Latest / The Financial Exchange Show / Is Tesla running out of juice across the globe?

Transcript

Is Tesla running out of juice across the globe? · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:03
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:09
Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:17
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
Speaker 1: this program do not endorse each other or their services.
0:26
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:28
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Mike Armstrong and Mark Vandetti. Your exclusive look
0:40
Speaker 1: at business and financial news affecting your day, your city,
0:43
Speaker 1: your world. Stay informed and up to date about economic
0:47
Speaker 1: and market trends, plus breaking business news every day. The
0:51
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:54
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:58
Speaker 1: heroes by visiting da AV five K dot Boston and
1:02
Speaker 1: making a donation Today. Face is the Financial Exchange with
1:06
Speaker 1: Mike Armstrong and Mark Vandetti.
1:10
Speaker 2: Good morning, happy snowy Thursday. Here on the Financial Exchange,
1:13
Speaker 2: It's Mike Armstrong, Mark Vandetti and Tucker Silva with you
1:17
Speaker 2: on a continued busy earnings week. We're going to be
1:20
Speaker 2: talking a little bit about the Trump administration's view on
1:24
Speaker 2: interest rates the upcoming jobs report. But first things first,
1:27
Speaker 2: on those earnings. Today we heard from a number of companies,
1:31
Speaker 2: some big, some small, some little bit nostalgic. We had
1:35
Speaker 2: Peloton reporting earnings, for example, which doesn't move markets at all,
1:39
Speaker 2: but I do kind of miss the early twenty twenty
1:42
Speaker 2: days of talking about the craziness that was Peloton. Eli
1:45
Speaker 2: Lilly reported, Astra Zeneca, Phillip Morris Honeywell new breakup talks there.
1:51
Speaker 2: And the big one will be Amazon, the two and
1:54
Speaker 2: a half trillion dollar company. Almost said billion. That would
1:57
Speaker 2: be wrong. Two and a half trillion dollar company will
1:59
Speaker 2: be reporting today day after the bell around five pm. Uh.
2:04
Speaker 2: Anything catching your market your eyes in terms of markets
2:07
Speaker 2: this morning, mark or any in companies you want to
2:09
Speaker 2: jump into. Dow is flat for the day, SMP and
2:12
Speaker 2: NASDAC are very slightly up at the at the moment,
2:15
Speaker 2: so it seems to me that no big moves from
2:18
Speaker 2: earnings yet and some baited breath waiting for tomorrow's jobs report,
2:21
Speaker 2: which will be somewhat complicated for people to digest. So
2:25
Speaker 2: we can jump out.
2:26
Speaker 3: You didn't mention it. I hope it's okay that I
2:29
Speaker 3: bring up Tesla and how much there's sales plummeted is not?
2:35
Speaker 2: Yeah, we gonna We're gonna go there, like no, I wasn't.
2:37
Speaker 2: You weren't available on the show, so we should jump
2:39
Speaker 2: in there because that was a report from what was
2:41
Speaker 2: it Monday or Tuesday of this week that.
2:44
Speaker 3: Your report europe numbers specifically.
2:46
Speaker 2: Okay, So the European numbers specifically came.
2:48
Speaker 3: Out fresher according to this the Financial Times there about
2:52
Speaker 3: five hours so Tesla?
2:54
Speaker 2: When when was the earning report for Tesla? Tucker? Was
2:56
Speaker 2: that this week or last week?
2:57
Speaker 3: Last week?
2:58
Speaker 2: Okay? So I remember discussing it at the moment because
3:00
Speaker 2: the market reaction was up on Tesla shares and the
3:04
Speaker 2: earnings themselves were a dumpster fire. They reported, Oh that, yes,
3:08
Speaker 2: bad sales, bad earnings, bad forecasted sales. But Elon Musk
3:13
Speaker 2: said he's never been more excited, and so people bought
3:16
Speaker 2: the company. What was this announcement?
3:18
Speaker 3: So compounding that and adding really to the narrative that
3:22
Speaker 3: their core business is arguably sucking wind or.
3:27
Speaker 2: Don't worry, robots right dancing robots, right right, right for everyone.
3:31
Speaker 3: But there's sales in Germany and France down sixty three
3:36
Speaker 3: percent in the latter, fifty percent in the former excuse me,
3:40
Speaker 3: sixty percent in the former as well, just a fraction
3:43
Speaker 3: of new ev sold I mean a fraction less than
3:46
Speaker 3: ten percent, where Tesla is a dramatic change from only
3:49
Speaker 3: several quarters ago. If you're a shareholder, of course you
3:54
Speaker 3: own it, possibly for other reasons, you believe the story.
3:58
Speaker 3: Somebody say the shype. But if you're focused on it's
4:02
Speaker 3: core business, when's the last time they had good news
4:04
Speaker 3: on that?
4:04
Speaker 2: Right? Yeah, it's an interesting pivot moment here because, as
4:09
Speaker 2: you say, the sales have been declining for a number
4:11
Speaker 2: of reasons.
4:12
Speaker 3: I mean, yeah, dated models, dated.
4:14
Speaker 2: Models in Europe. They're facing a lot more competition from
4:17
Speaker 2: Chinese manufacturers that we are not facing here Domestically, there's
4:20
Speaker 2: the politics situation going on, and so it is a
4:24
Speaker 2: important pivot point. And I mean there's been a few
4:30
Speaker 2: moments in Tesla's history that are more important. There was
4:33
Speaker 2: the point in time where they were very close to
4:34
Speaker 2: running out of cash and going out of business a
4:36
Speaker 2: few years ago, So it doesn't quite it doesn't quite
4:40
Speaker 2: line up with that importance. But you know, execution on
4:43
Speaker 2: some of their promises is going to become increasingly important
4:46
Speaker 2: if their vehicle sales volumes are actually showing some form
4:50
Speaker 2: of cyclical.
4:51
Speaker 3: Dealers when you price in his political activism, the only
4:54
Speaker 3: conspicuous figure I could think of historically was Henry Ford.
4:57
Speaker 3: He wrote of he was famously anti Semitic. He was
4:59
Speaker 3: a flake. He thought the Revolutionary War was the War
5:01
Speaker 3: of eighteen twelve. I mean, he knew very actually fit
5:04
Speaker 3: right into today's political scene, but knew very little about
5:07
Speaker 3: our history and didn't give I think he said something like,
5:10
Speaker 3: all I wouldn't give a dime for all of history.
5:13
Speaker 3: I think it's bunk or something like that. Anyway, he's
5:16
Speaker 3: the only figure that sort of comes to mind an industrialist.
5:20
Speaker 3: He was also very very opinionated, but that was of
5:22
Speaker 3: course before social media, and most Americans probably had no
5:25
Speaker 3: idea what Henry Ford thought about the issues. So it's
5:28
Speaker 3: an interesting it's just no parallel it's.
5:30
Speaker 2: An interesting and important one to keep an eye on.
5:31
Speaker 2: Important because it is a still massive company that is
5:34
Speaker 2: more valuable right all other automakers combined, and is seeing
5:39
Speaker 2: similar trends that other automakers are, but stock price is
5:41
Speaker 2: not reacting that way. You know, Ford, for example, down
5:45
Speaker 2: nineteen percent last year and reported that they expect their
5:49
Speaker 2: earnings to fall some no, no, that was a Nissan,
5:52
Speaker 2: but falling earnings and rolling out new models, and so
5:57
Speaker 2: it'll be interesting to me to see how they can
5:59
Speaker 2: peat with all this. But let's move on to tomorrow.
6:02
Speaker 2: Tomorrow is a job's report. It's also a revision jobs reports,
6:07
Speaker 2: So Mark, can you kind of bring us up to
6:09
Speaker 2: speed on what exactly happens tomorrow, because they do go
6:12
Speaker 2: back and revise a bunch of previous numbers. And it
6:16
Speaker 2: seems to me that everyone's making a big deal of this,
6:18
Speaker 2: that it's going to confuse everybody, And what I suspect
6:23
Speaker 2: will happen is one you shouldn't be confused about this
6:26
Speaker 2: because nobody actually pays attention to the jobs report other
6:28
Speaker 2: than the people on this show and people that watch
6:30
Speaker 2: financial markets really closely. But I suspect the confusion might
6:34
Speaker 2: come from politicians poking the bear here and saying, ah
6:38
Speaker 2: BLS is messing with their data, and you know they
6:41
Speaker 2: were making the jobs market look stronger.
6:44
Speaker 3: Than who's going to say now the people that most
6:50
Speaker 3: reliably voiced the conspiracy theories about data are now in
6:53
Speaker 3: charge of the data right right. By that, I mean
6:56
Speaker 3: Trump and his administration. Look, these revs, as you said, Mike,
7:00
Speaker 3: their routine. They are typically large. They won't impact the
7:04
Speaker 3: monthly number, but they'll impact the cumulative change over the
7:07
Speaker 3: past twelve months to people in the job market and
7:10
Speaker 3: to pay rolls. There are people who are knee deep
7:13
Speaker 3: in the nuances of this who have opinions on what
7:17
Speaker 3: will move in what direction. The labor force growth will
7:19
Speaker 3: probably go up large upward revisions to employment levels is
7:23
Speaker 3: sort of the consensus opinion, and possibly downward revisions to
7:28
Speaker 3: pay rolls. Those do come from two different surveys. As
7:30
Speaker 3: you and Chuck talk about a lot, it's ancient history, Mike, Well.
7:35
Speaker 2: I mean it's twelve months ago. So again, what will
7:39
Speaker 2: be happening here is you will have a read on
7:41
Speaker 2: the January Employment Summary that will be coming out tomorrow
7:45
Speaker 2: at eight thirty am. Yes, Tucker, Tucker shaking his head. Yes,
7:48
Speaker 2: you know, it's eight thirty am tomorrow. Alongside that, you
7:52
Speaker 2: get revisions to the last twelve months. And we've seen
7:54
Speaker 2: this before, but you know very obviously. What happens is
7:58
Speaker 2: they go out and survey a whole of people and
8:00
Speaker 2: businesses every single month, and as you can imagine, not
8:03
Speaker 2: everybody gets those surveys right back to the Bureau of
8:05
Speaker 2: Labor Statistics immediately. Sometimes it takes a few months, and
8:08
Speaker 2: so they compile all those and once every is it
8:11
Speaker 2: six months, do a bunch of revisions to it, I believe,
8:14
Speaker 2: and that leads to a fair bit of confusion on occasion,
8:16
Speaker 2: because all of a sudden you've got these massive changes
8:20
Speaker 2: to oh there were actually nine hundred thousand fewer jobs created,
8:23
Speaker 2: or there were you know, upticks in the unemployment rate
8:28
Speaker 2: beyond what we previously saw. But it is a normal
8:31
Speaker 2: course of business. But it is an important jobs report
8:33
Speaker 2: for that reason, because you will not only learn about
8:36
Speaker 2: the month of January, but you will get more accurate
8:38
Speaker 2: information about the course of the last year when it
8:41
Speaker 2: came to the labor market. Anything else to add on Tomorrow's.
8:43
Speaker 3: Other than what you just inted that these are always
8:46
Speaker 3: estimates subject to revisions. Some reports are more heavily revised,
8:51
Speaker 3: like GDP and employment than others like CPI IE inflation,
8:55
Speaker 3: which tends to not change much. But they are always estimates, Mike.
8:59
Speaker 3: Like you said, the government surveys a relatively small number
9:03
Speaker 3: of employers or households, and thus there's a lot of
9:06
Speaker 3: uncertainty tied to these numbers, which underscores the point you chuck,
9:11
Speaker 3: make a lot, which is, don't put too much credence
9:13
Speaker 3: in any one report, or even any two or or three.
9:16
Speaker 3: You need several to get a sense for where things
9:18
Speaker 3: are trending.
9:19
Speaker 2: Let's take a quick break here when we come back,
9:22
Speaker 2: commentary out of the Treasury Department. When it comes to
9:25
Speaker 2: interest rates, We've got another Federal Reserve meeting coming up
9:27
Speaker 2: in March. Latest comments from Scott Bestt and the Treasury
9:31
Speaker 2: on where they see rates needing to go in twenty
9:34
Speaker 2: twenty five. That's next here on the Financial Exchange.
9:37
Speaker 1: Business and financial news affecting the markets and your wallet.
9:41
Speaker 1: We've got it all straight from Wall Street right here
9:43
Speaker 1: on the Financial Exchange radio network Wall Street. Watch a
9:48
Speaker 1: full update on the market's performance todate weekdays at ten
9:51
Speaker 1: thirty only here on the Financial Exchange Radio Network.
9:56
Speaker 4: The Financial Exchange is proud of our partnership with the
9:59
Speaker 4: Decease American Veterans Department of Massachusetts.
10:03
Speaker 2: This year's five.
10:03
Speaker 4: K will be here before you know it. Some mark
10:06
Speaker 4: your calendars for Saturday, November eighth. We'll be keeping you
10:09
Speaker 4: updated on registration information in the coming weeks. But in
10:13
Speaker 4: the meantime, if you want to help our great American
10:15
Speaker 4: heroes right now, just visit Dav fivek dot Boston. Will
10:19
Speaker 4: you can make a donation today and support such programs
10:23
Speaker 4: such as the Veterans Transportation Program, which takes injured vets
10:27
Speaker 4: to their medical appointments. That's Dav five K, not Boston.
10:33
Speaker 2: Scott Bessett, newly appointed and confirmed Treasury secretaries out there
10:37
Speaker 2: talking interest rates today and focusing a little bit on
10:42
Speaker 2: or trying to divert attention away from the Federal Reserve
10:45
Speaker 2: a little bit, I think here and saying quote, he
10:49
Speaker 2: referring to Donald Trump is not calling for the FED
10:51
Speaker 2: to lower rates, and then goes on to further talk
10:54
Speaker 2: about the FED and their independence a little bit by saying, quote,
10:58
Speaker 2: I will only talk about what they they've done, not
11:01
Speaker 2: what I think they should do from now on. He
11:04
Speaker 2: said that tenure treasure yields climbed after the Fed's jumbo
11:07
Speaker 2: rate cuts, referring to the fifty base point reduction that
11:10
Speaker 2: Jerome Powell and his colleagues enacted in September. So what
11:12
Speaker 2: he's talking about there is one I do like to
11:15
Speaker 2: see it, because I don't want to see the Treasury
11:17
Speaker 2: Secretary piling on and saying I'm going to influence what
11:20
Speaker 2: the FED has to do here, and he's clearly saying
11:22
Speaker 2: the president's job. I'm not going to plan to do that.
11:25
Speaker 2: But what he's speaking to in particular, I think is
11:27
Speaker 2: an important quick lesson about the Federal Reserve, which people
11:31
Speaker 2: have already gotten here, which is that they don't control
11:35
Speaker 2: interest rates that most Americans care about. What I'm referring
11:40
Speaker 2: to is that they don't control long term rates. And
11:42
Speaker 2: most people don't really care that much about what their
11:45
Speaker 2: money market mutual fund is paying. They care a lot
11:48
Speaker 2: more about what they're going to be paying on a
11:50
Speaker 2: car loan, a student loan, a mortgage loan, you know,
11:54
Speaker 2: things along those lines that are much more tied to
11:56
Speaker 2: the longer rates. And his point that he made in
11:59
Speaker 2: more complex language is the FED cut rates and mortgage
12:02
Speaker 2: rates went up. So here's the data. On September seventeenth,
12:06
Speaker 2: which was the day before the FED began their rate
12:09
Speaker 2: cutting cycle, the FED Fund's target rate was at a
12:12
Speaker 2: high range of five point five percent. They don't actually
12:14
Speaker 2: set these rates, They target a range between. At this
12:17
Speaker 2: point it was five and a quarter to five and
12:19
Speaker 2: a half percent. They then cut rates by fifty basis
12:22
Speaker 2: points and did two more rate cuts at the end
12:24
Speaker 2: of twenty twenty four to bring that target rate down
12:27
Speaker 2: a full percentage point, so it went from five to
12:29
Speaker 2: five to four and a half. The thirty year mortgage
12:32
Speaker 2: rate during that same time period from September seventeenth. On
12:36
Speaker 2: September seventeenth, it was sitting at six point one point
12:39
Speaker 2: one according to Mortgage News Daily. By December eighteenth, when
12:42
Speaker 2: the FED was done with their most recent rate cutting cycle,
12:46
Speaker 2: the thirty year mortgage had gone up to seven point
12:48
Speaker 2: one to three percent. And that is specifically what Beson
12:51
Speaker 2: is talking about here is Look, we can pressure the
12:54
Speaker 2: FED all all we want, but recent history was lower
12:57
Speaker 2: rates and long term rates spike. What would you attribute
13:01
Speaker 2: I guess, first and foremost, just to focus on the
13:03
Speaker 2: education part, of this rather than the politics part of this.
13:07
Speaker 2: Why would it be that the FED cuts rates and
13:10
Speaker 2: markets respond by driving long term rates up higher. What
13:13
Speaker 2: is the expectation there, what's the concern there, or what
13:16
Speaker 2: causes all of that?
13:18
Speaker 3: The short answer is anticipation of higher perhaps higher growth.
13:23
Speaker 3: So when the FED, which controls the supply of money,
13:26
Speaker 3: as you pointed out, not interest rates, they don't even
13:28
Speaker 3: control very short term interest rates, they effectively control them
13:32
Speaker 3: because they can dump so much money in the form
13:35
Speaker 3: of reserves into banks. Banks thereby banks are thereby and
13:42
Speaker 3: able to make interest rates, make loans at lower interest rates.
13:45
Speaker 3: They effectively control, but they don't in fact control any
13:49
Speaker 3: interest rate. Important point that you made, so longer term
13:53
Speaker 3: rates rising when the FED stimulates the economy does make sense,
13:56
Speaker 3: and it happens more often than not. As people that
13:59
Speaker 3: this may not be happening in this case, it could
14:01
Speaker 3: be other things like fear of larger budget deficits or
14:04
Speaker 3: fear of a resurgence and inflation. These things can also
14:07
Speaker 3: drive up longer term rates, but it is not uncommon
14:11
Speaker 3: for the FED to cut short term rates and at
14:13
Speaker 3: the same time see long term rates perk up. Yeah,
14:15
Speaker 3: I'll just oversimplify here and say that is an expectation
14:18
Speaker 3: of increased economic activity, though there may be other factors
14:22
Speaker 3: in play.
14:22
Speaker 2: So other than intentionally causing a recession, which I assume
14:26
Speaker 2: Scott Bessont and Donald Trump don't really want to do.
14:30
Speaker 2: What sort of methodology, what sort of methods or policies
14:34
Speaker 2: has Besson talked about? Or can you imagine up that
14:36
Speaker 2: they might be able to do to influence those longer
14:39
Speaker 2: term rates? Because if that's their goal, what can you do?
14:42
Speaker 2: Because it's mainly driven, at least in the latter half
14:46
Speaker 2: of last year, by expectations that, hey, this economy isn't
14:49
Speaker 2: as bad as we thought it might get. The warnings
14:52
Speaker 2: about a recession from the PSALM rules seem to have dissipated,
14:55
Speaker 2: and so we're in pretty good shape here. How do
14:59
Speaker 2: you go about trying to bring those longer term rates
15:02
Speaker 2: down through policy.
15:04
Speaker 3: Curtailing spending and deficits, just like George H. W. Bush
15:08
Speaker 3: and then Bill Clinton did in the early nineteen nineties. Famously,
15:11
Speaker 3: they struck an informal deal with Alan Greenspan. At the time,
15:15
Speaker 3: Clinton said I will get the government's fiscal house in order,
15:18
Speaker 3: and Greenspan in turn implicitly, they didn't actually work this out.
15:24
Speaker 3: Greenspan agreed to keep monetary policy accommodative, so you had
15:29
Speaker 3: tight fiscal policy throughout the nineteen nineties, really easy if
15:33
Speaker 3: you will, or at least not overly stringent monetary policy.
15:36
Speaker 3: And it was the perfect brew that tight fiscal policy
15:40
Speaker 3: pursued by George hw who gets no credit for it,
15:43
Speaker 3: indeed is blamed for the recession wrongly that followed and
15:46
Speaker 3: lost the election of ninety two as a consequence. He
15:49
Speaker 3: started it. Clinton continued along the path of fiscal responsibility.
15:54
Speaker 3: This helped bring virtually everybody agrees, this helped bring long
15:57
Speaker 3: term interest rates down during the nineteen nineties. Mikes. So
16:00
Speaker 3: there's one model tight fiscal policy and at the other
16:03
Speaker 3: end monetary policy working to keep the economy going. Even
16:07
Speaker 3: though we're mainly concerned with fiscal policy and its impact
16:10
Speaker 3: on rates, there's this little discussion.
16:12
Speaker 2: In this piece, and Scott Best in particular, I spoken
16:14
Speaker 2: a lot about energy energy supply, increasing gasoline prices down.
16:19
Speaker 2: How might that possibly impact or affect the longer term
16:24
Speaker 2: end of the yield curve? I have a tough time seeing.
16:26
Speaker 3: It was also, you know, Bessant made his bones in
16:30
Speaker 3: the nineties, and he remembers well the mix of fisk,
16:33
Speaker 3: responsible fiscal and effective monetary policy that laid the groundwork
16:37
Speaker 3: for the prosperity of the nineties, in addition to some
16:40
Speaker 3: good luck with computers coming into their own in the
16:43
Speaker 3: Internet obviously becoming pervasive. Bessant knows that that favorable policy
16:50
Speaker 3: mix can influence rates and inflation, as we discussed. He
16:54
Speaker 3: also recalls that energy prices were subdued for much or
16:58
Speaker 3: falling through much of the ninety nine It's not necessarily
17:02
Speaker 3: the case, though, that just because energy prices remain or
17:08
Speaker 3: increases in energy prices are moderate, that you won't have inflation.
17:11
Speaker 3: Inflation is the persistent kind, the really bad kind, the
17:16
Speaker 3: underlying kind is a function of demand. So if they
17:21
Speaker 3: run big deficits instead of getting a handle on the deficit,
17:23
Speaker 3: and he's famously promised to reduce the debt to the
17:26
Speaker 3: deficit excuse me, to three percent of GDP. That sounds
17:29
Speaker 3: like a fantasy, but it's what he thinks he can do.
17:31
Speaker 3: If they fail to do that, they will fail.
17:33
Speaker 2: To bring those term term restricts.
17:35
Speaker 3: I mean, it may also fail to get inflation under
17:37
Speaker 3: control completely.
17:38
Speaker 2: So yeah, no, I think that is the key point
17:40
Speaker 2: here is if you want to get those longer term
17:42
Speaker 2: rates down, well, there's the accidental way, which would be
17:46
Speaker 2: unexpected recession, a bunch of people know their jobs. That's
17:49
Speaker 2: not what he wants to do. He wants to try
17:51
Speaker 2: and get dose to work to actually bring down government
17:54
Speaker 2: spending in some meaningful way to bring deficits down. And
17:58
Speaker 2: where I will find it very interesting is eventually Bessett
18:03
Speaker 2: will need to input his opinion on tax policy. And
18:08
Speaker 2: that's where I'm going to be interested to see he
18:11
Speaker 2: will eventually be asked. It's not being talked about seriously
18:13
Speaker 2: in Congress in terms of what those tax cuts look like.
18:16
Speaker 2: There's been discussion most recently of locking in the Trump
18:19
Speaker 2: tax cuts for just another five years in order to
18:21
Speaker 2: get a to get a deal actually done. But if
18:25
Speaker 2: he is very fundamentally serious about deficit control and trying
18:29
Speaker 2: to get those two a three percent target, then I'll
18:31
Speaker 2: be very intrigued to see what he says when asked, Okay,
18:35
Speaker 2: there's a bill on the table now to reduce the
18:37
Speaker 2: corporate tax rate even further. It's estimated that it'll blow
18:41
Speaker 2: up deficits to this level. What's your doing on.
18:43
Speaker 3: This as you know, as you guys have talked about
18:45
Speaker 3: a lot. Their math doesn't work. They're hoping for I
18:48
Speaker 3: don't know what productivity miracle or something. Their economic goals
18:52
Speaker 3: are frankly preposterous. I get it. Politically, you have to
18:55
Speaker 3: say your goals have to be stretch goals. A lot
19:00
Speaker 3: of hyperbole underlying all this, as is characteristic of these folks.
19:05
Speaker 3: But their goals three percent GDP growth, which is about
19:08
Speaker 3: where we've been the past two years, by the way,
19:11
Speaker 3: so it's not like it's impossible we've been doing it.
19:14
Speaker 3: Maybe that's not a stregical three percent deficit, slow inflation,
19:18
Speaker 3: all the rest of it. Some of these things are
19:19
Speaker 3: just plain incompatible. And Bessen knows.
19:22
Speaker 2: That it's been a week of tariff talk and Federal
19:24
Speaker 2: Reserve officials are hitting the media circus talking about the
19:28
Speaker 2: risk of terras. When we cover that next right after
19:30
Speaker 2: Wall Street Watch, Like.
19:45
Speaker 1: Us on Facebook and follow us on Twitter at TFE show.
19:49
Speaker 1: Breaking business news is always first right here on the
19:52
Speaker 1: Financial Exchange Radio Network. Time now for Wall Street. Watch
19:58
Speaker 1: a complete look at what's moving. Mark gets so far
20:00
Speaker 1: today right here on the Financial Exchange Radio Network.
20:04
Speaker 4: Busy Day on Wall Street. However, markets are mostly quiet
20:07
Speaker 4: and in mixed territory ahead of tomorrow morning's anticipated jobs report,
20:12
Speaker 4: and also ready for more big tech earnings after today's
20:15
Speaker 4: closing bell, this time from Amazon. At the moment, the
20:19
Speaker 4: Dow is off by eighty four points, SMP five hundred
20:24
Speaker 4: is up by ten points, and the Nasdaq is up
20:26
Speaker 4: about a quarter percent, or forty seven points. Russell two
20:29
Speaker 4: thousand edging four points higher, ten year Treasure reeled up
20:33
Speaker 4: by one basis point of four point four to three percent,
20:36
Speaker 4: and crude oil is up about three quarters of a percent,
20:40
Speaker 4: rating at seventy one dollars and fifty five cents a barrel.
20:44
Speaker 4: Big news out of Honeywell this morning, after the conglomerate
20:47
Speaker 4: announced plans to split into three separate companies after facing
20:50
Speaker 4: pressure from activist investor Elliott Management. Furthermore, the company offered
20:55
Speaker 4: a twenty twenty five forecast that was lighter than expected.
20:59
Speaker 4: Honeywell shares off by five percent. Meanwhile, four down by
21:03
Speaker 4: six percent after the automaker said deep losses in its
21:06
Speaker 4: electric car business would weigh and profitability this year. The
21:10
Speaker 4: company did, however, beat fourth quarter earnings expectations elsewhere Armholdings
21:16
Speaker 4: posted record quarterly sales due to AI chip buying. However,
21:19
Speaker 4: the semiconductor design companies guidance disappointed investors, that stock pulling
21:25
Speaker 4: back by three percent, Qualcom down by four percent despite
21:29
Speaker 4: the chip maker reporting better than than expected quarterly results
21:32
Speaker 4: and forward guidance. Eli Lilly posted mixed fourth quarter results
21:37
Speaker 4: after beating on earnings but missing on revenue, while sales
21:40
Speaker 4: of its weight loss drug zep Bound and diabetes drug
21:43
Speaker 4: Monjarro Sword they had lower realized prices. That stock up
21:48
Speaker 4: by two percent, Peloton jumping by fourteen percent after the
21:52
Speaker 4: exercise equipment company hiked its full year earnings guidance. Young Brands,
21:57
Speaker 4: the parent company to Taco Bell, up by seven percent
22:00
Speaker 4: after it beat fourth quarter earnings, and Hershey up by
22:03
Speaker 4: five percent as it's quarterly profit and sales also beat
22:08
Speaker 4: expectations on Tucker Silvan and that's Wall Street watch Tucker.
22:12
Speaker 2: You and Chuck always talk about Taco Bell, and can
22:14
Speaker 2: we just all admit that the better brand under the
22:17
Speaker 2: Young brand's name is undoubtedly KFC. Like, is there any
22:22
Speaker 2: real debate about what's better KFC or Taco Bell?
22:25
Speaker 1: Yeah?
22:25
Speaker 4: I would say that Taco Bell is the edge in
22:28
Speaker 4: terms of popularity or just taste, just taste in terms
22:33
Speaker 4: of popularities.
22:34
Speaker 2: Taco Bell, Yeah, I'm sure there's more. Taco Bell Yeah yeah,
22:39
Speaker 2: thanks Mark.
22:41
Speaker 3: Well, buttermilk biscuits, KFC hands down tacos. You want to
22:45
Speaker 3: go to? Taco Bell is what you're in the mood for.
22:48
Speaker 3: How can you compare the two? Just use a very
22:50
Speaker 3: different culture.
22:51
Speaker 2: Plain and simple. Which one is better?
22:53
Speaker 3: Which one makes your stomach?
22:55
Speaker 2: KFC is better than Taco Bell? Well yeah, can you
22:59
Speaker 2: tell me how many locations each of them have? Uh
23:03
Speaker 2: us locations? Taco bell us locations is coming from? I
23:10
Speaker 2: just I don't like the KFC doesn't get from KFC
23:13
Speaker 2: doesn't get any of the love. When we talk about
23:15
Speaker 2: young brands, it's all Taco Bell and Taco Bell quite honestly,
23:18
Speaker 2: kind of sucks.
23:20
Speaker 3: Hey, where's this coming from?
23:21
Speaker 2: You bite your frigging tons? Just disgusting, Just no good.
23:25
Speaker 3: Did you have a bad experience there recently?
23:27
Speaker 2: No, it's just you know, I can get cheap tacos
23:30
Speaker 2: from somewhere that actually knows how to make taco tacos.
23:32
Speaker 2: Where tell me where? Where?
23:36
Speaker 3: Where can you get cheap tacos?
23:38
Speaker 2: I'm waiting at Chapote, a place called Hungry Coyote in
23:43
Speaker 2: my town. Yeah, local businessman, if you're talking about makes
23:46
Speaker 2: a good taco. If you're talking about town's got a
23:49
Speaker 2: good local taco.
23:50
Speaker 3: But that's not what we're discussing though.
23:54
Speaker 2: You don't eat the kyot.
23:57
Speaker 3: No, no really, I lost my appetite.
24:00
Speaker 2: Uh. By the way, as the let's go to the
24:03
Speaker 2: mangy Beaver. As of twenty twenty five, there are eight thousand,
24:08
Speaker 2: ninety Taco Bell locations in the United States, compared to
24:12
Speaker 2: nearly half that of KFC locations. So but if you
24:17
Speaker 2: want to text in the show and agree with me
24:20
Speaker 2: on this on this point, that k an institution in.
24:23
Speaker 3: This country, though since the forties or fifties they had
24:26
Speaker 3: a bit of a.
24:27
Speaker 2: One more reason that they're better than Taco Bell. Yeah,
24:31
Speaker 2: just plenty of more history, better food, and uh, I'll
24:36
Speaker 2: just I'll just leave it right there.
24:39
Speaker 3: Somebody's feeling very maga today.
24:43
Speaker 2: So we are continuing to kind of unwind the discussion
24:49
Speaker 2: of tariff talk that was really the focus of all week,
24:52
Speaker 2: and we'll have some pieces later about these deminimous exceptions
24:55
Speaker 2: what they mean for for folks out there. But there's
24:58
Speaker 2: two pieces from members of the Federal Reserve this week.
25:01
Speaker 2: I don't know that Barkin is currently a voting member,
25:04
Speaker 2: but Goulesby is, and so I want to jump in
25:07
Speaker 2: here and talk about these and what it actually means.
25:12
Speaker 2: Less from whether they are right or wrong about tariffs,
25:16
Speaker 2: but I want to take it from the perspective of
25:18
Speaker 2: what does it mean for what the Federal Reserve is
25:20
Speaker 2: likely to do. Because Goulesby has a piece today an
25:23
Speaker 2: interview stating that, look, you know, higher tariffs very well
25:26
Speaker 2: could lead to high inflation. Supply side quote, supply side
25:30
Speaker 2: disruptions can have a material impact on aggregate inflation. Barkin says, look,
25:34
Speaker 2: economy is in good shape. It's really just government policy
25:37
Speaker 2: that's the wild card to me. Anyway, Both of these
25:40
Speaker 2: stories read as we are in charge of monetary policy
25:45
Speaker 2: in this country and we are not really ready to
25:50
Speaker 2: move things around on interest rates until we have a
25:53
Speaker 2: lot more certainty about what's going to happen with tariffs,
25:55
Speaker 2: tax policy, and things that could be good big contributions
25:59
Speaker 2: to inflation. Am I misreading anything there? Now?
26:03
Speaker 3: I think the prevailing view among economists, and they're both
26:05
Speaker 3: accomplished economists and their own right, in addition to having
26:09
Speaker 3: scores of economists advise them. Inflation can be thought of
26:15
Speaker 3: as having two components. An underlying part of persistent part
26:19
Speaker 3: that's demand driven. That's driven ultimately by monetary policy, which
26:24
Speaker 3: influences demand. That's kind of the steady part. It tends
26:27
Speaker 3: to grow two to three percent a year. Then there
26:29
Speaker 3: are these so called shocks. We use the term supply
26:32
Speaker 3: shock a lot. That could mean anything. It doesn't have
26:34
Speaker 3: to mean energy. Supply shocks can come from a positive
26:37
Speaker 3: productivity development, they can come from a food shortage somewhere.
26:40
Speaker 3: The seventies were characterized by supply shocks and food and energy.
26:44
Speaker 3: So you've got these noisy things distorting the trend in inflation,
26:48
Speaker 3: and the feds perennial problem, if you like, is is
26:55
Speaker 3: inflation going up or down because the trend is changing
26:59
Speaker 3: and that's something you can control. Or is it because
27:02
Speaker 3: there's some unfavorable or favorable change in relative prices? Chicken
27:08
Speaker 3: gets more expensive because we just wiped out a bunch
27:11
Speaker 3: of chickens to stave off avian flu. Those things the
27:15
Speaker 3: FED maybe can look past because supply shocks tend to
27:18
Speaker 3: be self correcting or tend to be fleeting, but maybe
27:21
Speaker 3: not if they push up expectations or if they last
27:24
Speaker 3: for a while. This is why if this sounds a
27:27
Speaker 3: little bit bewildering, that's the normal. You're having the right reaction.
27:31
Speaker 3: This is why a FED policy maker's job is hard.
27:34
Speaker 3: They're always thinking, should we be reacting to what's happening
27:37
Speaker 3: in the economy or is it likely a change in
27:40
Speaker 3: relative prices? Is it a special case that we can
27:43
Speaker 3: look past? And even so, if it's a special case,
27:47
Speaker 3: should we be looking past it? Are people looking past it?
27:51
Speaker 3: Or is it getting embedded in their expectations and likely
27:54
Speaker 3: to push up future inflation through wages and prices. Again,
27:57
Speaker 3: if this sounds a little complicated, it's because it is.
28:00
Speaker 2: Their job is hard, and there are examples of both
28:05
Speaker 2: successfully waiting out policy and assuming that it will pass
28:09
Speaker 2: and it won't have a long term impact inflation and missteps.
28:13
Speaker 2: I mean, I think the very clear misstep that we
28:16
Speaker 2: talk about over and over again, which was ultimately a
28:19
Speaker 2: read of a policy decision, was Hey, how is all
28:22
Speaker 2: this stimulus going to affect inflation? What are the government's
28:27
Speaker 2: policies on COVID going to do to inflation expectations? And ultimately,
28:32
Speaker 2: I think kind of misreading the room in terms of
28:34
Speaker 2: what it's going to do.
28:34
Speaker 3: To the nation and for years to come. Economists disagree
28:38
Speaker 3: on whether the inflation of the covid Era and immediate
28:41
Speaker 3: post covid era was supply or demand driven. There are ongoing,
28:46
Speaker 3: vigorous and intense disagreements. If they're all empiricals. The way
28:50
Speaker 3: economists disagree is to say, well, my models suggests slightly
28:53
Speaker 3: more influence from supply side factors than demands, and they
28:57
Speaker 3: very politely bash each other's head in using models and evidence.
29:02
Speaker 3: These discussions will continue. Nobody really knows if the FED
29:06
Speaker 3: could have stopped the covid era inflation without a huge
29:10
Speaker 3: cost in terms of employment. It upset people a lot,
29:14
Speaker 3: so you could argue that, well, on its face, it
29:16
Speaker 3: was a bad thing, But did the FED do the
29:19
Speaker 3: right thing by looking past it, by not tightening too
29:22
Speaker 3: much too quickly. It eventually kind of went away on
29:24
Speaker 3: its own without too much pain. That's the supply shock.
29:30
Speaker 3: Look past the supply shock if you like. Argument. On
29:33
Speaker 3: the other hand, people got very upset. They tossed a
29:35
Speaker 3: bunch of incumbents out, and now the Fed's faced with
29:39
Speaker 3: a president who might take away their independence. How do
29:42
Speaker 3: you like them? Apples federal reserve? So I don't know
29:44
Speaker 3: the right answer, Minke.
29:45
Speaker 2: Likewise, they are taking that similar road right now, which
29:49
Speaker 2: is we don't know what policy could look like, and
29:51
Speaker 2: we don't know what it's impact it will be on inflation,
29:54
Speaker 2: and so we're going to wait and see. Seems to
29:56
Speaker 2: be the answer right now.
29:58
Speaker 3: They't. They didn't say anything else else could they say?
30:01
Speaker 2: It's exactly what we're saying. Nothing, it's it's justified to
30:05
Speaker 2: say it. And Uh, the less clarity you get on
30:09
Speaker 2: where and where tariffs will be and where tax rates
30:12
Speaker 2: will be, the less clarity you're going to get on
30:13
Speaker 2: where interest rates will be. Next, let's take a quick break.
30:17
Speaker 2: When we come back, I want to talk a bit
30:18
Speaker 2: about Ford massive drop in profit among some other automakers
30:23
Speaker 2: that are experiencing the same thing. We'll be back with
30:24
Speaker 2: some talk about Ford Motor Company. Next.
30:28
Speaker 1: Miss any of the show. Catch up at your convenience
30:30
Speaker 1: by visiting Financial Exchange Show dot com and clicking the
30:34
Speaker 1: on demand icon, where you'll find all of our interviews
30:37
Speaker 1: and full shows. This is your home for the latest
30:40
Speaker 1: business and financial news in New England and around the country.
30:43
Speaker 1: This is the Financial Exchange Radio Network. Text us at
30:48
Speaker 1: six one seven three six two one three eighty five
30:50
Speaker 1: with your comments and questions about today's show and let
30:53
Speaker 1: us know what you think about the stories we are covering.
30:55
Speaker 1: This is the Financial Exchange Radio Network.
31:06
Speaker 2: There's been a mix of kind of two stories when
31:09
Speaker 2: it comes to American automakers over the last year or so.
31:13
Speaker 2: General Motors has generally been seeing a fairly good turnaround
31:16
Speaker 2: their stock price over the course of the last twelve months,
31:18
Speaker 2: up twenty six percent. Ford, on the other hand, exact
31:22
Speaker 2: opposite direction, down twenty two percent over the course of
31:25
Speaker 2: the last twelve months, and speaks to I think just
31:27
Speaker 2: some choices that were made over the last few years
31:30
Speaker 2: when it comes to these two brands. But you Ford
31:33
Speaker 2: very much leaned, as far as I can tell, more
31:37
Speaker 2: quickly and heavier into the electric vehicle market with their
31:40
Speaker 2: investments that they made in the electric F one P
31:43
Speaker 2: fifty as well as the Mustang Mochi. General Motors has
31:48
Speaker 2: more vehicle models for sale that are electric, but they
31:51
Speaker 2: haven't quite leaned in in the same way to it
31:53
Speaker 2: that from what I can tell, and just seem to
31:56
Speaker 2: be executing a little bit better. They also, from what
31:59
Speaker 2: I can tell, have these second best driving automation tool
32:03
Speaker 2: that's out there with the GM Cruse or super CRUs
32:08
Speaker 2: GM IS Cruise. Yeah. They again not the self driving cars,
32:13
Speaker 2: but rather the tools that they put into many of
32:16
Speaker 2: their vehicles today competes with Tesla's product, if not quite
32:20
Speaker 2: as good of it as it from what I have read.
32:22
Speaker 2: I don't own a Tesla or a General Motors vehicle,
32:25
Speaker 2: but in any case, the second largest US automaker, Ford
32:29
Speaker 2: expects no more than eight and a half billion in
32:31
Speaker 2: earnings before interest in taxes this year. That's down from
32:34
Speaker 2: ten points two billion generated in twenty twenty four. They're
32:38
Speaker 2: expecting a two percent decline in pricing industry wide, and
32:42
Speaker 2: then they have some big expenses from launching a new
32:45
Speaker 2: Lincoln Navigator and Ford Expedition SUVs. So continuing just to
32:49
Speaker 2: lean into their big profit centers of massive SUVs that
32:53
Speaker 2: really drive this company, and appear to be slowing down
32:57
Speaker 2: some of that investment in ev because because they are
33:00
Speaker 2: just not seeing the demand that they were looking for.
33:04
Speaker 2: But at some point Jim Farley starts to face a
33:08
Speaker 2: little bit more pressure here in terms of the turnaround story. Here.
33:11
Speaker 2: He's been quick to latch onto new trends, but overall
33:15
Speaker 2: missed the ball over the course of the last last
33:17
Speaker 2: year at least, and probably some questions being started to
33:22
Speaker 2: be asked about this company and where it goes from here?
33:24
Speaker 3: How could they not? In the past twelve months, GM's
33:26
Speaker 3: up nearly thirty percent forwards, down twenty the cumulative stock
33:31
Speaker 3: price change in the past five years. The difference is
33:33
Speaker 3: a little less star sure, but pretty dramatic. Up for
33:38
Speaker 3: GM is up roughly forty percent, forwards up a little
33:41
Speaker 3: under thirteen.
33:42
Speaker 2: Yeah, I mean, they've more and more become a very
33:45
Speaker 2: specialty automaker. Ford has right if your general leaders on
33:49
Speaker 2: passenger cars, they gave up on passenger cars. They said,
33:51
Speaker 2: you know, we're going to lean heavily into two segments,
33:55
Speaker 2: EV and big SUV, and those are kind of contradictory.
33:59
Speaker 2: But I think what people are finding is they don't
34:03
Speaker 2: necessarily want an F series electric vehicle. The buyer of
34:07
Speaker 2: an electric vehicle might be okay with a smaller car,
34:09
Speaker 2: and Ford doesn't have one to offer. And if you're
34:13
Speaker 2: not in the market for a big, giant truck or suv,
34:17
Speaker 2: Ford doesn't have much to offer. You these days, and
34:20
Speaker 2: so I grow increasingly concerned that they've kind of pigeonholed
34:23
Speaker 2: themselves here into a very specific and high profit margin,
34:29
Speaker 2: but narrow segment of the vehicle market. And if you
34:32
Speaker 2: continue to see interest rates this high and people struggling
34:35
Speaker 2: to make payments, then tough to see people continuing to
34:39
Speaker 2: buy sixty seventy eighty thousand dollars cars in perpetuity.
34:42
Speaker 4: If you're nearing retirement age and are concerned about how
34:46
Speaker 4: to protect your assets, you need to call Cushing and Dolan,
34:50
Speaker 4: the experts in elder law. Their new guide is called
34:52
Speaker 4: Back to the Basics, and it will help you create
34:55
Speaker 4: a plan that can help you understand issues like avoiding probate,
35:00
Speaker 4: passing your assets along to your family, and potentially eliminating
35:03
Speaker 4: your estate taxes. This free guide has all the information
35:08
Speaker 4: you need to build a safe and secure estate plan
35:11
Speaker 4: that will give you peace of mind as you close
35:13
Speaker 4: in on retirement. Call eight six six eight four eight
35:17
Speaker 4: five six nine nine right now and request your free
35:21
Speaker 4: guide today. You can also request a no obligation consultation
35:25
Speaker 4: to review any current planning you've done. Cushing and Dolan
35:29
Speaker 4: have been helping families like yours for more than thirty years.
35:32
Speaker 4: Let them help you too, get their new guide called
35:35
Speaker 4: Back to the Basics today by calling eight six six
35:39
Speaker 4: eight four eight five six nine nine. That's eight six
35:42
Speaker 4: six eight four eight five six nine nine, or you
35:45
Speaker 4: can request the guide from their website legal exchange show
35:49
Speaker 4: dot com.
35:50
Speaker 1: The proceeding was paid for and the views expressed are
35:52
Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
35:54
Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
35:58
Speaker 1: Cushing and Armstrong do not endorse each other and are
36:00
Speaker 1: not affiliated.
36:01
Speaker 2: We've got two egg stories to cover today, Mark, do
36:04
Speaker 2: you want to start with the heist or the waffle house?
36:07
Speaker 2: We did waffle house yesterday? We did, But if you
36:09
Speaker 2: want to die yesterday those okay, Sorry so I missed it,
36:12
Speaker 2: but thanks for waffle House famous for their hurricane Detection Index.
36:19
Speaker 2: If you haven't heard of the waffle House Index, you
36:21
Speaker 2: just take a look at how many locations are closed
36:24
Speaker 2: and it's a really good barometer of what sort of
36:26
Speaker 2: natural disasters are going on across the country.
36:28
Speaker 3: Relation between mortality.
36:30
Speaker 2: And eating a waffle house? No, no, no, okay, So
36:35
Speaker 2: the waffle House Index gives you a good idea of
36:37
Speaker 2: how bad a natural disaster is because they never close
36:40
Speaker 2: unless they really have to. But waffle House imposing a
36:44
Speaker 2: fifty cent egg surcharge on any egg dishes on their
36:47
Speaker 2: menu was apparently covered yesterday. Sorry Tucker. But the real
36:51
Speaker 2: story here is the biggest heist of twenty twenty five,
36:56
Speaker 2: where one hundred thousand eggs were stolen in pencil Vania
37:00
Speaker 2: amid the massive shortage that we're talking about, the theft
37:03
Speaker 2: of eggs which the authorities said were worth only Yeah,
37:08
Speaker 2: I guess that. I guess that that plays up forty
37:10
Speaker 2: thousand dollars comes as grocery store shoppers across the country
37:14
Speaker 2: are facing empty shelves. And my question actually have two questions. One,
37:19
Speaker 2: how do you move stolen eggs? You know, if I
37:22
Speaker 2: walk into downtown Pittsburgh, is somebody just gonna be like
37:25
Speaker 2: selling eggs out of a sketchy alley somewhere, because that
37:28
Speaker 2: is out of the back of your cameray amazingly entertaining to me.
37:32
Speaker 2: I hope it's just like New York City when you know,
37:34
Speaker 2: the guy with the big trench co comes up to you,
37:36
Speaker 2: opens it up, and he's got all sorts of watches
37:38
Speaker 2: and other jewelry that he can sell you. And it's
37:41
Speaker 2: just a pockets full of eggs. But that's dangerous because
37:44
Speaker 2: they crack pretty easily, So I don't know how that's
37:45
Speaker 2: gonna work.
37:46
Speaker 3: Don't touch me.
37:47
Speaker 2: The second piece is, can you imagine being the mob
37:51
Speaker 2: boss who has fallen so far from his forefathers, you know,
37:55
Speaker 2: decades ago, that you have fallen into egg heists? Like harrassing?
38:00
Speaker 2: Is that for you if you're a Pennsylvania mob boss
38:02
Speaker 2: who had to jump into stealing eggs as opposed to
38:06
Speaker 2: like precious metals bank robberies. Way, Like I just yeah,
38:12
Speaker 2: it's just hilarious to me. But in any case, one
38:14
Speaker 2: hundred thousand eggs stolen.
38:16
Speaker 3: From the legendary right up there with the Luftanza heist,
38:19
Speaker 3: the egg heist, it will be one of the old
38:21
Speaker 3: time legendary heists.
38:22
Speaker 2: Quick break. We'll be right back with more on the
38:24
Speaker 2: financial exchange.