Latest / The Financial Exchange Show / Trump vs Powell gets strange during Fed tour

Transcript

Trump vs Powell gets strange during Fed tour · 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.
0:25
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 com Boston and
1:00
Speaker 1: making a donation today. This is the Financial Exchange with
1:05
Speaker 1: Chuck Zada and Mike Armstrong.
1:10
Speaker 2: Chuck, Mike and Tucker with you here.
1:12
Speaker 3: We're wrapping up the last full week of July, as
1:15
Speaker 3: next Friday will be August first, which is a little
1:18
Speaker 3: bit hard to believe, but we continue to see stocks
1:22
Speaker 3: moving up and just hanging in there despite you know,
1:26
Speaker 3: some questions that are out there, and a number of
1:30
Speaker 3: those questions at least in recent days and weeks, you know,
1:33
Speaker 3: being answered rather positively. So you take a look at
1:37
Speaker 3: the S and P five hundred, and you say, okay,
1:41
Speaker 3: yesterday was another new all time high, close for it
1:44
Speaker 3: today opens in positive, positive territory as well. You take
1:49
Speaker 3: a look at the Nasdaq composite, same thing, another all
1:54
Speaker 3: time high, clothes yesterday and in positive territory thus far,
1:59
Speaker 3: and you'll get the Dow Jones Industrial Average and a
2:03
Speaker 3: little bit of a different story on this side of things,
2:06
Speaker 3: where just because of the composition of it, in particular
2:09
Speaker 3: the Dow having United Health making up you know, a
2:12
Speaker 3: big chunk of it oops. Well, you know, you do
2:15
Speaker 3: what you can, but the Dows still can't quite break through.
2:19
Speaker 2: To those new all time highs.
2:21
Speaker 3: But you know, knocking on the door at this point,
2:24
Speaker 3: and I think ultimately that the summary of kind of
2:27
Speaker 3: how we got here, Mike, in my opinion.
2:29
Speaker 2: Is, I think twofold.
2:31
Speaker 3: I've been thinking about this over the last week or so,
2:34
Speaker 3: and there are two things that I think, you know,
2:36
Speaker 3: god us to this point. The first is in the
2:38
Speaker 3: broad economic data. While we do see you know, a
2:41
Speaker 3: modest slowdown that's happening in the US economy from a
2:44
Speaker 3: growth rate perspective, there are no real red flags right
2:49
Speaker 3: now because of tariffs as it relates to the US economy,
2:52
Speaker 3: and so I think that the absence of them to
2:55
Speaker 3: to this point, you know, is something that has continued
2:58
Speaker 3: to be encouraging for ess. And the other piece is, look,
3:01
Speaker 3: I think after you know, the volatility that we saw
3:05
Speaker 3: in March and through the first you know, half two
3:07
Speaker 3: thirds of April, I think obviously you have a lot
3:10
Speaker 3: of investors that are off sides, that are now chasing
3:12
Speaker 3: on any particular point in time, and so that's kind
3:17
Speaker 3: of helping just because positioning has remained light even though
3:19
Speaker 3: it's you know, getting back to normal now, and so
3:21
Speaker 3: that's been a big push to kind of get things
3:23
Speaker 3: back to this point as well.
3:25
Speaker 2: Here.
3:26
Speaker 4: Yeah, the word resilient has been brought up a number
3:28
Speaker 4: of times here, and I think that that spells it
3:31
Speaker 4: fairly well. But you know, to clarify there, it's not
3:34
Speaker 4: just the resiliency of investors in their willingness to buy stocks.
3:37
Speaker 4: It is the resilience of the United States economy, which
3:40
Speaker 4: is far better than most we're anticipating in the face
3:45
Speaker 4: of tariff threats, and so yes, markets are hitting all
3:49
Speaker 4: time highs. That's in part happening because the economy hasn't
3:53
Speaker 4: fallen apart.
3:54
Speaker 3: And I think when we look at the economic data,
3:56
Speaker 3: so next week we're going to be getting GDP for
3:59
Speaker 3: the second quarter, it's going to be the first reading
4:00
Speaker 3: that we get there. The Atlanta Fed, through their GDP
4:03
Speaker 3: now projection, currently estimates that Q two GDP grew at
4:08
Speaker 3: a rate of two point four percent, So that's a
4:11
Speaker 3: bounce back from the rate of negative half percent in
4:14
Speaker 3: Q one. When you look at those kind of as
4:17
Speaker 3: one unit the first half of twenty two, effectively, what
4:20
Speaker 3: it tells you is that the estimate is that hey,
4:22
Speaker 3: US economy grew somewhere around one percent in the first
4:26
Speaker 3: half of this year. Goldman Sachs has an estimate out
4:28
Speaker 3: there of one one, So it tells you, Yeah, there's
4:32
Speaker 3: there's a slowdown because obviously, when we look at you know,
4:34
Speaker 3: the prior few quarters, we were growing you know, two six,
4:37
Speaker 3: two seven, two eight, as far as you know where
4:39
Speaker 3: us GDP was coming in. So there has been a
4:42
Speaker 3: modest slowdown. I think what we're hearing from most companies
4:46
Speaker 3: right now is the modest slowdown that happened as we
4:51
Speaker 3: went through the first half of this year is showing
4:54
Speaker 3: signs of stabilizing and they're not seeing further degradation right now.
4:58
Speaker 3: And this also measures with some of the projections I've
5:00
Speaker 3: seen for the second half of this year, which is
5:02
Speaker 3: that economic growth is likely to be somewhere in that
5:05
Speaker 3: one to one and a half percent range as well.
5:09
Speaker 5: All seems reasonable. I think.
5:13
Speaker 4: We're going to talk about tariffs and the where they
5:16
Speaker 4: have gone. We talked about this throughout the course of
5:18
Speaker 4: this year, but it was basically a story of, Hey,
5:22
Speaker 4: if tariffs get implemented, it's going to show up somewhere
5:25
Speaker 4: in the three areas we thought that it could possibly
5:28
Speaker 4: show up. Would be in consumers' wallets via higher prices,
5:33
Speaker 4: in corporate profits via absorption there without higher prices, or
5:39
Speaker 4: in foreign suppliers and We're going to be covering the
5:42
Speaker 4: pieces of this later today about where it seems to
5:46
Speaker 4: be showing up so far. And then the big question
5:49
Speaker 4: there is when do people get fed up with that?
5:54
Speaker 4: And it could be individuals, it could be those suppliers,
5:58
Speaker 4: it could be investors who are asking quotestions of those
6:00
Speaker 4: companies and their profit margins. But that's ultimately what we
6:04
Speaker 4: start seeing in all of this. But you know, for
6:08
Speaker 4: US equity markets, the big companies that lead in video,
6:12
Speaker 4: you know, Microsoft, these are not companies that are heavily
6:15
Speaker 4: affected by tariffs in the first place.
6:17
Speaker 3: So I think ultimately where we stand as we you know,
6:21
Speaker 3: kind of start to wrap up this week, is markets
6:24
Speaker 3: continue to chug along because there hasn't really been any
6:27
Speaker 3: bad news that's been broad enough to cause any significant
6:33
Speaker 3: volatility in markets. And I'm not talking about you know,
6:35
Speaker 3: volatility like April. We haven't even seen like a five
6:37
Speaker 3: percent pullback, right, So I think ultimately there's been a
6:41
Speaker 3: real absence of you know, concentrated bad news. Some signs
6:45
Speaker 3: in June that we were seeing a little bit of
6:47
Speaker 3: that slow down, but it's moderated a little bit, and
6:49
Speaker 3: so I think we'll see what the next set of
6:52
Speaker 3: data shows, and certainly, as we talked about earlier this week,
6:55
Speaker 3: it is a monster week for data and earnings. Next
6:58
Speaker 3: week you go down the list. You got on Tuesday,
7:02
Speaker 3: a couple different home price in disease, you got job openings,
7:05
Speaker 3: you got consumer confidence. Wednesday you got that Q two
7:08
Speaker 3: GDP report, and you got the FED. Thursday you've got
7:12
Speaker 3: jobless claims. You've got PCE Price Index, Personal income and spending. Friday,
7:18
Speaker 3: little thing called the jobs report, and ism manufacturing. And
7:21
Speaker 3: that's just on the economic data side of things. You
7:23
Speaker 3: look at earnings. Monday is pretty quiet because no one,
7:27
Speaker 3: no one of mondays earnings. Yeah, no one, no one
7:30
Speaker 3: of note wants to report earnings.
7:32
Speaker 2: On Friday.
7:32
Speaker 3: You get a company called k Force that's reporting earnings
7:36
Speaker 3: on Friday. Don't know what they do, but they're reporting
7:40
Speaker 3: them an ultra clean but they're really clean.
7:45
Speaker 2: Uh.
7:46
Speaker 3: Tuesday, you got Visa, Procter and Gamble, United Health. Wednesday
7:49
Speaker 3: you got Microsoft, Meda, Qualcom ADP.
7:52
Speaker 2: I'm just giving you the heaviest hitters.
7:54
Speaker 3: Thursday you got Apple, Amazon, MasterCard, ab v SO, A
7:58
Speaker 3: lot of market cap, lot of big names reporting next
8:01
Speaker 3: week and it's you got a lot of balls in
8:05
Speaker 3: play here. And by the way, August first also happens
8:08
Speaker 3: to be the tariff deadline for a bunch of those
8:11
Speaker 3: letters that went out, So there's there's a lot in
8:14
Speaker 3: play next week that we're gonna be looking at and
8:19
Speaker 3: you could see some fireworks in either direction that I
8:21
Speaker 3: can very easily see a case where you sit here
8:24
Speaker 3: and say, hey, the economic data comes in great. The earnings,
8:27
Speaker 3: particularly from big tech companies that have been driving this
8:30
Speaker 3: market with you, kind of a renewed pace in the
8:33
Speaker 3: last couple months after lagging actually in the second half
8:37
Speaker 3: of last year in Q one of this year, but hey,
8:39
Speaker 3: those tech earnings come in good, okay, like that can
8:42
Speaker 3: drive markets forward. There, there's an easy case to be
8:44
Speaker 3: made that you could see a couple more percentage points
8:47
Speaker 3: in markets to the upside. The counter to it is, hey,
8:49
Speaker 3: if the economic data starts to you know, show that
8:52
Speaker 3: July is kind of a turning point a little bit,
8:54
Speaker 3: you know, the labor market may be weakening a little there,
8:58
Speaker 3: and if the FED is more hotis than people expect,
9:02
Speaker 3: and if we get you know, higher tariffs coming into
9:05
Speaker 3: place on August first, Yeah, there's a case that you
9:07
Speaker 3: could see some renewed downside volatility. So I think next
9:10
Speaker 3: week is going to be really interesting and kind of
9:14
Speaker 3: a pivotal week from markets to determine, Hey, where's the
9:17
Speaker 3: next leg of this puppy? It is up or down
9:19
Speaker 3: and we've got a lot to sort through. So I'm
9:22
Speaker 3: I'm pretty excited. I would say, on a scale from
9:24
Speaker 3: one to excited, I'm a yes, yeah.
9:26
Speaker 4: I mean to that point, these big tech earnings, they
9:29
Speaker 4: don't need to just be good. They need to be
9:31
Speaker 4: surprisingly good.
9:33
Speaker 3: Exquisite if you will, exquisite. Just take a quick break
9:38
Speaker 3: when we return. Yesterday, President Trump headed down to the
9:43
Speaker 3: Federal Reserve to check out the state of the reno.
9:47
Speaker 3: We're going to discuss that visit right after.
9:50
Speaker 1: This business and financial news affecting the markets and your wallet.
9:55
Speaker 1: We got it all straight from Wall Street right here
9:58
Speaker 1: on the Financial Exchange Radio netw work. If you missed
10:02
Speaker 1: any of today's show, catch up whenever you want on
10:04
Speaker 1: our YouTube page. Find daily show segments and full shows.
10:08
Speaker 1: Just go to YouTube dot com and search for the
10:09
Speaker 1: Financial Exchange. This is your home for breaking business and
10:13
Speaker 1: financial news. This is the Financial Exchange Radio Network.
10:20
Speaker 6: This segment of the Financial Exchange is brought to you
10:23
Speaker 6: in part by the US Virgin Islands Department of Tourism.
10:26
Speaker 6: Three stunning islands, Saint Croix, Saint Thomas, and Saint John.
10:30
Speaker 6: All just a quick flight away, no passport required, just sunshine,
10:34
Speaker 6: soft sand, and that warm island vibe. Craving a break,
10:37
Speaker 6: plan your fall, escape now and experience the beauty of
10:40
Speaker 6: America's Caribbean. The US Virgin Islands book today at visit
10:45
Speaker 6: USVII dot com. That's visit USVII dot com.
10:50
Speaker 3: All right, So, yesterday President Trump made the trip over
10:53
Speaker 3: to the Federal Reserve to take a look at what's
10:57
Speaker 3: going on with the renovations there. And I believe we
11:01
Speaker 3: have the audio from that visit, So Tucker, can you
11:04
Speaker 3: fire that.
11:05
Speaker 2: Up for us? Yeah.
11:06
Speaker 6: I did edit it a little bit, but this is
11:08
Speaker 6: pretty much the exchange between Trump and Powell.
11:12
Speaker 2: The meat, if you will.
11:13
Speaker 6: Here we go.
11:13
Speaker 7: So we taking a look and it looks like it's
11:16
Speaker 7: about three point one billion, one up a little bit
11:19
Speaker 7: or a lot. So the two point seven is now
11:23
Speaker 7: three point one. Yeah, it just came out.
11:27
Speaker 2: Yeah, I haven't heard that from anybody to fit.
11:31
Speaker 7: Yeah, I just came.
11:31
Speaker 4: Man, he's handing him a piece of paper at the stage.
11:37
Speaker 2: Readers are coming.
11:38
Speaker 1: Out this game from us.
11:40
Speaker 7: Yes, I don't know who does that?
11:45
Speaker 2: Are you including the Martin renovation? You just added retire capital,
11:49
Speaker 2: you just you just edited in the third buildings.
11:51
Speaker 5: What that is?
11:51
Speaker 2: That's a third building.
11:53
Speaker 7: It's a building that's being built now.
11:55
Speaker 2: It's been you was built five years ago. We finished
11:57
Speaker 2: Martin five years ago.
11:59
Speaker 7: Part of the old.
12:01
Speaker 2: So new. So we're gonna take a look.
12:06
Speaker 3: So that's the audio from the visit, and I'll tell
12:09
Speaker 3: you the uh, the memes that have come out of
12:12
Speaker 3: this already in the first you know, sixteen hours after
12:16
Speaker 3: that that clip aar and have just been fantastic. It's
12:20
Speaker 3: there's some great stuff out there on the internet. It's
12:23
Speaker 3: the first time I've said that in a while. So
12:26
Speaker 3: here here's the thing, Mike, I don't know anything about
12:29
Speaker 3: the Martin Building. I read about it this morning just
12:32
Speaker 3: because you know, I knew that we would be talking
12:34
Speaker 3: about this, and so I read about it just because
12:37
Speaker 3: I was curious. The Martin Building was actually built in
12:41
Speaker 3: nineteen seventy four, and it was named after William McChesney Martin,
12:46
Speaker 3: who was Chair of the FED from nineteen fifty one.
12:49
Speaker 2: To nineteen seventy, So there's that.
12:52
Speaker 3: Kind the renovation was completed in twenty twenty one, so
12:56
Speaker 3: it's not active, it's not ongoing right now, and ultimately
13:01
Speaker 3: it was work that was also authorized during President Trump's
13:05
Speaker 3: first term.
13:06
Speaker 2: So I look at.
13:08
Speaker 3: This, and you know, I continue to come back to
13:11
Speaker 3: the fact that increasingly where I stand and this is
13:15
Speaker 3: kind of the most likely outcome here. The most likely
13:19
Speaker 3: outcome is that President Trump wants to continue to make
13:21
Speaker 3: things as uncomfortable as possible for Jerome Powell, but ultimately
13:26
Speaker 3: ends up not trying to fire him.
13:29
Speaker 4: Can we talk about something that I find impressive? Sure,
13:33
Speaker 4: if somebody on live television, let me take that back.
13:37
Speaker 4: If the President of the United States was, you know,
13:42
Speaker 4: questioning me about construction costs live on television and then
13:47
Speaker 4: handed me a piece of paper with a summary of
13:49
Speaker 4: costs that I had never seen before, my ability to
13:54
Speaker 4: in that moment come back and say this has nothing
13:56
Speaker 4: to do with the project that we're currently undergoing would
13:58
Speaker 4: be extraordinarily limited. I'm fairly impressed by how quickly he
14:01
Speaker 4: responded to that power.
14:03
Speaker 6: Yeah, I'm pretty sure I would be like, I'll wait
14:04
Speaker 6: until after all sort.
14:05
Speaker 4: Of tho yeahs, I recognize that that's kind of what
14:10
Speaker 4: he has to do now in this job is be
14:12
Speaker 4: prepared for anything with the president. But I don't know,
14:15
Speaker 4: I wouldn't be prepared to do that. I think it
14:18
Speaker 4: next to the president of the United States.
14:20
Speaker 2: I think it's very much Powell, you know, trying to
14:22
Speaker 2: say this is my turf.
14:24
Speaker 3: Yeah, this is not where you're supposed to be like,
14:27
Speaker 3: this is you know, an area that's carved out for
14:29
Speaker 3: me and my team. So again, the most likely scenario
14:36
Speaker 3: is that the President is simply trying to pressure, you know,
14:39
Speaker 3: make things as uncomfortable for Powell as possible in the
14:43
Speaker 3: hope that he either quits on his own or just
14:45
Speaker 3: you know, eventually he's like okay, fine, whatever. The possibility
14:51
Speaker 3: of the President trying to fire Powell still exist, which
14:56
Speaker 3: is something that if we're being completely honest, never had
14:59
Speaker 3: to say in any with any prior FED chair. Was
15:03
Speaker 3: not something that was even discussed.
15:06
Speaker 4: And we alluded to that a little bit yesterday. I mean,
15:09
Speaker 4: your comment was, it's interesting that this is occurring after
15:12
Speaker 4: markets closed after four PM. If you're going to do
15:15
Speaker 4: something pretty extreme, you would want to do it when
15:18
Speaker 4: markets are closed.
15:20
Speaker 5: This wasn't that.
15:21
Speaker 2: No, it certainly wasn't so.
15:24
Speaker 3: I think ultimately, as we've discussed before, the FED is
15:29
Speaker 3: a self funded institution. It is not taxpayer funds that
15:33
Speaker 3: are covering the cost of these renovations. Furthermore, I don't
15:38
Speaker 3: think Jay Powell has anything to do with the actual
15:40
Speaker 3: cost of it. They're very much most likely is some
15:44
Speaker 3: kind of waste that is happening in a construction project,
15:47
Speaker 3: as there is in every construction project that ever happens,
15:52
Speaker 3: is there fraud. There has been no evidence presented of
15:56
Speaker 3: any fraud that is happening as a result of the renovation,
16:00
Speaker 3: and so quite honestly, this story should be a nothing burger,
16:05
Speaker 3: and I don't really think there's any meat on this
16:08
Speaker 3: bone based on what we see today. If there's new
16:10
Speaker 3: evidence that emerges that you know, the feed is not
16:13
Speaker 3: fully disclosing you know, X, Y, and Z, and they're
16:19
Speaker 3: you know, doing whatever it might be that actually would
16:21
Speaker 3: represent you know, fraud as opposed to just hey, construction
16:24
Speaker 3: costs have gone up since we authorize this, then I
16:28
Speaker 3: think we could have something to talk about. But ultimately,
16:31
Speaker 3: I don't think this is a story worth continuing to
16:35
Speaker 3: cover in any way shape or form.
16:37
Speaker 4: Given what we know today, can we turn and said
16:40
Speaker 4: to another central bank where we know there is some
16:43
Speaker 4: things that don't seem directly related to central banking in
16:47
Speaker 4: the in there the ostra is that the Austrian National
16:50
Speaker 4: Bank that has a collection of twenty nine violins, three
16:55
Speaker 4: violas and six cellos, including several strata areas violins that
17:01
Speaker 4: they lease out to UH or give out.
17:04
Speaker 5: To musicians on an occasional basis to play.
17:08
Speaker 2: Honestly waste but not fraud. No, fine, they want to
17:11
Speaker 2: do that, they can do that, like you know, like it's.
17:15
Speaker 4: To our knowledge we have not seen anything about the
17:18
Speaker 4: United States housing any rare musical instruments in the Federal
17:23
Speaker 4: Reserve Building in DC or acquiring any of them.
17:25
Speaker 5: That doesn't I.
17:26
Speaker 2: Should Maybe that could be like part of QI.
17:28
Speaker 3: Instead of just buying mortgage backed securities, you could buy
17:32
Speaker 3: instrument backed securities.
17:33
Speaker 2: A couple of obos.
17:36
Speaker 3: Yeah, get Yo Yoma's cello over there, you know, uh yeah,
17:44
Speaker 3: are we ready.
17:44
Speaker 2: To just you know, I used to play the French horn,
17:46
Speaker 2: did you really? I did? I did? I used to
17:49
Speaker 2: play the cello.
17:50
Speaker 5: My father used to bribe me.
17:51
Speaker 2: We should start a band, man. We could do that.
17:56
Speaker 3: Hell, God, it would be uh, it would be just fantastic.
18:03
Speaker 2: We could even try to play the FED. I bet
18:05
Speaker 2: they do. They have orchestra space there. I'm sure they do.
18:09
Speaker 5: Point seven billion dollar renovation.
18:10
Speaker 2: Of course they have orchestra space. What are the.
18:12
Speaker 6: Acoustics like in the vault, acoustic paneling in those renos?
18:17
Speaker 2: Yeah?
18:19
Speaker 5: Okay, so yeah, yesterday was a big nothing burger?
18:22
Speaker 2: Are we are? We? Yeah?
18:25
Speaker 3: Honestly good to call it that, yeah, until something else
18:29
Speaker 3: materially changes here.
18:31
Speaker 2: Quite honestly, I don't think there's anything to pick out
18:33
Speaker 2: on this.
18:34
Speaker 6: I feel like that was the peak yesterday, right, Like
18:37
Speaker 6: was it?
18:37
Speaker 2: Yeah?
18:37
Speaker 3: You know, like if if that's it, then that's it.
18:40
Speaker 3: Like I don't know if if, if, if something exciting
18:43
Speaker 3: were to happen, wouldn't it have been when the two
18:45
Speaker 3: of them are in the room on TV together.
18:47
Speaker 4: It would seem so like if something dramatic and exciting
18:50
Speaker 4: were going to happen, the president would Evan should have
18:54
Speaker 4: announced it when he was standing there in the construction site.
18:58
Speaker 4: That would have been the opportunity for the photo shoot.
19:00
Speaker 4: So I think that this awkward, weird exchange of you know,
19:05
Speaker 4: whipping out a dramatic paper that doesn't seem to have
19:07
Speaker 4: anything to do with the.
19:08
Speaker 5: Construction project, was it? And we can move along.
19:11
Speaker 3: So let's take a quick break coming up here, and
19:15
Speaker 3: when we return, we've got Wall Street Watch that we're
19:18
Speaker 3: going to go through talking about what's moving in markets.
19:20
Speaker 3: But then we also got Intel earnings after the bell yesterday.
19:24
Speaker 3: We'll tell you how kind of the former national champion
19:28
Speaker 3: of semiconductors reported their earnings.
19:31
Speaker 2: Next.
19:40
Speaker 1: Like us on Facebook and follow us on Twitter at
19:43
Speaker 1: TFFE show. Breaking business news is always first right here
19:48
Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
19:52
Speaker 1: Street Watch. A complete look at what's moving market so
19:56
Speaker 1: far today right here on the Financial Exchange Radio Network.
20:00
Speaker 6: After the SMP five hundred and nasdak notch yet another
20:03
Speaker 6: record high, markets today are narrowly trading higher. Yesterday's close
20:07
Speaker 6: mark the SMP's thirteenth record close of twenty twenty five.
20:13
Speaker 6: Right now, the Dow is up by tenth of a percent,
20:16
Speaker 6: or fifty one points. SMP five hundred is up nearly
20:19
Speaker 6: two tenths of one percent or twelve points. Nasdaq is
20:22
Speaker 6: up a tenth of a percent as well, with thirty
20:24
Speaker 6: three points higher. Russell two thousand is off by about
20:27
Speaker 6: a quarter of a percent. Ten year treasureal is up
20:30
Speaker 6: one basis point now at four point four to two percent,
20:33
Speaker 6: and crude oil down six tenths of one percent, trading
20:37
Speaker 6: at sixty five dollars in sixty two cents a barrel.
20:40
Speaker 6: The big news in the tech spase around struggling chip
20:43
Speaker 6: maker Intel after it reported a wider quarterly loss and
20:47
Speaker 6: also said it will cut fifteen percent of staff as
20:50
Speaker 6: it seeks to refocus on AI chips. That stock is
20:54
Speaker 6: sinking by nine percent at the moment, and Chuck and
20:57
Speaker 6: Mike will have more Intel coming up here on the show. Meanwhile,
21:00
Speaker 6: the FCC approved Paramounts eight billion dollar merger with Skydance Media,
21:05
Speaker 6: paving the way for the deal to close in the
21:07
Speaker 6: next few weeks. Paramount shares are up modestly, sticking with
21:11
Speaker 6: the media space, where Charter Communications is dropping eighteen percent
21:16
Speaker 6: after the cable operator fell short of quarterly expectations. Elsewhere,
21:20
Speaker 6: Senteen shares are up five percent, despite the managed care
21:24
Speaker 6: provider posting a quarterly loss that saw membership declines across
21:28
Speaker 6: its Medicaid and medicare businesses. Decker's outdoor stock is jumping
21:33
Speaker 6: thirteen percent after the maker of ug boots beat earnings
21:37
Speaker 6: and revenue expectations. Deckers cited higher than expected sales of
21:41
Speaker 6: its flagship brand as well as its popular Hokah sneakers.
21:46
Speaker 6: Volkswagen lowered its financial guidance after its first half earnings
21:50
Speaker 6: were hit by one and a half billion dollars of
21:53
Speaker 6: tariff costs and online used car retailer Carvana was upgraded
21:57
Speaker 6: by Oppenheimer to outperform, with the firm said Carvana's business
22:01
Speaker 6: model is now humming, generating meaningful cash. That stock is
22:06
Speaker 6: up by two percent. I'm Tucker Silvan. That is Wallstree.
22:09
Speaker 3: Watch all right, Mike, let's talk a little bit more
22:12
Speaker 3: about Intel or more like outtel am I right.
22:16
Speaker 5: Got it?
22:17
Speaker 3: Yeah, So here, here's the deal with Intel. They are
22:23
Speaker 3: trying to turn this ship again. They're just trying to
22:27
Speaker 3: turn it in the exact opposite way that Pat Gelsinger
22:29
Speaker 3: was turning it over the previous I think it was
22:31
Speaker 3: five years that he was in the chair when he
22:34
Speaker 3: was trying to fix things. And I kind of wonder, like,
22:39
Speaker 3: if I'm being one hundred percent honest here, like in
22:43
Speaker 3: the semiconductor space, if.
22:44
Speaker 2: You're dead for five years are is that it for you?
22:49
Speaker 2: Is that it for you?
22:50
Speaker 3: And and this is a different dead than Intel was
22:54
Speaker 3: after the tech bubble, because here's the thing is, after
22:56
Speaker 3: the tech bubble, Intel stock fell sick magnificantly, you know,
23:01
Speaker 3: I mean you talk about like where it went, and
23:05
Speaker 3: it went from you know, being a fifty dollars stock
23:10
Speaker 3: almost sixty dollars sorry, seventy dollars stock at the peak
23:13
Speaker 3: of the tech bubble down to you know, in the team,
23:17
Speaker 3: so it lost you know, sixty seventy percent of its value.
23:20
Speaker 3: It's not because the core business was fundamentally bad. They
23:23
Speaker 3: were still the dominant uh CPU maker for you know,
23:27
Speaker 3: personal computers, which were the dominant form of computing, you know,
23:30
Speaker 3: for the next fifteen years. And so they still had
23:33
Speaker 3: a good business. They were still profitable, but the stock
23:35
Speaker 3: had been overvalued, and they were still just the biggest
23:38
Speaker 3: player out there who basically kept AMD around little AMD
23:42
Speaker 3: in order to you know, fight off anti trust concerns.
23:45
Speaker 3: And the business was was fine. It wasn't great, it
23:49
Speaker 3: wasn't awful. It was fine. Intel stock from nineteen ninety
23:54
Speaker 3: seven through twenty fifteen, even with the you know downturn
23:59
Speaker 3: that you saw, still had a total return of one
24:02
Speaker 3: hundred and twenty four percent over that time, so five
24:05
Speaker 3: to six percent a year. You know, even with the
24:06
Speaker 3: tech bubble and the financial crisis that that's not awful
24:10
Speaker 3: management quite honestly. Okay, here's the problem is that for
24:16
Speaker 3: the last five years they have not been able to
24:20
Speaker 3: execute at all. They've tried to get into the founders,
24:23
Speaker 3: which if you're not familiar with semi conductors being a foundry,
24:25
Speaker 3: it's basically what Taiwan's Semiconductor does. You take third party
24:28
Speaker 3: orders for what they want as far as their chip designs,
24:32
Speaker 3: and you make them in your your fabs.
24:35
Speaker 4: And that was the big push from Gelsinger over the
24:38
Speaker 4: last yeah, of course, the last five years. He pushed
24:42
Speaker 4: the Biden administration and got into the Chips Act and was,
24:46
Speaker 4: you know, promising investors funding from that on the construction
24:49
Speaker 4: of these foundries. Sorry, go on, but that's been the
24:54
Speaker 4: big push from Intel prior to the new CEO.
24:57
Speaker 3: It has been and so where you sit today is
25:02
Speaker 3: basically it hasn't worked. They just announced yesterday another round
25:06
Speaker 3: of layoffs another fifteen percent of their workforce, and I
25:09
Speaker 3: think this is the third one now in the last
25:12
Speaker 3: two years as far as layoffs that they're going through,
25:15
Speaker 3: so you gotta imagine that morale Intel.
25:17
Speaker 2: Is pretty not great.
25:19
Speaker 3: And here's the other thing, like when we look at
25:22
Speaker 3: the stock and I'm going back thirty eight years exactly
25:25
Speaker 3: just because I'm sorry, twenty eight years exactly just because
25:27
Speaker 3: it's convenient for me. If you look at the return
25:30
Speaker 3: since July fifth of twenty twenty five, Intel stock from
25:34
Speaker 3: a price perspective, not factoring in dividends is down seven
25:38
Speaker 3: percent in that time, which is bad. The total return
25:43
Speaker 3: factoring in dividends is seventy nine percent. Seventy nine percent
25:49
Speaker 3: during that time, which again over a twenty eight year
25:53
Speaker 3: period is like two percent a year.
25:56
Speaker 2: Yep.
25:56
Speaker 3: You would have been better sticking your money in the
25:59
Speaker 3: bank even with zero percent interest rates for ten years,
26:01
Speaker 3: and you would have come out probably in about the
26:03
Speaker 3: same place the S and P five hundred during that
26:06
Speaker 3: time period, total return factoring in dividends up over one
26:10
Speaker 3: thousand percent. So and a lot of this problem has
26:14
Speaker 3: come since twenty twenty. There was a period in early
26:17
Speaker 3: twenty twenty. You will get things during like early COVID
26:21
Speaker 3: days S and P five hundred relative to July twenty
26:24
Speaker 3: fifth of ninety seven S and P five hundred total
26:27
Speaker 3: return was two hundred ninety one percent. Intel was two
26:30
Speaker 3: eighty two. They were basically in a dead heat through
26:33
Speaker 3: March of twenty twenty, and since then, the S and
26:36
Speaker 3: P five hundred has you know, doubled from that, I'm sorry,
26:40
Speaker 3: tripled from that point, while Intel has effectively lost like
26:46
Speaker 3: seventy percent of its value.
26:48
Speaker 2: So I gotta be honest.
26:50
Speaker 3: In the seventy conductor space, there's so much CAPEX that's needed,
26:53
Speaker 3: there's so much R and D that's needed, and Intel
26:57
Speaker 3: feels so far behind that you just wonder like can
27:00
Speaker 3: they get there and stay relevant?
27:04
Speaker 2: And I don't know the answer.
27:05
Speaker 4: Yeah they are now, there's just nothing special about what
27:10
Speaker 4: Intel is doing, Like, yeah, they are the dominant chip
27:12
Speaker 4: maker in laptop computers. I'm looking at my Lenovo, think
27:18
Speaker 4: that with an Intel chip in it right now? But
27:20
Speaker 4: anybody can make that, And so what are you going
27:22
Speaker 4: to be the cheapest maker of computer semiconductors? I kind
27:27
Speaker 4: of doubt it. With Gelsinger, I could at least understand
27:32
Speaker 4: what his vision was. Do you know what the new
27:35
Speaker 4: vision of Intel looks like? I I struggled to put
27:40
Speaker 4: it together.
27:40
Speaker 3: In my head, it seems like what they're talking about
27:44
Speaker 3: is just you know, fiscal discipline and this and that.
27:47
Speaker 3: But I forget who I heard it from that you
27:49
Speaker 3: can't cut your way, you know, to growth, right, Well,
27:53
Speaker 3: you've got to find something that is going to generate,
27:58
Speaker 3: you know, real meaningful.
27:59
Speaker 2: Growth for I don't know what it is.
28:04
Speaker 3: I don't know what it is for them, and it's
28:07
Speaker 3: something where the problem is in the semiconductor space, it
28:10
Speaker 3: takes a long time to turn things, you know. It's
28:15
Speaker 3: like you've got to commit to things and stick with
28:17
Speaker 3: them for a while. And I don't know where they're
28:21
Speaker 3: going to be going.
28:22
Speaker 4: Yeah, I mean they speak to in this journal article
28:26
Speaker 4: at least a fourteen a technology, which is just a
28:29
Speaker 4: process that allows more efficient chips, more transistors. Intel's hoping
28:34
Speaker 4: that it will drive growth and tract large ship designers
28:37
Speaker 4: as customers, aiming to develop the technology by the end
28:39
Speaker 4: of the decade. You don't have that long if you're Intel.
28:44
Speaker 2: Yeah, it's I'm hoping to regrow some hair by the
28:46
Speaker 2: end of the decade. But you know, it's progress is slow.
28:50
Speaker 2: It's actually going there. I'm not hoping to regrow hair.
28:53
Speaker 2: It's better this way, take a quick break.
28:56
Speaker 3: When we return, let's talk a little bit about what
28:59
Speaker 3: we are seeing as far as costs on investment vehicles,
29:05
Speaker 3: different products, whether it's mutual funds, exchange traded funds, private equity,
29:09
Speaker 3: hedge funds, they've all got their management costs associated with them.
29:12
Speaker 3: The trend in the last twenty five years has been down.
29:16
Speaker 3: Are we seeing signs that might be starting to shift?
29:18
Speaker 3: We'll discuss after this.
29:20
Speaker 1: Find daily interviews and full shows of the Financial Exchange
29:23
Speaker 1: on how are YouTube page get cut up on anything
29:26
Speaker 1: and everything you might have missed. This is the Financial
29:29
Speaker 1: Exchange Radio Network. Text does six one seven twenty six
29:34
Speaker 1: to two one three eighty five with your comments and
29:36
Speaker 1: questions about today's show. This is the Financial Exchange Radio Network.
29:48
Speaker 2: All right, Mike, We've got a piece in Bloomberg.
29:50
Speaker 3: It's titled Wall Street is Challenging the low cost investing Revolution.
29:56
Speaker 2: And just a couple of stats that discuss this.
29:59
Speaker 3: The first thing is that we continue to see this
30:01
Speaker 3: trend towards exchange traded funds taking up a larger share
30:06
Speaker 3: of assets compared to mutual funds. Back in you know,
30:10
Speaker 3: two thousand, ETFs were less than two percent of the
30:14
Speaker 3: overall market by you know, assets. Now we're talking north
30:18
Speaker 3: of thirty five percent and growing at a rate of
30:21
Speaker 3: you know, one to one and a half percent a
30:23
Speaker 3: year as far as market share that they're taking. But
30:25
Speaker 3: the interesting piece is if you look at the pricing
30:29
Speaker 3: of new ETFs that are being launched in the nineteen nineties,
30:34
Speaker 3: they were coming in at about thirteen point eight basis
30:37
Speaker 3: points two thousands, thirteen basis points twenty tens.
30:40
Speaker 2: Moved up to twenty one.
30:41
Speaker 3: Point four basis points in twenty twenties, thirty eight point
30:45
Speaker 3: eight basis points. So in terms of trying to explain
30:48
Speaker 3: this shift, I came to a couple different conclusions.
30:52
Speaker 2: The first is.
30:54
Speaker 3: A larger percentage of the ETFs that are being launched
30:57
Speaker 3: now are actively managed ETFs, which would you know, come
31:00
Speaker 3: with higher costs.
31:02
Speaker 2: The other piece, uh is.
31:05
Speaker 3: That and this is again just getting it, you know,
31:09
Speaker 3: a methodology issue because I was looking at this. This
31:12
Speaker 3: is data from morning Star, and there's a little footnote
31:15
Speaker 3: on this it says quote analysis of surviving funds. What
31:21
Speaker 3: it tells you is we don't know what funds were
31:25
Speaker 3: priced at that don't exist anymore, that that died. It's
31:29
Speaker 3: complete survivorship bias, and so it's very possible that if
31:33
Speaker 3: you looked at, you know, ETFs that were launched in
31:35
Speaker 3: the nineties, maybe the average weighted expense ratio was close
31:40
Speaker 3: to like twenty or thirty BIPs, but the expensive ones
31:42
Speaker 3: died off. Maybe the same thing will happen over the
31:45
Speaker 3: next twenty years with these ones, or it could. The
31:48
Speaker 3: other piece that I that I point out on this
31:51
Speaker 3: is some of these funds have lowered cost over time.
31:54
Speaker 3: That's typically the trend that you see. Just because these
31:57
Speaker 3: funds are starting out with high expenses today doesn't mean
32:01
Speaker 3: they'll stay at those high expenses as they grow. For
32:04
Speaker 3: evidence of this, look at basically any of the major
32:06
Speaker 3: ETF issuers, whether it is Vanguard, whether it is Eyeshares.
32:13
Speaker 3: Like it's not every year, but on a pretty regular
32:15
Speaker 3: schedule you see announcements, Hey, we're lowering the cost on
32:18
Speaker 3: these funds because you know, we have more assets now,
32:21
Speaker 3: and so that's something to keep in mind as well.
32:23
Speaker 4: Yeah, I mean, look, if you are launching a new
32:26
Speaker 4: ETF today, you're you're probably not trying to compete with Vanguard.
32:32
Speaker 2: Or we're gonna have a better five hundred funding.
32:34
Speaker 4: Right, Like we're gonna have a fund that is better
32:37
Speaker 4: than the S and P five hundred and cheaper like
32:39
Speaker 4: it's almost it's already almost free. So naturally, if you're
32:42
Speaker 4: launching something new, it's going to be different. I don't
32:45
Speaker 4: know I would say that. I am again this isn't
32:49
Speaker 4: backed by evidence, but you know, I am hearing more
32:53
Speaker 4: about these more complicated ETFs, these actively managed ETFs, the
32:57
Speaker 4: ETFs that involve option strategies in there and more complex strategies,
33:02
Speaker 4: I guess, and I think that's naturally. If you are
33:06
Speaker 4: one of these large investment companies who has traditionally relied
33:11
Speaker 4: on expensive mutual funds to fund your business, and that
33:15
Speaker 4: business is rapidly being eroded, you launch an ETF repackage
33:19
Speaker 4: it is actively managed and maybe attract the flows that way.
33:24
Speaker 5: I guess where I think it comes reper hits.
33:28
Speaker 4: The road for investors is for years there's been that
33:32
Speaker 4: big push of go to ETFs because they're cheaper, and
33:36
Speaker 4: on average they still are compared to mutual funds.
33:39
Speaker 5: But that is changing. That is changing.
33:43
Speaker 4: That is you do have to be more deliberate about it,
33:46
Speaker 4: and it's not universally across the board in the way
33:50
Speaker 4: that if you talk to the average investor and ask
33:52
Speaker 4: them like, hey, what's the difference between the ETF and
33:54
Speaker 4: a mutual fund? I think most people would point towards cost,
33:57
Speaker 4: wouldn't you think?
33:59
Speaker 2: Yeah?
33:59
Speaker 3: I think two things that would be pointed out by
34:01
Speaker 3: most people are you know, oh I hear ETFs are
34:03
Speaker 3: cheaper and ETFs you can trade during the day. Yeah,
34:06
Speaker 3: it would be like the big things that most people
34:08
Speaker 3: would mention, but not always the case.
34:09
Speaker 5: Yeah.
34:11
Speaker 4: So the point would be they are much different today
34:14
Speaker 4: than they were at their launch thirty years ago. But
34:16
Speaker 4: they have been around for some time, and all sorts
34:20
Speaker 4: of things are going to make their way into these
34:22
Speaker 4: They are not all going to be universally good or bad.
34:25
Speaker 5: I would I would.
34:28
Speaker 4: You know, counter one of the points that's made in
34:30
Speaker 4: this article that you know, generally speaking, the only people
34:34
Speaker 4: that are going to benefit from these more expensive ETFs
34:36
Speaker 4: are the are the creators themselves.
34:38
Speaker 5: Like, No, not necessarily.
34:40
Speaker 4: There were plenty of good mutual funds that were quite
34:42
Speaker 4: expensive that absolutely dominated markets and did great by their investors.
34:47
Speaker 4: But you do need to be discerning, and I think
34:52
Speaker 4: the most important fundamental investment question that I always tell
34:56
Speaker 4: people to ask themselves, is do you understand what you're
34:59
Speaker 4: investing in right before anything else? Can you explain to
35:03
Speaker 4: an eighth grader what it is that you are investing in?
35:06
Speaker 4: And I tell you it's so often that the answer
35:10
Speaker 4: is know that it's concerning, But you know, you should
35:12
Speaker 4: be able to pretty precisely ask yourself that before making
35:16
Speaker 4: an investment decision on your own. Behalf of Okay, I
35:18
Speaker 4: heard about this ticker symbol because somebody was talking about
35:21
Speaker 4: it on CNBC. That's great, But what do they do?
35:25
Speaker 4: What's the business model, what's the investment strategy? You know,
35:27
Speaker 4: tell me some of the basics. And if you can't,
35:30
Speaker 4: that's a pretty big red flag to start looking around
35:33
Speaker 4: and understanding things a bit more. If you have stuff
35:37
Speaker 4: like that in your portfolio, if you're considering a new
35:39
Speaker 4: investment in some new strategy that's being talked about or
35:43
Speaker 4: that's you know, gaining popularity, or your neighbor or your
35:45
Speaker 4: cousin or you know uncle stepchild told you about, give
35:50
Speaker 4: the folks that I'm trying advisory group a call and
35:52
Speaker 4: let us at least unders help you understand how it
35:56
Speaker 4: may or may not fit into your overall investment strategy.
36:00
Speaker 4: There are a lot of good things about the potential
36:04
Speaker 4: for new investment strategies to be available to the general public.
36:07
Speaker 4: There are also a whole bunch of pitfalls that can
36:10
Speaker 4: occur with it. The number for the Armstrong Advisor Group
36:13
Speaker 4: eight hundred three to nine three four zero zero one.
36:16
Speaker 4: Let us sit down with you and analyze how these
36:19
Speaker 4: things work with your plan eight hundred three nine three
36:22
Speaker 4: four zero zero one.
36:24
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
36:27
Speaker 1: registered investment advisor. Nothing in the ad or in any
36:29
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
36:32
Speaker 1: your own financial, tax, and estate planning advisors before making
36:35
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
36:38
Speaker 1: advisory services.
36:40
Speaker 2: So I got to be honest here. So there's this
36:42
Speaker 2: piece from CNBC.
36:44
Speaker 3: There's a bunch of other places that have picked it up,
36:46
Speaker 3: and it quotes a memo from Sadni Nadella talking about.
36:55
Speaker 2: Basically your job cuts. Well, the memos not about job cuts.
36:59
Speaker 3: The memo is, you know, basically about hey, like, what
37:02
Speaker 3: is Microsoft trying to do this year? Like it's a
37:04
Speaker 3: message for like the new fiscal year, And I guess
37:09
Speaker 3: what I'm getting at here is a bunch of different
37:12
Speaker 3: places have seized on this to say about this one
37:15
Speaker 3: quote where he says, before anything else, I want to
37:17
Speaker 3: speak about what's been weighing heavily on me and what
37:19
Speaker 3: I know many of you were thinking about recent job eliminations,
37:22
Speaker 3: and people were criticizing and.
37:23
Speaker 2: Being like, oh, like, if you really cared that.
37:26
Speaker 3: Much, why didn't you just like keep these jobs and look,
37:28
Speaker 3: to a certain extent, I get that too. You know,
37:31
Speaker 3: my favorite quote from The Godfather is, look, this is
37:33
Speaker 3: the business we've chosen. You don't get to complain about
37:36
Speaker 3: stuff that you have to do in that role. If
37:37
Speaker 3: you don't want to lay people off, don't be the
37:39
Speaker 3: CEO of Microsoft. So I get that to a certain extent.
37:42
Speaker 3: And obviously it's worse for the people that have been
37:44
Speaker 3: laid off than for Satni Nadella. But this is like
37:48
Speaker 3: probably a fifteen hundred word piece talking about how Microsoft
37:51
Speaker 3: is trying to evolve, and this is one sentence in it,
37:55
Speaker 3: which is basically just trying to acknowledge. Hey, I'm you know,
38:00
Speaker 3: I understand that this is not easy for you. It's
38:02
Speaker 3: a little bit.
38:03
Speaker 2: Hard for me. Does it need to put that in there?
38:06
Speaker 4: I don't know, but like I think, generally speaking, when
38:10
Speaker 4: you're talking about job eliminations, you avoid talking about yourself
38:13
Speaker 4: at all costs.
38:13
Speaker 5: But otherwise it was a minor slip up.
38:16
Speaker 2: I agree.
38:16
Speaker 3: It's just like, if this is what we're gonna freak
38:19
Speaker 3: out about, come on quick break here when we return
38:24
Speaker 3: next hour.