Latest / The Financial Exchange Show / Markets Sell Off, Oil Jumps to $115, and Why Earnings Won’t Matter

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Markets Sell Off, Oil Jumps to $115, and Why Earnings Won’t Matter · The Financial Exchange Show

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• 1:03
  Speaker 1: This is the Financial Exchange with Mike Armstrong and faw Lane.
• 1:10
  Speaker 2: Good Martin, Welcome back to the Financial Exchange. It's Mike,
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  Speaker 2: Paul and Tucker with you on a Tuesday here where
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  Speaker 2: markets are selling off pretty substantially in early trading so far.
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  Speaker 2: We'll see where things go. We've got the S and
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  Speaker 2: P off seventy five points, a little more than one percent,
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  Speaker 2: and as that closing in on two percent to the downside,
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  Speaker 2: off one point seven percent now in the Dow Jones
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  Speaker 2: Industrial average off four hundred and thirty eight points, or
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  Speaker 2: nine tenths of a percent. That's roughly double where we
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  Speaker 2: started the day. In equity markets, we've got oil prices
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  Speaker 2: up three percent on the West Texas crewed benchmark to
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  Speaker 2: one hundred and fifteen dollars and ninety two cents, bond
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  Speaker 2: selling off yields moving up four point three eight percent
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  Speaker 2: on the ten year, and so translating into prices that
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  Speaker 2: all of us actually pay on a regular basis. To
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  Speaker 2: make it make sense, let's take a look at the
• 2:05
  Speaker 2: national average for gasoline as well as the thirty year
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  Speaker 2: fixed rate mortgage. Taking a look at the national average
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  Speaker 2: on gas, we've got it sitting at four dollars fourteen
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  Speaker 2: cents a gallon slightly below that in Maine, New Hampshire, Massachusetts,
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  Speaker 2: and Rhode Island, slightly above that in Connecticut and Vermont.
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  Speaker 3: And we have got the thirty year fixed rate mortgage now.
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  Speaker 2: Sitting today anyway at six point four sorry yesterday at
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  Speaker 2: six point four to three percent. As reminder, that's after
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  Speaker 2: reaching a low of about five point nine to nine
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  Speaker 2: percent in the week leading up to the.
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  Speaker 3: Events the war in Iran.
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  Speaker 2: So we've got about a half percent jump in that
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  Speaker 2: thirty year mortgage rate, which frankly just brings us to
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  Speaker 2: almost exactly where we were last Springs. That's we were
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  Speaker 2: at six point six percent a year ago. We're at
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  Speaker 2: six four to three, So not a substantial difference, it's there,
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  Speaker 2: and you know, all shorts of questions as to how
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  Speaker 2: much inventories can grow under that environment. I do just
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  Speaker 2: have to tease California for a minute here, where they've
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  Speaker 2: got the state average for gas prices in California sitting
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  Speaker 2: now at five dollars and ninety three cents per gallon there,
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  Speaker 2: So I.
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  Speaker 4: Would have guessed you even hire that. I think some
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  Speaker 4: areas it's like six fifty or seven bucks.
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  Speaker 3: Yeah, good times.
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  Speaker 2: Enjoy as we head into April. We're heading into earning
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  Speaker 2: season here. We will kick things off in earnest two
• 3:30
  Speaker 2: weeks from now. But we do have a few you know,
• 3:33
  Speaker 2: if you're really interested in Paul's blue jeans that he's
• 3:36
  Speaker 2: wearing today, you've got Levi Strauss closing after the bell.
• 3:40
  Speaker 2: I think he's wearing khakis actually, but that's neither here
• 3:42
  Speaker 2: nor there. Delta Airlines going tomorrow morning. That'll be interesting
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  Speaker 2: to hear, just you know how they are. I know
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  Speaker 2: they are raising prices on baggage fees and other services,
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  Speaker 2: So how they are reacting to the increase in jet
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  Speaker 2: fuel prices, how much they're hedged against that potential outcome,
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  Speaker 2: and what else they're seeing in the space. Next week,
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  Speaker 2: you kick things off with bank earnings, so number of
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  Speaker 2: banks reporting, and again very difficult to tell what any
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  Speaker 2: of those banks actually specify or signify for the larger economy.
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  Speaker 2: And then the week of the twentieth is when things
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  Speaker 2: really kick off. You've got ge raytheon United Health. We've
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  Speaker 2: got let's see here, Tesla I believe reports that week,
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  Speaker 2: as well as Google maybe yeah, Google and Intel reporting
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  Speaker 2: that week as well. So kicking off in earnest over
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  Speaker 2: the course of the next few weeks.
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  Speaker 3: I guess the question is what.
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  Speaker 2: Are we looking for out of these earnings, because quite frankly,
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  Speaker 2: company profits for the last five weeks haven't mattered at all,
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  Speaker 2: or any insinuation about what their profits are going to
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  Speaker 2: be has not driven markets at all.
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  Speaker 3: I suppose a story here or there, like the.
• 4:48
  Speaker 2: Medicare reimbursement one today, but by and large, the story
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  Speaker 2: of AI and how its development is going to drive
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  Speaker 2: the market forward has taken a back seat of the
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  Speaker 2: course of the last five weeks, as it should.
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  Speaker 3: That's absolutely true.
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  Speaker 4: I don't think that the earning season is going to
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  Speaker 4: be a huge catalyst for the market in one direction
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  Speaker 4: or another. The frustration that I have with this piece
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  Speaker 4: in Barrens is that the case that it lines out
• 5:13
  Speaker 4: lays out is that the earnings numbers are going to
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  Speaker 4: see significant profitability growth from where they were last year.
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  Speaker 4: And then the caveat they throw in in addition is
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  Speaker 4: that the market has seen a bit of a pullback
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  Speaker 4: at the same time, and as we covered earlier in
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  Speaker 4: the program, six exactly break and we were heading into
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  Speaker 4: this year. If you use forward price to earnings ratio
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  Speaker 4: a way to sort of gauge, what is the price
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  Speaker 4: of the market relative to what the companies underneath it
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  Speaker 4: are earning. We were at significant highs heading into this year.
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  Speaker 4: So just because we've seen a very small decline quarter
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  Speaker 4: to date or year to date and perhaps some earnings growth,
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  Speaker 4: it is not enough to reset those valuations to more
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  Speaker 4: favorable lovers so that I want to shove to a
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  Speaker 4: side for a moment. I just don't think that that
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  Speaker 4: is really a significant Sorry. The second part is a
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  Speaker 4: lot of this piece goes into the outsize impact that
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  Speaker 4: the technology sector has on earnings growth for the S
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  Speaker 4: and P five hundred. If you look at just the
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  Speaker 4: tech sector in general, it is responsible for about thirty
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  Speaker 4: percent of the projected S and P five hundred earnings
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  Speaker 4: growth that we are to see. And those companies are
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  Speaker 4: going to be heavily scrutinized from a market perspective because
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  Speaker 4: they're spending a whole lot of money to the point
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  Speaker 4: where they're actually decreasing some of their profitability from what
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  Speaker 4: they've reported previously. So I just don't think that either
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  Speaker 4: is going to be some huge sort of way that
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  Speaker 4: it ignites the market when we see the earnings report
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  Speaker 4: come out from Nvidia and the likes of some of
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  Speaker 4: these other companies.
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  Speaker 1: Yeah.
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  Speaker 2: Again, I think the interesting insights here might be, you know,
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  Speaker 2: questions that get asked about components coming from Southeast Asia.
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  Speaker 2: Are there any conversations with suppliers given the war in
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  Speaker 2: Iran that could.
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  Speaker 3: Disrupt things there?
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  Speaker 2: So not that there's nothing interesting happening here, but I
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  Speaker 2: think it is going to remain incredibly difficult to distract
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  Speaker 2: from the overall story of supply chain disruptions, higher oil
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  Speaker 2: prices and what it means for the economy as a whole.
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  Speaker 2: And I'm not really sure how I, as an investor
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  Speaker 2: should react if, for example, Meta or Alphabet say yeah,
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  Speaker 2: you know, if the war lasts another you know, six weeks,
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  Speaker 2: then we could see supply chain disruptions for data center
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  Speaker 2: center buildouts. Like again, I'm then just thrown back into
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  Speaker 2: the same loop that I've been in over the last
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  Speaker 2: five weeks, which is when does traffic start.
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  Speaker 3: Flowing through the straight up horror moves.
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  Speaker 2: One piece that I will acknowledge has changed a little
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  Speaker 2: bit is some of those major tech names that are
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  Speaker 2: out there, and Video and Microsoft included, their their own
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  Speaker 2: evaluations have changed. I mean, Microsoft stock is.
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  Speaker 4: For the year.
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  Speaker 2: I think in video likewise down from their peak from
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  Speaker 2: the fall of last year. Let's see Microsoft twenty two
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  Speaker 2: percent year to date and flat for the year. So
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  Speaker 2: I think there is an argument that, hey, these companies
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  Speaker 2: have become a little bit cheaper, and they are the
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  Speaker 2: largest companies out there, AI space or not, these are
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  Speaker 2: the biggest companies in the world. But is anything that
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  Speaker 2: they're going to say in that earnings call going to
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  Speaker 2: move the needle for them substantially? My guess would be
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  Speaker 2: likely not. I don't think there's a whole lot of
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  Speaker 2: new surprise built into this stuff right now. But we
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  Speaker 2: will see again really kicking off in earnest two weeks
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  Speaker 2: from now. But bank earnings coming next week, and I'm
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  Speaker 2: sure they'll have a lot to say about the state
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  Speaker 2: of the economy, of markets and what they are seeing
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  Speaker 2: from a volatility standpoint. Given the events in Iran. A
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  Speaker 2: number of cities and states coming up with solutions to
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  Speaker 2: what they view as an AI problem, And the AI
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  Speaker 2: problem that they are identifying is that massive demand for land,
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  Speaker 2: energy and water is coming to their local area and
• 9:03
  Speaker 2: they're not sure what sort of impact it's going to have,
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  Speaker 2: but they're worried about complaints from their citizens, and so
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  Speaker 2: we cover the story about Maine passing what could be
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  Speaker 2: the first in the country law suspending new AI data
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  Speaker 2: center construction for a period of time I think it
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  Speaker 2: was through end of twenty twenty seven while they assess
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  Speaker 2: the potential impact. But what I wasn't aware of is
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  Speaker 2: that a number of states either have already voted on
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  Speaker 2: these and had them.
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  Speaker 3: Rejected or are further considering them.
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  Speaker 2: And what you oftentimes think of as hey, really restrictive
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  Speaker 2: policy maybe belongs to one party and not the other,
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  Speaker 2: seems to be navigating party lines and one of those
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  Speaker 2: things that people tend to agree on. Right now, you're
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  Speaker 2: seeing states like Georgia, what was the other one? Was
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  Speaker 2: it Idaho or Nebraska considering a ban on this stuff?
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  Speaker 3: And I don't know.
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  Speaker 2: It seems to me that it's building to a point
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  Speaker 2: where typically when you talk about a massive new investment
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  Speaker 2: on the part of a major company, think about Amazon
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  Speaker 2: HQ two. Right there was this bidding process where every
• 10:09
  Speaker 2: state in the city in the country was submitting plans
• 10:12
  Speaker 2: for how much we're going to give you off in
• 10:13
  Speaker 2: taxes to attract your business. The exact opposite things happening here,
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  Speaker 2: which I find interesting. They are different, but in a
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  Speaker 2: lot of you know, in a lot of ways, people
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  Speaker 2: share the same concerns.
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  Speaker 3: Right.
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  Speaker 2: I don't want the traffic, I don't want the noise,
• 10:26
  Speaker 2: I don't want all of these other downstream effects. What
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  Speaker 2: doesn't exist for the Amazon warehouses or the Amazon headquarters is.
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  Speaker 3: The data centers do not employ a lot of people permanently.
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  Speaker 3: They do not. The Amazon headquarters certainly would not be
• 10:41
  Speaker 3: a drain on the electricity grid or that's what water.
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  Speaker 4: That's what it comes down to is pricing on the
• 10:47
  Speaker 4: utility system.
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  Speaker 2: Which is just fascinating because I don't know what these
• 10:52
  Speaker 2: companies are going to need to offer up, if anything,
• 10:54
  Speaker 2: in order to get these things built. Or my likely
• 10:59
  Speaker 2: conclusion is that there are plenty of places to build
• 11:01
  Speaker 2: them that are not going to build in these restrictions,
• 11:03
  Speaker 2: and local municipalities will be more than willing to provide
• 11:06
  Speaker 2: some tax breaks to attract even temporary help, which again
• 11:11
  Speaker 2: might be short sighted, you know, but you can certainly
• 11:14
  Speaker 2: imagine a city saying, hey, budget's a mess.
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  Speaker 3: If this excuse me.
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  Speaker 2: Better, If this big, you know, giant tech company comes
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  Speaker 2: and builds something here, we might not have a permanent
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  Speaker 2: fix to our problems, but we'll certainly have a number
• 11:31
  Speaker 2: of construction workers paying local taxes, renting out properties, and
• 11:36
  Speaker 2: generally boosting our economy, even if it's short term. So
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  Speaker 2: I'll be interested to see how this develops, because yeah,
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  Speaker 2: number of states are pushing back, how many of them
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  Speaker 2: will actually pass laws, and will these data centers actually
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  Speaker 2: be able to construct it in the way that the
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  Speaker 2: industry wants.
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  Speaker 4: Yeah, and the concerning thing here from a broader perspective,
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  Speaker 4: and we talked about this a little bit before when
• 11:54
  Speaker 4: this data centers story came up, is you had kind
• 11:58
  Speaker 4: of led into the article saying that they've found a solution. Well,
• 12:01
  Speaker 4: the solution has been just to pause everything, which I
• 12:04
  Speaker 4: don't know if it's going to be a good solution,
• 12:06
  Speaker 4: knowing how bureaucratic and slow some of these administrations can
• 12:10
  Speaker 4: be to move on things that if they do vote
• 12:12
  Speaker 4: these in and then pause, you just worry about how
• 12:15
  Speaker 4: quickly even if they find some sort of middle ground
• 12:19
  Speaker 4: that you get data center constructure back online in these states.
• 12:23
  Speaker 4: And ultimately, we're fighting a broader battle against China to
• 12:27
  Speaker 4: really try and perfect this technology of our official intelligence
• 12:31
  Speaker 4: as best as possible. So cutting off domestic supply because
• 12:36
  Speaker 4: of sort of red tape regulations, while I understand the
• 12:39
  Speaker 4: utility concerns for residents, is perhaps not the best for
• 12:44
  Speaker 4: the longer term.
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  Speaker 3: What is my real upside?
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  Speaker 2: Like, if I'm the state of Maine, what am I
• 12:47
  Speaker 2: missing out on by not allowing this? Like I get
• 12:50
  Speaker 2: what we might be missing out at as a country,
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  Speaker 2: But if I am a resident of Maine and I
• 12:56
  Speaker 2: am supporting this, and I'm trying to think about the
• 12:58
  Speaker 2: opposite side of it, I can see the downsides I
• 13:00
  Speaker 2: could have drain on, you know, a strain on the
• 13:02
  Speaker 2: electricity grid, on water resources. But what might by mean
• 13:06
  Speaker 2: what I'm what might I be missing out on by
• 13:09
  Speaker 2: banning it? And I struggle to come up with much.
• 13:11
  Speaker 2: You're like, am I gonna get a better party?
• 13:13
  Speaker 3: Tax break? Am I going to get better? AI? Because
• 13:16
  Speaker 3: the things in my backyard I don't believe. So, No,
• 13:19
  Speaker 3: I don't.
• 13:19
  Speaker 2: I don't believe so so I get where they're coming
• 13:21
  Speaker 2: from here, because I don't think these companies have made
• 13:24
  Speaker 2: a heck of an argument about why.
• 13:27
  Speaker 3: These should be in your backyard. And that's what they're
• 13:29
  Speaker 3: gonna need to come up with.
• 13:30
  Speaker 2: And you know, and you know, go down a pr
• 13:32
  Speaker 2: story here of yeah, this is the benefit to you
• 13:35
  Speaker 2: local resident if you let me build this massive data
• 13:38
  Speaker 2: center in your community. So otherwise I think they're going
• 13:40
  Speaker 2: to face more of this because I can't point to
• 13:42
  Speaker 2: a single upside for me personally.
• 13:44
  Speaker 4: No, I can't think of one either.
• 13:45
  Speaker 2: My claw will be faster, I doubt it. Quick break
• 13:49
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• 15:17
  Speaker 2: Some workers are opting to retire instead of taking on
• 15:21
  Speaker 2: artificial intelligence, and I can see the cases they outline. One,
• 15:25
  Speaker 2: for instance, a sixty eight year old healthcare worker who
• 15:29
  Speaker 2: was working was he healthcare Yeah, Dana Farber Cancer Institute, uh,
• 15:33
  Speaker 2: doing all sorts of planning, and was planning on retire
• 15:36
  Speaker 2: a couple of years from now, and just kind of
• 15:39
  Speaker 2: landed on, Hey, they're offering a buyout package for me
• 15:43
  Speaker 2: to retire early. I have no idea how to use
• 15:46
  Speaker 2: AI in my workplace. I know that they're going to
• 15:48
  Speaker 2: push me to do so. Now is a good time
• 15:50
  Speaker 2: to go. Which is a nice story for how a
• 15:53
  Speaker 2: sixty eight year old retires. It's also not how the
• 15:55
  Speaker 2: majority of us are going to face changes in the
• 15:57
  Speaker 2: workplace to have the choice to just walk yeah, like, hey,
• 16:01
  Speaker 2: here's a golden parachute for you to retire at sixty
• 16:03
  Speaker 2: eight years old. Guess what, That's not the experience of
• 16:06
  Speaker 2: most Americans, So I'm not sure it's relevant. I do
• 16:10
  Speaker 2: understand why somebody at some stage of life who is
• 16:13
  Speaker 2: financially well off would make that choice to say, hey,
• 16:16
  Speaker 2: you know, get out while the getting's good, And I
• 16:18
  Speaker 2: think that's a reasonable thing to consider. And if you're
• 16:21
  Speaker 2: facing a buyout package like oh yeah, I mean they're
• 16:24
  Speaker 2: gonna cover my health insurance for a few years and
• 16:26
  Speaker 2: I'm going to get a nice little severance payment.
• 16:28
  Speaker 3: Sure, But for the vast.
• 16:30
  Speaker 2: Majority of people, the way that this is likely to
• 16:33
  Speaker 2: come is in the form of a layoff in the
• 16:35
  Speaker 2: form of not being hired for a future role because
• 16:37
  Speaker 2: of a lack of skills, or you know, some form
• 16:40
  Speaker 2: of automation and robotics eventually replacing some of those roles,
• 16:43
  Speaker 2: which again goes back to one of those other two.
• 16:46
  Speaker 2: It's unbundantly clear to me that you have no choice
• 16:49
  Speaker 2: in pretty much every industry to start adapting and utilizing
• 16:54
  Speaker 2: AI in your business if you want to be hiable
• 16:57
  Speaker 2: in the future, and just like any other technolo, some
• 17:00
  Speaker 2: people are going to revolt against that.
• 17:01
  Speaker 4: Yeah, it's just like any other technology wave of the
• 17:04
  Speaker 4: past that you have older workers who perhaps are more
• 17:07
  Speaker 4: resistant to change in their day job. So as a
• 17:10
  Speaker 4: result of that, the idea of trying to learn a
• 17:13
  Speaker 4: whole new set of systems or procedures, and this could
• 17:16
  Speaker 4: be beyond technology, you often find older workers just reach
• 17:19
  Speaker 4: a breaking point and say, hey, I've done this long enough,
• 17:21
  Speaker 4: I'm positioned well enough for retirement. I'm just going to
• 17:23
  Speaker 4: step back and go. I remember my grandfather, years prior
• 17:27
  Speaker 4: when computers were adopted, you know, prevalently through his industry,
• 17:31
  Speaker 4: facing a similar sort of change, where he just said,
• 17:34
  Speaker 4: you know what, I'm not interested in learning that that
• 17:36
  Speaker 4: system and retired at that point in time.
• 17:39
  Speaker 2: So what I'll also say about this, I generally speaking,
• 17:44
  Speaker 2: I know there's exceptions to this, but most of you
• 17:46
  Speaker 2: listening don't owe your employer or anything.
• 17:50
  Speaker 3: I'm just going to throw that out there, like.
• 17:52
  Speaker 2: Vast majority of employers will not sweat one single bullet
• 17:56
  Speaker 2: about laying you off or replacing you with automation by
• 18:02
  Speaker 2: so I'm just you know, willing to throw it out
• 18:06
  Speaker 2: there that, like, the vast majority of people probably don't
• 18:10
  Speaker 2: owe their employer a whole lot and you know, make
• 18:13
  Speaker 2: them fire you, Like, if.
• 18:17
  Speaker 3: I'm in that position.
• 18:19
  Speaker 2: No, I'm not saying don't go to work, no, But
• 18:23
  Speaker 2: like if I'm in the position of being sixty eight
• 18:25
  Speaker 2: years old and being told, hey, I need to completely
• 18:28
  Speaker 2: revamp my skill set and learn artificial intelligence for my role,
• 18:32
  Speaker 2: I might have some problems with that, some reservations about that.
• 18:36
  Speaker 3: But I see far.
• 18:37
  Speaker 2: Too many people say, you know, and they've been so
• 18:40
  Speaker 2: good to me, I'm just gonna go and hang it
• 18:42
  Speaker 2: up and and go ahead and pull back from this
• 18:44
  Speaker 2: role now because I don't feel like I deserve it
• 18:46
  Speaker 2: or I feel like they've been too.
• 18:48
  Speaker 3: Good to me. And again, there are some people where
• 18:51
  Speaker 3: that's the case.
• 18:52
  Speaker 2: I'm trying to they just mail it in to get
• 18:54
  Speaker 2: first hell yeah again, Like I'm just going off of
• 18:59
  Speaker 2: what Oracle just did recently by emailing twenty thousand employees,
• 19:04
  Speaker 2: thirty thirty thousand employees like, hey see you later. You're
• 19:07
  Speaker 2: not coming to work anymore. No phone call, no meeting,
• 19:09
  Speaker 2: no announcement from the executives. Like the vast majority of
• 19:12
  Speaker 2: people in this country work for someone like that, and
• 19:15
  Speaker 2: so if.
• 19:15
  Speaker 3: You do, you don't owe them anything.
• 19:18
  Speaker 2: You don't if you're going to be laid off in
• 19:21
  Speaker 2: that fashion, then you do not owe them any sort
• 19:24
  Speaker 2: of special notice or respect, given how they treat the
• 19:28
  Speaker 2: vast majority of their people. Quick break Wall Street Watch
• 19:31
  Speaker 2: coming up.
• 19:31
  Speaker 6: Next, bringing the latest financial news straight to your radio.
• 19:45
  Speaker 1: Every day. It's the Financial Exchange on the Financial Exchange
• 19:49
  Speaker 1: Radio Network. Turn out full whoa Street Watch treking the
• 19:55
  Speaker 1: stocks FDATO in the headlines driving markets so far today
• 19:58
  Speaker 1: right here on the Financial Such to Exchange Radio and
• 20:01
  Speaker 1: net Well.
• 20:01
  Speaker 5: Markets are selling off as President Trump's eight pm deadline
• 20:04
  Speaker 5: for Arondo reopened. The straight of horror moves looms. As
• 20:08
  Speaker 5: of an hour ago, or Ran cut off direct communications
• 20:10
  Speaker 5: with the US over the threat, though talks with ceasefire
• 20:14
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• 20:19
  Speaker 5: a percent, SMP five hundred down over eight tenths of
• 20:22
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• 20:26
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• 20:32
  Speaker 5: six percent, and Oil jumping nearly four percent higher, trading
• 20:36
  Speaker 5: right around one hundred and sixteen dollars a barrel. Some
• 20:39
  Speaker 5: breaking news from Intel this hour, after the chip maker
• 20:42
  Speaker 5: announced it we'll partner with SpaceX and Tesla on Elon
• 20:46
  Speaker 5: Musk's terror Fab project, which aims to build specially designed
• 20:51
  Speaker 5: ships for the companies. Intel stock is up by three
• 20:54
  Speaker 5: percent on that news. Meanwhile, several healthcare and insurance stocks
• 20:58
  Speaker 5: are seeing gains after the Trump administration announced it would
• 21:01
  Speaker 5: raise twenty twenty seven Medicare advantage payments to insurers by
• 21:04
  Speaker 5: two point four to eight percent, marking a substantial improvement
• 21:08
  Speaker 5: from an earlier flat rate proposal. Jumana and CBS Health
• 21:13
  Speaker 5: are up by six percent, while United Health stock is
• 21:15
  Speaker 5: jumping eight percent. Hire and Bill Ackmans Perishing Square said
• 21:20
  Speaker 5: it had made an offer to buy Universal Music Group
• 21:23
  Speaker 5: and a deal that values the company at about sixty
• 21:27
  Speaker 5: billion dollars. Shares in the label behind Bad Bunny, Taylor,
• 21:30
  Speaker 5: Swift and the Beatles are up by twelve percent. I'm
• 21:34
  Speaker 5: Tucker Silva and that is Wall Street Watch. And in
• 21:37
  Speaker 5: the previous segment we asked you the trivia question, who
• 21:40
  Speaker 5: is Francis Ford Coppola's famous acting nephew. That would be
• 21:45
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• 21:52
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• 21:59
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• 22:00
  Speaker 2: Wall Street Journal has a piece today Paul about the
• 22:02
  Speaker 2: tax savings charity fund that wealthy people are buzzing about.
• 22:05
  Speaker 2: It's funny that they're buzzing about it because I just
• 22:06
  Speaker 2: looked it up. But they were created in the nineteen thirties.
• 22:09
  Speaker 2: So New York Community Trust established the first donor advised
• 22:13
  Speaker 2: fund in nineteen thirty one. They're formally recognizing the tax
• 22:17
  Speaker 2: code in nineteen sixty nine, and then gained more popularity
• 22:20
  Speaker 2: in the nineteen nineties with bigger sponsors. But this thing's
• 22:23
  Speaker 2: been around for most of the last hundred years, and
• 22:26
  Speaker 2: I agree it is starting to gain a little bit
• 22:28
  Speaker 2: more popularity out there. Talk to me about what a
• 22:31
  Speaker 2: donor advised fund actually allows people to accomplish, And I guess,
• 22:37
  Speaker 2: what if somebody need to know about one of these
• 22:39
  Speaker 2: things before they go, you know, set the course on it.
• 22:42
  Speaker 4: Well, So typically the benefit to it is usually you'll
• 22:46
  Speaker 4: have people who are looking at significant embedded capital gains
• 22:51
  Speaker 4: in a position that they may have purchased a highly
• 22:54
  Speaker 4: appreciated stocks. So, for example, perhaps you had boughten applestock
• 22:58
  Speaker 4: twenty five thirty years ago and sitting on a tremendous
• 23:01
  Speaker 4: amount of gains. If you were to sell the apple
• 23:04
  Speaker 4: stock yourself under the current ownership, you would have to
• 23:07
  Speaker 4: pay capital gains on those sales. If you were to
• 23:10
  Speaker 4: give some of those shares away to a charity, you'd
• 23:13
  Speaker 4: be eligible to offset. Now, again there's going to be
• 23:16
  Speaker 4: a lot of specifications here. If you're itemizing your taxes
• 23:20
  Speaker 4: how much money you make. Presumably, if you were itemizing
• 23:23
  Speaker 4: your deductions with your tax filing and you were making
• 23:27
  Speaker 4: a significant sum of money, you could use it to
• 23:30
  Speaker 4: offset some of your taxes. The reason that they've become
• 23:33
  Speaker 4: more in vogue is that they did institute a law
• 23:36
  Speaker 4: recently that's starting this year, charitable donations below a half
• 23:41
  Speaker 4: percent of adjusted growth income won't be deductible. So for
• 23:46
  Speaker 4: a person who makes a million bucks, if they say
• 23:48
  Speaker 4: they're going to give ten thousand dollars to charity over
• 23:51
  Speaker 4: the next four years, five thousand of the ten thousand
• 23:55
  Speaker 4: dollars that they were set to give away will no
• 23:58
  Speaker 4: longer be deductible. Again, this is for somebody who is
• 24:00
  Speaker 4: itemizing their task as not taking the standard deduction. So
• 24:05
  Speaker 4: by putting it into the donor advised fund, what you're
• 24:07
  Speaker 4: able to do is defray some of those capital gains
• 24:10
  Speaker 4: you might have realized by not selling the stock and
• 24:12
  Speaker 4: gifting away, and also investing it into a fund that
• 24:16
  Speaker 4: will disperse it out to qualified charitable organizations for you
• 24:20
  Speaker 4: rather than having to do it yourself.
• 24:21
  Speaker 2: So the piece that gets paved over all of this is,
• 24:25
  Speaker 2: in order to use one of these donor advice funds,
• 24:28
  Speaker 2: you are completely relinquishing control of the assets. Correct, And
• 24:31
  Speaker 2: that part gets a little bit confused. You are actually
• 24:33
  Speaker 2: donating it to a charity. The charity is usually run
• 24:36
  Speaker 2: by a major financial institution think Fidelity, Schwab, Vanguard as
• 24:40
  Speaker 2: an example here, and that charitable institution is turning back
• 24:46
  Speaker 2: to you, the donor, and saying, Okay, we're going to
• 24:49
  Speaker 2: allow you to tell us where to put that donation
• 24:51
  Speaker 2: money in the future. We're also going to let you
• 24:54
  Speaker 2: tell us generally how to invest it with some restrictions
• 24:58
  Speaker 2: and give you the big tax benefit it up front,
• 25:01
  Speaker 2: as Paul mentioned, and with these new limitations on how
• 25:04
  Speaker 2: much of a deduction is actually how much of a
• 25:07
  Speaker 2: gift is actually deductible. These have become more popular, so
• 25:11
  Speaker 2: you know, especially for instance, if you are in one
• 25:15
  Speaker 2: year selling a business, or selling a or selling a
• 25:18
  Speaker 2: home that has a lot of capital gains, this can
• 25:21
  Speaker 2: be a really good tool to effectively set yourself up
• 25:24
  Speaker 2: to make donations for the rest of your life but
• 25:27
  Speaker 2: get all the tax.
• 25:28
  Speaker 3: Benefits in one year.
• 25:29
  Speaker 2: That's kind of how I phrase it to people, because
• 25:32
  Speaker 2: it is pretty complicated. There are other tools too, though,
• 25:35
  Speaker 2: and the one now that these new rules are in place,
• 25:38
  Speaker 2: because the other thing that was implemented is if you're
• 25:41
  Speaker 2: in the very highest income tax bracket, which guess what,
• 25:43
  Speaker 2: if you're giving, you know, a quarter million dollars to
• 25:45
  Speaker 2: a donor advice fund, you might find yourself there. If
• 25:48
  Speaker 2: you're in that really high tax bracket, the charitable gift
• 25:51
  Speaker 2: deduction is now lower. It's at thirty five percent compared
• 25:54
  Speaker 2: to your ordinary income of thirty seven percent. So to me,
• 25:58
  Speaker 2: now the same on most tax beneficial way of taking
• 26:02
  Speaker 2: advantage of charitable donations is actually the qualified charitable distribution,
• 26:06
  Speaker 2: which comes out of a four oh one k or ira.
• 26:10
  Speaker 2: Was what I just said discernible at all.
• 26:13
  Speaker 3: Not to someone out in the industry.
• 26:14
  Speaker 2: It's very complicated. Here's the point that I would make.
• 26:19
  Speaker 2: Charitable giving is not part of every person's financial plan,
• 26:22
  Speaker 2: but if it is, if you're going to do it anyway,
• 26:25
  Speaker 2: my perspective, my personal perspective, would be I might as
• 26:28
  Speaker 2: well try and get the biggest tax benefit for it.
• 26:31
  Speaker 2: Will a charitable donation ever make more sense than holding
• 26:35
  Speaker 2: on to and investing the money for yourself. No, of
• 26:37
  Speaker 2: course not. That's not why people donate money to charity though.
• 26:40
  Speaker 2: But if you're going to make the donations, and if
• 26:43
  Speaker 2: you're going to support a cause that you believe in, in
• 26:46
  Speaker 2: my personal opinion, you want to get the biggest bang
• 26:48
  Speaker 2: for your buck out of it so that you can
• 26:49
  Speaker 2: afford to do more in the future. If you have
• 26:51
  Speaker 2: questions about how your plans to support charities in the
• 26:54
  Speaker 2: future have been changed over the last few years given
• 26:57
  Speaker 2: changes to the rules, or if you haven't heard of
• 26:59
  Speaker 2: these tools that have been out there for a long
• 27:01
  Speaker 2: time but are finally just getting some popularity, give the
• 27:04
  Speaker 2: folks at Armstrong Advisory Group a call. We're happy to
• 27:07
  Speaker 2: talk to you about how charitable giving can be a
• 27:10
  Speaker 2: part of your overall financial strategy and how to take
• 27:12
  Speaker 2: most advantage of it in the future. The numbers eight
• 27:15
  Speaker 2: hundred three to nine three for zero zero one. Again,
• 27:18
  Speaker 2: that's for the Armstrong Advisory Group. You can check us
• 27:20
  Speaker 2: out or book a time for us to call you
• 27:22
  Speaker 2: back at Armstrong Advisory dot com. But the phone number
• 27:25
  Speaker 2: again eight hundred three to nine three for zero zero one.
• 27:29
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 27:32
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 27:34
  Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
• 27:37
  Speaker 1: your own financial tax into state planning advisors before making
• 27:40
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 27:43
  Speaker 1: advisory services.
• 27:45
  Speaker 2: According to realtors, buyers in the first quarter of this
• 27:47
  Speaker 2: year are far more concerned about the economy and mortgage
• 27:50
  Speaker 2: rates than they are about home prices. Say they probably
• 27:53
  Speaker 2: could be concerned about all three because none of them
• 27:56
  Speaker 2: look like they're giving up any ground. But according to
• 27:58
  Speaker 2: a recent survey, this the NBC Housing Market Survey, it's
• 28:01
  Speaker 2: a national inquiry of real estate agents that are selected randomly.
• 28:05
  Speaker 3: Responses for the first quarter.
• 28:07
  Speaker 2: We're collected right just over the course of the last
• 28:10
  Speaker 2: few weeks and no surprise here. I think what most
• 28:12
  Speaker 2: realtors are experiencing is some buyer hesitancy. Would be my guess, hey,
• 28:19
  Speaker 2: am I still going to have a job?
• 28:21
  Speaker 3: Is you know?
• 28:21
  Speaker 2: Am I going to be able to afford a mortgage payment?
• 28:24
  Speaker 2: If my oil prices, my gas prices go through the roof?
• 28:28
  Speaker 2: What will I be able to afford on a six
• 28:30
  Speaker 2: and a half percent mortgage rate? And the one thing
• 28:34
  Speaker 2: that I feel like drives real estate decisions, especially your
• 28:38
  Speaker 2: own primary residence, more than anything is your concern for
• 28:42
  Speaker 2: buyer's remorse. I don't think it should drive it, but
• 28:46
  Speaker 2: in my experience when buying my own home, it was
• 28:49
  Speaker 2: filled with what if I pay too much? What if
• 28:51
  Speaker 2: my mortgage rate ends up dropping a week from now
• 28:54
  Speaker 2: when I could have gotten a lower rate. What if
• 28:56
  Speaker 2: I buy this place and there's more upkeep than I realize.
• 29:00
  Speaker 2: It's that idea that I might have buyer's remorse. And
• 29:03
  Speaker 2: the less certainty you have about something in the moment,
• 29:05
  Speaker 2: the more possibility for that buyer's remorse that can exist,
• 29:08
  Speaker 2: in my view, and.
• 29:08
  Speaker 4: So much easier just to delay the purchase. Given that
• 29:11
  Speaker 4: many people are sitting on mortgages in their existing homes
• 29:14
  Speaker 4: that are far lower interest rates now, So if you
• 29:16
  Speaker 4: have any sort of doubt or potential for remorse, and
• 29:20
  Speaker 4: you can lean back on this idea that hey, I'm
• 29:22
  Speaker 4: borrowing for a much lower interest rate than what I
• 29:25
  Speaker 4: would presumably be paying at this new home. It leads
• 29:28
  Speaker 4: to more indecision or more ability to kick the can
• 29:31
  Speaker 4: down the road. And that's really what we've seen in
• 29:33
  Speaker 4: a very stagnant housing market over the last few years.
• 29:36
  Speaker 2: It's funny at the national level, I don't really know
• 29:38
  Speaker 2: if this is a buyer or seller's market. Yeah, it
• 29:41
  Speaker 2: really is. In each little pocket. There's some areas that
• 29:45
  Speaker 2: might be a buyer's market. I think of Florida and Texas.
• 29:49
  Speaker 2: In Connecticut, it's pretty clearly a seller's market. But I
• 29:52
  Speaker 2: don't know what to tell somebody in New Hampshire, Hey,
• 29:55
  Speaker 2: is it a buyer or seller's market?
• 29:56
  Speaker 3: I'm not so sure. I don't have a good answer.
• 30:00
  Speaker 2: Prices are certainly up compared to five years ago, but
• 30:03
  Speaker 2: compared to a year ago, is it more of a
• 30:05
  Speaker 2: buyer seller's market?
• 30:07
  Speaker 3: Right now? I have a tough time telling, and right
• 30:10
  Speaker 3: now is when it matters.
• 30:12
  Speaker 4: So it seems like maybe New Hampshire had gotten some
• 30:15
  Speaker 4: overflow from Massachusetts exodus, but I think that's been overdone,
• 30:18
  Speaker 4: that sentiment out there. Ultimately, it comes down to the
• 30:21
  Speaker 4: five d's of housing that are nicely posted up in
• 30:24
  Speaker 4: our studio here. That really moves things along. Divorce, downsizing, diapers,
• 30:29
  Speaker 4: diamonds or death. That's Gosh and dodge.
• 30:34
  Speaker 2: The American Dodgeball Association of America. Let's take a quick
• 30:37
  Speaker 2: break when we come back a little bit. Stack Roulette
• 30:39
  Speaker 2: is next.
• 30:41
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• 30:44
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• 30:48
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• 30:58
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• 31:08
  Speaker 5: Financial Exchange is a proud partner of the Disabled American
• 31:12
  Speaker 5: Veterans Department of Massachusetts registered today for their series DAV
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• 31:46
  Speaker 3: Paul, what do you have for us? Sach Roulette.
• 31:48
  Speaker 4: The FCC may come in to rescue frustrated NFL fans, so.
• 31:53
  Speaker 3: Little bit of their NFL fans frustrated. They are there.
• 31:56
  Speaker 4: They are frustrated by the fact that typically with your
• 32:00
  Speaker 4: usual NFL coverage, all you needed at your disposal was CBS,
• 32:05
  Speaker 4: Fox and ESPN to get the majority of games. Since then,
• 32:09
  Speaker 4: with the emergence of streamers, there has become a much
• 32:12
  Speaker 4: more bifurcated way of watching football. For example, Thursday Night
• 32:17
  Speaker 4: Football is exclusive to Amazon Prime Video.
• 32:20
  Speaker 3: Wasn't there something exclusive in Netflix? This year?
• 32:21
  Speaker 4: Netflix had the Christmas games. Yeah, they're bringing those back.
• 32:26
  Speaker 4: You have a Sunday ticket, which is if you want
• 32:29
  Speaker 4: to watch out of market games. If you are a
• 32:33
  Speaker 4: Jaguars fan and live in the New England area, you'd
• 32:35
  Speaker 4: need Sunday ticket. That's through YouTube TV.
• 32:38
  Speaker 3: Didn't Peacock get one too?
• 32:39
  Speaker 4: Peacocks streams Sunday Night Football, so no one offs. Yeah,
• 32:45
  Speaker 4: one offs for Sunday Night Football and some other exclusive games.
• 32:48
  Speaker 4: I believe maybe the the opening game. Bottom line, you
• 32:52
  Speaker 4: need a lot of subscriptions to try and watch the NFL. Now,
• 32:56
  Speaker 4: many people wouldn't realize that the NFL actually has an
• 32:59
  Speaker 4: anti trusted exemption that was put in back in nineteen
• 33:02
  Speaker 4: sixty one. Where usually what used to happen was the
• 33:06
  Speaker 4: New York Giants used to negotiate their TV deals with
• 33:09
  Speaker 4: the New York metropolitan area and the Green bet Packers
• 33:12
  Speaker 4: would negotiate their TV rights with the Wisconsin Green Bay
• 33:15
  Speaker 4: area too, But back in the sixties, they combined together
• 33:18
  Speaker 4: to create one package where the NFL sells all of
• 33:21
  Speaker 4: the television rights of all of its teams. So it
• 33:23
  Speaker 4: helped prop up the smaller markets and the weaker market
• 33:26
  Speaker 4: and the stronger markets kind of meshed them all together
• 33:29
  Speaker 4: as one powerful package that is anti trust concerns of
• 33:32
  Speaker 4: just all these kind of cartel of teams coming together
• 33:35
  Speaker 4: to sell a television package. It did work tremendously for
• 33:39
  Speaker 4: viewers in that there was a uniform broadcast system where
• 33:42
  Speaker 4: basically the three major networks that were much more prevalent
• 33:45
  Speaker 4: back in the day, the CBS, the ABCS, and the
• 33:49
  Speaker 4: Foxes that was a fourth network. At a later point
• 33:51
  Speaker 4: in time, they televised all the games. It was a
• 33:53
  Speaker 4: standard experience for you watching your team in one area
• 33:56
  Speaker 4: of the country to me in another area of the country. Anyway,
• 34:00
  Speaker 4: that exemption that they have back in nineteen sixty one
• 34:03
  Speaker 4: now being put under a little bit of scrutiny by
• 34:05
  Speaker 4: this fact that it's not as easy for everyone to
• 34:08
  Speaker 4: get to the gains and have the free experience that
• 34:10
  Speaker 4: you would on major broadcast television. And so the FCC
• 34:14
  Speaker 4: is looking into whether or not the NFL is justified
• 34:18
  Speaker 4: holding this anti trust exemption by the way that they're
• 34:21
  Speaker 4: parsing on all the games. What could this mean, perhaps
• 34:25
  Speaker 4: some blowback on the NFL to really making these games
• 34:28
  Speaker 4: so out of reach for Christmas Day and some of
• 34:30
  Speaker 4: these other one offs that they've sold.
• 34:32
  Speaker 5: Now, I don't know if the FCC can do anything
• 34:35
  Speaker 5: with this, because you know, us being Patriots fans, when
• 34:39
  Speaker 5: there's a game on Prime Year's in a football they
• 34:43
  Speaker 5: broadcast that on one of the local cables.
• 34:46
  Speaker 4: That is the way they are covered. The NFL is
• 34:47
  Speaker 4: cover is that you are always taking care of within
• 34:50
  Speaker 4: your local market, so that even if Joe Schmo doesn't
• 34:53
  Speaker 4: have Netflix and the Patriots were to play on Christmas Day,
• 34:56
  Speaker 4: he's still going to see it on his channel four,
• 34:58
  Speaker 4: Channel five. I forget which one it is, so.
• 35:00
  Speaker 2: But here it would be my counterpoint, Tucker. Up until
• 35:03
  Speaker 2: two years ago, if I wanted to watch Thursday Night
• 35:05
  Speaker 2: football anywhere in the country, I could tun I could
• 35:08
  Speaker 2: tune my television even via antenna, to one of the
• 35:11
  Speaker 2: major outlets.
• 35:12
  Speaker 3: Today, I have to buy a specific.
• 35:14
  Speaker 2: Television that can stream and then download Amazon Prime and
• 35:18
  Speaker 2: pay them a monthly fee.
• 35:19
  Speaker 3: So I think I can.
• 35:19
  Speaker 5: Write if you're a Patriots fan, you don't have to
• 35:23
  Speaker 5: subscribe to Amazon true, but or whatever.
• 35:27
  Speaker 2: Again, if I'm just trying to prove consumer harm, Yeah,
• 35:32
  Speaker 2: like it was free.
• 35:33
  Speaker 3: Now it's being charged.
• 35:36
  Speaker 2: Seems seems justifiable. I think you can go after that.
• 35:39
  Speaker 2: I'm with you. If I'm a Patriots fan, I can
• 35:41
  Speaker 2: still watch it for free. But up to two years ago,
• 35:43
  Speaker 2: I was being provided something for free, and then the
• 35:46
  Speaker 2: NFL took it away.
• 35:47
  Speaker 5: Yeah sure, I mean the out of market stuff. If
• 35:49
  Speaker 5: you're just a general football fan, like, yeah, you're gonna
• 35:52
  Speaker 5: have to cough it up and pay for these streamers.
• 35:54
  Speaker 5: But if you're just a loyal Patriots fan, it'll be
• 35:57
  Speaker 5: available for you on cable.
• 35:58
  Speaker 4: The argument that could be made is that Congress would
• 36:01
  Speaker 4: somehow allow for a broadening of the local, the local
• 36:07
  Speaker 4: need to broadcast your your fan base to broadcast Patriots
• 36:12
  Speaker 4: games to you. They could broaden that out to more
• 36:14
  Speaker 4: than just the Patriots, that you'd be able to see
• 36:16
  Speaker 4: more of those Christmas games in one off.
• 36:18
  Speaker 3: What a good problem for the NFL to have.
• 36:20
  Speaker 2: The way that streamers the other sports just barely able
• 36:24
  Speaker 2: to find sponsors or anybody to watch their games or
• 36:27
  Speaker 2: fill the stadium in the NFL is like our sport
• 36:30
  Speaker 2: is so popular that we're going to be sued by
• 36:31
  Speaker 2: the Fed. We have we run the risk of being
• 36:33
  Speaker 2: sued by the federal government, oh one hundred.
• 36:35
  Speaker 4: I mean, if you look at the top one hundred
• 36:36
  Speaker 4: broadcasts from last year, they're like ninety some percent of
• 36:39
  Speaker 4: them in terms of live viewing. And they're looking to
• 36:41
  Speaker 4: renegotiate deals that they just made two years to go
• 36:44
  Speaker 4: to charge people more because see, some of these major
• 36:47
  Speaker 4: networks are life or death by not having the NFL.
• 36:51
  Speaker 4: If they were to lose them, they are so out
• 36:53
  Speaker 4: of lost.
• 36:54
  Speaker 5: Now, I will say, if you expand if you're talking
• 36:56
  Speaker 5: about the Boston teams, if you expand that outside of
• 36:58
  Speaker 5: the Patriots, and if there's a Bruins game on ESPN
• 37:01
  Speaker 5: Plus or Hulu whatever, or the Red Sox are on
• 37:07
  Speaker 5: Apple TV on a Friday, like sorry, I'm probably not
• 37:11
  Speaker 5: going to tune in for that one. Yeah, yeah, Yeah,
• 37:14
  Speaker 5: that's the community NFL has.
• 37:16
  Speaker 2: Yeah, the average tax refund is up three hundred and
• 37:20
  Speaker 2: fifty dollars compared to last year, which is good because
• 37:22
  Speaker 2: the average household spending on gas, if the national average
• 37:25
  Speaker 2: sits around here at four bucks, is going to be
• 37:28
  Speaker 2: about four hundred and fifty dollars increase.
• 37:30
  Speaker 3: So that is going to go to one place pretty quickly.
• 37:34
  Speaker 2: National average for monthly spending on fuel and twenty twenty
• 37:37
  Speaker 2: five was one hundred and seventy seven dollars per month,
• 37:40
  Speaker 2: so you know, with a twenty percent increase or.
• 37:42
  Speaker 3: So, it'll eat almost all that tax refund up.
• 37:45
  Speaker 2: Hopefully we see gas prices float back down, and that's
• 37:48
  Speaker 2: not actually the case, but all of those hopes for
• 37:50
  Speaker 2: those refunds being spent at retailers and other places seems
• 37:54
  Speaker 2: pretty far fetched now with these gas prices.
• 37:56
  Speaker 4: I would have guess a higher refund number.
• 37:59
  Speaker 2: As we close in on the noon hour, we've got
• 38:01
  Speaker 2: markets still in negative territory. Nasdaq leading the way down
• 38:04
  Speaker 2: two hundred and thirty seven points one point one percent,
• 38:07
  Speaker 2: SMP five hundred off three quarters percent, in the Dow
• 38:11
  Speaker 2: off eighty points eight tenths of a percent as we
• 38:13
  Speaker 2: close out the show ahead of the eight pm Eastern
• 38:16
  Speaker 2: time deadline.
• 38:17
  Speaker 3: More to come tomorrow on the financial exchange.
• 38:19
  Speaker 2: Stay tuned, folks, have a great rest your day,