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Are small US businesses under serious threat? · The Financial Exchange Show

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Speaker 2: Our two here on the Financial Exchange, Chuck, Paul and
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Speaker 2: Tucker with you, and markets mixed today. We had a
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Speaker 2: downward open where one point I think the SMP got
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Speaker 2: twenty one points, are about point four percent. Nasdaq down
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Speaker 2: ninety points, are about zero point four to five percent,
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Speaker 2: So mixed trading across equity markets at the moment. Tenure
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Speaker 2: US Treasury selling off just a little bit, nothing too
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Speaker 2: big as far as the movement there, with it moving
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Speaker 2: up one point nine basis points to four point three
1:48
Speaker 2: three nine percent. If we go and take a look
1:51
Speaker 2: at where mortgage rates are right now, as of the
1:54
Speaker 2: end of last Friday, Mortgage News Daily has the national
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Speaker 2: thirty year fixed rate average at six point nine percent,
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Speaker 2: up another seven basis points, so continuing to hang out
2:03
Speaker 2: just shy of seven percent there. Oil West Texas Intermediate
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Speaker 2: today is moving on down a dollar sixty five or
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Speaker 2: almost three percent. This on the news that OPEK is
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Speaker 2: going to have another production increase coming in June, so
2:18
Speaker 2: we're at fifty six sixty four on West Texas Intermediate,
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Speaker 2: the triple A national average for gas prices, though flat,
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Speaker 2: continuing to hang out right at three sixteen and five
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Speaker 2: tenths of ascent. And forgive me if I'm a broken
2:31
Speaker 2: record on this, We've just been between about three ten
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Speaker 2: and three twenty for the last couple of months now,
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Speaker 2: with no major moves above or below except for a
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Speaker 2: couple of days here or there. This has the potential
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Speaker 2: to start pushing us towards some lower numbers and maybe
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Speaker 2: under three per gallon if it sticks around for a
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Speaker 2: little bit. Gold after a tough week last week, bouncing
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Speaker 2: back today up seventy seven to fifteen ounce to thirty
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Speaker 2: three twenty and eighty cents. So you got a little
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Speaker 2: bit of a bounce back happening there. And those are
3:01
Speaker 2: the big things moving markets today. Piece in the Wall
3:05
Speaker 2: Street Journal it's titled the CEO who says an asteroid
3:07
Speaker 2: is coming to destroy America's businesses. So I looked up
3:12
Speaker 2: in the sky after this, Paul, and I said, hey,
3:16
Speaker 2: has anyone talked to Bruce Willis and Ben Afflack and
3:18
Speaker 2: gotten them on the scene, Because those guys they did
3:22
Speaker 2: some work in Armageddon and maybe we could use them
3:24
Speaker 2: right now. But in fact it's not an actual asteroid.
3:27
Speaker 2: But he's talking about, Hey, you've got this obvious issue
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Speaker 2: that's happening with supply chains having to be rerouted, and
3:35
Speaker 2: in some cases they're shut down because companies just won't
3:38
Speaker 2: chip stuff from China or other countries. In some cases,
3:41
Speaker 2: companies are voluntarily deciding not to import. You've got all
3:44
Speaker 2: kinds of disruptions happening. But he's basically saying, look, this
3:48
Speaker 2: is something where the big guys, the Walmarts and Targets
3:51
Speaker 2: of the world, they have tools at their disposal that
3:54
Speaker 2: these small businesses that import don't. And if there isn't
3:58
Speaker 2: some type of shift in the trade situation in the
4:02
Speaker 2: coming weeks, you've got real problems heading for US small
4:05
Speaker 2: businesses that import Chinese goods and goods from other countries
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Speaker 2: as well.
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Speaker 3: Yeah, exactly. You know, if you're a Walmart or a Target,
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Speaker 3: some of these other behemoths out there, the idea of
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Speaker 3: shifting where you source your products from from Vietnam or
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Speaker 3: from China to Vietnam is something that is possible. But
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Speaker 3: if you're a small business, you either don't have the
4:24
Speaker 3: capability to do it, or even if you could, Vietnam
4:26
Speaker 3: is not willing to take on the production. So it
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Speaker 3: just puts them in a very difficult position where it
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Speaker 3: takes ninety days until your goods are ray to shift
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Speaker 3: from China. So some of these decisions have already been
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Speaker 3: made for them, and now they're faced with the idea
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Speaker 3: of what do they do with these goods that they
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Speaker 3: had previously ordered under different conditions. It also brings up
4:46
Speaker 3: that point that you had made in the previous hour
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Speaker 3: where if there is some sort of resolution on the
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Speaker 3: trade perspective, you're going to have every business out there
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Speaker 3: just funneling through a tremendous amount of orders through China
4:57
Speaker 3: and it's going to take ninety days for those orders
4:59
Speaker 3: to be ready to go. That's a supply chain shakeup
5:02
Speaker 3: that we could see on the other end of things.
5:04
Speaker 3: But if something's not resolved sooner rather than later, there
5:07
Speaker 3: are thousands of companies that find themselves in a just
5:11
Speaker 3: really difficult position. CEO Fox Sport Ryan Peterson's behind this article.
5:17
Speaker 3: They have thirteen thousand customers from all range of goods
5:19
Speaker 3: and services, so he has a very good view into
5:22
Speaker 3: what is going on from the supply chain. Standpoint where
5:26
Speaker 3: they've seen bookings drop from China about sixty percent.
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Speaker 2: And I have a buddy of mine, I've talked about
5:31
Speaker 2: him before, So he runs a board game company, and
5:35
Speaker 2: the latest update that I got is they have no
5:39
Speaker 2: shipments that are coming from China. They have at this
5:41
Speaker 2: point almost twenty million dollars in canceled orders from big
5:44
Speaker 2: box retailers that just are not going to take them now.
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Speaker 2: And so what he is doing is not bringing the
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Speaker 2: business back to the United States because there is no
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Speaker 2: one in the US that can make the stuff that
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Speaker 2: he needs to make. Think about, you know, things as
6:00
Speaker 2: simple as like dice. No one makes dice in the
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Speaker 2: United States, and you're not gonna suddenly be like, hey,
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Speaker 2: let's start a dice factory. Like that's just, you know,
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Speaker 2: not gonna happen. What he's doing is he first tried
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Speaker 2: to find a supplier out of Vietnam, Malaysia, Thailand, Hey,
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Speaker 2: can anyone do this? No, we can't. Eventually he said, okay, fine,
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Speaker 2: we'll try to build a new factory in Vietnam, and
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Speaker 2: we're gonna try to get this done in like seven
6:27
Speaker 2: to nine months for what would normally be like a
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Speaker 2: multi year process based on the fact that they have
6:31
Speaker 2: commitments from companies to Okay, if you can get this
6:34
Speaker 2: spooled up, we'll be able to buy again. But it's
6:38
Speaker 2: they're basically like throwing everything at this because otherwise he's
6:42
Speaker 2: pretty much said, look, I won't have a business in
6:44
Speaker 2: four or five months if I don't start doing something.
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Speaker 2: So again, this is production that is not going to
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Speaker 2: come back to the United States just because you can't
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Speaker 2: make this stuff here and be anywhere near cost competitive.
6:57
Speaker 2: And no one makes it here right now anyways, so
6:59
Speaker 2: like you don't even have a factory to choose from,
7:03
Speaker 2: and they're gonna give it a go and see how
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Speaker 2: this goes. But hey, look, I do believe this is
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Speaker 2: probably one of the key goals of the Trump administration
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Speaker 2: is get the stuff made in China to be made
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Speaker 2: somewhere else, even if it's not the US, like diversify
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Speaker 2: away from there. But we're gonna have to see how
7:20
Speaker 2: this goes. It's gonna be messy. Just take a quick
7:22
Speaker 2: break here. When we come back, we're gonna be joined
7:25
Speaker 2: by a subject matter expert on this so that you
7:27
Speaker 2: don't have to just listen to what I'm saying. But
7:29
Speaker 2: someone who actually really knows the stuff on this. Craig Fuller,
7:32
Speaker 2: the CEO of Freight Waves, is joining us right after this.
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Speaker 1: The global trade war is in full swing. How long
7:40
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Speaker 2: As promised, we're now joined by Craig Fuller. He is
8:39
Speaker 2: the CEO of Freight Waves and here to give us
8:42
Speaker 2: some real information on what's going on as it relates
8:45
Speaker 2: to anything shipping, trucking or freight related. Craig, how are
8:50
Speaker 2: you today?
8:51
Speaker 5: Doing fantastic?
8:52
Speaker 6: How are you?
8:53
Speaker 2: We're doing well? So, Craig, can you can you give
8:55
Speaker 2: our listeners kind of the sense of let's start kind
8:58
Speaker 2: of from where the starting point of all container traffic
9:02
Speaker 2: coming in? What does it look like coming into US
9:06
Speaker 2: ports right now? Is it down significantly? Down modestly? Like,
9:10
Speaker 2: what's the actual number that we're seeing as far as
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Speaker 2: container traffic?
9:14
Speaker 6: Yeah, so it's a thirty five percent drop in container
9:17
Speaker 6: traffic into the ports of LA across the country. We're
9:22
Speaker 6: projecting that to be pretty consistent. As the trade war
9:26
Speaker 6: starts to impact a little bit less so on the
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Speaker 6: East coast, you may see as much as a twenty
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Speaker 6: to twenty five percent drop of volumes on the East coast.
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Speaker 6: But certainly, you know, what we're talking about is a
9:36
Speaker 6: very significant drop in international container movements.
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Speaker 2: Given the transit times for those container ships. Is this
9:43
Speaker 2: something that you're seeing even projecting out another two, three,
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Speaker 2: four weeks or is this just you know, a one
9:48
Speaker 2: to two week interruption at those levels.
9:50
Speaker 6: No, I mean currently the volume isn't being replenished.
9:55
Speaker 5: And so this is a you know.
9:56
Speaker 6: What we're talking about as a COVID level shock to
9:59
Speaker 6: the freight economy, particularly imports, that is going to continue
10:04
Speaker 6: to exacerbate until there's some change in policy. And so
10:09
Speaker 6: this is something that you know, at least for now,
10:12
Speaker 6: looks to be intermediate and I wouldn't say permanent, because
10:16
Speaker 6: we know it won't be permanent, but something that's going
10:18
Speaker 6: to continue to plague the industry for you know, for weeks,
10:21
Speaker 6: if not months.
10:23
Speaker 2: When you talk about how it impacts transportation companies here
10:26
Speaker 2: in the United States, then obviously not all goods that
10:30
Speaker 2: are shipped within the US or imports. So how big
10:32
Speaker 2: is the impact likely going to be for railroads and
10:35
Speaker 2: trucking companies and the like.
10:37
Speaker 6: Yeah, so broadly, freight imports represent direct imports represent about
10:42
Speaker 6: twenty percent of all freight handle the United States. Trucking
10:46
Speaker 6: is more exposed to imports in terms of it has
10:49
Speaker 6: more exposure to what we're about to see. The railroads
10:53
Speaker 6: are frankly better positioned, even though intermodal traffic, which is
10:57
Speaker 6: putting a container on the train, does have a lot
11:01
Speaker 6: of exposure.
11:01
Speaker 5: To international traffic.
11:03
Speaker 6: What you're going to see is a lot of the
11:05
Speaker 6: truckers are going to be the ones that actually get impacted,
11:07
Speaker 6: mostly because when you look at the cost of moving
11:10
Speaker 6: something over rail versus the cost of moving and on truck,
11:12
Speaker 6: the price the delta is so significant between the cost
11:17
Speaker 6: of trucking versus rail is that companies in this environment
11:21
Speaker 6: will choose rail over trucking. So we think the total
11:26
Speaker 6: freight that probably is going to disappear across the country
11:30
Speaker 6: is anywhere from five to six percent of total volume
11:33
Speaker 6: in the United States.
11:34
Speaker 2: What kind of damage does that cause to trucking companies? Then?
11:39
Speaker 6: Yeah, I mean, look, you're losing five to six percent
11:42
Speaker 6: of total freight across the country. It's going to really
11:45
Speaker 6: really significantly impact trucking companies and their ability to operate.
11:48
Speaker 6: So trucking companies really operate on two primary key metrics.
11:52
Speaker 6: One is being the rates at which they get Trucking
11:57
Speaker 6: is a commodity. Price is volatile based on the balance
12:01
Speaker 6: of supply and demand. So when you have a drop
12:04
Speaker 6: in demand, which is what we're talking about here, you're
12:06
Speaker 6: going to see rates fall significantly. Just sort of correct
12:09
Speaker 6: for that again, like any of the commodity price is
12:13
Speaker 6: all driven by supplying demand. Less demand is going to
12:16
Speaker 6: mean prices are going to drop. The other side is
12:18
Speaker 6: and so they get hit twice because the other side
12:20
Speaker 6: of this is rates fall, but so does demand, and
12:23
Speaker 6: so we have less orders, less miles, less less transactions
12:29
Speaker 6: with cheaper rates. Just it continues to just exacerbate the
12:33
Speaker 6: problem and creates almost an unsustainable level of their businesses.
12:39
Speaker 6: Many businesses can't survive. Trucking is already you know, it's
12:43
Speaker 6: been in a three year downturn. It will continue to
12:46
Speaker 6: be to continue to struggle with this this trade tariff issue,
12:51
Speaker 6: and it's going to continue to be something that is
12:53
Speaker 6: going to expose a lot of truck and companies.
12:55
Speaker 5: So we're projecting a lot of bankruptcies.
12:57
Speaker 6: Trucking operates in a good environment on digits, but in
13:01
Speaker 6: this environment, a lot of companies are going to be unprofitable,
13:05
Speaker 6: and unlike what we saw in COVID, there doesn't appear
13:07
Speaker 6: to be any near term movement for bellouts or financial assistance.
13:12
Speaker 6: Uh and so I we're projecting a large number of
13:15
Speaker 6: trucking bankruptcies to happen in the next couple of couple
13:20
Speaker 6: of weeks.
13:22
Speaker 2: Did you say a couple of weeks that you would
13:24
Speaker 2: We're not talking months, We're talking like in May.
13:27
Speaker 5: Yeah.
13:28
Speaker 6: I mean this is we've already seen a drop in
13:30
Speaker 6: freight volume really happening since Valentine's Day.
13:33
Speaker 5: So coming into this year, trucking was pretty bullish. That
13:36
Speaker 5: looked like the recovery was well underway.
13:38
Speaker 6: About Valentine's Day is when the sort of tariff stressed,
13:41
Speaker 6: this uncertainty of this on and off again tariff. Uh,
13:46
Speaker 6: you know, one day we'll have one policy, the next
13:48
Speaker 6: day had been reversed. There's no seem to be no
13:51
Speaker 6: consensus or no direction on what was happening. That really
13:54
Speaker 6: sapped a lot of business confidence in the later half
13:58
Speaker 6: of February March, and then beyond that drove a sharp
14:03
Speaker 6: downturn and trucking volumes. It's already showed up in the
14:06
Speaker 6: freight economy, and so this stuff as we go forward
14:09
Speaker 6: will be even more drastic in coming weeks and months,
14:13
Speaker 6: and so companies that have been living in one of
14:16
Speaker 6: the worst downturns in history, the Great Freight Recession has
14:19
Speaker 6: been going on since twenty twenty two, are just going
14:22
Speaker 6: to find it being that much harder, UH to continue
14:26
Speaker 6: to survive. So we are already seeing bankruptcies. Those will
14:30
Speaker 6: continue to pile up, and I think this will be
14:34
Speaker 6: a factor for for certainly in the next couple of weeks,
14:37
Speaker 6: but certainly beyond that. And as long as we have
14:40
Speaker 6: this trade war at a you know, with one hundred
14:43
Speaker 6: and forty five percent tariffs on China, it's just going
14:46
Speaker 6: to be that much more difficult for companies to survive.
14:49
Speaker 2: Craig for our listeners who are not you know, in
14:52
Speaker 2: the trucking industry, the vast majority of them, when do
14:54
Speaker 2: they start seeing impacts? I know we've heard talks of
14:57
Speaker 2: potential you know, product shortages and this and that are
15:00
Speaker 2: those things that you expect to show up in the
15:02
Speaker 2: near future.
15:04
Speaker 6: Yeah, I think it's going to be intermittent as you
15:07
Speaker 6: move into sort of the early parts of the summer.
15:09
Speaker 5: So you could start seeing.
15:10
Speaker 6: Shortages of specific types of products in early June. So
15:16
Speaker 6: maybe there's a color preference, or a product type preference,
15:19
Speaker 6: or a brand preference.
15:21
Speaker 5: You may not find those.
15:22
Speaker 6: The selection will start to diminish in June as you
15:26
Speaker 6: move into.
15:27
Speaker 5: The later part of the summer, and we're talking really
15:29
Speaker 5: July and then back to school. That's when I think
15:33
Speaker 5: most folks.
15:34
Speaker 6: Will start to realize that there are much bigger issues
15:37
Speaker 6: at play here. That's when inventory shortages will probably start
15:41
Speaker 6: to rear their head because that's the next major shipping season.
15:45
Speaker 6: So shipping freight markets work't typically a calendar before, sort
15:50
Speaker 6: of a season before. So if I want to get
15:52
Speaker 6: products in the store, I need to move it into
15:54
Speaker 6: my distribution centers and into my retail locations anywhere from
15:58
Speaker 6: sixty to ninety days before those products are going to
16:02
Speaker 6: end up truly in season. So what we're looking at
16:06
Speaker 6: right now is the first time that most consumers will
16:08
Speaker 6: probably notice it will be back to school. And so
16:11
Speaker 6: when moms go out to buy their kids the you know,
16:14
Speaker 6: the peril for back for the fall season, the backpacks,
16:17
Speaker 6: the school supplies, that's when they'll probably notice that those
16:22
Speaker 6: products will be in short supply. And so that's when
16:24
Speaker 6: we think most consumers will become aware of the tariff
16:29
Speaker 6: and trade war causing supply chain shortages.
16:32
Speaker 2: Craig, is this all tied to China one hundred and
16:35
Speaker 2: forty five percent or is the blanket ten percent elsewhere
16:39
Speaker 2: a contributing force as well here it's all.
16:41
Speaker 6: One hundred and forty five percent. It is true that
16:44
Speaker 6: the ten percent tariffs do have a small cost impact
16:48
Speaker 6: for importers, but most of those can be absorbed in
16:51
Speaker 6: small price changes. In fact, going into this year, when
16:56
Speaker 6: Donald Trump during the election was talking about tariffs, when
16:59
Speaker 6: we analyze it, we thought it would be actually a
17:00
Speaker 6: net benefit to trucking. We thought, you know, a little
17:03
Speaker 6: bit of trade friction will will bring more investment into
17:07
Speaker 6: the United States. Companies would make the decision to do that,
17:09
Speaker 6: maybe a snuff, a soft nudge.
17:11
Speaker 5: Even when we thought about sort of the upper.
17:13
Speaker 6: End of Chinese tariffs being the twenty five to thirty
17:16
Speaker 6: percent range, we said, well, that probably will be a
17:18
Speaker 6: net positive for trucking. We saw that during the first administration,
17:22
Speaker 6: even when you're going to have these tariffs that you
17:25
Speaker 6: know are naturally cost taxes on imports, still will nudge
17:30
Speaker 6: policy and businesses to make investments in the United States.
17:33
Speaker 6: The ten percent tariffs are sort of irrelevant in how
17:37
Speaker 6: companies manage their supply chains. Again, these are soft nudges,
17:40
Speaker 6: but when you talk about one hundred and forty five
17:42
Speaker 6: percent tariffs, they're effectively embargoes on products and so we
17:46
Speaker 6: have lost, for all intents and purposes, our trade with China.
17:50
Speaker 6: And so the way to think of what's happening is
17:53
Speaker 6: that businesses cannot absorb.
17:54
Speaker 5: This in their margins.
17:55
Speaker 6: They're not willing to pay the tariffs because they can't
17:58
Speaker 6: afford to pay those tariffs. Most products just simply don't
18:01
Speaker 6: have those margins built in to absorb those costs, so
18:05
Speaker 6: they're simply not making orders. You know, many manufactured products
18:09
Speaker 6: US brands with the China to produce products. They ordered
18:13
Speaker 6: them six months ago, they were produced, we said, don't
18:16
Speaker 6: ship them. I don't want those products. They're sitting in
18:19
Speaker 6: China and warehouses and manufacturers. What's also happening is companies
18:23
Speaker 6: that are thinking about the holidays are not making new orders,
18:26
Speaker 6: and that's where the shortages are really going to show
18:28
Speaker 6: up as we move to the second half.
18:29
Speaker 1: Of the year.
18:30
Speaker 2: Craig, we got thirty seconds left, so need to be
18:32
Speaker 2: a little quick. But is there still time to salvage
18:35
Speaker 2: that second half of the year or are we getting
18:38
Speaker 2: to the point where it's kind of baked in at
18:40
Speaker 2: this point now?
18:41
Speaker 6: I think we have about a at most of sixty
18:44
Speaker 6: day windows. So if we don't have trade deal resolved
18:47
Speaker 6: with China, and I'm only talking to China by July first.
18:50
Speaker 6: That's when I would start getting really nervous about the
18:52
Speaker 6: second half, both the economic impact but.
18:55
Speaker 5: Also the holiday shopping season impact.
18:58
Speaker 2: Very good, Craig, appreciate you joining us. You're busy and everything,
19:01
Speaker 2: but appreciate you making the time and thanks again for
19:03
Speaker 2: all the information today. Thanks for having me that is
19:07
Speaker 2: Craig for the CEO of Freight Waves talking about the
19:10
Speaker 2: current state of the transportation industry and what we're seeing
19:15
Speaker 2: as far as good shipping at the moment. Taking a
19:19
Speaker 2: look at markets as we head towards the bottom of
19:20
Speaker 2: the hour, the Dow is up twenty five points, the
19:22
Speaker 2: S and P is down twenty two Nasdaq is down
19:27
Speaker 2: ninety nine, so mixed markets, no clear trend today, just
19:30
Speaker 2: kind of a hodgepodge out there. Quick break, we got
19:33
Speaker 2: trivia when we return.
19:42
Speaker 1: Bringing the latest financial news straight to your radio every day.
19:47
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:52
Speaker 1: Thankst us six one, seven, three, six, two thirteen eighty
19:56
Speaker 1: five with your comments and questions about today's show and
19:59
Speaker 1: let us know. So what do you think about the
20:00
Speaker 1: stories we are covering this is the Financial Exchange Radio Network.
20:08
Speaker 4: All right time for trivia here on the Financial Exchange
20:10
Speaker 4: and on this day. Back in nineteen seven, nineteen ninety seven,
20:14
Speaker 4: Excuse Me, Married with Children aired its final episode. Married
20:18
Speaker 4: with Children ran on Fox from eighty seven to ninety seven,
20:21
Speaker 4: the longest running live action sitcom in the network's history.
20:25
Speaker 4: Trivia question today, what city was Married with Children?
20:30
Speaker 2: Based in?
20:30
Speaker 4: Once again, what city was Married with Children based in?
20:35
Speaker 4: Be the eighth person today to text us at six
20:37
Speaker 4: one seven three six two thirteen eighty five with the
20:40
Speaker 4: correct answer, and you win a brand new Financial Exchange
20:43
Speaker 4: Show t shirt. Once again, the eighth correct response to
20:46
Speaker 4: textus to the number six one seven three six two
20:49
Speaker 4: thirteen eighty five will win that t shirt. See complete
20:52
Speaker 4: contest rules at Financial Exchange Show dot com.
20:55
Speaker 2: Piece in New York Times here today, it's titled what
20:58
Speaker 2: your estate plan may be missing? Paul? What might it
21:02
Speaker 2: be missing?
21:03
Speaker 3: One of the issues that it brings up in this
21:05
Speaker 3: piece in the New York Times check is something that
21:07
Speaker 3: we have to deal with on a day to day basis,
21:10
Speaker 3: is that in some instances people will do the proper
21:13
Speaker 3: estate planning and create a trust and place that trust
21:18
Speaker 3: as the beneficiary on an IRA account. The challenging part
21:22
Speaker 3: is when that person passes away a lot of the
21:25
Speaker 3: major custodians out there, Fidelity, Vanguard and others, it is
21:29
Speaker 3: a tremendously heavy lift in order to get the assets
21:32
Speaker 3: out to the right people rather than just designating an
21:36
Speaker 3: individual as the beneficiary. If the individual is designated as
21:39
Speaker 3: the beneficiary, it's very simple. You open up two or
21:42
Speaker 3: three or however many retirement accounts that are necessary, and
21:45
Speaker 3: the percentages go very evenly amongst those three or two accounts.
21:50
Speaker 3: When you designate a trust, it is a much more
21:53
Speaker 3: complex process to get the proper paperwork aligned, and it
21:55
Speaker 3: can take a significantly longer period of time to distribute
21:59
Speaker 3: out those assets then normally with just designated a person
22:02
Speaker 3: to it.
22:02
Speaker 2: Yeah, and so it's one of these things where making
22:05
Speaker 2: sure all the pieces fit together, as far as the
22:08
Speaker 2: estate plan and name beneficiaries and the assets that are
22:11
Speaker 2: in each different type of account like that. There's a
22:13
Speaker 2: lot that goes into that in terms of making sure
22:17
Speaker 2: that the assets get where you want them to go
22:20
Speaker 2: as quickly as possible and as tax efficiently as possible.
22:24
Speaker 2: It's a lot that needs to fit together. The good news.
22:27
Speaker 2: The Armstrong Advisory Group has a guide available this month
22:31
Speaker 2: on this very topic. It's titled Trusts in your Financial
22:34
Speaker 2: Plan and gets at the questions about, hey, how does
22:38
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22:41
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22:47
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22:50
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22:55
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23:11
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23:14
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23:20
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23:27
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23:36
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23:38
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23:43
Speaker 2: Bloomberg's got a piece today. It's titled It's the End
23:45
Speaker 2: of Cheap Flying? Is Americans tire of budget airlines? I'll
23:50
Speaker 2: quote here. That comes as the industry has undergone a
23:52
Speaker 2: big shift. Lower cost airlines such as Spirit in Frontier
23:55
Speaker 2: have sought to go more upscale, and full service carriers
23:58
Speaker 2: like Delta and United have broaden their range to capture
24:00
Speaker 2: budget minded travelers. Jed Blue has sought to offer lower
24:04
Speaker 2: fares but with more upscale ambiance such as vegan leather
24:07
Speaker 2: seats and self serve snacks. Gosh, that sounds great. So
24:13
Speaker 2: here's the thing. I think that this might be getting
24:18
Speaker 2: cause and effect backwards. I think that we've gone through
24:23
Speaker 2: a period, in particular in the last like six or
24:26
Speaker 2: seven years, where there has been a tremendous amount of
24:29
Speaker 2: wealth created and income growth amongst those who tend to
24:34
Speaker 2: fly a lot. They're demanding more from their carriers as
24:39
Speaker 2: a result. If you were to go and see a
24:43
Speaker 2: meaningful economic slowdown, I don't know that you would be
24:47
Speaker 2: seeing travelers choosing to fly the same way in the future.
24:51
Speaker 2: That they are today. I think it's purely from a
24:55
Speaker 2: standpoint of the people who travel a lot have more
24:57
Speaker 2: money now and they want nicer stuff.
25:00
Speaker 3: Yeah, we always go back to that statistic that we've
25:02
Speaker 3: covered off on the program that fifty percent of the
25:04
Speaker 3: spending throughout the country comes from those people earning the
25:06
Speaker 3: highest ten percent, the top ten percent of income earners
25:09
Speaker 3: out there. So that backs right into your point of
25:11
Speaker 3: this idea that the people who are making good money
25:14
Speaker 3: are the ones probably spending the most on travel. And
25:18
Speaker 3: this low cost carrier model, which surge to popularity back
25:21
Speaker 3: in the twenty tens with Spirit and some others, it
25:25
Speaker 3: was basically, it's a great quote here from the United
25:28
Speaker 3: CEO back on a conference in April twenty fourth, the
25:30
Speaker 3: low cost carry model is about we're going to offer
25:32
Speaker 3: you a low price and we're gonna part my language
25:35
Speaker 3: screw you everywhere else, and customers hate it, and that's
25:38
Speaker 3: ultimately what's spend the model. But if you have a
25:40
Speaker 3: higher percentage of people traveling who make more money, that's
25:43
Speaker 3: not gonna fly, or they're not going to be as
25:45
Speaker 3: incentivized to use those types of airlines. So it's interesting
25:49
Speaker 3: the shift strategically that they're going through. I wonder what
25:52
Speaker 3: we see in the second half of the year. A
25:54
Speaker 3: lot of these airliners are pulling guidance for the second
25:57
Speaker 3: half of this year. That's not uncommon amongst other industries
26:00
Speaker 3: as well, But there does seem to be lessening domestic
26:03
Speaker 3: demand for travel over the course of the second half
26:07
Speaker 3: of this year from all the major airlines that you
26:09
Speaker 3: read from.
26:10
Speaker 2: But it's kind of wild because you go back fifteen
26:12
Speaker 2: years ago and the stuff we were hearing then again,
26:15
Speaker 2: remember we had just come through kind of the Great
26:17
Speaker 2: Financial Crisis. Remember the big airlines were declaring bankruptcy at
26:21
Speaker 2: the time, right, and you had, you know, mergers that
26:23
Speaker 2: they were trying to undertake in order to get out
26:25
Speaker 2: from under you know, previous bankruptcies that they had gone
26:28
Speaker 2: through where they were you know, not well set up.
26:31
Speaker 2: The low cost carriers were eating their lunch then, you know,
26:34
Speaker 2: Spirit and Jet Blue and Frontier were just like they
26:36
Speaker 2: were the dominant players that Delta and United were trying
26:39
Speaker 2: to react to. And now it's the opposite. So I
26:43
Speaker 2: kind of wonder if you know how sometimes like we've
26:46
Speaker 2: talked about this before, where like a company IPOs and
26:49
Speaker 2: it represents like the peak of that industry where we
26:52
Speaker 2: did it with Robin Hood and coinbase, where they were
26:55
Speaker 2: kind of like local maximums for those businesses. Or who
26:59
Speaker 2: was the the chip maker? Was it arm who went
27:01
Speaker 2: public like a year and a half ago.
27:03
Speaker 3: Yep, they were a big one.
27:04
Speaker 2: And chip Maker's stocks have kind of been flat for
27:06
Speaker 2: the last you know, in video like has basically been
27:08
Speaker 2: flat for the last twelve months now. And so you
27:12
Speaker 2: look at this and you kind of go, is this
27:14
Speaker 2: piece being published about the end of cheap flying? What
27:17
Speaker 2: if it's actually the start of cheap flying? Pau Zach, Yeah,
27:21
Speaker 2: what if? It's a great contra indicator As they say.
27:25
Speaker 3: It's so cyclical the airline industry in general, So I
27:28
Speaker 3: wouldn't bet against that, you know, speaking of another buffet
27:32
Speaker 3: was investing in airline companies over a long period of time.
27:36
Speaker 3: You have not made a significan amount of return because
27:38
Speaker 3: it tends to be a little boom.
27:40
Speaker 2: And bust, but boom and bust, and you have tremendous
27:42
Speaker 2: fixed costs because you need the gate space. Your planes
27:45
Speaker 2: are you know, obviously expensive. You got a highly unionized
27:48
Speaker 2: labor force that you can't you know, shrink as dynamically
27:51
Speaker 2: if things aren't going well. I've said this before. If
27:55
Speaker 2: you had to pick three industries that I would like
27:58
Speaker 2: never want to try to run a company in, airlines
28:02
Speaker 2: are at the top of the list, right up there
28:04
Speaker 2: with auto manufacturers and anything fashion related, right with you.
28:08
Speaker 3: Jims would be Yeah, Jims would be pretty tough too.
28:10
Speaker 3: That's maybe my number four.
28:11
Speaker 2: You mean James Jims, Jim's Jim Guines, Jim's. You're saying
28:16
Speaker 2: fraud protection. No, no, no, fraud protection. No, we're talking
28:21
Speaker 2: about fitness. Oh right, let's take a quick break here.
28:24
Speaker 2: When we come back, we'll do a little bit of
28:26
Speaker 2: stack roulette.
28:27
Speaker 1: Right after this, Tara Fleevery's in high gear. We've got
28:31
Speaker 1: the latest on what might be next and how long
28:33
Speaker 1: it might last. Only here on the Financial Exchange Radio Network.
28:38
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28:53
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Speaker 4: reservations and more information. Trivy question today what city was
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Speaker 4: married with children based in?
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Speaker 2: That would be Chicago.
29:35
Speaker 4: Dennis from Pennacook, New Hampshire is our winner today taking
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Speaker 4: home a Financial Exchange showed t shirt and we play
29:41
Speaker 4: trivia every day here on the Financial Exchange See complete
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Speaker 4: contest rules at Financial Exchange show dot com.
29:47
Speaker 2: Paul, what do you got for stack Roulette?
29:49
Speaker 3: Chuck the Maha friendly app that's driving food companies crazy.
29:53
Speaker 3: A piece out of the Wall Street Journal here. This
29:55
Speaker 3: is a mobile app called yucap which was launched back
29:59
Speaker 3: in France. Well launched in France in twenty seventeen. It
30:02
Speaker 3: now has over sixty eight million users worldwide. And what
30:06
Speaker 3: it does is it's a mobile app that allows for
30:09
Speaker 3: users to scan product barcodes, and they give this food
30:13
Speaker 3: a score from one to one hundred based on its
30:16
Speaker 3: nutritional quality, additives, and whether or not it is organic.
30:20
Speaker 3: It has become, like I said, increasingly popular. A third
30:23
Speaker 3: of its sixty eight million users are based out of
30:26
Speaker 3: the US, and is sort of furthering our trend that
30:29
Speaker 3: consumers are continuing to be more focused on what is
30:33
Speaker 3: in their favorite products that they're purchasing from the stores.
30:36
Speaker 3: There is some frustration out there is because with nutrition,
30:41
Speaker 3: there's a lot of different opinions and a lot of
30:43
Speaker 3: people have differing views as to whether or not certain
30:46
Speaker 3: ingredients are healthy or are useful for someone's diets. So
30:51
Speaker 3: they're continuing to fine tune their rating system on there.
30:55
Speaker 3: But it has increased tremendously in popularity, and there's others
30:59
Speaker 3: out there like it, and it's frustrating some grocery stores
31:03
Speaker 3: out there, some food producers just in terms of some
31:06
Speaker 3: of the ingredients that they use are coming under scrutiny.
31:09
Speaker 2: So I'm just trying to like figure out is this good, bad,
31:15
Speaker 2: or neutral, because again, here's my general view on this
31:20
Speaker 2: is I don't know anything about what's actually good or
31:25
Speaker 2: bad fee to eat other than you probably don't want
31:29
Speaker 2: to eat too much crap that has been made by
31:33
Speaker 2: stuff that is not like actual food. You know. I
31:37
Speaker 2: kind of take the Michael Pollen was it was is
31:40
Speaker 2: I don't know is a writer for I think he
31:43
Speaker 2: was The New York Times. He did a bunch of
31:44
Speaker 2: hell stuff, and he basically came to the understanding of, hey,
31:48
Speaker 2: no one really knows anything when it comes to food
31:50
Speaker 2: studies because it's so hard to separate cause and effect.
31:52
Speaker 2: So it's like, look, eat food, meaning like real food, steaks, potatoes,
31:57
Speaker 2: you know, stuff that's you know, you can tell where
31:59
Speaker 2: it came from, mostly vegetables, and not too much of it, Like,
32:03
Speaker 2: don't eat too much of any one thing other than that,
32:05
Speaker 2: like getting into like, hey, is this TV dinner better
32:10
Speaker 2: than that TV dinner for you? Or are these potato
32:13
Speaker 2: chips better than those? It's I don't know that that's
32:17
Speaker 2: gonna be the thing that determines whether or not you
32:19
Speaker 2: live longer.
32:20
Speaker 3: You know, No, some of these ingredients I barely can pronounce,
32:24
Speaker 3: let it alone, know what they do in their impact,
32:28
Speaker 3: you know.
32:28
Speaker 2: So I don't know how you can rate one.
32:30
Speaker 3: Sodium phosphate and carriagean like I have no idea. How
32:34
Speaker 3: that impacts my overall diet and system.
32:37
Speaker 2: How do you determine which food is a forty nine
32:39
Speaker 2: versus a fifty one? And how do you know that
32:41
Speaker 2: you're right in making that assumption? Yeap? Like That's where
32:45
Speaker 2: I kind of struggle with this is you know, I
32:48
Speaker 2: remember when I was a kid. You guys remember the
32:49
Speaker 2: food pyramid? Sure, yes, turned out to be a load
32:52
Speaker 2: of crap. Like it was like a pyramid of crap.
32:56
Speaker 2: It was a pyramid of crap. Yes, And you know
33:01
Speaker 2: a pyramid scheme if you will yees, you're good. And
33:04
Speaker 2: so like, I kind of look at this and I go,
33:06
Speaker 2: it's okay for us to say we don't know exactly
33:09
Speaker 2: how all these foods are gonna fit together and interact.
33:11
Speaker 2: Because if it were just as simple as, hey, let
33:14
Speaker 2: me eat fish and drink red wine and do that,
33:16
Speaker 2: then everyone would live to one hundred, right, But despite
33:19
Speaker 2: doing the things that healthy people in healthy countries do,
33:22
Speaker 2: we don't all live that long. So I just it
33:25
Speaker 2: kind of bothers me when anyone tries to act like
33:28
Speaker 2: they know definitively do this with food and do that
33:32
Speaker 2: in this trying to say that one food is like
33:34
Speaker 2: a forty nine and another is an eighty four. Well,
33:37
Speaker 2: how do you know.
33:39
Speaker 3: The positive that I would take from is that the
33:41
Speaker 3: hopefully the more good information that people can pick up
33:44
Speaker 3: as to their diet and nutrition habits. That's that is
33:47
Speaker 3: a good direction to be going in. I would agree,
33:50
Speaker 3: probably not worth microanalyzing every single ingredient out there. More
33:55
Speaker 3: taking a broader based look is probably the way to
33:58
Speaker 3: do it. But I am in the same boat as
34:00
Speaker 3: is just trying to limit what you take in. That's
34:03
Speaker 3: really the best that I can do.
34:05
Speaker 2: You know what's the other side of the corner. And
34:07
Speaker 2: I hope that if I'm offending either of you, I
34:09
Speaker 2: apologize in advance. Do either of you have any of
34:12
Speaker 2: like those sleep apps that track how well you sleep?
34:14
Speaker 4: No? I never understood it. People were the wear of if.
34:17
Speaker 2: I wake up and I feel rested, I had a
34:19
Speaker 2: great night's sleep.
34:20
Speaker 4: I don't understand this.
34:21
Speaker 2: I don't. I don't need someone to like tell me, hey,
34:24
Speaker 2: you didn't sleep well. I'll know now I understand, Like, hey, like,
34:28
Speaker 2: do you want to do a sleep study because you
34:30
Speaker 2: might have sleep appnear or something totally different, But oh,
34:33
Speaker 2: like you tossed and turned for an hour last night.
34:35
Speaker 2: Thanks for telling me I'm aware I was there, Like, yeah,
34:38
Speaker 2: I saw it, you know, not to mention the three
34:40
Speaker 2: of us are the worst candidates for a sleep tracking out.
34:42
Speaker 2: I almost want to try one, just to see how
34:44
Speaker 2: bad the scores would be.
34:45
Speaker 3: I was telling you guys about my Friday night where
34:47
Speaker 3: I was up from twelve to one thirty with a
34:48
Speaker 3: sick kid, Like I almost want to see how bad
34:51
Speaker 3: they've gotten during the year.
34:52
Speaker 2: In the bottom third percent Like bottom percentile, PAULA, you
34:56
Speaker 2: are really screwed today. It's gonna be a tough day
34:58
Speaker 2: at the office. It's a miracle you're not dead yet. Paul, congratulations.
35:03
Speaker 2: I got another great piece here from New York Times.
35:06
Speaker 2: Would the housing crisis ease if boomers rented out their
35:09
Speaker 2: empty rooms? So there's a few funny things about this,
35:12
Speaker 2: the first of which is if you take out other boomers,
35:18
Speaker 2: which remember boomers, at this point, it's like age Let
35:22
Speaker 2: me do the math, it's like age sixty two through eighty,
35:26
Speaker 2: I think is where we are. Quite honestly, if you're
35:32
Speaker 2: like a twenty four year old who's not related by
35:35
Speaker 2: birth to that person, not only do you probably not
35:39
Speaker 2: want to be living with them. They probably don't want
35:41
Speaker 2: to be living with you definitely, you know, like they
35:44
Speaker 2: don't need you ordering dominoes at two am when you
35:47
Speaker 2: came home from the club. It's not something that they're
35:51
Speaker 2: gonna be interested in. Likewise, you probably don't want, you know,
35:56
Speaker 2: the TV coming on at double the normal volume at
35:58
Speaker 2: five am when you're trying to sleep on a Saturday,
36:02
Speaker 2: like this is not a symbiotic relationship that I think
36:06
Speaker 2: would happen. So that's part one. Part two is would
36:10
Speaker 2: make for a great reality show probably. I think if
36:12
Speaker 2: a bunch of seventy five year olds wanted roommates, they
36:16
Speaker 2: would have them buy now.
36:18
Speaker 3: And you see them fight tooth and nail to not
36:20
Speaker 3: have roommates going into the nursing home. Like that's such
36:23
Speaker 3: fundamental tenant of like long term care, per section is.
36:26
Speaker 2: I just don't understand, like, where would the demand for
36:28
Speaker 2: this come from? Who Who are the people that suddenly
36:31
Speaker 2: are like, yes, I would like to go live with
36:33
Speaker 2: a boomer, And who are the boomers who are like
36:35
Speaker 2: I would like to have a roommate right now? Just
36:37
Speaker 2: think about it.
36:37
Speaker 3: Even we're not there yet, but people in the thirties
36:40
Speaker 3: and forties quickly realize they don't want to revert back
36:43
Speaker 3: to roommate days. That's basically what you're trying to avoid
36:46
Speaker 3: at all costs as you go through adult life.
36:48
Speaker 2: Now, if you want to make the case for within
36:51
Speaker 2: a family more multi generational living, totally buy it and
36:56
Speaker 2: think it's going to become increasingly more common over the
36:59
Speaker 2: next for kids to live with parents. Absolutely, I think
37:03
Speaker 2: it's gonna become increasingly more common. But would the housing
37:08
Speaker 2: crisis ease if boomer's rented out their empty rooms. No,
37:12
Speaker 2: you're not just gonna rent like an existing bedroom in
37:15
Speaker 2: a house that isn't like a full in law suite.
37:18
Speaker 3: Disputes would increase dramatically across police work would be uh
37:24
Speaker 3: on overtime.
37:25
Speaker 2: I mean, imagine like the fights that you would get
37:27
Speaker 2: into over groceries and utilities and stuff like that between
37:31
Speaker 2: seventy five year olds and twenty three year olds, like
37:34
Speaker 2: what are we doing here?
37:35
Speaker 7: Or aspired expired expired or okay, seventy five year old
37:40
Speaker 7: in Hey, we're gonna rent our room out to you know,
37:43
Speaker 7: a single parent in their kid. Okay, great, Now, imagine
37:47
Speaker 7: living with like an eight year old that's not related
37:50
Speaker 7: to you by blood and having to put up with
37:51
Speaker 7: all that annoyingness, or they get sick and you're like,
37:54
Speaker 7: it's not even my kid, Like what am I doing here?
37:58
Speaker 2: So I find the watch my kid. The basic premise
38:02
Speaker 2: of this seems to be a stretch, but it's I
38:05
Speaker 2: got some humor out of it. So there's that let's
38:08
Speaker 2: take a break for the rest of the day and
38:11
Speaker 2: we're gonna come back. We'll do a better job tomorrow
38:13
Speaker 2: and hopefully you'll tune in and see us then