Latest / The Financial Exchange Show / Stocks Hit New Highs, Private Credit Risks Grow, and the IPO Boom Returns

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Stocks Hit New Highs, Private Credit Risks Grow, and the IPO Boom Returns · The Financial Exchange Show

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Speaker 1: Chuck Zada and Mike Armstrong.
1:18
Speaker 2: Chuck, Mike and Tucker with you, and stocks are rallying
1:21
Speaker 2: to new all time highs. This on the back of
1:25
Speaker 2: a tweet from the Iranian Foreign Minister that the strait
1:28
Speaker 2: of horror Moves remains open as negotiated through the ceasefire process.
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Speaker 2: Despite that, you still aren't seeing meaningful traffic through horror
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Speaker 2: Moves at the moment, but markets are betting that there
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Speaker 2: is going to be a positive outcome probably the next
1:42
Speaker 2: three to six weeks. And so again, I think you
1:46
Speaker 2: certainly are getting to the point internationally at least where
1:48
Speaker 2: you are starting to see some problems cropping up in
1:51
Speaker 2: terms of shortages, most notably in Asia right now, but
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Speaker 2: also some sporadic items that are popping up across Europe
1:57
Speaker 2: here and there. Nothing significant to this point, but it's
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Speaker 2: it's starting to show up, and markets are effectively saying, hey,
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Speaker 2: if there's progress so that you can get horror moves
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Speaker 2: reopened in the near future. Yes, you're gonna have some
2:10
Speaker 2: shortages that happen for a two to three month period,
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Speaker 2: but that doesn't matter because you don't price earnings based
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Speaker 2: on the next two to three months. You price them
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Speaker 2: based on the next two to three years and we
2:20
Speaker 2: can get through that. So with that in mind, Dow
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Speaker 2: Jones Industrial Average up one hundred I'm sorry, one thousand,
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Speaker 2: thirty six points, about two and a quarter percent, the
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Speaker 2: S and P five hundred up ninety three points about
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Speaker 2: one in a third percent, and the nasdak can posite
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Speaker 2: up three hundred and eighty four points about one point
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Speaker 2: six percent. So a broad based rally happening in equities.
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Speaker 2: On the bond side of things, you've got bonds falling, sorry,
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Speaker 2: bonds rising with yields falling, as the ten year Treasury
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Speaker 2: is now at four point two to three six percent,
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Speaker 2: down seven point three basis points from yesterday. Dollar index
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Speaker 2: down point four to two percent to ninety seven sixty
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Speaker 2: you've got gold up ninety dollars and fifty cents and
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Speaker 2: ounce to forty eight ninety eight, and you've got West
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Speaker 2: text Intermediate crude oil down thirteen point seventy five percent
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Speaker 2: to eighty one sixty six, triple a national average. For
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Speaker 2: gas prices right now, we're looking at four oh seven
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Speaker 2: and six ten, so down about a cent and a
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Speaker 2: half overnight. If we hold with West Texas Intermediate in
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Speaker 2: this range, you are going to end up with gas
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Speaker 2: prices back into that three eighty three nine three eighty
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Speaker 2: five range within the next week or so, and we'll
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Speaker 2: see how things develop from there. Again, this can all
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Speaker 2: change quickly. You could have a comprehensive agreement that gets
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Speaker 2: signed in the next couple weeks where gas prices have
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Speaker 2: further to fall. You could have a continuation of this
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Speaker 2: where maybe oil prices continue to hang out. You know,
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Speaker 2: in the quite honestly, if four Moves remains closed, you're
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Speaker 2: gonna not closed. But if traffic remains not going through
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Speaker 2: despite the Iranians insistence that it's open, you would have
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Speaker 2: oil moving back up into the nineties in pretty short order.
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Speaker 2: And if you have renewed hostilities you can get back
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Speaker 2: into that hundred and twenty range. But at this point,
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Speaker 2: markets are pricing in that the worst is behind us,
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Speaker 2: and that very well maybe the case. We'll just see
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Speaker 2: how things go over the next couple weeks here. Indeed,
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Speaker 2: let's talk about this piece from the Financial Times. Wall
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Speaker 2: Street banks start trading derivatives to bet on pain in
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Speaker 2: private credits. Oh good, we've got credit default swaps back
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Speaker 2: in the news after a twenty year absence. Boil boil boy.
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Speaker 3: History sure does repeat itself. So during the lead up
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Speaker 3: to the Great Financial Crisis, investors of all sorts, we're
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Speaker 3: trying to find ways to bet against the American housing
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Speaker 3: market in one way or another. Yeah, that's really what
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Speaker 3: it was. It was like, hey, how do we actually
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Speaker 3: place these bets. There aren't a ton of bonds for
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Speaker 3: us to bet against. We can't short this, that or
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Speaker 3: the other. So they created this new cool product called
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Speaker 3: a credit default swap, which was effectively betting.
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Speaker 2: I don't know if they were new at the time.
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Speaker 3: Yeah, the new on the the product of what it
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Speaker 3: was betting against was new, which was all of these
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Speaker 3: mortgage backed securities. And so they created this this new uh,
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Speaker 3: this new product on this much like is happening today.
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Speaker 3: Before this, you could bet against the stock of private
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Speaker 3: credit companies if they existed, but there wasn't this liquidity
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Speaker 3: for the ability to bet against these.
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Speaker 4: And so.
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Speaker 3: The question of course is will this actually become a
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Speaker 3: very popular investment product as it did during that point
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Speaker 3: in time.
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Speaker 4: Who is taking the other side of that trade?
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Speaker 3: Right, Because if banks are selling credit default swaps, they're
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Speaker 3: they're selling the other part of that bet to somebody else, uh,
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Speaker 3: and does it grow to the point where it could
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Speaker 3: be real problematic for some of the folks bond the
6:00
Speaker 3: product in the other end.
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Speaker 2: So here's the thing. I know, everyone hears the phrase,
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Speaker 2: you know, credit default swapping immediately they go, oh wait, guys,
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Speaker 2: here's the thing, and Mike basically spelled it out. In
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Speaker 2: order for this to become an actual problem, the scale
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Speaker 2: and holdings and concentration of these bets against it have
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Speaker 2: to become so big and so problematic that like, it's
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Speaker 2: not even worth discussing right now. Ultimately, any financial product
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Speaker 2: can be either good or bad for the financial system
6:36
Speaker 2: depending on who owns it and how much of it
6:39
Speaker 2: they own. Okay, even the stuff that like I don't
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Speaker 2: particularly like. You know, when we talk about again few
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Speaker 2: betting markets, whatever they prediction markets, I might think they're
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Speaker 2: really dumb. But if three guys decide to get together
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Speaker 2: and make a bet as to you know, where whether
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Speaker 2: or not a human can grow wings, this year not
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Speaker 2: really going to be a problem for me. It's not
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Speaker 2: affecting people. If ten million people start betting on you know.
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Speaker 3: Sack and coming of Jesus, which you can currently bet
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Speaker 3: on on some of these sites.
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Speaker 2: Yes, yeah, problematic. Okay, if you've got everyone in their
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Speaker 2: grandmother betting on sports and just losing that vig to
7:27
Speaker 2: the house every single day becomes problematic for society. Ultimately,
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Speaker 2: credit default swaps are like anything else. Hey, if they're
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Speaker 2: used responsibly, they're fine. Like all the people who are like, well,
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Speaker 2: you shouldn't ever have any debt, Hey, guess what, I
7:43
Speaker 2: got a mortgage. Okay, I can pay my mortgage. I
7:47
Speaker 2: hope I'll still be able to, and I hope there's
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Speaker 2: no change in my employment situation that would cause that
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Speaker 2: to become a problem. But there are ways to use
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Speaker 2: debt responsibly, just like there are ways to use debt irresponsibly. Likewise,
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Speaker 2: they are a ways to use credit default swaps responsibly
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Speaker 2: and there's ways to use them irresponsibly.
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Speaker 3: It Yeah, there are always echoes of the past. And
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Speaker 3: this new financial product that you know, the real innovators
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Speaker 3: on Wall Street have put out there does bear resemblance
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Speaker 3: to what we saw during O Wait, the stuff that
8:16
Speaker 3: doesn't bear resemblance, I mean, how many people in the
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Speaker 3: entire world we're talking about the real concerns in the
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Speaker 3: US housing market in the lead up to that point
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Speaker 3: in time compared to the number of people that are
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Speaker 3: writing about real problems in private credit. The the sense
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Speaker 3: that I have is that people are far more realistic
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Speaker 3: about the risks in private credit today than they were
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Speaker 3: about the state of the US housing market and mortgage
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Speaker 3: backed securities back in two thousand and six and seven.
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Speaker 2: It's hard, It is hard to tell how few reasons.
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Speaker 2: The first is Hindsight's twenty twenty. Sure, Like you go
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Speaker 2: back and you look, and you're like, oh, these are
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Speaker 2: the people who were warning about it. I don't know.
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Speaker 2: I read plenty of guys now that are warning about it.
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Speaker 3: Maybe that's That's my point, is that far more people
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Speaker 3: seem to be warning about it today than I think
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Speaker 3: people were warning about the housing bubble and O five.
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Speaker 2: So why Here's the other reason why I have a
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Speaker 2: problem with like trying to make sense out of that.
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Speaker 4: The Internet was different, everything was different back then.
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Speaker 2: But information flows were different.
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Speaker 4: Yeah.
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Speaker 2: And on top of that, quite honestly, at that time,
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Speaker 2: I was a kid. Yeah, Like, I don't know what
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Speaker 2: was being said in the banking community during that time.
9:29
Speaker 2: I was having a couple of beers, quite honestly, maybe
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Speaker 2: a couple more if you know it was a Friday
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Speaker 2: or like that, So like I can't make heads or
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Speaker 2: tails of you know, was the environment different then, because
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Speaker 2: i wasn't even in the environment then, And I'm humble
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Speaker 2: enough to be able to be like that's a problem,
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Speaker 2: like with me trying to evaluate that. Is it going
9:51
Speaker 2: to become a problem or not? Don't know. But here,
9:54
Speaker 2: as I've said before, if it doesn't by the end
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Speaker 2: of next year, then I think you can put a
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Speaker 2: lot of the fears to the timeline for this to
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Speaker 2: become a problem is the next twenty months now. And
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Speaker 2: if it doesn't by then, it's not really private credits
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Speaker 2: that's going to cause the problems. It's gonna be something
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Speaker 2: else that yeah might tangentially, you know, spill over or something.
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Speaker 2: But you know, we'll see how things go. Just take
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Speaker 2: a quick break when we come back, We've got trivia
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Speaker 2: and then we're going to talk about two expensive makes
10:24
Speaker 2: that We're going to talk about two expensive mistakes that
10:29
Speaker 2: most retirees make and uh how to avoid them.
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11:09
Speaker 5: Time for trivia here on the Financial Exchange and on
11:13
Speaker 5: this day. In twenty eleven, Game of Thrones premiered on HBO.
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Speaker 5: Game of Thrones won fifty nine Primetime Emmy Awards during
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Speaker 5: their performance on the show. So our trivia question today,
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Speaker 5: which actor was the only one to win an Emmy
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Speaker 5: Award for their performance on Game of Thrones? Once again,
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Speaker 5: which actor was the only one to win an Emmy
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Speaker 5: Award for their performance on Game of Thrones. Be the
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Speaker 5: third person today to text us at six one seven
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Speaker 5: three six two thirteen eighty five with the correct answer
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Speaker 5: along with keword trivia, and you win a Financial Exchange
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Speaker 2: Once again.
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Speaker 5: The third correct response to textus to the number six
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12:11
Speaker 2: We got a piece here in uh market Watch today.
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Speaker 2: It's titled two expensive mistakes most retirees make and how
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Speaker 2: to avoid them. Number one microwaving fish.
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Speaker 4: Don't do it?
12:26
Speaker 2: Number two eating microwaved fish.
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Speaker 3: Uh So, I don't even know if these are the
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Speaker 3: top two most expensive retirees that or moves that retirees make.
12:36
Speaker 4: So one they claim soarce security too early.
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Speaker 3: I think there's plenty of evidence that on average, people
12:42
Speaker 3: do claim soar security earlier than they maybe should. This
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Speaker 3: second one, they spend less than they can afford. How
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Speaker 3: would that be your most expensive mistake in retirement?
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Speaker 2: Well, it would see it's expensive in that you are
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Speaker 2: voluntarily foregoing money that you could have spent, and so
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Speaker 2: as a result, you've made your life more expensive through
13:06
Speaker 2: income that you didn't take. It's convoluted logic, but I
13:11
Speaker 2: can see how you get there.
13:12
Speaker 3: Is this like my life is so rich because I'm
13:15
Speaker 3: happy conversation or is this a legitimately expensive.
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Speaker 2: No, it's like I made my life worse than it
13:21
Speaker 2: could be because I didn't spend money, you made yourself
13:26
Speaker 2: psychologically poor at the cost of staying financially rich.
13:31
Speaker 3: What would you say are the actual like most common
13:33
Speaker 3: mistakes retirees make.
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Speaker 2: So I do actually think that not spending enough money
13:38
Speaker 2: is one that I see, Like for people who have
13:41
Speaker 2: enough saved, I see for every person I see that
13:45
Speaker 2: spends way too much of their retirement, I see like
13:49
Speaker 2: four or five where they're like, I can't spend this
13:51
Speaker 2: because I'm nervous about running out of money. So I
13:54
Speaker 2: do think people prevent themselves from enjoying retirement if they're
13:57
Speaker 2: capable of doing so.
13:59
Speaker 4: I think plenty of people work longer than they have
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Speaker 4: to because they have.
14:01
Speaker 2: No similar thing like, It's just it expresses itself in
14:05
Speaker 2: a different format.
14:06
Speaker 3: The soci security decision, I'll admit that is a big one.
14:08
Speaker 3: I think people make irrational decisions when it comes to
14:12
Speaker 3: things like social security and pensions.
14:14
Speaker 4: I don't think they do the math.
14:16
Speaker 3: I don't think they care about the math yep, And
14:18
Speaker 3: they just want the peace of mind that they can
14:22
Speaker 3: get from a program like this, and you know, on
14:26
Speaker 3: average that might lead to some financial mistakes.
14:29
Speaker 2: One that I do see for people who are able
14:31
Speaker 2: or trying to retire early, they don't properly budget for
14:35
Speaker 2: healthcare before they hit Medicare age. That is one that
14:38
Speaker 2: is very expensive.
14:39
Speaker 3: Oftentimes they don't budget for it after the fact either
14:42
Speaker 3: because they fail to understand how Medicare works and IRMA
14:45
Speaker 3: prices break in. Like I think most people are now
14:48
Speaker 3: aware of Roth conversion strategies and oh my big bad RMD,
14:53
Speaker 3: but they don't really understand what that RMD is going
14:55
Speaker 3: to do to their future scenario until they suddenly get
14:58
Speaker 3: that nice little letter for Medicare saying, oh, by the way,
15:02
Speaker 3: your premiums are now going to be an extra two
15:04
Speaker 3: hundred bucks a month each. So there are a lot
15:07
Speaker 3: of these questions that we obviously get from folks at
15:11
Speaker 3: the Armstrong Advisor Group when it comes to retirement, and
15:14
Speaker 3: as such, wanted to make everybody aware if you're not
15:17
Speaker 3: already about an event that we are hosting from the
15:20
Speaker 3: Armstrong Advisory Group this month.
15:22
Speaker 4: It's on April thirtieth.
15:24
Speaker 3: It's up in Wuburn, Massachusetts, and if you have to
15:27
Speaker 3: happen to be in the area, would love for you
15:29
Speaker 3: to join. It's a retirement planning seminar. We're going to
15:31
Speaker 3: be talking specifically Social Security and Medicare Essentials. Susan Powers
15:36
Speaker 3: and Effie Vasulis are going to be hosting at Efie
15:39
Speaker 3: is a Medicare expert that is an enrolled agent and
15:42
Speaker 3: speaks about Medicare for her entire career. Susan Powers and
15:46
Speaker 3: an advisor with the Armstrong Advisory Group. I'll be there,
15:50
Speaker 3: you know, hosting the event. It's at the Crown Plaza
15:53
Speaker 3: in Wuburn. It's free to attend. It's at five pm
15:57
Speaker 3: on April thirtieth, So just coming up here here in
16:00
Speaker 3: a couple of weeks. Space is limited, so you do
16:03
Speaker 3: need to register ahead of time. Five pm. Crown Plaza
16:06
Speaker 3: is April thirty. I think that's Thursday, April thirtieth. Yeah,
16:09
Speaker 3: Thursday April thirtieth at five pm. It's gonna be a
16:13
Speaker 3: really great series of topics. I know a lot of
16:16
Speaker 3: people have questions about these two things. It's easily the
16:20
Speaker 3: two most common questions we get questions about. So register
16:24
Speaker 3: online at Armstrong Advisory dot com slash events. You can
16:29
Speaker 3: also call our office at eight hundred three nine three
16:32
Speaker 3: four zero zero one if you're having trouble, but easiest
16:35
Speaker 3: way to grab more information about our free event on
16:37
Speaker 3: social security and medicare Go to Armstrong Advisory dot com
16:41
Speaker 3: slash events.
16:42
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
16:45
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16:47
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
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16:58
Speaker 2: Mike, if you had to tire overseas, I say, had to, like,
17:02
Speaker 2: it's you know, a bad thing.
17:04
Speaker 4: Yeah, they are talking about kicking me out.
17:06
Speaker 2: If you had to pick one place to retire to overseas,
17:10
Speaker 2: where would you pick? And why? If money were no object?
17:16
Speaker 4: Take your time too, Yeah, I am.
17:17
Speaker 2: It's not like it's live radio or anything.
17:19
Speaker 3: Somewhere in Southern Europe, access to good quality healthcare, generally,
17:26
Speaker 3: good weather and history all appeal to me. Ye talk
17:29
Speaker 3: about there are parts of Latin America that could do
17:31
Speaker 3: the trick too, but the healthcare thing is something that
17:35
Speaker 3: I would be less certain about.
17:37
Speaker 5: I want to say Italy. I've never been to Italy,
17:39
Speaker 5: but you know I'm quarter percent of Italian quarter Italian
17:43
Speaker 5: quarter quarter.
17:45
Speaker 3: Quarter ninety nine percent Irish but that quarter percent of ITWN.
17:50
Speaker 2: My grandmother's as fat as mud.
17:52
Speaker 5: I'm just afraid I would put on thirty pounds of
17:54
Speaker 5: a week.
17:55
Speaker 2: You would. That's why the healthcare is Yeah.
17:57
Speaker 5: So maybe I don't know London or maybe some place war.
18:01
Speaker 4: I don't know.
18:01
Speaker 5: The possibilities are endless. I don't know guys, I don't know.
18:04
Speaker 4: They are on the moon.
18:06
Speaker 2: I would definitely not the moon overseas.
18:10
Speaker 1: Uh.
18:10
Speaker 2: Yeah, there is the Sea of tranquility up there, so uh.
18:13
Speaker 2: In any case, I'm in the same boat. But there's
18:15
Speaker 2: this piece from Barons dreaming of that Tuscan villa, like
18:20
Speaker 2: the three of us are here are some you know,
18:22
Speaker 2: things that you need to know before retiring abroad.
18:25
Speaker 4: They can't cover it in three pages.
18:27
Speaker 2: No, it's number one, like even just figuring out okay,
18:31
Speaker 2: like currencies and things like that, figuring out your health
18:33
Speaker 2: insurance situation.
18:35
Speaker 3: Where can I get a visa? How much is it
18:37
Speaker 3: going to cost me? How am I able to continue
18:39
Speaker 3: to manage assets in dollars?
18:41
Speaker 2: How do my taxes work in terms of any money
18:44
Speaker 2: earned there versus what I'm paying to the US?
18:46
Speaker 3: Do I give up on my medicare knowing that if
18:49
Speaker 3: I ever come back to the US, I'm gonna face
18:51
Speaker 3: huge penalties if I have to re enroll at that
18:53
Speaker 3: point in time.
18:54
Speaker 4: It is immensely complicated.
18:56
Speaker 2: It's a big decision.
18:58
Speaker 3: It's immensely complicated, by the way, Like how do I
19:01
Speaker 3: even handle my investments because a lot of big firms
19:03
Speaker 3: like Fidelity and Schwab will place restrictions if you are
19:07
Speaker 3: living abroad on what they will allow you to do
19:11
Speaker 3: and what they won't allow you to do, and which
19:13
Speaker 3: country you're living in. So it is immensely complicated. And
19:17
Speaker 3: do more than just read a baron's article, I guess
19:18
Speaker 3: would be my point.
19:19
Speaker 2: Yeah, like talk to someone who specializes in helping retirees
19:23
Speaker 2: living abroad. Let's take a quick break. When we come back.
19:26
Speaker 2: We've got the Trivia Answer Wall, Street Watch and the
19:29
Speaker 2: Money Matters Mailbag.
19:41
Speaker 1: Bringing the latest financial news straight to your radio. Every day.
19:45
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network,
19:50
Speaker 1: telling out full whoa Street Watch, treking the stocks, the
19:54
Speaker 1: data and the headlines driving markets so far today right
19:57
Speaker 1: here on the Financial Exchange Radio.
19:59
Speaker 5: Netw Markets are continuing to rally after Iran announced that
20:03
Speaker 5: the straight at four Moves is now completely opened for
20:06
Speaker 5: commercial traffic, sending oil prices lower. However, President Trump said
20:10
Speaker 5: the US naval blockade on Iranian ports would remain in
20:13
Speaker 5: full force. Right now. The Dow up by two percent,
20:17
Speaker 5: SMP five hundred up one point three percent, Nasdaq up
20:21
Speaker 5: one point six percent, Russell two thousand up over two
20:24
Speaker 5: percent higher, Tenure Tres reeled down seven basis points at
20:28
Speaker 5: four point two three eight percent, and oil plunging twelve
20:32
Speaker 5: percent to trade eight eighty three dollars a barrel. Netflix
20:35
Speaker 5: shares is sinking nearly ten percent after the streaming giant
20:38
Speaker 5: reported that reported guidance that disappointed investors. But the big
20:42
Speaker 5: news weighing on the stock is that co founder and
20:45
Speaker 5: chairman Read Hastings announced he plans his plans to leave
20:49
Speaker 5: the board in June when his term expires. And aluminum
20:53
Speaker 5: producer Alcoa posted lower sales in the first quarter as
20:57
Speaker 5: the conflict in Iran forced the company to re out
21:00
Speaker 5: millions of tons of refining capacity from the Middle East.
21:04
Speaker 5: Our Co shares are down by seven percent. I'm Tucker Silvan.
21:09
Speaker 5: That is Wall Street Watching. In the previous segment, we
21:12
Speaker 5: asked you the trivia question which actor was the only
21:17
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21:20
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21:38
Speaker 2: The mails here, here's the mail. The mails. It makes
21:42
Speaker 2: me want to wag my tail when it comes. I
21:45
Speaker 2: want a whale man.
21:47
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Speaker 1: to TFE Show at gmail dot com. Now it's time
22:10
Speaker 1: for the Money Matters mail bag.
22:12
Speaker 5: That's right, it is time for the Money Matters mail
22:15
Speaker 5: bag here on the Financial Exchange and one of the
22:20
Speaker 5: ongoing themes for this week's show. And we haven't heard
22:23
Speaker 5: Chuck's take on this, so let's get Chuck's take on this.
22:26
Speaker 5: Mm Chuck, who had it harder millennials or boomers millennials.
22:34
Speaker 2: All right, hit me, chuck. So let's first talk about
22:39
Speaker 2: all of the good things that the boomers got to experience,
22:42
Speaker 2: including just the greatest economic expansion in human history. They
22:47
Speaker 2: then got to also beyond that, participate on the right
22:53
Speaker 2: side of the housing bubble. Okay, they also, even if
22:57
Speaker 2: we want to continue going further, made things do look
23:00
Speaker 2: really harder for the millennials afterwards, specifically things that they've done.
23:05
Speaker 2: We get the millennials get blamed for a lot of
23:07
Speaker 2: stuff that the boomers actually did. Participation trophies. We didn't
23:10
Speaker 2: give them to ourselves, avocado toast, We didn't make it
23:14
Speaker 2: for ourselves. Other things that we didn't do. We weren't
23:17
Speaker 2: the ones who said, hey, when we're passing the Affordable
23:20
Speaker 2: Care Act, let's make it so that the young people
23:22
Speaker 2: pay more and the older people pay less in order
23:26
Speaker 2: to make the cost cheaper for boomers. So I'm gonna
23:31
Speaker 2: go with millennials in this case because I like it
23:35
Speaker 2: and it makes me feel good. And furthermore, even if
23:39
Speaker 2: we look at some of the non financial things, like
23:42
Speaker 2: we kind of go outside of that the draft, Yes,
23:45
Speaker 2: so that I was actually gonna go in this direction.
23:47
Speaker 4: Okay.
23:48
Speaker 2: I know that boomers will point to, you know, Vietnam
23:50
Speaker 2: War and everything, and I'll simply point to global War
23:53
Speaker 2: on Terror, which you know, if you talk to anyone
23:55
Speaker 2: who served in the last twenty years, was an awfully
23:58
Speaker 2: hard time for them to do. So I think you
24:01
Speaker 2: can make that a push. I'm not gonna argue like
24:03
Speaker 2: who had the worst war. That's just not a conversation
24:06
Speaker 2: that's worth having.
24:07
Speaker 4: Here's my counterpoint.
24:08
Speaker 3: Forty percent of boomers served in the military, four percent
24:12
Speaker 3: of millennials did.
24:13
Speaker 2: That's fair. I think that's a fair point. So I
24:17
Speaker 2: think ultimately boomers had huge advantages in housing cost, huge
24:22
Speaker 2: advantages in cost of education. They also had far more
24:26
Speaker 2: job market loyalty than millennials have experienced, and there was
24:31
Speaker 2: far less competition from overseas outsourcing as well.
24:36
Speaker 3: I'll counter that by age thirty five, according to most studies,
24:40
Speaker 3: millennials have a higher inflation adjusted net worth than boomers
24:43
Speaker 3: did at the time.
24:44
Speaker 2: Yes, I understand, Okay, that's because we've been able to
24:48
Speaker 2: overcome a lot, very resourceful, just tougher. Yeah, we're just
24:52
Speaker 2: tougher than the Boomersus Chuck is just throwing haymakers today.
24:56
Speaker 2: All right, listen. If you can't go in on boomers
24:59
Speaker 2: every now and then they go in on us, we
25:01
Speaker 2: went on them. Ultimately, here's the thing. The baby boomers
25:04
Speaker 2: are our parents. We love them. There's no way you
25:07
Speaker 2: can't have one without the other other. It's yin and yang. Okay. Ultimately,
25:12
Speaker 2: every generation goes through hard things. Every generation as it's positives.
25:16
Speaker 2: I don't think anyone's actually had it tougher than anyone else.
25:19
Speaker 2: I think there are ups and downs with all of them. Okay,
25:24
Speaker 2: but we definitely had it tougher.
25:27
Speaker 5: All right, Well, there you go on to the next
25:29
Speaker 5: question for the money matters mail bag.
25:33
Speaker 2: Let's see here.
25:35
Speaker 5: Uh do you have any tips for someone who may
25:37
Speaker 5: need to retire earlier than expected?
25:42
Speaker 4: Uh? Yeah, plenty.
25:44
Speaker 3: I think the biggest one would be map out your stuff,
25:47
Speaker 3: because it depends on how much earlier than expected. If
25:52
Speaker 3: you're talking pre fifty nine and a half, then there
25:54
Speaker 3: is a ton of work that you have to do
25:57
Speaker 3: because those retirement accounts really tough to access before fifty
26:01
Speaker 3: nine and a half without getting absolutely whacked with penalties.
26:03
Speaker 3: There are some ways around it, but it depends on
26:07
Speaker 3: what types you have. So just play an example here.
26:11
Speaker 3: If you have an IRA and you retire before fifty
26:14
Speaker 3: nine and a half, you cannot access that money without
26:18
Speaker 3: using what's called a seventy two T distribution or without
26:20
Speaker 3: paying a ten percent penalty. If you have a four
26:23
Speaker 3: oh one K, however, and quit that job or get
26:25
Speaker 3: laid off from that job after the age of fifty five,
26:28
Speaker 3: you can touch that one employer's four oh one K
26:31
Speaker 3: compared to your IRA. There are these nuanced rules that
26:34
Speaker 3: go into this. If you're talking about retiring early, the
26:37
Speaker 3: biggest problem for you is going to be health insurance.
26:40
Speaker 3: It's going to be the most costly line item you
26:42
Speaker 3: have to figure out. Depending on how early we're talking,
26:45
Speaker 3: it could be you know, anywhere from a year to
26:48
Speaker 3: a decade that you have to cover those costs outside
26:52
Speaker 3: of paying for medicare, and for most people that makes
26:56
Speaker 3: it prohibitably expensive to retire. So the big thing is
27:00
Speaker 3: you probably need to save a lot more than the
27:02
Speaker 3: average person if you're going to retire early, and where
27:05
Speaker 3: you save that money becomes incredibly important depending on what
27:10
Speaker 3: age you're talking about. Anything else to add, Chuck.
27:12
Speaker 5: No, I think you got it, Okay, all right, let's
27:16
Speaker 5: get to one more questionnaire. We probably only have time for.
27:18
Speaker 2: One more, this one.
27:21
Speaker 5: I sold my house and have enough money to fully
27:25
Speaker 5: pay my car off while still having a good amount
27:28
Speaker 5: of savings left. Should I invest or pay off my
27:31
Speaker 5: car the interest rates between six and seven percent and
27:34
Speaker 5: have about seventeen thousand left.
27:36
Speaker 2: And to pay on it. The answer on this one
27:40
Speaker 2: depends on your risk tolerance and time horizon. What I
27:43
Speaker 2: mean by this is, Hey, if you have the tolerance
27:48
Speaker 2: for a lot of risk and ups and downs in markets,
27:51
Speaker 2: and you don't need that money for the next twenty years,
27:53
Speaker 2: you're probably net going to end up better off by
27:57
Speaker 2: investing that, simply because if you will get long term
28:00
Speaker 2: turns on equities, they tend to be just north of
28:04
Speaker 2: the rate that you noted. Not all the time, but
28:07
Speaker 2: again you can make you know, most of the time
28:10
Speaker 2: it works out in that fashion.
28:12
Speaker 3: Yeah, we could run the numbers. I don't have them
28:14
Speaker 3: off the top of my head, but I'd be curious
28:15
Speaker 3: to know what percentage of the time equity markets on
28:19
Speaker 3: a ten year basis do less than seven percent.
28:21
Speaker 2: It's probably a lot. It's still probably somewhere in the
28:25
Speaker 2: ballpark of like twenty to thirty percent of the time. Yeah,
28:28
Speaker 2: if you are someone who needs that money in a
28:32
Speaker 2: few years and you don't like any investment risk and
28:35
Speaker 2: you could earn way less than that, then you're probably
28:38
Speaker 2: better off paying that car off. The other thing that
28:40
Speaker 2: I will point out is it doesn't have to be
28:43
Speaker 2: all or nothing. It could also be something where you say, hey,
28:45
Speaker 2: let me take half of it and put it towards
28:47
Speaker 2: the car so it's paid off sooner, and let me
28:49
Speaker 2: take half of it and invest it because I want
28:51
Speaker 2: to grow.
28:52
Speaker 4: It my personal threshold.
28:53
Speaker 3: If I have debt over four to five percent interest,
28:56
Speaker 3: I'm paying off that debt. And Ramsey would Ramsey poop
29:00
Speaker 3: p us for even asking the question. He would tell you,
29:02
Speaker 3: pay off that car immediately. Why did you even have
29:05
Speaker 3: a car loan in the first place, And then he
29:06
Speaker 3: would yell.
29:06
Speaker 2: At you for a little bit, call you an idiot.
29:08
Speaker 3: Yeah, but that doesn't make him right, does not. He
29:10
Speaker 3: has a lot of views that I completely disagree.
29:11
Speaker 2: You know, It's again, I think there are responsible ways
29:15
Speaker 2: to use debt and their irresponsible ones. Especially given where
29:18
Speaker 2: car loans are these days, one at six or seven
29:22
Speaker 2: is actually relatively affordable by current standards. Yep, take a
29:26
Speaker 2: quick break now when we come back. Paul A Monica
29:28
Speaker 2: from Barons joins US Talking SpaceX. Next.
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30:36
Speaker 2: Paul Amonica from Barons joins US now Here to talk
30:39
Speaker 2: a little bit about SpaceX. Paul, how you doing today?
30:44
Speaker 1: Good?
30:44
Speaker 6: Thanks? How you guys doing. It's a nice day of
30:46
Speaker 6: a lot of green on the screen out there, a.
30:49
Speaker 2: Lot of green, a lot of green. Paul. You ever
30:50
Speaker 2: been to space?
30:52
Speaker 6: I have not been to space? Probably not in my future.
30:58
Speaker 6: You never know.
30:59
Speaker 2: Would you go to SPA if offered the opportunity, Tucker
31:04
Speaker 2: would not?
31:05
Speaker 6: I would, Yeah, I don't know if I would. To
31:09
Speaker 6: be honest, I think there are things on Earth I'd
31:12
Speaker 6: rather do.
31:13
Speaker 2: What's the scariest part of space to use it? Re entry?
31:16
Speaker 1: Is it?
31:16
Speaker 2: The launch?
31:19
Speaker 6: Isn't it that in space no one can hear you scream?
31:22
Speaker 2: Or that is true?
31:23
Speaker 6: Too many movies, you know.
31:26
Speaker 2: Let's talk a little bit about Yeah, let's let's talk
31:29
Speaker 2: a little bit about SpaceX. Then, So they filed for
31:32
Speaker 2: their IPO. The expectation last time I heard was before
31:37
Speaker 2: the end of June. Is that still the timeline that
31:39
Speaker 2: we're hearing?
31:41
Speaker 6: That seems to be what the chatter is. I mean,
31:44
Speaker 6: they filed confidentially, so we're still waiting for the formal
31:51
Speaker 6: public filing that people can see that will lay out
31:55
Speaker 6: more of the financials, and then obviously they'll go on
31:58
Speaker 6: a road show and all of that pre IPO rigamarole
32:03
Speaker 6: before they finally start trading, But all indications are that
32:08
Speaker 6: it should be this summer.
32:10
Speaker 2: What are we seeing elsewhere in the IPO market in
32:14
Speaker 2: terms of companies that have gone public this year? What
32:16
Speaker 2: are they suggesting about the overall environment for new listings.
32:21
Speaker 6: Yeah, I think what's interesting is that so far, and
32:25
Speaker 6: I think probably it's because of the market volatility that
32:29
Speaker 6: we have had due to the war in Iran and
32:31
Speaker 6: what's happened with oil prices and concerns about the economy.
32:36
Speaker 6: As a result, you've had fewer companies go public by
32:40
Speaker 6: a pretty wide margin than the same time a year ago,
32:44
Speaker 6: but they have raised a lot more in proceeds about
32:49
Speaker 6: forty percent or so. So fewer IPOs, but they're bigger.
32:54
Speaker 6: So I think that suggests that companies that have a
32:59
Speaker 6: good story to tell that are a little bit later
33:01
Speaker 6: stage and more mature, which obviously SpaceX fits that category,
33:07
Speaker 6: are the ones that are able to go public. So
33:10
Speaker 6: just look at this week, for example, Madison Air, a
33:13
Speaker 6: company in the ventilation business that's done a lot of
33:18
Speaker 6: roll ups. I think a lot of people know them
33:19
Speaker 6: because of the big ass fans brand that they own.
33:24
Speaker 6: They went public yesterday, you know, and the stock did
33:27
Speaker 6: reasonably well, up about eighteen percent at last check. It's
33:31
Speaker 6: up slightly again today. So companies, it doesn't have to
33:36
Speaker 6: be about the AI trade. I think investors are looking
33:40
Speaker 6: for large companies that have significant revenue and either earnings
33:47
Speaker 6: or the potential in the near term for earnings, and
33:51
Speaker 6: they are probably still able to go out even in
33:54
Speaker 6: a volatile market. Space Sex of course, I think there's
33:58
Speaker 6: going to be a lot of clamoring for that, and
34:00
Speaker 6: then attention will turn to open Ay and Anthropic if
34:03
Speaker 6: when they both file later this year.
34:06
Speaker 2: When you look at a company like SpaceX, because of
34:10
Speaker 2: its size and it's you know, kind of hodgepodge of assets,
34:15
Speaker 2: do we have any sense as to how the heck
34:17
Speaker 2: this thing ends up getting valued.
34:19
Speaker 6: It's a great question. I mean, if you're looking at
34:23
Speaker 6: the talk of one point seventy five to two trillion
34:27
Speaker 6: for the company, you're looking at, you know, triple digit
34:32
Speaker 6: trailing multiples for both revenue and ebitdah. We don't know
34:38
Speaker 6: exactly though, what the twenty twenty six estimates are going
34:43
Speaker 6: to be from Wall Street, So maybe the stock is
34:45
Speaker 6: a little bit more of a bargain. But do you
34:50
Speaker 6: just throw out conventional metrics and bet on the fact that,
34:55
Speaker 6: more so than Tesla, this is maybe not a monopoly,
34:59
Speaker 6: but a much clearer leader in a highly profitable business.
35:07
Speaker 6: You know, I think there are concerns about Xai getting
35:10
Speaker 6: rolled into it, and maybe that lowers the profitability and
35:14
Speaker 6: the margins a little. But you know, let's be honest,
35:18
Speaker 6: open Ai and anthropic, you know, chat GPT and Claude's parents, respectively.
35:23
Speaker 6: They're probably not going to show any profitability when they
35:28
Speaker 6: finally file their s ones, but the revenue growth is
35:32
Speaker 6: so dramatic that I think investors expect that those companies
35:37
Speaker 6: will eventually turn a profit in that by the same token,
35:40
Speaker 6: XAI will eventually add the SpaceX's earnings as well.
35:45
Speaker 2: Very good and Paul, we appreciate you joining us today,
35:49
Speaker 2: and I hope you have a fantastic weekend and are
35:53
Speaker 2: able to avoid Space.
35:56
Speaker 6: I plan on avoiding Space and if you decide to go,
36:00
Speaker 6: I hope you don't run into any xenomores.
36:03
Speaker 2: I'll send pictures, don't you worry. Yes, thank you. Paul.
36:06
Speaker 2: Monica from Baron's talking about SpaceX here what do we
36:10
Speaker 2: got Mike anything we haven't covered today.
36:11
Speaker 4: To Space Mountain count I'm going there next week.
36:16
Speaker 2: No, No Space Mountain is on Earth.
36:19
Speaker 3: I will say that we called it regarding crypto years ago,
36:22
Speaker 3: two hundred and thirty three year old Wall Street institution
36:26
Speaker 3: going all in on crypto, the New York Stock Exchange,
36:30
Speaker 3: which I do feel like the Wall Street Journal does this,
36:33
Speaker 3: does this story some justice, centralized, gated and closed on weekends.
36:38
Speaker 3: The New York Stock Exchange is the ultimate architectural symbol
36:41
Speaker 3: of everything bitcoin was created to disrupt, and yet the
36:44
Speaker 3: two hundred and thirty three year old Titan of Wall
36:46
Speaker 3: Street has quietly positioned itself as an unlikely crypto powerhouse.
36:49
Speaker 3: We've been talking about this, chuck now for six or
36:52
Speaker 3: seven years.
36:53
Speaker 4: I don't know.
36:56
Speaker 3: Who is going to make money on crypto, where it's
36:59
Speaker 3: going to go next, But it seems to me that
37:01
Speaker 3: the financial institutions that crypto was attempting to disrupt in
37:06
Speaker 3: the first place are well prepared to take advantage of
37:09
Speaker 3: it and make a boatload of money on it, whether
37:11
Speaker 3: it goes up downer sideways. Quob just rolled out something
37:14
Speaker 3: new on their end. Fidelity has been pushing hard on
37:18
Speaker 3: this for years, and I don't think it is going
37:21
Speaker 3: to be anywhere near the disruptor that the creators had
37:24
Speaker 3: in mind.
37:25
Speaker 2: Yeah, if look, ultimately, we've said that the most likely
37:29
Speaker 2: outcome is it just becomes another number in the casino,
37:32
Speaker 2: which is really disappointing for those who wanted something that
37:35
Speaker 2: was more focused on privacy, autonomy and distributed networks that
37:41
Speaker 2: can't be co opted. Unfortunately, when Wall Street sees someone
37:45
Speaker 2: else making money, generally they say, hey, stop that, that's
37:50
Speaker 2: our job. They're pretty good at doing that. They they
37:54
Speaker 2: know the incentive structure to get people to play by
37:56
Speaker 2: their rules. It's just how it tends to work. Stocks
37:59
Speaker 2: remain broadly positive as we head towards the top of
38:03
Speaker 2: the hour. Dow is up thousand and sixty four points,
38:06
Speaker 2: SMP's up ninety three, Nasdaq is up three seventy five.
38:09
Speaker 2: Hope you all have a great weekend and uh good news.
38:14
Speaker 2: We'll see you back here on Monday for a whole
38:17
Speaker 2: another week, big earnings week next week