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Money Monday with Brian James · Brian Thomas

• 0:00
  Speaker 1: The Talk Station.
• 0:01
  Speaker 2: 8.05 on a Monday. Of course, it's that time of week.
• 0:06
  Speaker 2: Regular listeners know. Money Monday with Brian James from Allworth Financial.
• 0:10
  Speaker 2: He's a financial planner, and he's trying to keep us
• 0:12
  Speaker 2: on the right direction. He's got all kinds of information
• 0:14
  Speaker 2: about what we need to do, what we need to
• 0:16
  Speaker 2: think about when we're thinking about our future, our retirement.
• 0:19
  Speaker 2: I'll echo what Brian James will tell you all day long.
• 0:21
  Speaker 2: It's a good thing to get a financial planner on
• 0:23
  Speaker 2: your side to help you, well, make... Proper decisions like,
• 0:26
  Speaker 2: wait a second, should I invest in artificial intelligence companies?
• 0:29
  Speaker 2: Welcome back, Brian James. Appreciate you being on the program
• 0:32
  Speaker 2: every Monday. Good morning, Brian Thomas.
• 0:34
  Speaker 3: I appreciate the opportunity to talk to you and your
• 0:36
  Speaker 3: listeners every Monday.
• 0:37
  Speaker 2: Well, I keep reading about this inevitable bubble that's going
• 0:40
  Speaker 2: to burst. And if you look at all the billions
• 0:42
  Speaker 2: and billions of dollars that these tech giants are throwing
• 0:44
  Speaker 2: into artificial intelligence, and yet widely reported that, wait a second,
• 0:50
  Speaker 2: where are the earnings? Alphabet got a record day drop
• 0:54
  Speaker 2: of $ 500 billion in market value. Is that directly related
• 0:57
  Speaker 2: to AI? I kind of wonder, maybe you can explain
• 1:00
  Speaker 2: to me and my listening audience how AI generates a
• 1:02
  Speaker 2: profit other than just hoovering up individual information and selling
• 1:06
  Speaker 2: it off to people who might want to know who
• 1:07
  Speaker 2: we are.
• 1:09
  Speaker 3: Yeah, that's a good question to ask these days, isn't it?
• 1:12
  Speaker 3: So yeah, we do appear to be in what we
• 1:14
  Speaker 3: would commonly refer to as a bubble. The investing public
• 1:17
  Speaker 3: is in general excited about a thing. And we're all
• 1:20
  Speaker 3: kind of used to this now. Most people who are
• 1:22
  Speaker 3: paying attention and have significant wealth Probably were invested 30
• 1:27
  Speaker 3: years ago when we first started talking about the Internet
• 1:30
  Speaker 3: Wave 1, which was just a bunch of cool websites,
• 1:32
  Speaker 3: and we learned how to buy stuff online.
• 1:34
  Speaker 1: Obviously, we're a few generations past that now. So AI
• 1:37
  Speaker 1: is obviously a very powerful tool. Not going away. This
• 1:40
  Speaker 1: is not a fad, right? No.
• 1:41
  Speaker 3: There's a lot of opportunity to make things more efficient.
• 1:44
  Speaker 3: create things that didn't exist before. So it is a
• 1:46
  Speaker 3: thing and it can transform the economy. That also means
• 1:49
  Speaker 3: it becomes something that can disappoint investors who pay too much. So,
• 1:53
  Speaker 3: you know, today's evidence supports owning these profitable businesses. If
• 1:56
  Speaker 3: you're going to do it through a diversified portfolio and
• 1:58
  Speaker 3: being selective about adding more of them. The questions are,
• 2:02
  Speaker 3: does AI become more useful than it currently is? Do
• 2:05
  Speaker 3: companies make money off of it? And will somebody buying
• 2:07
  Speaker 3: these stocks today, you know, are they going to earn
• 2:09
  Speaker 3: an attractive return from the levels we're currently sitting at?
• 2:13
  Speaker 3: You know, I think right now we can answer yes
• 2:15
  Speaker 3: to the first two and then still get that third
• 2:17
  Speaker 3: one wrong, unfortunately.
• 2:18
  Speaker 2: Yeah, and obviously it's going to be transformative in ways
• 2:22
  Speaker 2: that you and I probably can't even think of yet.
• 2:24
  Speaker 1: But I guess.
• 2:26
  Speaker 2: The clamoring for government regulation springs from all these gloom
• 2:30
  Speaker 2: and doom and dire predictions. Some, I suppose, are accurate
• 2:33
  Speaker 2: or legitimate to at least think about. But how can
• 2:35
  Speaker 2: you predict, and no one can in any industry, where
• 2:38
  Speaker 2: this is going to go in terms of governmental intervention?
• 2:40
  Speaker 2: Because if you're invested in AI and the government comes
• 2:42
  Speaker 2: in and then says, no, this is too dangerous for
• 2:44
  Speaker 2: us to play with, and then it disappears or it
• 2:48
  Speaker 2: doesn't exist in its least current form investment-wise.
• 2:51
  Speaker 1: Yeah, that's absolutely true. And that remains to be seen, right?
• 2:54
  Speaker 3: Because we have the powers that be are generally in
• 2:58
  Speaker 3: the pockets of our leaders who decide the rules and
• 3:01
  Speaker 3: regulations around how this operates. And we don't, as a country,
• 3:05
  Speaker 3: we don't tend to put too many reins on business.
• 3:09
  Speaker 3: I say this gets perceived as a bad thing sometimes,
• 3:11
  Speaker 3: but I always say we are the United States of
• 3:13
  Speaker 3: profit margin, meaning we're We make our decisions based off
• 3:16
  Speaker 3: what will make our decisions most successful. And we tend
• 3:19
  Speaker 3: to sacrifice things, good, bad or indifferent. Right. There are
• 3:21
  Speaker 3: good reasons and bad reasons to do that. Sacrifice things
• 3:25
  Speaker 3: that that stand in the way of that. So, yeah,
• 3:28
  Speaker 3: regulation is definitely a problem. You know, so you're kind
• 3:31
  Speaker 3: of making an assumption about technology and profits and what
• 3:35
  Speaker 3: the government's going to allow that company to do. Currently,
• 3:38
  Speaker 3: Washington seems to favor expansion with some safeguards in place.
• 3:42
  Speaker 3: So back in March of 2026, there was a legislative
• 3:45
  Speaker 3: framework that kind of accelerated the permitting process and just
• 3:49
  Speaker 3: kind of a consistent national approach in protection against stuff
• 3:53
  Speaker 3: like child exploitation, fraud, all that kind of stuff.
• 3:56
  Speaker 2: Mm-hmm.
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  Speaker 3: That's a proposal that happened last spring, not an inactive
• 4:00
  Speaker 3: AI law. And then there was a June executive order
• 4:03
  Speaker 3: that put a voluntary process for government evaluation of some
• 4:06
  Speaker 3: of these things in place as well.
• 4:08
  Speaker 1: States themselves are moving aggressively.
• 4:10
  Speaker 3: There's been over 1,500 AI-related bills in 2026, but only
• 4:15
  Speaker 3: 280 of those have crossed the finish line as of
• 4:17
  Speaker 3: early October. So early stages of what the government is
• 4:21
  Speaker 3: going to do in response to the AI boom.
• 4:23
  Speaker 2: Well, and my suspicions is if the federal government does
• 4:26
  Speaker 2: decide to act in some way, it's going to be
• 4:27
  Speaker 2: sort of an interstate commerce-driven directive that federal law supersedes
• 4:32
  Speaker 2: and trumps local state laws, which is typically the case
• 4:35
  Speaker 2: in a heavily regulated area. I'm guessing it's going to
• 4:38
  Speaker 2: end up being heavily regulated.
• 4:40
  Speaker 1: I can't imagine it won't be.
• 4:42
  Speaker 3: How many scary headlines are there about how it escaped
• 4:44
  Speaker 3: its box?
• 4:45
  Speaker 1: These things sound like 80s movies.
• 4:48
  Speaker 3: It got out of its box and it's here to
• 4:49
  Speaker 3: haunt us and all that kind of stuff. So yeah,
• 4:52
  Speaker 3: that wouldn't be shocking at all. And I have a feeling,
• 4:55
  Speaker 3: my gut says we're probably going to over-regulate and then
• 4:58
  Speaker 3: back off. That is what we normally do, overreact to
• 5:01
  Speaker 3: things and then settle into what the actual reality is
• 5:04
  Speaker 3: going to be.
• 5:04
  Speaker 1: It just takes time.
• 5:05
  Speaker 2: And I agree with your assessment on that. The question is,
• 5:08
  Speaker 2: this has always been placed in terms of, well, If
• 5:10
  Speaker 2: we don't dominate it, control it, get ahead of it, America,
• 5:15
  Speaker 2: and be more successful than our rivals, and I think
• 5:17
  Speaker 2: the only rival on the level that we've got is China,
• 5:20
  Speaker 2: they're of course working on AI, that allows China to
• 5:24
  Speaker 2: move forward with it. So in a heavily regulated, let's
• 5:27
  Speaker 2: say confiscatorily so, regulated environment here in the United States,
• 5:31
  Speaker 2: China then could advance as it sees fit, might be frightening,
• 5:35
  Speaker 2: but Does that create an investment opportunity for Americans to
• 5:38
  Speaker 2: invest in Chinese companies who maybe will go on and
• 5:40
  Speaker 2: dominate the industry?
• 5:43
  Speaker 1: For sure.
• 5:44
  Speaker 3: Setting aside the geopolitical concerns of investing, that's a whole
• 5:47
  Speaker 3: different thing. You could make up a fake name of
• 5:50
  Speaker 3: a country and make the same argument. Somebody is going
• 5:53
  Speaker 3: to take the lead and be the most productive. Over
• 5:56
  Speaker 3: the last century, it's usually been the United States because
• 5:59
  Speaker 3: we are, like I said, that's the positive thing about
• 6:01
  Speaker 3: being the United States of profit margin. We are the
• 6:03
  Speaker 3: best place in the universe to have an idea, set
• 6:07
  Speaker 3: up a business, and squeeze a bunch of profit.
• 6:09
  Speaker 1: Out of it.
• 6:09
  Speaker 3: Historically, we have led the charge. But right now, we're
• 6:12
  Speaker 3: spending a lot more energy than we have in the
• 6:14
  Speaker 3: past fighting politically, trying to push the pendulum from one
• 6:18
  Speaker 3: extreme to the other every single election. And we sometimes,
• 6:21
  Speaker 3: I think, lose sight of those original things that the
• 6:24
  Speaker 3: country was founded on that make it such a great
• 6:26
  Speaker 3: place to make a profit. So China, on the other hand,
• 6:28
  Speaker 3: doesn't really care about its constituents and the people that
• 6:31
  Speaker 3: are there. They get abused, and that's where they find
• 6:34
  Speaker 3: their profit margin, in the people themselves.
• 6:37
  Speaker 2: It's something you follow in terms of whether artificial intelligence
• 6:41
  Speaker 2: is a decent investment or not, regardless of the geopolitical ramifications.
• 6:45
  Speaker 2: They seem to be having a difficult time getting adequate
• 6:47
  Speaker 2: supplies in the form of the computer chips that they
• 6:49
  Speaker 2: need to develop these facilities, whether or not they get developed.
• 6:53
  Speaker 2: Do you see that supply chain issues ironing themselves out,
• 6:55
  Speaker 2: or is that going to be a constant driver of
• 6:57
  Speaker 2: increased cost in building these facilities?
• 7:00
  Speaker 3: Yeah, I mean, I think in the short run, we're
• 7:02
  Speaker 3: sprinting so fast to get these things off the ground.
• 7:04
  Speaker 3: I mean, did anybody really think of a data center
• 7:07
  Speaker 3: four or five years ago? All of a sudden, we
• 7:09
  Speaker 3: have to have them everywhere, and they're in everybody's backyard.
• 7:13
  Speaker 1: Look at Amazon.
• 7:14
  Speaker 3: Amazon had approximately $ 220 billion in 2026 cash expenditures. Trailing
• 7:21
  Speaker 3: 12-month cash flow shifted from positive $ 14. 8 billion to negative
• 7:25
  Speaker 3: $ 42. 4 billion. That's a rough year. If you do that
• 7:28
  Speaker 3: in a household, the ship probably isn't floating very well anymore.
• 7:31
  Speaker 3: And that's mostly because of what they're spending on property
• 7:34
  Speaker 3: and equipment. with regard to the AI goals. So all
• 7:37
  Speaker 3: of that is cash after capital spending. That's not the
• 7:40
  Speaker 3: same measure as an accounting profit. So Microsoft's got a
• 7:43
  Speaker 3: similar story. Yeah, we're in a period now where it's
• 7:46
  Speaker 3: basically push all your chips on the table. Somebody's going
• 7:48
  Speaker 3: to come out a leader and somebody's not. And there's
• 7:51
  Speaker 3: an awful lot of corporate boardrooms out there that are
• 7:53
  Speaker 3: with little beads of sweat on their foreheads trying to
• 7:55
  Speaker 3: figure out what is the exact right move for us
• 7:57
  Speaker 3: to make right now.
• 7:58
  Speaker 2: Well, and the market's Overall, if you just look at this,
• 8:01
  Speaker 2: this year, numbers are doing really well. But I've read
• 8:03
  Speaker 2: that the vast majority of the market improvement is AI driven.
• 8:08
  Speaker 2: Without that component in there, without AI right now, what
• 8:11
  Speaker 2: would the economy look like or what would the growth
• 8:13
  Speaker 2: look like here?
• 8:14
  Speaker 3: Oh, it would certainly be a lot less. So, you know,
• 8:17
  Speaker 3: the recent headlines, of course, are scary. Friday, the S &
• 8:20
  Speaker 3: P 500 fell 1.8 percent overall.
• 8:23
  Speaker 1: You already mentioned that Google went over the cliff a
• 8:25
  Speaker 1: little bit. I think they're going to be fine.
• 8:27
  Speaker 3: But there's a lot of grumpy Googlers out there, Google employees,
• 8:31
  Speaker 3: not thrilled with what the 401K just did. NASDAQ was
• 8:34
  Speaker 3: down 3%. That was a scary day. However, the S &
• 8:37
  Speaker 3: P is still up over 10% for the year. We're
• 8:39
  Speaker 3: still on our third or fourth double-digit year in a row.
• 8:42
  Speaker 3: NASDAQ up almost double digits. Painful days followed by inside
• 8:47
  Speaker 3: of a year that is still pretty strongly positive. Yes,
• 8:51
  Speaker 3: that is mostly AI-driven because the market does perceive that
• 8:54
  Speaker 3: companies out there who are already profitable can become more
• 8:57
  Speaker 3: so with the opportunities that AI brings. But there's still
• 9:00
  Speaker 3: a little bit of froth in the market because we
• 9:02
  Speaker 3: are not yet demanding that these companies show actual profits.
• 9:06
  Speaker 1: We're in that phase of the bubble. We are.
• 9:08
  Speaker 2: Well, and you've always talked about cool heads ultimately prevail
• 9:11
  Speaker 2: for the best that don't get crazy and do crazy
• 9:13
  Speaker 2: things in anticipation of perhaps an expectation of the bubble burst. Now,
• 9:18
  Speaker 2: what would you advise your clients that are worried about
• 9:20
  Speaker 2: the impending, inevitable, perhaps AI burst?
• 9:24
  Speaker 3: Yeah, what I completely agree with is the word inevitable.
• 9:27
  Speaker 3: What I don't agree with is impending because that implies
• 9:31
  Speaker 3: that it's going to happen soon.
• 9:32
  Speaker 1: We don't know.
• 9:33
  Speaker 3: And you could have made similar arguments really over the
• 9:36
  Speaker 3: last four years from just the market in general because
• 9:38
  Speaker 3: we've just done nothing but go to the moon ever
• 9:40
  Speaker 3: since the 2022 panic. So the thing to be looking
• 9:44
  Speaker 3: at is the spending, right? Look at the expenses that
• 9:48
  Speaker 3: these companies have, like we just talked about a little bit,
• 9:50
  Speaker 3: and then look for the results, which won't be tomorrow.
• 9:53
  Speaker 3: At some point, the market is going to render a
• 9:56
  Speaker 3: full opinion on this. Right now, everything is positive. because
• 10:00
  Speaker 3: there's nothing bad and nothing bad can ever happen again.
• 10:02
  Speaker 3: But you can look through history and find all the
• 10:05
  Speaker 3: places where we got excited about something and ran it
• 10:08
  Speaker 3: a little bit too far. And then the bubble burst.
• 10:10
  Speaker 3: That's when the panic happens. And I'll also throw out there,
• 10:13
  Speaker 3: this is an election week. Obviously, there are folks out
• 10:16
  Speaker 3: there with their finger on the rebalance button in their
• 10:19
  Speaker 3: 401k based on which team wins. And I want to
• 10:21
  Speaker 3: tell you this, to put your mouse down and back
• 10:23
  Speaker 3: slowly away, there is no headline coming this week with
• 10:25
  Speaker 3: regard to the election or AI that should cause you
• 10:28
  Speaker 3: to make a major pivot in your own financial plan
• 10:31
  Speaker 3: as long as it was constructed correctly.
• 10:32
  Speaker 1: To begin with. Unlike Brazil, huh?
• 10:36
  Speaker 3: Well, yeah, other countries out there don't weather these types
• 10:40
  Speaker 3: of things quite as.
• 10:41
  Speaker 1: Well as we do. So that's why, yes, if I'm in.
• 10:44
  Speaker 3: Brazil, I'm probably having a different conversation, but I would
• 10:46
  Speaker 3: have been having a different.
• 10:47
  Speaker 1: Career as well.
• 10:49
  Speaker 2: See, that is absolutely true.
• 10:50
  Speaker 1: Don't go away.
• 10:50
  Speaker 2: Brian James will continue. We're going to talk about the Fed.
• 10:53
  Speaker 2: They held tight on the interest rates. What are they
• 10:55
  Speaker 2: going to do next, and what does that mean for
• 10:57
  Speaker 2: us out here in the unwashed masses? 816 right now, 55KRC,
• 10:59
  Speaker 2: the talk station.
• 11:00
  Speaker 1: 55KRC. Election Night Station.
• 11:06
  Speaker 2: It is 820 on a Monday. We're doing that money,
• 11:07
  Speaker 2: money thing with Brian James from Wallet Financial. Of course,
• 11:10
  Speaker 2: the Federal Open Market Committee, which Ed Finke used to
• 11:15
  Speaker 2: call the Federal Open Mouth Committee, met in late October
• 11:18
  Speaker 2: and voted 10 to 2 to keep the benchmark rate
• 11:20
  Speaker 2: steady at 3.75 to 4. What are they going to
• 11:23
  Speaker 2: do next, Brian? Because apparently rumor has it we're looking
• 11:26
  Speaker 2: for at least a.
• 11:27
  Speaker 1: 25 increase.
• 11:28
  Speaker 2: And where are you on this one, Brian James?
• 11:33
  Speaker 1: Well, yeah.
• 11:33
  Speaker 3: So, yeah, as expected last week, like I said, the
• 11:36
  Speaker 3: Federal Reserve left rates at 375 to 4 percent last week.
• 11:39
  Speaker 3: But there were two members that dissented in favor of
• 11:42
  Speaker 3: a hike. So there is some division among the committee
• 11:44
  Speaker 3: about how much tightening we actually need to bring down inflation.
• 11:48
  Speaker 3: You know, obviously, we have an election this week and
• 11:51
  Speaker 3: we tend to prefer to keep things super quiet around elections,
• 11:55
  Speaker 3: the politicians that be. And so there's an understandable suspicion there.
• 12:00
  Speaker 3: So maybe the Fed is sitting on its hands until
• 12:01
  Speaker 3: the voting is over. Then we get the rate hikes.
• 12:04
  Speaker 3: But history says it's a little more complicated than that.
• 12:06
  Speaker 3: So historically speaking, the Fed has raised them before elections,
• 12:10
  Speaker 3: raised them right after, cut them on both sides of
• 12:12
  Speaker 3: Election Day. And most recently in 2022, where we had
• 12:16
  Speaker 3: a significant hike within.
• 12:18
  Speaker 1: About a week of the actual election.
• 12:20
  Speaker 3: Now, that was obviously a pretty crazy period with regard
• 12:22
  Speaker 3: to inflation and all that. And there just was no choice.
• 12:25
  Speaker 3: the inflationary pressures that we were suffering through as a
• 12:29
  Speaker 3: result of the COVID pandemic forced the hand and made
• 12:33
  Speaker 3: the election a little bit less impossible.
• 12:34
  Speaker 2: Well, that was all the money that got thrown into
• 12:36
  Speaker 2: the economy through the various paycheck protection loans and the
• 12:39
  Speaker 2: Inflation Reduction Act money and all that. I mean, that's
• 12:42
  Speaker 2: what caused the inflation.
• 12:44
  Speaker 1: Oh, over liquidity, for sure. But that forced the– think
• 12:47
  Speaker 1: of it this way.
• 12:49
  Speaker 3: The powers that be, whoever is in office– generally don't
• 12:52
  Speaker 3: want the headline that, hey, we have to hike by
• 12:55
  Speaker 3: three quarters of a point.
• 12:57
  Speaker 1: That was a big one, too.
• 12:58
  Speaker 3: Normally, we like to tap the brakes and tap the gas,
• 13:00
  Speaker 3: but that was a really big one right before the election. Now,
• 13:03
  Speaker 3: that was such a chaotic year. I don't think it
• 13:05
  Speaker 3: had the loud impact that the concern was because by
• 13:08
  Speaker 3: this point, the market was down. Matter of fact, the
• 13:10
  Speaker 3: market bottomed right before the election, right around Halloween of
• 13:14
  Speaker 3: 22 was the market bottom.
• 13:15
  Speaker 1: And so people were grumpy anyway.
• 13:17
  Speaker 3: And that headline kind of just faded into the woodwork
• 13:20
  Speaker 3: of everything else we had to be grumpy about. But
• 13:22
  Speaker 3: the incumbents never want to hear a rate hike right
• 13:24
  Speaker 3: before people are about to go hit the ballot box.
• 13:26
  Speaker 1: Without question.
• 13:27
  Speaker 2: But where is inflation now that would justify an increase
• 13:30
  Speaker 2: after the election, which is what's expected?
• 13:33
  Speaker 3: Yeah, so corporate earnings are looking good, ultimately following the economy.
• 13:38
  Speaker 3: And inflation is still a problem. It has kind of
• 13:41
  Speaker 3: basically held steady. So the status quo is probably that
• 13:47
  Speaker 3: we need to be prepared for more rate hikes because
• 13:49
  Speaker 3: that is simply the only way to slow things down.
• 13:53
  Speaker 3: Chair Warsh spent a bunch of his press conference recently
• 13:56
  Speaker 3: discussing the overall financial conditions and saying that things have
• 14:00
  Speaker 3: indeed tightened since the last meeting.
• 14:02
  Speaker 1: And these weren't one sided comments either. Right.
• 14:05
  Speaker 3: So he also reiterated inflation is too high. The Fed
• 14:08
  Speaker 3: is focused on bringing it down to its two percent target,
• 14:10
  Speaker 3: which that's that's.
• 14:11
  Speaker 1: We hear that all the time.
• 14:12
  Speaker 3: That is basically the primary role of the Fed. We
• 14:15
  Speaker 3: want two percent and we want it yesterday. And how
• 14:17
  Speaker 3: are we going to get there? So as for how
• 14:19
  Speaker 3: the markets reacted to it, pretty much neutral. The odds
• 14:23
  Speaker 3: of December hike are around 85 to 90 percent. before
• 14:26
  Speaker 3: and after the meeting. So in other words, to answer
• 14:28
  Speaker 3: your question, yeah, we're probably looking at more rate hikes
• 14:31
  Speaker 3: sooner rather than later. And the likelihood of that did
• 14:33
  Speaker 3: not change because of the Fed meeting.
• 14:36
  Speaker 2: Well, what needs specifically to be slowed down? If you
• 14:38
  Speaker 2: listen to the gloom and doom reporting that's out there
• 14:41
  Speaker 2: all over the place, oh, my God, price of gas. Oh,
• 14:43
  Speaker 2: my God, this is too expensive.
• 14:45
  Speaker 1: Oh, my God.
• 14:46
  Speaker 2: Well, I mean, I would think that people are already
• 14:48
  Speaker 2: in belt tightening mode. So where's this driver coming from?
• 14:51
  Speaker 2: What needs to be slowed down?
• 14:54
  Speaker 3: Well, just the overall– that's the hard part, Brian, isn't it?
• 14:58
  Speaker 3: I mean, because it is fairly widespread. It's not located
• 15:02
  Speaker 3: in just one or two areas. When it comes out
• 15:06
  Speaker 3: of the energy sector, that affects everything because it costs
• 15:09
  Speaker 3: energy to move stuff across the country. Therefore, you can
• 15:13
  Speaker 3: apply that to absolutely every industry out there as opposed
• 15:16
  Speaker 3: to we can't have situations where, for example, housing runs
• 15:19
  Speaker 3: amok and there's nothing we can do about that.
• 15:20
  Speaker 1: We had that.
• 15:22
  Speaker 3: In 2006, 2007, inflation was largely under control with the
• 15:26
  Speaker 3: exception of housing prices. And then there have been other
• 15:29
  Speaker 3: bubbles since then where it's localized. But this time when
• 15:31
  Speaker 3: it's focused on energy, then it is fairly widespread and
• 15:35
  Speaker 3: we need everything to cool down a bit.
• 15:37
  Speaker 1: And that starts with the oil industry. All right.
• 15:40
  Speaker 2: Well, real quick here for you, Park Company, on this
• 15:42
  Speaker 2: topic and then move over to the post-election economy and
• 15:45
  Speaker 2: general ideas about that. How would a rate hike impact
• 15:49
  Speaker 2: in terms of mortgages, credit cards, and perhaps savings accounts?
• 15:51
  Speaker 2: It's going to be notched up, aren't they?
• 15:54
  Speaker 1: Yeah.
• 15:55
  Speaker 3: So the silver lining to this, if there is one,
• 15:57
  Speaker 3: I'll start with the last thing you said there, which
• 15:59
  Speaker 3: is you finally can get a respectable amount of interest
• 16:02
  Speaker 3: off of your your depository accounts, and treasury bonds. And
• 16:06
  Speaker 3: I bonds, remember the ones that are based off inflation,
• 16:09
  Speaker 3: they're not the 9% that we fell in love with
• 16:11
  Speaker 3: four or five years ago, but they're sneaking up around 5.5%.
• 16:15
  Speaker 3: So if that's something that floats your boat, then.
• 16:18
  Speaker 1: There are good opportunities there.
• 16:19
  Speaker 3: On the other side, if you are somebody who bought
• 16:22
  Speaker 3: a house with an adjustable rate mortgage four years ago
• 16:25
  Speaker 3: or so, then you better be watching that calendar because
• 16:28
  Speaker 3: you're going to, and starting to budget for an increase
• 16:31
  Speaker 3: in your mortgage payment.
• 16:33
  Speaker 1: So that can be a tough challenge if you wound
• 16:36
  Speaker 1: up staying put.
• 16:37
  Speaker 3: But make sure you can see what's coming. I wouldn't
• 16:40
  Speaker 3: worry so much if you have a credit card balance.
• 16:42
  Speaker 3: I wouldn't worry so much about the interest rate. You're
• 16:45
  Speaker 3: already paying a ridiculous amount of interest. If it goes
• 16:49
  Speaker 3: to 32, the problem is still the same. Yeah, and
• 16:51
  Speaker 3: at some point, somebody's going to declare it's usurious. Don't
• 16:53
  Speaker 3: go away.
• 16:54
  Speaker 2: We're going to get his tea leaf reading, key economic
• 16:57
  Speaker 2: scenarios and forecasts post-election.
• 16:59
  Speaker 1: Talk stations. It's 8.30 here at 55KRCD Talk Station.
• 17:05
  Speaker 2: Monday, Monday is Brian James on the line, as he
• 17:07
  Speaker 2: is every Monday, for a few segments here talking about things.
• 17:09
  Speaker 2: And now, forecasting the future. Brian James, I joked around
• 17:13
  Speaker 2: about Brazil earlier. Obviously, not a great market day after
• 17:16
  Speaker 2: that election. And one might say, well, listen, the Libs
• 17:18
  Speaker 2: won in Brazil, and therefore, if they win here, the
• 17:23
  Speaker 2: market will crash. It's a little bit more complicated than that,
• 17:25
  Speaker 2: isn't it, Brian James? What do you expect?
• 17:28
  Speaker 1: Oh, just a little bit.
• 17:29
  Speaker 3: Let's go for some big long-term historical perspective here. The
• 17:34
  Speaker 3: market does not care who's sitting on the throne, whether
• 17:38
  Speaker 3: that's the top throne in the president's office or Congress
• 17:42
  Speaker 3: or so forth. The market really just cares about whether
• 17:45
  Speaker 3: companies can make money or not. And you can go
• 17:48
  Speaker 3: all the way back through history and compare Democratic versus
• 17:51
  Speaker 3: Republican regimes, and all of them are generally positive throughout
• 17:54
  Speaker 3: the terms of presidential elections and congressional because the market
• 17:58
  Speaker 3: goes up, not down. I do have people who occasionally say,
• 18:00
  Speaker 3: I lost so much money when Obama was elected, and
• 18:03
  Speaker 3: I have to look at what they're invested in because
• 18:05
  Speaker 3: the market went up for that entire eight-year period as
• 18:08
  Speaker 3: it did for the most part of the prior eight
• 18:11
  Speaker 3: years and so forth. So there is no knee-jerk reaction that.
• 18:18
  Speaker 1: Makes any sense.
• 18:18
  Speaker 3: So the Americans are going to wake up Wednesday with
• 18:20
  Speaker 3: the same mortgage payments, same grocery prices, same interest rate
• 18:23
  Speaker 3: in your credit cards.
• 18:24
  Speaker 1: Nothing is really going to change. And so the question
• 18:27
  Speaker 1: is really, can the economy.
• 18:28
  Speaker 3: Keep expanding while inflation comes down, or does bringing inflation
• 18:31
  Speaker 3: under control require another squeeze on borrowers and businesses? But
• 18:35
  Speaker 3: that said, nothing is going to change the day after
• 18:37
  Speaker 3: you get out of bed from the ballot book.
• 18:38
  Speaker 2: Well, and if you look legislatively, nothing's going to change
• 18:42
  Speaker 2: for the next couple of years legislatively because I don't
• 18:44
  Speaker 2: care if the Dems get the House and the Senate
• 18:47
  Speaker 2: while they can mess around with the filibuster in the Senate.
• 18:51
  Speaker 2: President Trump is going to continue to be President Trump,
• 18:54
  Speaker 2: and he's already promised to wield his veto pen liberally.
• 18:58
  Speaker 2: So that means the laws aren't going to change, presumably,
• 19:01
  Speaker 2: with the exception of maybe executive orders.
• 19:03
  Speaker 1: Right.
• 19:04
  Speaker 3: So so gridlock gridlock can be actually good because a
• 19:06
  Speaker 3: lot of times the market gets worried about what potentially
• 19:09
  Speaker 3: the government could do to mess up a good thing.
• 19:11
  Speaker 3: And yes, as when he said he was going to
• 19:13
  Speaker 3: become Mr. Vito, some out there breathe a sigh of
• 19:16
  Speaker 3: relief just to say that, OK, that means for good,
• 19:18
  Speaker 3: bad or indifferent, at least nothing major is going to change.
• 19:22
  Speaker 3: And maybe we just go get back to some good
• 19:24
  Speaker 3: old fashioned gridlock. And I don't think that's a bad thing, right?
• 19:29
  Speaker 3: There's been an enormous amount of change for the last
• 19:31
  Speaker 3: two years. Maybe we should take a break, let the
• 19:33
  Speaker 3: dust settle on some things, and let things kind of
• 19:35
  Speaker 3: get back to whatever normal is.
• 19:37
  Speaker 1: I don't even like that I said that. I'm not
• 19:39
  Speaker 1: sure what normal is anymore.
• 19:40
  Speaker 2: Because you know it's going to say, we have a
• 19:41
  Speaker 2: spending problem in this country, and with gridlock, it's going
• 19:44
  Speaker 2: to continue spending at the rate we currently are at.
• 19:48
  Speaker 2: I think we can pretty much expect that because that's
• 19:51
  Speaker 2: the way it's been now for decades and decades.
• 19:54
  Speaker 1: Absolutely. It's funny you mention that. Exactly.
• 19:58
  Speaker 3: And that's coming from all corners. That even comes from
• 20:00
  Speaker 3: the consumer. So September consumer spending was up a half
• 20:03
  Speaker 3: percent while personal income rose 0.2 percent. One number is
• 20:08
  Speaker 3: bigger than the other. We're spending more, at least for
• 20:10
  Speaker 3: the month of September. We were in a phase where
• 20:11
  Speaker 3: we're spending more than we're bringing in. So that is
• 20:14
  Speaker 3: overspending is not just a governmental problem. It is a
• 20:17
  Speaker 3: societal problem that rears its ugly head every now and then.
• 20:20
  Speaker 1: Yeah.
• 20:20
  Speaker 2: It's a societal problem that our government has taught us
• 20:23
  Speaker 2: is okay, which is crazy because household don't have printing
• 20:26
  Speaker 2: presses and that's the huge difference between government and the
• 20:29
  Speaker 2: household incomes.
• 20:31
  Speaker 1: Uh, yeah, they do.
• 20:32
  Speaker 3: Well, they do in a sense of we stuff our,
• 20:34
  Speaker 3: we stuff their mailboxes full of credit card applications. That's
• 20:36
  Speaker 3: not unlike a printing press, just creating money that didn't
• 20:39
  Speaker 3: exist yesterday.
• 20:40
  Speaker 1: All right.
• 20:42
  Speaker 2: Brian James, always financial. Appreciate your sound advice. And, uh,
• 20:46
  Speaker 2: Of course, we'll do this again next Monday. We'll see
• 20:48
  Speaker 2: how the market actually reacted, and hopefully things will remain calm.
• 20:53
  Speaker 2: That's all we can hope for, Brian James, is something calm.
• 20:55
  Speaker 2: Financial planner is a great idea to help you navigate
• 20:58
  Speaker 2: these challenges and keep you out of hot water and
• 21:00
  Speaker 2: keep you from doing stupid things.
• 21:02
  Speaker 1: Right, Brian James?
• 21:04
  Speaker 3: That is very well put, and I look forward to
• 21:06
  Speaker 3: picking up the post-election pieces with you next Monday.