Latest / The Financial Exchange Show / Iran Deal Hopes Ease Oil Pressure as Warsh Faces the Fed

Transcript

Iran Deal Hopes Ease Oil Pressure as Warsh Faces the Fed · The Financial Exchange Show

0:00
Speaker 1: Sent Advisor. All opinions expressed are solely those of the hosts,
0:03
Speaker 1: do not reflect the opinions of Armstrong Advisory or anyone else.
0:06
Speaker 1: Investments can lose money. This program does not offer any
0:09
Speaker 1: specific financial or investment advice. Please consult your own financial, tax,
0:13
Speaker 1: and estate planning advisors before making any investment decisions. Armstrong
0:16
Speaker 1: Advisory and the advertisers heard on this program do not
0:19
Speaker 1: endorse each other or their services. Armstrong and Money Matters
0:21
Speaker 1: Radio do not compensate each other for referrals and are
0:24
Speaker 1: not affiliated. This is the Financial Exchange with Chuck Zada
0:31
Speaker 1: and Mike Armstrong, your exclusive look at business and financial
0:34
Speaker 1: news affecting your day, your city, your world. Stay informed
0:39
Speaker 1: and up to date about economic and market trends, plus
0:42
Speaker 1: breaking business news every day. The Financial Exchange is a
0:46
Speaker 1: proud partner of the Disabled American Veterans Department of Massachusetts.
0:50
Speaker 1: Help us support our great American heroes by visiting DAV
0:54
Speaker 1: five K dot Boston and making a donation today. This
0:58
Speaker 1: is the Financial Exchange. It's Chuck Zada and Mike Armstrong.
1:05
Speaker 2: It is Chuck, Mike and Tucker with you here and
1:10
Speaker 2: we kick things off with obviously the top story being
1:17
Speaker 2: that yesterday sometime afternoon ish, we had a preliminary agreement
1:26
Speaker 2: to sign a final memorandum of understanding this Friday that
1:30
Speaker 2: would then lead to a sixty day negotiating period to
1:33
Speaker 2: hopefully come up with a more final deal. Okay, that's
1:37
Speaker 2: where we are.
1:38
Speaker 3: So on Friday of last week, you and I both
1:41
Speaker 3: agreed that it didn't seem like we were substantially closer
1:44
Speaker 3: to anything than we were in the other forty some
1:48
Speaker 3: odd times that there was a promised deal to come.
1:52
Speaker 4: There were a couple signs.
1:53
Speaker 3: We noted that vance was scheduled, were reportedly scheduled to
1:56
Speaker 3: be traveling to the area. There were a few other
1:59
Speaker 3: signs that we point to, but not substantial more. Today,
2:02
Speaker 3: I would say we are substantially more substantially closer to
2:07
Speaker 3: some form of deal than any time since the war
2:09
Speaker 3: broke out.
2:10
Speaker 2: So here's what we know and here's what we don't know.
2:14
Speaker 2: On Friday in Geneva, this coming Friday, the memorandum of
2:19
Speaker 2: understanding is expected to be signed. Both sides did indicate
2:24
Speaker 2: that the text was finalized yesterday. They reportedly did an
2:28
Speaker 2: electronic signature of some kind, basically to indicate that they
2:31
Speaker 2: would sign the memorandum this Friday, and no one knows
2:37
Speaker 2: exactly what is in it yet. Both sides are doing
2:42
Speaker 2: their best to you know, spin it, but no one's
2:44
Speaker 2: seen the actual text. There are a few different versions
2:48
Speaker 2: that are floating around the Twitter sphere. I've read all
2:52
Speaker 2: of them. They all have substantial differences in the actual text,
2:56
Speaker 2: and I can't even prove that any of them are
3:00
Speaker 2: real documents and not just something that was put together,
3:03
Speaker 2: you know, by some enterprising young scammer online.
3:07
Speaker 3: So do you think they used docusigne and did they
3:10
Speaker 3: have the knowledge based authentication where you have to answer
3:12
Speaker 3: the questions about yourself like what car did you drive?
3:15
Speaker 5: And enter the four characters that it Q or no,
3:19
Speaker 5: I can't tell.
3:21
Speaker 2: Yeah, President trumpan did you own a nineteen seventy two
3:27
Speaker 2: Chevy and paula A? You know it's like, yeah, you
3:30
Speaker 2: do kind of wonder about that was my first pet's name, Sorry,
3:35
Speaker 2: Pepper grand Iatola. Which of these addresses have you previously
3:39
Speaker 2: lived at? Right? Like you could see that be like,
3:43
Speaker 2: how is it not? I forget there has.
3:45
Speaker 3: To be an snl skit for this one. Yeah, yeah,
3:48
Speaker 3: you know they're off now right now I'm blocked out
3:51
Speaker 3: for five minutes, got delayed because they failed knowledge based
3:55
Speaker 3: authentication on docusigine.
3:58
Speaker 2: Yeah, the iotola couldn't remember where he lived in nineteen
4:01
Speaker 2: ninety three, and so we're hung up for a little
4:04
Speaker 2: bit longer. But no, so here's the deal. We still
4:07
Speaker 2: don't have the details on this. In fact, Jade Vance
4:11
Speaker 2: was on CNBC this morning and said, look, a lot
4:17
Speaker 2: of the details still have to be ironed out on this.
4:20
Speaker 2: There still are you know, quite a few things that
4:22
Speaker 2: they are trying to finalize. And basically what we're looking
4:29
Speaker 2: for right now is the thing I'm looking for, because look,
4:34
Speaker 2: here's the deal. It doesn't really seem like either side
4:37
Speaker 2: wants to go back to just all out shooting each other.
4:40
Speaker 4: They don't.
4:41
Speaker 2: There have been some skirmishes over the last you know,
4:43
Speaker 2: couple of weeks, and they've basically all been diffused after
4:48
Speaker 2: you know, twenty four hours. So it's pretty clear that
4:50
Speaker 2: neither side wants to get into an extended, prolonged conflict
4:55
Speaker 2: right now. But I do think the question is, hey,
4:58
Speaker 2: when you see it being reported in various different places
5:01
Speaker 2: that Iran intends to allow for the strait of horror
5:04
Speaker 2: moves to open. It is a big question in terms
5:07
Speaker 2: of what does that actually mean, because on April seventh,
5:10
Speaker 2: when the original ceasefire was signed, one of the things
5:13
Speaker 2: that was widely reported was, Hey, the strait of horm
5:15
Speaker 2: Moves will open, and we clearly have not seen it
5:18
Speaker 2: open in the fashion for which we would describe it
5:21
Speaker 2: as you know, being open. Widely reported last week that
5:25
Speaker 2: the US has basically at night been trying to escort
5:27
Speaker 2: you know, convoys of three to five ships through, not escort,
5:31
Speaker 2: but basically provide navigational guidance to try to get you know,
5:35
Speaker 2: small numbers of ships through to maintain some flow of
5:38
Speaker 2: oil and other products through the strait. For the last
5:40
Speaker 2: several weeks, that's not what we would define as open,
5:43
Speaker 2: and it hasn't been enough to restart production broadly, which
5:47
Speaker 2: is what matters. So the questions that I am am
5:51
Speaker 2: looking to have answered as we go here show us
5:56
Speaker 2: the actual MoU text, like what does it actually do?
5:59
Speaker 4: What is it not?
6:00
Speaker 2: Number two? When does the normalization of straight traffic begin?
6:05
Speaker 2: Number three? What are the allowed levels of normalization for
6:10
Speaker 2: straight traffic? Like how many ships can you know where
6:12
Speaker 2: they're actually you know, moving through? When do volumes get
6:16
Speaker 2: high enough that you can restart that production and how
6:19
Speaker 2: quickly can you spool that production up? And so we're
6:21
Speaker 2: just going to watch over the next you know, month
6:23
Speaker 2: or two and see how things go. There's very much
6:26
Speaker 2: a ticking clock on this in terms of we've talked
6:30
Speaker 2: at length about what we're seeing both in the US
6:32
Speaker 2: and overseas as far as depletions of commercial stockpiles of
6:37
Speaker 2: both crude and refined product. So there is some urgency
6:41
Speaker 2: to get things moving. And as we've seen with Iron
6:45
Speaker 2: and a number of negotiations, they're happy to you know,
6:49
Speaker 2: dawdle around and say, Okay, yes, we know you want
6:51
Speaker 2: to do this, but what does this word mean and
6:54
Speaker 2: what does that mean? Like so I'm very curious when
6:58
Speaker 2: we're actually going to see ships moving in large enough
7:01
Speaker 2: quantities for it to matter. And by the way, the
7:05
Speaker 2: announcement that we got from the President yesterday via truth Social,
7:10
Speaker 2: the initial one said okay, the Straight of Horror moves
7:12
Speaker 2: will open immediately. He then followed up with a second
7:15
Speaker 2: one saying it'll actually open Friday, after the memorandum is
7:18
Speaker 2: actually signed in person in Geneva. So we'll see when
7:23
Speaker 2: that traffic actually comes because we don't know and we're
7:27
Speaker 2: just gonna watch and see and the best time for
7:29
Speaker 2: it to start would be yesterday. But if it can
7:33
Speaker 2: start up, you know, in large enough quantities on Friday, great,
7:36
Speaker 2: Like let's get things moving and you know, stave off
7:39
Speaker 2: some of kind of the worst case scenarios that are
7:41
Speaker 2: still looming out there. For every day that things aren't.
7:44
Speaker 3: Moving, obviously, you know, traffic volumes will be reported everywhere.
7:49
Speaker 3: But the IMF actually tracks you know, arrival of ships
7:54
Speaker 3: and port watch for the straight of horror moves and
7:57
Speaker 3: other navigable areas. And there are a bunch of different
8:00
Speaker 3: companies that do Yeah, there's plenty of different ones that
8:02
Speaker 3: do it.
8:03
Speaker 4: I'm looking at the IMF one to be obvious, it's.
8:06
Speaker 2: Where do they get their data from, because I'm guessing
8:08
Speaker 2: it's it's probably like VORTEXA or couple.
8:12
Speaker 4: Like the two big ones.
8:13
Speaker 2: I'm sure the IMF is not counting.
8:15
Speaker 3: The shipy source says just un global platform port watch good.
8:20
Speaker 3: So not sure what that indicates, but yeah, the moving
8:23
Speaker 3: seven day average has been like two after being you know,
8:28
Speaker 3: over one hundred prior to the outbreak of war. And
8:32
Speaker 3: so that's where we have been that's where everybody will
8:36
Speaker 3: be tracking. And and by the way, that is also
8:38
Speaker 3: where you can place bets on what that traffic will
8:41
Speaker 3: look like. And still today on some of those betting sites,
8:47
Speaker 3: people are putting like a one in three chance the
8:49
Speaker 3: traffic is returning to normal two weeks from now.
8:52
Speaker 2: So I don't know what we're going to see in
8:54
Speaker 2: terms of, you know, how quickly flows resumed there. We'll watch,
8:58
Speaker 2: we'll see what's going on. It's not going to affect
9:00
Speaker 2: anything that happened last week. It's it's based on what
9:03
Speaker 2: we've heard from the President directly himself, it doesn't sound
9:06
Speaker 2: like traffic's going to resume this week in any large
9:08
Speaker 2: numbers before Friday. So I think we've got a couple
9:12
Speaker 2: more weeks where, you know, at a bare minimum, we've
9:15
Speaker 2: got some continued high draws expected from US inventories, and
9:19
Speaker 2: the question is how quickly can you get other supplies
9:22
Speaker 2: into the global market to you know, mitigate that in
9:27
Speaker 2: the coming days and weeks. It's it's really something where,
9:31
Speaker 2: if you think about it this way, the US at
9:33
Speaker 2: this point is subsidizing the global energy market to the
9:37
Speaker 2: tune of around two to two and a half million
9:39
Speaker 2: barrels a day.
9:41
Speaker 3: Subsidizing saying hey, we're exporting and selling it on public markets.
9:46
Speaker 2: It's it's subsidizing, we're selling it from the spr It's
9:53
Speaker 2: between that and even like the commercial stuff. It's like, Okay,
9:55
Speaker 2: you're gonna you know, let us buy oil at eighty
9:57
Speaker 2: five bucks a barrel. Fine, Like, we'll do that because
9:59
Speaker 2: we think it could be higher, you know, a month
10:01
Speaker 2: and a half, two months from now. That's that's why
10:04
Speaker 2: countries are doing that. Yes, So the question is, hey,
10:08
Speaker 2: that flow is going to start to slow up from
10:12
Speaker 2: the US in the next four to six weeks because
10:15
Speaker 2: it can't continue at that pace. Can you get production
10:19
Speaker 2: from the Middle East spooling up to offset that in
10:23
Speaker 2: the interim. That's you don't need in order to maintain
10:28
Speaker 2: the balance that you have right now. You don't need
10:31
Speaker 2: the full twelve million barrels on day one because the
10:34
Speaker 2: other pieces are Okay, the US is doing that to
10:36
Speaker 2: the tune of two and a half million barrels a day.
10:39
Speaker 2: Japan and other OECD countries are doing another one and
10:42
Speaker 2: a half to two million barrels a day. That's got
10:44
Speaker 2: you know, a slightly longer shelf life on it of
10:47
Speaker 2: you know, till early fall. And then the big question
10:50
Speaker 2: that's in everyone's mind is, hey, China has stopped buying oil,
10:54
Speaker 2: you know, reducing its purchases by about four to five
10:57
Speaker 2: million barrels a day. How long can that continue? When
11:00
Speaker 2: do they come back to market? And this is the
11:02
Speaker 2: dance that you have to watch over, you know, the
11:04
Speaker 2: next I would say at least twelve weeks or so,
11:07
Speaker 2: to see how all of these factors play together. I
11:11
Speaker 2: still think it's incredibly likely that we see some type
11:14
Speaker 2: of late summer jump in energy prices. The magnitude of
11:18
Speaker 2: that move and how long it lasts is going to
11:20
Speaker 2: be an open question based on how quickly flows spool
11:23
Speaker 2: back up. And so we're just gonna have to watch
11:25
Speaker 2: over the next you know, six to twelve weeks and
11:27
Speaker 2: see what happens here. Let's take a quick break when
11:31
Speaker 2: we return. Big week for Kevin warsh as well, chairing
11:35
Speaker 2: his first FED meeting on Wednesday. We will discuss after this.
11:41
Speaker 1: The Financial Exchange streams live on YouTube. Subscribe to our
11:45
Speaker 1: page and stay up to date on breaking business news
11:47
Speaker 1: all morning. Long Face is the Financial Exchange radio network.
11:52
Speaker 1: Daily financial content in your feed when you want it
11:55
Speaker 1: follow the Financial Exchange on Instagram. Face is the Financial Exchange.
12:12
Speaker 2: Preas in the Wall Street Journal here talking about Kevin
12:16
Speaker 2: warsh in advance of his first FED meeting as FED chairs,
12:22
Speaker 2: Kevin worsh wants the FED to stop explaining everything. And
12:25
Speaker 2: this is something that I gotta be honest, I tend.
12:28
Speaker 4: To agree with.
12:30
Speaker 2: Yeah, we've talked at l like we've had like the
12:32
Speaker 2: weeks where we're like, hey, there's no economic data this week,
12:35
Speaker 2: but there's eleven FED speakers you know that are sets.
12:39
Speaker 2: And I'm very much in the camp of, hey, stop
12:44
Speaker 2: telling me what you're going to do and just either
12:48
Speaker 2: do it or don't do it. When it comes to
12:50
Speaker 2: the FED, we don't need forty three different people to
12:53
Speaker 2: explain this because quite often what you what you end
12:56
Speaker 2: up with is, hey, I'm you know, I have to
13:00
Speaker 2: be plugged into the exact words that all these speakers are,
13:03
Speaker 2: you know, saying, and oh, like this guy's the hawk
13:06
Speaker 2: on the committee. This one is you know, as far
13:10
Speaker 2: dubvish as you can get. And bub I like the
13:14
Speaker 2: idea of a FED that doesn't communicate as much and
13:17
Speaker 2: instead just takes action when needed and does nothing when needed.
13:22
Speaker 3: I think there can be a happy medium with all
13:24
Speaker 3: of this, right, Like, I don't think you need to
13:26
Speaker 3: go back to the vulgar days when they publish nothing
13:29
Speaker 3: and you had to guess what the interest rate was.
13:32
Speaker 3: I think there's a role for the FED to play,
13:35
Speaker 3: and mainly because Congress has kind of assigned this role
13:38
Speaker 3: to them. Every time that there's a financial crisis, you know,
13:41
Speaker 3: bring the FED chair out to reassure the public that
13:44
Speaker 3: and markets especially that uh, there's a backstop in place there.
13:49
Speaker 3: I think there's some role for that type of thing.
13:51
Speaker 3: But I would agree with you when we are trying
13:54
Speaker 3: to parse the words of May versus will versus type
14:00
Speaker 3: of thing, it's not a useful exercise. I don't think
14:02
Speaker 3: it adds any value in an economy where in an
14:06
Speaker 3: economy where there's some division among FED members about what
14:09
Speaker 3: the right policy choice is. I don't find a whole
14:11
Speaker 3: lot of value of a FED chair publishing seventeen different speeches.
14:17
Speaker 4: So and it's very clear what should happen.
14:19
Speaker 3: Yeah, sure, roll them all out all over the place
14:21
Speaker 3: in their local communities to make it ultimately very clear
14:24
Speaker 3: what the FED is attempting to do in those moments.
14:27
Speaker 3: Twenty twenty two comes to mind when inflation was tearing
14:30
Speaker 3: twenty twenty, when the markets were falling apart, two thousand
14:32
Speaker 3: and eight, when the markets were falling apart.
14:34
Speaker 4: Sure, I think there's some value there. Otherwise I agree,
14:37
Speaker 4: be quiet now.
14:39
Speaker 2: The piece that I do think needs, you know, to
14:41
Speaker 2: be paid attention to is the sequencing of this and
14:45
Speaker 2: how WORST goes about it, because there are a few
14:47
Speaker 2: different Again, when we talk about, you know, communication as
14:50
Speaker 2: a FED policy tool, questions that you have Number one,
14:55
Speaker 2: the STEP, the Summary of Economic Projections. The FED puts
14:58
Speaker 2: them out four times a year at every other meeting,
15:01
Speaker 2: and we do use it to get a sense of, Okay,
15:04
Speaker 2: here's what the FED is thinking about where rates in
15:08
Speaker 2: the economy are going to go. I don't think that
15:12
Speaker 2: this right now is a great time to get rid
15:15
Speaker 2: of the STEP, given the uncertainty surrounding the current inflation picture,
15:21
Speaker 2: and you know what it looks like over the next
15:23
Speaker 2: six to twelve months. So I think some of this
15:26
Speaker 2: it's kind of like when anyone whenever anyone has a
15:29
Speaker 2: big life event, you move somewhere, you get married, you
15:33
Speaker 2: get a new job, a spouse dies, or something like that.
15:38
Speaker 2: I generally give the same advice, wait a year, don't
15:41
Speaker 2: do anything big for a year. And so I'm kind
15:45
Speaker 2: of hoping that Warsh does the same thing just from
15:48
Speaker 2: a structural perspective, just because even though he's been in
15:50
Speaker 2: the FED previously, he's been on the outside looking in
15:53
Speaker 2: for the last you know, twelve thirteen years, and I
15:56
Speaker 2: think there's something to be said for Hey, it's kind
15:59
Speaker 2: of a chaotic time right now in the global economy.
16:03
Speaker 2: Give things a year, and then you can say, hey,
16:07
Speaker 2: I've observed X, Y and z. I'm gonna you know,
16:10
Speaker 2: change how we you know, go through policy in these
16:13
Speaker 2: different ways. Even if he doesn't give it a year, necessarily,
16:20
Speaker 2: you could look to Okay, as we head towards the fall,
16:24
Speaker 2: Jackson Hole Symposium is usually the last week in August. Okay,
16:28
Speaker 2: give it a few months, like don't don't announced on
16:31
Speaker 2: Wednesday that you're getting rid of the Summary of Economic
16:33
Speaker 2: Projections or this and that. But hey, as you go
16:36
Speaker 2: through the Jackson Ole Symposium, Hey, we've conducted a review
16:39
Speaker 2: over the last two to three months of FED policy
16:41
Speaker 2: and transmission mechanisms, and we're gonna do X, Y and
16:45
Speaker 2: Z in this fashion. I think that you can basically
16:49
Speaker 2: move in that way without causing any problems because I
16:53
Speaker 2: do think the FED communicates too much. I do think
16:56
Speaker 2: the worst time to stop communicating too much is as
16:59
Speaker 2: inflation is, you know, heading north of four percent. But
17:03
Speaker 2: there will, like, there will have to be a time
17:04
Speaker 2: when you're just like, guys, we need to stop this.
17:07
Speaker 2: If he's really serious about moving in that direction.
17:09
Speaker 4: Yeah, I mean order things.
17:11
Speaker 3: You have to build your credibility before you just you know,
17:14
Speaker 3: end communication. Yes, and to be clear, like maybe not
17:18
Speaker 3: everybody agrees, but Worsh has a credibility problem, like I
17:23
Speaker 3: think for until.
17:26
Speaker 2: Proven otherwise, people are gonna view him as someone who
17:30
Speaker 2: was sent there to do the bidding of the president. Yeah,
17:33
Speaker 2: and he needs to prove otherwise. It's very easy for
17:36
Speaker 2: him to prove otherwise by the way all hes do
17:38
Speaker 2: on Wednesday has come out and say inflation's too high
17:41
Speaker 2: right now, we can't cut interest rates, right. We'll look
17:44
Speaker 2: to see what we need to do. But if we
17:45
Speaker 2: need to raise rates, we will. If we need to
17:47
Speaker 2: cut rates, we will. And I'm gonna take a balanced
17:49
Speaker 2: approach that And if he says that and then just
17:51
Speaker 2: shuts up, yeah, like that'll go a long way. People
17:55
Speaker 2: were just nervous that you're gonna get on Wednesday. Well,
17:57
Speaker 2: we really wanted to cut rates, but we just could
18:00
Speaker 2: get there at this meeting. That's not what you want
18:03
Speaker 2: to hear this one, because that sets the stage for
18:06
Speaker 2: problems further down the road.
18:08
Speaker 3: This was, like you said, he has experience at the FED.
18:11
Speaker 3: He was there during the Great Financial Crisis. He argued
18:14
Speaker 3: against a lot of the measures that the FED took
18:16
Speaker 3: at that time out of concerns for inflation. So if
18:20
Speaker 3: he is anything button inflation hawk at this meeting, then
18:23
Speaker 3: he's gonna face credibility issues because he pretty much reversed
18:26
Speaker 3: on that when looking for the job of FED chairman
18:31
Speaker 3: during the last few months, which is understandable given the
18:34
Speaker 3: president's goals.
18:35
Speaker 4: But when he actually gets into the job.
18:37
Speaker 3: When he has his first press conference this week, that
18:41
Speaker 3: will be his opportunity to build that credibility, and I
18:43
Speaker 3: agree he needs that before he goes and changes the
18:46
Speaker 3: structure of how the FED operates and communicates.
18:49
Speaker 2: In terms of the lay of the land. Heading into
18:50
Speaker 2: this FED meeting, as of right now, no hikes or
18:54
Speaker 2: cuts projected over the next five meetings through the rest
18:57
Speaker 2: of the year. Markets are price sing in and again
19:01
Speaker 2: this is where you have to understand that markets are
19:03
Speaker 2: going to be wrong about this. Markets are pricing in
19:06
Speaker 2: a single hike in January of next year. What I
19:09
Speaker 2: can tell you, the FED never goes one and done
19:11
Speaker 2: in either direction. We saw it the last two falls
19:14
Speaker 2: where the FED had multiple cuts, three different sets. We
19:18
Speaker 2: saw it in twenty twenty two. The Fed didn't just
19:20
Speaker 2: hike once. You either go a couple times or you
19:23
Speaker 2: don't go at all. So we'll see how this evolves.
19:26
Speaker 2: But that's what's priced in today. Quick break Wall Street
19:29
Speaker 2: watches Next.
19:33
Speaker 1: Like us on Facebook and follow us on Twitter, act
19:36
Speaker 1: TFFE show. Breaking business news is always first right here
19:40
Speaker 1: on the Financial Exchange Radio Network. Time now full Wall
19:45
Speaker 1: Street Watch treking the stocks, the dato and the headlines
19:49
Speaker 1: driving markets so far today right here on the Financial
19:52
Speaker 1: Exchange Radio Network.
19:53
Speaker 5: Markets in rally mode to begin the week after the
19:56
Speaker 5: US and Iran agreed to an interim peace deal that
19:59
Speaker 5: would re up in the straight of four moves, sending
20:02
Speaker 5: oil to its lowest level since early March. Wall Street's
20:05
Speaker 5: also ridy for Kevin Warsh's first FED meeting this week.
20:09
Speaker 5: Right now, the Dow is up one point one percent
20:12
Speaker 5: SMB five hundred, up one and a half percent, NASDAC
20:16
Speaker 5: up two point three percent or six hundred and thirteen
20:19
Speaker 5: points higher, RUSS two thousands up just over one percent higher,
20:23
Speaker 5: ten Youre, Treasure reeled down four basis points at four
20:26
Speaker 5: point four to four percent, and Oil down nearly six
20:30
Speaker 5: percent lower, trading right around eighty dollars a barrel as expected.
20:34
Speaker 5: Energy and travel stocks seeing much attention following the piece
20:37
Speaker 5: deal between the US and Iran. Energy stocks including APA,
20:41
Speaker 5: Devon Energy, Chevron, and Exon Mobile are seeing losses of
20:45
Speaker 5: between two and four percent. United Airlines, Delta, Carnival, Royal
20:49
Speaker 5: Caribbean are jumping anywhere between two and six percent due
20:53
Speaker 5: to lower fuel prices. Meanwhile, some breaking news in the
20:56
Speaker 5: media and streaming space this morning after Fox need to
21:00
Speaker 5: acquire Roku for twenty two billion dollars, marking Fox's largest acquisition.
21:06
Speaker 5: Roku is the largest streaming platform for connected TVs, with
21:10
Speaker 5: a twenty five percent market share reaching more than one
21:13
Speaker 5: hundred million households. Fox shares are falling seventeen percent, while
21:18
Speaker 5: Roku stock down by two percent in after its history
21:22
Speaker 5: making IPO on Friday. SpaceX up another six percent today
21:27
Speaker 5: SpaceX jumped nineteen percent from its IPO price of one
21:31
Speaker 5: hundred and thirty five dollars a share. I'm Tucker Silvan.
21:34
Speaker 5: That is Wall Street Watch.
21:37
Speaker 2: We got a piece here from the New York Times.
21:40
Speaker 2: Wages are falling, wealth is surging, No wonder Americans are unhappy.
21:46
Speaker 2: I got a few bones to pick here. First, wages
21:50
Speaker 2: and nominal terms are not falling. One of me my
21:53
Speaker 2: nominal terms is Americans in terms of their take home
21:57
Speaker 2: pay on average, we're making more this year than last year.
22:01
Speaker 2: They are where wages are falling. Isn't what we call
22:03
Speaker 2: real terms, which is the fact that over the last
22:06
Speaker 2: year inflation has outpaced wage growth by about one percent
22:10
Speaker 2: or so. Yep, that tends to be a very short
22:14
Speaker 2: lived phenomenon because either a people generally can't spend more
22:18
Speaker 2: than they make for very long, so you can't have
22:21
Speaker 2: inflation run hotter than wage growth. Or b wage growth
22:26
Speaker 2: picks up because companies say, hey, I can't keep my people,
22:28
Speaker 2: I need to pay them more because they keep leaving
22:30
Speaker 2: further jobs, and so wage growth picks up and runs
22:34
Speaker 2: north of inflation. So you generally don't see inflation outpacing
22:41
Speaker 2: wage gains for very long periods of time. And yet
22:44
Speaker 2: despite the fact that this just happened, like in the
22:46
Speaker 2: last month or so, wages being outpaced by inflation, Americans
22:51
Speaker 2: have been saying that they're unhappy about the economy for
22:53
Speaker 2: quite a while now. It's not like it just popped
22:56
Speaker 2: up the day everyone did just suddenly wake up in
22:58
Speaker 2: the middle of May and go, hey, you know what,
23:02
Speaker 2: I'm not gaining as much as I'm spending. I need
23:08
Speaker 2: to be upset. I need to register my discontent with No, Like,
23:11
Speaker 2: that's not how any of this works.
23:12
Speaker 3: I was gonna say, so, like before the surge in
23:14
Speaker 3: oil prices, which is what you know, really sparked this,
23:18
Speaker 3: because that's that's when it surpassed, right May. So in February,
23:21
Speaker 3: for instance, wage gains were ahead of inflation.
23:25
Speaker 2: Mike, not just in February. If you look at the
23:27
Speaker 2: data from the BLS, since Q two of twenty two,
23:32
Speaker 2: real median wages median weekly real earnings have gone up
23:37
Speaker 2: by about four percent. So we've been seeing about one
23:40
Speaker 2: percent real wage gains per year since mid twenty twenty two.
23:45
Speaker 3: So, to defend your point here, in February of this year,
23:48
Speaker 3: the Michigan consumer sentiments survey ran at fifty six point six.
23:52
Speaker 3: We've been below that threshold on a few occasions. One
23:56
Speaker 3: was the summer of twenty twenty two when inflation was
23:58
Speaker 3: running nine percent. The other I don't think we should
24:03
Speaker 3: use the Michigan one even though I don't think we
24:06
Speaker 3: should either, because I think it's broken. But the only
24:08
Speaker 3: other time that it was worse than that was nineteen eighty,
24:12
Speaker 3: so in February of this year, when wages were up
24:15
Speaker 3: in real terms. The only time that Michigan Sentiment Survey
24:20
Speaker 3: gave you a worse reading was May of nineteen eighty
24:22
Speaker 3: when oil prices had just finished a decade of being
24:25
Speaker 3: all over the place. Interest rates were huge, unemployment was high.
24:28
Speaker 3: It is reading worse than it was in two thousand
24:31
Speaker 3: and eight, in two thousand and nine, back in February,
24:33
Speaker 3: so which is not cor Americans are unhappy for some
24:36
Speaker 3: reason other than real wages.
24:38
Speaker 2: The Conference Board runs there Consumer Confidence Index, and it's
24:43
Speaker 2: diverged completely from the University of Michigan one, despite the
24:47
Speaker 2: two of them typically correlating pretty well. From you know,
24:50
Speaker 2: the nineteen seventies through through twenty tens, The University of
24:54
Speaker 2: Michigan a couple of years ago, moved to an online
24:56
Speaker 2: methodology and they broke their survey. It gives us completely
25:00
Speaker 2: nonsensical readings like that. Now. It's not to suggest that
25:03
Speaker 2: everything is all well and good in the US economy.
25:05
Speaker 2: I'm not saying that, But sometimes I just look at
25:11
Speaker 2: the way the economy is being talked about and I
25:17
Speaker 2: can't make heads or.
25:18
Speaker 4: Tails of it.
25:21
Speaker 2: Like you, you've got a unemployment rate at four point
25:23
Speaker 2: three percent right now, the unemployment rates at four point
25:28
Speaker 2: three percent. There's like three other times in the last
25:32
Speaker 2: eighty years that the unemployment rate's been lower than this,
25:35
Speaker 2: and people are just complaining about the job market consistently. Yeah,
25:42
Speaker 2: if you do want to have a complaint right now,
25:44
Speaker 2: I do think the inflation piece is one of them.
25:47
Speaker 2: But again, the place that I come back to in
25:49
Speaker 2: terms of Americans just being fed up with the economy
25:51
Speaker 2: is that for the last seven years now, it's just
25:53
Speaker 2: been one thing after another. It's just there's been there's
25:57
Speaker 2: been no rest, and it's always been like different stuff
26:00
Speaker 2: each year. Twenty twenty, hey, everyone go home, stop working. Okay,
26:06
Speaker 2: twenty twenty two, hey, everybody come back. Try to buy
26:10
Speaker 2: all this stuff. Oh you can't what you've got six
26:12
Speaker 2: month delays on trying to get anything. Okay, fine, that's uncomfortable.
26:16
Speaker 2: Twenty twenty two, inflation peaked north of nine percent. Twenty
26:20
Speaker 2: twenty three, Silicon Valley Bank blows up. Oh, the banks
26:23
Speaker 2: are failing. Twenty four and twenty five. The labor market's
26:27
Speaker 2: slowing by the way. Twenty five. Hey, everyone gets nervous
26:30
Speaker 2: about tariffs. Twenty twenty six, you got energy prices through
26:34
Speaker 2: the roof again, Like it's been something new every year
26:37
Speaker 2: for the last seven years. I think people are just tired, man, Yes,
26:42
Speaker 2: and they haven't been able to get their footing. It's
26:44
Speaker 2: like you haven't had any period of sustained normalcy, and
26:50
Speaker 2: the stuff that's been like disruptive has been weirdly disruptive.
26:54
Speaker 2: It's not just like the twenty tens where it's like, Okay,
26:58
Speaker 2: the economy went in the toilet in two thousand and
26:59
Speaker 2: nine and then we just dealt with a slow labor
27:02
Speaker 2: market for three or four years and you know, slowly
27:05
Speaker 2: caught our way back. Like that was just okay. It
27:09
Speaker 2: was kind of one thing, and we had these peripheral
27:11
Speaker 2: things that we worried about. It's not that like everything
27:13
Speaker 2: was fine then, but it's it's like every year for
27:17
Speaker 2: the last seven years, there's been a crisis, and I
27:23
Speaker 2: think people are just exhausted, to be honest, you know,
27:25
Speaker 2: it's like it's like a weird crisis every year, Like
27:29
Speaker 2: I can't get any of my stuff. Everything went like
27:33
Speaker 2: crazy with pricing in this and that the labor market
27:37
Speaker 2: now is slowing. What the heck is a tariff? What's
27:41
Speaker 2: a horror moves?
27:42
Speaker 3: Like, how do I like it could be it's just
27:44
Speaker 3: something that we haven't seen every year, something that we
27:46
Speaker 3: haven't seen for a generation. I guess it's like really
27:50
Speaker 3: high oil shocks and inflation and things like that, or
27:53
Speaker 3: something that we haven't seen for a generation.
27:55
Speaker 2: Over half the population alive now hasn't lived through that
27:57
Speaker 2: stuff before.
27:58
Speaker 3: All fair, but it makes me extraordinarily concerned for how
28:03
Speaker 3: the public reacts to when we are dealing with something
28:06
Speaker 3: like eight percent unemployment, which.
28:09
Speaker 2: Is fairly rare.
28:10
Speaker 4: Maybe we only get to six or something like that,
28:12
Speaker 4: but we will get there.
28:13
Speaker 2: Like it's not.
28:14
Speaker 3: That rare six percent, No, it's not. No, like eight's
28:18
Speaker 3: not that rare. I mean, yeah, that's my point is
28:21
Speaker 3: like we are so if you assessed with how terrible
28:24
Speaker 3: the economy is right now and the unemployment rate is
28:27
Speaker 3: in like the ninetieth percentile.
28:30
Speaker 2: We had five separate periods in since nineteen seventy five,
28:34
Speaker 2: we're unemployment hit eight percent basically one every ten years. Yeah,
28:39
Speaker 2: okay not and that's not even every recession. By the way,
28:42
Speaker 2: the tech bubble recession that only got us up to
28:44
Speaker 2: like six three by mid two thousand and three. Uh,
28:49
Speaker 2: you know you had the early nineteen seventies recession only
28:52
Speaker 2: got us to six percent unemployment.
28:55
Speaker 4: So yeah, we're gonna be in crisis mode if that
28:57
Speaker 4: happens again. Any episode.
28:59
Speaker 2: It's an And you know, people say, well, the economy's
29:02
Speaker 2: different now, Guys like never said don't always don't say that,
29:06
Speaker 2: like it's different and it can't happen. As soon as
29:08
Speaker 2: you start saying that, that's when it does happen. I
29:12
Speaker 2: just don't jinx it or anything. So I don't know.
29:15
Speaker 2: I think Americans are unhappy with the economy. I'm not
29:20
Speaker 2: here to tell them like, actually no I am. I
29:23
Speaker 2: am here to say you can't be as unhappy with
29:25
Speaker 2: the economy right now as you were in two thousand
29:28
Speaker 2: and nine and twenty ten. Like I you would not
29:33
Speaker 2: want to go back there. If offered a time machine
29:36
Speaker 2: to go back there, you would go back, spend like
29:39
Speaker 2: one day looking for a job and be like, Nope,
29:42
Speaker 2: not gonna do this. Like it was just bad. Then
29:47
Speaker 2: It's not to say that, you know, overall Americans aren't struggling.
29:51
Speaker 2: They're plenty that are right now. But to compare it
29:54
Speaker 2: to two thousand and nine twenty ten in that kind
29:57
Speaker 2: of environment, that's make a lot say my goodness, like
30:01
Speaker 2: that was that was like as bad as it gets.
30:05
Speaker 2: Let's take a quick break. When we return, we're talking
30:08
Speaker 2: SpaceX and more generally other space companies as well.
30:14
Speaker 1: Subscribe now to our YouTube page, where you'll find daily
30:17
Speaker 1: interviews and full shows of the Financial Exchange. We'll get
30:20
Speaker 1: you cut up on anything and everything you might have
30:23
Speaker 1: missed right here on the Financial Exchange, breaking business and
30:27
Speaker 1: financial news first throughout the day, only here on the
30:31
Speaker 1: Financial Exchange Radio Network.
30:43
Speaker 2: So on Friday we saw the successful IPO of SpaceX.
30:50
Speaker 2: Stock is up another six or so percent today after
30:54
Speaker 2: rallying I don't know, twenty five or so percent from
30:58
Speaker 2: its IPO price over the core Friday, and we got
31:01
Speaker 2: a piece in the Wall Street Journal and boldened buy
31:03
Speaker 2: SpaceX investors are piling into all things space, and so
31:10
Speaker 2: what we are seeing is that venture capital funding for
31:14
Speaker 2: space companies excluding SpaceX rose to seven point one billion
31:18
Speaker 2: dollars in twenty twenty five from two and a half
31:21
Speaker 2: billion dollars a year earlier. And you've also got a
31:26
Speaker 2: number of like thematic ETFs focusing on space that are
31:31
Speaker 2: out there these days. You get this quote here, this
31:36
Speaker 2: is from John Gedmark, the chief executive of Astronis, a
31:39
Speaker 2: maker of smaller satellites that orbit Earth. Quote, there's just
31:42
Speaker 2: so much more you can do from space, and lots more.
31:47
Speaker 2: So here's the thing. I am about as pro space
31:50
Speaker 2: as you can get. Love space. The good news is
31:52
Speaker 2: that there's there's lots of it up there. It's it's
31:54
Speaker 2: a big sky, lot of space up there. The problem
31:59
Speaker 2: is his store. It's really expensive and dangerous to go
32:04
Speaker 2: to space. We saw this with Blue Origins rocket blowing
32:08
Speaker 2: up what was it a couple of weeks ago on
32:09
Speaker 2: the launch pad. Like this stuff sometimes doesn't work. It's
32:13
Speaker 2: expensive to get it up into space, and even once
32:17
Speaker 2: it's there, if it breaks, you gotta you know, send
32:21
Speaker 2: the mechanic all the way up there. And like it's
32:23
Speaker 2: it's kind of a long trip. It's it's not easy.
32:26
Speaker 2: So I am a big believer in space, but I
32:30
Speaker 2: do question whether, just because of the physics of the
32:35
Speaker 2: whole thing, it's not going to become like flying airplanes.
32:41
Speaker 2: They're like, what you know, it's not like it's it's
32:46
Speaker 2: just not what you need in order to escape. The
32:49
Speaker 2: gravitational pull of a planet is entirely different from trying
32:54
Speaker 2: to generate lift using a wing. So like, there's there
33:00
Speaker 2: are very real physical problems that you run into that
33:03
Speaker 2: are gonna make it challenging. And the problem with space
33:07
Speaker 2: is it is really enticing because of all the benefits
33:10
Speaker 2: of trying to conduct certain things up there, Like you
33:12
Speaker 2: can always you can have solar panels that are always
33:14
Speaker 2: facing the sun.
33:15
Speaker 4: You can immediately cool.
33:17
Speaker 2: It's actually harder to cool. But so here's the thing
33:21
Speaker 2: where you don't have air. The idea of absolute zero
33:26
Speaker 2: doesn't really exist because the way that cooling works, it
33:28
Speaker 2: generally requires stuff around you to absorb the heat. There's
33:33
Speaker 2: nothing to absorb the heat the same way, so you
33:35
Speaker 2: have to cool using radiators versus like you can't like
33:38
Speaker 2: it's it's a different cooling process that you have to use.
33:42
Speaker 4: You can't.
33:42
Speaker 2: You can't just be like, hey, put something in space
33:44
Speaker 2: and it cools down. It's it's it's yeah, you can't
33:48
Speaker 2: just like blow the space air because there is no
33:50
Speaker 2: space air.
33:51
Speaker 4: No, it's not.
33:52
Speaker 2: It's like so it's it's fundamentally different. So the problem
33:57
Speaker 2: that you run into on this is how do you
34:00
Speaker 2: can you separate like, who has a good idea that's
34:02
Speaker 2: going to pay off in ten years from a complete
34:04
Speaker 2: scammer because none of this stuff develops.
34:06
Speaker 3: Quickly right the other just confusion out there. That's worth mentioning.
34:11
Speaker 3: All the indices that track different stocks in different markets,
34:15
Speaker 3: and what's included SpaceX to this point, what has not?
34:18
Speaker 3: So Nasdak has Russell you said, has right?
34:22
Speaker 2: Yes, Russell will pick them up. They both will pick
34:26
Speaker 2: them up on accelerated schedules.
34:27
Speaker 3: Interestingly, Russell is categorizing SpaceX as a tech company, which
34:31
Speaker 3: not to say it's wrong, but they categorize Raytheon as
34:35
Speaker 3: an industrial company, and I would have more put them
34:38
Speaker 3: akin to there than a pure play tech company. I
34:42
Speaker 3: know they own Twitter too, so it's f I don't know.
34:46
Speaker 3: I don't really consider them to be a tech company.
34:48
Speaker 2: Based on where their revenue comes from. Right now, I
34:50
Speaker 2: would have put them in communications services because starlink is
34:53
Speaker 2: the big.
34:53
Speaker 3: Right right, So like interesting debate on that front not
34:58
Speaker 3: included at all in s and P five one hundred
35:01
Speaker 3: or SMP indicies for the moment. So I guess big
35:06
Speaker 3: point out there. If you're trying to own this through
35:09
Speaker 3: an index or directly, just really use some caution because
35:14
Speaker 3: there's a lot of stuff when something this big goes
35:16
Speaker 3: public that feels and ends up being a little bit scammy.
35:20
Speaker 5: A trust can do a lot more than simply pass
35:23
Speaker 5: assets to your family. Certain trusts may help keep your
35:27
Speaker 5: estate out of probate, protect assets for your children, and
35:30
Speaker 5: in some cases, even help reduce the state tax liability.
35:33
Speaker 5: Coaching and Dolan has created a new guide called Demystifying
35:37
Speaker 5: the Top eight estate Planning Trusts. It breaks down some
35:40
Speaker 5: of the most commonly used trusts in estate planning, including
35:44
Speaker 5: trust designed to help families plan for long term care,
35:47
Speaker 5: protect beneficiaries with special needs, and help keep life insurance
35:51
Speaker 5: proceeds outside of a taxable state. You also learn why
35:56
Speaker 5: simply having a trust isn't enough, because if it isn't
35:59
Speaker 5: properly fun it may not accomplish the goals you expect.
36:03
Speaker 5: To get your free copy, call Cushing in Dolin today
36:05
Speaker 5: at eight six six eight four eight five six nine nine.
36:09
Speaker 5: That's eight sixty six eight four eight five six nine nine,
36:13
Speaker 5: or you can request the guide from their website Legal
36:16
Speaker 5: exchange show dot com.
36:17
Speaker 1: The proceeding was paid for and the views expressed are
36:19
Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
36:21
Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
36:25
Speaker 1: Cushing and Armstrong do not endorse each other and are
36:27
Speaker 1: not affiliated.
36:28
Speaker 2: We got a text in from I guess it's not
36:31
Speaker 2: a text, it's a message from someone who was watching
36:35
Speaker 2: on YouTube. The question was how will the proposed Iran
36:38
Speaker 2: deal impact inflation? The answer is going to be the
36:41
Speaker 2: devil's in the details as far as when transits actually
36:45
Speaker 2: pick up through the straight offoe moves, and specifically then
36:48
Speaker 2: when those transits reach a high enough level that oil
36:51
Speaker 2: production can restart in the countries where it has slowed
36:54
Speaker 2: down significantly.
36:55
Speaker 3: I mean, plain simple answer would be oil prices of
37:00
Speaker 3: fallen recently from a high of one hundred and ten
37:01
Speaker 3: bucks a barrel to right now eighty Yes, if they
37:04
Speaker 3: stay there, then.
37:05
Speaker 2: If they stay there, then gas prices will have gone
37:07
Speaker 2: from around four fifty five probably down into the three
37:13
Speaker 2: seventy range somewhere. That's probably where we end up sitting
37:17
Speaker 2: if if we stay there on oil.
37:20
Speaker 3: Plain and simple answer, if they stay there, then we're there.
37:22
Speaker 3: I think the troubling part is that both you and I, Chuck,
37:26
Speaker 3: have had a pretty difficult time explaining why oil was
37:28
Speaker 3: as cheap as it was before, and there are some
37:33
Speaker 3: pretty hard deadlines that seem to be coming here sooner
37:37
Speaker 3: than later that would move oil and gas prices considerably higher.
37:42
Speaker 3: And so again, if the proposed deal that we actually
37:45
Speaker 3: don't have any details on goes through and traffic starts navigating,
37:50
Speaker 3: presumably yeah helps inflation, but there's a lot of ifs
37:53
Speaker 3: and you know, perfect things they need to go.
37:55
Speaker 4: Through for that to happen.
37:56
Speaker 2: Yeah, we're gonna have to watch really closely over the
37:58
Speaker 2: next the next four to six weeks in particular is
38:00
Speaker 2: really important, and then we'll see the impacts over you know,
38:04
Speaker 2: the summer as a whole, but see how traffic moves
38:08
Speaker 2: basically now through mid July. I think that's a good
38:10
Speaker 2: good thing to watch. Quick break here hour two coming
38:14
Speaker 2: up