Latest / The Financial Exchange Show / The Bond Market Is Testing the Treasury

Transcript

The Bond Market Is Testing the Treasury · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:02
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:08
Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:17
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
Speaker 1: this program do not endorse each other or their services.
0:26
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:28
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Chuck Zada and Mike Armstrong, your exclusive look
0:38
Speaker 1: at business and financial news affecting your day, your city,
0:42
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends, plus breaking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:53
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:57
Speaker 1: heroes by visiting dav five K dot Boston and making
1:01
Speaker 1: a donation today. This is the Financial Exchange with Chuck
1:05
Speaker 1: Zada and Mike Armstrong.
1:10
Speaker 2: It's Chuck, Mike an Tucker with you here. It's a
1:13
Speaker 2: Friday on the Financial Exchange, espectually Friday everywhere on planet
1:17
Speaker 2: Earth at this very moment in time, I believe I
1:21
Speaker 2: don't think it's Saturday anywhere yet. Yeah, I don't know
1:27
Speaker 2: we're cloture Saturday, but we're not there yet. In any case,
1:31
Speaker 2: our top story is not in fact what day of
1:33
Speaker 2: the week it is, but rather we continue to talk
1:36
Speaker 2: a little bit about what we are seeing in the
1:39
Speaker 2: bond market as it relates to the US Treasury's plan
1:44
Speaker 2: to increase buybacks of US long term debt and how
1:50
Speaker 2: different parts of the market are responding to that in
1:54
Speaker 2: recent days. So as I sit here right now, Michael,
1:58
Speaker 2: and you know it's serious when I go full Michael
2:01
Speaker 2: on you about the Michael, Yeah, US tenure Treasury is
2:03
Speaker 2: at four point seventy one percent. Just prior to the
2:07
Speaker 2: Treasury making that buyback announcement, US tenure Treasury was at
2:11
Speaker 2: four point seven percent. So effectively there's been no change.
2:14
Speaker 2: We've round tripped the entire thing. Uh at this point,
2:18
Speaker 2: and it raises the question, doesn't beg the question, but
2:21
Speaker 2: it raises it. What does the US Treasury Secretary Scott
2:27
Speaker 2: Bessont actually want out of this? If it is materially
2:33
Speaker 2: lower long term interest rates, then the market is effectively
2:38
Speaker 2: saying you called fine, I raise back in your court.
2:43
Speaker 2: What are you gonna do? Yep, that's pretty much where
2:47
Speaker 2: we are. If Bessint doesn't want lower long term treasury
2:51
Speaker 2: rates and this is just a mechanical thing just to
2:55
Speaker 2: you know, keep the plumbing, you know, going, then you look,
3:00
Speaker 2: quite honestly, it raises the question of like, okay, like
3:03
Speaker 2: why now? Then, like what do you know that we don't?
3:07
Speaker 2: But I think ultimately the real meat of this, in
3:13
Speaker 2: my opinion, is the juxtaposition between what we're hearing from
3:17
Speaker 2: the Treasury and what we're hearing from the Fed to
3:19
Speaker 2: different institutions that answer to different people on different timelines
3:24
Speaker 2: about different things. But we're clearly not seeing them singing
3:29
Speaker 2: from the same sheet of music. And this is why
3:32
Speaker 2: I think this is so problematic. Is Kevin Warrish, first
3:37
Speaker 2: three months on the job, has said, look, I'm not
3:40
Speaker 2: going to spoonfeedia his words, not mine. Tired of markets
3:44
Speaker 2: being spoon fed. I'm not just gonna spoon feedia. What
3:47
Speaker 2: we're going to do. Markets are going to have to
3:50
Speaker 2: interpret data and then markets can do the work for
3:53
Speaker 2: us so that we don't have to do as much. Yep,
3:56
Speaker 2: that's what he said. Scott Besant, who has a different,
4:00
Speaker 2: diferent set of guidelines. Remember, Kevin Worris's job is to
4:03
Speaker 2: maintain price stability and full employment. Treasury Secretary, you have
4:07
Speaker 2: one job. Pay the bills. That's what you do. You
4:12
Speaker 2: pay the bills, You finance the government, and you make
4:14
Speaker 2: sure everyone gets paid. That's it, plain and simple. Treasury
4:18
Speaker 2: secretaries not trying to make money for the US taxpayer.
4:22
Speaker 2: Treasury secretary is not trying to, you know, find the
4:26
Speaker 2: next hot stock. Treasury Secretary is to you. Your job
4:30
Speaker 2: is to pay the bills and make sure the financial
4:32
Speaker 2: system keeps working. And so bessn't through this. This action
4:37
Speaker 2: this week is pretty much saying, guys, something's not working
4:41
Speaker 2: for me when it comes to paying the bills. Is
4:43
Speaker 2: that a bad interpretation, MI like? Or is that accurate? No,
4:47
Speaker 2: that seems to be accurate.
4:49
Speaker 3: You know where it's coming from, whether it's actually plumbing
4:52
Speaker 3: issues or just a general distaste from the White House
4:55
Speaker 3: for mortgage rates that are this high. And another borrowing
4:58
Speaker 3: costs that are this high, I think remains an open question.
5:01
Speaker 3: But my interpretation is he tried to talk down interest
5:07
Speaker 3: rates and the and to your point, markets came back
5:12
Speaker 3: and said, yeah, talk isn't going to be enough.
5:14
Speaker 2: Talk is cheap. We're going to need to see more.
5:17
Speaker 3: And so, like you said, you know, markets kind of
5:21
Speaker 3: raised the stakes here, and we will have to see
5:23
Speaker 3: whether bestn't in the Treasury are willing to really put
5:27
Speaker 3: serious dollars behind this goal of bringing down those longer
5:31
Speaker 3: term rates. Now, if this were a plumbing issue, we'd
5:34
Speaker 3: be seeing it somewhere in terms of look, on a
5:37
Speaker 3: regular basis, the US Treasury issues new bonds. It's how
5:44
Speaker 3: we borrow money. And when you start to see you know,
5:48
Speaker 3: big tails on those auctions. The way they do it,
5:50
Speaker 3: it's a reverse auction where basically you end up you
5:55
Speaker 3: bid on the new treasuries that are issued, and much
6:00
Speaker 3: what ends up happening is the lowest rate ends up
6:03
Speaker 3: you know, taking this thing. And so when you look
6:07
Speaker 3: at this signs of like failed treasury auctions, not US treasuries,
6:11
Speaker 3: but like just in general, like signs of like bad
6:13
Speaker 3: treasury auctions. Hey, there's not that much like bid to cover,
6:17
Speaker 3: like you don't have, like you know, normally you want
6:20
Speaker 3: like depending on the issue, like a two to one
6:22
Speaker 3: or three to one, you know, bid to cover. So
6:23
Speaker 3: you're getting way more bids than what you have.
6:26
Speaker 2: Occasionally maybe you get that dipping, maybe you get a
6:28
Speaker 2: tail on it where it's like, hey, we really had
6:30
Speaker 2: to like reach in order to like fill the entire
6:32
Speaker 2: thing because the yields that we were getting were higher
6:35
Speaker 2: than we anticipated. We're not seeing signs of those, you know,
6:39
Speaker 2: like we're seeing like a half basis point tail on
6:41
Speaker 2: some of the recent bond issues, Like it's nothing right
6:44
Speaker 2: there's so it's not a plumbing issue, like I'll call it, like,
6:50
Speaker 2: it's not a plumbing issue because you're not seeing it there.
6:53
Speaker 2: And so the problem then is if you're a bond investor,
6:58
Speaker 2: and remember like they're different reasons why people can buy bonds,
7:02
Speaker 2: lots of them. You could be a life insurance company
7:06
Speaker 2: you just need to buy thirty year treasuries because you
7:07
Speaker 2: got a bunch of people you think are gonna die
7:09
Speaker 2: thirty years from now, and that's what you're buying. Cool.
7:12
Speaker 2: You could be an investor buying a ten year treasury
7:14
Speaker 2: just to provide ballast in your portfolio. That's cool too.
7:18
Speaker 2: You could be a total return focused bond investor saying, hey,
7:22
Speaker 2: I think the ten years undervalued right now. I'm gonna
7:25
Speaker 2: buy it and then flip it in a month when
7:26
Speaker 2: I you know if it rallies. They are all different
7:29
Speaker 2: reasons why investors can buy bonds. Sure, the problem that
7:33
Speaker 2: you run into now is if you are a bond investor,
7:37
Speaker 2: part of the reason, like the way that bonds are
7:41
Speaker 2: priced is basically by knowing the risks that are out
7:45
Speaker 2: there and being able to say, Okay, here are the
7:46
Speaker 2: risks that I see, and this is the interest that
7:50
Speaker 2: I demand in order to hold that risk. You're basically
7:52
Speaker 2: wear housing that risk. Well, how do I know what
7:56
Speaker 2: the rules of the road are? Who do I listen to?
7:59
Speaker 2: Do I I listened to Scott Bestn Or do I
8:01
Speaker 2: listen to Kevin Warsh Because they're telling me very different
8:04
Speaker 2: things and that affects how I look at this. And
8:07
Speaker 2: so if I don't know who to believe, well, in
8:10
Speaker 2: the absence of you know, any you know new information
8:13
Speaker 2: about you know, how the Treasury operates or how the
8:15
Speaker 2: Fed does, I kind of got to listen to Kevin Warsh,
8:19
Speaker 2: because Warsh has the Bazuka, yeah, whereas Scott Beston does not.
8:24
Speaker 2: What I mean by that is the Fed can print money.
8:27
Speaker 2: Treasury can't. Treasury can borrow money, but the Fed can
8:30
Speaker 2: print money, and you take the money, printer over the
8:33
Speaker 2: money borrow where any day. And that's I think what
8:36
Speaker 2: markets are doing right now is they're saying, look, Scott,
8:40
Speaker 2: you're telling us that like you want lower rates. The
8:43
Speaker 2: guy with the real Bozuka saying, I don't care what
8:46
Speaker 2: rates are, I'm gonna believe him. Is that a bad interpretation? No?
8:51
Speaker 2: I think worsh really laid this out.
8:55
Speaker 3: He does not want to be He does not want
8:59
Speaker 3: to investor is listening to him as the referee right
9:02
Speaker 3: like that was not his goal. He made it very
9:05
Speaker 3: clear that he wants markets trying to figure out, uh,
9:09
Speaker 3: you know, where things are going on their own without
9:12
Speaker 3: looking to him and the Federal Reserve as the referee.
9:16
Speaker 3: In the absence of that, Bessent has now stepped into
9:18
Speaker 3: that referee rule. I don't know if anybody's gonna listen
9:22
Speaker 3: to him, but he has made the decision to step
9:24
Speaker 3: into that referee rule. And I don't know what Worsh
9:27
Speaker 3: is supposed to do about that. Now, I'll make one
9:29
Speaker 3: point just that I think is interesting. Kevin Worsh isn't
9:31
Speaker 3: actually the referee. Kevin Walsh is the ball. I mean,
9:39
Speaker 3: you think about it. The way that bonds get priced
9:42
Speaker 3: is based on, Okay, here's what we think the central
9:46
Speaker 3: bank is going to do, because ultimately they can print
9:48
Speaker 3: money like full stop. It's okay, we're gonna price this
9:52
Speaker 3: this way because if X happens, the FED or the
9:54
Speaker 3: Bank of Japan or the Bank of England or whoever
9:56
Speaker 3: it might be, is going to have to move interest
9:59
Speaker 3: rates this way in order to, you know, get things
10:03
Speaker 3: to happen.
10:04
Speaker 2: Kevin Worsh is the ball. Like you, you're you are
10:07
Speaker 2: playing what the FED is going to do. Even if
10:09
Speaker 2: the Fed's not gonna tell you what they're going to do,
10:13
Speaker 2: You're still playing that because they still are either going
10:16
Speaker 2: to they're gonna do one or three things. They're gonna raise,
10:18
Speaker 2: they're gonna cut, or they're gonna do nothing. So you're
10:22
Speaker 2: still like, Kevin Worsh is the ball, regardless of whether
10:25
Speaker 2: he tells you he's the ball. Scott Bessen, you can
10:28
Speaker 2: make a case is the referee he does not have
10:31
Speaker 2: like the authority to do that. Treasury can borrow, they
10:34
Speaker 2: can't print money, they can't change interest rates at at
10:39
Speaker 2: the drop of a hat. So I think this is
10:41
Speaker 2: gonna be really interesting to see how the next one
10:43
Speaker 2: to two months play out. Uh, A lot of a
10:48
Speaker 2: lot of different cross currents that could take this in
10:49
Speaker 2: a lot of different directions. Uh. It is again after
10:53
Speaker 2: just what's been like a slow, doldrumy summer where like
10:57
Speaker 2: not much interesting has happened in markets in my opinion, Like,
11:00
Speaker 2: I mean, let's be honest, Mike, we've been talking about
11:02
Speaker 2: AI like forty five minutes a show for the summer. Yeah,
11:05
Speaker 2: I'm just sick of it. It's not like it's no
11:09
Speaker 2: one's fault. It's just there hasn't been anything interesting to
11:11
Speaker 2: talk about. Yeah, we got some unanticipated excestmens. Oh my goodness,
11:15
Speaker 2: Like just oh, I'm so happy we have something else
11:18
Speaker 2: to talk about, even if like it's not necessarily ideal. Hey,
11:22
Speaker 2: the next month or two is going to be really
11:24
Speaker 2: interesting because of this. Now, let's take a quick break.
11:27
Speaker 2: When we return, we've got Jackson Hole the symposium for
11:32
Speaker 2: the FED coming up next week. We'll discuss what to
11:35
Speaker 2: expect after this.
11:37
Speaker 1: The Financial Exchange streams every day live on YouTube. Subscribe
11:41
Speaker 1: to our page and follow the markets all morning longs
11:43
Speaker 1: only here on the Financial Exchange Radio Network. Daily financial
11:48
Speaker 1: content in your feed when you want it. Follow the
11:51
Speaker 1: Financial Exchange on Instagram. Face is the Financial Exchange.
11:59
Speaker 4: The Financial Change is a proud partner of the Disabled
12:02
Speaker 4: American Veterans Department of Massachusetts and this year's five K
12:05
Speaker 4: is officially sold out. The race will take place on Saturday,
12:10
Speaker 4: November seventh at Fort Independence on Castle Island, and we
12:13
Speaker 4: hope you can take this opportunity to consider making a donation.
12:17
Speaker 4: Your gifts help provide vital services like free transportation to
12:21
Speaker 4: medical appointments and safe housing for single veterans and their families.
12:25
Speaker 4: Donate today a Dav five k dof Boston. That's Dav
12:29
Speaker 4: five k dof Boston, Mike.
12:32
Speaker 2: Next week, the Federal Reserve heads to Jackson Hole for
12:36
Speaker 2: their annual symposium there. Do we have any idea what's
12:39
Speaker 2: on the menu this year from what I've seen?
12:41
Speaker 3: No, And you know, this is an interesting event where
12:45
Speaker 3: worsh is gonna speak, but he can really talk about
12:48
Speaker 3: darn near whatever he wants.
12:50
Speaker 2: Did they get rid of the bats. You remember last
12:54
Speaker 2: year one of the cabins had bats in it. We
12:56
Speaker 2: covered it. I think I was out that day, Chuck,
13:00
Speaker 2: you miss the Jackson Hole bats? I guess I did. Tucker,
13:03
Speaker 2: you remember that vaguely?
13:04
Speaker 4: Yeah, twenty twenty five. I'm seeing now colony of bats
13:07
Speaker 4: was discovered at a lodge.
13:09
Speaker 2: Yeah, you know, I hope not. You hope that they
13:12
Speaker 2: haven't gotten rid of it. Correct. Yeah, that's mine because
13:14
Speaker 2: you hope that someone on the FED contracts.
13:16
Speaker 3: No, I don't want anybody getting rabies. That's you know,
13:19
Speaker 3: not every bat's got rabies. But yeah, it would be
13:22
Speaker 3: a fun story to cover again. So we've got this
13:25
Speaker 3: Jackson Hole Symposium where we've got the opportunity to hear
13:28
Speaker 3: from Kevin worsh again after hearing from him end of July.
13:32
Speaker 2: Was it, yes, July twenty something.
13:36
Speaker 3: And I know we just spent the first entire segment
13:38
Speaker 3: talking about the bond market and Bessent and all this stuff.
13:41
Speaker 3: But I have to reiterate why this is so important
13:44
Speaker 3: and why every financial media outlet is covering it so heavily.
13:48
Speaker 3: You personally might not care that much about the bond market.
13:51
Speaker 3: You might not own any bonds at all, although I
13:53
Speaker 3: would bet you do based on the average four oh
13:57
Speaker 3: one K and you know ways that those the ways
14:01
Speaker 3: that those act. But the point that I will make
14:03
Speaker 3: is the entire global financial system is pretty darn reliant
14:09
Speaker 3: on the US government securities functioning paying their interest and
14:17
Speaker 3: you know, running fairly smoothly, whether it is borrowing rates
14:22
Speaker 3: for large corporations, savings rates that you get from the bank,
14:27
Speaker 3: or even the funding mechanism for publicly traded stocks, like,
14:32
Speaker 3: all of this kind of revolves around the US government
14:37
Speaker 3: bond market. And so that's why we're so fascinated in
14:40
Speaker 3: this is you've got a very big departure from what
14:44
Speaker 3: was status quo activity at the Federal Reserve for the
14:47
Speaker 3: last decade.
14:49
Speaker 2: So that's been fascinating.
14:50
Speaker 3: And then at the same time you have this action
14:53
Speaker 3: from Scott Bassett, which is not anything terribly new, right,
14:56
Speaker 3: Plenty of Treasury secretaries have done exactly version of what
15:01
Speaker 3: Besent is doing right now, but they've done so in
15:04
Speaker 3: the context of a FED chair that was doing, like
15:08
Speaker 3: I said, something completely different from Warsh. And that's what
15:10
Speaker 3: makes this interesting is on the surface, you've set up
15:14
Speaker 3: a conflict between this Treasury secretary and this Federal Reserve
15:18
Speaker 3: chair who you know, both seems like they are pretty
15:23
Speaker 3: close with the President and see eye to eye with
15:26
Speaker 3: a lot of his views on things, and so yeah,
15:29
Speaker 3: pretty fascinating stuff.
15:31
Speaker 2: So the question is going to be like, what what
15:32
Speaker 2: are we actually gonna get from Worsh on next Friday?
15:37
Speaker 2: And again, they are basically two ways that this can go,
15:42
Speaker 2: Like it's kind of a binary outcome. Either Worsh is
15:46
Speaker 2: going to provide sufficient clarity not on like what he's
15:51
Speaker 2: going to do, but just on his overall view of
15:57
Speaker 2: like the Federal Reserve and the role that it is
15:59
Speaker 2: going to play in conjunction with with the Treasury, or
16:03
Speaker 2: he's not, And there are two very different outcomes from
16:07
Speaker 2: markets depending on that. If we get a repeat of
16:10
Speaker 2: the July twenty ninth performance, then this movie Yields is
16:14
Speaker 2: not over.
16:14
Speaker 3: Because the July tventy ninth performance left pretty much every
16:17
Speaker 3: financial expert in you know, complete confusion about how Worsh
16:23
Speaker 3: thinks about the policy that he's laying out.
16:27
Speaker 2: Yes to put this clear the day before, okay, like
16:31
Speaker 2: if if you want to know, like how things moved
16:33
Speaker 2: immediately after the day before the that FED meeting, the
16:38
Speaker 2: ten yere treasurer was at four five eight eight. Two
16:41
Speaker 2: days after it was at four seven five. So like, okay,
16:46
Speaker 2: like clear move around that if you want to look
16:49
Speaker 2: at gold, just as an example, because gold's been getting
16:52
Speaker 2: a lot of chatter as well. You know recently, gold
16:55
Speaker 2: the day before closed at fourenty twenty eight. A week
16:59
Speaker 2: later on August fifth, it was up to forty two
17:02
Speaker 2: forty seven, So like that kind of kicked things off,
17:04
Speaker 2: you know, on that move as well. So it's it's
17:08
Speaker 2: pretty clear that what we've seen over the course of
17:10
Speaker 2: August in rates and in precious metals and basically anything
17:16
Speaker 2: that is sensitive to the idea of hey, how much
17:20
Speaker 2: trust is there in the US treasury market has been
17:25
Speaker 2: kind of getting a hit, you know, over the course
17:27
Speaker 2: of the month. Not disastrous type stuff, but certainly stuff
17:32
Speaker 2: that should wake up a policy maker to say, okay,
17:35
Speaker 2: like I need to do something before this becomes a disaster.
17:39
Speaker 2: And by the way, we talked about this, every FED
17:42
Speaker 2: chair gets tested at some point yep. And you know,
17:46
Speaker 2: immediately after the first FED meeting that worst presided over,
17:50
Speaker 2: where a lot of people myself included, like we were
17:52
Speaker 2: pretty complimentary. It was like, okay, like this is this
17:54
Speaker 2: is good, but it's just one meeting and we need
17:57
Speaker 2: to see more. We were saying that it's like, look,
18:01
Speaker 2: you can go and pull the tape from like the
18:02
Speaker 2: day after the FED meeting or the week after that
18:04
Speaker 2: first FED meeting, and I think it was late May
18:06
Speaker 2: or early June. I can't remember offhand, but we were
18:10
Speaker 2: sitting there and we said, hey, this is good, but
18:13
Speaker 2: he hasn't done anything yet, you know, like he hasn't
18:16
Speaker 2: had to respond to anything yet. Jay Powell, back when
18:20
Speaker 2: he came on board in late twenty eighteen, he was
18:25
Speaker 2: He famously made the comment, hey, o, our you know,
18:28
Speaker 2: program to wind down and to reduce the size of
18:30
Speaker 2: our balance sheet is on autopilot. And the market pressed
18:34
Speaker 2: him and he said, you know what, not on autopilot anymore.
18:37
Speaker 2: And it might not have been what Jay wanted to do,
18:40
Speaker 2: but ultimately the market was telling him, Jay, you can't
18:44
Speaker 2: do this. This is not gonna work. And so now
18:48
Speaker 2: you've got a market that when you look at the
18:51
Speaker 2: signals that FED chairs, look at yields, medals like anything,
18:56
Speaker 2: that's telling you, hey, is there a policy error that's
18:58
Speaker 2: happening right now? They're quite honestly, like they're kind of screaming, Hey,
19:06
Speaker 2: you're about to do something you shouldn't and now we
19:10
Speaker 2: have to see like how they handle it. Is it
19:13
Speaker 2: just the question is is it the pizza that's the problem?
19:16
Speaker 2: Is at the box? Like is what you're trying to
19:20
Speaker 2: do the issue or did you just phrase it and
19:22
Speaker 2: package it wrong and you just need to reset. We'll see.
19:26
Speaker 2: Let's take a quick break. When we return, We've got
19:29
Speaker 2: Wall Street Watch.
19:38
Speaker 1: Like us on Facebook and follow us on Twitter at
19:41
Speaker 1: TFE show. Breaking business news is always first right here
19:46
Speaker 1: on the Financial Exchange Radio Network. Time out full Wall
19:51
Speaker 1: Street Watch tracking the stocks, the data, and the headlines
19:54
Speaker 1: driving markets so far today, Right here on the Financial
19:57
Speaker 1: Exchange Radio Network.
19:59
Speaker 4: Market's are wrapping up a chaotic week in positive territory
20:02
Speaker 4: as Wall Street continues to assess the bond buy back
20:05
Speaker 4: made by the Treasury this week. Traders also writing for
20:08
Speaker 4: the Jackson Ole Symposium and in video earnings due out
20:10
Speaker 4: next week. Right now, the Dow up two thirds of
20:13
Speaker 4: a percent, or three hundred and fifty seven points higher,
20:15
Speaker 4: SMP five hundred up about a third of a percent
20:19
Speaker 4: or twenty three points highed, Nasdaq is up about a
20:22
Speaker 4: tenth of a percent or thirty points higher. Rust two
20:24
Speaker 4: thousand is up over a third of a percent, Tenure
20:27
Speaker 4: Treasure Reel is up three basis points at four point
20:30
Speaker 4: seventy three percent, and Oil retreating half a percent, trading
20:33
Speaker 4: right around eighty six dollars barrel. Bitcoin heading for its
20:37
Speaker 4: best week and more than three years and now trading
20:39
Speaker 4: at seventy seven thousand dollars. Crypto related stocks, including Strategy,
20:43
Speaker 4: Coinbase in robin Hood are seeing gains in reaction to
20:47
Speaker 4: the recent leap in bitcoin. Meanwhile, shares and Row Stores
20:50
Speaker 4: climbing over two percent after the off price retailer hiked
20:54
Speaker 4: it's full year outlook on higher demand from new inexisting
20:57
Speaker 4: customers sticking with retail where shares in Beach Wholesale are
21:01
Speaker 4: up by four percent after the company posted better than
21:04
Speaker 4: expected second quarter results where it's revenue jumped sixteen percent
21:08
Speaker 4: as budget conscious shoppers were in search of value. BJ's
21:13
Speaker 4: also increase its full year adjusted earnings forecast, and according
21:17
Speaker 4: to Bloomberg, Broadcom is in talks with lenders to raise
21:20
Speaker 4: more than sixty billion dollars in debt from an AI
21:24
Speaker 4: chip financing deal that will benefit anthropic and other companies.
21:28
Speaker 4: Broadcom is up over one percent right now. I'm Tucker Silva,
21:33
Speaker 4: and that is Wall Street. Watch, Mike.
21:36
Speaker 2: We got a piece from Baron's here, Six big takeaways
21:39
Speaker 2: from retail's big week of earnings. I have one thing
21:42
Speaker 2: just before we go further on it. The first sentence,
21:47
Speaker 2: Walmart said a somber tone for the first week of
21:49
Speaker 2: retailer earnings. Somber somber. No one died at Walmart's earnings.
21:56
Speaker 2: I'm just not sure that's the right word. They weren't
22:01
Speaker 2: even that bad of earning. The somber is not the
22:06
Speaker 2: right word.
22:06
Speaker 3: Yeah, But in any case, let's talk about the takeaways here.
22:11
Speaker 3: One is a takeaway that I think anybody close to
22:15
Speaker 3: the real estate space already knew. People aren't buying and
22:18
Speaker 3: selling homes. Therefore, people aren't going to home home depot
22:21
Speaker 3: in Lows quite as much as they normally would.
22:25
Speaker 2: Sure like pretty basic one.
22:27
Speaker 3: But you know, for anybody that was expecting a blowout
22:30
Speaker 3: quarter from home Depot and lows, it's not gonna happen
22:33
Speaker 3: until home volume, home purchase and sale volume ticks up
22:38
Speaker 3: in some meaningful way, which I don't expect to happen
22:42
Speaker 3: without a meaningful drop in interest rates, which is the
22:44
Speaker 3: whole thing that we're talking about for the first half
22:46
Speaker 3: hour of the show.
22:47
Speaker 2: So, by the way, they're continuing to go up as
22:49
Speaker 2: we've gone through the show ten years, gone up two
22:51
Speaker 2: basis points since we started.
22:52
Speaker 3: Yeah, yeah, so continued doubt about the Treasury's ability and
22:57
Speaker 3: willingness to go and do that. But yeah, until it happens,
23:00
Speaker 3: you can talk about, you know, a continuing, you know,
23:05
Speaker 3: slight increase in elevated purchases and sales of single family residences,
23:10
Speaker 3: just as more people get used to these higher interest rates,
23:13
Speaker 3: but the idea of substantially higher just doesn't happen until
23:17
Speaker 3: rates moved down. On the other side of the consumer space, Walmart, Target,
23:23
Speaker 3: TJX all reported earnings this week, and my general takeaway
23:27
Speaker 3: is that while the consumer is okay, they're a little
23:32
Speaker 3: bit stressed. And Walmart called this out specifically that four
23:36
Speaker 3: dollars a gallon seems to be some sort of psychological
23:39
Speaker 3: or you know, real dollar wise breaking point for a
23:43
Speaker 3: lot of their customers, and so they are trading down,
23:46
Speaker 3: pulling back, and not going for as many high end
23:49
Speaker 3: discretionary items as they might usually do.
23:53
Speaker 2: Yeah, and look, I don't like to overreact to like
23:58
Speaker 2: any one particular or quarter of earnings from even like
24:04
Speaker 2: from like a few companies here, Sure, just because some
24:07
Speaker 2: of this could be okay, like people spend a bunch
24:09
Speaker 2: of money on the like World Cup, and so they
24:11
Speaker 2: didn't spend money at Walmart, you know, or again that's
24:15
Speaker 2: probably a dumb one, but sure, I get it. There's
24:19
Speaker 2: other stuff that goes on. And here's the thing that
24:21
Speaker 2: when we look at the overall credit cards spending data,
24:24
Speaker 2: if you're looking at what Visus telling you, if you're
24:27
Speaker 2: looking at what master Card's telling you, if you look
24:29
Speaker 2: at what the banks are telling you, if you look
24:31
Speaker 2: at what we're seeing just from you know, transaction reporting
24:36
Speaker 2: companies and things like that, none of them are signaling
24:39
Speaker 2: any overall problem with consumer spending. Right, So it might
24:42
Speaker 2: have just been that for this quarter, maybe it was
24:44
Speaker 2: a shift from retail to services like that. That's very
24:49
Speaker 2: possible in terms of what we're seeing. I get that
24:55
Speaker 2: this week's retail earnings weren't great, and in particular the
24:59
Speaker 2: Walmart ones kind of like ooh, like why is Walmart
25:01
Speaker 2: down ten percent? But I'm just not sitting here like
25:06
Speaker 2: being like, hey, this is a huge problem right now.
25:11
Speaker 3: Yeah, it does not seem like a big problem. If
25:13
Speaker 3: it were a big problem, you'd see same store sales declining.
25:16
Speaker 3: That's not what happened, right Like, the same store sales
25:19
Speaker 3: sure pretty flat for most of these guys. They are
25:24
Speaker 3: not warning investors about their future earnings coming down further.
25:27
Speaker 3: They're suggest saying, look, you know, people are adjusting to
25:30
Speaker 3: these higher gas prices, and maybe maybe it's going to
25:35
Speaker 3: mean tougher earnings for us in the future, but we
25:36
Speaker 3: don't think so. And so it was a roughish quarter,
25:41
Speaker 3: but the sky isn't falling.
25:44
Speaker 2: If you do want the piece to potentially be worried about,
25:46
Speaker 2: it's the fact that the savings rate has continued to dwindle,
25:49
Speaker 2: and maybe that's why the you know, spending growth has
25:52
Speaker 2: been as consistent as it's been overall, and that can
25:55
Speaker 2: only continue for so long. So if you want something
25:58
Speaker 2: to potentially be concerned about, that could be it. The
26:01
Speaker 2: counter to it is that the savings rate tends to
26:03
Speaker 2: be retroactively, retroactively revised up in a lot of cases,
26:09
Speaker 2: and so I'm not sure it's worth making any noise
26:11
Speaker 2: about just because a lot of times, you know, we
26:13
Speaker 2: have the conversation like, oh, like the savings rate looks
26:15
Speaker 2: like it's going down, and then when they, you know,
26:18
Speaker 2: go and have additional data a year from now, they're like, well,
26:21
Speaker 2: it didn't actually decline as much as we thought it did.
26:23
Speaker 3: Also make the point, and not to sound insensitive to
26:26
Speaker 3: the average American consumer, not sure this story matters one
26:29
Speaker 3: bit right now to markets. You know, like, generally speaking,
26:33
Speaker 3: we're often focused on the consumer, and hey, how's.
26:36
Speaker 2: The consumer doing.
26:36
Speaker 3: We're a consumer driven economy right now, we are not
26:39
Speaker 3: a consumer driven economy. We're an AI, an infrastructure driven economy,
26:43
Speaker 3: and that won't last forever.
26:45
Speaker 2: In my opinion.
26:46
Speaker 3: But right now, you know, how great the consumer is
26:50
Speaker 3: doing matters to retailers, matters to those consumers, might not
26:54
Speaker 3: matter to the stock market.
26:55
Speaker 2: Yeah, I think that's a fair point as well. You
26:59
Speaker 2: probably don't want that to continue in perpetuity. But again,
27:04
Speaker 2: the stuff that's been driving the market for the last
27:06
Speaker 2: three four years has been AI. It hasn't been housing,
27:08
Speaker 2: it hasn't been the consumer. It's been AI. Let's take
27:12
Speaker 2: a quick break here. When we return, talk a little
27:15
Speaker 2: bit about what we're seeing in terms of healthcare costs
27:17
Speaker 2: and also ghost jobs. Are they well? Is it a
27:23
Speaker 2: spooky thing for Halloween or is it something bad? We'll
27:27
Speaker 2: discuss next.
27:28
Speaker 1: Text us six one, seven, three, six, two thirteen eighty
27:32
Speaker 1: five with your comments and questions about today's show, and
27:35
Speaker 1: let us know what you think about the stories we
27:37
Speaker 1: are covering. This is the Financial Exchange Radio Network. The
27:42
Speaker 1: Financial Exchange streams live on YouTube. Subscribe to our page
27:46
Speaker 1: and stay up to date on breaking business news all morning.
27:49
Speaker 1: Long Face is the Financial Exchange Radio Network.
28:01
Speaker 2: Mike, we've got a Wall Street Journal exclusive. Here's exactly
28:06
Speaker 2: sure what's exclusive about it? But something is us workers
28:11
Speaker 2: are paying more for healthcare and next year will be worse. Yeah.
28:14
Speaker 2: This mark just describes basically every year for my entire life, and.
28:19
Speaker 3: Especially for the last five So for those that don't
28:22
Speaker 3: pay close attention to this because it comes right out
28:24
Speaker 3: of your paycheck, and you know, some people kind of
28:27
Speaker 3: ignore that a little bit. The jump for twenty twenty
28:31
Speaker 3: six for employer sponsored health insurance, according to National Insurance Services,
28:38
Speaker 3: was somewhere in the six and a half to eight
28:40
Speaker 3: and a half percent range for twenty twenty six. Our
28:43
Speaker 3: own health insurance plan here bumped about eight percent last
28:47
Speaker 3: year and US employers are now expecting for twenty twenty
28:52
Speaker 3: seven that jump to be over eleven percent, And yeah,
28:58
Speaker 3: this is just kind of wild and out of control.
29:02
Speaker 3: A lot of it is still being pointed at for
29:05
Speaker 3: GLP one drugs quite expensive and a very rapid adoption
29:10
Speaker 3: on behalf of insurance. More and more employer plans that
29:14
Speaker 3: I'm hearing about are and medicare plans in fact, are
29:19
Speaker 3: barring these drugs for weight loss only. They are saying, hey,
29:23
Speaker 3: we will cover them, but it's got to be more
29:26
Speaker 3: than just for the purpose of weight loss. Otherwise we're
29:28
Speaker 3: not covering the cost of them. But nonetheless, yeah, prices
29:32
Speaker 3: continuing to shoot up on health insurance side and accelerating,
29:36
Speaker 3: which is not only are the prices going up by
29:39
Speaker 3: big percentages, but those percentages are getting.
29:42
Speaker 2: Larger every year for the last five years. And it's
29:45
Speaker 2: not surprising. It's entirely predictable that things move in this
29:51
Speaker 2: fashion because when it comes to the US healthcare system,
29:55
Speaker 2: we've basically taken the worst features of both private and
29:58
Speaker 2: publicly run healthcare plans and said, hey, let's put those together,
30:04
Speaker 2: you know, and so you just end up with this
30:06
Speaker 2: this mess that just people don't feel like they're getting
30:09
Speaker 2: the care that they want at the price that they want,
30:13
Speaker 2: And I find it very rare for people to just
30:20
Speaker 2: generally have any kind of good experience with the broader
30:24
Speaker 2: healthcare system as a whole.
30:26
Speaker 3: I'll just share a story yesterday of two people that
30:31
Speaker 3: I heard from who were service members. Military service members
30:35
Speaker 3: that were on Trycare, which a lot of listeners are
30:38
Speaker 3: probably familiar with, health insurance plan for a lot of
30:43
Speaker 3: military and the process of switching over on Medicare, ensuring
30:51
Speaker 3: that they had the right coverage and navigating that entire
30:57
Speaker 3: process so that Medicare would acknowledge that they're is Tricare
31:00
Speaker 3: in place and they could switch over and their spouse
31:03
Speaker 3: could stay on health insurance was such a dramatic mess
31:07
Speaker 3: that the two people in the room that didn't know
31:09
Speaker 3: each other prior to ended up talking for a good
31:12
Speaker 3: half an hour about like how this actually works. In
31:15
Speaker 3: one case, you know, the woman whose spouse was a
31:19
Speaker 3: military service member found that her health insurance from I
31:24
Speaker 3: think it was Blue Cross Blue Shield covered more and
31:27
Speaker 3: was better than the Tricare exposure. The average retiree has
31:31
Speaker 3: something like thirty five different Medicare plans that they can
31:36
Speaker 3: choose from like good, it's just a pardon me, frigging disaster,
31:43
Speaker 3: and you know, it just is so immensely complicated that, yeah,
31:50
Speaker 3: we've created this beast that I don't see how you
31:54
Speaker 3: fix without completely breaking it and starting over.
31:58
Speaker 2: But for the time being, it means.
32:00
Speaker 3: That you know whether you're on Medicare, or whether you
32:04
Speaker 3: are on employee, you provided health insurance, or even getting
32:06
Speaker 3: it through the marketplace, all of those things have increased
32:10
Speaker 3: dramatically over the last few years and don't seem to
32:12
Speaker 3: be showing any sign of slowing down.
32:15
Speaker 4: One day you're living in your own home, the next
32:18
Speaker 4: you can't return home after rehab. Now you're faced with
32:22
Speaker 4: a nursing home bill of more than fourteen thousand dollars
32:25
Speaker 4: a month and wondering how you're going to pay for it.
32:28
Speaker 4: These situations can occur with a warning, but Cushing in
32:32
Speaker 4: Dolan can help before you make any major financial decisions,
32:36
Speaker 4: get the facts. Cushing in Dolan's new guide, Last Minute
32:40
Speaker 4: Medicaid Eligibility, explains common misconceptions about Medicaid, what assets may
32:45
Speaker 4: or may not be a risk, and why the first
32:47
Speaker 4: answer you receive isn't always your only option. Call right
32:52
Speaker 4: now at eight six six eight four, eight five, six
32:55
Speaker 4: nine nine and get your free copy of cushing In
32:57
Speaker 4: Dolan's guide called Last Misis Medicaid Eligibility once again the
33:02
Speaker 4: numbers eight six six eight four eight five six, nine
33:06
Speaker 4: to nine, or you can request the guide from their
33:08
Speaker 4: website Legal exchange show dot com.
33:11
Speaker 1: The proceeding was paid for and the views expressed are
33:13
Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
33:15
Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
33:19
Speaker 1: Cushing and Armstrong do not endorse each other and are
33:21
Speaker 1: not affiliated.
33:22
Speaker 2: Mike, as we head towards October, I want to talk
33:24
Speaker 2: about ghost jobs. Uh not actually related. Thank you, thank you.
33:32
Speaker 2: You don't get it based on that booing. It's just
33:36
Speaker 2: it was a little too high pitched in my opinion.
33:38
Speaker 2: I need I need a.
33:39
Speaker 3: Ghost with a little that sounds more like a ghoul
33:43
Speaker 3: or a yeah. No, I don't think I have it.
33:46
Speaker 3: I'm not gonna get the job.
33:47
Speaker 2: What's well, it's not just you, Michael, Because here's the thing, Lock, Amen,
33:53
Speaker 2: when we talk about it, when we talk, when we
33:57
Speaker 2: talk about ghost jobs, we're not talking about you know people,
34:00
Speaker 2: We are hired to be ghosts, but in fact, we're
34:02
Speaker 2: talking about postings that are on job boards that supposedly
34:08
Speaker 2: have no intention of actually being filled. Now, I look,
34:13
Speaker 2: I struggle to understand this because I've never again, I've
34:20
Speaker 2: worked at two places in my adult life, so like,
34:23
Speaker 2: my experience is not that broad. Admittedly, the first place
34:26
Speaker 2: was for two days, so I didn't really understand the
34:28
Speaker 2: hiring process there. But I've been in the same place
34:31
Speaker 2: for seventeen years now and I've never seen a ghost
34:34
Speaker 2: job posted by us. Every time there's been one, it's
34:38
Speaker 2: been Okay, we have a need and we need to hire,
34:40
Speaker 2: and here's you know, the role that we're hiring for.
34:43
Speaker 2: So I struggle to understand the reasons laid out in
34:48
Speaker 2: this piece, even why companies would post jobs that they
34:52
Speaker 2: don't intend on hiring.
34:54
Speaker 3: I think this does exist, and I don't think it's
34:56
Speaker 3: a full intent on not hiring, but I think it
34:58
Speaker 3: is a concept of we don't need a person, but
35:02
Speaker 3: if we find an impeccable candidate that you know, is
35:05
Speaker 3: just going to you know, raise our organization to a
35:09
Speaker 3: higher level than we would hire them. So we're just
35:12
Speaker 3: gonna leave a job open permanently with that hopes of
35:15
Speaker 3: finding the needle in the haystack at Okay, So I
35:17
Speaker 3: think that.
35:18
Speaker 2: Exists, So let's let's let's I will concede that it exists,
35:22
Speaker 2: even though I've again I don't apply for jobs, have
35:25
Speaker 2: been the same place for seventeen years, so I can
35:27
Speaker 2: see that it exists. Why is this a problem worthy
35:30
Speaker 2: of government intervention? It is not because it makes people upset.
35:35
Speaker 2: You know what makes me upset? Lots of stuff. You
35:37
Speaker 2: know what I don't do say, oh, the government needs
35:40
Speaker 2: to help me, because the government exists to solve the
35:42
Speaker 2: problems between people that are unsolvable on their own right,
35:46
Speaker 2: things like, oh, do you want to have like a
35:49
Speaker 2: private army? No, probably not. You don't want Chuck's private
35:52
Speaker 2: army fighting Mike's private army. So you have the US Army.
35:55
Speaker 3: If there were only one employer in the country and
35:58
Speaker 3: they were postingobs that they never intended to fill, again,
36:03
Speaker 3: would look at that and say, you know, this might
36:05
Speaker 3: be not the most competitive situation.
36:06
Speaker 2: We should do something about it. Correct, But that's what's happening.
36:09
Speaker 2: Let's let's say that I am looking for a job. Actually,
36:12
Speaker 2: let's say I'm the woman that is cited in this piece,
36:14
Speaker 2: who was applied to three thousand jobs in the last year.
36:17
Speaker 2: How do which do that? I got? Well, I mean
36:20
Speaker 2: ten a day for a year gets you there. And
36:22
Speaker 2: I gotta be honest. When I was applying to jobs
36:24
Speaker 2: out of college, I applied to I think it was
36:26
Speaker 2: around one hundred or so. I got like two interviews
36:28
Speaker 2: out of the whole thing. Yeah, and that was, you know,
36:30
Speaker 2: over you know, a few months, and like, trust me,
36:34
Speaker 2: like applied for job sucks, Like I get it. But
36:38
Speaker 2: she's applied to three thousand jobs. So let's say that's
36:41
Speaker 2: ten a day over the last year. In terms of
36:46
Speaker 2: let's even say that five hundred of those are ghost jobs,
36:49
Speaker 2: because the estimate that's in here from a company called
36:52
Speaker 2: Greenhouses nineteen percent of jobs advertised on digital job boards
36:56
Speaker 2: or ghost jobs. That still means that she applied to
36:59
Speaker 2: twenty five hundred real ones during that time. What's the
37:03
Speaker 2: cost to her? What's the net loss to her by
37:06
Speaker 2: virtue of those other applications she made, Like she took
37:10
Speaker 2: up some of her time fractional, But she still applied
37:13
Speaker 2: to all these other jobs and hasn't gotten those yet.
37:16
Speaker 3: Yeah, And I'll also say the only way that you
37:19
Speaker 3: can crack down on this, even if you thought it
37:23
Speaker 3: was a good idea, which I don't, would be by
37:26
Speaker 3: penalizing employers.
37:27
Speaker 2: Well, and how do you prove a job as a
37:29
Speaker 2: ghost job? Right? And I don't think you can.
37:31
Speaker 3: So I think the only way to do it would
37:33
Speaker 3: be to put in a financial disincentive to post ghost jobs,
37:37
Speaker 3: which is a stupid idea, like, hey, we are going
37:39
Speaker 3: to tax job postings at the rate of thirty dollars
37:43
Speaker 3: a year. That would do it, because if you're an
37:45
Speaker 3: employer that doesn't actually want to hire, you're not going
37:47
Speaker 3: to pay the fee to post a job. But what
37:50
Speaker 3: a terrible disincentive to hire people.
37:52
Speaker 2: The plus side is that the DL could finally have
37:55
Speaker 2: a ghostbuster's division. Oh now we're talking which who are
38:00
Speaker 2: you gonna call? But yeah, let's be honest, this is
38:03
Speaker 2: not a problem worthy of government intervention. There are plenty
38:06
Speaker 2: of other ones where we can say, yeah, like problem this,
38:10
Speaker 2: I just don't think rises to that level. Let's take
38:12
Speaker 2: a quick break hour or two coming up in a
38:14
Speaker 2: bit