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Oil, Markets & the Strait of Hormuz: How Long Can This Last? · The Financial Exchange Show

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  Speaker 2: Chuck, Mike and Ben with you today and kicking things off.
• 1:17
  Speaker 2: Brief conversation on the news overnight regarding Homeland Security DHS
• 1:23
  Speaker 2: getting a funding bill across the finish line in the Senate.
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  Speaker 3: It's been sent to the House for passage.
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  Speaker 2: There expectations that it'll pass today and be signed by
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  Speaker 2: the President later today. This comes after forty one days
• 1:37
  Speaker 2: of DHS not being funded, which is obviously led to
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  Speaker 2: some big lines and stuff like that at airports DS
• 1:45
  Speaker 2: TSA workers missing paychecks, a bunch of them quitting as
• 1:48
  Speaker 2: a result of that, and general messiness surrounding airport travel.
• 1:55
  Speaker 2: Ultimately not something that has any meaningful impact on the
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  Speaker 2: US economy in any way, shape or form, but good
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  Speaker 2: to see TSA workers finally able to get paid again.
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  Speaker 2: I know it's been you know, a hard month and
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  Speaker 2: a half for them, obviously, And if you have travel
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  Speaker 2: plans for the uh you know, upcoming weeks, it looks
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  Speaker 2: like the airport lines that have been making the rounds
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  Speaker 2: over the last week or two should be a thing
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  Speaker 2: of the past.
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  Speaker 4: One pretty short warner. It'll be less terrible, It'll be normal,
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  Speaker 4: flying terrible for your trip if you are flying at anything.
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  Speaker 3: Why does everyone think flying is terrible?
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  Speaker 4: I just you know, I missed the good old days
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  Speaker 4: in nineteen sixties when you know, I served the full
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  Speaker 4: steak dinner on my flight.
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  Speaker 2: Like I just I find the idea like people like
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  Speaker 2: glamorize like the nineteen sixties air travel, when really it
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  Speaker 2: was slow on a lot of propeller planes, had a
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  Speaker 2: decent amount of crashes, and really expensive was also like
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  Speaker 2: crazy expensive.
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  Speaker 3: And the cabin was filled with cigarette smoke. Yes, well
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  Speaker 3: that part was fun.
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  Speaker 2: So I just you know, I know everyone thinks it
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  Speaker 2: was better back in the day, but it probably wasn't. Actually,
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  Speaker 2: you know, I hate if it really was better back
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  Speaker 2: in the day, then it would still be better.
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  Speaker 3: Yeah.
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  Speaker 4: Interestingly, from what I've been reading, for whatever reason, Logan
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  Speaker 4: Airport largely escaped some of the worst issues with TSA.
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  Speaker 3: I don't know.
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  Speaker 4: Presumably wages are higher for TSA employees here in the
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  Speaker 4: Northeast than they are in other parts of the country,
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  Speaker 4: but nonetheless, the lines when you looked at the average
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  Speaker 4: ones across the country not nearly as bad. I mean,
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  Speaker 4: still bad at Logan, but not as bad as other
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  Speaker 4: parts of the country.
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  Speaker 3: Yeah. No, Houston was particularly bad.
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  Speaker 2: The New York airports weren't very good, and I don't
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  Speaker 2: really know what else. So you've got this done at
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  Speaker 2: this point. Also, just a quick follow on to this,
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  Speaker 2: there's a piece in the Wall Street Journal talking about
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  Speaker 2: how Clear, which is a company that runs like an
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  Speaker 2: expedited line through security. I don't know exactly how it works,
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  Speaker 2: to be honest, Like, yeah, it's biometric based.
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  Speaker 4: So you go up, you scan, I think it scans
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  Speaker 4: your face, maybe iris and and two hundred bucks a year,
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  Speaker 4: and you know, skips you right through the security line
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  Speaker 4: and you know, straight over to the TSA agent.
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  Speaker 3: And so unsurprisingly a bunch of people have signed up
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  Speaker 3: for it. Yeah, So what.
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  Speaker 2: I'm really hoping is that this becomes like the new
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  Speaker 2: thing and then leaves the conventional lines empty for for
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  Speaker 2: people like me.
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  Speaker 3: Do you not even have pre check?
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  Speaker 2: I have PreCheck, okay, but apparently even that was like
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  Speaker 2: a mess. It was, And so I'm really hoping that
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  Speaker 2: as you know, newer and faster things get rolled out,
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  Speaker 2: more people migrate to those, and eventually the masses end
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  Speaker 2: up in the fast line.
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  Speaker 3: Actually, which used to be the slow line.
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  Speaker 2: Any other thoughts on this, I don't really have many
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  Speaker 2: because again, happy that you know, TSA workers are getting paid.
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  Speaker 4: Beyond that, this is not something that's impacted the US.
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  Speaker 4: It's not an economic story, it's not anything else. It
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  Speaker 4: is a political story. There was you know, nobody really
• 5:01
  Speaker 4: got their way here the you know, certain apartments of.
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  Speaker 2: Well, I'm glad that we didn't pay everyone for forty
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  Speaker 2: one days just so that we could go back to
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  Speaker 2: how things were, Like you know, I'm like, wow, this
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  Speaker 2: was really useful, Like thanks for just not paying people
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  Speaker 2: for a month.
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  Speaker 3: And a half.
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  Speaker 4: So as is typical, lots of political implications, very few
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  Speaker 4: economic or market ones.
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  Speaker 3: So I agree we can move on.
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  Speaker 4: But if you're flying sometime soon, then things should be,
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  Speaker 4: like I said, slightly better than it was for the
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  Speaker 4: last few weeks.
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  Speaker 2: Let's talk a little bit about what we are seeing
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  Speaker 2: in the Middle East, because this is still where quite honestly,
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  Speaker 2: this is still the only thing that matters. And here
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  Speaker 2: is the status quo as of today. It's the same
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  Speaker 2: as yesterday. A couple things, just in terms of notable
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  Speaker 2: events in the last twenty four hours, around five o'clock
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  Speaker 2: maybe five thirty, yes, I can't remember when it was.
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  Speaker 2: Maybe it was four thirty. Around four to thirty yesterday,
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  Speaker 2: the President put out a post indicating that he was
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  Speaker 2: delaying striking any Iranian energy infrastructure for an additional ten days.
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  Speaker 2: That takes us out to Can we call it Easter Monday? Yeah,
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  Speaker 2: the Monday after Easter is what we're getting at.
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  Speaker 3: Yeah, Easter Monday. Okay, so long as it's not the
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  Speaker 3: Monday leading up to Easter.
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  Speaker 2: No, it's that'd be that'd be a long way out,
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  Speaker 2: Like it's that's a big gap between Friday, Monday, Easter Monday,
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  Speaker 2: we'll call it, and so effectively out till April sixth
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  Speaker 2: is when he's delayed this, which again I maintain the
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  Speaker 2: delay of striking any energy infrastructure is not a change
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  Speaker 2: in the status quo because the United States has not
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  Speaker 2: been to this point. The only thing that matters here
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  Speaker 2: is whether or not the straight of Horror moves opens,
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  Speaker 2: and this morning signs that that is not happening in
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  Speaker 2: any active fashion because the IRGC turned away three Chinese
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  Speaker 2: owned vessels that we're trying to make their way through,
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  Speaker 2: which is notable for the fact that they're Chinese zoned,
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  Speaker 2: and generally the thought has been, hey, if you are
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  Speaker 2: you know, affiliated with countries that we're friendly with, we'll
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  Speaker 2: let you pass. But in this case was two ships
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  Speaker 2: operated by Costco, not Costco, but Costco, who was a
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  Speaker 2: Chinese shipping conglomerate, that were turned away and you know,
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  Speaker 2: headed back towards the Persian Gulf.
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  Speaker 4: So Brent crude prices topping one hundred and ten dollars
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  Speaker 4: at barrew West Texas Cruse sitting at ninety seven dollars
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  Speaker 4: a barrel, both up a good two to three percent. Yesterday,
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  Speaker 4: the Nasdaq closed in correction territory. This morning, all three
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  Speaker 4: indices down further, and I believe as of this morning the.
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  Speaker 3: DOO is also in correction territory.
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  Speaker 4: Reminder of these terms, ten percent indicates a corrections that's
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  Speaker 4: ten percent off of the previous highs. Twenty percent indicates
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  Speaker 4: a bear market. So we are in the correction zone
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  Speaker 4: on two of those major indices.
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  Speaker 2: And again I continue to maintain I have no idea
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  Speaker 2: what's going on with negotiations. They could be going really well,
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  Speaker 2: they could be going really badly. I have no idea,
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  Speaker 2: and I'm not going to glean that from what's being
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  Speaker 2: publicly said. What I do know is that ships are
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  Speaker 2: continuing to not pass through horror moves at anywhere near
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  Speaker 2: the rate that they previously did, and that, to me
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  Speaker 2: is the only thing that matters for the broader economy
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  Speaker 2: right now, because every day that you go is another
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  Speaker 2: ten million barrels that's not produced and not shipped, as
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  Speaker 2: well as a whole bunch of other stuff in terms
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  Speaker 2: of fertilizer and natural gas, aluminum. Like you go down
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  Speaker 2: the list of all of these things, a.
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  Speaker 4: Little bit of timing, you know, stuff to just kind
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  Speaker 4: of keep in the back of everyone's mind. Generally speaking,
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  Speaker 4: when the president has good news about events, specifically you know,
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  Speaker 4: these events, but other ones too, he tends to announce
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  Speaker 4: those during trading hours. When there is bad stuff, a
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  Speaker 4: lot of it has been happening on Friday evenings into
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  Speaker 4: Saturday mornings.
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  Speaker 3: So I think there might be a little bit of.
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  Speaker 4: Pent up nervousness as we head into the weekend because
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  Speaker 4: a lot of the recent events have been occurring on Fridays,
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  Speaker 4: so that markets have time to react to them over
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  Speaker 4: the weekend. Presumably we're all guessing. The present hasn't stated
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  Speaker 4: openly that this is his is his mo or his intention,
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  Speaker 4: but it certainly aligns pretty well with the last few events.
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  Speaker 2: So I do have to tell you if we're still
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  Speaker 2: sitting here a tent on April sixth, I'm sorry, ten
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  Speaker 2: days from yesterday, and there is no shift in what's
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  Speaker 2: going through Hormuz, you've got some some real problems because
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  Speaker 2: again they're continuing to build every day. And I know
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  Speaker 2: that markets Quite honestly, I think that markets have done
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  Speaker 2: a really good job to this point of holding up.
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  Speaker 2: And and you know, I know that the nasdac's off
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  Speaker 2: ten percent this morning, the Dow, you know, cross that threshold.
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  Speaker 2: The S and P is down like high sevens, low eights.
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  Speaker 2: I know, depending on you know, the particular minute that
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  Speaker 2: you're looking at them. But quite honestly, if you had
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  Speaker 2: told me, hey, hormones closed for a month, what's the
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  Speaker 2: market impact, it would not be S and P five
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  Speaker 2: hundred down eight percent.
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  Speaker 3: Yeah, you know.
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  Speaker 2: So I think this gets at the fact that remember
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  Speaker 2: a year ago, as markets, you know, really started to
• 10:13
  Speaker 2: get into that panic about tariffs, the resolution came with hey,
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  Speaker 2: we're pushing this off, and you had that nine and
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  Speaker 2: a half percent upday, and everyone's nervous about missing that now.
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  Speaker 2: And you know, I've remarked I think it was yesterday. Look,
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  Speaker 2: you obviously can't get that when markets are off like
• 10:30
  Speaker 2: six percent. It's not like you're gonna rally to new
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  Speaker 2: all time highs off this. But the further you fall,
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  Speaker 2: the more that you do end up in a chance
• 10:38
  Speaker 2: where you potentially have a large move up, but you
• 10:41
  Speaker 2: still need to get a resolution that to this point
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  Speaker 2: has not been able to get across the finish line.
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  Speaker 2: So we'll see how things develop. But every day that
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  Speaker 2: Hormuze has closed, the problems are going to grow bigger
• 10:55
  Speaker 2: for the world economy. You're into the point now where
• 10:58
  Speaker 2: over the next five or six days, the last ships
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  Speaker 2: that cleared hor Moves prior to its closing they're getting
• 11:06
  Speaker 2: to Europe now. And so once that stops, then you
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  Speaker 2: have a flow that has stopped there. And this is
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  Speaker 2: by the way, also hitting Europe at a time when
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  Speaker 2: you've got other disruptions to energy supply coming out of Russia,
• 11:20
  Speaker 2: which you know, Europe has begrudgingly now turned to saying okay, like,
• 11:24
  Speaker 2: given what's going on, maybe we'll figure out, you know,
• 11:27
  Speaker 2: if there's you know, some use for Russian oil. You've
• 11:30
  Speaker 2: got Russian oil exports facilities that are all you know
• 11:34
  Speaker 2: ablaze right now following Ukrainian drone attacks recently.
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  Speaker 3: So there's.
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  Speaker 2: Again I think that there's this idea in markets that
• 11:45
  Speaker 2: things are just going to be fixed very quickly. This week,
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  Speaker 2: I think they've started to wake up to the idea
• 11:52
  Speaker 2: that maybe they're not going to be fixed quickly. But again,
• 11:56
  Speaker 2: it's still kind of on this edge of, well, we
• 11:59
  Speaker 2: don't want to miss out on the gains once this
• 12:01
  Speaker 2: is resolved, and yes, I'll just make serience, I'll just
• 12:05
  Speaker 2: maintain a physical shortage of product requires a different resolution
• 12:12
  Speaker 2: than changing the tax rate of imports. You know that
• 12:16
  Speaker 2: you can do at the stroke of a pen, or
• 12:18
  Speaker 2: the tweet of a tweet, the type of a tweet,
• 12:23
  Speaker 2: the typing.
• 12:24
  Speaker 3: Of a tweet, slash true social post, yeah yeah this.
• 12:28
  Speaker 2: You can't print oil, you can't print aluminum, you can't
• 12:31
  Speaker 2: print fertilizer. And it takes a while to unsnarl these
• 12:35
  Speaker 2: problems once they've begun.
• 12:37
  Speaker 3: So we'll see where things go. But this is where
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  Speaker 3: we are at the moment. Quick break.
• 12:41
  Speaker 2: When we return, let's talk about higher oil prices and
• 12:47
  Speaker 2: inflation after this.
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  Speaker 2: Peas and market Watch today the two reasons higher oil
• 13:58
  Speaker 2: prices may not trigger the inflationary spike that investors fear.
• 14:05
  Speaker 2: What are the things laid out in this piece, Mic,
• 14:07
  Speaker 2: And then I'll tell you whether I think they're.
• 14:09
  Speaker 3: Correct, So one I think is reasonable.
• 14:11
  Speaker 4: So one argument is, Look, oil prices can move up,
• 14:16
  Speaker 4: but if the US economic growth system is not there,
• 14:21
  Speaker 4: i e. There's not enough cash in the system to
• 14:23
  Speaker 4: absorb higher prices all across the board, then it's gonna
• 14:26
  Speaker 4: be tough to see the type of inflation that is
• 14:29
  Speaker 4: really problematic, i e. To get inflation, people need to
• 14:33
  Speaker 4: be able to afford higher prices, and right now they can't.
• 14:38
  Speaker 3: Okay, I might be able to buy that.
• 14:40
  Speaker 4: The extension of credit, all those things free money out
• 14:44
  Speaker 4: there from stimulus is just not what it once was,
• 14:47
  Speaker 4: So that piece I might be able to buy. The
• 14:51
  Speaker 4: second piece, I'm just not there. Productivity gains are driving
• 14:56
  Speaker 4: almost all real US GDP growth, suggesting inflation won't come
• 15:01
  Speaker 4: to pass because productivity is gonna wash it away.
• 15:05
  Speaker 3: Nah, I'm not there. Productivity cannot make a barrel of oil. Yeah. Here,
• 15:10
  Speaker 3: here's my view on this is I think everyone's missing
• 15:15
  Speaker 3: the boat on this pun intended. Who Yeah, we're all
• 15:18
  Speaker 3: missing boats.
• 15:19
  Speaker 2: People are thinking this is an oil price shock. It's
• 15:23
  Speaker 2: more supply change. It's more broad than that. And that's
• 15:27
  Speaker 2: what I think people are missing. And it's not that
• 15:30
  Speaker 2: this is going to be like doom for everyone. Like again,
• 15:34
  Speaker 2: I'm not saying that, But what I am saying is,
• 15:38
  Speaker 2: if you're interpreting this through the lens of, hey, when
• 15:40
  Speaker 2: oil prices move up this much, here's the impact to
• 15:43
  Speaker 2: the US economy. It's not factoring in the fact that, a,
• 15:49
  Speaker 2: there are oil shortages that are gonna happen all around
• 15:52
  Speaker 2: the world in terms of not just you know, crude,
• 15:55
  Speaker 2: but also especially refined products and things like that that
• 15:58
  Speaker 2: go into plastics and all that stuff.
• 16:00
  Speaker 3: And so what does that.
• 16:02
  Speaker 2: Mean about what the availability of those products are going
• 16:06
  Speaker 2: to be, Because this is not just prices moving up.
• 16:09
  Speaker 2: It may very well be, hey, we don't have enough
• 16:12
  Speaker 2: plastic to make all the ziploc bags we want, or
• 16:15
  Speaker 2: hey we can't make the plastic that goes into cameras,
• 16:21
  Speaker 2: we can't make the plastic that goes into your shoes.
• 16:25
  Speaker 2: This is the kind of stuff that I think is
• 16:28
  Speaker 2: not being factored in when people talk about this is
• 16:31
  Speaker 2: an oil price shock, and it's beyond just plastic even
• 16:34
  Speaker 2: again we're talking fertilizer. Yeah, you know, oil price shocks
• 16:38
  Speaker 2: historically are not caught, you know, are not something where
• 16:41
  Speaker 2: you're like, hey, the price of you know, fertilizer went
• 16:45
  Speaker 2: through the roof, or the price of aluminum went through
• 16:47
  Speaker 2: the roof, because those things were not included this you
• 16:50
  Speaker 2: have all this other stuff that's not transiting hormus. And
• 16:55
  Speaker 2: this is why I think people are missing the boat
• 16:57
  Speaker 2: when they're just trying to view this as an oil
• 16:59
  Speaker 2: price shock. The other thing that I will say, and
• 17:02
  Speaker 2: Mark Fandetti and I were talking about this this week,
• 17:04
  Speaker 2: and we don't have an answer on this. People like
• 17:08
  Speaker 2: to look at the idea and this is true. By
• 17:12
  Speaker 2: the way, I've mentioned this, Hey, the US uses way
• 17:16
  Speaker 2: less oil than it used to in terms of people's
• 17:19
  Speaker 2: monthly budgets. It's gone from about four and a half
• 17:22
  Speaker 2: to five percent back in the seventies to only around
• 17:24
  Speaker 2: two percent today. So our budgets are less dependent on oil.
• 17:29
  Speaker 2: It's what we say, like the US economy is less
• 17:31
  Speaker 2: energy intensive than it used to be, which is one
• 17:34
  Speaker 2: hundred percent true, yep. But we also import a lot
• 17:37
  Speaker 2: more stuff than we used to. And I don't know
• 17:41
  Speaker 2: what I don't know. I have not found any research
• 17:45
  Speaker 2: on the relative energy intensity of those other countries and
• 17:51
  Speaker 2: how important how much they are impacted by changes in
• 17:54
  Speaker 2: the price and supply of oil, so it may very
• 17:57
  Speaker 2: well be. Yes, the US is far less dependent on
• 18:00
  Speaker 2: the price of oil in terms of its impact on GDP,
• 18:03
  Speaker 2: but maybe part of that's because, Okay, we outsourced production
• 18:06
  Speaker 2: of X, Y and Z to these countries and their
• 18:09
  Speaker 2: economy is way more dependent on oil because they've industrialized
• 18:13
  Speaker 2: more than fifty years ago.
• 18:15
  Speaker 4: I think the point about affordability in absorbing price increases
• 18:21
  Speaker 4: is a it's a reasonable point to make, and so
• 18:25
  Speaker 4: to me, you know, we all have this very recent
• 18:27
  Speaker 4: jarring experience of inflation, and it was caused by two
• 18:31
  Speaker 4: things happening just about the same time. One was a
• 18:34
  Speaker 4: massive increase in the US and global deficits where everyone
• 18:39
  Speaker 4: was getting money and I'm not just talking about people
• 18:41
  Speaker 4: but corporations, et cetera.
• 18:42
  Speaker 3: The second was what was the one that was in
• 18:46
  Speaker 3: the Paycheck Protection Program.
• 18:47
  Speaker 4: The PPP, All of these things, and then it was
• 18:50
  Speaker 4: combined with massive supply chain disruptions that were predicted but
• 18:57
  Speaker 4: not really fully understood because they kept rolling. We might
• 19:01
  Speaker 4: get there's a much higher probability that we could get
• 19:05
  Speaker 4: the supply chain disruptions. Again, I can't imagine we are
• 19:09
  Speaker 4: going to see the fiscal response from governments that we
• 19:12
  Speaker 4: saw back in twenty twenty and twenty twenty one.
• 19:17
  Speaker 2: I agree that I don't think it's the most likely,
• 19:19
  Speaker 2: but never underestimate the dumb solutions that governments will come
• 19:23
  Speaker 2: up to to try to manage an inflationary shock.
• 19:26
  Speaker 3: Fair god, that'd be scary. Let's take a quick break here.
• 19:31
  Speaker 3: When we come back, it's Wall Street Watch after this.
• 19:40
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:43
  Speaker 1: TFE show. Breaking business news is always first right here
• 19:48
  Speaker 1: on the Financial Exchange Radio Network. Time out full Wall
• 19:53
  Speaker 1: Street Watch tracking the stocks FANDATO and the headlines driving
• 19:57
  Speaker 1: markets so far today right here on the Financial ex
• 20:00
  Speaker 1: James Radio Network.
• 20:03
  Speaker 6: Ten thirty four and a lot of red is on
• 20:06
  Speaker 6: the board right now, but Dow Jones is off just
• 20:08
  Speaker 6: over four hundred points, or nine tenths of a percent.
• 20:11
  Speaker 6: The S and P five hundred also down nine tenths
• 20:13
  Speaker 6: of a percent or fifty eight points. The Nasdaq is
• 20:16
  Speaker 6: down over one point three two percent, and as we
• 20:22
  Speaker 6: look over now, a pharma giant, AstraZeneca, is up about
• 20:25
  Speaker 6: three and a half percent after its experimental drugs TOES
• 20:30
  Speaker 6: zero I don't even know was found to meaningfully reduce
• 20:33
  Speaker 6: flare ups in cases of chronic obstructive pulmonary disease to
• 20:37
  Speaker 6: drug deliver the results in two late stage trials, and
• 20:40
  Speaker 6: the company said full results will be delivered in an
• 20:42
  Speaker 6: upcoming medical meeting. Travel booking website Trip Advisors up three
• 20:47
  Speaker 6: point two percent following upgrade to buy from neutral at
• 20:50
  Speaker 6: Bank of America, citing accelerating activist engagement and rising strategic
• 20:54
  Speaker 6: optionality across the portfolio. Shares of the companies that were
• 20:58
  Speaker 6: Wall Street's favorite play to start are clawing their way
• 21:01
  Speaker 6: back today after some recent hits. Micron is up one
• 21:04
  Speaker 6: point five percent, getting a little relief after it closed
• 21:07
  Speaker 6: on Thursday down twenty two percent in just six trading sessions.
• 21:12
  Speaker 6: Sand Disc is up more than two percent, while Western
• 21:14
  Speaker 6: Digital and LAMB Research are up seven tents of a
• 21:17
  Speaker 6: percent respectively. Oil prices rose again this morning, bringing energy
• 21:22
  Speaker 6: names up with it. EOG Resources, Phillip sixty six, Diamond Energy,
• 21:26
  Speaker 6: and devn Energy are all up nearly one percent. I
• 21:29
  Speaker 6: am ben Kitchen, and that was Wall Street Watch.
• 21:33
  Speaker 2: Let's talk about this piece from Wall Street Journal quote.
• 21:38
  Speaker 2: The title is Renewable energy gives us a crisis, subatters
• 21:42
  Speaker 2: the West handed Iran leverage by diluting itself into believing
• 21:45
  Speaker 2: it could wean itself from fossil fuels. So I think
• 21:48
  Speaker 2: a couple things are true here. The first is that
• 21:52
  Speaker 2: I don't think there's any way possible for in the
• 21:58
  Speaker 2: next ten to fifteen years countries to wean themselves off
• 22:02
  Speaker 2: fossil fuels.
• 22:03
  Speaker 3: And their entirety is certainly not.
• 22:04
  Speaker 2: No, there's no way, And I don't think that should
• 22:07
  Speaker 2: be a realistic goal because it's not realistic. But I
• 22:12
  Speaker 2: do think that if you are, if you are a
• 22:16
  Speaker 2: country that cannot produce significant amounts of oil, one of
• 22:21
  Speaker 2: the things that you are going to do on the
• 22:23
  Speaker 2: there are gonna be two things that you do on
• 22:25
  Speaker 2: the back half of this three actually four?
• 22:29
  Speaker 3: Do I have four?
• 22:29
  Speaker 1: No?
• 22:30
  Speaker 3: I have three. I mean, for me, it's very easy.
• 22:31
  Speaker 3: You're going to take the China model.
• 22:35
  Speaker 2: I don't know what that means, but here's you could
• 22:38
  Speaker 2: tell me if this is what you mean. Number one,
• 22:40
  Speaker 2: they are going to build up far larger strategic reserves
• 22:44
  Speaker 2: of petroleum products than they've ever had before.
• 22:47
  Speaker 3: Yes.
• 22:47
  Speaker 2: Number two, they are going to diversify the suppliers from
• 22:51
  Speaker 2: which they buy from to a level the level they
• 22:54
  Speaker 2: never have before. Yes, even if it means not paying.
• 22:56
  Speaker 3: The lowest price.
• 22:58
  Speaker 2: Number Three, they are going to spend a boatload of
• 23:01
  Speaker 2: money building out non fossil fuel infrastructure production, whatever you
• 23:07
  Speaker 2: want to call it, and that can take different forms,
• 23:09
  Speaker 2: but for my purposes, nuclear, solar, wind, battery, all the above.
• 23:17
  Speaker 3: Yes, is going to be the answer.
• 23:19
  Speaker 4: What Germany and all of Europe are facing right now
• 23:21
  Speaker 4: is they went down this renewable path of saying, hey,
• 23:25
  Speaker 4: we're going to you know, decrease our reliability.
• 23:28
  Speaker 3: On oil while not building nukes.
• 23:31
  Speaker 2: Not only that, Not only that, here, here's the dumbest
• 23:33
  Speaker 2: part of what they did. They turned their nuclear power
• 23:36
  Speaker 2: plants off, the ones that were already built and functioning
• 23:40
  Speaker 2: just fine with no problems. They said, let's turn these
• 23:46
  Speaker 2: off and see what happens.
• 23:47
  Speaker 4: Right, So this was the point in case, massive issue here,
• 23:53
  Speaker 4: But again the China model. They invested heavily in news.
• 24:00
  Speaker 4: They invested in all sorts of other power generation too.
• 24:04
  Speaker 4: There now the world leader in solar production and wind
• 24:07
  Speaker 4: farms and everything that goes into this stuff. And I
• 24:11
  Speaker 4: think a bunch of people kind of looked at them
• 24:12
  Speaker 4: or they said publicly, you know, you know, China's going
• 24:15
  Speaker 4: greener too. That wasn't what it was about. It was
• 24:17
  Speaker 4: about energy independents. They don't have any oil. They didn't
• 24:19
  Speaker 4: want to have to rely on a run or a
• 24:21
  Speaker 4: bunch of unstable countries and partners to get their oil,
• 24:24
  Speaker 4: and so they massively built up their strategic petroleum reserves
• 24:27
  Speaker 4: over the last twenty years and massively built up their
• 24:30
  Speaker 4: non oil energy infrastructure over the last twenty years.
• 24:33
  Speaker 2: And they've actually done, believe it or not, they've dramatically
• 24:36
  Speaker 2: increased how much oil they produce. Also, a lot of
• 24:39
  Speaker 2: people don't realize this. China is the sixth biggest country
• 24:41
  Speaker 2: by oil production. Now wow, it's around I think four
• 24:45
  Speaker 2: million barrels a day. So it's again a big jump
• 24:48
  Speaker 2: from where they've been historically. You know, like you go
• 24:52
  Speaker 2: back and you look at you know, what they used
• 24:54
  Speaker 2: to do, and it was next to nothing. But they
• 24:56
  Speaker 2: have you know, also done that to try to you know,
• 24:58
  Speaker 2: fix the problem the best they can as well. But
• 25:03
  Speaker 2: I gotta tell you the problem that like Europe had
• 25:07
  Speaker 2: was not oh like we built too many renewables. It's
• 25:11
  Speaker 2: we shut down our nuclear power plants. We didn't commit
• 25:15
  Speaker 2: to replacing that with any other capacity other than what
• 25:19
  Speaker 2: was controlled by like foreign imports of raw fuel, and
• 25:23
  Speaker 2: as such, we kind of screwed ourselves over.
• 25:26
  Speaker 3: Yeah.
• 25:26
  Speaker 2: I absolutely believe that countries are going to use significant
• 25:32
  Speaker 2: increases in renewable construction and production to try to manage
• 25:36
  Speaker 2: this in the future as part of a more comprehensive strategy.
• 25:41
  Speaker 2: But it's not the I find the idea that like
• 25:43
  Speaker 2: renewable energy caused this kind of laughable. No, it was
• 25:50
  Speaker 2: dumb energy policy that caused this.
• 25:53
  Speaker 3: Yeah.
• 25:53
  Speaker 4: In fact, China invested heavily in renewable energy. Yes, they
• 25:56
  Speaker 4: did it intelligently, and they are in a far better
• 25:59
  Speaker 4: position than all of your because they did it dumbly.
• 26:02
  Speaker 3: Yes, Europe did it dumbly.
• 26:04
  Speaker 2: China said, hey, you know what, We're gonna start the
• 26:06
  Speaker 2: largest construction of nuclear power plants in history.
• 26:11
  Speaker 3: Like okay, great, like because we're.
• 26:13
  Speaker 4: Gonna build a dam so big that it slightly changes
• 26:17
  Speaker 4: the Earth's tilt.
• 26:19
  Speaker 3: Didn't that happen? Is that true? I'll get some references
• 26:23
  Speaker 3: for you on this. Or was that us jumping? Yeah,
• 26:26
  Speaker 3: we all did it at the same time. Yes, an elevator.
• 26:28
  Speaker 3: Maybe we can't.
• 26:30
  Speaker 2: Maybe we can't, cause you know, the planet to move
• 26:32
  Speaker 2: by jumping, but you never know. Until you try. So
• 26:36
  Speaker 2: this is where I land is. On the back end
• 26:38
  Speaker 2: of this energy security is going to be paramount for
• 26:42
  Speaker 2: just about every country that can't produce China oil.
• 26:45
  Speaker 4: China's three Gorgeous Dam, the world's largest hydro project, holds
• 26:49
  Speaker 4: enough water roughly thirty nine trillion kilograms to shifts Earth's
• 26:53
  Speaker 4: to shift Earth's mass, slowing its rotation and lengthening days
• 26:56
  Speaker 4: by about point zero six microseconds.
• 26:59
  Speaker 3: Lengthening the day, lengthening the days. Yes, you know, I
• 27:05
  Speaker 3: think I saw this in Superman three.
• 27:07
  Speaker 4: It also redistributed water so that Earth's pole position by
• 27:12
  Speaker 4: approximately two centimeters.
• 27:14
  Speaker 3: So the North pole is not where it used to be,
• 27:17
  Speaker 3: is what you're telling me? Correct? True North is no
• 27:19
  Speaker 3: longer true North. It's fake North Man. What a year.
• 27:25
  Speaker 2: Let's take a quick break here when we come back. Actually, no,
• 27:30
  Speaker 2: I don't want to take a quick break. Can you
• 27:31
  Speaker 2: can you pause that break?
• 27:32
  Speaker 1: Pen?
• 27:33
  Speaker 2: Okay, we're not breaking yet. I want to talk about
• 27:35
  Speaker 2: this that I saw this morning as well. I'm glad
• 27:37
  Speaker 2: Ben put it in the stack. China starts trade probes
• 27:40
  Speaker 2: against US before g Trump's summit.
• 27:42
  Speaker 3: So what else is new?
• 27:43
  Speaker 2: This summit, by the way, was supposed to be starting.
• 27:47
  Speaker 2: I think either today or tomorrow soon. It was supposed
• 27:50
  Speaker 2: to be this weekend was the big thing. It's been
• 27:52
  Speaker 2: pushed back. The White House is indicated. I believe it's
• 27:56
  Speaker 2: going to be in mid May. Now we'll see if
• 27:58
  Speaker 2: that date hold, because obviously things are kind of in flux.
• 28:03
  Speaker 2: But yes, I'm sure that China is starting a bunch
• 28:05
  Speaker 2: of trade probes because they want to have something that
• 28:08
  Speaker 2: they can give away without really giving anything away in
• 28:11
  Speaker 2: these negotiations. Hey, if if you do X for us,
• 28:15
  Speaker 2: we'll stop these probes. Well, the probes weren't going on before.
• 28:19
  Speaker 2: If you do X for us, we'll stop these probes. Okay,
• 28:23
  Speaker 2: Like this is what all sides do heading into a negotiation,
• 28:26
  Speaker 2: is they try to figure out as many things that
• 28:28
  Speaker 2: they can build up that they can give away without
• 28:30
  Speaker 2: giving anything away. Actually, and you know, here you go.
• 28:35
  Speaker 2: So I'm not surprised by this. I don't think it
• 28:38
  Speaker 2: represents any escalation intensions. I think the bigger thing to watch,
• 28:43
  Speaker 2: quite honestly, is whether the date moves for that summit again.
• 28:47
  Speaker 2: When it was originally earlier in this month. I think
• 28:49
  Speaker 2: it was like maybe the first week or so into
• 28:52
  Speaker 2: the conflict, China had said we're going to maintain the date.
• 28:55
  Speaker 2: The fact that it's moved now, that to me is
• 28:58
  Speaker 2: more indicative potentially of problems getting somewhere than any of
• 29:04
  Speaker 2: this noise. So watch the date to see if it
• 29:07
  Speaker 2: moves again, because I think that's a better signal as
• 29:10
  Speaker 2: to where relations are. Then whether you know you've got
• 29:13
  Speaker 2: trade probes being started in this and that those are
• 29:16
  Speaker 2: to be expected heading into any type of summit.
• 29:20
  Speaker 3: Take a quick break.
• 29:21
  Speaker 2: When we return, we'll talk a little bit about healthcare costs.
• 29:25
  Speaker 1: Next, from market moves to retirement planning strategy. Follow the
• 29:29
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• 29:32
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• 29:35
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• 29:39
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• 29:46
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• 29:49
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• 29:59
  Speaker 3: We got a piece from Bloomberg here.
• 30:01
  Speaker 2: It's titled healthcare costs are forcing terrible trade offs. A
• 30:07
  Speaker 2: KFF summary found that eighty percent of people enrolled in
• 30:10
  Speaker 2: marketplace plans say that the costs have gone up, to
• 30:13
  Speaker 2: which I ask, who are the twenty percent of people
• 30:15
  Speaker 2: that say they've.
• 30:15
  Speaker 3: Gone down or sideways.
• 30:17
  Speaker 4: If you are under like four hundred percent of the
• 30:21
  Speaker 4: poverty or like an if you're under the poverty level,
• 30:24
  Speaker 4: then they're probably there, or like under two hundred percent
• 30:27
  Speaker 4: of the poverty level.
• 30:28
  Speaker 3: They probably still don't think they've moved at all.
• 30:30
  Speaker 4: Not not much, not much. But it's not just those
• 30:34
  Speaker 4: on Obamacare. I mean Medicare premiums went up by was
• 30:38
  Speaker 4: it like twenty five thirty bucks this year a month
• 30:41
  Speaker 4: hang on, It was a big jump across the board
• 30:45
  Speaker 4: in healthcare cost now with Obamacare policies specifically, and again
• 30:50
  Speaker 4: I'm saying Obamacare every state, A bunch of states have
• 30:53
  Speaker 4: their own state run versions of this, but it all,
• 30:56
  Speaker 4: you know, follows the subsidy schedule from the federal government.
• 31:00
  Speaker 3: They didn't go away.
• 31:01
  Speaker 4: What happened is they got dramatically increased during COVID and
• 31:05
  Speaker 4: then it all expired at the end of last year.
• 31:07
  Speaker 4: And so anybody on these policies is now facing a
• 31:11
  Speaker 4: massive uptick in premiums for twenty twenty six with really
• 31:15
  Speaker 4: no real rescue in sight here. But again, it's returning
• 31:19
  Speaker 4: to the pre COVID levels of how these policies worked.
• 31:22
  Speaker 2: I'm looking just at a history of Medicare premiums. Mike,
• 31:27
  Speaker 2: what do you think the monthly premium was for Medicare
• 31:29
  Speaker 2: Part B in nineteen.
• 31:30
  Speaker 4: Seventy three dollars sixty cents four dollars? Yeah, pretty good? Wow,
• 31:36
  Speaker 4: pretty good. The most remarkable thing that I see here.
• 31:40
  Speaker 4: In nineteen ninety five, Medicare Part B premiums were forty
• 31:43
  Speaker 4: six to ten.
• 31:45
  Speaker 3: Okay, wow.
• 31:46
  Speaker 2: In two thousand it was forty five to fifty five
• 31:49
  Speaker 2: years and the cost of Medicare Part B went down
• 31:52
  Speaker 2: by three percent.
• 31:53
  Speaker 3: Yeah, that doesn't happen often, No, certainly doesn't.
• 31:56
  Speaker 2: It then almost doubled over the next five years, from
• 31:59
  Speaker 2: forty five to fifty to seventy eight twenty, and then interestingly,
• 32:03
  Speaker 2: for the last fifteen or so, the cost inflation. Again,
• 32:06
  Speaker 2: it's not to say that it's been like perfect, but
• 32:09
  Speaker 2: you've basically seen an almost doubling over a fifteen year period, which,
• 32:13
  Speaker 2: if you do the math out quates to around like
• 32:15
  Speaker 2: a five to five and a half percent annualized rate
• 32:18
  Speaker 2: of inflation there.
• 32:19
  Speaker 4: So there's a number of different causes behind the increases
• 32:23
  Speaker 4: that we're seeing right now. Right like, for anybody on Albamacare.
• 32:26
  Speaker 4: It's not because we're all getting GLP one weight loss
• 32:28
  Speaker 4: drugs now, it's because government subsidies that were supposed to
• 32:32
  Speaker 4: be temporarily expired. Yes, in the case of Medicare, it
• 32:35
  Speaker 4: has a lot to do with all sorts of new
• 32:37
  Speaker 4: drugs and plans that people are on. In terms of employers,
• 32:41
  Speaker 4: lois just nod your head if you can hear me.
• 32:44
  Speaker 4: I think our own employer plan costs went up by
• 32:47
  Speaker 4: ten to twelve percent somewhere in that general rule eleven
• 32:50
  Speaker 4: more eleven. Okay, yeah, yeah, I'm trying to interpret hand
• 32:54
  Speaker 4: signals over there.
• 32:55
  Speaker 3: But she holds up two ones. It's eleven.
• 32:57
  Speaker 4: Could have been her pointing up, so that would have
• 32:59
  Speaker 4: been like with an upward gesture.
• 33:01
  Speaker 3: Sure she wasn't just giving you the double bird. I
• 33:03
  Speaker 3: think that might have been it, too. Hold on, we're communicating.
• 33:08
  Speaker 4: The point is there have been dramatic increases in healthcare
• 33:14
  Speaker 4: costs for everybody over the course of the last few years,
• 33:17
  Speaker 4: and it is surprising to people, but is honestly one
• 33:21
  Speaker 4: of the number one topics of conversation that I have
• 33:25
  Speaker 4: with my own clients when working with them on their
• 33:27
  Speaker 4: financial strategies.
• 33:29
  Speaker 2: Well, and the fact is, as I said, Look, Medicare
• 33:32
  Speaker 2: prices have gone up somewhere between like five and five
• 33:34
  Speaker 2: and a half percent a year for the last fifteen years.
• 33:36
  Speaker 3: Yep.
• 33:37
  Speaker 2: If you're not incorporating in a different rate of inflation
• 33:41
  Speaker 2: for healthcare expenses, which are predominantly larger as you get
• 33:45
  Speaker 2: older than the overall rate of inflation, that's a potential
• 33:49
  Speaker 2: weak spot in your plan.
• 33:50
  Speaker 3: Yeah.
• 33:50
  Speaker 4: The average number, according to Fidelity does a survey for
• 33:54
  Speaker 4: once in a while a few years, they do a
• 33:55
  Speaker 4: survey for retirees trying to come up with the average
• 33:58
  Speaker 4: cost before any law term care costs, and it's over
• 34:01
  Speaker 4: six grand a person for those over the age of
• 34:04
  Speaker 4: sixty five, and can be quite a bit higher if
• 34:07
  Speaker 4: you are retiring prior to the age of sixty five
• 34:10
  Speaker 4: and trying to privately insurorten yourself. If you are getting
• 34:14
  Speaker 4: to the retirement stage and you are not planning to
• 34:17
  Speaker 4: work until sixty five. If you are getting to the
• 34:20
  Speaker 4: retirement stage and you're over sixty five but might have
• 34:23
  Speaker 4: some heavy income for the first few years of retirement,
• 34:26
  Speaker 4: maybe you're planning on roth conversions or selling a property
• 34:29
  Speaker 4: or selling a business. You need to understand what that
• 34:32
  Speaker 4: is going to do to your cost of health care
• 34:34
  Speaker 4: insurance health insurance. It can dramatically reshape your financial plan
• 34:39
  Speaker 4: and doing some planning can dramatically reshape the strategy to
• 34:42
  Speaker 4: keep those costs lower than they would otherwise be. If
• 34:46
  Speaker 4: you have questions about how your RMD, your ROTH conversion strategy,
• 34:49
  Speaker 4: the sale of your home or your business is going
• 34:51
  Speaker 4: to affect your healthcare cost in retirement, give the folks
• 34:54
  Speaker 4: at Armstrong Advisory Group a call. I know everybody thinks
• 34:57
  Speaker 4: about investing it and these different things, but financial planning
• 35:01
  Speaker 4: is the one very predictable way that you can better
• 35:05
  Speaker 4: improve your outlook for the future. The numbers eight hundred
• 35:09
  Speaker 4: three nine three for zero zero one. That's for the
• 35:12
  Speaker 4: Armstrong Advisory Group. Again, you can check us out at
• 35:15
  Speaker 4: Armstrong Advisory dot com. Book a time for us to
• 35:17
  Speaker 4: call you back, but the phone number is eight hundred
• 35:19
  Speaker 4: three nine three for zero zero one.
• 35:22
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 35:24
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 35:27
  Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
• 35:30
  Speaker 1: your own financial tax and to state planning advisors before
• 35:32
  Speaker 1: making any investment. Decisions. Armstrong, make contact you to offer
• 35:35
  Speaker 1: investment advisory services.
• 35:38
  Speaker 2: PCE and CNBC US Ambassador to EU stop finding big tech. Honestly,
• 35:44
  Speaker 2: I think big tech sucks. Maybe we should find them
• 35:47
  Speaker 2: more like. I just can't get past the fact that
• 35:51
  Speaker 2: everyone hates these companies and yet for some reason we
• 35:54
  Speaker 2: bend over backwards to be like, well, if we do
• 35:57
  Speaker 2: anything to make them upset, then our economy won't grow
• 36:02
  Speaker 2: fast enough. Okay, let's just let them build a big
• 36:04
  Speaker 2: pool of suck for us all to swim in them.
• 36:08
  Speaker 4: I do find it ironic at a time where we
• 36:10
  Speaker 4: just got off of two massive lawsuits against Meta and
• 36:13
  Speaker 4: YouTube here in the United States that resulted in big fines.
• 36:17
  Speaker 3: But I will say, I will ask if.
• 36:19
  Speaker 4: There's something to this chuck right. I mean, can you
• 36:22
  Speaker 4: point to any major successful European tech companies that are
• 36:27
  Speaker 4: investable in twenty twenty six.
• 36:30
  Speaker 3: Spotify? Okay, it's about it?
• 36:33
  Speaker 4: Yeah, I mean, but here's the This is the trade
• 36:36
  Speaker 4: off we are seemingly making right now.
• 36:38
  Speaker 3: And maybe it's not a.
• 36:39
  Speaker 4: Necessary trade off, but we are just running letting tech
• 36:43
  Speaker 4: companies run wild west here in the United States, and
• 36:45
  Speaker 4: they're investing pretty heavily in the United States. The European
• 36:48
  Speaker 4: Union has a very different set of rules that I
• 36:51
  Speaker 4: think makes a heck of a lot more sense. And
• 36:53
  Speaker 4: the big tech companies are choosing to employ people and
• 36:55
  Speaker 4: roll out products elsewhere.
• 36:57
  Speaker 2: I'm not saying that we should adopt what europe does, sure,
• 37:00
  Speaker 2: because do I want the US economy to look anything
• 37:03
  Speaker 2: like the European one?
• 37:04
  Speaker 3: Hard no, like hard hard no.
• 37:07
  Speaker 2: But no one likes these tech companies. And yet somehow
• 37:14
  Speaker 2: like we're convinced, well, we can't do anything about it
• 37:17
  Speaker 2: because then the economy wouldn't.
• 37:19
  Speaker 3: Grow as quickly. Oh okay, that makes sense.
• 37:23
  Speaker 2: So we just have to you know, sit here and
• 37:25
  Speaker 2: let them do whatever they want, got it?
• 37:28
  Speaker 3: Like, that's that's cool.
• 37:29
  Speaker 2: I did see yesterday, Did you see that open Ai
• 37:32
  Speaker 2: did finally back down from launching their erotica plan.
• 37:35
  Speaker 3: Oh that's good. Yeah, they got a little bit of
• 37:38
  Speaker 3: pushback against it and decided they weren't going to do that. Yeah. Look,
• 37:40
  Speaker 3: I think there might be a happy medium here.
• 37:43
  Speaker 4: Right, Like, there's somewhere, But they don't need to allow
• 37:45
  Speaker 4: them to, you know, demonstrably hurt children. But we probably
• 37:51
  Speaker 4: don't need to go with the European regulation Regamen.
• 37:53
  Speaker 2: There's somewhere between Europe and the United States, and it's
• 37:57
  Speaker 2: called Iceland. I don't know what the regulatory environment looks there,
• 38:03
  Speaker 2: but by the way, the Icelandic economy is cranking the
• 38:07
  Speaker 2: last twenty years.
• 38:07
  Speaker 3: I don't know if you've paid attention.
• 38:09
  Speaker 2: Furthermore, while we're talking about Europe, you guys seen the
• 38:12
  Speaker 2: Polish economy lately. Nope, no sarcasm here on fire for
• 38:16
  Speaker 2: the last decade.
• 38:18
  Speaker 3: Quick break. We've got hour two coming up in a
• 38:20
  Speaker 3: bit