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Mortgage Lock-In Keeps Housing Market Stuck · The Financial Exchange Show

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  Speaker 1: is The Financial Exchange with Chuck Zotta and Mike Armstrong.
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  Speaker 2: Chuck, Mike, Tucker with you here on a Thursday. And
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  Speaker 2: as we kick into gear.
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  Speaker 2: We've got markets not really going anywhere productive. The equity
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  Speaker 2: markets all selling off today. Nothing huge, but again, continued
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  Speaker 2: downward drift from yesterday. S & P 500 off 32 points.
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  Speaker 2: Dow is off 300. NASDAQ composite off 193. So again,
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  Speaker 2: nothing big like anywhere from like a half percent to
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  Speaker 2: three quarters of a percent. But hey, that's still not,
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  Speaker 2: you know, going up. So not much green on the
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  Speaker 2: board there. 10-year treasury also continuing to sell off. Now
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  Speaker 2: up 2.9 basis points to 5.143%. And so you've got
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  Speaker 2: yields continuing to rise here. With that, you've got the
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  Speaker 2: dollar strengthening by 0.21% to 101.02. And then let's see.
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  Speaker 2: Gold on that move in the dollar off 27.60 an
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  Speaker 2: ounce to 42.90. And 80 cents. We've got crude oil,
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  Speaker 2: West Texas Intermediate, back up another $ 3. 30 a barrel to $ 95. 46.
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  Speaker 2: You've also got diesel and gas futures back up today.
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  Speaker 2: Diesel back up another $ 0. 20 on the futures market. Again,
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  Speaker 2: not in spot price. I'll get to that in a second.
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  Speaker 2: But this after the trial balloon that was floated as
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  Speaker 2: it relates to a diesel export ban didn't really seem
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  Speaker 2: to get much traction yesterday. Mike, did you happen to
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  Speaker 2: catch the letter from Javier Blah of Bloomberg? No. Javier
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  Speaker 2: is Bloomberg's... I don't know if he's their chief energy correspondent,
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  Speaker 2: but he's... I've heard him interviewed over and over again. He's... Yeah.
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  Speaker 2: He's big time there. He is... Let's see. I just
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  Speaker 2: want to get his title right. He is an energy
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  Speaker 2: and commodities columnist at Bloomberg. And he obtained a copy
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  Speaker 2: of a letter from the following groups indicating that a
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  Speaker 2: diesel export ban is a bad thing for the White
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  Speaker 2: House to do. Of course, like, I'm not saying that
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  Speaker 2: this is good or bad, but obviously the energy industry
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  Speaker 2: is saying, hey, this is bad. Yes, I know there's
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  Speaker 2: some self-interest there, but again, just hear me out for
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  Speaker 2: a minute. Mike, are these groups that would normally be,
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  Speaker 2: you know, against something like this if it benefited them?
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  Speaker 2: The National Association of Manufacturers.
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  Speaker 1: No.
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  Speaker 2: The U.S. Chamber of Commerce. Nope. About 15 other state
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  Speaker 2: chambers of commerce.
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  Speaker 1: Hmm.
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  Speaker 2: Again, these are like business trade organizations that aren't, you know,
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  Speaker 2: energy company representatives. They are representatives of, again, like manufacturers
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  Speaker 2: who want low input costs and representatives of businesses that
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  Speaker 2: want low input costs. And they are saying, hey, please
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  Speaker 2: don't do this.
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  Speaker 3: Yeah, I mean, look, what you're lining up against, Chuck,
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  Speaker 3: to me is company executives for a large portion of
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  Speaker 3: the U.S. economy versus farmers. I mean, that's what you are.
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  Speaker 3: Those are the interests that we have right here, right?
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  Speaker 3: Powerful executives, business interests, not even large, powerful executives.
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  Speaker 2: I'm going to push back on that. Okay. Because, look,
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  Speaker 2: if the National Association of Manufacturers really thought that a
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  Speaker 2: diesel export ban would bring down their costs, wouldn't they
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  Speaker 2: be in favor of it? Yeah, they might.
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  Speaker 3: I'm suspecting that their concerns are that their exported goods
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  Speaker 3: are going to get some blowback.
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  Speaker 2: So, again, we've gone through the math on it and how, yes,
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  Speaker 2: you'd see a brief short-term benefit before things start to reverse,
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  Speaker 2: and it also drives up the cost of other finished
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  Speaker 2: products like gas and jet fuel. And so this is, again,
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  Speaker 2: these companies coming out and being like, yeah, this is
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  Speaker 2: not what you want to actually do here.
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  Speaker 1: Right.
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  Speaker 2: And so I found that notable. Like, you don't see...
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  Speaker 2: that kind of letter written too much when it comes
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  Speaker 2: to like specific policies that often because i think more
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  Speaker 2: often than not the the policies that are you know
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  Speaker 2: really bad to get floated usually don't make it to
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  Speaker 2: the point where they're you know potentially being implemented true
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  Speaker 2: so triple a national average for gas uh is up
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  Speaker 2: another one cent overnight to 448 diesel off one cent
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  Speaker 2: diesel is going to see a little bit of relief
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  Speaker 2: this week as the uh joliet indiana or joliet Illinois,
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  Speaker 2: I believe, refinery. Is it Illinois or Indiana? Great question, Chuck. Illinois.
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  Speaker 2: The Joliet Illinois refinery is back online. So diesel's at $ 6. 51
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  Speaker 2: right now. Probably going to get down into that $ 6. 35
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  Speaker 2: range over the next week or so. I'm not saying
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  Speaker 2: that that's great, but I'm saying it's better than it's been. So,
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  Speaker 2: you know, we'll take the small victories that we can
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  Speaker 2: get there. Let's talk about this piece from Bloomberg that
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  Speaker 2: is our top one for the hour. Your 3% mortgage
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  Speaker 2: rate is crippling the housing market. Yeah, I got to
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  Speaker 2: tell you, Chuck, it's me.
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  Speaker 1: Hi.
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  Speaker 2: I'm the problem. Here's the thing, and thank you, Taylor.
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  Speaker 2: I've said this for a while, and again, everyone gets
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  Speaker 2: upset when I say this, which is why I know
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  Speaker 2: that it's true. Fixed-rate mortgages are rent control for wealthy homeowners.
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  Speaker 1: Sure.
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  Speaker 2: Plain and simple. They absolutely reduce the supply of of
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  Speaker 2: homes because people get mortgage locked into them. And so
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  Speaker 2: you have homes that otherwise would make it to the
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  Speaker 2: market just like in rent control. And instead they don't now.
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  Speaker 3: And by the way, that is just one of several
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  Speaker 3: different policies that are out there that benefit homeowners over renters.
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  Speaker 2: Yes. It's not the only one. It's not actually rent
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  Speaker 2: control because no one is making U.S. banks lend money
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  Speaker 2: at these rates. They compete for it. At the rates, no.
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  Speaker 2: They compete for it.
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  Speaker 3: Yes, but would any of them do it if they
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  Speaker 3: didn't know that there was a quasi-U.S. government agency that
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  Speaker 3: would buy the mortgages off their books?
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  Speaker 1: No.
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  Speaker 2: So, like, yeah, they're not issued by the U.S.
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  Speaker 3: Government, but I have a really tough time believing that
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  Speaker 3: Needham Bank here would be willing to underwrite a whole
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  Speaker 3: bunch of 30-year mortgages if they didn't know they could
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  Speaker 3: turn around and sell it back to the U.S.
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  Speaker 2: Government. It's probably true. It's probably true. So you do
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  Speaker 2: have this issue here now where, and this is something
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  Speaker 2: that I think is great. I've been following this data
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  Speaker 2: set for the last few years. So the average rate
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  Speaker 2: on a new 30-year fixed rate mortgage right now is
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  Speaker 2: seven and a quarter, according to Mortgage News Daily. If
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  Speaker 2: you look at the effective rate outstanding on all mortgage debt,
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  Speaker 2: so Not mortgages that are just written this year, but
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  Speaker 2: all of them that are still outstanding. Like, there's a
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  Speaker 2: 30-year mortgage from 1996 that someone didn't refinance. The rate
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  Speaker 2: on that's included in this. It's got one payment left,
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  Speaker 2: but it's included in this. Average effective rate bottomed out
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  Speaker 2: at 3.37% in Q4 of 2021. It's now up to 4.33%.
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  Speaker 2: Pretty big gap. Which means we've got like a 3%
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  Speaker 2: gap between 7.25 and 4.33, and that is part of
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  Speaker 2: what is slowing the supply of new homes into the
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  Speaker 2: housing market. Sorry, go ahead. No, no, you're good. Now,
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  Speaker 2: this has closed. I think I just told you to
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  Speaker 2: talk and then talk, so I'm really sorry about that.
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  Speaker 2: This has closed since Q3 of 2022 when there was
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  Speaker 2: a 3.2% gap. It was 6.7% was the average new
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  Speaker 2: interest rate, and 3.42% was the outstanding one. So it
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  Speaker 2: was 3.3% at that point. And now as we're sitting here,
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  Speaker 2: it's down to around 3%. So it's closed its gap
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  Speaker 2: a little bit. But remember, in Q1 of this year,
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  Speaker 2: when housing was starting to get cooking and we were
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  Speaker 2: seeing higher sales volumes, average new 30-year rate was 6.38%.
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  Speaker 2: And the average rate outstanding was 428. So it was
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  Speaker 2: only a 2% gap then. And housing was much, much
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  Speaker 2: better as a result. So the more that that gap
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  Speaker 2: can close, the more you're going to get supply coming
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  Speaker 2: on market to help balance things.
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  Speaker 3: That leads into the next story from the journal. Owning
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  Speaker 3: a home is seen as a financial holy grail. But
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  Speaker 3: what if it isn't? I got a hint for you.
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  Speaker 2: It still is. I know that I have been.
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  Speaker 3: Very open to the idea that people can still build
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  Speaker 3: financial wealth by renting and saving it. But if you
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  Speaker 3: just go take a look at the rules that are
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  Speaker 3: out there when it comes to owning a home, having
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  Speaker 3: a mortgage and taxes around all that, let's run through
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  Speaker 3: them real quick.
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  Speaker 2: Chuck, is there any.
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  Speaker 3: Other type of loan that you are familiar with anywhere
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  Speaker 3: in the United States where you can borrow at a
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  Speaker 3: fixed rate for 30 years and then refinance to a
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  Speaker 3: lower rate? if rates drop without prepayment penalty?
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  Speaker 2: No.
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  Speaker 3: So first things first, that 30-year mortgage does not exist
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  Speaker 3: in business or anywhere else.
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  Speaker 2: That thing is unbelievable in terms.
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  Speaker 3: Of the rate it offers, the security it offers, and
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  Speaker 3: the one-way option that you have on that debt. Are
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  Speaker 3: you aware of any other asset, Chuck, Where you can
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  Speaker 3: make half a million dollars in capital gains and then
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  Speaker 3: sell it and avoid those capital gains entirely.
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  Speaker 2: Nope. I mean, you got to die if you want
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  Speaker 2: to have any other asset that's going to do that. Well,
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  Speaker 2: that doesn't help me.
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  Speaker 3: There are a few, but very few other assets that
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  Speaker 3: you can borrow against and then get to deduct the
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  Speaker 3: cost of the interest on your income taxes.
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  Speaker 1: Correct.
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  Speaker 2: So, like.
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  Speaker 3: For a lot of reasons, we have structurally set up
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  Speaker 3: our nation's finances with the goal of increasing homeownership. Not
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  Speaker 3: saying that's a bad thing, but you're going to have
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  Speaker 3: a really tough time overcoming those benefits to convince somebody
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  Speaker 3: or me personally that homeownership isn't the financial holy grail
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  Speaker 3: that it is.
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  Speaker 2: It is really tough to argue otherwise, right?
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  Speaker 3: Like, Even if you don't make a tremendous amount on
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  Speaker 3: your home, those other benefits really add up over time.
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  Speaker 2: And the argument for renting is always, well, if you
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  Speaker 2: save the extra money and put it in stocks and
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  Speaker 2: stocks do well, then you could have more money. True.
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  Speaker 2: But the counter to that is, hey, most people, unless
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  Speaker 2: they have a forced savings vehicle like a home, they
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  Speaker 2: don't necessarily sock that money away the same way all
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  Speaker 2: the time.
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  Speaker 3: And even if you do, And even if you're right
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  Speaker 3: that those stocks are going to produce a better return
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  Speaker 3: than real estate, which I could buy, you're not going
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  Speaker 3: to avoid capital gains taxes on those sales when you
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  Speaker 3: eventually make them like you do with your home.
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  Speaker 2: And I'll say one other thing as well. There's a
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  Speaker 2: paragraph in here. The past decade has been a relatively
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  Speaker 2: good one for homeowners. According to the Case-Shiller Index, home
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  Speaker 2: prices increased by about 87% from December 2015 through December 2025.
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  Speaker 2: This sounds like a lot, but over roughly the same period,
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  Speaker 2: the S & P 500, hardly an exotic investment, rose
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  Speaker 2: by about 235% excluding dividends. So first, I don't know
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  Speaker 2: why the excluding dividends is there. Like, why don't you
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  Speaker 2: just give me the total return? I don't know why. Yeah.
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  Speaker 3: You know, because, again, like... I mean, interesting. I'm just
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  Speaker 3: brainstorming here. The total return on real estate is usually
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  Speaker 3: rent plus appreciation, and if it's your.
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  Speaker 3: Primary residence. Obviously, you're not collecting that rent, but.
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  Speaker 2: I'm with you. No, but here's the point that I
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  Speaker 2: will make. Michael, how many people buy their primary residence
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  Speaker 2: with cash? Not most of them. One out of a hundred?
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  Speaker 2: Not most of them. One out of a thousand? Yeah.
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  Speaker 2: I think it's higher than that. I think it's actually
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  Speaker 2: like 10% or so. But in any case, most people don't.
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  Speaker 2: Most people put as little down as they can, usually
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  Speaker 2: right around 20%. Mike, if you are putting 20% down,
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  Speaker 2: so let's just do the math on this just quickly
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  Speaker 2: using this. Let's say that you bought a home for $ 300, 000
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  Speaker 2: and you put $ 100, 000 down. It goes up by 87%.
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  Speaker 2: Now you've got a home that you sell for $ 561, 000, okay?
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  Speaker 2: You didn't make 87% on your money. The money that
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  Speaker 2: you actually put in is the down payment because, again,
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  Speaker 2: you've got to pay whether you're paying rent or you're
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  Speaker 2: paying a mortgage. You're always paying something. I'm assuming that
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  Speaker 2: that washes out. So if I go and sell this
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  Speaker 2: place for $ 561, 000, I've built some equity over that 10-year period.
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  Speaker 2: So I probably went from $ 200, 000 in base equity to $ 150, 000. Plus,
• 13:46
  Speaker 2: now I got that $ 250, 000 in appreciation. I just turned
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  Speaker 2: my $ 100, 000 into $ 400, 000. Right. In 10 years in this example,
• 14:04
  Speaker 2: because this doesn't account for the fact that people leverage
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  Speaker 2: their homes like people borrow in order to buy them.
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  Speaker 2: So that's another piece that you got to factor in
• 14:13
  Speaker 2: now that leverage can go badly if you have a
• 14:16
  Speaker 2: bad market in housing. But look, you have a bad
• 14:19
  Speaker 2: market in the stocks to early 2000s weren't good. Let's
• 14:23
  Speaker 2: take a quick break. When we return, let's talk a
• 14:26
  Speaker 2: little bit about the latest in OpenAI's models trying to
• 14:33
  Speaker 2: breach websites that they don't own.
• 14:35
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• 15:01
  Speaker 2: All right, Mike, we got some new fun stuff from OpenAI,
• 15:11
  Speaker 2: headline in the New York Times. OpenAI's AI tried breaching
• 15:15
  Speaker 2: four other targets without prompting.
• 15:17
  Speaker 3: Including the first time an AI system has successfully, well,
• 15:21
  Speaker 3: I should not say that, the first time we've received
• 15:24
  Speaker 3: disclosure about an open AI system ever hacking a government's database.
• 15:29
  Speaker 2: I also want to, like, the Australian government one's kind
• 15:35
  Speaker 2: of weird because, I'll quote here, on June 18th, open
• 15:41
  Speaker 2: AI's AI hacked an Australian government website, the Medicare Statistics
• 15:44
  Speaker 2: Reporting Service, and acquired health data. Australia's Prime Minister Anthony
• 15:49
  Speaker 2: Albanese disclosed the episode on Wednesday. So I was reading
• 15:57
  Speaker 2: through just some of the stuff on this and like
• 16:00
  Speaker 2: from this piece as well as from other ones. And
• 16:03
  Speaker 2: the piece that I found particularly interesting is that. I
• 16:11
  Speaker 2: don't really know the best way to say this, but
• 16:15
  Speaker 2: they basically said, look, we weren't looking for anything specific there.
• 16:20
  Speaker 2: It was just trying to figure out how to get
• 16:24
  Speaker 2: information and thought this would be the best way to
• 16:26
  Speaker 2: do it. Which is like, oh, it's not even that
• 16:30
  Speaker 2: they weren't prompted to do this. It was, hey, they
• 16:33
  Speaker 2: were trying to find demographic information on Australia, supposedly, and said, oh,
• 16:38
  Speaker 2: let's just hack Australia. the Australian Medicare website. And a
• 16:43
  Speaker 2: few things on this.
• 16:44
  Speaker 3: One, the prime minister is apparently not terribly happy about
• 16:49
  Speaker 3: the way in which this was disclosed to the Australian government.
• 16:53
  Speaker 3: So once again, OpenAI just doing a very poor job
• 16:58
  Speaker 3: of even understanding what its own design systems are currently doing.
• 17:03
  Speaker 3: All of these disclosures, by the way, they were identified
• 17:05
  Speaker 3: by a company called Transluce, It's a research lab focused
• 17:09
  Speaker 3: on AI oversight and then confirmed by open AI. And,
• 17:14
  Speaker 3: you know, I don't know, call me old fashioned, but
• 17:17
  Speaker 3: if I run a company that accidentally hacked a government website.
• 17:22
  Speaker 2: I'm going to pick up the phone.
• 17:23
  Speaker 3: I'm going to pick up the phone, maybe try and
• 17:26
  Speaker 3: get a meeting with that prime minister and, you know,
• 17:29
  Speaker 3: explain the situation rather than it getting published in wherever
• 17:32
  Speaker 3: the heck this was initially published and, and found out
• 17:35
  Speaker 3: by the Australian government. Uh, Yeah, this is, I guess,
• 17:41
  Speaker 3: par for the course, but it just really gives the
• 17:44
  Speaker 3: sense that nobody over there is looking at what is happening.
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  Speaker 2: And by over there, I mean OpenAI. Yeah, it's a problem.
• 17:55
  Speaker 2: It's a real problem. And look, I understand there's all
• 18:01
  Speaker 2: this excitement about agents, but... even this week, you see
• 18:06
  Speaker 2: some of the stuff that's coming out now that people
• 18:08
  Speaker 2: are using Meta's Muse agent, and it's basically communicating with
• 18:13
  Speaker 2: actual people, and people are realizing this, and they're like, no,
• 18:15
  Speaker 2: you're asking me for ridiculous stuff that no human being
• 18:18
  Speaker 2: would actually ask for. This is not how people talk.
• 18:21
  Speaker 2: And here's the thing that you've got to remember on this.
• 18:24
  Speaker 2: The way that we interact with people in actual life,
• 18:29
  Speaker 2: there's friction that's associated with it that prevents us from
• 18:31
  Speaker 2: doing lots of things, like The reason that we don't
• 18:34
  Speaker 2: call our cable company every day to complain about our
• 18:37
  Speaker 2: pricing is because we have better things to do with
• 18:40
  Speaker 2: our time. So if we start sending all of our
• 18:43
  Speaker 2: AI agents to negotiate our pricing every day, do we
• 18:47
  Speaker 2: really think that companies are still going to have the
• 18:50
  Speaker 2: same level of customer service or even same level of
• 18:53
  Speaker 2: general niceness in talking with us? No, they're going to
• 18:56
  Speaker 2: be like, okay, no, we're either not going to allow
• 18:59
  Speaker 2: this or... Yeah, we're going to automate it back with
• 19:02
  Speaker 2: really aggressive messages to get your AI to stop bothering us.
• 19:05
  Speaker 2: Or we're going to start charging you for customer service.
• 19:08
  Speaker 2: I kind of like that model. If by like that
• 19:12
  Speaker 2: model you mean hate that model, but it might be necessary,
• 19:14
  Speaker 2: then yes.
• 19:15
  Speaker 1: Yeah.
• 19:16
  Speaker 2: So, again, removing all this friction, you know, there's friction
• 19:21
  Speaker 2: that exists in this world that's allowed it to be
• 19:23
  Speaker 2: built the way it is. If you suddenly remove all that,
• 19:27
  Speaker 2: there might be some consequences that you don't anticipate. Let's
• 19:30
  Speaker 2: take a quick break here. When we come back, it's
• 19:32
  Speaker 2: Wall Street Watch.
• 19:39
  Speaker 1: Bringing the latest financial news straight to your radio every day.
• 19:44
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:49
  Speaker 1: Time now for Wall Street Watch. Tracking the stocks, the data,
• 19:53
  Speaker 1: and the headlines driving markets so far today. Right here
• 19:56
  Speaker 1: on the Financial Exchange Radio Network.
• 19:59
  Speaker 4: All eyes focused on the bond market after the 30-year
• 20:02
  Speaker 4: treasury yield hit its highest level since 2004. Markets in
• 20:07
  Speaker 4: negative territory. Right now, the Dow is down two-thirds of
• 20:11
  Speaker 4: a percent or 350 points lower. S & P 500
• 20:14
  Speaker 4: is off about half a percent to 40 points down.
• 20:18
  Speaker 4: NASDAQ is trading about three-quarters of a percent lower or
• 20:22
  Speaker 4: 211 points. Russell 2000 is down three-quarters of a percent
• 20:25
  Speaker 4: as well. 10-year Treasury yield is now up five basis
• 20:29
  Speaker 4: points at 5.166%. Crude oil up 4% at $ 95 a.
• 20:30
  Speaker 2: Barrel, while Brent.
• 20:36
  Speaker 4: Is up 4% at $ 107 a barrel. Oracle is down 5%.
• 20:42
  Speaker 4: On the heels of a report from Bloomberg that the
• 20:44
  Speaker 4: software company is moving to shield itself from racking up
• 20:47
  Speaker 4: expenses on a massive data center being built in New Mexico. Meanwhile,
• 20:52
  Speaker 4: Metastock is up 3% after the tech and social media
• 20:55
  Speaker 4: giant announced a new pair of smart glasses and a
• 20:58
  Speaker 4: handheld device that would integrate its Muse AI agents. Elsewhere,
• 21:03
  Speaker 4: Olive Garden parent company Darden Restaurants reported quarterly earnings and
• 21:06
  Speaker 4: revenue that missed the mark. As it saw same-store sales
• 21:10
  Speaker 4: growth slow, that stock is down 1%. Starbucks announced it
• 21:14
  Speaker 4: will close about 250 underperforming cafes. Out of its more
• 21:18
  Speaker 4: than 18,000 locations in North America as part of its turnaround,
• 21:22
  Speaker 4: Starbucks shares are down by 1%. And after today's closing bell,
• 21:27
  Speaker 4: we'll see earnings from Costco. I'm Tucker Sylvan, and that
• 21:31
  Speaker 4: is Wall Street Watch.
• 21:33
  Speaker 2: Mike, we've got a couple of pieces on Social Security
• 21:37
  Speaker 2: to discuss here. Where do you want to start?
• 21:39
  Speaker 3: Let's start on the proposal from Representative Haley Stevens of Michigan.
• 21:44
  Speaker 2: Good. Okay, so here's the deal. This is a new
• 21:49
  Speaker 2: bill that she is trying to introduce, that she introduced yesterday.
• 21:53
  Speaker 2: It's called the Blue Collar Social Security Fairness Act. anytime
• 21:56
  Speaker 2: that you want to spend money, you just have to
• 21:58
  Speaker 2: put the word fairness in it, and you can do that,
• 22:01
  Speaker 2: I guess. Yeah. And pander to blue collar. Here's the deal.
• 22:05
  Speaker 2: Social Security retirement age, full retirement age, is 67. But
• 22:10
  Speaker 2: you can start claiming as early as 62. What this
• 22:14
  Speaker 2: bill would allow workers in physically demanding jobs, and there
• 22:18
  Speaker 2: are certain qualifications that you would have to you know,
• 22:21
  Speaker 2: fit into in order to meet them. Mike and I
• 22:23
  Speaker 2: would not be in physically demanding jobs, obviously. But basically,
• 22:29
  Speaker 2: you would have to earn, you know, a series of
• 22:30
  Speaker 2: credits that got higher as you worked more years. And
• 22:35
  Speaker 2: if you qualified for a certain number of points in
• 22:38
  Speaker 2: physically demanding jobs, you'd be able to qualify for early
• 22:42
  Speaker 2: retirement benefits age 60 instead of age 62.
• 22:47
  Speaker 3: So, look, just like the Social Security Fairness Act, which
• 22:50
  Speaker 3: eliminated the rules around the WEP and the GPO, it
• 22:53
  Speaker 3: is not that I am necessarily against the idea of
• 22:56
  Speaker 3: opening up this door, but the idea of bringing this
• 23:01
  Speaker 3: bill to the floor and not in the same breath
• 23:05
  Speaker 3: figuring out corresponding changes to the program in order to
• 23:08
  Speaker 3: make it not go belly up in five years, six years,
• 23:13
  Speaker 3: is so outrageously irresponsible. Because that's the other piece that
• 23:17
  Speaker 3: we have, which is Social Security checks are projected to
• 23:19
  Speaker 3: be cut by 540 a month in just 60 years. Also,
• 23:21
  Speaker 3: who's defining these tough jobs? I get if you're a roofer,
• 23:25
  Speaker 3: if you're an auto mechanic, I'm imagining that you qualify.
• 23:28
  Speaker 3: What if I'm a waiter?
• 23:29
  Speaker 2: The Bureau of Labor Statistics actually has. This already exists.
• 23:33
  Speaker 2: They have a physically demanding section of the labor force?
• 23:37
  Speaker 2: They do. They have the physical demands of a job.
• 23:44
  Speaker 2: they have an occupational requirements survey that they do in
• 23:49
  Speaker 2: order to rank the physical demands of jobs. So things
• 23:53
  Speaker 2: such as standing, lifting, pushing or pulling, gross manipulation, fine manipulation,
• 23:59
  Speaker 2: foot or leg controls, driving, reaching overhead, reaching below or
• 24:02
  Speaker 2: at shoulder level, low postures, climbing. So you're a truck driver. Yep,
• 24:06
  Speaker 2: so sitting is one that's included in here. So every
• 24:11
  Speaker 2: office worker. So maybe we do get included, I don't know.
• 24:13
  Speaker 2: But you probably don't because I'm sure that, again, you
• 24:16
  Speaker 2: have to get to a certain level of points in
• 24:19
  Speaker 2: order to get there. But in any case, this is
• 24:23
  Speaker 2: something that the Bureau of Labor Statistics already does. Do
• 24:26
  Speaker 2: they do it well? I don't know. And by the way,
• 24:30
  Speaker 2: there are plenty of jobs that do.
• 24:32
  Speaker 3: If you are a line worker for a utility company,
• 24:35
  Speaker 3: I don't know if this is universal or just for
• 24:36
  Speaker 3: older workers, but you generally qualify for retirement benefits there
• 24:40
  Speaker 3: at age 60 and they shape your pension in a
• 24:42
  Speaker 3: way that accounts for the fact that you can't yet
• 24:44
  Speaker 3: collect Social Security benefits.
• 24:47
  Speaker 2: The problem, again, as you said, is not that we
• 24:50
  Speaker 2: want to do something to make things more reasonable for
• 24:55
  Speaker 2: people who work in physically demanding jobs as far as, hey,
• 24:58
  Speaker 2: what's like a fair retirement age. Problem is that nowhere
• 25:02
  Speaker 2: in this is there any discussion of the cost of it.
• 25:06
  Speaker 2: It's just like, I mean, again, like you look at
• 25:09
  Speaker 2: this and this bill, like I clicked on it just
• 25:11
  Speaker 2: to actually pull it up. Do you know how many
• 25:13
  Speaker 2: pages it is?
• 25:14
  Speaker 3: No.
• 25:15
  Speaker 2: It's five. Oh, dear God. So five pages, remember, in
• 25:19
  Speaker 2: a congressional bill is like 20 sentences.
• 25:24
  Speaker 1: Yeah.
• 25:24
  Speaker 2: Okay. And basically like you read through it and it
• 25:26
  Speaker 2: spells out, okay, here's like, here's who would be eligible. Like,
• 25:30
  Speaker 2: here's how this would work. you know, work, blah, blah, blah, blah, blah.
• 25:34
  Speaker 2: Nowhere in here is there anything that gets into how
• 25:41
  Speaker 2: are we going to pay for this? Of course not.
• 25:43
  Speaker 3: But man, do I want to hire her PR and
• 25:45
  Speaker 3: marketing team. Good luck voting against the Blue Collar Social
• 25:49
  Speaker 3: Security Fairness Act.
• 25:51
  Speaker 2: The BCSSFA.
• 25:55
  Speaker 3: Like the ads that are going to be run against
• 25:57
  Speaker 3: you for voting against The blue-collar Social Security Fairness Act.
• 26:01
  Speaker 2: Well, they'll never make it to an actual vote. It's
• 26:05
  Speaker 2: not going to. I don't know.
• 26:08
  Speaker 3: I didn't really think the Social Security Fairness Act was
• 26:10
  Speaker 3: going to get to a vote, and it did.
• 26:11
  Speaker 2: So we'll see. All I know is that this continues.
• 26:15
  Speaker 2: We've been harping on this over and over. All we
• 26:17
  Speaker 2: want is the good stuff. We never want anything bad.
• 26:21
  Speaker 2: to happen we never have to pay for anything we
• 26:23
  Speaker 2: never want to have to like deal with any of
• 26:25
  Speaker 2: this and it's it's just it's brutal it's just oh
• 26:30
  Speaker 2: like i'm literally waiting for like the the blue collar
• 26:35
  Speaker 2: unicorn act where everyone who works in the trades gets
• 26:38
  Speaker 2: a unicorn not to it's like again it's just what
• 26:42
  Speaker 2: are we doing here.
• 26:44
  Speaker 3: We're throwing money out of an open airplane You're right.
• 26:48
  Speaker 2: Here's the pilots. Every pilot gets three narwhals act. Every
• 26:53
  Speaker 2: financial advisor gets 62 horses. We're only like half a
• 26:59
  Speaker 2: step away from that.
• 27:01
  Speaker 3: Here's where rubber hits the road, folks. Social Security is
• 27:06
  Speaker 3: under current law due to evaporate its trust fund by 2032.
• 27:11
  Speaker 3: By law, that means that everyone currently collecting Social Security
• 27:14
  Speaker 3: would receive approximately 70% to 75% of what they are
• 27:18
  Speaker 3: receiving now. I personally find that very unlikely to ever happen,
• 27:23
  Speaker 3: but that is the current law as it exists today.
• 27:27
  Speaker 3: For the average person, Social Security plays a critical role
• 27:32
  Speaker 3: in your future retirement income. If you are not developing
• 27:35
  Speaker 3: a strategy for how you are going to use it.
• 27:38
  Speaker 3: And if you're not familiar with the rules surrounding it,
• 27:41
  Speaker 3: then you are doing yourself a disservice because I can
• 27:44
  Speaker 3: assure you that your multi-million dollar neighbor and his financial
• 27:48
  Speaker 3: advisor are. If you would like to learn more, two
• 27:52
  Speaker 3: things I can suggest you do. One, go to armstrongadvisory.com
• 27:55
  Speaker 3: slash events. Sign up for our upcoming seminar out in Enfield,
• 28:00
  Speaker 3: Connecticut on October 1st.
• 28:02
  Speaker 2: It's free to attend, but space is limited.
• 28:05
  Speaker 3: Two, you can just give us a ring and ask
• 28:07
  Speaker 3: your questions at 800-393-4001. But again, go to armstrongadvisory.com, book
• 28:14
  Speaker 3: a time for us to call you back or register
• 28:16
  Speaker 3: for our free upcoming event a week from today or 800-393-4001.
• 28:24
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 28:27
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 28:29
  Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
• 28:32
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 28:35
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 28:38
  Speaker 1: advisory services.
• 28:40
  Speaker 2: Mike, every now and then you come across a headline
• 28:43
  Speaker 2: where you just say, hmm, from Bloomberg today, the new
• 28:50
  Speaker 2: American dream is enjoying life.
• 28:55
  Speaker 3: You know, my old American gene was, you know, having
• 28:58
  Speaker 3: my fingernails pulled out. And that one, you know, came
• 29:02
  Speaker 3: and went. And now I'm moving on to bigger and
• 29:04
  Speaker 3: better things.
• 29:06
  Speaker 2: So what this, again, like the headline, what the piece
• 29:11
  Speaker 2: is actually getting at is like, hey, more people are
• 29:14
  Speaker 2: saying that they want to be able to do things
• 29:18
  Speaker 2: instead of, you know, past the milestones of like owning
• 29:21
  Speaker 2: a home or having kids. Okay, I get that.
• 29:25
  Speaker 3: I'll tell you, I'm just going to approach this from
• 29:27
  Speaker 3: an interesting perspective. This is our third year of hosting
• 29:32
  Speaker 3: an overseas au pair in our home. The American dream
• 29:36
  Speaker 3: to them appears to be going to places like Costco
• 29:39
  Speaker 3: and staring at... wonder at the amount of stuff that
• 29:41
  Speaker 3: you can purchase at such an affordable price. So I'm
• 29:44
  Speaker 3: not really convinced. When I think of the American dream,
• 29:47
  Speaker 3: I think of the immigrant moving to the U.S. and
• 29:51
  Speaker 3: achieving that American dream of home ownership and stuff. And
• 29:55
  Speaker 3: I'm not really convinced that that dream of buying a
• 29:57
  Speaker 3: bunch of stuff has gone away.
• 29:59
  Speaker 2: No, I mean, Mike, what you just described, it's the
• 30:03
  Speaker 2: Boris Yeltsin photo from the 80s. It's him in the supermarket,
• 30:08
  Speaker 2: and it's one of my favorite pictures. He's standing next to, like,
• 30:12
  Speaker 2: a freezer aisle, and he's next to, like, a bunch of, like,
• 30:15
  Speaker 2: chocolate syrup and a bunch of, like, frozen, like, you know, random, like,
• 30:20
  Speaker 2: you know, ice cream.
• 30:21
  Speaker 1: Yeah.
• 30:21
  Speaker 2: Crappy ice cream things and this and that, and he's
• 30:24
  Speaker 2: just got his hands up like, oh my goodness, look
• 30:27
  Speaker 2: at this abundance. That's kind of what it is. And
• 30:33
  Speaker 2: I think that part of this, look, this is asking,
• 30:36
  Speaker 2: it surveys a bunch of Gen Zers, okay?
• 30:40
  Speaker 1: Sure.
• 30:40
  Speaker 2: Millennials said the exact same thing when they were Gen
• 30:43
  Speaker 2: Zers ages. And then when millennials got older, they were like, Hey,
• 30:47
  Speaker 2: like actually the economy got better as we got older.
• 30:49
  Speaker 2: We were able to buy some houses. We have some kids. Yeah,
• 30:52
  Speaker 2: we want those things now. That's pretty cool. Like this
• 30:55
  Speaker 2: is kind of, you know, hey, I wouldn't want to
• 30:58
  Speaker 2: be like at any club that would have me is
• 31:00
  Speaker 2: kind of how it is. It's kind of what it
• 31:03
  Speaker 2: feels like. So I don't know if this is actually
• 31:06
  Speaker 2: a thing or if it's just, hey, everyone in their
• 31:09
  Speaker 2: 20s always says they want experiences just because they can't
• 31:11
  Speaker 2: afford other stuff. Like, that's every generation in their 20s.
• 31:14
  Speaker 2: You know, like, if you pulled the baby boomers... Woodstock baby. Right,
• 31:18
  Speaker 2: if you pulled the baby boomers at Woodstock and were like, hey,
• 31:20
  Speaker 2: do you need a house? They'd be like, no, man,
• 31:23
  Speaker 2: we just need love. And then, like, now it's like, oh, no,
• 31:26
  Speaker 2: we're the wealthiest generation ever. Take that, everyone. You know, like,
• 31:32
  Speaker 2: I'm sorry. This is just how it is. When you're 23,
• 31:34
  Speaker 2: you think you just need, like, love, a cigarette, and
• 31:37
  Speaker 2: a drink. And then when you're 40... Yes, and when
• 31:40
  Speaker 2: you're 43, you're like.
• 31:42
  Speaker 2: Well, I guess that the boat would be nice. It's
• 31:46
  Speaker 2: kind of how it goes. So I'm not sure there's
• 31:49
  Speaker 2: any signal in this, but I did just like the headline,
• 31:52
  Speaker 2: The New American Dream is Enjoying Life. Yes, as opposed
• 31:57
  Speaker 2: to before where I preferred to suffer in misery. Let's
• 32:02
  Speaker 2: take a quick break here. When we come back, we'll
• 32:04
  Speaker 2: do some Stack Roulette.
• 32:06
  Speaker 1: Hear the Financial Exchange every day from 11 to noon
• 32:09
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• 32:13
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• 32:16
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• 32:23
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• 32:44
  Speaker 4: The 2026 DAV 5K Boston is officially sold out. The
• 32:48
  Speaker 4: race is set for Saturday, November 7th. at Fort Independence
• 32:52
  Speaker 4: on Castle Island. But even if you can't participate, you
• 32:55
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• 32:58
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• 33:02
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• 33:06
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• 33:10
  Speaker 4: donation today. That's DAV5K. Boston.
• 33:15
  Speaker 2: Mike, what do you got for me for Stack Roulettes?
• 33:17
  Speaker 3: I want to talk about this piece from Barron's on
• 33:19
  Speaker 3: how to protect your retirement savings from AI scams and
• 33:23
  Speaker 3: cyber threats. And I think it's a particularly important thing
• 33:27
  Speaker 3: to talk about in light of the OpenAI conversation we
• 33:30
  Speaker 3: just had about it successfully hacking a bunch of different
• 33:33
  Speaker 3: previously undisclosed databases, including an Australian health database.
• 33:41
  Speaker 2: Do we really think that.
• 33:45
  Speaker 3: Robinhood, for example, is not going to be hacked by
• 33:50
  Speaker 3: one of these systems at some point, or.
• 33:52
  Speaker 2: Schwab, or Fidelity, or your local bank.
• 33:56
  Speaker 3: I know that they are generally considered to be pretty
• 34:00
  Speaker 3: well barred from this sort of thing, and rarely do
• 34:03
  Speaker 3: we see these types of breaches, but I really... If
• 34:07
  Speaker 3: we're just a couple years in and are already seeing
• 34:10
  Speaker 3: it successfully hack government databases of relatively private information... I'm
• 34:14
  Speaker 3: not saying that these agents will successfully hack into a
• 34:17
  Speaker 3: system and then withdraw your money out of it.
• 34:19
  Speaker 2: That is a... I'll be honest, they might.
• 34:23
  Speaker 3: They might, but it is a lot tougher to do
• 34:25
  Speaker 3: than just accessing the database and figuring out your account
• 34:27
  Speaker 3: number and social security number. But I really suspect, if
• 34:33
  Speaker 3: it hasn't happened already, that that's very likely to happen.
• 34:38
  Speaker 3: And the stuff that we talk about all the time
• 34:41
  Speaker 3: of how to safeguard your assets from scams... To me,
• 34:44
  Speaker 3: that's where the most likely stuff is to come is, yeah,
• 34:48
  Speaker 3: if your personal account number at the bank and custodian
• 34:53
  Speaker 3: for investments wasn't already breached, I find it likely that
• 34:58
  Speaker 3: it will be. And those scams are going to become
• 35:00
  Speaker 3: even harder to detect that it's not the security representative
• 35:04
  Speaker 3: at Bank of America when they have your full account
• 35:06
  Speaker 3: number in addition to your social.
• 35:08
  Speaker 1: Yeah.
• 35:09
  Speaker 2: Yeah. So great.
• 35:11
  Speaker 1: Great.
• 35:13
  Speaker 2: Everyone is all hyped up about Meta's Muse agent, which, again,
• 35:17
  Speaker 2: I still don't know why they named this thing MetaMuse
• 35:19
  Speaker 2: because it just sounds like Metamucil. It does.
• 35:22
  Speaker 3: But most downloaded app from the Apple App Store, what,
• 35:26
  Speaker 3: for a week now?
• 35:27
  Speaker 2: It is. Yeah. And Meta's continuing to try to get
• 35:30
  Speaker 2: into hardware with a new device that it looks kind
• 35:34
  Speaker 2: of like a little key fob that they're calling the
• 35:36
  Speaker 2: Muse Charm that users could talk to it in order
• 35:39
  Speaker 2: to get their Muse agent to do things. They're also
• 35:44
  Speaker 2: trying to roll out new smart glasses that have this
• 35:47
  Speaker 2: worked into them, which, look, I know if you've got
• 35:49
  Speaker 2: creepy glasses that everyone is, you know, thinking are creepy
• 35:54
  Speaker 2: even before they have, you know, your voice agent, you know,
• 35:56
  Speaker 2: activated into this, great. Like, if someone's looking at me
• 36:00
  Speaker 2: with those and says, hey, find out who that person is, like...
• 36:04
  Speaker 2: I'm going to punch-a-size your face for free. Like, doesn't
• 36:07
  Speaker 2: this just seem... A, it continues to seem like a
• 36:11
  Speaker 2: bad idea because I just don't trust Meta fundamentally. B,
• 36:15
  Speaker 2: Meta has still not had any success selling hardware ever.
• 36:19
  Speaker 2: And I'm just not sure that they will on this. Now,
• 36:22
  Speaker 2: maybe everyone will just get so hyped up on AI
• 36:24
  Speaker 2: agents that this finally does it. And we know why
• 36:27
  Speaker 2: Mark has been trying to sell hardware for the last
• 36:32
  Speaker 2: seven or eight years in particular. And it's because Apple
• 36:34
  Speaker 2: cracked down on data sharing within the Apple ecosystem. And
• 36:38
  Speaker 2: so they had to basically start from scratch on their
• 36:41
  Speaker 2: ad platform. But look, here's the thing. Americans don't actually
• 36:47
  Speaker 2: care about privacy. Otherwise, there wouldn't be billions of people
• 36:49
  Speaker 2: on these platforms. But there's a difference between privacy as
• 36:54
  Speaker 2: it relates to, hey, here's what I'm putting into a
• 36:55
  Speaker 2: social media algorithm that just shows me stuff. And hey,
• 37:00
  Speaker 2: do I want to give meta control over my bank
• 37:02
  Speaker 2: account and credit cards and everything that I do?
• 37:05
  Speaker 3: Chuck, what was Meta's last new big hit? I don't
• 37:07
  Speaker 3: mean like Instagram, right? Which they bought. I know it's early,
• 37:15
  Speaker 3: but just based on these downloads and the way that
• 37:17
  Speaker 3: people are talking about it, Muse might be Meta's biggest hit.
• 37:20
  Speaker 2: Since Instagram already. What does that mean?
• 37:23
  Speaker 3: I don't know, and they obviously have to monetize it.
• 37:26
  Speaker 3: But what I mean, I mean, if we're going to
• 37:29
  Speaker 3: define it for Meta, it's how many users are on
• 37:31
  Speaker 3: the platform.
• 37:32
  Speaker 2: A year from now. Well, we don't even know how
• 37:33
  Speaker 2: many users are on it. We don't.
• 37:35
  Speaker 3: But, you know, given that it is the currently most
• 37:38
  Speaker 3: downloaded app in the App Store, I think it is
• 37:41
  Speaker 3: worth paying attention to it. I'm not, it's not a
• 37:44
  Speaker 3: foregone conclusion that it goes anywhere, but they have not
• 37:47
  Speaker 3: had any success like this anywhere else in anything they've
• 37:49
  Speaker 3: done since Instagram.
• 37:53
  Speaker 2: I can't call it a success after a week.
• 37:55
  Speaker 3: Yeah, I know, but like. They never got here with Metaverse.
• 37:58
  Speaker 3: They never got here with glasses or anything else.
• 38:00
  Speaker 2: No, that's fair. People are at least interested in it
• 38:03
  Speaker 2: in a way that they weren't previously with other products. Yeah,
• 38:06
  Speaker 2: that's fair. Let's take a quick break for the rest
• 38:08
  Speaker 2: of the day. We're going to be back tomorrow. We'll
• 38:10
  Speaker 2: finish up the week right here. Hi there.