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The Fed has a lot of work to do to conquer inflation · The Financial Exchange Show

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Speaker 2: Good morning, Welcome back to the Financial Exchange. I hope
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Speaker 2: everyone a well bit further north than here is digging
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Speaker 2: out safely and has electricity and everything that you would
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Speaker 2: hope for on a icy, snowy Thursday morning. It is
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Speaker 2: Mike Armstrong, Paul Lane, and Tucker Silva with you on
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Speaker 2: a Thursday. We have inflation data out from the Producer
1:34
Speaker 2: Price Index. Yesterday we had the consumer Price Index, which
1:38
Speaker 2: came in hotter than anticipated. We'll give a bit of
1:40
Speaker 2: an update on markets because it was, in my opinion,
1:43
Speaker 2: unusually calm day in equity trading yesterday, and then I'll
1:48
Speaker 2: tell you Tucker, just an amazing stack today found I
1:51
Speaker 2: think probably the best pre Valentine's Day piece you can
1:57
Speaker 2: find on the Worst Reasons to Get Married Bloomberg today,
2:01
Speaker 2: So we'll be covering that later in the show. Just
2:03
Speaker 2: that the perfect Valentine's Day piece here from the Financial Exchange,
2:07
Speaker 2: I think.
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Speaker 3: But first I listening, No, No, this.
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Speaker 2: Is about single people, not about already married people.
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Speaker 4: We're good, Paul, We're covered to late.
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Speaker 2: Everyone everyone currently broadcasting on the show is happily married,
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Speaker 2: so we're good. But Powell saying that new inflation data
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Speaker 2: shows the Fed has more work to do, so Jay
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Speaker 2: Powell was in front of Congress Tuesday and Wednesday of
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Speaker 2: this week testifying on his latest thoughts about the path
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Speaker 2: for interest rates, and as is normal, a lot of
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Speaker 2: political grand standing and questions that have nothing to do
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Speaker 2: with his job at the Federal Reserve. But the commentary
2:47
Speaker 2: coming out of him was I think quite calm in
2:51
Speaker 2: reaction to what was a quite uncomm CPI report.
2:55
Speaker 4: That came out Wednesday.
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Speaker 2: So you did the program yesterday, Paul I did not,
2:58
Speaker 2: but I mean helped me contact extraalized, you know, thoughts
3:01
Speaker 2: right now on the state of inflation and where j.
3:04
Speaker 4: Powell seems to be driving things.
3:06
Speaker 3: His commentary was a measured approach.
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Speaker 5: You know, it's stating the fact that we don't get
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Speaker 5: excited about one or two good readings, and we don't
3:15
Speaker 5: get excited about one or two bad readings. For context,
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Speaker 5: the last couple of reports that we've had from the
3:20
Speaker 5: CPI front, we covered it on yesterday's show. They've been
3:23
Speaker 5: hotter than anticipated, they've been poor readings, and typically on
3:28
Speaker 5: this program we tried to stay measured as well, understanding
3:31
Speaker 5: that these can be noisy month to month.
3:33
Speaker 3: You know, you do have some things get that could
3:35
Speaker 3: perhaps be one offs.
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Speaker 5: We've talked a lot about egg prices and things like that,
3:39
Speaker 5: though I don't think that there is a near term
3:42
Speaker 5: solution for anything that's going on there. But ultimately, inflation
3:46
Speaker 5: has been running hotter than expected. If you look at
3:48
Speaker 5: the different factors that could feed into persistent inflation. We've
3:51
Speaker 5: got a very strong labor market. Granted we're not hiring
3:55
Speaker 5: at the rates that we were in twenty two, but
3:57
Speaker 5: you still have four percent unemployment. You've got average average
4:02
Speaker 5: hourly earnings data that we receive that the worker is
4:05
Speaker 5: earning more money. And you've had gdpre growth that has
4:08
Speaker 5: been quite strong as well. And the consumer has really
4:11
Speaker 5: been extremely resilient for the last couple of years, spending
4:14
Speaker 5: a lot of money there. And as a result, you
4:17
Speaker 5: sit here and say, there are a lot of factors
4:19
Speaker 5: out there that are keeping inflation higher. And Mike I
4:22
Speaker 5: was surprised by the fact that the markets didn't react
4:25
Speaker 5: perhaps as negatively as I would have thought, because to me,
4:29
Speaker 5: that report that we saw again we saw close to
4:31
Speaker 5: a half percent month over month inflation on CPI three
4:35
Speaker 5: percent year over year. We were as low as two
4:37
Speaker 5: point six or two point seven percent. Now we're back
4:40
Speaker 5: to three percent, further away from the FAGS target of
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Speaker 5: two percent. So I was surprised by the market reaction
4:46
Speaker 5: being rather muted by the end of the day yesterday.
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Speaker 4: Yeah, I'll tell you what.
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Speaker 2: I've been a little bit surprised this year about the
4:52
Speaker 2: calm and just lack of volatility to the downside when
4:56
Speaker 2: it comes to bad news for Marcus. The first one
4:59
Speaker 2: was back when we had the announcement of Canadian and
5:02
Speaker 2: Mexican tariffs that eventually did not go into place. Now
5:05
Speaker 2: we have this, and to be clear, this is a
5:07
Speaker 2: divergence from what we saw in markets over the course
5:10
Speaker 2: of the last few years. Of course, the last few
5:12
Speaker 2: years pretty clear path inflation higher, equity markets down out
5:17
Speaker 2: of concern for higher interest rates. And that path broke
5:20
Speaker 2: a little bit today because sorry yesterday, because we did
5:24
Speaker 2: see inflation higher, we did see rates higher, and equity
5:29
Speaker 2: markets well, they initially sold off. We're pretty flat for
5:32
Speaker 2: the day. I don't know where we actually landed for
5:34
Speaker 2: the day, but I saw the Nasdaq was nearly flat
5:36
Speaker 2: at one point and the SMP very down slightly when
5:39
Speaker 2: I was looking, and so it was a relatively calm
5:42
Speaker 2: day and things taking off again. So how do I
5:45
Speaker 2: read into that one? I don't think you can discount
5:48
Speaker 2: to the possibility that people are just putting on the blinders,
5:51
Speaker 2: whistling past the graveyard. Use whatever you know, comparison or
5:55
Speaker 2: phrase you want when it comes to that. That could
5:57
Speaker 2: be possible. You could also have once again investors sniffing
6:02
Speaker 2: out some bogus data here, and you know they did
6:05
Speaker 2: successfully sniff that out when it came to Canada and
6:08
Speaker 2: Mexico tariffs. And could you make a compelling argument that,
6:14
Speaker 2: like we did in the first quarter of twenty twenty four,
6:17
Speaker 2: that you're going to see a blip on the radar
6:19
Speaker 2: when it comes to inflation here and then see it
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Speaker 2: calm down again.
6:24
Speaker 4: Who am I to say, I don't I don't know
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Speaker 4: for certain.
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Speaker 5: It is different that this time in the sense that
6:28
Speaker 5: these are not political policies that we're digesting here as
6:31
Speaker 5: to whether or not, you know, Canada and Mexico get tariff.
6:34
Speaker 5: This is hard economic data that you're right, could be
6:38
Speaker 5: noisy from month to month, but it's it's numbers less,
6:41
Speaker 5: so just someone taking action and instituting a terrorft.
6:44
Speaker 4: But that would be.
6:44
Speaker 2: My point is first quarter of last year, we saw
6:46
Speaker 2: numbers on inflation that were then anticipating gotcha, yea, And
6:49
Speaker 2: then you know, the Fed kind of looked at and said,
6:51
Speaker 2: you know, we don't think this is a big deal,
6:52
Speaker 2: and they were right.
6:53
Speaker 4: The same thing.
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Speaker 3: Happened with the labor market in the summer too.
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Speaker 5: We saw unemployment take up from three six to four
6:58
Speaker 5: to two and now we sit for and there was
7:01
Speaker 5: concerns that in July and August we're going to continue
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Speaker 5: on that pace.
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Speaker 3: So that's fair.
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Speaker 2: So you know, there's also been a lot of conjecture
7:07
Speaker 2: and I don't know how much, if at all, you
7:09
Speaker 2: guys covered this yesterday, but economists have been kind of
7:12
Speaker 2: debating how successful the BLS is at taking out seasonal adjustments.
7:18
Speaker 2: So I'm going to briefly overview what we're talking about
7:20
Speaker 2: with seasonal adjustments when it comes to inflation. The Federal
7:25
Speaker 2: Reserve and whoever consumes this data is more interested in
7:29
Speaker 2: the trend on price increases, and so what you find
7:33
Speaker 2: in things like retail sales and consumer price index and
7:37
Speaker 2: employment is there is big swings during certain times a year,
7:41
Speaker 2: you know, right like on the employment side, employment ticks
7:44
Speaker 2: up around the holiday shopping season because a bunch of
7:46
Speaker 2: people get temporary jobs working in shopping malls and delivery companies,
7:49
Speaker 2: ups et, cetera. And so they try and adjust that
7:52
Speaker 2: data to take it out and remove those big swings
7:56
Speaker 2: out of there because they're not relevant when you're trying
7:58
Speaker 2: to make policy.
7:59
Speaker 4: Likewise, with CPI.
8:01
Speaker 2: Companies very frequently will use the new year as the
8:05
Speaker 2: opportunity to reprice things. We're seeing that a lot in
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Speaker 2: restaurants right now with egg prices. You could say that
8:11
Speaker 2: that's just reaction to egg prices, but it might just
8:13
Speaker 2: be part of the new year as well. CPI tries
8:16
Speaker 2: to take that out. There has been a lot of
8:18
Speaker 2: conjecture and a lot of economic debate, which is pretty
8:22
Speaker 2: boring stuff when you talk about economic debate as to
8:24
Speaker 2: how good those seasonal adjustments are at actually filtering this out,
8:28
Speaker 2: because for the last few years you've seen a spike.
8:30
Speaker 4: In inflation in the first quarter of the year.
8:32
Speaker 2: So I don't know that I buy it, but that
8:34
Speaker 2: is another possible reason that I think maybe people are saying, hey,
8:38
Speaker 2: let's take a break here now. The counter argument would be, well,
8:42
Speaker 2: equity markets did not get concerned. Bond markets certainly did, sure,
8:47
Speaker 2: and so I can't explain that. Clearly, some investors in
8:51
Speaker 2: some places are worried about inflation, others are less so.
8:55
Speaker 2: So it was a pretty ugly consumer price index report yesterday.
8:59
Speaker 2: It was more than just food that was moving things.
9:03
Speaker 2: You can blame Biden if you want. You canplain Trump
9:05
Speaker 2: if you want. I don't really care. The fact of
9:07
Speaker 2: the matter is the data is there, and frankly, no
9:09
Speaker 2: president is really in charge of where egg prices go. No, No,
9:14
Speaker 2: Can we all just admit this for a minute, that
9:16
Speaker 2: you know, in spite of how much everyone hates politicians,
9:19
Speaker 2: that politicians are not responsible for the price of eggs.
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Speaker 2: Can we all agree on that one thing. It'd be great,
9:25
Speaker 2: it'd be nice if we could agree on one economic certainty,
9:28
Speaker 2: which is presidents don't control grocery prices and a lot.
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Speaker 5: Of other things that we're going to talk about here too.
9:33
Speaker 5: From an economic standpoint, there's only so much reach you
9:36
Speaker 5: can have.
9:37
Speaker 2: There's another piece that I have to make here, which
9:39
Speaker 2: is commentary from our president. I was checking myself this
9:42
Speaker 2: morning to see, like, hey, am I being unreasonable in
9:45
Speaker 2: my treatment here? And then I realized that no. If
9:48
Speaker 2: Joe Biden or Kamala Harris had said this, then I
9:50
Speaker 2: would have torn them to shreds. And so I'm going
9:52
Speaker 2: to go ahead and point this out. On Wednesday, President
9:55
Speaker 2: Donald Trump called for lower interest rates, noting that it
9:58
Speaker 2: would quote go hand in hand with up coming tariffs. Folks,
10:02
Speaker 2: that is as stupid an idea as saying that we're
10:05
Speaker 2: to go after grocery stores for price gouging. If you
10:08
Speaker 2: just want that on the like economic stupidity gradient, that's
10:13
Speaker 2: how dumb of a policy. That is, tariffs lead to
10:17
Speaker 2: higher prices, Lowering interest rates leads to higher economic activity,
10:21
Speaker 2: which would drive up prices higher. A lot of stuff
10:24
Speaker 2: goes into that. I'm not saying don't use tariffs. I'm
10:27
Speaker 2: just saying that raising tariffs and lowering interest rates is
10:32
Speaker 2: one of the dumber things I've heard from a president
10:35
Speaker 2: in terms of economic policy. So he doesn't control interest rates,
10:39
Speaker 2: he's not going to influence them. But we have to
10:41
Speaker 2: call stupid stupid, and that is very stupid policy, and
10:46
Speaker 2: you know, would lead to a.
10:47
Speaker 4: Spike in inflation if it went through.
10:49
Speaker 2: So there you have it. Let's take a quick break.
10:52
Speaker 2: When we come back, I want to talk more about inflation.
10:54
Speaker 2: We did get the Producer Price Index report at a
10:57
Speaker 2: thirty a on this morning. We'll be digesting that next
10:59
Speaker 2: Here on the Financial Exchange.
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12:03
Speaker 2: So Bondields sliding back down a little bit today, But
12:05
Speaker 2: yesterday you had yields up significantly on the ten year
12:08
Speaker 2: treasury up about a tenth of a percent to around
12:11
Speaker 2: four point six percent on that ten year benchmark. Interest
12:15
Speaker 2: rates which derives things like car loans and mortgage loans,
12:19
Speaker 2: et cetera, all sort of pegged to that ten year rate.
12:23
Speaker 2: This morning at eight thirty, we did receive the Producer
12:25
Speaker 2: Price Index Report. This one has looked at a lot less,
12:28
Speaker 2: not just because it comes out the day after the
12:30
Speaker 2: Consumer Price Index report, but looking at it long term,
12:33
Speaker 2: it does not directly correlate to what consumers end up paying.
12:37
Speaker 2: So while it does give you some interesting insight into
12:41
Speaker 2: what producers are paying, you know, again there hasn't been
12:45
Speaker 2: great studies showing hey, this actually leads to higher inflation.
12:48
Speaker 2: But it too printed hotter than expected, similar to the
12:52
Speaker 2: CPI report, came in at zero point four percent versus
12:56
Speaker 2: zero point three percent on expectations. When you took out
13:00
Speaker 2: food and energy, it too was at zero point three percent,
13:03
Speaker 2: a little bit hotter than expectations.
13:05
Speaker 4: So again, this is just a follow.
13:07
Speaker 2: On report to the one, the more important one that
13:09
Speaker 2: we received yesterday that indicated look across multiple areas. We
13:14
Speaker 2: are still seeing a push upwards on prices, and we
13:20
Speaker 2: will need to wait and see if these prices start
13:23
Speaker 2: to come down. But I don't see really much in
13:25
Speaker 2: the way of policy that is going to do that, because,
13:26
Speaker 2: as you pointed out, hot labor market, four percent unemployment,
13:30
Speaker 2: Egg prices through the roof. But again, let's focus in
13:33
Speaker 2: on that consumer price index report again for a moment here,
13:36
Speaker 2: because I think this is the one that people actually
13:38
Speaker 2: care about. So, yes, food at home through the roof
13:41
Speaker 2: up half a percent over the course of the last
13:44
Speaker 2: twelve months. Most of that, or a good chunk of it,
13:48
Speaker 2: was egg prices. So egg prices month over month increased
13:51
Speaker 2: fifteen point two percent, largest increase in the eggs index
13:55
Speaker 2: since June of twenty fifteen. It also accounted for two
13:58
Speaker 2: thirds of that monthly incre he said food at home.
14:00
Speaker 2: So I would think that eventually we will be able
14:04
Speaker 2: to deal with avian bird flu and get more eggs
14:07
Speaker 2: into grocery stores, at which point this becomes less of
14:09
Speaker 2: an issue. It's also why generally speaking, the FED, it's
14:13
Speaker 2: not that they don't care about food and gas prices,
14:15
Speaker 2: but they just say, look.
14:17
Speaker 4: We don't control them. We can't control them.
14:19
Speaker 2: The Federal Reserve can't do anything to fix bird flu,
14:21
Speaker 2: and so they're going to largely discount that. My point
14:24
Speaker 2: would be, however, that when you look across other areas,
14:28
Speaker 2: transportation services, so this is largely auto insurance up one
14:32
Speaker 2: point eight percent month over month, used cars and trucks
14:35
Speaker 2: up two point two percent month over month. Shelter costs
14:39
Speaker 2: still not going away, up zero point four percent.
14:42
Speaker 3: That's a third of it right there.
14:44
Speaker 2: Yeah, the shelter cost So a third of total CPI
14:47
Speaker 2: is shelter costs. And so you know, I look at
14:49
Speaker 2: some of these things and say, okay, look food prices,
14:52
Speaker 2: egg prices that will pass car prices being up two
14:57
Speaker 2: percent in a month. I don't know what's going on there.
15:00
Speaker 2: Is that tariff fear, is the motor vehicle insurance piece?
15:04
Speaker 2: Is that going to go away? Is it going to
15:06
Speaker 2: get cheaper to repair cars anytime soon? I have a
15:09
Speaker 2: tough time believing that. And so this is where you
15:12
Speaker 2: really dig in. Yeah, you can discount the fuel oil,
15:15
Speaker 2: the gasoline prices, who knows where that's going to swing.
15:18
Speaker 2: But when we look at all of that stuff, stripping
15:20
Speaker 2: them out the core components of inflation that drive inflation
15:27
Speaker 2: further in one direction or another. That's the piece that
15:29
Speaker 2: I'm concerned about. And that number came in at zero
15:32
Speaker 2: point four percent a month over month, three percent, three
15:34
Speaker 2: point three percent a year over year, and I think
15:38
Speaker 2: that's the piece that we all need to hone in
15:40
Speaker 2: on and be concerned about going forward, because you don't
15:43
Speaker 2: have to look far in the past twenty twenty two.
15:46
Speaker 2: Remember what happened to markets when we saw inflation printing
15:49
Speaker 2: persistently higher than people were expecting. I think would be
15:52
Speaker 2: my main takeaway. So fed very unlikely to move on
15:56
Speaker 2: interest rates anytime soon. Long term rates seemed to be
15:59
Speaker 2: stuck in this four and a half percent range. So
16:02
Speaker 2: what that means for consumers good news, I guess CDs
16:05
Speaker 2: don't seem like they're coming down in rates anytime soon.
16:07
Speaker 2: But mortgage rates also stuck in this seven percent plus
16:11
Speaker 2: range as we are gearing up for the busiest housing
16:16
Speaker 2: season right right after Super Bowl is when people start
16:20
Speaker 2: listing those homes and things start to really take off
16:24
Speaker 2: in terms of the real estate market, and mortgage rates
16:27
Speaker 2: are seemingly going to be stuck here around seven percent.
16:30
Speaker 2: Anything else to add on inflation, Paul on.
16:32
Speaker 3: This front, No, I think we hit all the key
16:34
Speaker 3: points there.
16:34
Speaker 2: Yeah, So look, you know, the fact of the matter
16:38
Speaker 2: is inflation almost certainly played a role in getting Donald
16:41
Speaker 2: Trump elected, and I would say is probably the single
16:45
Speaker 2: biggest risk to him being able to execute his plans
16:48
Speaker 2: for the future is a resurgence in inflation. And so
16:52
Speaker 2: we talked about last year at the end of last year,
16:55
Speaker 2: like this is going to be a really narrow needle
16:58
Speaker 2: to thread for Donald Trump and his administration here because
17:02
Speaker 2: they really see the benefit of tariffs, of getting people
17:05
Speaker 2: to the negotiating table and negotiating a better deal for America.
17:09
Speaker 2: But if they follow through, you have the possibility of
17:14
Speaker 2: a repeat of this. I don't think there's much evidence,
17:17
Speaker 2: by the way. I'm sure that there have been outlets
17:19
Speaker 2: all over saying, okay, here's Trump's economy egg prices, Like,
17:22
Speaker 2: give me a break. The Guy's been in office for
17:25
Speaker 2: what like less than thirty days. Now, we're not seeing
17:28
Speaker 2: inflation as a result of Trump's implemented policies right now,
17:32
Speaker 2: That is bogus. Fast forward six months and we're still
17:36
Speaker 2: seeing this type of inflation, and specifically, if we're seeing
17:39
Speaker 2: it in the areas of car prices and areas that
17:42
Speaker 2: are affected by tariffs. That's a different story. That is
17:46
Speaker 2: something to keep an eye on and be concerned about.
17:48
Speaker 2: And I'm sure that Scott Bessen't and those surrounding this
17:52
Speaker 2: administration who are trying to get these policies on tax
17:55
Speaker 2: cuts and other things done, are looking at this inflation
17:58
Speaker 2: report and saying, Okay, here's the benchmark. We got to
18:01
Speaker 2: keep a very close eye on this.
18:03
Speaker 5: It's really important to emphasize the difference in backdrop between
18:06
Speaker 5: the first time President Trump was in office versus where
18:09
Speaker 5: we sit today. And Mike, you alluded to it a
18:10
Speaker 5: little bit, but back in twenty eighteen, the idea of tariffs,
18:13
Speaker 5: while it garnered a lot of headlines in the news,
18:16
Speaker 5: we had inflation that could barely crust two percent. We
18:19
Speaker 5: now sit at a period of time where it got
18:21
Speaker 5: as high as nine percent on the CPI level. We
18:23
Speaker 5: now sit at three percent. It can be extremely stubborn.
18:26
Speaker 5: We're starting to start to see that now heading into
18:29
Speaker 5: this year. It's very hard to get the last mile
18:31
Speaker 5: of inflation under control. So the backdrop of instituting tariffs
18:34
Speaker 5: back in twenty eighteen, it was actually working more in
18:37
Speaker 5: lockstep with the Fed, because tariffs are inflationary by nature,
18:40
Speaker 5: and the tax cuts also that we saw in twenty
18:42
Speaker 5: eighteen inflationary by nature because you're allowing for more money
18:45
Speaker 5: in the system. You have pretty much the opposite backdrop
18:49
Speaker 5: today where those two things work against what the FED
18:51
Speaker 5: is trying to do to get inflation under control. So
18:54
Speaker 5: that's why there's so much sensitivity on being careful instituting
18:58
Speaker 5: the tariffs when we can all all agree. The biggest
19:01
Speaker 5: takeaway I had from that period of time was no
19:03
Speaker 5: one likes inflation, and so you gotta be aware that
19:07
Speaker 5: these types of tariffs will lead to this type of
19:09
Speaker 5: activity if they are prolonged.
19:11
Speaker 2: Donald Trump vowing reciprocal tariffs today, he hasn't provided details
19:15
Speaker 2: yet on what that will look like. We will cover
19:17
Speaker 2: it if it comes out within the next hour and
19:20
Speaker 2: a half. But market's in positive territory this morning. We'll
19:23
Speaker 2: have a full recap next with Wall Street Watch.
19:40
Speaker 1: Like us on Facebook and follow us on Twitter at
19:43
Speaker 1: TFE show. Breaking business news is always first right here
19:47
Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
19:53
Speaker 1: Street Watch a complete look at what's moving markets so
19:56
Speaker 1: far today right here on the Financial Exchange Radio network.
20:00
Speaker 6: One day after a hotter than expected consumer price index.
20:04
Speaker 6: Markets today are in positive territory as investors digest another
20:08
Speaker 6: inflation measure this morning in the Producer Price Index, where
20:13
Speaker 6: wholesale prices climbed zero point four percent in January, also
20:18
Speaker 6: higher than estimates. At the moment, the Dow is up
20:21
Speaker 6: by about a quarter percent or one hundred points. S
20:23
Speaker 6: and P five hundred, up a half a percent or
20:25
Speaker 6: thirty points in the Nasdaq is up by over eight
20:29
Speaker 6: tenths of a percent or one hundred and sixty seven points.
20:32
Speaker 6: RUSSED two thousand is up nearly six tenths of a
20:35
Speaker 6: percent or thirteen points. Ten year treasure reeled back by
20:40
Speaker 6: eight basis points, now at four point five to four percent,
20:43
Speaker 6: and crude oil is down about a third a percent
20:46
Speaker 6: third of a percent, trading just above seventy one dollars
20:50
Speaker 6: a barrel. Shares in Cisco's Systems climbing climbing by over
20:54
Speaker 6: one percent after the networking equipment company lifted its annual
20:58
Speaker 6: revenue outlook after its court sales beat expectations. The company's
21:02
Speaker 6: revenue grew nine percent year over year, which comes after
21:07
Speaker 6: four quarters of declines Meanwhile, digital trading platform Robinhood posted
21:11
Speaker 6: stronger than expected fourth quarter revenue driven by a flurry
21:15
Speaker 6: of post election activity that stock jumping by twelve percent. Elsewhere,
21:20
Speaker 6: Deer down by two percent after the agricultural machinery company's
21:25
Speaker 6: fiscal first quarter report reflected subdued demand going forward, even
21:30
Speaker 6: though it's quarterly profit in revenue beat analysts forecasts. Dutch
21:34
Speaker 6: Brothers shares jumping twenty nine percent after it beat fourth
21:37
Speaker 6: quarter expectations and offered optimistic twenty twenty five revenue guidance.
21:42
Speaker 6: Unilever announced it would emerge its ice cream business, which
21:46
Speaker 6: owns Ben and Jerry's, as part of a plan to
21:48
Speaker 6: slim down the business. The company also said its revenue
21:51
Speaker 6: grew less than expected, that stock retreating six percent, Trade
21:55
Speaker 6: Desk shares dropping by thirty two percent after the digital
21:59
Speaker 6: market and company posted soft quarterly revenue and issued week
22:04
Speaker 6: guidance in app Love and shares surging by thirty one
22:07
Speaker 6: percent after the software company beat fourth quarter forecast. The
22:11
Speaker 6: company also said assigned a deal to sell its mobile
22:16
Speaker 6: gaming division. And just a quick note here about the
22:20
Speaker 6: reciprocal tariffs item that Mike mentioned before the break there,
22:24
Speaker 6: President Trump will hold a press conference at one o'clock
22:28
Speaker 6: this afternoon with further details. I'm Tucker Silman.
22:32
Speaker 1: That's Wall Street.
22:33
Speaker 2: Watch the Trump layoffs push federal workers into a tough
22:36
Speaker 2: job hunt. There haven't actually been many true layoffs to
22:40
Speaker 2: this point, but rather suspension of work and other types
22:44
Speaker 2: of indications so far. But I am done just accepting
22:50
Speaker 2: these stories. So the title again is that the Trump
22:55
Speaker 2: laffs are going to push federal workers into a tough
22:57
Speaker 2: job hunt.
22:58
Speaker 4: And I will certainly buy that.
23:00
Speaker 2: Your experience as a federal worker may not translate directly
23:05
Speaker 2: into certain areas of the corporate workforce.
23:08
Speaker 4: But are you listening to yourselves?
23:11
Speaker 2: Like every employee of the federal government who went through
23:16
Speaker 2: looking for a job in two thousand and eight is
23:18
Speaker 2: just laughing at this story. And I'm laughing at this story.
23:21
Speaker 2: The unemployment rate right now is four point zero percent.
23:25
Speaker 2: I recognize it is absolutely a tougher job market right
23:30
Speaker 2: now than any time over the course of the last
23:32
Speaker 2: two years. Sure, like we're on board, Like absolutely it
23:37
Speaker 2: is tougher right now than it was in twenty twenty
23:39
Speaker 2: three or twenty twenty four. But that's it. It is
23:44
Speaker 2: a better job market now. Than most of the entire
23:47
Speaker 2: twenty ten decade, other than maybe twenty nineteen. And I
23:51
Speaker 2: just have a really tough time getting up enough pity
23:55
Speaker 2: for anyone that is calling this a really difficult and
23:58
Speaker 2: tough job market right now. It is difficult to find
24:02
Speaker 2: a job in the exact field that you want. There
24:04
Speaker 2: are certain areas that are not hiring as robustly as
24:07
Speaker 2: they are.
24:08
Speaker 4: But guess what, I'm not.
24:09
Speaker 2: Hearing any stories of PhD scientists taking jobs delivering pizzas.
24:14
Speaker 2: And you know what, I was hearing those stories in
24:16
Speaker 2: two thousand and eight and two thousand and nine. So
24:19
Speaker 2: I just I get a little bit heated about this
24:22
Speaker 2: stuff because you don't say, calling this a tough job
24:25
Speaker 2: market when we have near record low unemployment is just
24:29
Speaker 2: ridiculous to me.
24:30
Speaker 5: I can't speak enough to the specifics of federal workers
24:34
Speaker 5: and how recruiters and talent sources out there view their
24:38
Speaker 5: skill set, So there may be a grain of truth
24:43
Speaker 5: to this, because I'm not familiar just with how their
24:46
Speaker 5: skills would translate. You're saying, perhaps it's being made a
24:50
Speaker 5: bigger issue than it actually is, but typically it's definitely
24:53
Speaker 5: a different style culturally the government sector, the federal sector
24:57
Speaker 5: versus the private sector in terms of tenure, the bureaucracy
25:01
Speaker 5: that you're up against, how difficult it is to get
25:03
Speaker 5: those jobs, but also you end up keeping them for
25:05
Speaker 5: a lot longer. On average, you've got about six and
25:08
Speaker 5: a half years the tenure of a federal employee versus
25:11
Speaker 5: three point nine in the private sector. So absolutely, when
25:15
Speaker 5: you compare anything to two or two thousand and nine,
25:17
Speaker 5: no close, not even close.
25:19
Speaker 4: I'll even take a step back.
25:20
Speaker 2: Forget about O eight, O nine, twenty ten decade, the
25:23
Speaker 2: entire two thousands decade.
25:26
Speaker 4: You know, unemployment was.
25:27
Speaker 2: Probably lower in the late nineties, so that was a
25:29
Speaker 2: better job market. But there are so few periods of
25:33
Speaker 2: time that anyone living has been through that represent a
25:36
Speaker 2: better job market than right now that I'm just not
25:39
Speaker 2: willing to set this one aside. And yes, I hear you,
25:42
Speaker 2: college grads. It is a relatively difficult job market when
25:46
Speaker 2: you don't have experience and you're trying to get a
25:48
Speaker 2: role in some white collar areas.
25:50
Speaker 4: No debate there, but.
25:55
Speaker 2: Be patient, take the job doing something that's not directly
25:58
Speaker 2: related to what you're doing right now. And I'm sorry,
26:00
Speaker 2: but tough enough. But a cup like this is a
26:03
Speaker 2: pretty good job market right now. And if you don't
26:06
Speaker 2: like this one, just wait until unemployment sitting at six percent.
26:08
Speaker 2: Then you're gonna have some real problems. So yeah, I'm
26:12
Speaker 2: again I'm sitting here from the person who's employed and
26:15
Speaker 2: in a good spot financially, So I don't mean to
26:17
Speaker 2: minimize the effect of others. But it's a really good
26:21
Speaker 2: job market and calling it not is just dishonest.
26:24
Speaker 3: Mike's got the flame for I do no prisoners.
26:27
Speaker 2: Donald Trump's buyout for federal workers has now been do
26:31
Speaker 2: we say, approved by a federal judge. They refused to
26:35
Speaker 2: block it in any case, and so the deadline I
26:38
Speaker 2: believe was now yesterday or the day before. Some seventy
26:40
Speaker 2: five thousand federal workers have apparently took taken that buyout deal.
26:46
Speaker 2: We will see where this lines up, because, as we
26:48
Speaker 2: pointed out before, Bloomberg reported that on average over the
26:52
Speaker 2: last decade, sixty two thousand government workers per year have retired. Okay,
26:58
Speaker 2: and so that's just kind of my benchmark in my mind,
27:00
Speaker 2: And it's okay, you've had sixty two thousand people retiring
27:02
Speaker 2: every year. Anyway, certain areas of the federal government weren't
27:06
Speaker 2: eligible for this buyout right. If you're working in some
27:08
Speaker 2: crucial roles, you can't participate. So it's not all people
27:12
Speaker 2: that were planning on retiring. But I doubt we'll ever
27:15
Speaker 2: get this data. But I would love to know the
27:16
Speaker 2: average age of the buyout taker in this deal.
27:19
Speaker 5: I would have to think it's I mean, we there's
27:21
Speaker 5: someone I work with who is in the spot where
27:23
Speaker 5: they were on the cusp of retirement, and so to
27:26
Speaker 5: them it was sort of a no brainer. So I
27:28
Speaker 5: feel like that is I'm making a huge assumption. I
27:30
Speaker 5: know one of the seventy five thousand, but I feel
27:33
Speaker 5: like that is the demographics of the seventy five It's, hey,
27:36
Speaker 5: we were going to hang it up in a year
27:37
Speaker 5: or two anyway, why not just take this. It seems
27:40
Speaker 5: like that would be the lowest hanging fruit with this exercise.
27:44
Speaker 2: The federal workforce under President Joe Biden grew by six
27:47
Speaker 2: point three percent, and so if this three percent holds true,
27:52
Speaker 2: that would bring the total federal workforce back down to
27:54
Speaker 2: number seen in twenty twenty three. This seventy five thousand
27:57
Speaker 2: is well below the aspiration of DOJE and penal President
28:02
Speaker 2: Donald Trump to get one hundred to two hundred thousand
28:04
Speaker 2: workers accepting this deal. So we'll see what comes next,
28:07
Speaker 2: but for the time being, these are the numbers that
28:09
Speaker 2: we're aware of in terms of that federal buyout, which
28:13
Speaker 2: again a federal judge refused to block and therefore seems
28:17
Speaker 2: to be going forward. Quick break when we come back,
28:20
Speaker 2: going to talk a bit about that spring housing market
28:22
Speaker 2: we mentioned with mortgage rates up over seven percent. What
28:25
Speaker 2: are we seeing so far? That's next on the Financial Exchange.
28:29
Speaker 1: Breaking business and financial news first throughout the day. Only
28:33
Speaker 1: here on the Financial Exchange Radio Network, find daily interviews
28:38
Speaker 1: and full shows of the Financial Exchange on how Are
28:40
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28:43
Speaker 1: you might have missed. This is the Financial Exchange Radio Network.
29:00
Speaker 2: Up for the spring housing market here, and it's not
29:04
Speaker 2: shaping up to be a fantastic one for buyers anyway.
29:10
Speaker 2: We've got the thirty year fix sitting at seven point
29:12
Speaker 2: one three percent, but there are areas pockets where you
29:16
Speaker 2: are starting to see potentially some indications of deals to
29:20
Speaker 2: be found. First data points here. Nearly seventy three thousand
29:23
Speaker 2: homes were pulled from sale in December of twenty twenty four.
29:27
Speaker 2: That's a sixty four percent increase compared to the same
29:31
Speaker 2: month in twenty twenty three. And the question is why
29:34
Speaker 2: would you be pulling a home for sale, But usually
29:37
Speaker 2: it's an indication of not seeing the demand that you
29:41
Speaker 2: are looking for on the sales side, and so you
29:42
Speaker 2: oftentimes will pull it, refigure out your plans, and relisted
29:46
Speaker 2: at a later date, oftentimes for a lower price, because
29:49
Speaker 2: you don't necessarily want to be showing the price cut
29:52
Speaker 2: on the listing itself, and so oftentimes it is seen
29:54
Speaker 2: as an indication of hey, more supply to come, price
29:58
Speaker 2: reductions to come. Things a lot on those lines, and
30:01
Speaker 2: we are seeing that in certain areas of the country,
30:03
Speaker 2: like I mentioned Florida, Texas, Louisiana, Utah, Nashville area of Tennessee.
30:10
Speaker 2: There has been some indication of price weakness Arizona and Colorado,
30:13
Speaker 2: or two other markets that were mentioned here in the northeast.
30:17
Speaker 2: I've mentioned it at nauseum, so I won't keep going.
30:19
Speaker 2: But inventory situation is still so much worse than it
30:24
Speaker 2: was in twenty nineteen that we are not going to
30:25
Speaker 2: see any of that price action here, I don't think,
30:28
Speaker 2: but you know, perhaps just a better matchup of buyers
30:33
Speaker 2: and sellers come spring housing market here, because quite honestly,
30:37
Speaker 2: at seven point one point three percent, there aren't a
30:40
Speaker 2: ton of buyers available to be able to afford these
30:43
Speaker 2: types of homes. So once again, the things that I
30:47
Speaker 2: think would uptick inventory nationally would be some form of
30:50
Speaker 2: a recession. We're just not seeing that. But as time
30:53
Speaker 2: goes on, there are certain unavoidables in the housing market. Divorce, downsizing, diapers, diamonds,
30:59
Speaker 2: and death are five d's of housing that I don't
31:02
Speaker 2: have that we have pasted to the board here in
31:05
Speaker 2: front of Tucker, And you know, those are the ones
31:07
Speaker 2: where you just say, okay, that stuff always occurs and
31:10
Speaker 2: there's no avoiding that. But in the absence of a
31:12
Speaker 2: big downturn in the labor market, where people are forced
31:15
Speaker 2: to sell and rethink their lives, I just am not sure.
31:19
Speaker 2: We're certainly not seeing the building to justify inventory going
31:22
Speaker 2: up anything to add on the house in market. No.
31:24
Speaker 5: I mean, right now, you still have two thirds of
31:26
Speaker 5: the country that's got a mortgage under four percent, and
31:29
Speaker 5: so outside of those five d's that you just mentioned,
31:32
Speaker 5: it's hard for a lot of people to part with those.
31:34
Speaker 5: The further that we get away from basically twenty twenty one.
31:37
Speaker 5: That was kind of your range of time twenty twenty
31:39
Speaker 5: to twenty twenty one, where you were locking those really
31:41
Speaker 5: low mortgage rates. Further we get away from that, the
31:43
Speaker 5: more houses will become available because those natural life events
31:46
Speaker 5: will occur. But still on the by side, it's just
31:50
Speaker 5: the affordability issue is still remains a challenge.
31:53
Speaker 6: Yeah.
31:54
Speaker 2: I do think though that there's been some I guess
31:59
Speaker 2: more accepting of these higher rates. I recognize two third
32:02
Speaker 2: Americans still have those lower locked in mortgages. But when
32:06
Speaker 2: I talk to people now, they are not flabbergasted when
32:10
Speaker 2: I tell them that mortgage rates are over seven percent.
32:12
Speaker 2: In fact, you know, I was speaking to somebody yesterday
32:13
Speaker 2: and we were talking about interest rates, and he's like,
32:15
Speaker 2: where are mortgage rates these days?
32:16
Speaker 4: Like seven? I was like, yeah, like seven point one.
32:19
Speaker 2: So there's at least now an understanding of, hey, that's
32:21
Speaker 2: where rates are now, like it or not, and by
32:26
Speaker 2: most opinions, probably not going anywhere anytime in the near term.
32:33
Speaker 2: You got to have if you want rates down, there's
32:35
Speaker 2: really only one path for that today, which is recession.
32:39
Speaker 3: Yeah.
32:39
Speaker 5: Put it this way, any buyers that you talk with
32:41
Speaker 5: are not trying to play the game of Hey, I'll
32:43
Speaker 5: just wait for rates to come down because they are.
32:46
Speaker 4: Yeah, that game has not worked out.
32:48
Speaker 3: That was a sentiment in twenty two and twenty three.
32:52
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33:57
Speaker 2: We got a few Massachusetts focused stories here pop to
34:00
Speaker 2: let you take your pick yimby cost of living or logan.
34:03
Speaker 5: I'll go Ymby because this is pretty close to my backyard,
34:07
Speaker 5: Lexington here that's featured in this story. So Lexington is
34:10
Speaker 5: going to be responsible for a thousand apartments. A town
34:14
Speaker 5: that only has a population of thirty four thousand will
34:17
Speaker 5: be adding more than a thousand apartments, townhouses, and condos
34:20
Speaker 5: over the next few years. This is going to account
34:23
Speaker 5: for one third of the housing shortage units that are
34:27
Speaker 5: being added as a result of some of the Massachusetts
34:30
Speaker 5: legislation to de zone some of these communities and also
34:34
Speaker 5: provide more housing next to public transit. And it is
34:38
Speaker 5: surprising because there are so many towns that fit the
34:43
Speaker 5: demographics of Lexington that are in the NIMBI camp of
34:46
Speaker 5: not in my backyard that to see this. It's a
34:49
Speaker 5: very affluent area that has a great school system and
34:52
Speaker 5: also typically pretty difficult in terms of zoning restrictions. To
34:55
Speaker 5: see the embrace of this, it's fantastic to see because
34:59
Speaker 5: it's it's very rare to find amongst the Greater Boston
35:02
Speaker 5: area for any communities jumping on.
35:04
Speaker 3: Board with you.
35:04
Speaker 2: Yeah again, you know here in need and where we're
35:07
Speaker 2: broadcasting from, they voted down a similar type of plan.
35:11
Speaker 2: This plan from Lexington was not just to comply with
35:13
Speaker 2: the MBTA zoning law. They went well above and beyond
35:16
Speaker 2: those plans and Need them shot an exact deal like
35:19
Speaker 2: that down. Lexington seemingly embraced it. And again why I
35:24
Speaker 2: find it compelling and I don't think anyone's got the
35:25
Speaker 2: blinders on this one. Lexington voters basically voted to say,
35:30
Speaker 2: I'm willing to see my own home price fall a bit.
35:33
Speaker 4: That's what you're doing.
35:34
Speaker 3: I mean, like, you know, you can see all the
35:36
Speaker 3: property taxes a little bit.
35:38
Speaker 2: You are doing something to hopefully spread out the property
35:41
Speaker 2: taxes agreed there, And so maybe it's a hey, I'm
35:44
Speaker 2: not worried about my resale value. I really just want
35:47
Speaker 2: to see a larger tax base here to pay some
35:50
Speaker 2: of those bills.
35:51
Speaker 3: To find more congestion into the school system. If you're
35:54
Speaker 3: a parent out there.
35:54
Speaker 4: Though yeah, so I was.
35:56
Speaker 2: I was impressed, and I think it was just a
35:59
Speaker 2: very honest vote from people to say, yeah, I mean like, look,
36:04
Speaker 2: this is gonna come with some downsides here, but we
36:06
Speaker 2: do want to see more housing. And this is not
36:09
Speaker 2: affordable housing, it's not subsidized housing, it's not even voting
36:12
Speaker 2: to build anything. Literally, the vote here was simply this
36:16
Speaker 2: corridor is going to be eligible for multi family development,
36:19
Speaker 2: and so we will see, we will see where that goes.
36:22
Speaker 2: Logan Airport considering a increased fee on uber and lift
36:27
Speaker 2: rides into Logan airports and so gonna get probably more
36:33
Speaker 2: expensive to catch an uber or lift into Logan going forward.
36:37
Speaker 2: So currently Massport charges ride apps a three dollars twenty
36:41
Speaker 2: five cent fee for pickups or drop offs at Logan.
36:44
Speaker 2: Agency said that the airport is discussing hiking those fees
36:47
Speaker 2: to five dollars fifty cents each way starting in July,
36:50
Speaker 2: then up to seven to fifty starting in July of
36:52
Speaker 2: twenty twenty seven. On the other hand, taxis currently pay
36:58
Speaker 2: two dollars and twenty five cents to but only for pickups,
37:02
Speaker 2: no fee for drop offs, and they plan to increase
37:05
Speaker 2: that to five dollars and fifty cents by twenty twenty seven.
37:08
Speaker 2: And I'm not going to debate what the right amount
37:11
Speaker 2: is to charge in terms of fees to get dropped
37:13
Speaker 2: off at Logan Airport. But can we all agree that
37:15
Speaker 2: Taxis and ubers should pay the same fee? Yes, what
37:19
Speaker 2: the hell's the difference? The sticker spicy here, the medallion
37:24
Speaker 2: sticker push that you just have more lobbying power. Is
37:28
Speaker 2: that your answer? Yes, okay, got it. Yeah, it is
37:30
Speaker 2: a good answer. It's an honest answer. But it's bad policy.
37:34
Speaker 2: There's no reason why Taxis should get a subsidized rate
37:39
Speaker 2: of dropping people off and picking people up at Logan Airport.
37:43
Speaker 2: But guess what, I guess I will start shifting my
37:45
Speaker 2: business back over to taxis a little bit more often,
37:48
Speaker 2: especially these days, since they don't just you know, suddenly
37:51
Speaker 2: hit the credit card machine and tell you that it's
37:53
Speaker 2: not working like they did back in my day. So
37:56
Speaker 2: in any case, getting to and from Logan you are
38:00
Speaker 2: taking some of these shuttles, it looks like it's going
38:03
Speaker 2: to get substantially more expensive over the next few years.
38:06
Speaker 2: Quick Break A lot more to cover in the second
38:09
Speaker 2: hour of the Financial Exchange, including our Valentine's Day.
38:13
Speaker 4: Story ahead of the big day tomorrow. Quick Break will
38:16
Speaker 4: be right back