffing distance of new all
2:16
Speaker 2: time highs, but about three quarters of a percent off
2:20
Speaker 2: at this point. You take a look at what we've
2:23
Speaker 2: got on the Nasdaq, which has made new closing all
2:28
Speaker 2: time highs this week. This on the back of you know,
2:31
Speaker 2: kind of Apple staging a little bit of a rally
2:33
Speaker 2: the last couple of days. More than anything else. Semiconductor
2:36
Speaker 2: stocks had a nice day on Wednesday, but then not
2:39
Speaker 2: really a great day yesterday, And so I think this
2:43
Speaker 2: is a market that you know, faced some challenges from
2:46
Speaker 2: that employment report last Friday, and to this point is
2:50
Speaker 2: still largely you know, shrugging them off in the aggregate,
2:54
Speaker 2: even though when you look under the hood, it still
2:55
Speaker 2: is a relatively small number of stocks that are driving
2:58
Speaker 2: the ship, which can be fine, but the problem is
3:01
Speaker 2: if those run out of steam, then you know, you've
3:03
Speaker 2: kind of got a real problem there.
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Speaker 3: Yeah, and I don't I know this gets overplayed sometimes,
3:09
Speaker 3: but we are in that summer duldrums right.
3:12
Speaker 2: August is the lowest trade volume month of the year.
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Speaker 3: Historically, July is the second, and there may be something
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Speaker 3: to said about that. You know, junior associate at the
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Speaker 3: helm of the trade desk in August, when all the
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Speaker 3: senior partners are out so we will see where things go.
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Speaker 3: But that could be explaining some of the kind of
3:30
Speaker 3: funky swings that we have seen over the course of
3:32
Speaker 3: the last week. Yeah, I mean, there's also been a
3:34
Speaker 3: ton of big news, so I don't wanted to minimize that,
3:37
Speaker 3: especially last week, but even this week with the tariff announcements.
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Speaker 2: So ultimately, you've got stocks in a pretty good spot
3:43
Speaker 2: right now, as far as you know where the major
3:46
Speaker 2: indices sitting in the S and P five hundred is
3:49
Speaker 2: right now less than one percent off its all time highs,
3:54
Speaker 2: the Nasdaq continuing to move through some new all time highs,
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Speaker 2: and the Jones Industrial Average doesn't have you know, as
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Speaker 2: much tech exposure. It is a couple percentage points away
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Speaker 2: from the all time highs that it hit a couple
4:08
Speaker 2: of weeks ago. So again, I don't know that you know,
4:12
Speaker 2: we have any definitive read on on where this market
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Speaker 2: is going. But what I can tell you, look, we're
4:17
Speaker 2: mostly through earning season at this point. The heavy lifting
4:20
Speaker 2: has been done. You still have some retailers that are
4:22
Speaker 2: going to report earnings in the next couple of weeks.
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Speaker 2: You get all of you know, the home depots and
4:27
Speaker 2: the lows and all those guys coming out, but the
4:30
Speaker 2: heavy lifting has been done by big tech. The only
4:33
Speaker 2: one of those that is left right now is in video,
4:36
Speaker 2: which is always a couple of weeks late. And so yeah,
4:40
Speaker 2: it's it's kind of you know, you look at how
4:43
Speaker 2: August tends to shape up in terms of just the calendar.
4:46
Speaker 2: We got some CPI data next week that'll be interesting
4:49
Speaker 2: retail sales as well, but then after that it's pretty
4:52
Speaker 2: quiet until you get to the post labor day period,
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Speaker 2: and that's when things tend to get moving again combination
5:00
Speaker 2: of you know, some more data that comes through. You
5:03
Speaker 2: got a FED meeting in September, that's that's gonna happen
5:06
Speaker 2: as well, So you know, things tend to pick up then.
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Speaker 2: But yeah, the next few weeks usually don't have any
5:12
Speaker 2: significant fireworks just because the calendar is kind of skewed
5:16
Speaker 2: to you know, earlier in the summer, if anything, you know,
5:19
Speaker 2: kind of like what we've seen the last couple of
5:21
Speaker 2: summers where July and early August. You know, I've had
5:24
Speaker 2: a couple of things here and there, but that's basically
5:26
Speaker 2: been it.
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Speaker 3: Yeah, so it could then therefore be policy information that
5:33
Speaker 3: comes out that could be what's driving markets, right, You
5:35
Speaker 3: get more terif announcements, you get more escalation or de escalation,
5:39
Speaker 3: and that could be what actually ends up moving things
5:41
Speaker 3: over the course of the next few weeks until you
5:44
Speaker 3: get to that fed A reserve meeting where everyone's betting
5:47
Speaker 3: that rates end up coming down.
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Speaker 2: So that's where we stand in terms of, you know,
5:51
Speaker 2: kind of the big equity markets. Yesterday, I'm sitting at home,
5:55
Speaker 2: it's around eight forty five or so, finished watching an
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Speaker 2: episode of show. Pulled up my phone. I said, Okay,
6:02
Speaker 2: let me just see if anything interesting is going on
6:04
Speaker 2: futures wise, And I'm flicking through and I see gold
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Speaker 2: futures up one in three quarters percent, and I'm like,
6:13
Speaker 2: the Heck's going on here? So I'm scrolling through. I'm God,
6:19
Speaker 2: thank you, Tucker. I appreciate that. I'm scrolling through. I'm
6:23
Speaker 2: trying to find something on social media and there's not
6:25
Speaker 2: really much there. I'm looking around. I'm like, this is
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Speaker 2: kind of oddly, you know, your spidy sense kind of
6:30
Speaker 2: starts tingling. It's like, who knows something like what's going on?
6:33
Speaker 2: And finally, after you know, like ten minutes of digging.
6:36
Speaker 2: I mean, it wasn't easy to find this thing. It
6:39
Speaker 2: turns out that the United States, the Trump administration is
6:46
Speaker 2: potentially maybe kind of planning to impose tariffs on imports
6:52
Speaker 2: of one kilogram and one hundred ounce gold bars.
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Speaker 3: So are we going to have ninety nine ounce old
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Speaker 3: bars now being manufactured? I would imagine that takes some
7:03
Speaker 3: time to refine your manufacturing process to make ninety nine
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Speaker 3: ounce gold bars.
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Speaker 2: Which is why we probably won't have ninety nine ounce
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Speaker 2: gold bars. Would be my guess.
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Speaker 3: I love this trade stuff because we learned all sorts
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Speaker 3: of new things. I had no idea until today that
7:16
Speaker 3: Switzerland ends up refining about two thirds to three quarters
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Speaker 3: of the world's gold supply.
7:23
Speaker 2: Who no, you think about love gold? Yes, I know,
7:27
Speaker 2: I understand. The factories that make the gold bars also
7:31
Speaker 2: make the chocolate bars. It turns out Toblarone is right
7:34
Speaker 2: down the street. So I think here's the thing. And
7:38
Speaker 2: this was originally reported by the Financial Times late yesterday.
7:44
Speaker 2: I'll quote from them. The USS and post tariffs on
7:47
Speaker 2: imports of one kilo gold bars in a move that
7:49
Speaker 2: threatens to up end the global bullyan market until a
7:52
Speaker 2: fresh blow to Switzerland, the world's largest refining hub. The
7:55
Speaker 2: CBP's decision stands in sharp contrast with the industry's previous
7:58
Speaker 2: expectations that the these types of gold bars should be
8:01
Speaker 2: classified using a different customs code that is exempt from
8:04
Speaker 2: Trump's country wide tariffs. One Kiwa bars are the most
8:08
Speaker 2: common form traded on the Comics, the world's largest gold
8:11
Speaker 2: futures market, and comprise the bulk of Switzerland's bulliant exports
8:15
Speaker 2: to the United States. So now you get into the
8:19
Speaker 2: weird thing where we have to start talking about what's
8:21
Speaker 2: the difference between gold futures and gold spot and glad
8:25
Speaker 2: you're tackling it, Chuck. Look, here's the deal is. Gold
8:30
Speaker 2: futures are to take delivery of gold at a time
8:33
Speaker 2: in the future. You don't have to if he close
8:34
Speaker 2: out the contract beforehand, which is why most of the
8:36
Speaker 2: time there's no physical delivery that happens. Who was the
8:40
Speaker 2: person during the pandemic that what they end up taking
8:43
Speaker 2: delivery of by mistake? It wasn't oil. It was something
8:46
Speaker 2: like coffee or something like that. I can't remember, but
8:48
Speaker 2: they ended up with.
8:49
Speaker 3: New traders not understanding how futures contracts work and accidentally
8:53
Speaker 3: taking I don't know if that was actually during COVID,
8:55
Speaker 3: but there was risk of it happening.
8:56
Speaker 2: Yeah, let me see. But yeah, I can't find anything
9:04
Speaker 2: just googling quickly again, Like I gotta tell you, in
9:08
Speaker 2: the last couple of weeks, I've shifted more and more
9:10
Speaker 2: of my search activity to AI. Even if it's not right,
9:13
Speaker 2: it's faster and then I can figure out if it's
9:15
Speaker 2: right from there. Whereas like the front page of Google
9:18
Speaker 2: and induc duck going stuff kind of useless. Now I
9:21
Speaker 2: just get a whole bunch of useless stuff. So anyways,
9:25
Speaker 2: comics futures, you're saying, Okay, I've got a contract for
9:28
Speaker 2: what the price of gold is going to be in September, October, November,
9:32
Speaker 2: whatever month it is. Gold spot is Hey, if you
9:36
Speaker 2: want gold today, how much does it cost you to
9:39
Speaker 2: get it? And typically these track each other pretty closely.
9:43
Speaker 2: There can be some small divergences here and there for
9:46
Speaker 2: you know, technical reasons, uh, but they're generally tracked pretty closely. Instead,
9:52
Speaker 2: what we've now seen is this is widened in the
9:54
Speaker 2: last week or so as these you know, new tariff
9:56
Speaker 2: announcements have gone into effect and so now you've got
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Speaker 2: a one hundred dollars per ounce divergence between gold futures
10:04
Speaker 2: and gold spot. Now, if you think that you can,
10:08
Speaker 2: you know, exploit this by being able to arbitrage it,
10:12
Speaker 2: you can't. And the reason why is if hedge funds could,
10:16
Speaker 2: they would have already. Okay, so you can't be like, well,
10:19
Speaker 2: I'm gonna buy gold spot and sell it on the
10:22
Speaker 2: futures market. Trust me, I think the hedge funds would
10:25
Speaker 2: have thought of this. They're not dumb. They get paid
10:28
Speaker 2: to do this. Interestingly enough, So what this actually means
10:33
Speaker 2: for gold and the price of gold and any of this,
10:38
Speaker 2: If I'm being one hundred percent ounce, I have no idea.
10:41
Speaker 3: And there's a lot of people who think that this
10:44
Speaker 3: was misinterpreted and that the tariffs on these gold products
10:47
Speaker 3: are going to be waved in the next few days
10:49
Speaker 3: as well, so like this might just go away soon,
10:53
Speaker 3: which is the danger of talking about tariffs. But this
10:56
Speaker 3: one's actually implemented. So we said we weren't going to
10:59
Speaker 3: talk about hypothetic tariffs. This isn't hypothetical.
11:01
Speaker 2: This is real. So with moving prices, yes, So with
11:05
Speaker 2: that now, most of that price game reversed in overnight trading.
11:08
Speaker 2: Sure again, it was up one point seventy five percent
11:11
Speaker 2: around nine pm last night. This morning it was about
11:14
Speaker 2: half a percent. Now it's up one point one, but
11:16
Speaker 2: that could also be due to a couple other things moving,
11:19
Speaker 2: things like fixed income markets and things along those lines.
11:22
Speaker 2: So we're just gonna have to watch and see what
11:24
Speaker 2: happens on this puppy. Let's take a quick break when
11:27
Speaker 2: we return. Yesterday afternoon, we got an indication from the
11:31
Speaker 2: Trump administration who they would be naming UH to fill
11:35
Speaker 2: Adrana Kugler's chair at the FED for the next several months.
11:40
Speaker 2: We'll talk about who it is and what it means.
11:43
Speaker 2: Right after this.
11:46
Speaker 1: Tara Fleevery's in high gear. We've got the latest on
11:49
Speaker 1: what might be next and how long it might last.
11:52
Speaker 1: Only here on the Financial Exchange Radio Network. Text does
11:56
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12:45
Speaker 2: Yesterday afternoon, President Trump announced that his pick to phil
12:50
Speaker 2: the open slot on the Federal Reserve Board of Governors
12:54
Speaker 2: vacated by Adriana Kuguler, who is going to be heading
12:57
Speaker 2: to Georgetown to teach in the fall, is going to
13:01
Speaker 2: be Stephen Moran, who's currently the chair of the White
13:05
Speaker 2: House Council of Economic Advisors. Now, this is a path
13:09
Speaker 2: that's been followed before that you don't have to go
13:11
Speaker 2: back too far in history. Back in two thousand and three,
13:15
Speaker 2: George W. Bush named a young man by the name
13:18
Speaker 2: of Ben Bernanke as the chair of his Council of
13:20
Speaker 2: Economic Advisors, and three years later, in two thousand and six,
13:23
Speaker 2: Bernanky was made the chair of the Well actually was
13:27
Speaker 2: nominated to the Board of Governors and then shortly after
13:32
Speaker 2: was made the chair of the Fed by George W.
13:34
Speaker 2: Bush and had his term then renewed by President Obama
13:38
Speaker 2: four years later. So this is a path that we
13:41
Speaker 2: have seen before as far as the path onto the
13:46
Speaker 2: Board of Governors. Where this becomes interesting and where there's
13:49
Speaker 2: some intrigue is that in order for someone to be
13:54
Speaker 2: nominated for FED chair, they do have to be a
13:56
Speaker 2: governor on the board. And one thing that's interesting is
14:01
Speaker 2: that the President indicated this was at this point a
14:04
Speaker 2: temporary replacement until Coogler's term ends in January. So you
14:09
Speaker 2: look at this and you say, okay, there's the potential
14:12
Speaker 2: that you know, this is trying to eventually elevate Miran
14:15
Speaker 2: to that you know, post at the FED.
14:17
Speaker 3: There's also been rumors about Waller being the top pick
14:20
Speaker 3: who is already at the FED.
14:22
Speaker 2: Correct So you know, you kind of look at this
14:27
Speaker 2: and Waller's already been, you know again on the Border governors.
14:31
Speaker 2: Harsh I'm sorry, Warrish has already been on the Border
14:33
Speaker 2: governors as well, and so you kind of look at
14:37
Speaker 2: this and say, okay, if it's going to be Kevin Hassett,
14:39
Speaker 2: then your opportunity is kind of in January in order
14:42
Speaker 2: to you know, get Hassett into a place where he
14:46
Speaker 2: could be made the chair of the FED. Either way,
14:49
Speaker 2: I think that when we when we look at this.
14:51
Speaker 2: It's something where given Miran's you know, views on how
14:55
Speaker 2: he thinks the FED should operate, you look at this
14:58
Speaker 2: and you say, okay, you have you know a little
15:01
Speaker 2: bit of a change in direction of the FED that
15:03
Speaker 2: the President is trying to push for here. Obviously, you know,
15:07
Speaker 2: being just one of the governors, you can't steer the
15:10
Speaker 2: entire ship. But it certainly is something that I think,
15:13
Speaker 2: you know, we're gonna get a sense of how the
15:16
Speaker 2: Trump administration may try to impact policy from the inside,
15:21
Speaker 2: given you know kind of where Moran is coming from
15:24
Speaker 2: and what you know some of his views are as
15:26
Speaker 2: it relates to things like tariff's, inflation and down the line.
15:30
Speaker 3: I was gonna say, you know, his views on tariffs
15:32
Speaker 3: and protection's policy clearly aligned with Trump administration. He's had,
15:36
Speaker 3: you cano accountcilate kind of designed a lot of this stuff.
15:39
Speaker 3: Where would you say his views on FED independence and
15:43
Speaker 3: everything else are I mean, I know he was critical
15:45
Speaker 3: of the chair back in twenty twenty when you know
15:48
Speaker 3: a lot of stimulus was going into place during COVID,
15:51
Speaker 3: But I don't know, you know how critical he has been,
15:55
Speaker 3: for instance, of interest rates setting policy over the last
15:57
Speaker 3: couple of years.
15:59
Speaker 2: I think that I think we're just gonna have to
16:03
Speaker 2: see just I liken this too. You know, Scott Bessen
16:06
Speaker 2: who's the Treasury secretary now sure all last year, you know,
16:11
Speaker 2: writing and going on TV and saying, hey, I can't
16:13
Speaker 2: believe that we're issuing so many you know, short term
16:17
Speaker 2: t bills instead of you know, longer term. It's the
16:20
Speaker 2: only thing that's keeping the bond market from imploding its
16:22
Speaker 2: market manipulation to da da da comes in and then
16:25
Speaker 2: Bessie comes in and is doing the exact same thing.
16:27
Speaker 2: So I think some of this and this is by
16:30
Speaker 2: the way, that the case with you know, kind of
16:32
Speaker 2: any outsider at an institution. Generally, it's really easy to
16:36
Speaker 2: be critical of the actions when you're not the one
16:39
Speaker 2: driving policy. And then a lot of times, once you
16:42
Speaker 2: actually come in to you know, whatever office you're in,
16:45
Speaker 2: you kind of look around and you see the lay
16:46
Speaker 2: of the land and you're like, oh, I get why
16:49
Speaker 2: they were doing this this way. We probably have to
16:51
Speaker 2: do something kind of similar. It's it's rare that you
16:54
Speaker 2: see someone that's willing to take large scale risks deviating
16:58
Speaker 2: from what was done before, because oftentimes there are good
17:02
Speaker 2: reasons for you know, why that policy was being enacted.
17:05
Speaker 2: So I'm a big believer. I always come back to, hey,
17:08
Speaker 2: don't pay attention to what people say, pay attention to
17:10
Speaker 2: what people do. I'm more interested in seeing how uh
17:13
Speaker 2: Miron actually operates once he's at the FED, because it's
17:18
Speaker 2: easy to be critical from the outside, just as Scott
17:20
Speaker 2: Besson was, and then you start doing the same thing.
17:23
Speaker 2: So I I take kind of, you know, an open
17:26
Speaker 2: mind as to where he might go from a governance perspective,
17:29
Speaker 2: because I think ultimately, once you're kind of in that,
17:32
Speaker 2: once you have access to those levers power, you kind
17:35
Speaker 2: of say, oh gee, like now now I get why
17:38
Speaker 2: we're doing, you know, what we're doing. Maybe that won't
17:40
Speaker 2: be the case. Maybe there will be, you know, a
17:41
Speaker 2: significant deviation that he pushes for. But I'm open to
17:45
Speaker 2: the idea that he might not make, you know, as
17:47
Speaker 2: big a changes as some people think.
17:49
Speaker 3: Many have been critical of Powell for not being a
17:52
Speaker 3: you know, fully trained economist, more of a business person.
17:54
Speaker 2: That's not Miranda.
17:55
Speaker 3: He has that PhD in Harvard Economics from Harvard.
17:59
Speaker 2: He's a super nerd.
18:00
Speaker 3: He has differing views than probably the mainstream economists who
18:05
Speaker 3: graduate from Harvard with a PhD.
18:06
Speaker 2: So that's notable.
18:07
Speaker 3: But you know, in terms of his training, in terms
18:09
Speaker 3: of his knowledge base, there's little you can criticize there
18:13
Speaker 3: when you do have a PhD in economics from Harvard.
18:16
Speaker 3: And I'll do a little honorable mentioned for you know,
18:19
Speaker 3: graduating from Boston University as well, so been in the
18:23
Speaker 3: Boston area for some time.
18:25
Speaker 2: I think, Look, you don't necessarily want, you know, everyone
18:28
Speaker 2: to have the same views when you're talking about, you know,
18:31
Speaker 2: in any institution, and so I think it's something where
18:36
Speaker 2: you can make a really good case that hey, as
18:38
Speaker 2: you know, one of the members, you know, as one
18:41
Speaker 2: of the members of the Board of Governors, it's good
18:44
Speaker 2: to have, you know, a diversity of views out there
18:47
Speaker 2: so that you know you're possibly exploring different ideas that
18:50
Speaker 2: you might not previously. Obviously that doesn't mean that anyone's
18:54
Speaker 2: ideas are always right or wrong. But just because he
18:58
Speaker 2: has some different thoughts from you know, the Convention on
19:01
Speaker 2: things like tariffs, it doesn't it doesn't you know, invalidate
19:04
Speaker 2: you know, anything that that he's he's saying, we're all
19:07
Speaker 2: kind of in new territory here, and we're we're still
19:10
Speaker 2: gonna have to see how this plays out, So I
19:13
Speaker 2: think ultimately, once he actually gets into the role, we'll see,
19:18
Speaker 2: you know, what happens from a policy perspective and what
19:21
Speaker 2: kind of you know, thoughts he has at that point.
19:24
Speaker 2: But at least we've got a little bit of clarity
19:26
Speaker 2: on where this is going. Right now, let's take a
19:28
Speaker 2: quick break. When we return, we got Wall Street Watch,
19:32
Speaker 2: and then we're talking inflation.
19:41
Speaker 1: Like us on Facebook and follow us on Twitter at
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Speaker 1: TFE show. Breaking business news is always first right here
19:48
Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
19:54
Speaker 1: Street Watch a complete look at what's moving market so
19:57
Speaker 1: far today right here on the Financial Exchange Radio Network.
20:01
Speaker 4: After yet another terror filled week, gold is all the
20:04
Speaker 4: talk on Wall Street today after The Financial Times reported
20:07
Speaker 4: that the US imposed levies on one kilo bars, which
20:11
Speaker 4: would mark a blow to Switzerland, a major refining hub.
20:16
Speaker 4: At the moment, the dows up by six tenths of
20:19
Speaker 4: one percent, or two hundred and sixty four points. SMP
20:22
Speaker 4: five hundred is up over seven tenths of one percenter,
20:25
Speaker 4: forty eight points higher. Nasdaq up by nearly nine tenths
20:29
Speaker 4: of one percent, or one hundred and eighty four points.
20:31
Speaker 4: Russell two thousand is up by about a half a percent.
20:34
Speaker 4: Ten year Treasure reeled up three basis points at four
20:37
Speaker 4: point two seven nine percent, and crude oil is down
20:40
Speaker 4: about eight tenths of a percent, trading at sixty three
20:43
Speaker 4: dollars and thirty eight cents a barrel. Rocket maker Firefly
20:47
Speaker 4: Aerospace had a successful IPO yesterday as it made its
20:51
Speaker 4: debut trading on the Nasdaq, surging thirty four percent. However,
20:55
Speaker 4: that stock is giving back nine percent today. Meanwhile, video
20:59
Speaker 4: game developer to Interactive raise its annual outlook after posting
21:03
Speaker 4: better than forecast a quarterly earnings. Shares and the maker
21:06
Speaker 4: of Grand Theft Auto are down by one percent thus
21:09
Speaker 4: far today. Elsewhere, Trade Desk shares dropping thirty eight percent
21:14
Speaker 4: after Bank of America and Moffatt Nathansen downgraded the stock,
21:18
Speaker 4: even after the tech company had strong earnings. However, it's
21:22
Speaker 4: CEO warrened during the company's earnings call that some of
21:25
Speaker 4: the world's largest brands are absolutely facing pressure from tariffs
21:30
Speaker 4: and inflation. Pinterest falling eight percent after the social media
21:34
Speaker 4: company posted better than expected quarterly revenue, but it's adjusted
21:37
Speaker 4: earnings per shared disappointed after plunging nearly thirty percent yesterday.
21:42
Speaker 4: Croc shares are modestly rebounding two percent today. Yesterday's steep
21:47
Speaker 4: drop came after the casual footwear company said it plans
21:50
Speaker 4: to reduce orders for the second half of the year
21:53
Speaker 4: amid what its CEO called a concerning environment for the
21:56
Speaker 4: consumer and struggling retailer under Armours It's stock tumble nineteen
22:01
Speaker 4: percent today after the athletic apparel company missed quarterly expectations.
22:08
Speaker 4: I'm Tucker Silvan. That is Wallstreet Watch, Mike.
22:11
Speaker 2: We had a piece here from the Wall Street Journal.
22:14
Speaker 2: It's titled Trump's biggest economic threat is inflation? Before we
22:19
Speaker 2: get to the thesis, agree or disagree?
22:25
Speaker 3: Hmmm, probably yeah, what, Yeah, probably the biggest. I'm thinking
22:33
Speaker 3: of things that politically would be the most damaging from
22:36
Speaker 3: the economic standpoint. I'm not saying that inflation is the
22:41
Speaker 3: most likely, but in terms of the most damaging to
22:44
Speaker 3: your legacy. You don't think that if an inflation higher
22:46
Speaker 3: inflation would be the most problematic.
22:49
Speaker 2: Well, I mean now we're getting like talking like what's
22:51
Speaker 2: problematic for a politician in general, not a politician in
22:54
Speaker 2: the US at this point in time. Fair? Yeah, Fair,
22:57
Speaker 2: And I don't think generally.
22:59
Speaker 3: I think specifically, the reason that you would rank inflation
23:02
Speaker 3: the highest in terms of economic threats would be because
23:06
Speaker 3: we just had it. And if you allow it to repeat,
23:09
Speaker 3: just like the Federal Reserve, if you allow it to
23:11
Speaker 3: repeat itself, then you lose anything resembling credibility about your
23:15
Speaker 3: master of the mastery of the economy.
23:17
Speaker 2: So, look, this biggest economic threat thing. I disagree on this. Okay,
23:23
Speaker 2: where do you put it? Recession? Recession is always like
23:26
Speaker 2: incredibly painful to go through. Either recession or high inflation
23:31
Speaker 2: is enough to you know, see politicians voted out in
23:35
Speaker 2: any sphere. It's just how it is. Like, if if
23:39
Speaker 2: your economy goes through a recession, you're probably not going
23:41
Speaker 2: to win the next election. If you have high inflation,
23:43
Speaker 2: you're probably not going to win the next election.
23:45
Speaker 3: So but let's talk about this. I'm gonna give a
23:48
Speaker 3: real hypothetical. If by mid terms next year, let's paint
23:58
Speaker 3: two scenarios, inflation's at six percent or unemployments at six percent.
24:02
Speaker 2: Reputions lose seats either way, Yeah, which one makes them
24:04
Speaker 2: lose more? I'd say inflation. I wonder if you're saying
24:13
Speaker 2: that just because we haven't had a natural recession in
24:15
Speaker 2: over fifteen years. Yeah, might be, you know, like, yeah,
24:18
Speaker 2: I think about I think about how unhappy people were
24:21
Speaker 2: with the economy in twenty ten and twenty eleven, like
24:24
Speaker 2: even after the recession ended. Yep. And so I like,
24:28
Speaker 2: I here, here's what I'll say on this. And this
24:32
Speaker 2: piece goes a bunch of different directions. Also, it talks
24:35
Speaker 2: about how the data collection from the BLS is not
24:39
Speaker 2: as good as it used to be because of response rates,
24:41
Speaker 2: not just the BLS, but like all survey response rates
24:43
Speaker 2: are are down. Uh. It talks about how, uh, you know,
24:49
Speaker 2: you've got different inflation indices that may capture inflation differently.
24:53
Speaker 2: And I think this misses the point when it comes
24:56
Speaker 2: to inflation. And this, I guess is the place where
25:00
Speaker 2: you can say that inflation could be more damaging. When
25:03
Speaker 2: you see a recession, the biggest thing that you see
25:07
Speaker 2: is job loss, obviously, Like that's that's the biggest thing
25:10
Speaker 2: that like the average person sees in a recession is
25:13
Speaker 2: more of their friends being laid off yep. And it
25:16
Speaker 2: doesn't touch everyone in the same way. Like you can
25:20
Speaker 2: either be employed or not. You might not have as
25:22
Speaker 2: much job as you'd like. But employment is fundamentally binary,
25:26
Speaker 2: like you're employed or you're not. Right, inflation is not.
25:30
Speaker 2: It's a sliding scale. It's not you're inflated or you're not.
25:33
Speaker 2: It's two percent, three percent, four percent. And here's what
25:36
Speaker 2: I can tell you, Mike, what what percentage of Americans
25:39
Speaker 2: do you think know what the inflation rate is for
25:42
Speaker 2: the last twelve months? What percentage of Americans? I was
25:48
Speaker 2: gonna say five, Like, it's it's very low. It's it's
25:50
Speaker 2: it's our listeners and not many more. Okay, despite that,
25:55
Speaker 2: do you still think that Americans have a good sense
25:58
Speaker 2: for how price is jet really move? No, up, down, faster, slower.
26:04
Speaker 2: I do think they have to do that, Yeah, I do.
26:06
Speaker 3: I think they've In fact, I think that Americans have
26:09
Speaker 3: been shockingly uh spot on about their their fears of
26:14
Speaker 3: tariffs and inflation.
26:16
Speaker 2: They're not good at predicting where inflation is going to be,
26:19
Speaker 2: but up or down they're pretty good. But in terms
26:21
Speaker 2: of what it's done for the last year, they could
26:24
Speaker 2: tell you if prices have gone up or down a
26:26
Speaker 2: lot or a little. Yeah, Like, I do believe that.
26:29
Speaker 2: And so this is why all this hemming and hang
26:32
Speaker 2: about like, well, if the CPI is, you know, becoming
26:35
Speaker 2: less accurate because of more imputed prices, and it doesn't matter.
26:40
Speaker 2: Inflation is not something you can fake. Whether the CPI
26:44
Speaker 2: says inflation's four percent or two percent, okay, right, isn't
26:49
Speaker 2: going to be. This is the thing that I also
26:52
Speaker 2: come back to on this. Does anyone think that what
26:56
Speaker 2: the inflation report is in any particular month influences the
27:01
Speaker 2: vast majorities of America's thinking on inflation. No, it's their
27:06
Speaker 2: lived experience.
27:07
Speaker 3: In June of twenty twenty two, nobody, everybody was telling
27:10
Speaker 3: me that inflation was fifteen percent. It wasn't it was
27:12
Speaker 3: eight point seven percent. But it didn't matter. It didn't
27:16
Speaker 3: people do prices went up a lot?
27:18
Speaker 2: Yeah, Like it's whether it doesn't matter like the exact number.
27:22
Speaker 2: People know if prices are moving up a lot, up
27:24
Speaker 2: a little, down a little, or down a lot. So
27:26
Speaker 2: I go back.
27:26
Speaker 3: I say, if you have either inflation or unemployment at
27:31
Speaker 3: six percent, the inflation one's more damning.
27:34
Speaker 2: Okay, inflation one is more damning. You've changed my mind
27:36
Speaker 2: and you've convinced me, and I'm gonna give you more evidence.
27:39
Speaker 3: Back in the last natural recession, the labor force participation
27:43
Speaker 3: rate back then was sixty six point one percent. Today
27:46
Speaker 3: it is sixty two point two. You have a smaller
27:48
Speaker 3: portion of America voting Americans that are actually working now,
27:51
Speaker 3: and they will be less affected by a recession than
27:55
Speaker 3: they will be by overall inflation.
27:58
Speaker 2: Yeah. Okay, I've I've sworn around. Tone to your side here.
28:02
Speaker 2: Let's take a quick break. But when we come back.
28:07
Speaker 2: Oh boy, look at this from MarketWatch. This is the headline.
28:11
Speaker 2: Stagflation is coming to the United States, says this economist.
28:15
Speaker 2: Here's what it means for the dollar, bonds and stocks.
28:18
Speaker 2: We'll cover that when we return.
28:20
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28:52
Speaker 2: All right, pc market Watch, Stagflation is coming to the
28:57
Speaker 2: United States, says this economy. Here's what it means for
29:01
Speaker 2: the dollar, bonds and stocks.
29:02
Speaker 3: May I bring something up, Chuck, I think I found
29:05
Speaker 3: a somewhat useful use of artificial intelligence. I had Google's
29:09
Speaker 3: AI do a quick search for me of how many
29:12
Speaker 3: times the term stagflation appeared in MarketWatch subject like article
29:17
Speaker 3: titles over the last five years, and they found fifteen instances,
29:21
Speaker 3: six so.
29:22
Speaker 2: Far this year, four in twenty twenty four.
29:24
Speaker 3: They couldn't find any in twenty twenty three, three articles
29:27
Speaker 3: in twenty twenty two, and two back in.
29:29
Speaker 2: Twenty twenty one. So we haven't gotten that stagflation yet.
29:32
Speaker 3: Market Watch has published so far at least fifteen articles
29:35
Speaker 3: that we could find.
29:37
Speaker 2: But maybe this is the time go lay it out
29:39
Speaker 2: for me. Joe. Well, so, first I think we needed
29:43
Speaker 2: to I think we need a new economic term. Michael, oh, okay,
29:47
Speaker 2: and the reason why is stagflation in my mind and
29:51
Speaker 2: in everyone else's mind listening. The first thing you think
29:54
Speaker 2: about is nineteen seventies. Yep. And you take a look
29:58
Speaker 2: at the nineteen seventies and you say, okay, during that
30:01
Speaker 2: time period we had two you know, unique peaks in
30:05
Speaker 2: inflation that you know, we're running north of ten percent
30:11
Speaker 2: in each instance. And also during that time the labor
30:16
Speaker 2: market when we look at the unemployment rate, okay, the
30:20
Speaker 2: unemployment rate went north of eight percent in nineteen seventy five,
30:25
Speaker 2: north of six percent and seventy one, and then back
30:27
Speaker 2: finally in eighty two north of ten percent. So I'm
30:31
Speaker 2: trying to come up with we need a new term
30:34
Speaker 2: for when unemployment and inflation are both higher than you'd like,
30:39
Speaker 2: but not that high, because like, when I use stagflation,
30:44
Speaker 2: I'm like, okay, eight percent inflation, six percent unemployment, there's
30:48
Speaker 2: a problem. What do we call four and a half
30:51
Speaker 2: percent inflation and five percent unemployment because five percent unemployment
30:56
Speaker 2: by historical standards is still pretty low. It's just a
30:59
Speaker 2: stagnant job market. But then you can't use stag because
31:02
Speaker 2: then you're in stagflation. So it's like, is it slow flation,
31:06
Speaker 2: is it high lowflation? Is it?
31:10
Speaker 1: Like?
31:11
Speaker 2: What? What's the term that we want to use for it?
31:14
Speaker 2: Because words matter and their definitions matter, and it's tough
31:19
Speaker 2: for me to be like stagflation with unemployment at four
31:23
Speaker 2: and a half or five percent, But then what's your
31:25
Speaker 2: threshold higher? In order for something to be stagflationary, unemployment's
31:32
Speaker 2: got to be above five and a half and inflation's
31:33
Speaker 2: got to be above five Yeah, fiflation, fiflation right now,
31:38
Speaker 2: right now? We're heading for fourflation maybe, Okay, I.
31:43
Speaker 3: Want to actually get an accurate read on this, so
31:45
Speaker 3: I'm pulling up the unemployment rate between nineteen seventy and
31:49
Speaker 3: the end of nineteen seventy nine.
31:51
Speaker 2: Where did we peak out here? Hold on just a minute.
31:54
Speaker 2: You peaked at eight point eight percent in April seventy five.
31:57
Speaker 3: On the unemployment yes, I see nine in May of
32:02
Speaker 3: seventy five. But in either case, yeah, you had a
32:05
Speaker 3: decade low unemployment of I guess you did get below
32:10
Speaker 3: four back in nineteen seventy, but after nineteen seventy the
32:14
Speaker 3: decade low is four point six percent, and you spent
32:16
Speaker 3: a lot of time up a lot higher than that.
32:20
Speaker 3: And to point inflation peaked at twelve percent back in
32:23
Speaker 3: seventy four and then was getting back up to thirteen
32:25
Speaker 3: percent by the end of the seventies.
32:27
Speaker 2: And especially like given the demographics we've talked about this,
32:30
Speaker 2: you could see a case where there's not much job
32:32
Speaker 2: growth but the unemployment rate just hangs out in the
32:34
Speaker 2: low fours.
32:34
Speaker 3: Because it is tough to get that unemployment rate back
32:37
Speaker 3: up to like eight.
32:39
Speaker 2: It's not tough, like there's a circumstance where it could happen,
32:41
Speaker 2: but that's not what we're seeing now. So, like, what
32:44
Speaker 2: if inflation in the next year goes to four and
32:48
Speaker 2: a half and unemployment you know, can't budge past four
32:51
Speaker 2: and a half itself, Like, that's not stagflation to me,
32:56
Speaker 2: just because is it based on the numbers or is
32:59
Speaker 2: it based on feeling? Because if all we're gonna do
33:00
Speaker 2: is base our terms on feeling, that's useless, then it's vibeflation.
33:04
Speaker 2: Then we're doing that.
33:05
Speaker 3: Yeah, I will say that if unemployment and inflation are
33:08
Speaker 3: around four and a half percent and then there's a
33:09
Speaker 3: lot of people that are pissed off, is that.
33:11
Speaker 2: Helpful pissed flation?
33:16
Speaker 3: There's a lot of very unhappy people if that's the case,
33:18
Speaker 3: mainly because of the inflation.
33:19
Speaker 2: I would be pretty upset too. It's gross flation. I
33:22
Speaker 2: don't know. We we've got We've gotta come up with something, Tucker,
33:24
Speaker 2: what's the text line number?
33:26
Speaker 4: Uh six one seven, three six two thirteen eighty five
33:29
Speaker 4: text us.
33:30
Speaker 2: For what you would call a more mild form of stagflation,
33:34
Speaker 2: where unemployment doesn't move a lot and inflation moves a
33:37
Speaker 2: little but not super lot. You know, it's I don't know,
33:42
Speaker 2: it's modflation. No, that's not it, text us and and
33:46
Speaker 2: we'll we'll get an answer.
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34:45
Speaker 2: Mike, I gotta go off grid a little bit here
34:48
Speaker 2: just because I saw this one this morning. And I
34:49
Speaker 2: thought it was great over on the Reddit over employed forum,
34:55
Speaker 2: which is basically where people talk about having multiple jobs
34:58
Speaker 2: at once, yeah, without like their employers knowing about it.
35:01
Speaker 2: This one's titled after a Year, I finally got caught.
35:05
Speaker 2: Woke up this morning to a fun I PROMPTU meeting
35:07
Speaker 2: with HR from job two. Turns out our VP couldn't
35:11
Speaker 2: find me on LinkedIn, so they messaged the recruiting firm
35:13
Speaker 2: who hired me and saw job one on my profile.
35:16
Speaker 2: I was terminated immediately and asked if they were going
35:18
Speaker 2: to reach out to the other employer, which they replied
35:20
Speaker 2: there in the process of doing how cooked a mine?
35:22
Speaker 2: What can I do to try to keep job one? Update?
35:26
Speaker 2: Not even hour later, I was just terminated from job one.
35:29
Speaker 2: It really sucks because I was a top performer for
35:31
Speaker 2: both roles and never thought I would get caught. Update two.
35:35
Speaker 2: Job three was also contacted, as it was on my resume.
35:38
Speaker 2: Had been there nearly two years and got shut off
35:40
Speaker 2: end of day. Shout out job to HR. I respect
35:43
Speaker 2: the dedication to ruin my livelihood.
35:47
Speaker 3: So who knows if that's true, But yeah, we have
35:51
Speaker 3: heard these stories of people working multiple remote jobs. Obviously
35:57
Speaker 3: we have no idea what sector this person works in,
35:59
Speaker 3: et cetera, et cetera. But as an employer, I can't
36:02
Speaker 3: imagine rabbing somebody out to like, you know, terminate the employment.
36:07
Speaker 2: But wouldn't it end there for you? Why would you
36:10
Speaker 2: go do that? Yeah, go the extra mile. Well, so
36:13
Speaker 2: there are if you were to national security, if you
36:15
Speaker 2: work in finance, then you do. There are a few
36:17
Speaker 2: industries like if you're in healthcare, yeah, you know, like
36:21
Speaker 2: you potentially have access to patient records and stuff like that,
36:23
Speaker 2: or you know, drug testing and drug trials and stuff
36:26
Speaker 2: like that. There are some instances where I could see
36:29
Speaker 2: that being the case.
36:30
Speaker 3: Yeah, and financial services you would probably have an obligation
36:33
Speaker 3: to notify.
36:33
Speaker 2: Actually, if you're in you know, anything tech related, do
36:36
Speaker 2: you have access to trade secrets? I could see that
36:38
Speaker 2: being something where you're like, hey, like just a word
36:41
Speaker 2: of warning, like this person you know, may have been
36:44
Speaker 2: sharing stuff with us, Like I could understand that, Yeah,
36:48
Speaker 2: if it's here's the thing, I'm not sure. Like I
36:52
Speaker 2: was on the other side of this the first time
36:54
Speaker 2: we talked about one of these, and the more I've
36:55
Speaker 2: thought about it, the more I've kind of come into
36:58
Speaker 2: agreement with yeah, like it's it's pretty bad if you're
37:02
Speaker 2: doing this in a lot of instances because you usually
37:04
Speaker 2: have access to stuff that is like trade secret type
37:08
Speaker 2: stuff or you know, confidential or classified information, and so it's.
37:14
Speaker 3: Why I mean, you know, beyond all of that, even
37:17
Speaker 3: if you don't if you are violating the terms of
37:21
Speaker 3: your employment via your employment contract, then yeah, you don't
37:27
Speaker 3: have a light to stand on.
37:28
Speaker 2: Because ultimately, like the places where you could in theory
37:31
Speaker 2: have like multiple jobs if you call it that is okay,
37:34
Speaker 2: Like I'm you know, a third party who does marketing promotions,
37:37
Speaker 2: and I do it for three different companies. But in
37:39
Speaker 2: that case you're not a no. And even there they're
37:42
Speaker 2: probably like, hey, I don't want you doing work for
37:44
Speaker 2: like a direct competitor in our space, right, you know,
37:47
Speaker 2: it's probably written in that like, hey, if you're the
37:49
Speaker 2: firm that's doing McDonald's ad campaign, you probably can't do
37:53
Speaker 2: Wendy's two.
37:55
Speaker 3: I think it just comes back to a general philosophy
37:58
Speaker 3: I would have, which is, don't lie to your employer,
38:01
Speaker 3: right or if you do anticipate getting.
38:03
Speaker 2: Fired, you know, hey, I'm doing a really good job
38:06
Speaker 2: at this job. Do you mind if I take on
38:08
Speaker 2: a second one, and if my performance goes down, let
38:12
Speaker 2: me go. They probably won't let you do it, but
38:13
Speaker 2: I don't know, Like I just thought this was interesting.
38:19
Speaker 2: Let's take a quick break. Hour or two coming up
38:21
Speaker 2: in just a bit.