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Markets Slide on Iran Deadline, Oil Surges, and Uncertainty Builds · The Financial Exchange Show

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1:07
Speaker 1: and Falloane.
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Speaker 2: Good morning, welcome back to the Financial Exchange. As we
1:15
Speaker 2: are within ten hours of the White House deadline to
1:19
Speaker 2: Iran to reopen the Straight of Horror Moves or presumably
1:23
Speaker 2: down some deal to do so on a ceasefire. We've
1:27
Speaker 2: got markets erasing their gains from yesterday and oil price
1:30
Speaker 2: is unsurprisingly moving upward.
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Speaker 3: It's Mike, Paul and Tucker.
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Speaker 2: With you here this Tuesday, and as I mentioned, eight
1:36
Speaker 2: pm deadline that the President has set for negotiations here
1:40
Speaker 2: on the Straight of Horror Moves reopening Otherwise, the the
1:43
Speaker 2: imply it's not so much implied as stated.
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Speaker 3: The stated threat is strikes.
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Speaker 2: On energy infrastructure assets, presumably strikes on oil infrastructure and
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Speaker 2: other and other capabilities that are less seen as military
1:57
Speaker 2: assets and more seen as you know, physical infrastructure, civilian
2:01
Speaker 2: infrastructure is the is the underlying threat here, and the
2:05
Speaker 2: question of course remains will a deal be made, will
2:08
Speaker 2: something be announced, will a delay happen?
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Speaker 3: What will be the end result here?
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Speaker 2: Investment investors out there seemingly taking some of the risk
2:17
Speaker 2: off the table here, like I mentioned, erasing yesterday's gains
2:21
Speaker 2: and then some. We've got the Dow currently off four
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Speaker 2: hundred points or eight tenths of a percent, SMP off
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Speaker 2: closer to one percent after being up close to half
2:29
Speaker 2: percent yesterday, and the NASDAC down three hundred points or
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Speaker 2: one point four percent. As we head over to oil markets,
2:35
Speaker 2: we've got West Texas crewed up three and a quarter
2:37
Speaker 2: percent this morning to one hundred sixteen bucks a barrel,
2:41
Speaker 2: Brent not moving a whole lot for some reason, and
2:44
Speaker 2: in the bond market we are seeing the ten year
2:47
Speaker 2: move up slightly two tenths of a percent, up to
2:50
Speaker 2: four point three five seven. Paul, this is one of
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Speaker 2: those scenarios like that. I'm not sure how much time
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Speaker 2: we can legitimately spend talking about investors are taking some
3:03
Speaker 2: risk off the table, But correct me if I'm wrong.
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Speaker 2: I'm not sure that anyone other than the president himself
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Speaker 2: has any unique insight as to what's going to happen next.
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Speaker 2: Maybe some of his close advisors, but even those close
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Speaker 2: advisors have acknowledged that nobody knows what is going to
3:19
Speaker 2: be done other than the presidents himself.
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Speaker 4: No, in preparing for today's show, you have to lead
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Speaker 4: off with this as the headline in terms of what
3:26
Speaker 4: we need to cover from an economic perspective. But I
3:29
Speaker 4: sat here prepping prior to the show thinking I can't
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Speaker 4: really add any great insights to other than what you
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Speaker 4: just summarize in terms of here's where we sit right now.
3:38
Speaker 4: We know where the deadline is looming to eight o'clock tonight.
3:41
Speaker 4: We've talked extensively about the concerns that the market has
3:45
Speaker 4: for the current conditions. It all falls under the strait
3:49
Speaker 4: of Hormos and the twenty percent of global trade that
3:52
Speaker 4: it represents. That is the most critical thing from an
3:54
Speaker 4: economic perspective. Any clarity that we get on what direction
3:59
Speaker 4: in terms of re opening is of the utmost focus
4:02
Speaker 4: at this point for markets, and there continues to be
4:05
Speaker 4: from a market perspective. Clearly some skepticismism here regarding any
4:09
Speaker 4: real progress we see, with the major industries off over
4:13
Speaker 4: a percent in early trading today, But otherwise it's really
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Speaker 4: wayde and sea mic. It's hard to even add too
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Speaker 4: much more.
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Speaker 3: Yeah, I mean story.
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Speaker 2: Wall Street Journal has a headline this morning, Hope's fade
4:24
Speaker 2: for deal with around ahead of Tuesday night deadline, and
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Speaker 2: my notes say, which means what I don't think I know,
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Speaker 2: I don't think anybody knows. I think It could mean
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Speaker 2: severe strikes, strikes on infrastructure that Iron retaliates with strikes
4:38
Speaker 2: on infrastructure in neighboring countries. It could mean that the
4:42
Speaker 2: deadline comes and goes and the president's announces progress and speaking.
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Speaker 2: It could mean any number of things, and the markets,
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Speaker 2: I'm sure, will pivot on any of the news that happens.
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Speaker 2: But as things sit now, they're erasing some of the
4:54
Speaker 2: gains that we saw over the course of the last
4:57
Speaker 2: week or so. I will just contextual all of this again.
5:01
Speaker 2: I know that this is it is dramatic.
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Speaker 5: It is.
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Speaker 3: A continuation of a lot of volatility.
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Speaker 2: It's being written about quite dramatically. The market reaction is
5:12
Speaker 2: not dramatic. I really have to contextualize that over and
5:16
Speaker 2: over again. In spite of the headlines, In spite of
5:18
Speaker 2: the feeling that you probably get in your gut when
5:21
Speaker 2: you see a market open up a percentage point and
5:24
Speaker 2: then down a percentage point the same day, the reality
5:27
Speaker 2: is that the S and P five hundred is off
5:29
Speaker 2: six and a quarter percent from its all time highs Ever,
5:35
Speaker 2: we are not experiencing an extreme bout of volatility here.
5:38
Speaker 2: We have not even entered into a correction on markets
5:42
Speaker 2: in spite of the uncertainty around the global supply chains,
5:45
Speaker 2: the price of oil, all of the potential impacts to
5:47
Speaker 2: the economy here.
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Speaker 3: Which are real.
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Speaker 2: Right, even if the straight reopens tomorrow, there are real
5:53
Speaker 2: damaged impacts to the global economy that we will feel
5:56
Speaker 2: for a while here.
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Speaker 3: Equity investors, though, are.
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Speaker 2: Taking the obvious lesson from the last few years and saying, yeah,
6:06
Speaker 2: by the dip and just hold out hope because things
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Speaker 2: are going to bounce back.
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Speaker 3: And I.
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Speaker 2: Was thinking about this because I've been asked a few
6:13
Speaker 2: times like is that a logical conclusion to come to?
6:16
Speaker 2: And I don't know if it's logical or not, but
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Speaker 2: I can at least explain it, right, Like, I think
6:20
Speaker 2: a lot of people are scratching their heads, like why
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Speaker 2: are markets doing what they're doing here? You know, don't
6:25
Speaker 2: they have a lot of downside possibility? And my answer is, yeah,
6:28
Speaker 2: they might, but I can at least understand where investors
6:31
Speaker 2: are coming from right now. The lesson every time markets
6:34
Speaker 2: have gone down. Frankly, this is not only a Donald
6:38
Speaker 2: Trump thing, right. The only time markets have gone down
6:42
Speaker 2: over the course of the last seventeen years, they've rebounded
6:47
Speaker 2: within twelve months. All right, I'm trying to think of,
6:53
Speaker 2: you know, any instance. Twenty twenty two rebounded pretty quickly,
6:57
Speaker 2: twenty twenty rebounded, twenty fifteen. There has been no prolonged
7:03
Speaker 2: market downturn where you can look at and say, wow,
7:06
Speaker 2: you know, if you weren't prepared for that one, you
7:08
Speaker 2: were severely damaged. And so I think investors are working
7:13
Speaker 2: off of recent experience. The obvious question is will it
7:17
Speaker 2: hold true this time? Is it anything like the teriff
7:21
Speaker 2: volatility or the inflation volatility or the COVID volatility, or
7:26
Speaker 2: is it something completely different. Rarely does history actually mirror itself.
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Speaker 2: It just you know, has echoes of itself, and you know,
7:33
Speaker 2: could this time be similar or different?
7:35
Speaker 3: I think is entirely possible.
7:38
Speaker 2: But I think some important context there, because I do
7:41
Speaker 2: continue to get the questions like, oh, what's for sale? Like,
7:44
Speaker 2: you know, are there real buying opportunities here? Or you know,
7:47
Speaker 2: the other one is this seems like we're on the
7:50
Speaker 2: precipice of something very dangerous. Why aren't equity markets reacting?
7:53
Speaker 2: And I think there's an answer for both of those groups.
7:57
Speaker 2: But the reality is that it's six ish percent down
8:01
Speaker 2: from all time highs. It doesn't seem to me that
8:04
Speaker 2: investors are immensely concerned about where we are right now.
8:06
Speaker 4: And it's funny this pales in comparison. Like you were
8:09
Speaker 4: mentioning to the terear volatility that we saw last year.
8:12
Speaker 6: I mean we sit year today.
8:13
Speaker 4: I know you mentioned six percent off of all time highs,
8:15
Speaker 4: but year to date calendar twenty twenty six, with today's action,
8:19
Speaker 4: we're off about four percent year to date. But I
8:21
Speaker 4: believe we had saw as much as a twenty percent
8:23
Speaker 4: drop in all of the Terrify calamity sort of last year.
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Speaker 2: So there's many different options that are clearly on the table.
8:31
Speaker 2: President Trump has floated the idea of seizing around an
8:33
Speaker 2: oil infrastructure. What's that carg Island is, I believe the
8:39
Speaker 2: main infstructure that we're talking about there, And you know,
8:41
Speaker 2: could that be a point of leverage against the Chinese
8:44
Speaker 2: who rely heavily on this Middle Eastern oil? Maybe, But
8:47
Speaker 2: the Chinese also seemingly have probably a good year's worth
8:51
Speaker 2: of reserves set aside, and so there is this complex
8:55
Speaker 2: cat and mouse game that continues to exist with Iran.
8:59
Speaker 2: But my conclusion continues to be that unless you are
9:02
Speaker 2: in that oval office, and unless you are very very
9:06
Speaker 2: close to the President's thinking on things, you can't possibly
9:09
Speaker 2: know what comes next. So we have an APM deadline.
9:11
Speaker 2: The last deadline that was out there came and went
9:14
Speaker 2: without a severe escalation.
9:16
Speaker 3: We will see if.
9:17
Speaker 2: That is the same story for this time around, and
9:20
Speaker 2: markets at least for the time being, I think making
9:23
Speaker 2: some appropriate moves here as they interpret that. Hey, the
9:26
Speaker 2: risk of something escalating here is out there, and we
9:29
Speaker 2: will see what happens next. Let's take a quick break.
9:31
Speaker 2: When we come back, time to move away from the
9:35
Speaker 2: events here. Will obviously keep you updated if there are
9:37
Speaker 2: any discussions or progressions with the events coming up in
9:42
Speaker 2: the APM deadline, But I want to move on to
9:45
Speaker 2: more talk about the shape of the US economy and
9:49
Speaker 2: whether or not it's at all relevant for you. The
9:51
Speaker 2: listener quick break K shaped economies.
9:54
Speaker 3: Next.
9:55
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10:36
Speaker 2: So, Paul, we have to cover this story about the
10:38
Speaker 2: K shaped economy, not because I want to talk at
10:40
Speaker 2: all about the K shaped economy anymore. Where the pac
10:43
Speaker 2: Man shaped economy? Tucker, there you go. Or yesterday there
10:49
Speaker 2: was a story about an E shaped economy that I
10:52
Speaker 2: found equally useless. But one of the main cited statistics
10:57
Speaker 2: that we ourselves have talked about on the show claimed
11:01
Speaker 2: it as gospel. Came from Moody's Analytics, who you know,
11:04
Speaker 2: I think is a generally safe source to site. They're
11:07
Speaker 2: not tabloid. They've you know, published this information several times
11:12
Speaker 2: now that the top ten percent of Americans by income
11:15
Speaker 2: were responsible for forty five point eight percent of consumer
11:19
Speaker 2: spending last year, and that figure was estimated at forty
11:23
Speaker 2: nine percent, and suffice to say, they concluded, is a
11:26
Speaker 2: lot higher than previous years. And I think a lot
11:31
Speaker 2: of folks, ourselves included, have latched onto that to explain,
11:34
Speaker 2: you know, some things like why is the economy continuing
11:37
Speaker 2: to chug along in you know, in spite of a
11:40
Speaker 2: lot of folks struggling to find work or falling behind
11:43
Speaker 2: on debts.
11:44
Speaker 3: And this was part of our explanation.
11:47
Speaker 2: Bloomberg today comes out and really debates this and speaks
11:50
Speaker 2: to the fact that, hey, you know, according to the
11:53
Speaker 2: BLS and their own surveys, you know, households in the
11:58
Speaker 2: top ten percent of pre taxing I'm accounted for only
12:02
Speaker 2: twenty three percent of spending, which is a huge divergence.
12:06
Speaker 2: And the reality that they acknowledge is that both the
12:10
Speaker 2: numbers are probably wrong. Yeah, they're all survey estimates, they're
12:14
Speaker 2: all best guesses. But I guess the question is, why
12:19
Speaker 2: does it matter other than us looking foolish, because that's
12:22
Speaker 2: we look foolish all the time. I don't think that's
12:24
Speaker 2: you know, I don't think that's a real problem. But
12:26
Speaker 2: when I talk about this, like, what would it mean
12:29
Speaker 2: if the top ten percent was only representing twenty percent
12:32
Speaker 2: of the overall spending, I guess it would mean that
12:35
Speaker 2: those lower ninety percent are contributing a lot more to
12:40
Speaker 2: to you know, retail and consumer spending overall, which does
12:47
Speaker 2: kind of conflict with the narrative that's been dominating, which is, hey,
12:50
Speaker 2: those very high income, wealthy, typically older folks are really
12:54
Speaker 2: driving a lot of the economy forward.
12:56
Speaker 4: At this point, Yeah, this one's gonna have to now
12:58
Speaker 4: fall in just the eye of the beholder to a degree,
13:01
Speaker 4: because I had really lashed on to the statistic because
13:05
Speaker 4: if you looked at data from hotel companies, airliner airlines,
13:10
Speaker 4: it did just seem that those high income, wealthy consumers
13:15
Speaker 4: were responsible for a lot of the demand on the
13:17
Speaker 4: leisure spending side. Now, granted, that's not all of the
13:20
Speaker 4: spending in the economy. There are many other areas where
13:23
Speaker 4: dollars get allocated, but it felt like that was a
13:25
Speaker 4: reasonable explanation. You piggyback that off of what's been a
13:28
Speaker 4: really tremendous stock market of the last four or five years,
13:31
Speaker 4: and typically wealthier people participate in that, and that's what
13:34
Speaker 4: sort of drew drove all this consumer spending. You know
13:38
Speaker 4: where I land on this, And it is now just
13:41
Speaker 4: sort of an opinion, really, because even Bloomberg has acknowledged
13:44
Speaker 4: that both ways that these numbers are captured have their
13:48
Speaker 4: flaws in them. Is somewhere in between the two that
13:53
Speaker 4: perhaps on the higher end Moodies did overestimate the impact
13:56
Speaker 4: of higher income consumers. That it's probably not fifty It's
14:01
Speaker 4: also probably not twenty three percent like the Bureau of
14:03
Speaker 4: Label Statistics. It's probably somewhere in the middle. And I
14:06
Speaker 4: would still at least lean that it is. My view
14:11
Speaker 4: is that it still is impactful. It's clearly I'm going
14:15
Speaker 4: to retract, you know, that fifty percent statistic out my
14:18
Speaker 4: normal day to day dialog. But I still feel that
14:20
Speaker 4: there isn't an impact. I'm not willing to go down
14:22
Speaker 4: to the bottom, not perhaps willing to go to the
14:24
Speaker 4: top anymore.
14:25
Speaker 3: But I guess doesn't matter. Right.
14:27
Speaker 2: What we can with the high degree of certainty measure
14:30
Speaker 2: is growth in consumer spending. Yes, in the aggregate, regardless
14:33
Speaker 2: of where it's coming from. We have a pretty good
14:35
Speaker 2: idea of where consumer spending is going. And so while
14:40
Speaker 2: it was an interesting story to tell and helped explain
14:44
Speaker 2: some of the behaviors of Delta Airlines and Hilton brand hotels,
14:49
Speaker 2: I'm just not sure how much it mattered for an
14:52
Speaker 2: investable thesis.
14:54
Speaker 3: For example, the.
14:55
Speaker 4: Reason why investors or maybe people should care is that
14:58
Speaker 4: if you're you have a heavy concentration of spending in
15:00
Speaker 4: one era that can be susceptible to significant disruption, that
15:05
Speaker 4: that would be sort of.
15:06
Speaker 2: So the I think the argument that we've come up
15:08
Speaker 2: with in the past was, Hey, if you're in that
15:10
Speaker 2: top ten percent, you derive a lot of your wealth
15:12
Speaker 2: from the stock market, and if you get a stock
15:14
Speaker 2: market correction, maybe fifty percent of consumer spending takes a
15:18
Speaker 2: big hit because they feel less wealthy. Right, So in
15:23
Speaker 2: the aggregate, do we take this story as good news
15:28
Speaker 2: less concentration?
15:30
Speaker 4: I would say that we should take it as rather
15:32
Speaker 4: good news because that fifty percent was a little bit
15:36
Speaker 4: alarming in terms of a concentration risk. So perhaps a
15:40
Speaker 4: little bit of relief to this idea that that is
15:43
Speaker 4: overstating it.
15:44
Speaker 2: Yeah, yeah, I think I think I'm there too. Is
15:47
Speaker 2: any insinuation that there's less concentration risk in the growth
15:52
Speaker 2: of the US economy should be seen as a good thing.
15:54
Speaker 2: If it's less reliant on just a top ten percent
15:56
Speaker 2: or the top twenty percent, then the ability for anyone
16:00
Speaker 2: event to throw off the economy or throw it into recession.
16:04
Speaker 3: Is mitigated.
16:05
Speaker 4: Also, one other thing, Dad, you don't want that bottom
16:07
Speaker 4: ninety percent to get overly frustrated with the system, and
16:11
Speaker 4: that would lead to rise of more sort of socialists, sort.
16:14
Speaker 6: Of endeavors or initiatives.
16:17
Speaker 4: If you have ninety percent of the people who feel
16:19
Speaker 4: like they are not participating in the wealth and growth
16:22
Speaker 4: of this country, that's taking it really far to go
16:25
Speaker 4: to that dramatic. Yeah, but if it continued.
16:28
Speaker 2: On Occupy Wall Street and things like that came from
16:31
Speaker 2: the marin I would say it came more from just
16:34
Speaker 2: desperate economic times and high unemployment than it did wealth concentration.
16:38
Speaker 2: But nonetheless I think, yeah, those types of big events.
16:43
Speaker 6: Mahamdi in New York that electric Yeah, I am Donnie, Yeah, yeah.
16:48
Speaker 2: I think again where it comes from is economic dissatisfaction, right.
16:51
Speaker 2: That can come from high inflation, that can come from
16:53
Speaker 2: high unemployment. And if you mitigate the risk of either
16:57
Speaker 2: of those, then you have less possibility of extreme outcomes.
17:01
Speaker 3: I guess is where I'll go.
17:02
Speaker 2: Medicare insure payments rising to two point four eight percent
17:06
Speaker 2: in twenty twenty seven. Why we care as a few
17:08
Speaker 2: weeks ago, or a rather a few months ago, now,
17:11
Speaker 2: a bunch of big health insurance players who issue Medicare
17:15
Speaker 2: policies took a massive hit to their share price, and
17:18
Speaker 2: I remember covering these I think they were down like
17:19
Speaker 2: twenty percent in a day at the time. At last look,
17:23
Speaker 2: they were making some of that ground up this morning.
17:25
Speaker 2: But initially the US government had said that they were
17:28
Speaker 2: going to be coming in with an annual increase to
17:30
Speaker 2: Medicare reimbursements of zero point zero nine percent. We're now
17:34
Speaker 2: settling in at that two and a half percent range
17:37
Speaker 2: after presumably the threats from the insurance companies worked right, Like,
17:42
Speaker 2: these guys have some really powerful lobbyists, and what they
17:45
Speaker 2: were saying is, hey, if we can't get a reasonable
17:49
Speaker 2: reimbursement increase, then prepare for Medicare plans to get more
17:52
Speaker 2: expensive and the benefits to be cut.
17:55
Speaker 4: And for scenems to be really pissed as a result
17:57
Speaker 4: of that, because you're going to see you know, stingier benefits,
17:59
Speaker 4: higher castst and potentially insures pulling out of the market.
18:02
Speaker 4: So they were able to flex their leverage of this
18:05
Speaker 4: Medicare advantage in particular, which covers about half of sixty
18:09
Speaker 4: seven million seniors and disabled people, so that concentration of
18:14
Speaker 4: people that they covered, they were able the lobbyists to
18:17
Speaker 4: enact a much greater in peace and then anticipated. I
18:21
Speaker 4: mean they were thinking estimates were one percent for the increase,
18:24
Speaker 4: far higher than the point zero nine that was initially
18:27
Speaker 4: mentioned on January twenty six. But this two and a
18:29
Speaker 4: half percent clearly shows that there was some momentum there
18:34
Speaker 4: for a higher increase from all these insurers lobbying together.
18:38
Speaker 2: So United Healthcare stock today in reaction, up eight percent
18:43
Speaker 2: in early trade and making up some losses from earlier.
18:46
Speaker 2: Who are the other big players out here in this
18:49
Speaker 2: We'll pick.
18:50
Speaker 6: The CBS was, Yeah, CBS was tied the two.
18:54
Speaker 4: The other quick thing to mention here, Mike, is that
18:56
Speaker 4: they eliminated the practice that basically had caused a signific
19:00
Speaker 4: an issue between twenty eighteen and twenty twenty one of insurers,
19:03
Speaker 4: the healthcare insurers coming up with questionable diagnoses to get
19:07
Speaker 4: a higher reimbursement from the government.
19:10
Speaker 2: And so this is this is pretty nuanced, but effectively
19:14
Speaker 2: getting paid for medical chart derived diagnoses that aren't linked
19:17
Speaker 2: to a specific medical service, which again, unless you're deep
19:21
Speaker 2: into the medical industry you might not I certainly.
19:24
Speaker 6: Don't wasting tax bigger dollars.
19:25
Speaker 2: Yeah, quick break full market recap next with Wall Street Watch.
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Speaker 1: TFE show. Breaking business news is always first right here
19:49
Speaker 1: on the Financial Exchange Radio Network till now full Wall
19:54
Speaker 1: Street Watch tracking the stocks, theodato and the headlines driving
19:57
Speaker 1: markets so far today right here on the Financial Exchange Radio.
20:01
Speaker 5: Netwell markets are falling as President Trump's eight pm deadline
20:05
Speaker 5: for a run to reopen the Straight.
20:06
Speaker 6: Up or MoU's looms.
20:08
Speaker 5: This morning, the US conducted strikes on military targets on
20:12
Speaker 5: carg Island that did not include oil infrastructure. Right now,
20:16
Speaker 5: the Dow is down half a percent, SMP five hundred
20:20
Speaker 5: down six tens of a percent or forty points lower,
20:23
Speaker 5: Nasdaq selling off over one percent or two hundred and
20:25
Speaker 5: twenty seven points, Rusted two thousand, down eight tenths of
20:29
Speaker 5: one percent, Tenure Treasure reeled up one basis point at
20:32
Speaker 5: four point three five three percent, and Oil jumping three
20:36
Speaker 5: percent higher this morning, trading at one hundred and sixteen
20:40
Speaker 5: dollars a barrel. Broadcom shares are climbing three percent after
20:44
Speaker 5: the chip maker said it will develop and supply custom
20:47
Speaker 5: AI chips to Google an additional computing capacity to Entthropic
20:51
Speaker 5: and an expansion of strategic collaboration between the three companies. Meanwhile,
20:57
Speaker 5: several healthcare and insurance stocks are seeing game after the
21:01
Speaker 5: Trump administration announced it would raise twenty twenty seven Medicare
21:04
Speaker 5: advantage payments to insurers by two point four to eight percent,
21:08
Speaker 5: marking a substantial improvement from an earlier flat rate proposal.
21:12
Speaker 5: Humana and CBS Health rising about five percent, while United
21:17
Speaker 5: Health stock is jumping eight percent, and Bill Ackman's Perishing
21:21
Speaker 5: Square said it had made an offer to buy Universal
21:24
Speaker 5: Music Group and a deal that values the company at
21:27
Speaker 5: about sixty billion dollars. Shares in the label behind Bad Bunny,
21:31
Speaker 5: Taylor Swift and the Beatles are up by ten percent.
21:35
Speaker 5: I'm Tucker Silva, and that is Wall Street.
21:37
Speaker 2: Watch peace from Bloomberg here, Paul about healthcare workers and
21:43
Speaker 2: just how they're reshaping the US labor market. And to me,
21:45
Speaker 2: this story is less about healthcare workers than it is
21:48
Speaker 2: about just the state of the labor market, regardless of healthcare,
21:53
Speaker 2: and the state of the labor market is that we
21:56
Speaker 2: are barely growing the supply of workers. And I think
22:03
Speaker 2: some might take this as good news, some might take
22:05
Speaker 2: this as bad news. I'm not necessarily placing judgment on it.
22:09
Speaker 2: I think it's well, Actually, let me be clear, I
22:11
Speaker 2: think if it stays this way, probably good for wages
22:14
Speaker 2: and bad for GDP. But we can talk about that
22:17
Speaker 2: and how that all plays out. But the piece that
22:20
Speaker 2: I found pretty shocking was that the pool of available workers,
22:24
Speaker 2: according to FED research, could grow by only around one
22:27
Speaker 2: hundred thousand people in twenty twenty six.
22:29
Speaker 6: That was surprising to me.
22:32
Speaker 3: That is.
22:35
Speaker 2: What one twentieth of the average pace of job creation
22:39
Speaker 2: over the course of the last four years. Like, if
22:42
Speaker 2: we want to compare things here, right, like, we've probably
22:45
Speaker 2: averaged two plus million jobs created over the last couple
22:49
Speaker 2: of years. And if you're only growing the labor force
22:51
Speaker 2: now by one hundred thousand, where's that all going to
22:55
Speaker 2: come from? And the argument that they may hear is,
23:00
Speaker 2: you know, you're causing this shortage in available workers because
23:04
Speaker 2: a lot of them are being sucked up into the
23:06
Speaker 2: healthcare industry for obvious reasons.
23:07
Speaker 3: We're all getting older, and so you.
23:10
Speaker 2: Know, if you are a Amazon warehouse, or if you
23:15
Speaker 2: are a McDonald's or those are not good comparisons because
23:20
Speaker 2: it is not as easy to go get a healthcare
23:23
Speaker 2: job compared to some of those. But you know, in
23:26
Speaker 2: some of the cases where you don't require a registered
23:28
Speaker 2: nursing degree or things along those lines, there are healthcare
23:31
Speaker 2: rules that will pay substantially more than working at one
23:34
Speaker 2: of those places. And then for more qualified jobs where
23:37
Speaker 2: you do need a secondary degree, Yeah, the wages that
23:41
Speaker 2: you can draw from being in nursing far outshine, for instance,
23:45
Speaker 2: what I might be able to get by being a teacher. Right, Like,
23:47
Speaker 2: I don't know the actual degree requirements, but they're both substantial, right,
23:50
Speaker 2: you both need continuing education and.
23:54
Speaker 3: A higher degree.
23:56
Speaker 2: And I would think, what do you think starting starting
24:02
Speaker 2: healthcare starting like registered nurse roles probably fifty percent higher
24:10
Speaker 2: than starting teacher role at.
24:12
Speaker 6: Least thirty, at least thirty or forty, I would.
24:15
Speaker 2: Say, yeah, So again, just you know, comparing things out here,
24:18
Speaker 2: what it sets you up for is a number of
24:20
Speaker 2: industries that are going to try and make do with less.
24:23
Speaker 2: Given the current immigration scenario in this country, which to
24:26
Speaker 2: be clear, is not a whole lot of immigration immigrants
24:29
Speaker 2: legal or legal coming into the US, which again short
24:34
Speaker 2: term probably does drive up wages a little bit. Long
24:37
Speaker 2: term leads to questions about you know, what do companies do.
24:42
Speaker 2: Do they keep employees in the US or go look
24:45
Speaker 2: for cheaper employees elsewhere or other solutions from artificial intelligence,
24:50
Speaker 2: robotics or other automation.
24:52
Speaker 3: That's kind of where I went to with all this.
24:54
Speaker 2: I thought the real interesting piece was not about the
24:56
Speaker 2: state of healthcare workers, but rather the state of the
24:58
Speaker 2: labor market growth, which the FED is estimating pretty much
25:02
Speaker 2: won't happen in twenty twenty six.
25:03
Speaker 4: Yeah, so the the impacts that you'd see there. Basically,
25:07
Speaker 4: what the point that Connor sends making this Bloomberg pieks
25:10
Speaker 4: is that healthcare is sort of covering up for a
25:13
Speaker 4: lot of jobs that are being shed in other industries.
25:15
Speaker 4: Over the last twelve months, six hundred and eighty thousand
25:18
Speaker 4: healthcare workers have been added, while four hundred and twenty
25:21
Speaker 4: jobs four hundred and twenty thousand jobs have been shed
25:24
Speaker 4: from other industries. And then as as a result, also
25:27
Speaker 4: you have a shrinking labor survive force like you were
25:30
Speaker 4: mentioned before on the immigration front, and then you have
25:32
Speaker 4: a lot of people retiring as well.
25:34
Speaker 6: So on one end, I could see the inflationary.
25:37
Speaker 4: Impacts right, because you have fewer workers that can demand
25:43
Speaker 4: a higher salary because they don't have to worry about
25:46
Speaker 4: an influx of newer workers coming in that looms as
25:49
Speaker 4: a potential risk. But then on the other side of things,
25:54
Speaker 4: you don't want to have you don't want that inflation
25:57
Speaker 4: and risk, but also you want to key continue to
25:59
Speaker 4: add new workers to the system because they will go
26:03
Speaker 4: out and presumably spend some of that income and keep
26:06
Speaker 4: the economy growing. But it's hard for me to say
26:11
Speaker 4: really what the impacts of it will be in the
26:15
Speaker 4: labor market. It seems like we will just kind of
26:17
Speaker 4: sit at this unemployment rate, like I just don't see
26:19
Speaker 4: the risks as a spike up in unemployment. Though on
26:21
Speaker 4: the other side of it, so yes, inflationary risk, but
26:24
Speaker 4: then I don't I worry less about unemployment spiking up,
26:28
Speaker 4: but there's also looming that risk of inflationary pressure on wages.
26:31
Speaker 4: I guess that's sort of sit in the middle of
26:33
Speaker 4: those two things.
26:34
Speaker 2: Yeah, it makes me definitely less concerned about the possibility
26:37
Speaker 2: for severe unemployment.
26:38
Speaker 4: Yeah, which is good because the concern going into this year.
26:42
Speaker 4: I'm less concerned about that. I guess you could make
26:46
Speaker 4: the argument that with some of the supply chain shocks
26:48
Speaker 4: that we're seeing here and a tighter workforce that maybe
26:52
Speaker 4: they command higher wages that sets off inflation. Maybe that
26:55
Speaker 4: risk is something that looms that is perhaps more of
26:59
Speaker 4: an is than we thought heading into this year.
27:02
Speaker 2: By the way, ZIP recruiter is telling me that the
27:04
Speaker 2: starting wage for a registered nurse in the Boston area
27:08
Speaker 2: is around Sorry, the average starting pay is around forty
27:11
Speaker 2: six bucks an hour for a registered nurse compared to
27:15
Speaker 2: roughly thirty seven bucks an hour for a Boston City teacher. Obviously,
27:19
Speaker 2: that rate changes dramatically the further away you get from
27:23
Speaker 2: city rates, So not quite as dramatic as I was
27:25
Speaker 2: as I was alluding to speaking of Boston and the
27:29
Speaker 2: state of Massachusetts. The state of Massachusetts or the Commonwealth
27:33
Speaker 2: is saying that they are going to pursue a child
27:35
Speaker 2: social media ban as well as a prohibition on cell
27:38
Speaker 2: phones in public schools.
27:40
Speaker 3: They would not be the first date to try and
27:42
Speaker 3: move forward with this.
27:43
Speaker 2: Florida has something similar that they're currently being sued over,
27:48
Speaker 2: effectively someone suing them over free speech right saying that
27:52
Speaker 2: you know, if I don't have access to social media,
27:54
Speaker 2: I can't express express political speech and things along those lines.
27:59
Speaker 2: We will see if it goes forward and masters it's
28:01
Speaker 2: also acknowledging that they might face similar blowback here in
28:05
Speaker 2: similar lawsuits. But yeah, ultimately I don't know. I would
28:09
Speaker 2: think it's not all that different from you know, towns
28:12
Speaker 2: Well needam Mesters, where we're broadcasting the show from right now,
28:15
Speaker 2: you must be twenty one to buy tobacco. I don't
28:18
Speaker 2: think that seems all that different from saying you have
28:20
Speaker 2: to be fifteen to have a social media account. But
28:22
Speaker 2: we will see. I'm sure, I'm sure there are differences. Nonetheless,
28:27
Speaker 2: they're talking about requiring verifiable consent, similar to what we
28:31
Speaker 2: see in Australia, for example, where they just passed this
28:34
Speaker 2: the law and the idea of a cell phone ban
28:38
Speaker 2: in public schools. While I welcome, it would be pretty
28:41
Speaker 2: difficult to enforce, of course, But I don't know. I
28:44
Speaker 2: don't think this is going to be massively impactful. But
28:46
Speaker 2: I'm also completely fine banning social media for young people.
28:51
Speaker 4: I'm all about that too. I think it's something I
28:53
Speaker 4: don't know, Mike, if you talk about a lot, but
28:55
Speaker 4: I think about it a lot because I have younger
28:57
Speaker 4: kids and they're not at the point yet where it's
29:00
Speaker 4: something that they are attached to, but I do kind
29:04
Speaker 4: of wonder how to try and insulate them from that
29:07
Speaker 4: as best as possible, And my wife and I kick
29:09
Speaker 4: around sort of policies and it would be nice if
29:12
Speaker 4: there was some sort of already standard policies in place
29:16
Speaker 4: from a school perspective, to me, that seems like a
29:19
Speaker 4: no brainer of just having them locked away or something
29:22
Speaker 4: like that, but easier said than done.
29:26
Speaker 2: Yeah, I mean, the early indications in Australia at least
29:29
Speaker 2: are that kids are really good at getting around these
29:32
Speaker 2: day wreckages and they are always going to be one
29:34
Speaker 2: step ahead of you in terms of tech.
29:36
Speaker 3: But frankly, I think.
29:39
Speaker 2: Regardless of whether laws like this sweep the nation, which
29:42
Speaker 2: there's not a ton of evidence, but I think there's
29:44
Speaker 2: clearly a push. There are more social media bands and
29:47
Speaker 2: just a more critical ee. What's obvious to me is
29:50
Speaker 2: that parents.
29:51
Speaker 3: Are much more aware of it than I.
29:55
Speaker 2: Guess my parents didn't have to be aware of it
29:57
Speaker 2: because it didn't come about until like I.
29:59
Speaker 3: Was in college, but yeah, that next generation apparently the.
30:01
Speaker 4: Internet was the same for us to a degree, though
30:04
Speaker 4: there was concern with parents whether it was you know,
30:06
Speaker 4: aim chat or whatever. It's not the same, but it
30:09
Speaker 4: was still a problem that loomed out.
30:11
Speaker 3: Yeah.
30:12
Speaker 2: I think people are much more aware though of not
30:15
Speaker 2: only like at that point when I was a kid
30:17
Speaker 2: AAM chat that was more concerned like, oh Jesus, guy,
30:20
Speaker 2: you know, is he talking with some forty five year
30:23
Speaker 2: old stalker. Yeah, that's not the main concern I think
30:26
Speaker 2: people parents have with Facebook. That is a concern, but
30:29
Speaker 2: I think the concern that people have addictive nature. This
30:31
Speaker 2: is going to be an addictive and damaging product to
30:34
Speaker 2: my child's mental development, which is definitely different than how
30:38
Speaker 2: our parents addressed us using the internet.
30:41
Speaker 6: That's fair, That's fair.
30:42
Speaker 2: Let's take quick break. When we come back. There is
30:45
Speaker 2: a fire sale going on in real estate, and if
30:49
Speaker 2: you can come up with a few million bucks, you
30:51
Speaker 2: might be able to participate. We'll be covering the real
30:53
Speaker 2: estate fire sale going next on The Financial Exchange Mister Show.
30:58
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31:29
Speaker 2: Well, I'm generally pretty pessimistic about the state of real
31:35
Speaker 2: estate across the country for twenty twenty six. There's clearly
31:39
Speaker 2: a fire sale going on in commercial office buildings, and
31:43
Speaker 2: we've talked about this now for six years, but finally
31:46
Speaker 2: you're seeing some movement on it, which is I think
31:50
Speaker 2: both the combination.
31:50
Speaker 3: Of good news and bad news.
31:52
Speaker 2: Bad news for city budgets who collect property taxes on
31:56
Speaker 2: these buildings, good news for frankly, both the current owners
31:59
Speaker 2: and the new acquirers. But a few examples here of
32:03
Speaker 2: the just ludicrous prices that are being paid. In Chicago,
32:07
Speaker 2: real estate developer Mark Collabria bought a four hundred and
32:09
Speaker 2: eighty five thousand square foot office building for four million dollars.
32:13
Speaker 2: Same buildings sold at sixty eight point one million dollars
32:16
Speaker 2: a decade ago. Developer Asher Lozado paid a mere five
32:22
Speaker 2: point three million for the Denver Energy Center after foreclosure process,
32:28
Speaker 2: sold for one hundred and seventy six million back in
32:30
Speaker 2: twenty thirteen. There's case after case of this. What is
32:34
Speaker 2: wild as these properties just didn't move for a prolonged
32:40
Speaker 2: period of time. You know, they didn't sell, they did
32:43
Speaker 2: not know The owners were basically trying to play the
32:47
Speaker 2: lesson from the Great Recession, and the clear lesson from
32:50
Speaker 2: the Great Recession was pretty plain, hold on to your stuff,
32:52
Speaker 2: do your best to keep your keys, and if you
32:54
Speaker 2: can make it out the other side, then you'll have
32:56
Speaker 2: a property that is worth more than UOE. It's now
32:59
Speaker 2: been six years and it just didn't happen. And so
33:04
Speaker 2: now they're finally accepting reality, I think, and saying Okay,
33:06
Speaker 2: we either need to come up with funds to redevelop
33:09
Speaker 2: this into something else ourselves. Class A office space is
33:12
Speaker 2: probably the easiest solution, or turn over the keys to
33:15
Speaker 2: let somebody else try and figure it out with class
33:18
Speaker 2: A office space or apartments or something else. The piece
33:23
Speaker 2: about the big loser being the city. I mean, I
33:26
Speaker 2: was trying to find the the property tax records for
33:30
Speaker 2: this building in sorry, in Denver, Colorado for previous years. Yeah,
33:39
Speaker 2: hear you, prior year information. Yeah, it doesn't have it,
33:44
Speaker 2: But that to me is the biggest question is Okay,
33:47
Speaker 2: if the city was appraising this building at fifty million
33:50
Speaker 2: dollars previously, in assessing taxes based on a fifty million
33:54
Speaker 2: dollar appraisal, they're gonna have no choice but to reassess
33:58
Speaker 2: it down to this new five point three million dollars
34:01
Speaker 2: sales price, or you know they're going to have a
34:03
Speaker 2: tough time making an argument anyway. And this is precisely
34:06
Speaker 2: what we've seen in many cities, Boston included, where the
34:09
Speaker 2: budget is just a mess because they previously collected such
34:13
Speaker 2: a large portion of their budget from commercial properties that
34:17
Speaker 2: are worth a hell of a lot less than they
34:18
Speaker 2: were a decade ago.
34:19
Speaker 4: Yeah, Boston, to me, just off memory, I don't remember
34:22
Speaker 4: the percentage, but was heavily reliant upon those revenues from
34:26
Speaker 4: the taxation on commercial office space. And so it will
34:29
Speaker 4: lead to cities facing budget deficits and trying to find
34:33
Speaker 4: new ways to get a diversified revenue stream as a
34:37
Speaker 4: result of some of these write downs. But it has
34:39
Speaker 4: just been a brutal span of time for that commercial
34:43
Speaker 4: real estate, the office.
34:45
Speaker 3: So you know what we should do.
34:46
Speaker 2: What would be the logical solution in Boston and all
34:50
Speaker 2: of Massachusetts if we're worried about commercial office valuations, is
34:55
Speaker 2: make it so that if you want to buy that office,
34:57
Speaker 2: it's conferred it into apartments and then rent those apartments out.
35:02
Speaker 3: We're going to make sure that they're all rent controlled
35:04
Speaker 3: going forward, because that is going to lead to more
35:07
Speaker 3: investment and development in properties that suddenly are worth ninety
35:12
Speaker 3: percent less than what they were a decade ago and
35:14
Speaker 3: are responsible for paying ninety percent less taxes. So, yippie,
35:18
Speaker 3: let's do it.
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36:28
Speaker 2: A big plans for the World Cup this summer, Paul,
36:32
Speaker 2: you gonna be heading down to Gillette and catching a
36:34
Speaker 2: three thousand dollars game?
36:35
Speaker 6: No, I think we'll just put it on the TV
36:37
Speaker 6: here at the office, right.
36:38
Speaker 2: Well, MBTA has their way of capitalizing on this one.
36:42
Speaker 2: They are going to charge what normally costs eight seventy
36:46
Speaker 2: five for a train ride from Boston down to Gillette Stadium.
36:49
Speaker 3: Whopping eighty dollars.
36:50
Speaker 2: I assume they'll be you know, they'll be serving champagne
36:54
Speaker 2: and caviare on the.
36:56
Speaker 3: Service on the commuter rail down to secruitery boards.
36:59
Speaker 4: Yeap, what would be if you're an Internet, if you're
37:03
Speaker 4: an international visitor, the most oppressing way to spend a
37:06
Speaker 4: train ride from what you're probably used to in any.
37:09
Speaker 2: Type of Not only am I paying eighty dollars for
37:12
Speaker 2: this twenty train ride? I get, but I get on
37:14
Speaker 2: it and like, this train looks like the one that
37:17
Speaker 2: I used to take in my childhood when I was
37:20
Speaker 2: going to school in uh, you know, in rural Spain.
37:26
Speaker 2: Instead I am taking this lousy commuter rail that rattles,
37:30
Speaker 2: has no internet service and all the seats are torn open.
37:35
Speaker 3: But honestly, they should absolutely do this. What else are
37:38
Speaker 3: you going to do?
37:39
Speaker 6: It's the only thing to charge one hundred.
37:40
Speaker 3: Yeah.
37:41
Speaker 2: I am in favor of charging what the market will support,
37:46
Speaker 2: and in this case, eighty dollars is absolutely something.
37:49
Speaker 5: Because the locals are just going to drive there, right,
37:53
Speaker 5: probably a locals.
37:54
Speaker 3: Going to this game.
37:55
Speaker 6: Yeah, that's fair, that's fair.
37:58
Speaker 3: I mean I know that there are, but not a lot.
38:02
Speaker 6: Do you imagine root one? It is gonna be crazy.
38:05
Speaker 3: Is gonna be a good time. It's gonna be a
38:06
Speaker 3: good time.
38:07
Speaker 2: We'll get your MBTA tickets now you have to have
38:09
Speaker 2: a ticket booked to the World Cup in order to
38:11
Speaker 2: book your MBT a ticket for eighty dollars.
38:13
Speaker 3: Probably all starts of delays.
38:17
Speaker 2: Switching problems, train tracks, quick break market strongly in Niggatory Territory.
38:23
Speaker 3: Will have a full recap and more for you. Next
38:26
Speaker 3: on the financial exchange