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S&P 500 nears record highs but is something lurking underneath? · The Financial Exchange Show

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  Speaker 1: Face is the Financial Exchange with Paul Lane and Mark Vandetty.
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  Speaker 2: Kicking off the second hour of the Financial Exchange on
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  Speaker 2: a hot Wednesday summer morning. Here, we're taking a look
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  Speaker 2: at the SMP five hundred, which is relatively flat at
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  Speaker 2: the moment today through an hour and a half of training,
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  Speaker 2: only about four points. That Dow Jones is off about
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  Speaker 2: sixty points, and the energy markets are rallying a bit
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  Speaker 2: after what had been two days of decline in West
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  Speaker 2: Texas intermediate prices Oil now sits at sixty five Darl's
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  Speaker 2: a barrel only up about one point four percent. Paul Lane,
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  Speaker 2: Mark Vendetti, and Tucker Silver here with you, and we'll
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  Speaker 2: start the second hour here of the show talking about
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  Speaker 2: the SMP five hundred. Certainly was out of a tremendous
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  Speaker 2: amount of pressure in April, where we saw pretty significant
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  Speaker 2: decline and one day sell offs, a lot of volatility
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  Speaker 2: after the announcements of reciprocal tariffs and things of that nature. However,
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  Speaker 2: the majority those losses have been made up for the
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  Speaker 2: most part, and we've actually seen it to a point
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  Speaker 2: where we are up year to date from a stock
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  Speaker 2: market perspective, one percent off of some all time highs
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  Speaker 2: that we reach back in February the all time high
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  Speaker 2: thing is something that even though I've used it from
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  Speaker 2: time to time, you know, you're always setting new Tucker
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  Speaker 2: and I started doing that behind your back, you know,
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  Speaker 2: just throw a little excitement on a Wednesday, summer summer morning.
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  Speaker 2: But ultimately, if we look at the backdrop of where
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  Speaker 2: we are at this point in time. I mentioned this
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  Speaker 2: on a couple media things that I do this morning
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  Speaker 2: radio call in, and I'm taking it from someone else.
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  Speaker 2: I apologize who mentioned this. Resiliency. This market has been
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  Speaker 2: extremely resilient. It seems like in the face of all
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  Speaker 2: of these issues, whether it be the geopolitical crisis between
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  Speaker 2: Israel and i Ran, as well as concerns about tariffits
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  Speaker 2: and inflation, we sit at a point here with the
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  Speaker 2: S and P five hundred is up close to four
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  Speaker 2: percent year to date.
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  Speaker 3: After all that, and you were on Fox.
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  Speaker 4: This morning, so your odds are becoming fed chair, I
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  Speaker 4: see here have risen.
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  Speaker 3: You're I'm the fourth game today.
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  Speaker 4: Yeah, you're now You're now actually favored after your performance
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  Speaker 4: on Fox this morning.
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  Speaker 2: So right, the biggest issues that are in focus now
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  Speaker 2: that it seems as if the concerns regarding Israel and
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  Speaker 2: Iran have subsided for the time being, I say that
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  Speaker 2: with some caution, obviously things could change very quickly.
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  Speaker 3: There is the Federal Reserve is now.
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  Speaker 2: A main focus for our show, and from an economic perspective,
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  Speaker 2: Jerome Powell has been in Congress the last two days,
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  Speaker 2: testifying today as we speak, in front of the Senate
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  Speaker 2: Banking Committee, and the issues that he is being pressed
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  Speaker 2: on the most of course, are the Fed's decision to
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  Speaker 2: hold steady on interest rates. Just taking a look at
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  Speaker 2: the CME futures which give assess a probability that we
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  Speaker 2: would see a rate cut in subsequent FED meetings. The
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  Speaker 2: next FED meeting is going to be at the end
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  Speaker 2: of July. At this point in time, there is only
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  Speaker 2: a twenty percent chance that we would see an interest
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  Speaker 2: straight cut at that point. It's not until mid September
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  Speaker 2: where we have the highest probability that there would perhaps
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  Speaker 2: be a twenty five base point cut. So, Mark, what
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  Speaker 2: are you most focus on over the last the next
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  Speaker 2: couple months, or perhaps where do you find the Fegg's predictment?
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  Speaker 2: Perhaps you could summarize it till me.
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  Speaker 4: Go back to stocks for a second. Here you opened
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  Speaker 4: with a point about where equities are nearly back at
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  Speaker 4: their all time high. Someone internally in a meeting we
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  Speaker 4: had here at Armstour Advisory Group yesterday said to me,
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  Speaker 4: you know, you guys always talk about bad news, and
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  Speaker 4: we do because if everything goes back right else because
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  Speaker 4: it's very very sexy, especially when when we talk about
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  Speaker 4: it now. But because if everyth goes right, you don't
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  Speaker 4: really have to be thoughtful. But when you talk about
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  Speaker 4: what could go wrong, it sounds as if you are
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  Speaker 4: being more judicious and measured. It just seems more like
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  Speaker 4: your doctor never says to you, everything's great, just go
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  Speaker 4: out and have a great year. See you next year.
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  Speaker 4: Is physical. Then we tell you that things you should
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  Speaker 4: be watching they sort of nag you, so we as
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  Speaker 4: a consequence, I think maybe sometimes just to try to
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  Speaker 4: sound thoughtful, focus on the negative. But I want to
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  Speaker 4: point out that stocks way more often than not go up.
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  Speaker 4: You can go all the way back to the last
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  Speaker 4: third of the nineteenth century. Eighteen seventy one, specifically, a
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  Speaker 4: famous economist won the Nobel Prize by the name of
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  Speaker 4: Robert Schiller. He publishes monthly updates on how richly or
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  Speaker 4: not stocks are valued and non asset class returns and
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  Speaker 4: the frequency of stocks returning greater than zero positive returns
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  Speaker 4: on a rolling one month basis is over sixty percent.
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  Speaker 4: This is so better than a coin flip. You'll make
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  Speaker 4: money if you do nothing on your typical month. There
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  Speaker 4: are months obviously which are not typical, but on average
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  Speaker 4: over the very long term, sixty one percent of the
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  Speaker 4: time on a one month horizon, twelve month horizon it
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  Speaker 4: goes up to nearly seventy percent. Ten year horizon it
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  Speaker 4: goes up to over eighty percent. You've heard the expression
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  Speaker 4: stocks for the long run. This is why. And finally,
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  Speaker 4: twenty year horizon again, I'm using Robert Chillers data here,
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  Speaker 4: just rolling twenty year periods starting in eighteen seventy one
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  Speaker 4: going right to March of this year, I think was
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  Speaker 4: the endpoint of this series that I used one hundred
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  Speaker 4: percent of the time over twenty year periods. And by
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  Speaker 4: the way, these are real or after inflation returns. So
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  Speaker 4: the long term bowl case for equities is stocks are
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  Speaker 4: tied to earnings, which are in turn tied to GDP
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  Speaker 4: to economic growth. As long as the economy continues to
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  Speaker 4: grow and earnings continue to grow on average, you're rewarded
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  Speaker 4: for bearing short term risk. It doesn't pay to get
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  Speaker 4: excessively bearish no matter how bad the news gets. So
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  Speaker 4: we like to talk about short term risks. And these
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  Speaker 4: might be more relevant if you're trying to time a
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  Speaker 4: distribution from a retirement plan, liquidating something, shifting to a
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  Speaker 4: more conservative allocation, But if you're a long term investor.
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  Speaker 4: In preparing this little exhibit that we'll use here internally
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  Speaker 4: in our day jobs, it dawned on me the most
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  Speaker 4: important bowl case and there are a few others that
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  Speaker 4: we can get into in the short term because I'm
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  Speaker 4: now on this kick, and it does relate to the FED.
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  Speaker 4: By the way, one of the bowl arguments in the
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  Speaker 4: short term is the FED is about to increase the
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  Speaker 4: money supply rate of growth. That's how they lower their
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  Speaker 4: short term FED funds, that is target. When they do
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  Speaker 4: that way, more often than not, stocks tend to go up. Now,
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  Speaker 4: the caveat there is that's that's context dependent. If they
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  Speaker 4: do that because it's due economy, then that it would
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  Speaker 4: not be a good or if there's some other there's
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  Speaker 4: some geogoltical global pandemic there you go, Yeah, there are
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  Speaker 4: really there are times when the FED ease is when
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  Speaker 4: it's not good for equities or anything else, right, because
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  Speaker 4: the growth outlook becomes so obscured. But more often than not,
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  Speaker 4: stocks do tend to respond positively to FED easing. They
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  Speaker 4: might not this time. I don't know, obviously, but there's
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  Speaker 4: a long term argument for not getting too caught up
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  Speaker 4: in the morass of bad news, even though we'll continue
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  Speaker 4: to talk about it, because news is almost by definition bad,
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  Speaker 4: don't We don't often report to you good news cat
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  Speaker 4: rescued from tree Child, dodges, you know, injury. You know,
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  Speaker 4: the news is almost inherently bad. It's the only reason
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  Speaker 4: people tune in. But you know there were good reasons
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  Speaker 4: just to stay put if you're long term investor. I
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  Speaker 4: want to underscore that right off the bat, because it's
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  Speaker 4: kind of top of mind.
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  Speaker 3: That is a nice summary there on the ten year
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  Speaker 3: period he said, it was over eight.
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  Speaker 4: Eighty three percent, if you want to be precisely now,
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  Speaker 4: I adjusted that for Schuler publishes his own version of
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  Speaker 4: the S and P. So this is not the same
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  Speaker 4: data you'd get if you went to sp Global or
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  Speaker 4: some play sels, but it's highly correlated with all the
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  Speaker 4: major equity indices. And the beautiful thing about Schuler's data
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  Speaker 4: is it goes back to eighteen seventy one. Now, the
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  Speaker 4: economy is very different structurally. Obviously it's had a few
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  Speaker 4: metamorphoses over the past one hundred and fifty or so years.
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  Speaker 4: But if there's one thing that is fairly persistent, it's
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  Speaker 4: the trend. In persistent trend doesn't I'm mixing terms there
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  Speaker 4: in a way that I shouldn't, but I'm just gonna
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  Speaker 4: go with it because I'm too far into this. GDP
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  Speaker 4: tends to go up. If you look at the time
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  Speaker 4: series of GDP, it's a beautiful upward sloping exponential if
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  Speaker 4: you like type relationship. So is the stock or so
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  Speaker 4: are the S and P five hundreds earnings, and that
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  Speaker 4: is not a coincidence, and so is the S and
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  Speaker 4: P five hundred stock price. So when I get really
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  Speaker 4: nervous in a short term, I just remind myself of
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  Speaker 4: that long term trend. And if the structure of the
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  Speaker 4: economy doesn't change dramatically, if our institutions don't change dramatically,
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  Speaker 4: if the President doesn't mess with the federal reserve. Now
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  Speaker 4: we didn't have a federal reserve for that entire period,
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  Speaker 4: So I'm being a little selective in my points about
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  Speaker 4: preserving our institutions. But that's front burner today, Powells testifying
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  Speaker 4: they're asking him about independence. The President should not mess
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  Speaker 4: with FED independence. If he does, you potentially mess with
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  Speaker 4: that trend line, and you mess with the miracle that
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  Speaker 4: stock returns have been for investors for the better part
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  Speaker 4: of the last really two centuries, though the market wasn't
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  Speaker 4: fully investable.
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  Speaker 3: I know you've you've always told me that you love
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  Speaker 3: the eighteen nineties. You thought that was a good period
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  Speaker 3: for returning me and.
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  Speaker 4: Me and the president. Yeah, that it was not a
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  Speaker 4: good time to be an Italian American. I don't think Actually,
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  Speaker 4: we had a lot of anarchists and so forth in
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  Speaker 4: our midst.
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  Speaker 2: We're gonna take a quick break here on the Financial Exchange,
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  Speaker 2: but when we come back, we'll be doing a little
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  Speaker 2: bit of trivia as well as talking about a concerning
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  Speaker 2: trend on Americans tapping their four on K for emergencies.
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  Speaker 3: That's right after this break.
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  Speaker 5: dot Boston. Time for trivia here on the Financial Exchange
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  Speaker 5: and on this day. Back in nineteen ninety three, David
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  Speaker 5: Letterman hosted Late Night with David Letterman on NBC for
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  Speaker 5: the final time. When Letterman did not get the Tonight
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  Speaker 5: Show gig, he left NBC for CBS to start a
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  Speaker 5: new show, The Late Show with David Letterman.
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  Speaker 1: SHH.
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  Speaker 5: Trivia question today, Who replaced David Letterman hosting the late
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  Speaker 5: night Talk show on NBC Once again? Who replaced David
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  Speaker 5: Letterman hosting the Late night Talk Show on NBC. Be
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  Speaker 5: the seventh person today to text us at six one
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  Speaker 5: seven three six two thirteen eighty five with correct answer,
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  Speaker 5: and you win a Financial Exchange Show t shirt once again.
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  Speaker 2: Vanguard is one of the largest four m K providers
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  Speaker 2: out there, and they recently did a study titled How
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  Speaker 2: America Saves twenty twenty five report, and they were studying
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  Speaker 2: the behavior of five million participants in Vanguard administered plans.
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  Speaker 3: And one of the findings.
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  Speaker 2: That they had stood out this is not something that
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  Speaker 2: new news, it's certainly been mentioned before, but they found
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  Speaker 2: that thirty seven percent of Americans don't have four hundred
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  Speaker 2: dollars in liquid savings, and those who are in that
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  Speaker 2: situation where they don't have four hundred dollars to go
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  Speaker 2: to are thirteen times more likely to take a hardship
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  Speaker 2: withdrawal from their four owe k.
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  Speaker 3: And while I've certainly heard that.
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  Speaker 2: Statistic before, it always is jarring when you hear it
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  Speaker 2: that if you lined up ten people, that close to
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  Speaker 2: four of them would not have four hundred dollars to
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  Speaker 2: go to to cover a busted flat tire or whatever,
• 13:35
  Speaker 2: you know, emergency expense would arise in their life in
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  Speaker 2: terms of the hardship with draws. I don't want to
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  Speaker 2: make it seem as if this data indicates that there
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  Speaker 2: is a out of whack proportion of percentage of hardship
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  Speaker 2: withdrawals relative to historical norms, but certainly it is something
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  Speaker 2: that with the inflation that we've seen over the course
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  Speaker 2: of the last four or five years or so, that
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  Speaker 2: has ticked up a little bit. Four point four point
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  Speaker 2: eight percent of hardship withdrawals, that's the percentage that we
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  Speaker 2: saw of Vanguard participants in twenty twenty four. That was
• 14:09
  Speaker 2: up from about three point six percent in twenty twenty three.
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  Speaker 4: I'm wondering if again, if we're not focusing wondering again,
• 14:14
  Speaker 4: if we're not focusing on the negative here, I'm looking
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  Speaker 4: I'm sorry to take this in a direction you didn't
• 14:19
  Speaker 4: intend there's some okay, we could talk about hardships and
• 14:21
  Speaker 4: wring our hands, and Fidelity reported the same thing. More
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  Speaker 4: people are tapping for what immediate and heavy financial needs,
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  Speaker 4: I think is what the IRS calls a hardship withdrawal.
• 14:30
  Speaker 4: So what is it like purchase of a principal residence,
• 14:32
  Speaker 4: first time home, education, on insurance, medical expenses. And there's
• 14:37
  Speaker 4: another kind of random one, like your house is hit
• 14:39
  Speaker 4: by a tornado and it's but immediate and heavy financial
• 14:43
  Speaker 4: need is the broad category. And yeah, that's I guess
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  Speaker 4: that's not good. But this is not a random sample.
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  Speaker 4: I don't know which plan, Like you said, Vanguard is
• 14:51
  Speaker 4: one of the three of the big three record keepers
• 14:54
  Speaker 4: reality t row Vanguard they have there's like nine trillion
• 14:58
  Speaker 4: and four to one case total. They probably have ten
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  Speaker 4: to fifteen million participants on their platform. I don't know
• 15:05
  Speaker 4: how they get this sample. Is it big companies, little companies,
• 15:07
  Speaker 4: companies that agreed to be included in the samples. If
• 15:10
  Speaker 4: they agree they're in better shape than the average. Probably
• 15:13
  Speaker 4: that's why you agree. You don't agree if you're ashamed
• 15:15
  Speaker 4: of what you're doing for your work force. So I
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  Speaker 4: always have problems with generalizing from these what that's worth.
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  Speaker 3: But the withdrawals I don't. If I'm a company, I
• 15:23
  Speaker 3: wouldn't be. Oh, I guess, But if my name's not
• 15:28
  Speaker 3: going to come up, what do I care? If I'm reporting?
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  Speaker 4: I don't think it's a random sample.
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  Speaker 2: But let's focus on some positives that you're right.
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  Speaker 4: Did you say, what are you having there? Oh?
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  Speaker 1: No?
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  Speaker 3: The savings rate, I think is is tremendous.
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  Speaker 4: Go on, I'm just reading off vanguards and you can
• 15:43
  Speaker 4: see this if you're interested. I don't anybody with any
• 15:46
  Speaker 4: decent social life or hobbies would be. But savings rate
• 15:50
  Speaker 4: so called deferral rate. If you've ever been in a
• 15:52
  Speaker 4: four one K, you know these days you're defaulted in
• 15:54
  Speaker 4: and you can raise that. Average referral rates seven point
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  Speaker 4: seven percent, an all time high four van guard the
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  Speaker 4: median for what it's worth six point eight. So there
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  Speaker 4: are some people who differ a lot, but it's so
• 16:06
  Speaker 4: this sample is skewed to the right a little bit
• 16:09
  Speaker 4: by the high defers. But the point is it's up,
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  Speaker 4: which is a positive. Another positive is automatic features. Savings
• 16:16
  Speaker 4: and investment are at all time highs. More employers are
• 16:19
  Speaker 4: saying I want you to default my employees in at
• 16:22
  Speaker 4: whatever the company match maximum is. So if we match
• 16:25
  Speaker 4: up to five percent of salary, that's what we're going
• 16:27
  Speaker 4: to default you in at. And by default in, we
• 16:29
  Speaker 4: just mean you have to affirmatively say I don't want
• 16:31
  Speaker 4: to be in, and very few people actually do that
• 16:33
  Speaker 4: once you put them in. So this is a good
• 16:35
  Speaker 4: thing too. Auto features, which were enshrined in law nearly
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  Speaker 4: twenty years ago, now have finally become sort of commonplace,
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  Speaker 4: and that's that's a longer.
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  Speaker 2: Term that is tremendous. We have about sixty one percent
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  Speaker 2: of plans automatically enroll eligible workers in twenty twenty four.
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  Speaker 2: That was up from fifty four percent in twenty twenty
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  Speaker 2: and that is a feature that is tremendous because oftentimes
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  Speaker 2: it may seem small the dollars that go into that
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  Speaker 2: four on K plan for those people who are have
• 17:06
  Speaker 2: kids or grandkids who are just starting working, but it
• 17:09
  Speaker 2: compounds and it is really significant, and missing several years
• 17:13
  Speaker 2: of four and K contributions can have a negative impact
• 17:17
  Speaker 2: on your ability to UH to save. So it is
• 17:21
  Speaker 2: great to see that that auto enrollment has has ticked up.
• 17:24
  Speaker 4: But you did you go right to the negative on
• 17:25
  Speaker 4: I went right to the negative on this. Are we
• 17:27
  Speaker 4: too do we seek out bad news? Well?
• 17:31
  Speaker 3: The title was based on the hard shot, So we're
• 17:34
  Speaker 3: just we don't just.
• 17:35
  Speaker 4: We don't set the tone here. We're just going with
• 17:38
  Speaker 4: what the editors are, the pieces we read.
• 17:39
  Speaker 3: We're going.
• 17:40
  Speaker 6: Now.
• 17:40
  Speaker 4: I'm doing a little self I'm doing a little introspection here,
• 17:43
  Speaker 4: and I'm thinking, am I actually just delivering bad news
• 17:46
  Speaker 4: all the time?
• 17:46
  Speaker 3: Market?
• 17:47
  Speaker 4: I don't feel in enough to be blamed for this.
• 17:48
  Speaker 4: It's really on you and Suck and Mike.
• 17:50
  Speaker 3: Mark glooms Day, dooms Day.
• 17:52
  Speaker 4: No, I'm not here off, I'm really pointing the finger
• 17:54
  Speaker 4: at you.
• 17:55
  Speaker 3: I'm just kidding.
• 17:57
  Speaker 2: Student loan delinquency, here's another story to to focus on.
• 18:01
  Speaker 2: Line them up, baby, they hit a record as of
• 18:05
  Speaker 2: as late payments pile up.
• 18:07
  Speaker 5: Bother me, I'm going to just line up negative stories now.
• 18:10
  Speaker 4: Oh I'm sorry.
• 18:11
  Speaker 3: Well, I just I wasn't doing not.
• 18:12
  Speaker 5: You, not you, not you, the person who's talking to you.
• 18:15
  Speaker 4: It's like, what what.
• 18:16
  Speaker 5: Else do you want us to talk about?
• 18:18
  Speaker 4: That was me?
• 18:19
  Speaker 5: No, no, no, I'm not talking the person who was
• 18:20
  Speaker 5: talking to you about the show.
• 18:22
  Speaker 4: Oh that's all okay.
• 18:23
  Speaker 5: Oh, like come on, yeah, like it's a radio show.
• 18:28
  Speaker 5: Let's just talk about you know, positive things and cats
• 18:30
  Speaker 5: coming out of trees like you said.
• 18:32
  Speaker 3: Mark ponies and flowers. Yeah, sunshine, it is.
• 18:35
  Speaker 4: A wonderful year for flowers and foliage. It is boring.
• 18:40
  Speaker 3: That's I'm already.
• 18:41
  Speaker 4: That's anxious.
• 18:44
  Speaker 2: Roughly thirty one percent of borrowers are up at least
• 18:47
  Speaker 2: ninety days past due, according to data from TransUnion. We
• 18:52
  Speaker 2: covered this a little bit yesterday where there was some
• 18:55
  Speaker 2: TikTok hat going around where some people with student loans
• 18:58
  Speaker 2: were looking to delete them from their credit report. But
• 19:01
  Speaker 2: very important to note that that doesn't just because it
• 19:04
  Speaker 2: gets wiped out or they were contesting it to have
• 19:06
  Speaker 2: it wiped off their credit report. But just because it
• 19:08
  Speaker 2: gets what wiped out doesn't mean you don't have to
• 19:11
  Speaker 2: pay back the money. This is an area I've talked
• 19:14
  Speaker 2: about before. Don't have a tremendous amount of sympathy for this.
• 19:17
  Speaker 2: Forbearance was about four or five years. The idea that
• 19:20
  Speaker 2: people couldn't attack some of their student loans at that
• 19:24
  Speaker 2: point in time, to me is a little bewildering. So
• 19:27
  Speaker 2: they should have been at least keeping up with payments
• 19:29
  Speaker 2: We're gonna take a quick break here, but when we
• 19:31
  Speaker 2: come back, Wall Street Watch and the trivia answer right
• 19:33
  Speaker 2: after this break, and more good news.
• 19:41
  Speaker 6: Bringing the latest financial news straight to your radio. Every day.
• 19:45
  Speaker 6: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:51
  Speaker 6: Time now for Wall Street Watch a complete look at
• 19:54
  Speaker 6: what's moving market so far today right here on the
• 19:58
  Speaker 6: Financial Exchange Radio Network.
• 20:02
  Speaker 5: Well on the heels of yesterday's rally, markets today our
• 20:05
  Speaker 5: mixed territory, with the SMP nearing a record high as
• 20:08
  Speaker 5: Wall Street monitors day two of testimony from FED Chairman
• 20:11
  Speaker 5: Jerome Powell. Right now, the Dow is down by about
• 20:16
  Speaker 5: a quarter percent or one hundred and twelve points, SMP
• 20:19
  Speaker 5: five hundred is flat, dipping by one point, and the
• 20:22
  Speaker 5: Nasdaq is up by about a quarter percent or forty
• 20:25
  Speaker 5: eight points. Russell two thousand actually down now by one percent,
• 20:29
  Speaker 5: ten year treasure reeled down by one basis point at
• 20:32
  Speaker 5: four point three one percent, and crude oil up over
• 20:35
  Speaker 5: one and a half percent higher training sixty five dollars
• 20:38
  Speaker 5: and thirty five cents a barrel. FedEx said it expects
• 20:42
  Speaker 5: a one hundred and seventy million dollars head wind in
• 20:45
  Speaker 5: the current quarter from a change in tariff rules that
• 20:48
  Speaker 5: cut demand for packages shipped to the US from China.
• 20:51
  Speaker 5: As for its previous quarter, the delivery giant beat expectations.
• 20:55
  Speaker 5: Shares our down by over two percent. However, meanwhile, Tesla
• 20:58
  Speaker 5: saw another month of steep sales declines in the European Union,
• 21:03
  Speaker 5: where new car registrations fill more than forty percent. In May,
• 21:06
  Speaker 5: Tesla stock is down by four percent. Elsewhere, BlackBerry jumping
• 21:10
  Speaker 5: by thirteen percent after the cybersecurity company saw its first
• 21:14
  Speaker 5: quarter revenue and profit beat analysts expectations. Bumble shares rallying
• 21:19
  Speaker 5: more than nineteen percent after the dating app company revealed
• 21:22
  Speaker 5: in a securities filing that it intends to slash thirty
• 21:26
  Speaker 5: percent of its workforce, or about two hundred and forty rolls.
• 21:30
  Speaker 5: Management estimates that reductions will help the company save about
• 21:34
  Speaker 5: forty million dollars annually, and General Mills Warren sales could
• 21:38
  Speaker 5: fall this year as consumers spend less on snacks and
• 21:41
  Speaker 5: Tarift's rays costs. Shares in the Cheerios maker a down
• 21:45
  Speaker 5: over three percent. I'm Tucker Silva and that is Wall
• 21:49
  Speaker 5: Street Watch and the trivia question we asked in the
• 21:51
  Speaker 5: previous segment was who replaced David Letterman hosting the late
• 21:56
  Speaker 5: night talk show on NBC. That would be Conan O'Brien
• 22:00
  Speaker 5: Brooks from Groveland, Mass is our winner today taking on
• 22:03
  Speaker 5: the Financial Exchange showed t shirt and we play trivia
• 22:06
  Speaker 5: every day here on the Financial Exchange. See complete contest
• 22:10
  Speaker 5: rules at Financial Exchange show dot com.
• 22:12
  Speaker 2: The housing market is set to round off its third
• 22:16
  Speaker 2: year of poor sales were on pace for a seasonally
• 22:20
  Speaker 2: adjusted four point one million homes that will be sold
• 22:24
  Speaker 2: over the course of twenty twenty five. That's through the
• 22:27
  Speaker 2: first five months of data. For comparison's sake, in twenty
• 22:31
  Speaker 2: twenty one, that figure was about six million homes. And
• 22:34
  Speaker 2: obviously we've covered the macroeconomic backdrop as to why the
• 22:39
  Speaker 2: housing market has remained, you know, really tepid. Obviously the
• 22:43
  Speaker 2: mortgage rates are part of it, and of course the
• 22:45
  Speaker 2: price increases as well, but there's some other interesting dynamics
• 22:49
  Speaker 2: going on where we talked about this a little bit
• 22:51
  Speaker 2: on the show yesterday. Zillow was sued by Compass, the
• 22:56
  Speaker 2: largest US brokerage by sales volume, fur regarding Zillo's listings,
• 23:02
  Speaker 2: where Compass is trying to direct more of the traffic
• 23:06
  Speaker 2: on browsing home listings to its site. So as a result,
• 23:10
  Speaker 2: what they've done is offered some of these sort of
• 23:14
  Speaker 2: prelisting windows where they'll say coming soon that a house
• 23:17
  Speaker 2: will be listed on the market, but it will not
• 23:19
  Speaker 2: yet be on Zillo. So it will direct the potential
• 23:23
  Speaker 2: buyer of just anyone who's nosy to go do Compass's
• 23:26
  Speaker 2: website rather than Zill's website, which I believe gets two
• 23:29
  Speaker 2: hundred and twenty million monthly viewers. It's a heavy traffic portal.
• 23:33
  Speaker 2: And so the reason that Compass is suing Zillo's because
• 23:36
  Speaker 2: Zill came back and said, if you're going to list
• 23:38
  Speaker 2: a home in that fashion, if we don't get notice
• 23:41
  Speaker 2: of it within twenty four hours of it being listed,
• 23:44
  Speaker 2: it will not be listed on Zill. We're just axing
• 23:46
  Speaker 2: it from the platform. So Compass is going after them
• 23:49
  Speaker 2: saying that this is sort of any anti trust play here.
• 23:53
  Speaker 2: So just an interesting anecdote on the real estate market
• 23:56
  Speaker 2: for those who follow it.
• 23:57
  Speaker 4: Clearly is Zillo. I could do without like I use it,
• 24:00
  Speaker 4: but if it went away tomorrow, no offense if you
• 24:02
  Speaker 4: work there. I don't want to. I don't want to
• 24:04
  Speaker 4: diminish anybody's contribution to the economy, but.
• 24:08
  Speaker 3: I could why could you do with that?
• 24:10
  Speaker 4: So it's public, I could go elsewhere to get what
• 24:11
  Speaker 4: I want if I wanted to see what somebody's house
• 24:13
  Speaker 4: was assessed at or what they're in terms of search
• 24:18
  Speaker 4: so called zestimate. You know, I don't I don't know.
• 24:20
  Speaker 4: I don't know that that's a good forecaster of actual
• 24:22
  Speaker 4: sales price. So it's just one of those sites that
• 24:26
  Speaker 4: I use a lot when I'm curious about what something
• 24:28
  Speaker 4: in the neighborhood is selling for because it's convenient. But
• 24:31
  Speaker 4: I could also live without it, And maybe that's why
• 24:33
  Speaker 4: they haven't been able to monetize the tremendous monetize into profitability.
• 24:38
  Speaker 4: The tremendous consistently sorry keep amending my statements here, but
• 24:42
  Speaker 4: consistently earn profit on what is effectively just a lot
• 24:46
  Speaker 4: of data that's otherwise publicly available.
• 24:48
  Speaker 2: They do a tremendous job of driving traffic, there's no
• 24:51
  Speaker 2: doubt about that. With that number I quoted before. There
• 24:54
  Speaker 2: are competitors. There are Redfinn andrealtor dot Com are right
• 24:56
  Speaker 2: on their heels in terms of being big players in
• 24:59
  Speaker 2: the space too. So so what Mike and I were
• 25:01
  Speaker 2: discussing yesterday. I believe Mike you mentioned that Zilla has
• 25:05
  Speaker 2: somewhere around sixty percent of market share of like the
• 25:07
  Speaker 2: online brokerage listings.
• 25:10
  Speaker 4: So is that exclusive? Pardon my ignorance, what does that mean.
• 25:13
  Speaker 3: That they they exclusively?
• 25:15
  Speaker 2: If you're looking at a house online, you google my
• 25:17
  Speaker 2: house because you want to see it. Yeah, sixty percent
• 25:20
  Speaker 2: of the traffic and sort of market share, you'll go
• 25:23
  Speaker 2: to Zillo basically by looking for that for.
• 25:25
  Speaker 4: That like by default.
• 25:26
  Speaker 2: Yeah, but there are you know, peers chasing them. So
• 25:29
  Speaker 2: it's it's not the Google search engine stuff that we
• 25:32
  Speaker 2: talk about where it's ninety percent market share and there's
• 25:35
  Speaker 2: really no other competitors in town.
• 25:39
  Speaker 5: Summer in New England is upon us. The kids are
• 25:41
  Speaker 5: home from school, the sun doesn't set until after eight,
• 25:45
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• 26:37
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• 26:42
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• 26:43
  Speaker 2: Tesla had been up heading early into this week. The
• 26:47
  Speaker 2: stock was up six or seven percent early in the week,
• 26:50
  Speaker 2: perhaps on Monday or Tuesday, I believe Monday, after the
• 26:53
  Speaker 2: unveiling of their robotaxi service in Austin over the weekend,
• 26:57
  Speaker 2: where they did a handful of rides somewhere ten to
• 27:00
  Speaker 2: eleven vehicles are out there, you know, doing rides in Austin,
• 27:04
  Speaker 2: and there were some issues that emerged from that, But
• 27:07
  Speaker 2: initially the market had rallied a bit on that optimism
• 27:10
  Speaker 2: I had done a little spiel yesterday as to I
• 27:12
  Speaker 2: don't understand why there was so much enthusiasm around that
• 27:16
  Speaker 2: when Waimo has been driving you know, thousands of miles
• 27:19
  Speaker 2: for a long period time. But in terms of news
• 27:21
  Speaker 2: today for Tesla, some negative news coming out where their
• 27:26
  Speaker 2: EU sales slumped in May despite ev market growth in
• 27:31
  Speaker 2: the European unions. Tesla stock is down about four percent
• 27:34
  Speaker 2: today and some of these numbers mark are pretty staggering.
• 27:37
  Speaker 2: Where we saw the new car registration for Tesla models
• 27:40
  Speaker 2: basically a way to reflect sales fell about forty and
• 27:44
  Speaker 2: a half percent across the EU this month. According to
• 27:48
  Speaker 2: European Automobile Manufacturers Association, they've been lessening their market share,
• 27:54
  Speaker 2: dropping from two percent down to you know, one and
• 27:58
  Speaker 2: a half percent, and these vehicles are continuing to make
• 28:02
  Speaker 2: their presence felt more in the EU.
• 28:05
  Speaker 4: Yeah, my personal take, and I have no claim to
• 28:08
  Speaker 4: being a specialist here, it's really not my area. But
• 28:10
  Speaker 4: my personal take is that the people who call Tesla
• 28:14
  Speaker 4: a meme stock, meaning it's valuation is based on fantasy,
• 28:19
  Speaker 4: and I don't mean that in a derogatory way, even
• 28:21
  Speaker 4: though it sounds very derogatory. It's valuation is not based
• 28:25
  Speaker 4: on fundamental so it's hard to get your arms around.
• 28:27
  Speaker 4: Like you said the other day, their response, the response
• 28:29
  Speaker 4: to the stock price to a few successful you know, okay,
• 28:32
  Speaker 4: they didn't kill anybody in Austin. So this market cap
• 28:35
  Speaker 4: increased like twice the valuation of weimo. This makes am
• 28:39
  Speaker 4: I getting that right? There's wemo evaluation. You can back out.
• 28:44
  Speaker 3: Forty billion or something that way less than where.
• 28:47
  Speaker 4: Okay, okay, so again not a little out of my
• 28:49
  Speaker 4: depth here, but pretty underwhelming debut and the stock goes crazy.
• 28:54
  Speaker 4: So people who buy Tesla buy it because they want
• 28:56
  Speaker 4: to hand the bag off, possibly to a greater fool
• 28:59
  Speaker 4: at some point, or they really admire Musk's showmanship, which
• 29:03
  Speaker 4: I do. By the way, I think he's one of
• 29:05
  Speaker 4: the great personalities, if not geniuses, probably too strong a
• 29:08
  Speaker 4: word for a guy that's actually not invented anything himself.
• 29:11
  Speaker 4: I don't know that he's exactly Thomas Edison, but anyway.
• 29:13
  Speaker 3: He's not Thomas Edison, but you cannot knock the business history,
• 29:17
  Speaker 3: the entrepreneurial success.
• 29:18
  Speaker 4: That he had.
• 29:19
  Speaker 3: I think that that gets lost a little bit.
• 29:21
  Speaker 2: And probably the reason is I'm reading this founder's book,
• 29:23
  Speaker 2: which is about the creation of PayPal and all the
• 29:26
  Speaker 2: successful entrepreneurs that came out of that. If you look
• 29:28
  Speaker 2: back historically, he's had trementous success.
• 29:31
  Speaker 3: And not even that's not even talking.
• 29:32
  Speaker 4: About like I'm.
• 29:33
  Speaker 3: Not talking to politics.
• 29:34
  Speaker 2: I'm just saying entrepreneurly SpaceX its valuation, there's been some just.
• 29:40
  Speaker 4: He's one of the great entrepreneurs of our meteoric creators
• 29:42
  Speaker 4: of our yeah age. But Tesla is one of those
• 29:45
  Speaker 4: things that you take on faith, right, so it's very
• 29:47
  Speaker 4: hard to apply a fundamental or analytical lens to it.
• 29:50
  Speaker 2: Like I mentioned, Tesla stock off about four percent in
• 29:54
  Speaker 2: trading today. We're going to take a quick break here
• 29:57
  Speaker 2: on the Financial Exchange. When we come back, a little
• 30:00
  Speaker 2: bit of stack Roulette right after this.
• 30:04
  Speaker 1: The Financial Exchange is life on Series XM's Business radio
• 30:07
  Speaker 1: channel one thirty two weekdays from eleven to noon. Get
• 30:11
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• 30:14
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• 30:20
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• 30:48
  Speaker 2: I want to talk about a little bit of breaking
• 30:50
  Speaker 2: news here before we get to stack Roulette. BP shares
• 30:54
  Speaker 2: have jumped about eight percent on report that it's in
• 30:58
  Speaker 2: an early stage talks to be acquired by Shell. Basically
• 31:02
  Speaker 2: this proposed merger, again, these are just in early talks.
• 31:06
  Speaker 2: BP would be valued around eighty billion dollars. They've lagged
• 31:10
  Speaker 2: big time behind Shell in terms of their renewable energy push,
• 31:15
  Speaker 2: but by acquiring BP, it would strengthen Shell's position against
• 31:19
  Speaker 2: the two behemoths in the energy sector space, Exon and Chevron.
• 31:23
  Speaker 2: And immediately when Tucker passed along this news story to me,
• 31:27
  Speaker 2: the first thing that came to mind is this, you know,
• 31:29
  Speaker 2: concerns of antitrusts, that the fact that we would have
• 31:32
  Speaker 2: just three massive oil producers in size really by Shell,
• 31:38
  Speaker 2: Exon and Chevron here and I just wonder if this
• 31:40
  Speaker 2: would face some sort of scrutiny on that side of things. Again,
• 31:45
  Speaker 2: these are just early discussions. There is a five percent
• 31:50
  Speaker 2: stake that activist investor Elliott Investment Management owned and they
• 31:54
  Speaker 2: VP and they've pushed for these type of changes in
• 31:57
  Speaker 2: the company since at least February to try and just
• 32:01
  Speaker 2: sort of, you know, try to regenerate some return on
• 32:05
  Speaker 2: BP side of things. So we'll continue to follow that
• 32:07
  Speaker 2: story there.
• 32:08
  Speaker 4: Yeah, I haven't thought a lot about obviously the news
• 32:10
  Speaker 4: was just released, but about market share and the implications
• 32:15
  Speaker 4: for consumer welfare. Those would hopefully be the stand that
• 32:18
  Speaker 4: would hopefully be the standard that the new administration is considering.
• 32:22
  Speaker 4: But I don't I don't know. The political climate is
• 32:24
  Speaker 4: sort of weird. Both parties have become a lot more interventionist.
• 32:28
  Speaker 4: There is no free market, there is no appetite for
• 32:31
  Speaker 4: a free a free market approach to these types of
• 32:34
  Speaker 4: things anymore. So I guess, like you said, we'll see.
• 32:37
  Speaker 2: This would be one of the largest deals if you
• 32:39
  Speaker 2: know it were to go through. Excellon did acquire Pioneer
• 32:42
  Speaker 2: National Resources last year for sixty billion dollars. So Mark,
• 32:46
  Speaker 2: we'll kick back to you for for stack roulette.
• 32:49
  Speaker 4: Yeah, not so much a story as what's maybe an
• 32:51
  Speaker 4: interesting fact and this comes from USA facts dot org.
• 32:57
  Speaker 4: The states that pay the most to the federal government
• 33:01
  Speaker 4: are mostly who you would think, but a couple that
• 33:04
  Speaker 4: maybe would surprise you. So again, this is states that
• 33:08
  Speaker 4: on net send the most to Washington, and I'll so
• 33:11
  Speaker 4: these are these are the top five. New York eighty
• 33:13
  Speaker 4: nine billion dollars.
• 33:14
  Speaker 3: California has got to be on there.
• 33:16
  Speaker 4: California, yeah, eighty billion.
• 33:18
  Speaker 3: Some of the other ones, the New Jersey, New.
• 33:22
  Speaker 4: Jersey is seventy billion. They're number three.
• 33:24
  Speaker 2: Let's see another state with the high state income tax, Washington.
• 33:29
  Speaker 4: Washington State fifty five billion. They're number five. Number four
• 33:32
  Speaker 4: might surprise you, or maybe not. I don't think they
• 33:34
  Speaker 4: have an income tax. Florida, Texas, Texas. Remind me. Okay,
• 33:42
  Speaker 4: so those are the top five. I'll just call them contributors.
• 33:45
  Speaker 4: They send more to Washington than they get back. The
• 33:48
  Speaker 4: top five beneficiaries call them moochers if we wanted to
• 33:52
  Speaker 4: be unkind not something we do on this program. I
• 33:55
  Speaker 4: don't know, Okay. So Virginia is number one, not surprising
• 33:59
  Speaker 4: given their prox the neck to the power center of
• 34:05
  Speaker 4: the fiscal power center of the country. Virginia gets eighty
• 34:07
  Speaker 4: billion more than they send. The rest are those that
• 34:11
  Speaker 4: you might associate with having lower incomes and consuming more
• 34:14
  Speaker 4: of things like medicaid. Alabama gets forty billion more than
• 34:18
  Speaker 4: they send to Washington. Arizona because of the retire repopulation,
• 34:23
  Speaker 4: gets forty billion more than they send. South Carolina, poor
• 34:26
  Speaker 4: state probably a much higher per porres than average of
• 34:30
  Speaker 4: Medicaid recipients, gets nearly forty billion more than they send.
• 34:34
  Speaker 4: And finally Maryland rounds out the top five. They get
• 34:36
  Speaker 4: about thirty five billion more than they send, again due
• 34:39
  Speaker 4: to their proximity to the hub of power.
• 34:42
  Speaker 3: Any of the New England states touched that report, really or.
• 34:44
  Speaker 4: Not, we're all in the middle. Massachusetts actually just outside
• 34:49
  Speaker 4: the top five. We send nearly fifty billion forty six billion,
• 34:52
  Speaker 4: according to USA facts, more than we get from DC.
• 34:55
  Speaker 4: I mean a lot of blues. The irony here is
• 34:57
  Speaker 4: the Blue states send the unaverage based on this quick
• 35:02
  Speaker 4: scanning and work I've seen done elsewhere, send more than
• 35:05
  Speaker 4: they get. Yet they're consistently voting for bigger government. It
• 35:09
  Speaker 4: doesn't seem like Blue states vote in their economic self
• 35:13
  Speaker 4: interest and red states they tend to be poor on average.
• 35:18
  Speaker 4: Not a statement about your average voter, just a statement
• 35:20
  Speaker 4: about the way demographics are playing out. But they tend
• 35:23
  Speaker 4: to be huge beneficiaries of federal spending. I'm not the
• 35:26
  Speaker 4: first person to observe. There's a lot of people have
• 35:28
  Speaker 4: talked about how Medicaid cuts, though they're obviously needed to
• 35:31
  Speaker 4: get the deficit under control, they'll hit president's constituencies republic
• 35:35
  Speaker 4: Now what are now Republican constituencies hardest.
• 35:39
  Speaker 2: ESPN renews its media deal with Professional Lacrosse and takes
• 35:42
  Speaker 2: an equity stake in the league. This is going to
• 35:46
  Speaker 2: be a five year deal beginning in the twenty twenty
• 35:49
  Speaker 2: six season, to include all of the Premier League Lacrosse
• 35:54
  Speaker 2: Premier Lacrosse League regular season games as well as playoff
• 35:57
  Speaker 2: in championship games. And the reason that I bring up
• 36:02
  Speaker 2: this story is that I'm not a lacrosse player by background,
• 36:06
  Speaker 2: much more in sort of the baseball roots that I
• 36:09
  Speaker 2: grew up with a huge Red Sox fan around here.
• 36:11
  Speaker 2: But it is extremely prevalent and popular around this New
• 36:15
  Speaker 2: England area, and it's a sport that at the college
• 36:19
  Speaker 2: level has had some sort of excess success on a
• 36:22
  Speaker 2: national level gaining interest. It seems like the final four
• 36:26
  Speaker 2: of the lacrosse college Championship gets you know, some attention
• 36:30
  Speaker 2: in viewership, but it's really never taken off at the
• 36:33
  Speaker 2: professional level. And I think a lot of communities around
• 36:36
  Speaker 2: this area and the states that we broadcast in have
• 36:40
  Speaker 2: a lot of kids who play lacrosse, and it's becoming
• 36:43
  Speaker 2: taking more and more market share away from baseball. But
• 36:46
  Speaker 2: they've never been able to capitalize on it from a
• 36:49
  Speaker 2: major league, you know, professional perspective. So maybe ESPN can help.
• 36:56
  Speaker 2: I don't know. Its strength is nowhere near what it
• 36:59
  Speaker 2: was back into that and twelve make this more.
• 37:01
  Speaker 5: I'll tell you, I was just about to say the
• 37:03
  Speaker 5: same thing, Paul. There's been multiple fathers that I've spoken to,
• 37:08
  Speaker 5: you know, with kids similar to my age, who have
• 37:12
  Speaker 5: gone and put their kid into lacrosse and they love it. Yeah,
• 37:17
  Speaker 5: well from a coaching perspective, and the kids love it too.
• 37:19
  Speaker 3: I just wonder.
• 37:20
  Speaker 2: I've always questioned, and I asked fathers around town, my
• 37:23
  Speaker 2: kids are too young to really be in the little
• 37:24
  Speaker 2: league baseball scene. It just seems like that would be
• 37:27
  Speaker 2: a dying breed at the younger level. I mean, yeah,
• 37:29
  Speaker 2: but we just did it. But it sounds like that's
• 37:32
  Speaker 2: not the case.
• 37:32
  Speaker 3: Right. There's still enrollment, a lot of kids getting out
• 37:35
  Speaker 3: there playing.
• 37:36
  Speaker 5: I mean, you know, te ball, they're just kind of
• 37:37
  Speaker 5: it's just chaos, But there's still a lot of kids
• 37:40
  Speaker 5: that show up. And then we just did coach pitch
• 37:42
  Speaker 5: this past year and we consistently had twelve kids show
• 37:46
  Speaker 5: up every time, so you could field a team.
• 37:48
  Speaker 2: It seems like I talked to my town. The enrollment
• 37:51
  Speaker 2: in baseball. It's still there, but I just wondered with
• 37:53
  Speaker 2: like the smartphone generation and iPads and quicker action, it's
• 37:56
  Speaker 2: a game that is a little bit slower in nature,
• 37:59
  Speaker 2: and lacrosse feeds much more into sort of consistent action
• 38:02
  Speaker 2: and a lot going on there. So we will see
• 38:05
  Speaker 2: if ESPN can turn that league around. That's all the
• 38:08
  Speaker 2: time that we have for this edition of the Financial
• 38:11
  Speaker 2: Exchange Markets remain in mixed territory. We'll be back at
• 38:14
  Speaker 2: it tomorrow morning at ten am. Thanks so much for
• 38:17
  Speaker 2: joining us.