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What is the warning signal that credit markets are flashing? · The Financial Exchange Show

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Speaker 2: Good morning, have it Tuesday, Welcome back to the Financial Exchange.
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Speaker 2: We've got mixed markets at the moment, with the Dow
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Speaker 2: up sixty nine points a little bit more than a
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Speaker 2: tenth of a percent, but SMP and NAZAC both in
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Speaker 2: the red, with the S ANDP down four tenths a
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Speaker 2: percent and NAZAK off a little bit more than one percent,
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Speaker 2: giving up most of yesterday's gains. It's Mike, Paul and
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Speaker 2: Tucker with you on this Tuesday morning. At ten am today,
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Speaker 2: we received the report on the labor market from the
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Speaker 2: Bureau of Labor Statistics on job openings, the job opening
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Speaker 2: the labor Turnover survey, continuing to indicate a job market
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Speaker 2: that I would describe as stagnant, but we did see
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Speaker 2: some improvement in terms of those openings figures. We'll have
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Speaker 2: to wait and see if it turns into new jobs created.
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Speaker 2: But the total number of job openings in this labor
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Speaker 2: market it sitting at about eight point one million in total.
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Speaker 2: That's up about three hundred thousand from the previous month.
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Speaker 2: That was as of the end of November. This particular
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Speaker 2: report gives you a slight lag in terms of data
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Speaker 2: on Friday of this week, we will get the jobs
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Speaker 2: the monthly jobs report for the month of December. Expectations
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Speaker 2: are anywhere from one hundred and fifty to two hundred
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Speaker 2: thousand jobs created from what I have seen out there.
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Speaker 2: Unemployment rate to be around four to two to four
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Speaker 2: to three. So no huge movements would be my guest,
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Speaker 2: but it will be one of the key items folks
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Speaker 2: are looking at, because, like I said, there has been
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Speaker 2: just a stagnating sense from the labor market. Not that
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Speaker 2: there's been huge layoffs, though you have seen those reported
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Speaker 2: here and there, but just that employers are generally holding
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Speaker 2: on to their employees, but you know, cutting bonuses, cutting
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Speaker 2: big raises, cutting opportunities, and not going on big hiring
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Speaker 2: sprees out there, and those employees likewise taking a kind
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Speaker 2: of cautious step with their employer and saying, yeah, I'll
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Speaker 2: come back to the office. I won't be quite as
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Speaker 2: confrontational it comes to some of those items as maybe
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Speaker 2: I would have been.
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Speaker 3: A few years ago.
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Speaker 2: Speaking of which will be joined next segment by Corey
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Speaker 2: Adams from Robert haf. He joins us regularly to talk
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Speaker 2: about the state of the labor market and what they're
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Speaker 2: seeing from one of the largest placement firms in the country.
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Speaker 2: He'll be talking to us about his expectations and predictions
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Speaker 2: for the labor market in twenty twenty five. Paul, anything
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Speaker 2: else catching your eyes? Markets? I suppose you mentioned earlier
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Speaker 2: ten year yield approaching four point seven percent today impacting
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Speaker 2: all sorts of things, and most importantly to most Americans
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Speaker 2: that average thirty year fixed rate mortgage now sitting at
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Speaker 2: seven point one percent. Oil markets are moving up again.
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Speaker 2: You've got West Texas crud sitting at seventy four dollars
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Speaker 2: twenty one cents. That's up nearly nine tenths of a
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Speaker 2: percent in terms of oil prices. Translation over to gas
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Speaker 2: prices from TRIPLEA, you have the national average sitting just
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Speaker 2: shy of three oh seven, threeho six and eight tenths
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Speaker 2: of a cent. Sorry, go ahead, Paul, you Oh yeah,
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Speaker 2: I asked you a question that I completely spoke over
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Speaker 2: you for the next thirty five seconds.
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Speaker 4: No worries in videos. Down five percent in today, just
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Speaker 4: interesting to kind of not because kind of heading in
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Speaker 4: pre market it looked like there was some optimism on
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Speaker 4: some of the CS notes that were coming out of
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Speaker 4: that conference, but down five percent at the moment.
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Speaker 2: Kind of par for the course for a stock like
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Speaker 2: in video that moves around like it has. Credit markets
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Speaker 2: signaling a warning for a rentless equity strategy. Paul, you
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Speaker 2: and I and Chuck, we've all focused quite a bit
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Speaker 2: on price to earnings ratios and just different valuation metrics
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Speaker 2: that have been flashing, if not warning signs, then signals
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Speaker 2: that equities are among the priceest we've seen in US history.
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Speaker 2: This piece on credit markets offers a I guess, same
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Speaker 2: perspective with some different data points, which is just again
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Speaker 2: compelling to me that a lot of them are pointing
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Speaker 2: in the same direction. You don't have people writing a
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Speaker 2: whole lot about well, look at this valuation metric, it
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Speaker 2: actually might indicate that the S Andp's underpriced at the moment.
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Speaker 4: No, whatever metric you want to look at, whether it's
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Speaker 4: priced earnings ratio or in this case it's the inversion
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Speaker 4: of the price to earnings ratio that they're looking at
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Speaker 4: the S and P five earnings yield. The market is expensive,
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Speaker 4: and you know, on a priced earnings basis, which we
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Speaker 4: like to harp on quite frequently, the S and P
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Speaker 4: five hunter is trading at twenty seven times. It's over
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Speaker 4: the class its average over the last trailing twelve months
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Speaker 4: compared to eighteen point seven over the last two decades.
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Speaker 3: But if you look at this.
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Speaker 4: Other metric, which is the earnings yield, it's at three
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Speaker 4: point seven percent, which is the lowest relative to a
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Speaker 4: triple B rated corporate bond of five point six percent
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Speaker 4: since two thousand and eight. And so typically the higher
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Speaker 4: that you have interest rates, very broadly speaking, the more
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Speaker 4: that is demanded from equities from a return perspective. If
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Speaker 4: you have a you know, treasury bond sitting at four
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Speaker 4: and a quarter or four and a half percent, the
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Speaker 4: risk premium relative to investing in equity markets, you'd have
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Speaker 4: to continue to generate substantial earnings to justify not just banking.
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Speaker 4: What is the safety is an asset of the US
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Speaker 4: Treasury and collecting four and a quarter to four and
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Speaker 4: a half percent.
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Speaker 3: And that's what really Ryan's to compare.
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Speaker 2: Yes, it's showing you, hey, you know, given the risk
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Speaker 2: associated with buying stock in a company, right, you're not
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Speaker 2: owed anything by owning a company. It can go bankrupt,
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Speaker 2: it can fall in value, it can cut its prices
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Speaker 2: and see a huge hit to earnings. All sorts of
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Speaker 2: things can happen when when owning a company compared to
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Speaker 2: the relatively risk free return of a government bond. That
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Speaker 2: risk free return from government bonds, as we just mentioned,
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Speaker 2: the ten year guarantee from the US government is sitting
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Speaker 2: close to four point seven percent. You are getting quite
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Speaker 2: a bit less than that than the for the earnings
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Speaker 2: yield on the s and P five hundred. The the
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Speaker 2: SMP's earnings yield now sitting at three point seven percent.
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Speaker 2: It's closest to the lowest relative to the yield of
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Speaker 2: you know, low rated junk debt or other types of
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Speaker 2: debt instruments. And as we talked about, even the US
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Speaker 2: government paying you four point seven percent for pretty much
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Speaker 2: a risk free asset. That tells you nothing about warestocks
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Speaker 2: are going to go in the short term, but it
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Speaker 2: does speak a lot to Hey, if you're going to
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Speaker 2: fit into these valuations, then earnings need to continue to grow,
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Speaker 2: and they need to do so at a pace that
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Speaker 2: we don't typically see.
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Speaker 3: Out of US companies.
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Speaker 1: Right.
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Speaker 2: I mentioned earlier that you're expecting now fourteen percent earnings
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Speaker 2: growth approximately for twenty twenty five. That's not impossible to achieve.
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Speaker 2: But you just think about how much you need to
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Speaker 2: raise prices or sell more stuff or services or anything
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Speaker 2: in order to achieve those growth numbers, because that's all
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Speaker 2: you're talking about, right, This isn't Sometimes we get really
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Speaker 2: opaque with what we're talking about here. But put plainly,
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Speaker 2: when we talk about you know, earnings expectations growing at
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Speaker 2: fourteen percent, means the companies need to find way to
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Speaker 2: grow their profits by fourteen percent. You typically do that
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Speaker 2: in one of two ways. Sell more stuff at the
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Speaker 2: same price. I guess there's three ways, raise prices or
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Speaker 2: cut your expenses a whole bunch, right, If you can
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Speaker 2: find a whole bunch of expenses to cut at this stage,
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Speaker 2: I'd be surprised. Seems to me that companies are already
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Speaker 2: operating pretty thin and you know, being cautious about hiring.
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Speaker 2: If you're able to raise prices significantly, I would also
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Speaker 2: be surprised. It seems to me that Americans are pretty
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Speaker 2: fed up with price increases and are focusing a lot
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Speaker 2: more on them, and so that comes to selling more stuff.
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Speaker 2: You could convince me that might be the case, especially
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Speaker 2: when you look at the global economy, that might be
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Speaker 2: an opportunity you have, but those are your methods.
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Speaker 4: The US consumer has been extremely resilient, so it's a
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Speaker 4: fair argument to make, But it circles back to the
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Speaker 4: point that we continue to come back to as price
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Speaker 4: to perfection. You know, a lot has to go right
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Speaker 4: to continue to justify those valuations. There remains a lot
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Speaker 4: of risks out there. There always are risks, but at
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Speaker 4: the levels we're at today, you really need to kentinue
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Speaker 4: to see execution from these companies at large.
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Speaker 3: Let's take a quick break.
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Speaker 2: As I mentioned, Corey Adams from Robert Haff joining us
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Speaker 2: next to talk about their own twenty twenty five workplace predictions.
9:12
Speaker 2: That's next year on the Financial Exchange.
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Speaker 2: Join us now is Corey Adams from Robert Half for
10:33
Speaker 2: his twenty twenty five workplace predictions. Corey, thanks for joining us.
10:37
Speaker 2: Appreciate it.
10:37
Speaker 6: Happy New Year, Good morning, Happy new year. Free to
10:40
Speaker 6: you as always.
10:41
Speaker 2: So as we head into twenty twenty five, we just
10:43
Speaker 2: got a labor market report this morning, and I've been
10:47
Speaker 2: describing over the course of the last few months this
10:49
Speaker 2: labor market is a bit stagnant. What are you hearing
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Speaker 2: from both employers and employees as we head into twenty
10:56
Speaker 2: twenty five for what they're looking at for this labor market.
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Speaker 6: So there's a few things, and let's start with this.
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Speaker 6: You know, I think business confidence is on the rise,
11:05
Speaker 6: but I also think that the hiring challenges that we've
11:07
Speaker 6: seen will probably carry over into twenty twenty five, at
11:11
Speaker 6: least to start, you know, I think managers need to
11:13
Speaker 6: be wary of the costly hiring delays that could lose
11:17
Speaker 6: them their top candidate to another firm or a competitor
11:19
Speaker 6: another company. I think unemployment remains low for specialized talent,
11:24
Speaker 6: which is a theme that we've seen. So US unemployment
11:26
Speaker 6: rates was at four point two percent that held pretty
11:29
Speaker 6: steady for most of all of last year. We also
11:32
Speaker 6: know that their rate for college agreed workers even lower
11:34
Speaker 6: at two point four and that's also been pretty steady.
11:36
Speaker 6: So I think hiring activity for specialized roles is aligned
11:39
Speaker 6: with pre pandemic norms, which which indicates high demand. And
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Speaker 6: I think the last thing, this is an important one
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Speaker 6: for me, at least, I think the elevated quits signals
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Speaker 6: worker optimism, and so the voluntary quits rate climbed to
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Speaker 6: two point one percent, which was the highest level to
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Speaker 6: ben since May of twenty twenty four. So this uptick
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Speaker 6: to me, suggests that for professionals feel ready to at
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Speaker 6: least start seeking new opportunities as other factors signal improving
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Speaker 6: economic conditions in the rise and demand for talent, what.
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Speaker 2: Does it look like employers are looking for out of
12:11
Speaker 2: new employees that are applying right now. I've been speaking
12:13
Speaker 2: to a number of college graduates recently or soon to
12:16
Speaker 2: be college graduates and their plans for looking at the
12:18
Speaker 2: labor market. How can folks out there hone their skills
12:22
Speaker 2: a little bit or at least hone their resumes to
12:25
Speaker 2: focus on what employers are looking for.
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Speaker 6: So we have a few tips where we're throwing out
12:29
Speaker 6: there for all professionals twenty twenty five. So let me
12:32
Speaker 6: just give you a few of those, and this would
12:34
Speaker 6: cover a number of different industries and silos if you will.
12:36
Speaker 6: So first tip I would say is that you're going
12:39
Speaker 6: to want to leverage market trends to your advantage, and
12:41
Speaker 6: so hiring challenges have prompted employers to develop or enhance
12:45
Speaker 6: mentorship programs, including offering paid internships and even bringing back
12:50
Speaker 6: retirees and a part time consulting basis, and so all
12:53
Speaker 6: of this is really indicating a promising job market for
12:56
Speaker 6: twenty twenty five for workers at all level. Another tip
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Speaker 6: I would say is you want to highlight your transferable skills,
13:02
Speaker 6: and so for that, you want to emphasize skills that
13:05
Speaker 6: apply across all industries, such as problem solving and adaptability.
13:09
Speaker 6: And all of this is designed to help you broaden
13:11
Speaker 6: opportunities today in the future. The next one, I've got
13:14
Speaker 6: you more here for you. The next one, I would say,
13:16
Speaker 6: expand your network, so building connections through industry events, professional associations,
13:22
Speaker 6: or even alumni networks and ultimately uncovered job leads. And
13:26
Speaker 6: it can also help you stand out competitive job market.
13:29
Speaker 6: And when we're comment on this one, this space in particular,
13:33
Speaker 6: you know probably hasn't been what's been the past couple
13:36
Speaker 6: of years, and it's it's real. So many of these
13:38
Speaker 6: associations and events were virtual and they're fully back and
13:41
Speaker 6: this is a really key cornerstone for all professionals in
13:45
Speaker 6: their advancement. And then Finally, I love this one is
13:48
Speaker 6: just be visible online, So optimize your LinkedIn profile and
13:51
Speaker 6: engage in industry specific discussions and groups to enhance your
13:55
Speaker 6: digital presidents presidence so that way you can be attractive
13:58
Speaker 6: to recruiters hiring managers in the future lawyers.
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Speaker 2: This week is the CS conference out in Las Vegas, Nevada.
14:05
Speaker 2: Obviously a lot of talk about artificial intelligence and Nvidia
14:09
Speaker 2: and all the push there. What are you seeing in
14:12
Speaker 2: terms of workers and their expectations for both what the
14:17
Speaker 2: company offers in terms of AI tools, but I think
14:19
Speaker 2: more importantly for listeners what companies expect in terms of
14:22
Speaker 2: new employees on artificial intelligence.
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Speaker 6: So there's a couple of things with AI, and we
14:27
Speaker 6: can really go deep on this, but we know there's
14:30
Speaker 6: challenges and limitations, and I won't go through all of those,
14:32
Speaker 6: but just quickly, we know that some of the challenges
14:34
Speaker 6: that employers are seeing around data quality. We also know
14:37
Speaker 6: that they're having difficulty integrating with their existing systems and infrastructure.
14:41
Speaker 6: And we also know that there's a significant skills gap
14:43
Speaker 6: and talent shortage. And so to your question, here's some
14:46
Speaker 6: data for you in terms of the impact of AI
14:49
Speaker 6: and what people are thinking and feeling about it. So
14:51
Speaker 6: a Robert Half research shows that forty one percent of
14:54
Speaker 6: workers believe that earning a certificate can actually help advance
14:57
Speaker 6: their career. So almost one in every two people think
15:00
Speaker 6: that that's sort of the catalyst to help them, and
15:02
Speaker 6: that includes certificate in additional training and AI specifically. And
15:06
Speaker 6: then forty percent of managers say that they're already bringing
15:09
Speaker 6: in contract talent to help support AI related projects. So
15:14
Speaker 6: the big message is that AI is a skill to learn,
15:17
Speaker 6: and it's a skill to master, and it's different for
15:20
Speaker 6: every job and industry. So my encouragement is to explore
15:25
Speaker 6: learning how AI is impacting your industry in your role
15:28
Speaker 6: within the industry.
15:29
Speaker 2: Final question here, Corey, I've given Robert hafs role in
15:32
Speaker 2: the labor force. What are you seeing from contract professionals,
15:36
Speaker 2: temporary help things like that as we had into the
15:38
Speaker 2: new year.
15:39
Speaker 6: Yeah, one of the things with our predictions, we've got
15:41
Speaker 6: a few out there, but one of them is that
15:43
Speaker 6: we're expecting a greater emphasis on the flexible staffing solution.
15:47
Speaker 6: So it's great for us. So many organizations and more
15:50
Speaker 6: of them more than ever, are actually looking to contract
15:53
Speaker 6: professionals and they use this as a scalable talent model
15:57
Speaker 6: because reality is we're still dealing in some level of
16:00
Speaker 6: a shifting market condition, So listen. Contract work is an
16:04
Speaker 6: essential part of the flax flexible model today for employers
16:08
Speaker 6: because it gives them the ability to bring people in
16:11
Speaker 6: for project work and also gives them the opportunity to
16:14
Speaker 6: almost try before they buy, because they can consider the
16:16
Speaker 6: person for a permanent role and then the contrarian side,
16:19
Speaker 6: the opposite side for the individual. The employee contract works
16:22
Speaker 6: provides flexibility, it can help support work life balance, and
16:26
Speaker 6: ultimately it gives an employee contractor the ability to explore
16:30
Speaker 6: different industries and companies and try different assignments, all still
16:34
Speaker 6: accelerating their skill development.
16:35
Speaker 2: It's Corey Adams from the Contracting and Placement from Robert
16:39
Speaker 2: Half talking to us about their predictions for the labor
16:42
Speaker 2: market come twenty twenty five. Corey, thanks so much for
16:44
Speaker 2: joining us. I'm sure we'll talk to you again soon.
16:45
Speaker 2: Have a great twenty twenty five.
16:47
Speaker 6: You as well. Thanks so much.
16:48
Speaker 5: All right, time for trivia here on the Financial Exchange,
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Speaker 5: and today Nicholas Cage turns sixty one years old. Before
16:56
Speaker 5: beginning his acting career, Nicholas Cage changed his name or.
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Speaker 1: His last name.
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Speaker 5: Excuse me to avoid claims of nepotism because his uncle
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Speaker 5: A triviy questions today, what was Nicholas Cage's original last name?
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17:37
Speaker 2: I hate talking politics. Will only spend a couple of
17:39
Speaker 2: minutes on this, but come twenty twenty five, another political
17:42
Speaker 2: fight that will be in place, the debt ceiling fight.
17:45
Speaker 2: It'll be occurring sometime mid year twenty twenty five, unless
17:49
Speaker 2: it is rolled into a spending package in the new year.
17:53
Speaker 2: A few weeks ago, Donald Trump, President elect Donald Trump
17:57
Speaker 2: had proposed doing away with this per face a lot
18:00
Speaker 2: of backlash from a number of the members of his
18:03
Speaker 2: own party, and is again just kind of Weirdly, one
18:08
Speaker 2: of those things that both Donald Trump and Elizabeth Warren
18:10
Speaker 2: seem to support right now is doing away with the
18:14
Speaker 2: debt ceiling. I personally, just my own purview, it is
18:17
Speaker 2: a dumb way to govern. We have blown through the
18:20
Speaker 2: debt ceiling on every single occasion. All it does is
18:23
Speaker 2: approve spending that has already been touched into law by Congress.
18:27
Speaker 2: So if you want to have an honest conversation about deficits,
18:30
Speaker 2: all on board. But the debt ceiling fight is not
18:33
Speaker 2: a good way to deal with it. So I'm actually
18:35
Speaker 2: I'm with them on doing away with it permanently. But
18:39
Speaker 2: typically what we see is that when one party's in
18:42
Speaker 2: favor or in control of Congress, then they hate the
18:45
Speaker 2: debt ceiling. When they are not in control, then guess
18:49
Speaker 2: what they want to use it as a negotiating tactic
18:51
Speaker 2: to call out all the stupid spending and tax cuts
18:54
Speaker 2: that the other party's passing.
18:55
Speaker 4: That's the negative aspect of it, Mike, is that the
18:57
Speaker 4: other side of the aisle is able to use it
19:00
Speaker 4: leverage when we come up on these debt ceialing issues,
19:02
Speaker 4: and it would be a global economic catastrophes. Probably over
19:09
Speaker 4: state it would be a significant global economic issue if
19:11
Speaker 4: we were to default on our debt. Yeah, that would
19:14
Speaker 4: be catastphe. Probably is appropriate. I'll stick with my original
19:17
Speaker 4: guns and every single time this comes about, we have
19:21
Speaker 4: to cover on the show. So there's a little personal
19:23
Speaker 4: offend DEBTA there too, so we'll see what happens with it.
19:26
Speaker 4: It is antiquaid, but I don't love the idea of
19:28
Speaker 4: continuing to increase the debt sealing any further Quick Break
19:30
Speaker 4: Trivia Answers.
19:31
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19:45
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19:54
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19:57
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20:06
Speaker 5: Trivia questions today was what was Nicholas Cage's original last name?
20:11
Speaker 3: That'll be Coppola.
20:12
Speaker 5: He changed his name from Copola to Cage to avoid
20:16
Speaker 5: the perception of nepotism as the nephew of famous director
20:20
Speaker 5: Francis Ford Coppola and to establish his own identity as
20:25
Speaker 5: an actor. Josh from Nottingham, New Hampshire is our winner today,
20:28
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20:31
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20:35
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20:39
Speaker 2: New year means new financial planning and planning for your year,
20:44
Speaker 2: as maybe somebody that's still working and contributing to a
20:46
Speaker 2: four oh one K plan. And there are a number
20:49
Speaker 2: of different changes affecting all sorts of personal finance coming
20:52
Speaker 2: twenty twenty five, and I want to just kind of
20:54
Speaker 2: rapid fire a few of them. So biggest one that
20:57
Speaker 2: I can think of here in Massachusetts and Maine would
21:00
Speaker 2: be huge changes coming to social Security through the Social
21:05
Speaker 2: Security Fairness Act. And if we can quickly focus there,
21:08
Speaker 2: Paul for a moment on those changes before we move
21:10
Speaker 2: on to four to one case.
21:11
Speaker 4: Yeah, So this applies to the government pension offset and
21:15
Speaker 4: the windfall elimination provision, basically applicable to anyone who worked
21:20
Speaker 4: in the private sector and paid into Social Security and
21:23
Speaker 4: also is collecting a municipal pension, whether that's spousal benefits
21:28
Speaker 4: that could be impacted or benefits from the Social Security
21:31
Speaker 4: filer themselves. Previously, I believe it was the seventies or
21:35
Speaker 4: eighties that this initial legislation had got into place.
21:38
Speaker 3: I think it was during the Reagan administration. Yeah, there
21:40
Speaker 3: was a.
21:43
Speaker 4: Cap and an elimination on some of the benefits you
21:45
Speaker 4: were intelled to receive if you were collecting municipal pension
21:48
Speaker 4: and had paid into the Social Security system. That has
21:50
Speaker 4: now as of Monday, I believe President Biden had signed
21:53
Speaker 4: in this new legislation that will no longer be the
21:56
Speaker 4: case where you will be impacted by any government pension
21:58
Speaker 4: offset or fall elimination provision. For those people who are
22:02
Speaker 4: impacted and find themselves in that box of municipal pension
22:07
Speaker 4: as well as private sector work, Social Security will take
22:10
Speaker 4: care of all of the ins and outs of it
22:12
Speaker 4: if you're registered on the system, So that's important to note.
22:15
Speaker 4: But if you are subject to the windfall elimination provision
22:18
Speaker 4: and had not filed yet, perhaps want to revisit that.
22:22
Speaker 1: Yeah.
22:22
Speaker 2: I think the key thing here is if you have
22:25
Speaker 2: never filed for Social Security because you were ineligible because
22:28
Speaker 2: of one of these things, then SSA might not know
22:31
Speaker 2: about you might not know to make you eligible, and
22:34
Speaker 2: so that would be the key takeaways. If you're receiving
22:36
Speaker 2: nothing from Social Security today and you are of age,
22:40
Speaker 2: then you might consider going and looking into that. Big
22:44
Speaker 2: changes coming to four to one K contributions as well
22:47
Speaker 2: with the super catchup, which is just, you know, the
22:51
Speaker 2: dumbest thing out there, but does benefit some people. So
22:54
Speaker 2: specifically it applies to participants between the ages of sixty
22:59
Speaker 2: to sixty three in four oh one K four to
23:02
Speaker 2: three B government four fifty seven plans, you can now
23:06
Speaker 2: contribute up to eleven thousand, two hundred and fifty dollars
23:09
Speaker 2: as a catch up contribution on top of your normal contribution.
23:12
Speaker 2: That means, specifically, if you are again sixty to sixty
23:17
Speaker 2: three and working and offered a retirement plan, your total
23:20
Speaker 2: contribution can get up to nearly thirty five thousand dollars
23:23
Speaker 2: in twenty twenty five. If you are fifty to fifty
23:26
Speaker 2: nine or over sixty four, then you're still subject to
23:29
Speaker 2: the same seventy five hundred dollars catch up, which is
23:32
Speaker 2: confusing as all hell.
23:33
Speaker 4: Why the hell did they do the two things?
23:35
Speaker 3: They didn't have enough money? Sorry, the two to fifty A.
23:38
Speaker 4: Why eleven thousand and two fifty more?
23:40
Speaker 3: Why not like eleven thousand.
23:41
Speaker 2: Just give us a flat Yeah, yeah, we we'd like
23:44
Speaker 2: to be as confusing as posible. Job Paul, Look, stop complaining,
23:47
Speaker 2: this is your job.
23:47
Speaker 3: Security.
23:48
Speaker 2: Okay, finally, this is not a new feature, but it's
23:53
Speaker 2: one that bears reminding. If you contribute to your four
23:56
Speaker 2: oh one K, oftentimes what we will see out there
24:00
Speaker 2: is you know your goal is to max out that
24:02
Speaker 2: four oh one K, and because you're doing it that way,
24:05
Speaker 2: maybe you're on a flexible commission based compensation plan, right,
24:09
Speaker 2: and maybe you were planning on maxing it out in December,
24:13
Speaker 2: but you got there in October. You need to talk
24:16
Speaker 2: to your employer about this weird little feature called the
24:20
Speaker 2: true up because in many, many four to one K plans,
24:24
Speaker 2: if you finish contributing your maximum in October, for example,
24:28
Speaker 2: you'll miss out on two months of matches from your employer.
24:32
Speaker 2: And unless they have a special true up feature that
24:34
Speaker 2: goes goes back and looks at your full year contributions
24:38
Speaker 2: and trus up your match, you will miss out on that.
24:41
Speaker 2: And so again, not a lot of people are able
24:44
Speaker 2: to max out their four oh one ks. But if
24:45
Speaker 2: you are finding yourself in any of these situations, you
24:48
Speaker 2: were eligible for a pension from the government and collecting
24:52
Speaker 2: Social security, and you were subject to the WEB or
24:55
Speaker 2: the GPO. I'm sure if you were, you already know
24:57
Speaker 2: about these changes. But if you you are in that
25:00
Speaker 2: sixty to sixty three time range and trying to figure
25:03
Speaker 2: out how much you should be putting into your retirement plan,
25:06
Speaker 2: or if you're unsure if you've got this true up
25:07
Speaker 2: feature on your four h one K, I would encourage
25:10
Speaker 2: you to give us a ring at the Armstrong Advisory Group.
25:12
Speaker 2: I know these are very particular scenarios that don't apply
25:16
Speaker 2: to everyone, but I'm here to tell you that it's
25:19
Speaker 2: tricky and unless you're gonna spend a lot of time
25:22
Speaker 2: reading through these rules and understanding the ins and outs,
25:25
Speaker 2: there's room for mistakes, and more likely, there's just room
25:28
Speaker 2: for money to be left on the table. If you
25:30
Speaker 2: don't want to leave money on the table for twenty
25:32
Speaker 2: twenty five, give us a call here at the Armstrong
25:34
Speaker 2: Advisory Group. Let us help you guide you through these
25:36
Speaker 2: complex rules that are ever changing by calling eight hundred
25:40
Speaker 2: three nine three four zero zero one. That's the number
25:43
Speaker 2: for the Armstrong Advisory Group, where we offer free consultations
25:45
Speaker 2: to the general public five days a week. That number again,
25:49
Speaker 2: eight hundred three nine three four zero zero one.
25:52
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
25:55
Speaker 1: registered investment advisor. Nothing in the ad or in any
25:57
Speaker 1: Armstrong guide a specific financial, legal, or tech advice. Consult
26:00
Speaker 1: your own financial, tax into state planning advisors before making
26:03
Speaker 1: any investment decisions. Armstrong make contact you to offer investment
26:06
Speaker 1: advisory services.
26:07
Speaker 3: Paul.
26:08
Speaker 2: When ETFs were first really released, they've been around forever,
26:12
Speaker 2: but when they started getting really popular, the reason was
26:15
Speaker 2: pretty simple. They were a low cost alternative to a
26:18
Speaker 2: mutual fund that typically tracked something pretty basic like the
26:22
Speaker 2: S and P five hundred. Those were some of the
26:24
Speaker 2: biggest ones early on. Really cheap, easy way to track
26:29
Speaker 2: an index. As time has gone on, and you know,
26:34
Speaker 2: there's been this race to zero, there's been a lot
26:36
Speaker 2: of new entrance into the ETF space that didn't previously exist,
26:41
Speaker 2: And I guess my question for you is it's probably
26:44
Speaker 2: a balance of both, but good, bad or ugly. Like
26:47
Speaker 2: you know, there's a lot of different things that we
26:48
Speaker 2: are seeing out there now that I think have confused
26:52
Speaker 2: investors in some ways, and some of them are useful tools,
26:55
Speaker 2: others not really holding up to what they're supposed to do.
26:58
Speaker 4: Yeah, the thing you always have to caution yourself with
27:00
Speaker 4: with ETFs is that they're offering often chasing the flavor
27:04
Speaker 4: of the week or the month, they you know, pile
27:06
Speaker 4: into I know that there's one behind the Magnificent seven
27:10
Speaker 4: that has been created, there's ones that are going to
27:12
Speaker 4: be tied to bitcoin with leverage, and also of other
27:15
Speaker 4: different mechanisms that they're they're chasing money, and oftentimes what
27:18
Speaker 4: they do that is they're doing it in asset classes
27:20
Speaker 4: that are generating a lot of interest and perhaps could
27:23
Speaker 4: be trading at a premium relative to what they should be.
27:26
Speaker 4: It was interesting, Mike. I was having a conversation with
27:29
Speaker 4: my sister in law who works for a mutual fund
27:30
Speaker 4: company around the Boston area and serves in a mayor
27:34
Speaker 4: giro role, and I was just talking about, you know,
27:36
Speaker 4: how their year fared and sort of what their focuses
27:38
Speaker 4: were for next year, and really the focus was more
27:43
Speaker 4: and more investment in ETFs, just you know, echoing what
27:45
Speaker 4: we're talking about here. Where the mutual fund industry is
27:49
Speaker 4: a bit of a dying breed. There's a lot more
27:51
Speaker 4: funneling of money and capital into the ETF So their
27:55
Speaker 4: focus from a firm perspective is actively managed ETFs rather
27:59
Speaker 4: than the actively managed mutual funds side. Of things which
28:03
Speaker 4: had been so prevalent in four one K plans and
28:05
Speaker 4: elsewhere for decades. In this article speaks to that shift
28:09
Speaker 4: that we're seeing in the market. It's been going on
28:12
Speaker 4: for years, but it's just getting stronger and stronger the
28:14
Speaker 4: momentum behind it.
28:15
Speaker 2: Heck, these days there's even ETFs that track the purchases
28:19
Speaker 2: of congressional lawmakers through the Subversive Unusual Wales Democratic ETF
28:25
Speaker 2: and Republican ETFs that are out there. There are so
28:28
Speaker 2: many different flavors that are out there and available to
28:31
Speaker 2: the general public. And I am not going to say
28:34
Speaker 2: that availability and new products are a bad thing. I
28:39
Speaker 2: can't get there. But here is my general rule of thumb.
28:43
Speaker 2: If you can't look through your portfolio and explain what
28:46
Speaker 2: it is that every single holding.
28:48
Speaker 3: Does, that's a problem.
28:51
Speaker 2: And I don't just mean like, oh, yeah, but I've
28:54
Speaker 2: got this professional that handles it for me. No, you
28:57
Speaker 2: yourself should understand or at least be able to ask
28:59
Speaker 2: that person, what is it that I own with this,
29:03
Speaker 2: and why do I own it? What is it actually underlying?
29:06
Speaker 2: How is it, for example, generating a twelve percent dividend yield?
29:11
Speaker 2: If it if it smells funny.
29:15
Speaker 3: If it looks funny, it might be a little bit funny.
29:18
Speaker 2: And that's I think the main message that I can
29:21
Speaker 2: continually try to convey to people, and it goes for
29:23
Speaker 2: anything in investing, is if you can't understand what.
29:26
Speaker 3: It is that's going on underneath the hood, you at
29:30
Speaker 3: least need to exercise caution.
29:32
Speaker 4: The other aspect that we should hit on with these
29:34
Speaker 4: ETFs is it's one thing to talk about the really
29:36
Speaker 4: popular ones out there that are heavily traded and track
29:39
Speaker 4: the S and P five hundred. Those are extremely liquid
29:42
Speaker 4: some of these. It's important for you or you know,
29:45
Speaker 4: speaking with the advisor to understand the liquidity behind the
29:47
Speaker 4: products that you're buying, because if you have something that's
29:50
Speaker 4: thinly traded and the markets get hairy from an ETF perspective,
29:54
Speaker 4: and you don't have the prerequisite amount of buyers and
29:57
Speaker 4: sellers in a particular market or to trade a particularly ta,
30:00
Speaker 4: challenging things can happen. Our negative things can happen in
30:03
Speaker 4: times of volatility, So understanding the market and the liquidity
30:07
Speaker 4: behind these products is important in addition to obviously understanding
30:11
Speaker 4: what's under the hood of them as well.
30:13
Speaker 2: Let's take a quick break here on the Financial Exchange
30:15
Speaker 2: when we come back bit a stack Roulette.
30:18
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30:21
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31:22
Speaker 3: Paul, what do you have for us? Stackerle At this morning?
31:25
Speaker 4: The Boston Globe here has a piece regarding a college
31:29
Speaker 4: student based out of Newton who had a physical therapy
31:33
Speaker 4: bill that he thought would be twenty five dollars per session,
31:35
Speaker 4: and then the bill came for four thousand, five fifteen
31:39
Speaker 4: dollars And so.
31:40
Speaker 2: Did he have three thousand sessions to justify this exorbitant cost.
31:44
Speaker 4: He did not.
31:45
Speaker 5: In fact, he had a total of twenty five in
31:50
Speaker 5: terms of that's what it should have been if it
31:52
Speaker 5: was twenty five dollars per.
31:54
Speaker 4: So, as always with the healthcare system, it's a little care.
31:57
Speaker 3: Twenty one sessions at twenty five bucks. Yeah, I was
31:59
Speaker 3: quoted right.
32:01
Speaker 4: He thought the co payment would totally cover the sessions
32:05
Speaker 4: in place. He was had an ankle injury, started doing
32:07
Speaker 4: the PT work back here locally in Newton at a
32:11
Speaker 4: physical therapy facility. He went back to school at University
32:14
Speaker 4: New Hampshire, found a local place near Durham, New Hampshire,
32:18
Speaker 4: which turned out to be an outpatient hospital facility, and
32:23
Speaker 4: the difference in charge per session was three hundred and
32:26
Speaker 4: seventy one dollars per session at this Durham facility in
32:29
Speaker 4: New Hampshire versus the session at home, which was seventy
32:32
Speaker 4: three dollars, unbeknounced to him now an expensive lesson, and
32:36
Speaker 4: he claims that the physical therapy, I mean it's an
32:39
Speaker 4: ankle injursury. There's really only so much that you can
32:42
Speaker 4: do out there. Typically it's you know, heat, ice and
32:46
Speaker 4: some other exercises. So it's not like there's anything that's
32:48
Speaker 4: five times more innovative that you're going to see from
32:51
Speaker 4: ankle rehab in New Hampshire. But it does speak to
32:53
Speaker 4: what we all deal with on a daily basis, where
32:57
Speaker 4: there is so much ambiguity and in terms of what
33:01
Speaker 4: things cost in the healthcare space, it's baffling.
33:03
Speaker 2: I just imagine for a moment, Paul, that let's take
33:07
Speaker 2: it to our own industry. Somebody wanted to hire you
33:11
Speaker 2: and you quoted them twenty five hundred dollars to deliver
33:14
Speaker 2: a complicated financial plan that was going to answer a
33:17
Speaker 2: number of questions for them, and you did that. They
33:21
Speaker 2: were a customer of yours for nine months, you had
33:24
Speaker 2: several sessions where you went through all this information and
33:27
Speaker 2: then a few months later you build them forty five
33:30
Speaker 2: thousand dollars. What do you think that person would say,
33:35
Speaker 2: and what do you think we as your employer would
33:39
Speaker 2: say about all that one, we would probably honor the
33:42
Speaker 2: twenty five hundred dollars that we had quoted. We wouldn't
33:45
Speaker 2: have and if we were wrong about the price, we
33:47
Speaker 2: probably wouldn't have provided services for a several months at
33:50
Speaker 2: the lower price without correcting. Something likewise, if you walk
33:53
Speaker 2: into a Best Buy and the employer tells you, oh, yeah,
33:55
Speaker 2: I think that thing's twenty five bucks, and then you
33:57
Speaker 2: get to the cash register and it's forty five hundred bucks,
33:59
Speaker 2: you have time to make some sort of different decision.
34:03
Speaker 2: Or if you're they charge your credit card for forty
34:07
Speaker 2: five hundred dollars after the fact, then you have the
34:09
Speaker 2: ability to dispute that charge and say, no, they told
34:12
Speaker 2: me it's me twenty five bucks, and they charged me
34:14
Speaker 2: forty five hundred. This is the only industry in the
34:16
Speaker 2: world where we allow this, right. I can't think of
34:19
Speaker 2: anything else where we allow this type of thing. Now, Okay,
34:23
Speaker 2: he was, you know, a college student, So what's that
34:25
Speaker 2: put you? Eighteen to twenty one years old? And I
34:27
Speaker 2: think most of us adults having dealt with the healthcare
34:30
Speaker 2: industry would know that some person at the front desk
34:34
Speaker 2: who's telling you how much the therapy is going to cost?
34:36
Speaker 2: Is probably not the best person to ask, and you
34:38
Speaker 2: should go check your healthcare provider. But give me a break, Like,
34:43
Speaker 2: some ownership of all of this needs to exist somewhere.
34:47
Speaker 2: And I'm not claiming to have any of the solutions here,
34:50
Speaker 2: because you know, I fully recognize that this is how
34:54
Speaker 2: the hospitals are able to support themselves and provide the
34:58
Speaker 2: services and top of, top of the notch healthcare that
35:01
Speaker 2: they do.
35:03
Speaker 3: Transparency.
35:04
Speaker 2: But the transparency is impossible, right, It's impossible because for
35:08
Speaker 2: him to go do this, he would have had to
35:09
Speaker 2: reach out to his insurance network, try to navigate a
35:13
Speaker 2: bunch of web pages that don't tell you anything about
35:15
Speaker 2: how much things are going to cost, and then spend
35:18
Speaker 2: hours on hold with the insurer to try and figure out, Hey,
35:21
Speaker 2: if I go to this facility, they just told me
35:23
Speaker 2: it's gonna be twenty five bucks co payment per treatment?
35:25
Speaker 3: Is that actually what I will pay?
35:27
Speaker 2: And they'll give you some complicated answer, Well, it depends
35:30
Speaker 2: if you meet you're deductible or not, and are you
35:32
Speaker 2: paying out of pocket or will be? Like, nobody can
35:36
Speaker 2: possibly navigate all of this stuff, And like I said,
35:39
Speaker 2: I have no real answer for a solution here, but
35:45
Speaker 2: everyone out there has experienced something like this and it
35:47
Speaker 2: is just especially when it happens to what is probably
35:50
Speaker 2: like a nineteen year old kid who's again parents will
35:54
Speaker 2: ultimately probably fit the bill on this. It's just atrocious
35:58
Speaker 2: and ridiculous. Fubo TV my network TV provider if you're unfamiliar.
36:04
Speaker 2: They are the second largest streaming cable package out there now.
36:10
Speaker 2: Scream streaming cable is kind of a oxymoron that doesn't
36:14
Speaker 2: make any sense, but what they do is they just
36:16
Speaker 2: try and replicate a cable package that's delivered over the
36:19
Speaker 2: Internet instead of via an actual cable package like you
36:23
Speaker 2: would get from Exfinity or FiOS. They are being acquired
36:27
Speaker 2: and combined with Disney's same offering in this space, which
36:31
Speaker 2: is Hulu Live TV. I don't know what space they
36:34
Speaker 2: occupied in there, but not nearly as much market share,
36:37
Speaker 2: and ultimately trying to better compete with Google out there,
36:40
Speaker 2: who has the number one spot with YouTube TV. I
36:44
Speaker 2: don't know what this ultimately changes in the short term,
36:47
Speaker 2: it certainly will give Fubo more negotiating power with those
36:50
Speaker 2: heavy hitters because you do have Disney behind you and
36:54
Speaker 2: a little bit more push, but it's not as though
36:56
Speaker 2: Disney has been absent from any of the big negotiations
36:59
Speaker 2: and has had blackouts of their own with their own channel,
37:02
Speaker 2: So I expect that this probably doesn't change too too
37:06
Speaker 2: much in terms of what's out there, but continued narrowing
37:09
Speaker 2: of the available options out there for people that are
37:11
Speaker 2: looking to cut the court and save on cost.
37:13
Speaker 4: It also seems like a big impact of this MIC
37:15
Speaker 4: is going to be that Venue Sports, which was a
37:17
Speaker 4: Rileville streaming service that was planned by Fox, Warner Brothers,
37:21
Speaker 4: Discovery and Disney's ESPN were it will likely fast track that.
37:27
Speaker 4: Obviously Disney and ESPN perhaps will not be or will
37:31
Speaker 4: not be part of that going forward, but that may
37:33
Speaker 4: be something that gets it off the ground there that
37:36
Speaker 4: was back in last year that that agreement was made
37:40
Speaker 4: to create this combined entity.
37:43
Speaker 2: In case you're curious, I'm looking at Fubu right now.
37:45
Speaker 2: It's going for ninety bucks a month at this stage
37:47
Speaker 2: for the elite package with a bunch of sports, so
37:49
Speaker 2: regional sports you pay ninety bucks a months to compete
37:52
Speaker 2: with the real cable packages that are out there, so
37:54
Speaker 2: still might be cheaper than your FiOS or your Exfinity
37:57
Speaker 2: packages when you count the set top boxes and all
37:58
Speaker 2: that stuff.
37:59
Speaker 3: But it's it's a lot narrower than it was five
38:01
Speaker 3: years ago.
38:02
Speaker 4: YouTube TV two is creeping up there.
38:04
Speaker 2: That's all the time we have for today, major US
38:08
Speaker 2: markets in the red at the moment. We'll have a
38:10
Speaker 2: full recap for you tomorrow where it would be right
38:13
Speaker 2: back at it here on the Financial Exchange