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Is another shutdown on the horizon? · The Financial Exchange Show

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Speaker 1: a donation today. This is the Financial Exchange with Chuck
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Speaker 1: Zada and Mike Armstrong.
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Speaker 2: Chuck, Mike and Tucker with you, and we kick things
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Speaker 2: off today with the expected news that the federal governments reopening,
1:20
Speaker 2: President Trump signing the spending package into law late yesterday night.
1:25
Speaker 2: And so the forty three day long shutdown it's over.
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Speaker 3: What does it mean, Michael, Uh, Well, it means people
1:34
Speaker 3: finally get paid, some people go back to work. Some
1:36
Speaker 3: people have been working all the way through. It's funny.
1:39
Speaker 3: I've been having over and over a couple of conversations
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Speaker 3: with people affected by the shutdown. One works in the
1:46
Speaker 3: defense in one way or another. Another works at a
1:49
Speaker 3: passport center, and I kind of would have thought that
1:52
Speaker 3: the person working in defense would have been working this
1:54
Speaker 3: whole time, but it was actually the opposite. Neither of
1:56
Speaker 3: them were getting paid, but the person working at the
1:58
Speaker 3: passport center was deemed critical and was working throughout the shutdown.
2:03
Speaker 3: And I was just talking to it was actually the
2:05
Speaker 3: father of the person at the passport center, and then
2:07
Speaker 3: the individual and Defense, and he was kind of like, Yeah,
2:10
Speaker 3: it's just seems kind of funny, right that you know
2:13
Speaker 3: that one person got a forty day stressful vacation, but
2:17
Speaker 3: time off. My daughter has been working this whole time,
2:21
Speaker 3: and in either case, both of them are going to
2:22
Speaker 3: be fully paid, neither of them receiving any extra pay.
2:26
Speaker 3: But yeah, mely one hundreds of thousands of people back
2:29
Speaker 3: to work and we expect payment within the next couple
2:32
Speaker 3: of days. Other things will take a little bit longer, right,
2:35
Speaker 3: I mean, the reshuffling of the deck when it comes
2:38
Speaker 3: to air traffic control and flights getting back and scheduled
2:41
Speaker 3: on time is going to take probably a week or so.
2:44
Speaker 3: Snap benefits should be pretty quick, but not instantaneous, and
2:48
Speaker 3: so every piece of the government takes a little bit
2:50
Speaker 3: different amount of time to get back up and running.
2:53
Speaker 3: Big thing.
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Speaker 2: It seems like, based on everything I've read, it should
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Speaker 2: be that things are pretty much back to normal operation
3:01
Speaker 2: that week of Thanksgiving.
3:03
Speaker 3: Is that the sense that you get, Mike easily? Yeah,
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Speaker 3: I think probably prior to But yeah, all I wouldn't
3:10
Speaker 3: expect any significant government shutdown related travel delays by Thanksgiving.
3:17
Speaker 2: So some questions that you know, are our top of
3:20
Speaker 2: mind when we look at, you know, the impact on
3:22
Speaker 2: the broader economy. Number One, we are going to start
3:25
Speaker 2: getting economic data coming out. We don't know the exact
3:28
Speaker 2: schedule yet. We don't know the exact you know, releases
3:30
Speaker 2: that we're going to see at any particular time, but
3:34
Speaker 2: this will help to give us a little bit of
3:35
Speaker 2: a clue as to Hey, what may have happened to
3:38
Speaker 2: the economy during that month and a half shutdown. Was
3:42
Speaker 2: there any meaningful impact or is it more similar to
3:45
Speaker 2: prior shutdowns of shorter length where there wasn't any meaningful
3:49
Speaker 2: impact and the economy continued on its very way. So
3:52
Speaker 2: that's one thing that we're gonna be looking at.
3:54
Speaker 3: Interesting update on that front. I just saw a headline
3:57
Speaker 3: come across the screen from Kevin Hasset, the director of
3:59
Speaker 3: the National Economic Council. He said that we will be
4:03
Speaker 3: getting an October jobs report, but it will not include
4:08
Speaker 3: the job ash rate, meaning they probably got enough survey
4:10
Speaker 3: data from businesses to determine how many people did you hire,
4:15
Speaker 3: how many did you fire, but did not get enough
4:17
Speaker 3: surveying of households done to be able to determine that
4:20
Speaker 3: unemployment rate. So I wasn't sure we'd get a job
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Speaker 3: in October jobs report at all. Kevin Hasset saying, we
4:26
Speaker 3: will get kind of half of a job's report. We'll
4:28
Speaker 3: get something there.
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Speaker 2: Yeah, So I think it'll be interesting to see what
4:31
Speaker 2: we get on that front. Another question, Mike mentioned that, look,
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Speaker 2: the people that have been furloughed over the last month
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Speaker 2: and a half, they are going to be receiving back pay.
4:40
Speaker 2: Questions on that, We saw a little bit of an
4:42
Speaker 2: uptick in delinquency rates in a couple areas, subprime model loans,
4:46
Speaker 2: credit cards.
4:47
Speaker 3: Both ticking up a little bit.
4:48
Speaker 2: Does this reverse some of that now that those people
4:51
Speaker 2: can potentially make those payments or is that a trend
4:55
Speaker 2: that's happening independently there, So that'll be something that we
4:57
Speaker 2: look for along with that. Now that that back pay
5:01
Speaker 2: has been provided, do we see any kind of upward
5:03
Speaker 2: inflection in spending that happens.
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Speaker 3: I don't know.
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Speaker 2: I wouldn't necessarily expect it, because again, that back pay
5:11
Speaker 2: is likely going to pay for purchases and things that
5:14
Speaker 2: were made, you know, during that time on credit and
5:17
Speaker 2: things like that.
5:17
Speaker 3: So I wouldn't expect a huge shift.
5:19
Speaker 2: But could there be a positive inflection from you know
5:22
Speaker 2: the fact that you have folks that are going to
5:24
Speaker 2: be paid now the counter to that, and again, I'm
5:28
Speaker 2: just kind of throwing all these different things out there,
5:30
Speaker 2: because these are the ways that you have to think
5:32
Speaker 2: about that, Mike. Last time I checked, this is a
5:35
Speaker 2: very short term spending bill that carries us through January thirtieth. Right,
5:40
Speaker 2: we could be right back here in two and a
5:42
Speaker 2: half months. I don't know that that will or will
5:44
Speaker 2: not be the case. But do government workers who have
5:48
Speaker 2: gone through this now say, Hey, if we might be
5:51
Speaker 2: back here in a couple months, do they pull back
5:53
Speaker 2: on spending over that time because they want to have
5:55
Speaker 2: additional savings put aside in the instance that in the
6:00
Speaker 2: case that we see another shutdown of similar length or longer.
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Speaker 3: My guess is probably not, just because I see very
6:07
Speaker 3: little evidence that American consumers generally are that forward thinking
6:12
Speaker 3: and that financially disciplined. I don't have reason to suspect
6:15
Speaker 3: that government workers are any better at that. But it's
6:18
Speaker 3: an interesting possible theory what would be different, because there
6:22
Speaker 3: would be some things that would be different if they
6:23
Speaker 3: shut down again in January, because as part of this
6:25
Speaker 3: bill they signed in funding for a few different programs
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Speaker 3: for over for a full year, which I tell January
6:33
Speaker 3: shut down so complex and confused.
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Speaker 2: It really feels like we're heading towards another one in
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Speaker 2: January because of this because they basically they passed authorization
6:41
Speaker 2: to cover snap benefits for a full year, okay, regardless of.
6:46
Speaker 3: The shutdown, keep getting food stamps.
6:48
Speaker 2: And they passed authorization to pay the military in the
6:51
Speaker 2: event of a future shutdown during that time. Oh then
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Speaker 2: why not, so like, doesn't it feel like you like,
6:57
Speaker 2: which then raised the Republicans might shut it down in January,
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Speaker 2: which then raised the question, Okay, like, if you shut
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Speaker 2: down the federal government with those guardrails in place, what
7:08
Speaker 2: are you really doing aside from like closing national parks.
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Speaker 3: Yeah, well, I know there's more.
7:13
Speaker 2: Than that obviously, but like in terms of you know,
7:16
Speaker 2: it's like okay.
7:18
Speaker 3: Yeah, you're once again shutting down air travel.
7:22
Speaker 2: Yes, so, but it's like it almost feels like you're
7:26
Speaker 2: clearing the path to be like, yeah, we might shut this.
7:29
Speaker 3: Thing down again in January. Yeah, you know that way.
7:32
Speaker 2: So that's where things stand on all of this. Again, Historically,
7:36
Speaker 2: government shutdowns have not resulted in any major impact of
7:40
Speaker 2: the US economy. Historically, they've all been shorter than this.
7:43
Speaker 2: So while my gut tells me that we didn't go
7:46
Speaker 2: on long enough to cause any major problems, you never
7:49
Speaker 2: know for sure until you start getting the data trickling
7:51
Speaker 2: in over the next month or so, and so I
7:54
Speaker 2: think we'll have a pretty good handle on that as
7:56
Speaker 2: we get towards the end of the year and towards
7:59
Speaker 2: the start of Anuary. But my gut says this didn't
8:03
Speaker 2: go on long enough to cause any kind of major damage.
8:05
Speaker 3: I tend to agree.
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Speaker 2: So that's where we stand as it relates to the
8:10
Speaker 2: government shutdown. Anything else that you want to cover on
8:13
Speaker 2: that front, Mic, No.
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Speaker 3: I think the important piece to keep in mind is
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Speaker 3: they are setting things up for another possible shutdown in January.
8:22
Speaker 3: It'll be contingent, really, I mean, the only thing that
8:25
Speaker 3: seems to matter would be whether or not you get
8:27
Speaker 3: this vote on subsidies for Obamacare plans. And I guess
8:34
Speaker 3: that's one big change that I can say definitely exists
8:36
Speaker 3: today compared to three months ago. How many times did
8:39
Speaker 3: we talk about subsidies on Obamacare plans, even on this
8:43
Speaker 3: a financial and personal finance and economic show. I can
8:47
Speaker 3: think of few, maybe a handful ghost And I asked
8:51
Speaker 3: other people that we know that have shows on different networks, like, hey,
8:54
Speaker 3: did you ever talk about The answer is no, nobody
8:56
Speaker 3: really had any sense of what this meant and how
8:59
Speaker 3: many people if we're on it. There is a general
9:01
Speaker 3: awareness now of how this works, and I think the
9:06
Speaker 3: general cens from people is not terribly well. So will
9:09
Speaker 3: we get that vote, what will it look like? That's
9:13
Speaker 3: really going to define whether or not we get another
9:14
Speaker 3: shutdown come January.
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Speaker 2: I think to take a quick break here when we return,
9:19
Speaker 2: we were supposed to get the October CPI report today.
9:23
Speaker 3: That's not going to happen.
9:25
Speaker 2: So we'll talk a little bit about what we have
9:28
Speaker 2: seen from other inflation data, what kind of signs we
9:31
Speaker 2: might be getting on what's happening with inflation, and the
9:33
Speaker 2: absence of that report.
9:35
Speaker 3: We'll discuss that when we return.
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11:07
Speaker 2: Mike this morning at eight thirty pm am Eastern time.
11:11
Speaker 2: We received the October No Nothing report. We didn't get
11:15
Speaker 2: the October CPI report, and again it's uncertain if slash
11:21
Speaker 2: when we will. But that doesn't mean that, you know,
11:24
Speaker 2: people aren't still paying attention to what's going on when
11:28
Speaker 2: it comes to inflation. There's a piece in Barns today
11:32
Speaker 2: discussing this and specifically, you know, it's titled there's no
11:35
Speaker 2: inflation report today.
11:36
Speaker 3: But here's what the experts think. What do they think, Michael?
11:39
Speaker 3: They think that inflation did pretty much what it has
11:43
Speaker 3: done for the last few months, which is averaged somewhere
11:45
Speaker 3: around three percent. I don't find any of the projections
11:49
Speaker 3: about specific items to be terribly useful without the government's
11:52
Speaker 3: own data, but yeah, core inflation expected to did rise
11:56
Speaker 3: by three percent year of the year in September, expected
11:59
Speaker 3: to maintain that pace in October as well. I think
12:03
Speaker 3: some context around the story with inflation would be helpful, though, Chuck,
12:08
Speaker 3: you know, I know we've talked about this before, but
12:10
Speaker 3: the current state of inflation right now, we're hitting this
12:13
Speaker 3: three percent number, and I want to kind of dig
12:16
Speaker 3: in in terms of why we seem to be here
12:19
Speaker 3: at the moment compared to previous years, in previous decades,
12:23
Speaker 3: because I'd like to use the TV example over and
12:26
Speaker 3: over again. But television, other electronics, these items that we
12:31
Speaker 3: buy have generally gotten cheaper for the last twenty years,
12:35
Speaker 3: or at least not gotten substantially more expensive. Right, Goods
12:39
Speaker 3: inflation for the last several decades, mainly because non exist
12:43
Speaker 3: of China and their massive manufacturing capacity and are willing
12:47
Speaker 3: to have all that stuff made there in Korea and
12:50
Speaker 3: other places too. But yeah, goods inflation hasn't existed. We're
12:55
Speaker 3: getting some goods inflation now, and so that is, you know,
12:59
Speaker 3: keeping our inflation rate at three percent, Why it's not
13:03
Speaker 3: fifteen percent? Well, the terrafs themselves are not all that substantial.
13:07
Speaker 3: We know we're sitting at like twelve to fifteen percent
13:10
Speaker 3: average annual inflation.
13:12
Speaker 2: But and not everything we bought is tariff, so you
13:14
Speaker 2: wouldn't you know, you wouldn't expect it.
13:17
Speaker 3: To range exactly that high. But it does I think
13:21
Speaker 3: call into question for me at least. Right, the reason
13:24
Speaker 3: that we had two ish percent inflation for the last
13:26
Speaker 3: couple decades was because services inflation, people's wages, those working domestically,
13:31
Speaker 3: we're getting wage increases and so airport, you know, whether
13:35
Speaker 3: it's airline tickets or trips to Disney or hotels, got
13:39
Speaker 3: a little bit more expensive over the last couple of decades,
13:42
Speaker 3: but goods didn't, and in some cases got cheaper. And
13:47
Speaker 3: so therefore we had an overall inflation scenario that was
13:50
Speaker 3: pretty comfortable. We are reversing some of that trend. And
13:54
Speaker 3: so I guess I'm what I'm trying to get at
13:57
Speaker 3: here is should we expect that three percent is more
14:00
Speaker 3: of a new normal going forward? Right? Should we anticipate
14:04
Speaker 3: returning to the two percent to day? And I know
14:06
Speaker 3: we never actually hit two percent, but you know, over
14:09
Speaker 3: the course of the couple decades in the twentyands through
14:13
Speaker 3: twenty twenty, we were around that two percent range, right, yeah, generally.
14:19
Speaker 2: And and so I think it's Look, it's it's an
14:22
Speaker 2: important question to ask because if you look at the
14:27
Speaker 2: tailwinds that led to inflation being where it's been for
14:31
Speaker 2: the last forty years generally, aside from you know, twenty
14:33
Speaker 2: twenty one through twenty five. Now, yeah, there are two
14:38
Speaker 2: big ones, in my opinion, that are both reversing. The
14:42
Speaker 2: first one, Mike, why if I am a company and
14:46
Speaker 2: someone comes to me and says, hey, you can move
14:49
Speaker 2: your manufacturing to China. The main reason they tell me
14:53
Speaker 2: to do that is because it will be cheaper for
14:56
Speaker 2: me to do so. Yes, Like no, one's like, hey,
15:00
Speaker 2: come move your factory to China because you know it'll
15:05
Speaker 2: be a longer trip for you know, your goods to
15:07
Speaker 2: get to the store.
15:07
Speaker 3: Like no, that's it's not how it is. It's it's
15:10
Speaker 3: not how it's sold. It's significantly cheaper to manufacture there.
15:14
Speaker 3: So if we believe that we are in a world
15:17
Speaker 3: where even some of that manufacturing, not all of it,
15:21
Speaker 3: but some of it is coming back to the United
15:24
Speaker 3: States or even countries near the United States that still
15:28
Speaker 3: are not as cheap to manufacture in as China, then
15:31
Speaker 3: one has to believe that that cost is going to
15:34
Speaker 3: have to show up somewhere. And based on the fact
15:37
Speaker 3: that corporate profit margins remain pretty darn good, the answer
15:42
Speaker 3: is not that companies are just gonna eat that out
15:45
Speaker 3: of the goodness of their heart. The second piece, as
15:49
Speaker 3: it relates to lower inflation, is the main expense for
15:53
Speaker 3: most businesses, and you know, again, it's it's rare to
15:57
Speaker 3: find one where this is the case. The main expense
16:00
Speaker 3: for most businesses is labor. Labor supply is currently not
16:07
Speaker 3: growing at the pace that it's been growing for even
16:09
Speaker 3: the last twenty years, which was slower than the previous
16:11
Speaker 3: twenty years and so on. The two main reasons for
16:14
Speaker 3: that are baby boomers retiring and not having enough gen
16:18
Speaker 3: zers to replace them, and immigration, both legal and illegal
16:22
Speaker 3: this year is down significantly. We don't know the exact
16:25
Speaker 3: magnitude of that change, but we do know that immigration
16:29
Speaker 3: is down, and so the labor force is potentially not
16:33
Speaker 3: even growing this year. It might be flat when it's
16:35
Speaker 3: all said and done. And so if you have less
16:39
Speaker 3: labor but you still have the same demand for your
16:42
Speaker 3: goods and stuff, well, that means that you probably have
16:47
Speaker 3: to pay people more in order to do the work
16:52
Speaker 3: that you in order to provide this And by the way,
16:55
Speaker 3: I pulled up the CPI Report, which the CPI Report
16:58
Speaker 3: is not the be all end all of these at
17:00
Speaker 3: least gives us an idea of what we're seeing. Plus
17:03
Speaker 3: we've had it for decades, so it's easy to compare
17:05
Speaker 3: itself to Yeah, it's easy for us to look at this.
17:08
Speaker 2: So again, CPI all items running at three percent over
17:11
Speaker 2: the last year, let's look at a few areas that
17:13
Speaker 2: are very labor intensive. MIC when it comes to you know,
17:18
Speaker 2: what goes into the product that's produced. Care of elderly
17:22
Speaker 2: at home. Would you say that that's a high labor
17:25
Speaker 2: intensive job. Yeah, that price is up eleven point six
17:29
Speaker 2: percent year over year.
17:30
Speaker 3: How about childcare? Do we have that one broken out?
17:32
Speaker 3: Hang on?
17:32
Speaker 2: I have other ones here. Gardening and lawn care services.
17:35
Speaker 2: Would you say that that has a high labor component
17:37
Speaker 2: to it? Still is Yeah, up thirteen point nine percent
17:40
Speaker 2: year over year. Garbage and trash collection, would you say
17:43
Speaker 2: that that involves a lot of labor?
17:44
Speaker 3: Still does yep?
17:45
Speaker 2: Up five point four percent year over year. Let's see,
17:50
Speaker 2: hang on, you want a childcare, Yeah, if you've got it.
17:54
Speaker 2: Let's see, Uh, this is where is daycare? And preschool?
18:00
Speaker 2: Up five point two percent year over year. So these
18:04
Speaker 2: areas that are again very labor focused, tend to be
18:11
Speaker 2: high postage delivery services. Would you say there's a high
18:14
Speaker 2: labor component to that, Yeah, eight percent up year over year.
18:19
Speaker 2: So the areas that are primarily labor focused in terms
18:23
Speaker 2: of what they have to deliver, whether it's services or goods,
18:27
Speaker 2: those are running at a pretty steep clip as well.
18:29
Speaker 2: And so that's something where even if the tariffs side,
18:33
Speaker 2: let's say that, you know, a month and a half
18:34
Speaker 2: from now, a bunch of tariffs get struck down, and
18:36
Speaker 2: let's say that, for whatever reason, the Trump administration might say, Okay, look,
18:40
Speaker 2: we're not going to you know, find another way to
18:43
Speaker 2: impose these I'm not saying they will or won't do that,
18:45
Speaker 2: but let's say the tariffs are no longer a thing
18:48
Speaker 2: heading into next year, the labor side of the equation
18:52
Speaker 2: still is, and that can potentially still have an impact
18:56
Speaker 2: along with the push for deglobalization.
18:59
Speaker 3: And so as I look at this, I think we
19:02
Speaker 3: have to be aware that.
19:03
Speaker 2: Hey, the next forty years, do I think that inflation
19:08
Speaker 2: on average is going to run higher or lower than
19:10
Speaker 2: the previous forty I'm taking the over.
19:13
Speaker 3: Yeah, if you buy the deglobalization story, then I don't
19:16
Speaker 3: know how you don't. I suppose if automation takes a real,
19:20
Speaker 3: you know, firm grasp here over the next couple decades,
19:23
Speaker 3: that could reverse it. But yeah, I think to your point,
19:29
Speaker 3: if you're expecting a repeat of the last two decades,
19:34
Speaker 3: get don't with the story. Don't don't expect that because
19:36
Speaker 3: the last two decades were just defined by a roaring
19:39
Speaker 3: stock market with a couple of big crises in between,
19:42
Speaker 3: and an inflation story that was very muted. And it's
19:47
Speaker 3: pretty tough for me to see a repeat of both
19:50
Speaker 3: of those scenarios over the next two decades. Let's take
19:53
Speaker 3: a quick break.
19:54
Speaker 2: When we come back, we got Wall Street Watch, and
19:56
Speaker 2: we got new four oh one K contribution limits for
19:59
Speaker 2: twenty set twenty six.
20:01
Speaker 3: I'll tell you all about that when we return.
20:11
Speaker 1: Liked us on Facebook and follow us on Twitter. Act
20:14
Speaker 1: TFE show Breaking business news is always first right here
20:18
Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
20:23
Speaker 1: Street Watch. A complete look at what's moving market so
20:26
Speaker 1: far today, right here on the Financial Exchange Radio Network.
20:30
Speaker 5: Well, the longest government shutdown in US history has come
20:34
Speaker 5: to an end. In markets our negative territory, with the
20:37
Speaker 5: tech sector selling off right now. The Dow is down
20:42
Speaker 5: just over a third of a percent, or one hundred
20:44
Speaker 5: and sixty three points, SMP five hundred down about three
20:48
Speaker 5: quarters of a percent, Nasdaq selling off one in a
20:51
Speaker 5: quarter percent or two hundred and ninety six points, RUSTED
20:54
Speaker 5: two thousands down over eight tenths of a percent, ten
20:57
Speaker 5: Your Treasure reeled up two basis points at four zo
21:00
Speaker 5: point one zero six percent, and crude oil up about
21:03
Speaker 5: one percent. Hire today trading just above fifty nine dollars
21:07
Speaker 5: a barrel. Cisco's stock is popping nearly five percent today
21:11
Speaker 5: after the network equipment company lifted its earnings outlook, driven
21:16
Speaker 5: by demand for artificial intelligence products. Meanwhile, Disney offered mixed
21:21
Speaker 5: quarterly results, where it beat earnings expectations but fell short
21:25
Speaker 5: of revenue forecasts. The media in entertainment giants, TV networks
21:29
Speaker 5: and movie business declined, offsetting gains in parks and streaming.
21:33
Speaker 5: Disney stock is falling almost eight percent. Elsewhere, betting operator
21:38
Speaker 5: and fandual parent company Flutter Entertainment cut its annual outlook.
21:43
Speaker 5: The company also said it plans to launch a sports
21:45
Speaker 5: prediction market platform next month, partnering with CME. Fletter shares
21:52
Speaker 5: are dropping about eleven percent. Firefly Aerospace shares are soaring
21:57
Speaker 5: seventeen percent after it posted strong third quarter results. Nike
22:01
Speaker 5: upgraded by Wells Fargo to overweight from equal weight, with
22:04
Speaker 5: a bank set it's profit and loss figures could be
22:07
Speaker 5: hitting a bottom. Nike up by over one percent and
22:10
Speaker 5: after today's closing bell, we'll see earnings from chip making,
22:14
Speaker 5: equipment maker, Applied Materials. I'm Tucker Silva, and that is
22:19
Speaker 5: Wall Street Watch.
22:20
Speaker 3: I love the irony in Nike being upgraded to overweight.
22:27
Speaker 3: They make double excel sizes, all right, they do, but
22:30
Speaker 3: it's like it's just something where like you think of
22:32
Speaker 3: the company and you're like, it's just kind of you know,
22:35
Speaker 3: it's it's humorous.
22:37
Speaker 2: Let's talk a little bit about new contributional limits for
22:40
Speaker 2: twenty twenty six. I don't know if this is just
22:43
Speaker 2: because we're like fresh off the shutdown, or if this
22:45
Speaker 2: was the day that this was gonna be released anyways,
22:47
Speaker 2: but the IRS gave us the data for contribution limits
22:53
Speaker 2: for retirement accounts for next year. So for one ks
22:57
Speaker 2: there's a little complicated, so you're gonna have to, you know,
23:00
Speaker 2: maybe write this down. If you're not driving four to
23:03
Speaker 2: one ks. You get to contribute twenty four thousand, five
23:06
Speaker 2: hundred dollars next year. That's up a thousand from this year. Okay,
23:10
Speaker 2: that's easy enough. People fifty and older, the bonut, the
23:16
Speaker 2: extra contribution, what's it called the ketchup ketchup, that's the
23:19
Speaker 2: one ketchup contribution is gonna be eight thousand extra next year,
23:22
Speaker 2: up from seventy five hundred this year, So that gets
23:25
Speaker 2: you a total of thirty two thousand, five hundred. But
23:28
Speaker 2: then you got the super Ketchup contribution if your age
23:30
Speaker 2: sixty to sixty three next year, and that gives you
23:34
Speaker 2: an extra contribution that you can contribute a total of
23:36
Speaker 2: thirty five seven fifty two. So it's an extra thirty
23:40
Speaker 2: two hundred and fifty dollars that you can contribute also
23:44
Speaker 2: next year. And this one is exciting to me. I
23:46
Speaker 2: do have to say, Uh, the Ketchup contribution for iras
23:50
Speaker 2: is gonna be eleven hundred dollars next year instead of
23:53
Speaker 2: one thousand. The inflation adjustment for IRA ketchups is now
23:59
Speaker 2: able to be index in one hundred dollars increments instead
24:01
Speaker 2: of five hundred, so you're gonna see those happening more
24:04
Speaker 2: often that that Ketchup gets bumped up on iras, which
24:07
Speaker 2: I think is long overdue. And this is you know,
24:09
Speaker 2: still ignoring the problem of Hey, if your employer has
24:12
Speaker 2: a retirement planned, you can contribute you know, thirty thousand,
24:15
Speaker 2: but if you have to do your own, it's significantly less.
24:19
Speaker 2: But that's neither here.
24:20
Speaker 3: North there agreed, and that scenario is becoming a lot
24:23
Speaker 3: less common. It has become a lot easier to start
24:27
Speaker 3: a four oh one K. You know, a decade ago,
24:29
Speaker 3: I would meet with people that work for a company
24:32
Speaker 3: with fewer than ten employees. None of them would have
24:33
Speaker 3: a four oh one K. These days a lot of
24:35
Speaker 3: them do, so that's becoming less of an issue. But
24:38
Speaker 3: I still think it's preposterous. Uh, let's see what anybody
24:42
Speaker 3: else just focused on the condiment catchup right now?
24:46
Speaker 5: Whenever you guys say ketchup contributions, that's literally all I
24:49
Speaker 5: think about.
24:49
Speaker 3: I know I'm not actually in favor of corporate sponsorships
24:53
Speaker 3: of government programs, but don't you think the ketchup contribution
24:55
Speaker 3: should be brought to you by Hines? Yeah? Just see
25:00
Speaker 3: like that.
25:00
Speaker 2: I mean, look like like you've got your wroth for
25:02
Speaker 2: a one k, why can't you have your hines for
25:04
Speaker 2: a one k?
25:04
Speaker 3: Also, yeah, I like that idea. The trickier party you
25:09
Speaker 3: got your Goulden's four fifty seven. So the other tricky
25:14
Speaker 3: part of all of this is the contributions by your
25:19
Speaker 3: employer for certain people. So this took a while to
25:22
Speaker 3: actually get into effect because four to one K providers
25:24
Speaker 3: were like, hey, Congress, pump the brakes. This is complicated,
25:27
Speaker 3: We're not sure if we can do it. But in
25:29
Speaker 3: twenty twenty six, if you earned more than one hundred
25:32
Speaker 3: and fifty thousand dollars in twenty twenty five, then your
25:37
Speaker 3: ketchup dollars must go into a WROTH for a one
25:42
Speaker 3: K account.
25:43
Speaker 2: And in twenty twenty six, higher innershes employers don't offer
25:46
Speaker 2: a WROTH for a one K won't be able to
25:48
Speaker 2: make ketchup contributions.
25:51
Speaker 3: And the good news what if I'm a new employee
25:55
Speaker 3: who is making more than one hundred and fifty grand
25:58
Speaker 3: in twenty twenty six, but they don't have my earnings
26:00
Speaker 3: record for I don't understand some of this stuff.
26:03
Speaker 2: I don't know, but what I what I do know
26:07
Speaker 2: is that the number of plans that don't offer a
26:11
Speaker 2: WROTH component now has dwindled. In twenty twenty, seventy four
26:15
Speaker 2: percent of four to one K plans offered by Vanguard
26:18
Speaker 2: at least, so this is Vanguard, it's not across the board.
26:21
Speaker 2: Seventy four percent of Vanguard four to one k's in
26:24
Speaker 2: twenty twenty offered WROTH options eighty six percent of them
26:28
Speaker 2: offered it last year. I would imagine giving the impetus
26:31
Speaker 2: on this, you're probably getting north of ninety percent for
26:34
Speaker 2: next year. But there still could be some gaps in there.
26:38
Speaker 3: I'll tell you the this has all been about, you know,
26:41
Speaker 3: how much to contribute, how much the limits are, and
26:45
Speaker 3: that is an interesting component of all this. But I
26:48
Speaker 3: don't know about you, Chuck. I was speaking with somebody yesterday,
26:50
Speaker 3: so this is just kind of fresh in my mind
26:52
Speaker 3: at the moment. They weren't at all confused about how
26:55
Speaker 3: much to contribute. The answer for them was, I've got
26:58
Speaker 3: two kids. You know, I'm gonna contribute whatever I can,
27:01
Speaker 3: but ultimately, I got to pay the bills, and so
27:04
Speaker 3: I know, to contribute as much as I can afford
27:08
Speaker 3: while still being able to pay the bills and not
27:09
Speaker 3: getting caught into a spiral of debt. The more difficult
27:13
Speaker 3: question for this person was what should I be contributing
27:18
Speaker 3: to traditional versus ROTH like. That is not a very
27:22
Speaker 3: commonly understood formula to go about it, and there's a
27:26
Speaker 3: few different components to it, you know. One is how
27:29
Speaker 3: much do you think your earnings are going to grow
27:31
Speaker 3: over time? How much might your deduction shrink over time.
27:34
Speaker 3: Where are your current assets already lined up?
27:37
Speaker 1: Like?
27:37
Speaker 3: Those are complicated questions to begin with, not to mention, Hey,
27:41
Speaker 3: you know, I just need some extra cash flow, So
27:44
Speaker 3: how am I best served if I am in a
27:46
Speaker 3: you know, if I'm pinching pennies right now because I
27:48
Speaker 3: got two kids that are playing sports or heading to
27:50
Speaker 3: college next year, and I need to pay for daycare
27:53
Speaker 3: and you know, new car insurance for my sixteen year old.
27:56
Speaker 3: Who's going to be on the insurance? Now, what's my
27:59
Speaker 3: best option? And so these types of questions around retirement plans,
28:06
Speaker 3: they're more complicated than just hey, how much should I
28:08
Speaker 3: be tossing in these days? And that's to your benefit
28:12
Speaker 3: if you get it right, but can be to your
28:15
Speaker 3: detriment if you're just kind of pointing at it blindly.
28:18
Speaker 3: And more and more often I'm seeing people just split
28:20
Speaker 3: the difference and say, hey, half is going in traditional
28:22
Speaker 3: half is going wrong because I don't know what to do.
28:24
Speaker 3: If you have questions like that, if you are facing
28:27
Speaker 3: this decision and you're not sure what to do, which
28:29
Speaker 3: is common. It's one of the most common questions I
28:31
Speaker 3: get about retirement plans. Call the Armstrong Advisory Group. Let
28:35
Speaker 3: us sit down with you for our free consultation. Will
28:37
Speaker 3: go through these types of complex decisions and how we
28:40
Speaker 3: frame them for our clients. The numbers eight hundred three
28:43
Speaker 3: nine three four zero zero one. We offer free consultations
28:47
Speaker 3: to the public. We have offices scattered throughout New England,
28:50
Speaker 3: but we can do them over zoom via phone whatever
28:52
Speaker 3: is most convenient for you. That number again, eight hundred
28:56
Speaker 3: three nine three four zero zero one.
28:59
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
29:01
Speaker 1: registered investment advisor. Nothing in the ad or in any
29:04
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
29:07
Speaker 1: your own financial tax and to state planning advisors before
29:09
Speaker 1: making any investment decisions. Armstrong may contact you to offer
29:12
Speaker 1: investment advisory services.
29:14
Speaker 3: Mike, do you like ducks uh in to eat? Yes?
29:20
Speaker 3: One of my favorite? You eat multiple ducks? No?
29:24
Speaker 2: No, no.
29:26
Speaker 3: The reason I asked J Powell I think is a
29:27
Speaker 3: big duck fan.
29:29
Speaker 5: Where the hell are you going with this?
29:31
Speaker 3: I'm waiting for the payoff here. Yeah, Okay, Jay's got
29:35
Speaker 3: his ducks in a row. Is where I'm going with this?
29:37
Speaker 3: You got it.
29:38
Speaker 2: There's been a parade of fed speakers this week, and
29:43
Speaker 2: each and every one of them is in lockstep in
29:46
Speaker 2: talking about this December meeting the same way, basically saying,
29:50
Speaker 2: basically saying, yeah, I'm not sure if we're going to
29:54
Speaker 2: get there as far as a cut. And what this
29:56
Speaker 2: has the FED Fund's futures market doing is we're now
30:00
Speaker 2: at a point where it's basically a fifty to fifty
30:03
Speaker 2: coin toss as to what the market thinks the Fed
30:06
Speaker 2: is going to do in December. Now, I said yesterday
30:09
Speaker 2: and Mike, I'm interested to get your thoughts on this.
30:11
Speaker 2: I have two conflicting views I think on this meeting.
30:14
Speaker 3: Okay. The first is given the.
30:17
Speaker 2: Lack of new economic data, and given the fact that
30:21
Speaker 2: supplemental labor market data ADP paychecks indeed is all continuing
30:28
Speaker 2: to show a weakening labor market, given that the Fed
30:31
Speaker 2: already cut in September and October, I don't think there's
30:35
Speaker 2: anything out there that suggests they shouldn't cut in December.
30:40
Speaker 2: I tend to agree, like, if you've already started down
30:43
Speaker 2: this path, yeah, there's nothing that would change your mind
30:45
Speaker 2: in my opinion.
30:46
Speaker 3: Yeah, there's been no data release that would make you
30:49
Speaker 3: do so. The counter to this And here's the other piece.
30:54
Speaker 2: When we talk about monetary policy errors, they're rarely because
30:57
Speaker 2: you went not rarely, they are never because you went
31:00
Speaker 2: a quarter percent in one direction too far. Sure, it's
31:03
Speaker 2: usually because it's like, hey, we started cutting and we
31:05
Speaker 2: should have hiked, or hey we hiked a quarter percent,
31:08
Speaker 2: we should have hiked five percent twenty twenty two. Like
31:11
Speaker 2: it's it's those kinds of things. So the place that
31:15
Speaker 2: I also end up in, though, is well, since September
31:19
Speaker 2: of last year, the FED is now cut by one
31:21
Speaker 2: and a half percent one hundred and fifty bases points,
31:24
Speaker 2: and the housing market is objectively worse today than it
31:27
Speaker 2: was a year ago. Maybe they're pushing on a string
31:32
Speaker 2: and additional cuts aren't going to do anything unless you
31:35
Speaker 2: get to a point where you're like, hey, we got
31:37
Speaker 2: to take FED funds right down to like one percent,
31:39
Speaker 2: in which case there's a real problem in the economy.
31:41
Speaker 3: Yeah, you may be right there, it might not be
31:44
Speaker 3: doing anything. I'm not sure that inaction is the right
31:46
Speaker 3: policy in that case. But I do take your point,
31:48
Speaker 3: and you say they've got their ducks in the row. Obviously,
31:51
Speaker 3: I don't think we're gonna hear this type of rhetoric
31:54
Speaker 3: from the likes of Stephen Meyron. I don't think we'll
31:56
Speaker 3: hear it from though he came out and said he
31:58
Speaker 3: wanted a half percent in Yeah, like Chris Waller isn't
32:01
Speaker 3: gonna come out and say, oh, yeah, we need to
32:03
Speaker 3: we need to be cautious and we don't need to
32:05
Speaker 3: cut rates right now. Those two at least have been
32:07
Speaker 3: firmly in the camp of more rate cuts. But yeah,
32:10
Speaker 3: generally speaking, otherwise, I don't know if they're giving a
32:14
Speaker 3: signal of we're not cutting as much as they are
32:16
Speaker 3: trying to just hold their cards close to the vest.
32:19
Speaker 2: But what's the point in doing that, right Like when
32:26
Speaker 2: when is the Fed ever wanted to like keep strategic
32:29
Speaker 2: ambiguity out there.
32:32
Speaker 3: It's been a while, you know.
32:34
Speaker 2: It's like generally you kind of know what they want
32:36
Speaker 2: to do in advance, and so when they're talking about
32:39
Speaker 2: it this way, my answer is that.
32:41
Speaker 3: You have no They have no idea what's going on
32:42
Speaker 3: in the economy. They mean that they're My only seeming
32:46
Speaker 3: answer is they're genuinely confused about the current state of things.
32:50
Speaker 2: Look, I know that they haven't gotten their data releases
32:53
Speaker 2: on schedule, like all of us, and that makes us cranky.
32:56
Speaker 3: But grow a pair and make a decision.
32:59
Speaker 2: This this is the job you've chosen, you know, like, no,
33:02
Speaker 2: no one made you become you know, the the president
33:06
Speaker 2: of the whatever fed or the on the board of governors,
33:10
Speaker 2: like you chose to do this. And so given that
33:14
Speaker 2: that's the case, you don't just get to like pack
33:15
Speaker 2: it in when you don't get a couple of you know,
33:17
Speaker 2: government data reports and be like, well, I don't know
33:20
Speaker 2: what to do. No, I don't think that's what they're doing.
33:23
Speaker 2: I think they're setting the stage for potentially not cutting
33:26
Speaker 2: in December. I think that's really where they're going. Do.
33:30
Speaker 3: I think that's the right move.
33:32
Speaker 2: Quite honestly, I don't think it matters either way, because
33:34
Speaker 2: one rate cut or not is not going to make
33:37
Speaker 2: or break the economy. It's the trend and the shape,
33:40
Speaker 2: and and that's what matters. I think that it's unusual,
33:45
Speaker 2: in my mind, given that the economic data has continued,
33:49
Speaker 2: you know, to come out matching their concerns that they
33:51
Speaker 2: already had. Why would they change now that that's the
33:54
Speaker 2: piece that's interesting to me. But I guess we'll just
33:58
Speaker 2: have to wait and see. S Take a quick break.
34:01
Speaker 2: When we return, let's see, we'll talk a little bit
34:05
Speaker 2: about housing. Actually, no, I want to deal with this
34:07
Speaker 2: new utility scam. Let's talk about that when we return.
34:12
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34:16
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34:21
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34:24
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34:28
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34:33
Speaker 5: This year's DAV five k was another incredible success, with
34:37
Speaker 5: over fifteen hundred runners and walkers, all supporting the Disabled
34:40
Speaker 5: American Veterans Department of Massachusetts. The race results and photo
34:44
Speaker 5: galleries are available to see. And if you didn't have
34:47
Speaker 5: a chance to participate, but it would still like to
34:50
Speaker 5: support our great American heroes, please visit DAV fivek dot Boston.
34:54
Speaker 5: Your gifts help fund free rides to medical appointments for
34:57
Speaker 5: veterans and the nation's first dav led housing initiative providing
35:02
Speaker 5: homes for single veterans and veteran families. Go to DAV
35:05
Speaker 5: fivek dot Boston. Make your donation today. That's DAV five
35:10
Speaker 5: KT Boston.
35:11
Speaker 2: All Right, got a new scam that is floating around
35:14
Speaker 2: out there, This one in relation to utilities detailed by
35:18
Speaker 2: the Boston Globe. Boston City resident decided to switch their
35:22
Speaker 2: electricity supplier. The city of Boston allows you to do this.
35:25
Speaker 2: Most the state of Massachusetts has a whole website that
35:29
Speaker 2: you know, you can search for different suppliers. Distributors are
35:33
Speaker 2: generally not ones that you can switch between, because the
35:36
Speaker 2: actual infrastructure to deliver the electricity is you know, limited.
35:40
Speaker 2: There's not two sets of telephone polls, is the example
35:43
Speaker 2: I'll give. So this guy basically signed up to switch,
35:47
Speaker 2: and a couple days later got basically tag teamed by
35:51
Speaker 2: like a couple of scammers pretending to be his original
35:54
Speaker 2: supplier and the new one that he had switched to.
35:58
Speaker 2: And long story short, he ended up going out and
36:02
Speaker 2: purchasing nine hundred dollars in gift cards in order to
36:06
Speaker 2: try to stop this shutdown of his electricity that these
36:09
Speaker 2: scammers said they were going to be doing so big
36:14
Speaker 2: things that I continue to come back to.
36:16
Speaker 3: Number one.
36:17
Speaker 2: There is no merchant, no tax collecting agency, no government official,
36:26
Speaker 2: no anyone who legitimately would tell you to take payments
36:30
Speaker 2: in gift cards. Yeah, and so number one. Number two,
36:36
Speaker 2: if someone calls you saying that you owe them money,
36:42
Speaker 2: the polite thing to do is to say, thank you,
36:43
Speaker 2: I appreciate you telling me that I'm going I'm busy
36:46
Speaker 2: right now, but I'll give you a call back hang up,
36:49
Speaker 2: and then go and find the actual callback number. Four
36:52
Speaker 2: the institution that said that they called. It can be
36:54
Speaker 2: on you know, a website for a city or a company.
36:58
Speaker 2: It can be on a piece of correspondent that you
37:00
Speaker 2: have in your house. But do not call back the
37:02
Speaker 2: same number that just called you, because it may or
37:05
Speaker 2: may not be legitimate. Find the contact number from somewhere.
37:10
Speaker 5: Do you know.
37:11
Speaker 3: That's another thing that a legitimate debt collector will do,
37:14
Speaker 3: will or will not will what. They'll send you a letter? Yeah,
37:19
Speaker 3: and they know where you live, right so like they
37:22
Speaker 3: do if you legitimately have a debt outstanding, it's a
37:25
Speaker 3: very reasonable quest to say, understood, please send me a
37:28
Speaker 3: letter in the mail so I can review it. A
37:31
Speaker 3: stammer won't.
37:32
Speaker 2: There's basically never anything where you need to pay someone
37:35
Speaker 2: right that minute, because that's just.
37:39
Speaker 3: Not how it works. And it's getting increasingly difficult for
37:43
Speaker 3: me to not victim blame on this, and I really
37:45
Speaker 3: try not to, and I understand how this happens, and
37:49
Speaker 3: I understand, especially with vulnerable adults, how this happens. Might
37:53
Speaker 3: trust me. I get confused about this stuff sometimes too.
37:56
Speaker 3: I I do too. There's a time second. The second
37:59
Speaker 3: you find yourself walking to a CVS to buy gift cards,
38:02
Speaker 3: that alarm bell has to go off. And if you
38:05
Speaker 3: can legitimately ask yourself, if you legitimately tell yourself that
38:07
Speaker 3: that wouldn't go off for you, then you need to
38:09
Speaker 3: give up control of your finances.
38:12
Speaker 2: I do think that that might be, you know, accurate,
38:15
Speaker 2: But like I can tell you, like I've had instances
38:17
Speaker 2: in the last month or two where I'm sitting there
38:19
Speaker 2: and I'm like, is this legit or not? And I'm
38:23
Speaker 2: even when I make a final decision, I might not
38:26
Speaker 2: be completely sure.
38:27
Speaker 3: Yep, you know. So it's the other place that's full
38:31
Speaker 3: of scams. Anything on Facebook, marketplace, if you're listing something,
38:34
Speaker 3: if you're buying something, be especially concerned about it. Yeah,
38:38
Speaker 3: just take a quick break. Hour two coming up on
38:41
Speaker 3: the financial exchange. Just the bit