Latest / The Financial Exchange Show / The Economy Is Running Out of Easy Fixes

Transcript

The Economy Is Running Out of Easy Fixes · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:02
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:08
Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:17
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
Speaker 1: this program do not endorse each other or their services.
0:25
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:28
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Mike Armstrong and Mark Vandetti. Your exclusive look
0:39
Speaker 1: at business and financial news affecting your day, your city,
0:43
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends, plus breaking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:54
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:58
Speaker 1: heroes by visiting dav dot Boston and making a donation today.
1:03
Speaker 1: Face is the Financial Exchange with Mike Armstrong and Mark Vandetti.
1:12
Speaker 2: Good morning, Happy Tuesday, and welcome back to the Financial Exchange.
1:16
Speaker 2: It is Mike, Mark and Tucker with you on a
1:19
Speaker 2: Tuesday where we have the NASDAC off about three hundred points,
1:21
Speaker 2: down one point two percent, the SMP off forty five
1:25
Speaker 2: points or two thirds of percent now actually holding on
1:28
Speaker 2: to some positive gains to the day, up about a
1:30
Speaker 2: tenth of a percent after touching all time highs. I
1:33
Speaker 2: believe on the SMP and NASDAC just yesterday with a
1:36
Speaker 2: bit of a surge, they're relatively flat but getting just
1:40
Speaker 2: above those all time highs.
1:41
Speaker 3: Again.
1:42
Speaker 2: We've got a Federal Reserve meeting ongoing, so taking a
1:45
Speaker 2: look at more interest rates around there. Yield on the
1:49
Speaker 2: ten year Treasury sitting at four point three five eight percent.
1:54
Speaker 2: We've got the thirty year fixed rate mortgage today according
1:57
Speaker 2: to Mortgage News Daily, sitting at six and a third
2:00
Speaker 2: of a percent. And when we take a look at
2:03
Speaker 2: expectations for FED action for the rest of the year,
2:07
Speaker 2: first things first, one thing that really pretty rarely happens
2:10
Speaker 2: Chicago marketallics change is pricing in one hundred percent probability
2:13
Speaker 2: of no action by the Federal Reserve today by the
2:17
Speaker 2: end of this year. Still investors mainly pricing in no
2:21
Speaker 2: likelihood of rate cuts, as it's eighty one and a
2:24
Speaker 2: half percent probability that interest rates are exactly where they
2:27
Speaker 2: are now. Kevin Worsh on Friday cleared a key hurdle
2:30
Speaker 2: with Senator Tom Tillis removing his threat to vote against
2:36
Speaker 2: his confirmation from the Senate Bank Senate Finance Committee.
2:40
Speaker 1: Finance.
2:40
Speaker 2: Yes, Senate Finance Committee, So that looks like that is
2:43
Speaker 2: going to move forward. Still no announcement quite yet from
2:46
Speaker 2: Powell as to his intentions. He will not be able
2:49
Speaker 2: to serve as FED president of course if Worsh is confirmed,
2:53
Speaker 2: but he could remain in his seat on the Federal
2:57
Speaker 2: Reserve Board of Governors. Very unlikely in my view based
3:01
Speaker 2: on all of this, but is a possibility at least
3:04
Speaker 2: out there. Fuel prices moving higher today. Oil prices up.
3:08
Speaker 2: They touched over one hundred dollars a barrow, currently sitting
3:11
Speaker 2: at ninety nine dollars seventy two cents on the West
3:13
Speaker 2: Texas Crew benchmark, up three and a half percent today
3:17
Speaker 2: on the continued tensions and reports that President Trump isn't
3:20
Speaker 2: happy with the Iran proposed deal to reopen the straight
3:24
Speaker 2: of hor MoES of the plan that's bringing gas prices
3:28
Speaker 2: up as well, up to about four dollars and eighteen
3:31
Speaker 2: cents a gallon on the national average according to Triple A.
3:36
Speaker 2: Anything else market wise catching your eye this morning, mark
3:41
Speaker 2: no nice summary in terms of other data that we're
3:44
Speaker 2: going to be getting out there. Obviously, we have the
3:47
Speaker 2: FED meeting, which is going to dominate the news tomorrow
3:50
Speaker 2: after noon their press conference at two thirty PM. We
3:53
Speaker 2: have some housing information coming out early tomorrow, housing starts,
3:57
Speaker 2: building permits coming out tomorrow morning at eight thirty am.
4:01
Speaker 2: Initial jobless claims that we always get, as well as
4:04
Speaker 2: the GDP revisions and the Personal Consumption Expenditures Index. This
4:09
Speaker 2: is the Fed's preferred measure of inflation. We got CPI
4:12
Speaker 2: a couple of weeks ago. We'll get PCI PCE rather
4:15
Speaker 2: for March. All anticipating a pretty big bump up in
4:19
Speaker 2: inflation given the gas prices that I just mentioned. Some
4:23
Speaker 2: manufacturing data on Friday, but the big potential market moving
4:27
Speaker 2: stuff is all on the earnings calendar front, where we
4:30
Speaker 2: have some key companies reporting over the course of the
4:33
Speaker 2: next two days. We do have VISA after the bell
4:36
Speaker 2: today Coca Cola already reported, but the big heavy hitters.
4:40
Speaker 2: You've got the four point two trillion dollar market cap
4:43
Speaker 2: Alphabet reporting tomorrow after the bell, Microsoft's three three point
4:48
Speaker 2: two trillion dollars of market cap reporting after the bell,
4:52
Speaker 2: Amazon at two point eight trillion, Meta at one point
4:55
Speaker 2: seven all reporting tomorrow, that's Wednesday after the bell, and
4:59
Speaker 2: following that, you'll Apple about a four trillion dollar company,
5:02
Speaker 2: reporting Thursday after the bell. So plenty of information there
5:06
Speaker 2: to potentially drive future AI spending from the likes of
5:12
Speaker 2: well pretty much all of them other than Apple at
5:15
Speaker 2: this point, and plenty of them to also tell you, hey,
5:19
Speaker 2: how is our current spend paying off? As you know,
5:21
Speaker 2: Meta has significantly pivoted away from the metaverse and into AI,
5:27
Speaker 2: which kind of begs the question if they're going to
5:29
Speaker 2: rename themselves for a second time. And then obviously Google
5:35
Speaker 2: is both spending on the data center build out as
5:37
Speaker 2: well as testing their own models and getting some traction
5:40
Speaker 2: with their Gemini products.
5:42
Speaker 3: So quite a bit to learn over the course of
5:43
Speaker 3: the next few days.
5:44
Speaker 2: Not that they're going to answer all of those questions,
5:46
Speaker 2: but certainly that's what they're going to get questions about.
5:49
Speaker 2: Is how do we as investors determined whether your massive
5:53
Speaker 2: increase in capital expenditure is paying off in many any
5:57
Speaker 2: meaningful way.
5:57
Speaker 4: Yeah, that's the big question. Will these investments result in
6:02
Speaker 4: future profits? That sounds stupidly simple, Why would you even
6:06
Speaker 4: have to like articulate it, But it is it is
6:08
Speaker 4: the question. Sure, we know past profits have been in
6:11
Speaker 4: current are spectacular, But the massive investments to an extended
6:15
Speaker 4: gamble that they're making today, the prospects for those are uncertain.
6:20
Speaker 4: And that's probably an understatement, Mike.
6:22
Speaker 2: Yeah, we covered this last quarter, but Amazon, Alphabet, Meta,
6:26
Speaker 2: and Microsoft alone in twenty twenty six are preected projected
6:30
Speaker 2: to spend between six hundred and seven hundred billion with
6:34
Speaker 2: a B dollars on capital expenditures, primarily on AI infrastructure,
6:40
Speaker 2: most of that being spent here in the United States.
6:43
Speaker 2: So that's going to be the other question that's asked, Hey,
6:45
Speaker 2: are you still on target to spend that? Can you
6:47
Speaker 2: actually spend that? Can you get the infrastructure that you
6:49
Speaker 2: want up and running? Is that six hundred dollars six
6:52
Speaker 2: hundred billion dollar price tag even realistic now? With costs
6:57
Speaker 2: moving up, states, restricting data center build out, et cetera,
7:00
Speaker 2: et cetera. So big questions to be answered from those
7:03
Speaker 2: major tech players, and many of those questions.
7:06
Speaker 3: Being asked tomorrow after the bell.
7:08
Speaker 2: In the meantime, we have a piece in Bloomberg from
7:10
Speaker 2: Alison Schraeger title AI Maybe the US Economy's Only Hope?
7:16
Speaker 2: Obi Wan Kenobi. What exactly is her argument here about AI,
7:24
Speaker 2: you know, coming to save the day here? Because it
7:28
Speaker 2: read to me is a little bit drawn out. She
7:32
Speaker 2: talks about the aging population, our overwhelming amounts of debt,
7:37
Speaker 2: and how all of those things are likely to sink
7:39
Speaker 2: the economy unless AI saves us.
7:42
Speaker 4: Well, we need growth to come from somewhere, and she
7:44
Speaker 4: sees AI as the obvious like everybody does. I guess
7:47
Speaker 4: as the obvious savior. Like you said, we need a savior.
7:50
Speaker 4: Productivity growth, until very recently, slowed down a lot twenty
7:56
Speaker 4: ten's it was kind of languid, kind of stagnant. Productivity
8:00
Speaker 4: growth is important doing more with the same amount of
8:03
Speaker 4: time or stuff. You could think of that as the
8:05
Speaker 4: definition of productivity or output per hour. As output goes
8:09
Speaker 4: up and the hours stay the same, that means we're
8:12
Speaker 4: getting better at doing stuff with the same amount of
8:13
Speaker 4: resources and wages. Closely tracked productivity growth.
8:17
Speaker 3: Yep.
8:17
Speaker 2: So my biggest problem with this argument over like, she's
8:21
Speaker 2: right that a productivity boost would dramatically help perforce US economy.
8:26
Speaker 4: Of course. Yeah, so you can increase in the labor force.
8:29
Speaker 3: Yeah.
8:31
Speaker 2: I guess my problem is whenever we talk about the
8:33
Speaker 2: overwhelming debt or the aging population, we seem to do
8:38
Speaker 2: so as though it's this looming crisis that's happening any
8:41
Speaker 2: day now, when this has been a crisis that we've
8:44
Speaker 2: been dealing with for the course of the last quarter century,
8:47
Speaker 2: and people have been writing about it the same way.
8:48
Speaker 4: And by the way, Mike, it's it's a slow crisis,
8:51
Speaker 4: but you know growth went from three percent in the
8:53
Speaker 4: last century to two percent this century.
8:55
Speaker 3: Yeah, it is a crisis. I don't mean to dismiss it.
8:58
Speaker 2: I don't even yeah, sorry, I don't mean to dismiss
9:01
Speaker 2: it as not problematic. But to be clear, if we
9:04
Speaker 2: are in crisis, then we're in good company.
9:06
Speaker 4: It's a crisis in the sense that we've got these
9:08
Speaker 4: big unfunded liabilities Social Security, Medicare, and the revenue's got
9:14
Speaker 4: to come from somewhere, and it's easier to raise revenue
9:16
Speaker 4: if the economy is growing faster. Yeah, it's not a
9:18
Speaker 4: crisis in the sense that, well, we're just gonna have
9:21
Speaker 4: to make sacrifices. It's not like we're not all going
9:23
Speaker 4: to get up, go to work, eat, maybe even eat well,
9:26
Speaker 4: go on vacation, have happy lives and like we just
9:29
Speaker 4: won't know any Like, I don't know what the alternative
9:32
Speaker 4: universe of three percent growth the last quarter century would
9:34
Speaker 4: have been. Like i'd we'd all be on average.
9:36
Speaker 3: A little worse off, excuse me, significally worse off.
9:39
Speaker 4: Yeah, well, well, I'm sorry, we'd all be on average,
9:43
Speaker 4: you know, fifty percent richer close to that I growth. Yeah, yeah, yeah,
9:47
Speaker 4: but no, but you're you're saying the same thing. You're
9:48
Speaker 4: just looking at the opposite side.
9:49
Speaker 1: Of the coin.
9:51
Speaker 4: But Mike, you know, we don't know what that. We
9:52
Speaker 4: can't we can't peer into that universe and say, oh
9:55
Speaker 4: my god, look at me. I've got a great head
9:57
Speaker 4: of hair and I'm taller because I had extensions, and
10:01
Speaker 4: I have so much money. I have three homes.
10:03
Speaker 3: And several trips to Turkey. Yeah, that's your thing. Extensions
10:08
Speaker 3: that got them is where I'm gonna get it, I guess.
10:13
Speaker 2: Yeah, the Japanese economy, for instance, that is kind of
10:17
Speaker 2: in this scenario, in the worse one than we are.
10:21
Speaker 2: I can't look at their society and say, wow, it's
10:23
Speaker 2: crumbled in fault.
10:23
Speaker 4: No, No, they're still wealthy. The level is still high.
10:26
Speaker 3: The growth economy crap.
10:27
Speaker 4: Yeah, well I'm sorry they were. Yes, it's you could
10:30
Speaker 4: say crap if you look at just the growth rate.
10:32
Speaker 4: But they're still very, very rich and the level of
10:35
Speaker 4: per capita GDP is very high. It just slowed down
10:38
Speaker 4: a lot after nineteen nine. It had to slow down, Mike.
10:41
Speaker 4: It wasn't gonna they they were bombed into oblivion. After
10:46
Speaker 4: World War Two. They grew at a very They didn't
10:48
Speaker 4: have a recession for like forty years after that because
10:50
Speaker 4: they were catching up. It almost had to slow once
10:53
Speaker 4: they caught up to their own so called steady state.
10:56
Speaker 4: No need to define it. The intuition is enough. I
10:59
Speaker 4: think once they got to their own sort of steady state,
11:02
Speaker 4: they sort of plateaued there if you have not been,
11:06
Speaker 4: but they live well. They're a very sophisticated Western countries.
11:09
Speaker 2: And if if we're going to talk about the need
11:11
Speaker 2: for productivity to take off in the United States, you
11:14
Speaker 2: better hope if you're in China that productivity takes off
11:17
Speaker 2: there because the demographic issues that they face in their
11:20
Speaker 2: country are far more serie than they're global. They are
11:24
Speaker 2: global problems, and I think that piece doesn't solve the problem,
11:28
Speaker 2: but it is overlooked quite a bit that you know,
11:31
Speaker 2: most developed countries are in the same problem or a
11:35
Speaker 2: worse one when you look at either the combination either
11:37
Speaker 2: demographics on their own, debt on their own or the
11:39
Speaker 2: combination of the two.
11:40
Speaker 4: Yeah, go ahead, we got a break here.
11:42
Speaker 3: Let's say a quick break.
11:43
Speaker 2: When we come back, A little bit of trivia is
11:45
Speaker 2: coming up next on the Financial Exchange.
11:47
Speaker 1: Subscribe now to our YouTube page, where you'll find daily
11:50
Speaker 1: interviews and full shows of the Financial Exchange. We'll get
11:53
Speaker 1: you caught up on anything and everything you might have
11:56
Speaker 1: missed right here on the Financial Exchange. Time for trivia.
12:06
Speaker 5: Here on the Financial ex Change, and on this day.
12:08
Speaker 5: In nineteen thirty seven, pan Am operated the first scheduled
12:13
Speaker 5: commercial trans Pacific flight. From the fifties through the seventies,
12:18
Speaker 5: pan Am was the jewel of the sky, bringing luxury
12:21
Speaker 5: and innovation to air travel. Unfortunately, four pan Am hard
12:26
Speaker 5: times plagued the airline until it was forced to declare bankruptcy.
12:31
Speaker 5: So our trivia question today, what year did pan AM
12:36
Speaker 5: cease operations? Once again? What year did pan AM cease operations?
12:44
Speaker 5: Be the fifth person to text us at six one seven, three,
12:48
Speaker 5: six two, thirteen eighty five with correct answer along with
12:51
Speaker 5: keyword trivia. In when a Financial Exchange Show t shirt
12:54
Speaker 5: once again, the fifth correct response to text us to
12:57
Speaker 5: the number six one seven to thirteen eighty five with
13:02
Speaker 5: the correct answer along with keyword trivia, will win that
13:05
Speaker 5: T shirt. See complete contest rules excuse me at Financial
13:09
Speaker 5: Exchange Show dot com.
13:11
Speaker 2: Gallup does an annual poll that I was not previously
13:14
Speaker 2: really aware of. They've been doing it for over twenty
13:16
Speaker 2: years on the state of americans finances, and unsurprisingly, affordability
13:21
Speaker 2: continues to dominate American's financial concerns and worries. Thirty one
13:25
Speaker 2: percent cited affordability in an open ended question. That's below
13:29
Speaker 2: the peak back in twenty twenty four, when forty one
13:32
Speaker 2: percent of people cited as a top concern in that
13:36
Speaker 2: open ended question. But unsurprising data here and you know,
13:41
Speaker 2: falls in line with other survey related information we've been
13:45
Speaker 2: getting from University of Michigan consumer sentiments and others. I
13:50
Speaker 2: think what's different about this one is when you look
13:53
Speaker 2: at the data from Gallup, it brings you back to
13:56
Speaker 2: a level that we were seeing in the early to
13:59
Speaker 2: me twenty tens in terms of Americans views on the economy,
14:04
Speaker 2: and compare that to the University of Michigan when like,
14:07
Speaker 2: oh no, the sentiment that you're getting from there is
14:09
Speaker 2: worse than at times in the oeight crisis and other
14:11
Speaker 2: periods of time. This one actually lines up with I
14:15
Speaker 2: think where you can find some hard data points too.
14:17
Speaker 2: Right when we look at the unemployment rate, when we
14:19
Speaker 2: look at the pace of job creation, all of those
14:22
Speaker 2: things are lining up with a twenty thirteen to twenty
14:25
Speaker 2: sixteen timeframe, And as are the responses to this survey,
14:28
Speaker 2: which I just found more interesting and informative than what
14:31
Speaker 2: we've been getting from other sentiment surveys recently.
14:33
Speaker 4: Mark, look, Mike. The reality is cost of living has
14:37
Speaker 4: gone up by twenty eight percent on average. That's using
14:39
Speaker 4: the CPI. That's since January of twenty twenty, So that's
14:44
Speaker 4: just the overall change. Yeah, we're used to hearing about
14:47
Speaker 4: the inflation rate. If you annualize inflation for this decade,
14:52
Speaker 4: you get three point six. I'm rounding up just a
14:54
Speaker 4: few hundredths of a percentage.
14:56
Speaker 3: This is for the twenty twenties decades to.
14:58
Speaker 4: Our current decade. Compare that to the last decade one
15:00
Speaker 4: point five to the two thousands, which nobody associates with
15:05
Speaker 4: economic health and stability. And the first half of the
15:08
Speaker 4: two thousands was quite inflationary. We talked about gas prices
15:11
Speaker 4: earlier and oil prices earlier and how that changed consumer habits.
15:14
Speaker 4: The rate of inflation again, I'm annualizing it here, two
15:17
Speaker 4: point one four percent in nineteen nineties, two point three percent,
15:21
Speaker 4: rounding up. So it's it's shocking how much you know,
15:24
Speaker 4: two percent doubles every what thirty I should know this
15:27
Speaker 4: thirty five, thirty thirty five years. Yeah, three percent is
15:30
Speaker 4: like every twenty two thirty six. Thank you, Yeah, I
15:33
Speaker 4: could have just thank you. Hey, tucker up yours. So
15:39
Speaker 4: prices are going to double a lot faster twenty Well,
15:42
Speaker 4: you have to take okay, if you're a Mathew guy
15:45
Speaker 4: used the you could use the rule of seventy two.
15:47
Speaker 4: You could use logarithms if you you don't want to
15:49
Speaker 4: solve that equation, all right, anyway, point is we cover
15:52
Speaker 4: all the bases here, so prices are going to double
15:55
Speaker 4: faster your dollars go less far. That is a reality.
15:59
Speaker 4: And you know some categories have gone up a lot
16:02
Speaker 4: faster than inflation. Shelter prices are up thirty two percent
16:05
Speaker 4: cumulatively in the last five years.
16:06
Speaker 3: Education massive y.
16:07
Speaker 4: I didn't pull that, but I have to be as
16:09
Speaker 4: much as shelter, maybe a little bit more, because education
16:11
Speaker 4: inflation is like mid high single digits.
16:14
Speaker 2: I look at the experience that you know you brought
16:16
Speaker 2: up to twenty tens, and I'm looking at another number here,
16:19
Speaker 2: which is real median household income. So real just means
16:24
Speaker 2: inflation adjusted, and it's not average, so you're not being
16:27
Speaker 2: dramatically swayed by that top one percent that has obviously
16:30
Speaker 2: gotten a lot wealthy over the course of the last
16:32
Speaker 2: fifteen years. But in twenty ten, the real median household
16:35
Speaker 2: income was sixty eight thousand dollars, and people weren't terribly
16:38
Speaker 2: happy because back in oh seven it was seventy three thousand,
16:41
Speaker 2: So you know, household incomes, real household incomes had dropped
16:44
Speaker 2: during that point in time. But then you got to
16:47
Speaker 2: twenty nineteen inflation remained relatively low, wages increased over that time,
16:53
Speaker 2: and you got from again real median household income in
16:56
Speaker 2: twenty ten of sixty eight thousand dollars by twenty nineteen
16:59
Speaker 2: you were in at eighty three thousand.
17:02
Speaker 3: I think the.
17:02
Speaker 2: Problem that Americans are experiencing is not that incomes haven't
17:06
Speaker 2: really kept pace with inflation.
17:08
Speaker 3: They have.
17:09
Speaker 2: Real median income today is higher than it's really ever been.
17:14
Speaker 2: It's sitting at eighty four thousand dollars, but that's right
17:17
Speaker 2: where it was in twenty nineteen.
17:19
Speaker 3: Yeah, it's a good way to put it.
17:21
Speaker 2: You know, like you just haven't gotten a head over
17:23
Speaker 2: the course of the last seven years. And if you've
17:26
Speaker 2: been trying to buy a home, or if you've been
17:28
Speaker 2: trying to, you know, send yourself to college, then you
17:31
Speaker 2: might have fallen behind. And so that's been the experience
17:33
Speaker 2: that I think people are realizing, which is honestly similar
17:36
Speaker 2: to the one back during the Great Recession where hey, yeah,
17:39
Speaker 2: pre pre you know, great financial crisis, it took me
17:44
Speaker 2: as a household a good eight years to get back
17:48
Speaker 2: to the you know, average or the median real household
17:51
Speaker 2: income that I was experiencing back then.
17:53
Speaker 4: So Can I ask a philosophical question here? Or did
17:55
Speaker 4: you want to?
17:55
Speaker 3: Sure? But you only got forty five seconds to do,
17:57
Speaker 3: it's a hurry up.
17:57
Speaker 4: Is this the new normal or is something broken? Because
18:00
Speaker 4: it could just be the new It could.
18:01
Speaker 3: Be structure, you mean, the way people respond to cer,
18:03
Speaker 3: the way.
18:04
Speaker 4: The economy is growing, the inflation in fits and starts,
18:07
Speaker 4: geopolitical instability, protectionism. I mean, Mike, this could be the
18:11
Speaker 4: secular if you like, just the fancy word for sort
18:14
Speaker 4: of affects everything in his long term and will be
18:17
Speaker 4: with us for a while. This could just be the
18:19
Speaker 4: new normal. I don't wait experience so far this century
18:22
Speaker 4: because it is.
18:23
Speaker 3: I don't see, for instance, a lot of politicians really
18:26
Speaker 3: pushing for a globalization again. So to that end, what I.
18:31
Speaker 4: Mean, by the way, is inflationary in a slower growth?
18:35
Speaker 4: You could say, I like it. I don't want any
18:37
Speaker 4: foreign goods or foreign people or whatever. It means slower
18:39
Speaker 4: growth than higher inflation, full stop good.
18:41
Speaker 2: Sorry, Yeah, So I mean, could you convince me that
18:44
Speaker 2: for some period of time we are on a de
18:48
Speaker 2: globalization trend. Well, I don't see any political party directly
18:54
Speaker 2: contradicting that here in the United States, Democrats seem to
18:56
Speaker 2: want it, Republicans seem to want it. And granted it's
19:01
Speaker 2: the far extremes on both sides of that party that
19:03
Speaker 2: really pushed for it, but that is the preveying message
19:05
Speaker 2: from both ends of the party. Quick break when we
19:08
Speaker 2: come back. Full Market update is next with Wall Street Watching.
19:20
Speaker 1: Bringing the latest financial news straight to your radio. Every day.
19:25
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:30
Speaker 1: Tin out full Wall Street Watch treking the stocks, the
19:34
Speaker 1: dato and the headlines driving markets so far today right
19:37
Speaker 1: here on the Financial Exchange Radio Network.
19:40
Speaker 5: The markets are pulling back with oil in tech in
19:42
Speaker 5: the news, as the UAE announced this morning you will
19:45
Speaker 5: leave Opek on May first, in a major blow to
19:48
Speaker 5: the group.
19:49
Speaker 3: As for tech, the.
19:50
Speaker 5: Wall Street Journal reported open ai recently missed its own
19:54
Speaker 5: targets for new users and revenue. However, last hour, open
19:58
Speaker 5: ai has pushed back on those concerns. Right now, the
20:03
Speaker 5: Dow is up nearly two tenths of a percent, eighty
20:06
Speaker 5: one points higher, S and P five hundred down about
20:09
Speaker 5: three quarters of a percent. Tech heavy Nasdaq selling off
20:12
Speaker 5: one point four percent. RUSS to two thousand, down over
20:15
Speaker 5: one percent. Ten year treasure build is up two basis
20:18
Speaker 5: points at four point three five eight percent, and oil
20:22
Speaker 5: jumping three percent higher, trading right below one hundred dollars,
20:25
Speaker 5: a barrel oracle taking a hit of four percent on
20:29
Speaker 5: the heels of that open AI report is the software
20:31
Speaker 5: company is a data center deal worth three hundred billion dollars. Meanwhile,
20:36
Speaker 5: Spotify shares tanking twelve percent after the music in podcast
20:40
Speaker 5: streamer posted as smaller than expected projection for premium subscriber growth,
20:45
Speaker 5: increasing worries that customers may be put off by a
20:49
Speaker 5: recent price increase. Elsewhere, General Motors reported better than expected
20:53
Speaker 5: first quarter of profit. Jim also raised its full year
20:57
Speaker 5: earnings forecast. After the Supreme Court rejected in Trump's emergency tariffs,
21:01
Speaker 5: the stock is down by two percent, and after today's
21:05
Speaker 5: closing bell, Visa, Starbucks, and Robinhood will all report their
21:10
Speaker 5: first quarter results. I'm Zucker Silva and that is Wall
21:13
Speaker 5: Street watching. On the previous segment, we asked you the
21:16
Speaker 5: trivia question what year did pan Am cease operations? That
21:21
Speaker 5: will be nineteen ninety one, and Mark from Shrewsbury, Mass
21:24
Speaker 5: is our winner today taking on the Financial Exchange show
21:27
Speaker 5: T shirt. Congrats to Mark and we play trivia every
21:30
Speaker 5: day here on the Financial Exchange. See complete contest rules
21:34
Speaker 5: at Financial Exchange Show dot.
21:36
Speaker 2: Com companies in the state of California received eighty five
21:40
Speaker 2: percent of all US venture capital investment in the first
21:43
Speaker 2: quarter of this year. If you think that that is
21:46
Speaker 2: just a one off, those same companies or sorry, companies
21:51
Speaker 2: based in California received sixty percent of USVC money for
21:54
Speaker 2: all of calendar You're twenty twenty five.
21:56
Speaker 3: According to Pitchbook Venture Monitor. This is not a one off.
22:01
Speaker 2: Seemingly, it is you know, defined by this moment in
22:07
Speaker 2: you know, tech infatuation, AI infatuation, and Justin Fox from
22:11
Speaker 2: Bloomberg asks if it's a kind of an indication for
22:15
Speaker 2: where the rest of the country might go, because, as
22:18
Speaker 2: he points out, employment hasn't exactly followed suit on all
22:22
Speaker 2: of this stuff. He focused specifically on tech employment in
22:26
Speaker 2: California versus the rest of the United States, and points
22:29
Speaker 2: out that interestingly, since August of twenty twenty two, which
22:32
Speaker 2: lines up fairly well with when chat GPT was rolled out,
22:37
Speaker 2: tech employment in the state of California pretty significantly down
22:42
Speaker 2: on percentage terms compared to the same employment in the
22:45
Speaker 2: rest of the United States, which has grown and you know,
22:49
Speaker 2: out of curiosity, I pulled the same data for the
22:52
Speaker 2: unemployment rate. So forget about tech employment. Let's just look
22:55
Speaker 2: at overall unemployment. In August of twenty twenty two California,
23:00
Speaker 2: he was sitting at three point eight Today most recent
23:04
Speaker 2: data is only as of February, but we are sitting
23:06
Speaker 2: at five point four percent of unemployment at that point
23:10
Speaker 2: in time. Now, overall employment unemployment has risen across the country,
23:13
Speaker 2: but the US on average went from three to six
23:16
Speaker 2: to four to three during that period of time. So
23:18
Speaker 2: I think it's it's reasonable say it to say that
23:21
Speaker 2: unemployment in California has grown at a faster pace than
23:25
Speaker 2: the rest of the country.
23:27
Speaker 3: But boy, are there a whole lot.
23:29
Speaker 2: Of other things that it could be other than AI
23:31
Speaker 2: creating job losses.
23:34
Speaker 4: Oh sure, it's way too soon to say none of
23:36
Speaker 4: this is new. Much like Route one twenty eight here
23:40
Speaker 4: in the Metro West area of Boston where we live
23:44
Speaker 4: in broadcasts from there are cost savings productivity gains that
23:51
Speaker 4: firms in any industry, but tech is a really conspicuous
23:54
Speaker 4: example because of Silicon Valley that firms gained by clustering
23:58
Speaker 4: together so California is I mean, I'm saying what everybody
24:02
Speaker 4: already knows, but that doesn't I wouldn't necessarily expect, Okay,
24:07
Speaker 4: all the most VC's investment. Most VC investment venture capitalists
24:11
Speaker 4: a form of private equity investments, I would guess. I
24:15
Speaker 4: don't think it's a risky guess has gone to firms
24:18
Speaker 4: in southern California. Sure in the past fifty years, a
24:22
Speaker 4: little bit here, a little bit in New York, and
24:24
Speaker 4: then a couple of other little hubs.
24:26
Speaker 2: Yeah, I think to your point it is too early
24:29
Speaker 2: to tell. There are other forces that work here too.
24:32
Speaker 2: There are massive tariffs. There is trade with China that
24:36
Speaker 2: primarily gets diverted through California that has been disrupted for
24:40
Speaker 2: the last several years.
24:41
Speaker 3: There are all sorts of policy.
24:43
Speaker 2: Decisions that are being made in California that could be
24:45
Speaker 2: changing the overall tech landscape.
24:46
Speaker 3: There. So an interesting piece, and I do find it
24:49
Speaker 3: interesting that.
24:50
Speaker 2: Yeah, unemployment has seemingly diverged from the national average in
24:54
Speaker 2: the state of California in ways that other states haven't.
24:58
Speaker 3: But there are a number of different contributing that could
25:00
Speaker 3: be the.
25:00
Speaker 4: Cost some of this VC, this venture capital money could
25:03
Speaker 4: be early stage. It's not going to go into financing
25:07
Speaker 4: one hundred person workforce right away. True, necessarily, we don't
25:10
Speaker 4: know what I mean. If it was late stage VC
25:13
Speaker 4: and you didn't, you weren't seeing jobs created. Maybe that's
25:17
Speaker 4: a little bit of a paradox. Maybe not, though, given
25:20
Speaker 4: that the whole point is to increase productivity doing more
25:23
Speaker 4: with the same number or even fewer people.
25:26
Speaker 2: So folks want to make you aware of our seminar
25:29
Speaker 2: that's coming up in just two days. You've probably already
25:32
Speaker 2: heard about it, but there is still a little bit
25:35
Speaker 2: of space left to register. It's this Thursday, April thirtieth,
25:39
Speaker 2: five pm in Wuuburn.
25:40
Speaker 3: It's at the Crown Plaza in Woburn. We're gonna be
25:43
Speaker 3: joined by.
25:43
Speaker 2: Susan Powers e fi Vesulis. I've been talking about social
25:47
Speaker 2: Security and Medicare and a lot of the ins and
25:50
Speaker 2: outs that we just don't have the ability to get
25:53
Speaker 2: into the weeds on on this program. And so if
25:56
Speaker 2: you are staring down social Security and Medicare age, if
25:59
Speaker 2: you have questions. We chose these subjects because they are
26:03
Speaker 2: easily the most common questions that we get from pre
26:07
Speaker 2: retirees about how these programs work. And how it's going
26:10
Speaker 2: to benefit them, what the costs are going to be,
26:12
Speaker 2: what their options look like, and how to maximize the
26:15
Speaker 2: benefits that they are entitled to. Again, easily the most
26:18
Speaker 2: common questions that we get. We've got this all planned
26:21
Speaker 2: out for you to educate you on how these programs
26:24
Speaker 2: work and how to take advantage of them.
26:26
Speaker 3: Again.
26:26
Speaker 2: It's at five pm on Thursday, April thirtieth. It is
26:30
Speaker 2: free to attend. It's at the Crown Plaza in Wuburn.
26:33
Speaker 2: You must register before the deadline, though you can go
26:36
Speaker 2: to Armstrong Advisory dot com slash events. Space is limited.
26:41
Speaker 2: You need to register online or give us a call
26:44
Speaker 2: again Armstrong Advisory dot com slash events or call us
26:48
Speaker 2: at eight hundred three nine three four zero zero one
26:51
Speaker 2: to reserve your spot today.
26:53
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
26:55
Speaker 1: registered investment advisor. Nothing in the ad or in any
26:58
Speaker 1: Armstrong guide a specific financial legal tax advice. Consult your
27:01
Speaker 1: own financial tax into state planning advisors before making any
27:04
Speaker 1: investment decisions. Armstrong may contact you to offer investment advisory services.
27:08
Speaker 2: Well, there was something that we all kind of sensed
27:11
Speaker 2: and knew, and Chuck's been making a big point of
27:14
Speaker 2: this on prediction markets and just how badly the average
27:18
Speaker 2: person is faring. But somebody actually went out and measured it,
27:21
Speaker 2: because on poly market they actually have a way of
27:25
Speaker 2: doing so. They anonymize all the accounts and actually tell
27:29
Speaker 2: you how much people.
27:30
Speaker 3: Are winning or losing.
27:31
Speaker 2: And over one hundred thousand accounts lost at least one
27:36
Speaker 2: thousand dollars on poly market, according to Bloomberg News analysis
27:40
Speaker 2: of every wallet active since the beginning of twenty twenty five.
27:44
Speaker 2: That number, by the way, is almost twice the number
27:46
Speaker 2: of that made at least.
27:48
Speaker 3: One thousand dollars.
27:49
Speaker 2: So interesting, you know, fifty thousand accounts made at least
27:53
Speaker 2: one thousand dollars, over a hundred thousand acounts lost over
27:55
Speaker 2: thousand dollars. The vast majority were obviously somewhere in between,
28:00
Speaker 2: but I think speaks to for instance, what would be
28:04
Speaker 2: your expectation if you measured the same thing at Fidelity, Schwab,
28:09
Speaker 2: Robinhood and each trade.
28:11
Speaker 4: Do you mean for stock traders? Yeah, oh, totally different
28:14
Speaker 4: because for every.
28:15
Speaker 3: Taing, vast majority would have made money.
28:16
Speaker 4: Because well, for every active bet in the stock markets
28:21
Speaker 4: against the S and p FA against the weights In
28:23
Speaker 4: the end, I suppose you think Apple is overvalue.
28:25
Speaker 3: I don't.
28:25
Speaker 4: I don't want to pick on Apple. I don't necessarily
28:28
Speaker 4: think that, but I don't have an opinion. But suppose,
28:30
Speaker 4: just to use a sort of concrete example, you could
28:33
Speaker 4: bet against Apple by waiting it less than the roughly
28:36
Speaker 4: seven percent? Is that about right?
28:37
Speaker 3: Sure? That something there? Yeah, just call them I'm gonna
28:41
Speaker 3: call it seven.
28:42
Speaker 4: So if you thought Apple was overvalued, you might own
28:44
Speaker 4: zero percent in your portfolio. Someone else has to has
28:48
Speaker 4: to overweight that for you to underweight it. There are
28:51
Speaker 4: always winners and losers on every side of an active trade.
28:54
Speaker 4: It's very different. You have to sort of recalibrate when
28:56
Speaker 4: you're thinking about prediction markets. The expectation beforehand isn't the
29:01
Speaker 4: same as it is in the so called in the
29:04
Speaker 4: stock market game, so to speak.
29:06
Speaker 2: A professor at the University of Toronto's Business School recently
29:09
Speaker 2: co authored a paper that found since twenty twenty two,
29:12
Speaker 2: around sixty nine percent of traders on poly market lost money,
29:17
Speaker 2: while the top one percent captured three quarters of the profits.
29:20
Speaker 3: And so.
29:22
Speaker 2: My hope here is that those people betting on places
29:25
Speaker 2: like poly market or on sports books, which are differently operated, differently,
29:30
Speaker 2: differently regulated. Begin to come to the realization that this
29:34
Speaker 2: operates much more like a casino than it does an
29:37
Speaker 2: investing platform, at least the results seem to resemble that
29:41
Speaker 2: a lot more. Because where I get concerned is that
29:45
Speaker 2: from a from a user experience standpoint, it feels a
29:52
Speaker 2: lot more like a brokerage platform than it does a casino,
29:56
Speaker 2: but from a results standpoint, it acts a lot more.
30:00
Speaker 3: Like Yo than it doesn't. Broken.
30:01
Speaker 4: I assume they did that deliberately to give it respectability.
30:04
Speaker 4: What I said earlier, by the way, let's just I
30:06
Speaker 4: you can't dump it now, Tucker, It's been like two minutes.
30:08
Speaker 4: But I don't think that was quite the right analogy,
30:10
Speaker 4: So just just forget it if you were even paying attention.
30:14
Speaker 4: But yeah, I think they do that to give it
30:16
Speaker 4: a veneer of like legitimacy, of course, but it's actually
30:19
Speaker 4: I think it's success actually just a total st gambling.
30:22
Speaker 2: It's gambling, and I think the problem that we have
30:26
Speaker 2: talked about at length is when you're eighteen years old
30:31
Speaker 2: or twenty years old, or you know, of a young age,
30:34
Speaker 2: you tend to do some stupid things. In previous decades,
30:39
Speaker 2: to do that stupid gambling thing, I'd have to drive
30:42
Speaker 2: down to Connecticut and you know, take my dollars out
30:47
Speaker 2: of the ATM, convert them into into chips, and then
30:50
Speaker 2: go gamble them away.
30:52
Speaker 3: And today it's a heck of a.
30:54
Speaker 2: Lot easier to do by linking my bank account to
30:56
Speaker 2: a betting platform to get any I mean.
30:58
Speaker 4: Any sporting event on TV induced to bet on just
31:01
Speaker 4: I mean, you're you can't avoid it. You feel assaulted
31:05
Speaker 4: by the pressure to gamble when you're watching the NBA
31:08
Speaker 4: on Prime or whatever.
31:10
Speaker 5: It's almost almost feels like the mid game promotions of like, hey,
31:14
Speaker 5: this guy could hit all give me a break, right,
31:16
Speaker 5: these are the odds, and you're watching the game and
31:18
Speaker 5: it's a third inning y or whatever.
31:19
Speaker 4: Yeah, I'm just trying to enjoy an all American pastime here.
31:23
Speaker 1: Yes, you're bombarded with this.
31:24
Speaker 4: Stop trying to get me to become a gambling and
31:26
Speaker 4: I want to play something.
31:28
Speaker 5: I'll know what to do.
31:29
Speaker 3: To be clear, the new American pastime is gambling on sports.
31:33
Speaker 3: Oh that's the problem. Let's take a quick break when
31:37
Speaker 3: we come back. A little bit of snacker Roulette is next.
31:39
Speaker 1: Stay connected between shows, follow the financial Exchange on Instagram
31:44
Speaker 1: for daily clips on business news from New England and
31:47
Speaker 1: around the country. This is the Financial Exchange.
31:55
Speaker 5: The Financial Exchange streams live every day on YouTube. Subscribe
32:00
Speaker 5: to our YouTube page and fall market activity all morning
32:04
Speaker 5: long only here in the Financial Exchange Radio network just
32:07
Speaker 5: searts a Financial Exchange on YouTube and be sure to
32:11
Speaker 5: hit that subscribe button.
32:13
Speaker 3: Time for a bit of stack roulette. What do you
32:14
Speaker 3: have for us this morning? Mark?
32:16
Speaker 4: Did you guys hear that the UAE is leaving OPEK
32:19
Speaker 4: the United Arab Emirates They're not Its biggest oil producer
32:23
Speaker 4: is a group OPEC, which had about a dozen members
32:25
Speaker 4: now I guess they're down to eleven after this. They
32:28
Speaker 4: produce about thirty one million barrels a day. We here
32:31
Speaker 4: in the US produce about twenty for comparison, so UA
32:36
Speaker 4: is not big. They do three to four million barrels
32:40
Speaker 4: a day. But they're doing it so they can say,
32:42
Speaker 4: for example, not so they don't have to curtail supply
32:46
Speaker 4: when the Saudis put pressure on the rest of the
32:48
Speaker 4: cartel to do that. So maybe in the long term
32:51
Speaker 4: this is a positive for oil output. Yeah, I would
32:55
Speaker 4: like I'm just looking for a lot all commers of
32:58
Speaker 4: hope here myke and oil markets. Yeah, I mean, not
33:01
Speaker 4: much to cheer lately.
33:02
Speaker 3: Yeah, it's great.
33:03
Speaker 2: They're leaving Opeka and still can't get their oil out
33:05
Speaker 2: of the Middle East based on what's going on. Yeah,
33:08
Speaker 2: fair point, produce as much as you want. New York
33:11
Speaker 2: Times has a piece these couples wanted to have children.
33:14
Speaker 2: Rising costs are stopping them. And gotta be honest. I
33:18
Speaker 2: read the piece. I don't think it's costs, So I'm
33:22
Speaker 2: going to read a little bit of this. Mister Goodwin,
33:25
Speaker 2: twenty five, works as a firefighter. Miss Stewart also twenty five,
33:28
Speaker 2: nail technician. Adding a child would push them into living
33:31
Speaker 2: paycheck to paycheck, they said. Missus Stewart said she would
33:34
Speaker 2: need to take on extra shifts. Mister Goodwin would have
33:36
Speaker 2: to give up hobbies he enjoys, like golfing. Yeah, that's
33:42
Speaker 2: what having kids does. You don't get to explore your
33:45
Speaker 2: hobbies as much when you have screaming three month olds
33:48
Speaker 2: around the house.
33:49
Speaker 5: You could do nine holes.
33:50
Speaker 2: Come on, when was the last time you escaped to
33:53
Speaker 2: do how many times? Would you say a year, Tucker,
33:56
Speaker 2: you escaped to do nine holes? Since having kids compared
33:59
Speaker 2: to prior to having kids.
34:01
Speaker 5: In the summer, I do nine holes once a week
34:05
Speaker 5: in a league, but eighteen holes geez, maybe twice a summer.
34:11
Speaker 2: Yeah, compared to pre kids quite a bit more frequently. Sure, guess, Sure, guys,
34:16
Speaker 2: that is part.
34:17
Speaker 3: Of the deal.
34:18
Speaker 2: When you have children, you give up some of your
34:21
Speaker 2: other hobbies that you were passionate about because you wanted
34:24
Speaker 2: to have children. I'm not saying that a firefighter and
34:27
Speaker 2: a nail technician are going to have an easy financial life,
34:31
Speaker 2: but at twenty five years old, it just read to
34:33
Speaker 2: me that they weren't quite prepared to have children, and
34:36
Speaker 2: I should have decided not to do so.
34:38
Speaker 5: I should say, try to play nine holes a week.
34:41
Speaker 5: If like, everything's not well at home, like the kids
34:43
Speaker 5: are just you know, crazying or something, or tired, and
34:46
Speaker 5: my wife needs help, then guess what I'm staying.
34:48
Speaker 4: So do they get into particular's mike, like, how constrained
34:51
Speaker 4: are they? Did they put a number on it?
34:54
Speaker 2: No, they just said that, yeah, in the event that
34:56
Speaker 2: they had a kid, they assumed that they would need
34:58
Speaker 2: to pick up additional shifts, drop some of their hobbies,
35:01
Speaker 2: and none of them might need to stay at home
35:04
Speaker 2: to raise the child because their job didn't pull enough
35:07
Speaker 2: income to just.
35:07
Speaker 4: Okay, I mean you can quantify this. There's a lot
35:09
Speaker 4: of maybes and mites, and okay, so we could do
35:11
Speaker 4: it by the time we're twenty eight. If the public
35:14
Speaker 4: employee gets a couple of promotions, I mean, it's a
35:16
Speaker 4: good job.
35:18
Speaker 2: By the way, though I don't want to diminish the
35:20
Speaker 2: cost of raising a child in the United States, I
35:24
Speaker 2: will point out that, according to studies from lending Tree
35:27
Speaker 2: and Northwestern Mutual, the average cost to raise a child
35:33
Speaker 2: to the age of eighteen years old so this does
35:35
Speaker 2: not include college tuition, is between three and three hundred
35:38
Speaker 2: twenty thousand dollars in the United States. So yeah, it
35:44
Speaker 2: is incredibly expensive. Massachusetts and Hawaii happened to be the
35:48
Speaker 2: two most expensive in the country at more like four
35:52
Speaker 2: hundred plus thousand dollars to get a kid to age eighteen.
35:54
Speaker 2: So yeah, I'm not trying to diminish the cost that
35:59
Speaker 2: it takes to do all of this.
36:02
Speaker 3: But frankly, the story just read as yeah.
36:04
Speaker 2: A bunch of what I consider to be kids twenty
36:07
Speaker 2: five year old saying yeah, I think I'd rather party
36:09
Speaker 2: and play golf than have a child right now. That
36:12
Speaker 2: might change when you're thirty. Well, we'll have to wait
36:14
Speaker 2: and see. It is exorbitantly expensive to have kids. I
36:20
Speaker 2: will also say that seemingly, country after country, municipality after
36:25
Speaker 2: municipality have tried to change policy to incentivize more people
36:29
Speaker 2: to have kids make it more economically affordable to do so,
36:33
Speaker 2: and almost none of.
36:34
Speaker 3: Them have had any real success. There's been like one.
36:37
Speaker 2: I think it was a city in Italy that completely
36:40
Speaker 2: reshaped their entire budget and their entire strategic plan to
36:44
Speaker 2: really focus on increasing the birth rate. And they had
36:46
Speaker 2: some degree of success there, but it was quite costly
36:50
Speaker 2: and required an entire, you know, pretty much city focusing
36:55
Speaker 2: on one major thing, which is increasing the birth rate.
36:57
Speaker 2: So this is a problem that I see, but I
37:01
Speaker 2: don't see any real way of fixing it unless we
37:04
Speaker 2: as society are going to say, yeah, we're pouring a
37:08
Speaker 2: massive part of every year's US budget into bringing down
37:13
Speaker 2: costs for families of young children, which I'd be pretty
37:16
Speaker 2: pissed about if you know it happens, because I'll have
37:19
Speaker 2: already raised my children on the four hundred plus thousand
37:21
Speaker 2: dollars that it takes to get them dayteened.
37:23
Speaker 4: Look, Mike, there's no silver bullet, right, and many of
37:25
Speaker 4: the solutions involve subsidizing things, which only increases demand for them.
37:29
Speaker 4: It does so it does nothing for the price side.
37:31
Speaker 2: Again of the equation having kids is sacrifice. They're just
37:35
Speaker 2: part of that that goes into it. Markets are mixed
37:37
Speaker 2: as we close out the show today, Dow up sixty
37:40
Speaker 2: seven points, SMP down three quarters percent, NASDAK off now
37:44
Speaker 2: one point four percent. We'll be right back at it tomorrow, folks,
37:47
Speaker 2: and it's a FED meeting tomorrow, so stay tuned in.
37:50
Speaker 3: We'll be back