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No one is talking about recession. They probably should be. · The Financial Exchange Show

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Speaker 1: a donation Today. Face is the Financial Exchange with Mike
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Speaker 1: Armstrong and Mark Vandebdi.
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Speaker 2: More than welcome back to the Financial Exchange. It is Mark,
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Speaker 2: Mike and Tucker with you on a Tuesday where markets
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Speaker 2: are mixed, as they have been to many trading days
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Speaker 2: of twenty twenty five so far, the Dow currently up
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Speaker 2: forty points, one tenth of a percent, S and P
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Speaker 2: off nine points a little bit more than a tenth
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Speaker 2: of a percent, and the Nasdaq off thirty eight points,
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Speaker 2: or one fifth of one percent. Barrel of oil West
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Speaker 2: Texas crud is going for seventy eight bucks a barrel.
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Speaker 2: As oil prices and Russian sanctions in particular, stay and focus.
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Speaker 2: This was a piece that we had yesterday. I don't
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Speaker 2: think we covered as the Biden administration imposing some new
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Speaker 2: possible sanctions on those who refine Russian oil, and so
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Speaker 2: a lot of questions as to whether India and China
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Speaker 2: can continue to buy in the volumes that they have
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Speaker 2: been without being subject to US sanctions, or whether or
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Speaker 2: not an and cooming Trump administration will maintain those yield
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Speaker 2: in the ten yure Treasury coming down slightly, sitting just
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Speaker 2: under four point eight percent four point seven nine to two.
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Speaker 2: As we open up the eleven o'clock hour of trading here.
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Speaker 2: Anything else catching your eye at the moment in markets, Mark.
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Speaker 3: No, not a lot to comment on today though, as
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Speaker 3: you point out, pretty much everything's just you might describe
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Speaker 3: it as a little change.
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Speaker 4: Yeah.
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Speaker 3: So we do have a oil which is taking a breather.
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Speaker 2: We do have a big report coming out tomorrow on inflation,
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Speaker 2: and markets have seemingly shifted their focus quite a bit
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Speaker 2: from where we were in the summer and fall of
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Speaker 2: last year, where there was a lot of talk of
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Speaker 2: the unemployment rate and recession. All eyes now seemingly turned
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Speaker 2: away from that and much more focused on, you know,
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Speaker 2: specifically inflation. Again, just a couple other data points to
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Speaker 2: point out in terms of markets. We talked about oil
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Speaker 2: prices triple a national average on gas prices is sitting
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Speaker 2: at three dollars seven cents, and the thirty year fixed
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Speaker 2: rate mortgage, which I'm just going to continue to bring
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Speaker 2: up relentlessly for the general thirty year fixed according to
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Speaker 2: Mortgage News Daily, sitting at seven point two six percent
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Speaker 2: for a jumbo, which, let's face it here in New
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Speaker 2: England is a is a contributing factor for a lot
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Speaker 2: of folks sitting at seven point four to four percent
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Speaker 2: on that fixed rate mortgage now, so not great for
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Speaker 2: the spring housing season, would be my guest, but we
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Speaker 2: will see how that shapes up after the super Bowl.
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Speaker 2: Brings us to one of our pieces today, No one
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Speaker 2: is talking about a recession for red flags for markets
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Speaker 2: to watch. I guess Mark first and foremost, would you
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Speaker 2: agree nobody is talking about recession? And would you say
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Speaker 2: that investors seem to be placing trades as though they
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Speaker 2: are not concerned about recession. I think yeah, Going back
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Speaker 2: to my good news bad news comparison here, it certainly
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Speaker 2: seems as though investors are far more concerned about inflation
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Speaker 2: than they are recession right now.
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Speaker 3: Yeah, we work in financial markets as stewards of people's money,
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Speaker 3: so I prefer financial market indicators. It's not just because
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Speaker 3: I'm biased toward the things we deal with day to day,
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Speaker 3: but it's because they're pretty reliable. They're not exclusively reliable.
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Speaker 3: You need to look at other things. But stocks, so,
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Speaker 3: for example, are certainly not pointing toward recession. Interest rates
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Speaker 3: are longer term rates are going up. That could be
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Speaker 3: a sign expected of an expected pickup and economic growth.
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Speaker 3: It could be a lot of other things too. It
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Speaker 3: could just be uncertainty generally worries about ballooning deficits in debt.
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Speaker 3: It could be any number of things. But one of
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Speaker 3: the possible culprits there is stronger economic growth, maybe because
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Speaker 3: of tax cuts from the incoming administration, more spending, business
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Speaker 3: friendly deregulation, stuff like that. So I would agree that
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Speaker 3: no financial market indicator is flashing any kind of recession signal.
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Speaker 3: That's not to say, though, that some macroeconomic indicators haven't
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Speaker 3: softened a bit, Mike. You never really know where the
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Speaker 3: economy is going to be in three or there's a
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Speaker 3: little bit of an ersha so three months over three
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Speaker 3: months are not likely to see dramat drastic changes, but
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Speaker 3: over a period of six months or a year, all
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Speaker 3: bets are off.
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Speaker 2: We all know that what do you suppose one is
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Speaker 2: to do, like the average person is to do with
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Speaker 2: information like the one that we talk about all the time,
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Speaker 2: where the you know, the priced earnings ratio on the
5:10
Speaker 2: SMP is at levels rarely seen in US history, or
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Speaker 2: the earnings yield on the S and P five hundred
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Speaker 2: is I think the quote is fifty percent higher than
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Speaker 2: the risk free rate of return on US tenure treasury yields,
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Speaker 2: and that's been quite rare to happen.
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Speaker 4: What is one to do with this information?
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Speaker 3: First of all, work with a professional to make sure
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Speaker 3: you're interpreting it right, or be really confident in your
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Speaker 3: ability to parse this stuff and understand what it means.
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Speaker 3: If valuations are stretched, and they can be stretched for
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Speaker 3: a very long period of time, as anyone who lived
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Speaker 3: through the nineties knows. Heck, valuations have seemed stretched with
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Speaker 3: a couple of exceptions, for the last thirty some odd years. Sure,
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Speaker 3: But if they seem unusually stretched, if stocks seem unusually
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Speaker 3: ex expensive relative to earnings, is what we need.
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Speaker 4: Which I would argue they have for the last eighteen months.
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Speaker 3: Right, So lousy timing tools you and chucks out to
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Speaker 3: talk about a lot, But if you have real if
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Speaker 3: you are personally concerned about stocks being too expensive or
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Speaker 3: the economic outlook being unusually cloudy, that might affect the
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Speaker 3: timing of a big investment. But your typical investor, like
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Speaker 3: the people we work with and like us personally, should
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Speaker 3: just continue to average in if you're in your accumulation years,
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Speaker 3: or average out if you're in your decumulation years. Don't
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Speaker 3: make a big move that could leave you overly exposed
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Speaker 3: if there's a short term shift in the in the
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Speaker 3: market in don't make a big investment all at once
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Speaker 3: if you can avoid it. I think this is a
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Speaker 3: good rule of under any circumstances.
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Speaker 2: Another side effect of all of this that I seem
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Speaker 2: to be seeing right now is that balance of power
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Speaker 2: between bosses and their employees seemingly having shifted over the
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Speaker 2: course of the last year. You remember the stage of
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Speaker 2: quiet quitting and you know, all this stuff that was
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Speaker 2: occurring when the job market was exceedingly tight seems to
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Speaker 2: have gone away to a you know, significant degree here
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Speaker 2: over the last few months. And while while I think
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Speaker 2: most investors are still not concerned about recession, a lot
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Speaker 2: of people in their jobs, I think are worried about
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Speaker 2: that possibility of losing that job compared to a couple
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Speaker 2: of years ago where it seemed almost impossible to happen.
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Speaker 2: And you're seeing this in a few different ways show up.
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Speaker 2: I mean, one, you are seeing it in the return
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Speaker 2: to Office piece. Right when you hear about Amazon or
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Speaker 2: JP Morgan Chase. They are still being met with resistance
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Speaker 2: from their employees, but they're pushing forward in a way
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Speaker 2: that they weren't. In Amazon's case in particular, right like
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Speaker 2: the very idea that they required all the people to
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Speaker 2: come back and then realize that they didn't have enough
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Speaker 2: office space for all those people to me insinuates, not
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Speaker 2: only do they feel emboldened, but they were actually hoping
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Speaker 2: they would get some quits on all of this that
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Speaker 2: actually didn't come about, which once again speaks to I
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Speaker 2: think people's perceptions of the state of the labor market
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Speaker 2: right now and that shift of power. And so if
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Speaker 2: you haven't personally felt it, I'll be interested. But I
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Speaker 2: think especially in those jobs where there was a lot
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Speaker 2: of flexibility on where and how you work, right there's
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Speaker 2: still shortages in areas like you know, skilled manufacturing and
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Speaker 2: truck driving and trades people. There's still those shortages that exist.
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Speaker 2: But if you are working corporate for Southwest Airlines or
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Speaker 2: Amazon or JP Morgan Chase, things have shifted over the
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Speaker 2: last couple of years pretty significantly.
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Speaker 3: They got away away murder. They didn't even live in
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Speaker 3: the cities in which their offices were located. They were
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Speaker 3: going in like once a month or once a quarter
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Speaker 3: for a meeting with their managers. So it's the pendulum
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Speaker 3: has really swung environment. We've talked about this Mike on
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Speaker 3: and off for the last three years. We always said,
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Speaker 3: as soon as the labor market softens, or as soon
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Speaker 3: as people forget about how moody millennials think about work
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Speaker 3: life balance.
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Speaker 4: It's gen Z Now. We're allowed to pick on gen
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Speaker 4: Z now because now they're in the labor force. They're
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Speaker 4: the youngest generation of the.
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Speaker 3: Labor Oh okay, okay, yeah, I can't think of any
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Speaker 3: alliterative criticism of gen Z, but we'll work on it.
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Speaker 3: We knew that the pendulum would swing.
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Speaker 4: Yeah, this was and it started to do.
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Speaker 2: And the concerning piece to me again, who knows? But
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Speaker 2: in Amazon's case, right, it's I generally think that the
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Speaker 2: people who organize Amazon and think about logistics of their
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Speaker 2: workforce are probably pretty well informed.
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Speaker 4: And so when.
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Speaker 2: They called all their people back to the office and
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Speaker 2: then publicly announced that, oops, we don't have enough office
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Speaker 2: space for all of you, to me, there's only one conclusion.
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Speaker 2: Either they are complete morons, which I just said they aren't,
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Speaker 2: or they thought more people would quit when they asked
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Speaker 2: them to come back, and they were banking on more
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Speaker 2: people quitting, so that they didn't have.
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Speaker 4: To do layoffs.
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Speaker 2: So I find that, again, it's one company, but it
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Speaker 2: is all also the largest private employer in the nation
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Speaker 2: or close to it, and to see them do something
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Speaker 2: like that and be surprised by the dynamic shift is
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Speaker 2: just really intriguing me. I think that's the only read
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Speaker 2: I have on it is I don't think they're more
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Speaker 2: on so. I think they knew that they didn't have
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Speaker 2: enough office space and they thought more people would be quitting.
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Speaker 4: As part of this, let's take a quick break.
10:20
Speaker 2: When we come back, we're going to have trivia for you,
10:22
Speaker 2: and then we want to talk about a surprising group
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Speaker 2: of people contributing to social security and how a Trump
10:28
Speaker 2: policy could change the dynamics when it comes to social securities.
10:32
Speaker 2: Fund and quick break, we'll be back on the Financial Exchange.
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11:03
Speaker 5: Time now for trivia here on the Financial Exchange On
11:08
Speaker 5: this day. In nineteen eighty four, Ray Kroc passed away
11:11
Speaker 5: at eighty one years old. Kroc was the man responsible
11:15
Speaker 5: for turning a regional restaurant chain into the most profitable,
11:19
Speaker 5: profitable restaurant chain in the world. Trivia question today which
11:25
Speaker 5: actor portrayed Ray Kroc in the twenty sixteen hit movie
11:29
Speaker 5: The Founder Once again? Which actor portrayed Ray Kroc in
11:34
Speaker 5: the twenty sixteen hit movie The Founder. Be the eighth
11:38
Speaker 5: person today to text us at six one seven three
11:41
Speaker 5: six two thirteen eighty five with correct answer you know
11:44
Speaker 5: whin a Financial looks Change showed T shirt once again.
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Speaker 5: The eighth correct response to text us at six one
11:49
Speaker 5: seven three six two thirteen eighty five will be our winner.
11:53
Speaker 5: See complete contest rules at Financial eks Change show dot com.
11:57
Speaker 2: The New York Times has a piece today on what
12:00
Speaker 2: I might consider to be the least compelling argument for
12:02
Speaker 2: why we should continue to do what we're doing on
12:05
Speaker 2: undocumented immigrants, but did surprise me. According to the Institute
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Speaker 2: on Taxation and Economic Policy, which is a left leaning
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Speaker 2: tax research group, they found that undocumented immigrants paid and
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Speaker 2: estimated twenty five point seven billion dollars in SO security
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Speaker 2: taxes in twenty twenty two, which surprise that got of me.
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Speaker 2: I didn't really understand how that could happen, and so
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Speaker 2: I'll explain it because they outline how that actually works.
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Speaker 2: Is many undocumented workers do not file tax returns, that
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Speaker 2: is true, but many of them do, and instead of
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Speaker 2: being paid in cash, many may just use a made
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Speaker 2: up Social Security number. They could use another person so
12:46
Speaker 2: security number and therefore that person is paying the faika
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Speaker 2: on their behalf. Or they might use a number that
12:53
Speaker 2: was once valid. So maybe you had a work permit
12:55
Speaker 2: that expired and you are still.
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Speaker 4: Using that number. The employer might not figure that out
12:59
Speaker 4: in a day.
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Speaker 2: The Internal Revenue Service back in ninety six enabled people
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Speaker 2: who are ineligible or who do not have SOCI Security
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Speaker 2: numbers to legally file tax returns and comply with the
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Speaker 2: tax laws. So, hey, I'm not complying with immigration law,
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Speaker 2: but I want to comply with tax law.
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Speaker 4: For some reason, it allows me to do that.
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Speaker 2: And so according to this study, there was a good
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Speaker 2: twenty five point seven billion dollars in taxes that went
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Speaker 2: into the Social Security Trust Fund in twenty twenty two
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Speaker 2: that would hypothetically dry up in the case that you
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Speaker 2: deport undocumented immigrants, and this is pure cash with no
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Speaker 2: liability because these same people can't collect benefits in the future.
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Speaker 2: Like I said, that seems like a terrible reason to
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Speaker 2: not reform immigration in our country is the fact that
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Speaker 2: we're getting paid off to not do it. But nonetheless,
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Speaker 2: it is one more item that will potentially hit social
13:52
Speaker 2: security depending on how this all goes. That again, I
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Speaker 2: was just unaware of. It was not something that was
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Speaker 2: on my radar.
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Speaker 3: No, And if the conclusion is don't deport because it will.
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Speaker 2: Because it will hurt our social security benefits, like that
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Speaker 2: seems just so we should.
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Speaker 3: Double the flow of undocumented to shore up social security.
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Speaker 3: There's they're probably better ways to ensure the solvency of
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Speaker 3: social security.
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Speaker 4: Well long term.
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Speaker 2: A very easy similar one would be double the rate
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Speaker 2: of documented immigration because all of those people that work.
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Speaker 4: Would they created the pain into social security they do?
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Speaker 3: Yeah, that's what you wouldn't get the free lunch. What
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Speaker 3: they're basically saying is these people are basically working as
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Speaker 3: indentured servants, paying.
14:37
Speaker 2: Into our retirement pension fund while not receiving better it
14:41
Speaker 2: seems problematic.
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Speaker 3: I know that institutes are left and right leaning. I
14:44
Speaker 3: person like Cato Institution libertarian leaning, but researcher shouldn't be
14:49
Speaker 3: left or right leaning. You should go with what the
14:51
Speaker 3: data tell you. I know they look into questions that
14:54
Speaker 3: are of interest to people who are left or right leaning,
14:56
Speaker 3: but it does worry me when everything that comes out
14:59
Speaker 3: of a so called think is less supports the conclusion
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Speaker 3: that they'd hoped they would reach.
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Speaker 2: And to be clear, that institute is not arguing that, hey,
15:06
Speaker 2: this is a good reason to change allow, but that
15:09
Speaker 2: is the subtext, and I think anybody that's reading it would,
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Speaker 2: any reasonable person that's reading it would probably, I hope,
15:18
Speaker 2: conclude that that's a crappy argument to a left undocumented
15:21
Speaker 2: in saying there are plenty of moral arguments that I
15:24
Speaker 2: know people have come up with in their minds, and
15:26
Speaker 2: all of them are more compelling than this one.
15:27
Speaker 4: To me.
15:28
Speaker 3: Yeah, but it's so, but my landscapers is so cheap.
15:30
Speaker 3: I'm going to lose that if we throw out all
15:32
Speaker 3: the undocument Not to stereotype, but I think we all
15:34
Speaker 3: try to do lower skilled jobs. That'd be such a
15:37
Speaker 3: weak and insensitive argument.
15:39
Speaker 2: I bring up this story more as a education on
15:43
Speaker 2: the Social Security Trust Fund, because there's a lot of
15:46
Speaker 2: misinformation about it, right, Like, I don't think so. When
15:49
Speaker 2: Donald Trump was campaigning on the idea of I'm going
15:52
Speaker 2: to eliminate Social Security taxes on retiree benefits, the number
15:57
Speaker 2: of people that actually were aware that every penny of
16:00
Speaker 2: that tax goes back into the trust fund was like zero.
16:03
Speaker 3: Yeah, I didn't know that at the time.
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Speaker 2: I didn't know it at the time either, and nor
16:06
Speaker 2: did any person that I brought it up with.
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Speaker 3: Guaranteed Trump didn't know that.
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Speaker 2: The fact that we have now done away We've passed
16:13
Speaker 2: the Social Security Fairness Act, which, if you're not familiar,
16:16
Speaker 2: allows you to collect more social Security if you're also
16:19
Speaker 2: collecting of government pension or some of SU or another. Again,
16:24
Speaker 2: I can understand the arguments on either side. I think
16:27
Speaker 2: there are some cases where it's a ridiculous, uh forfeiture
16:31
Speaker 2: of benefits. I think there are other cases where it's
16:32
Speaker 2: pretty compelling. But in either case, it was already passed
16:35
Speaker 2: and there is no corresponding increase in revenue to the
16:37
Speaker 2: Social Security Trust Fund. These are all things that are
16:40
Speaker 2: going to guess what bankrupt the Fund a little bit
16:44
Speaker 2: sooner than anticipated. You know, none of these in and
16:47
Speaker 2: of themselves are going to bankrupt that five years ahead
16:50
Speaker 2: of time.
16:50
Speaker 4: But that's where we are. That's where we are going.
16:53
Speaker 3: Seven years now until the trust fund can no longer.
16:56
Speaker 4: Pay Trust Fund, I believe so.
16:58
Speaker 3: So we have to go the Socialurity have to go
17:00
Speaker 3: to Congress and ask for more money or changes. But
17:02
Speaker 3: we're seven years now.
17:04
Speaker 2: With Let's be clear, the rules as they are stated
17:07
Speaker 2: right now is in the event that Congress does not act,
17:10
Speaker 2: Social Security must just pay out what they are collecting,
17:13
Speaker 2: which is estimated to be around three quarters beneficult to.
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Speaker 3: Current retire corrects. Not the perspectives reformers.
17:21
Speaker 2: My personal opinion is there's no chance in hell that
17:23
Speaker 2: will ever happen, but that will be.
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Speaker 4: That is how the law.
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Speaker 3: I didn't want to open that can of worms. I
17:30
Speaker 3: just wanted to point out that we're now seven years
17:32
Speaker 3: out from that from D.
17:34
Speaker 2: Day, it's not that far away. In the waning days
17:37
Speaker 2: of the Biden administration, the FTC is preparing to sue
17:40
Speaker 2: the largest US apartment landlord over further hidden fees, and
17:45
Speaker 2: I I don't understand why we're going after this right now.
17:51
Speaker 2: Especially in the waning days of the Biden administration. But
17:53
Speaker 2: here's the story. The FTC, led by Lena Khan, going
17:56
Speaker 2: after Gray Star Real Estate Partners, which is a pair
18:00
Speaker 2: only the largest US apartment landlord in the country, over
18:03
Speaker 2: what they deemed to be hidden fees.
18:06
Speaker 4: The government acknowledges by the.
18:08
Speaker 2: Way that Gray Star has always disclosed fees to tenants
18:12
Speaker 2: in their lease agreements.
18:14
Speaker 4: They have always done.
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Speaker 2: So is what the government acknowledges as part of this,
18:18
Speaker 2: or at least that's what the Wall Street Journal is
18:20
Speaker 2: reporting here, is that they acknowledge it. But starting in
18:24
Speaker 2: twenty twenty four, Graystar also began including a fee guide
18:28
Speaker 2: at the bottom of the apartment listing. So it appears
18:30
Speaker 2: to me that the FTC's case is that while you
18:33
Speaker 2: did disclose it in the fifty page lease document, all
18:36
Speaker 2: these other junk fees such as pest control, trash services,
18:41
Speaker 2: performing ten and background checks, it was so far buried
18:44
Speaker 2: in the lease agreement that nobody knew about it, and
18:46
Speaker 2: therefore you're at fault in some way, shape or form.
18:50
Speaker 2: And I just don't understand which judge is going to
18:54
Speaker 2: look at that and say, well, you had a legal
18:56
Speaker 2: contract with this person you had the fees stated in
18:59
Speaker 2: that contract. That person then didn't read the contract and
19:02
Speaker 2: you hit them with those fees, So you're at fault.
19:06
Speaker 3: How's it supposed to change practices, like they're going to
19:07
Speaker 3: print it in bigger font next time.
19:09
Speaker 2: Well, what they've done now is they've started putting it
19:11
Speaker 2: right on the listing. So when you see the listening
19:14
Speaker 2: in the apartment, the exact same language with a fee guide,
19:17
Speaker 2: that's clear more clearly the.
19:19
Speaker 3: Corectory for the forces of antitrust.
19:22
Speaker 2: Excuse me, it's just confusing to me more than anything
19:27
Speaker 2: else as to why you would focus on this quick
19:29
Speaker 2: break Trivia winner. When we come back, followed by TikTok.
19:32
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19:44
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19:48
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19:56
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19:58
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20:02
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20:12
Speaker 5: Triviut question today was which actor portrayed Ray Kroc in
20:16
Speaker 5: the twenty sixteen hit movie The Founder.
20:19
Speaker 3: That will be Michael Keaton.
20:21
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20:25
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20:28
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20:32
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20:35
Speaker 2: We are rapidly closing in on a TikTok band in
20:39
Speaker 2: the United States, which we'll go into place by January nineteenth,
20:43
Speaker 2: assuming the US Supreme Court up holds the law. In
20:47
Speaker 2: terms of what that will actually mean, it does not
20:49
Speaker 2: mean that TikTok is suddenly illegal in the US. If
20:52
Speaker 2: you have it on your phone and you choose to
20:54
Speaker 2: use it, nobody's gonna come after you and put you
20:56
Speaker 2: in jail. It does mean that Google and Apple, the
21:00
Speaker 2: main two app store providers in the United States, will
21:02
Speaker 2: be forced to take the app down in terms of
21:05
Speaker 2: the ability to download it. If you already have TikTok
21:08
Speaker 2: on your phone, it will likely still function for quite
21:10
Speaker 2: some time, but will no longer be getting pushed updates
21:13
Speaker 2: from the application, and data from the application will no
21:16
Speaker 2: longer go back to the parent company byte dance about
21:20
Speaker 2: usage of the app. There are frankly nothing more than
21:26
Speaker 2: rumors as far as I'm concerned. That China is apparently
21:30
Speaker 2: well sorry. Chinese officials are evaluating a potential option that
21:34
Speaker 2: would involve Elon Musk acquiring the US operations of TikTok
21:39
Speaker 2: if the company failed to fend off the fight from
21:42
Speaker 2: the US government, According to people familiar with the matter,
21:45
Speaker 2: and so one, I wouldn't expect this to develop quickly because,
21:48
Speaker 2: like I just mentioned, even though the app gets banned
21:51
Speaker 2: on January nineteenth, that does not mean it.
21:52
Speaker 4: Gets completely shut down.
21:54
Speaker 2: And so I don't think I think a lot of
21:56
Speaker 2: people are looking at this as Okay, they've got to
21:57
Speaker 2: get it done in five days. Likely not the case.
22:00
Speaker 2: In fact, that would be I'd be more compelled to
22:03
Speaker 2: believe that it's going to something like this would happen
22:06
Speaker 2: if it went past the January nineteenth deadline, so that
22:10
Speaker 2: the company actually realizes that the United States is serious
22:13
Speaker 2: and Donald Trump is serious about it?
22:16
Speaker 3: Is he do we know that? Does he have a
22:18
Speaker 3: public position on this?
22:19
Speaker 4: He has asked the Supreme Court publicly to not hould
22:22
Speaker 4: off so that he can.
22:24
Speaker 3: Use his vaunted negotiating skills.
22:26
Speaker 4: Apparently.
22:27
Speaker 2: Yeah, as I've brought up time and time again, and
22:30
Speaker 2: I don't think we need to spend any time on
22:32
Speaker 2: why this is the case. But this is a company
22:34
Speaker 2: that is clearly a national security risk based on what
22:37
Speaker 2: data that they I know, the data that they gather
22:41
Speaker 2: on smartphones across the United States and the one hundred
22:43
Speaker 2: and seventy million users of TikTok.
22:46
Speaker 4: It allows you to paint a very easy.
22:48
Speaker 2: Picture of the state of the United States and influence
22:52
Speaker 2: people pretty easily. And so I tend to agree with
22:55
Speaker 2: the lawmakers that passed the ban. We will see if
22:58
Speaker 2: a TikTok sale were to come to pay to place.
23:02
Speaker 2: And it's most certainly not a coincidence that Elon Musk
23:05
Speaker 2: is in talks for it.
23:07
Speaker 3: No, that's probably his endgame. I don't know enough about
23:10
Speaker 3: him to decide whether he is ruthless and just pursuing
23:16
Speaker 3: his own self interest in making a big investment in
23:18
Speaker 3: the Trump campaign and now getting an office on the
23:21
Speaker 3: White House. I'll just call it the grounds, even though
23:23
Speaker 3: I think it's a little executive office building next door. Whatever.
23:26
Speaker 3: So he's wormed himself into and rightfully so. In some
23:29
Speaker 3: ways he's a revolutionary entrepreneur, but wormed himself into the
23:33
Speaker 3: highest levels of power. And there are some people who
23:36
Speaker 3: think he's just doing it to make himself the world's
23:38
Speaker 3: first trillionaire full stop. He doesn't care about anything like
23:41
Speaker 3: his invocations of free speech being sacrisanct. He doesn't seem
23:45
Speaker 3: to understand the First Amendment applies to governments, not to
23:48
Speaker 3: private entities.
23:49
Speaker 2: Well, furthermore, he has no problem giving up any sort
23:52
Speaker 2: of free speech when doing business in China.
23:54
Speaker 3: And when somebody says something that he or cuts on
23:56
Speaker 3: his platform, he removes their check mark or something like that.
24:00
Speaker 3: So behavior like that makes me wonder what's really going
24:02
Speaker 3: on with this guy? And I think this is probably
24:04
Speaker 3: his his endgame. Grow his empire, become the world's first trillionaire,
24:08
Speaker 3: be the power behind the throne indefinitely and controlling social
24:13
Speaker 3: media TikTok x and whatever else he decides to buy.
24:18
Speaker 3: We'll cement that position for a generation. I assume that's
24:21
Speaker 3: his endgame at this point.
24:22
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25:15
Speaker 1: The proceeding was paid for and the views expressed are
25:17
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25:26
Speaker 2: I've got a candidate for dumbest piece so far of
25:30
Speaker 2: twenty twenty five, which is easy to do since we're
25:31
Speaker 2: only fourteen days in.
25:32
Speaker 4: But peace from the New York Times.
25:34
Speaker 2: Why airlines are optimistic about twenty twenty five Unemployment rates low,
25:39
Speaker 2: people are spending money, They want to travel.
25:41
Speaker 4: Okay, check they go on.
25:42
Speaker 2: To say, the industry is enjoying a strong demand for
25:46
Speaker 2: tickets and rising profits, but it remains vulnerable to unexpected
25:50
Speaker 2: problems like a recession or a surgeon inflation. You literally
25:53
Speaker 2: just described ninety nine percent of companies in the United States. Sure,
25:58
Speaker 2: of course they're vulnerable to the problems like a recession
26:01
Speaker 2: or surgeon inflation. Show me one company that is not
26:05
Speaker 2: subject to risks from recession or a surgeon inflation. I
26:10
Speaker 2: can think of maybe, like utility companies wouldn't be all
26:14
Speaker 2: that concerned about a recession or a surgeon inflation. Every
26:19
Speaker 2: other one that I can think of is worried about
26:21
Speaker 2: those two things. Can you think of any other companies
26:23
Speaker 2: that wouldn't be worried about inflation prospects or recession?
26:27
Speaker 4: Yeah, inflation prospects and recession.
26:29
Speaker 3: It would be excited about I think about it.
26:31
Speaker 2: I mean, alcohol sales maybe would be excited about a recession.
26:34
Speaker 2: They tend to fare pretty well when people are out
26:36
Speaker 2: of job.
26:36
Speaker 4: They tend don't think they're actually they just fall by this.
26:39
Speaker 2: Yeah, yeah, this is useless information as far as I
26:43
Speaker 2: am concerned.
26:43
Speaker 3: Yeah, there just wasn't a lot of insight. The larger
26:45
Speaker 3: point is the one that you made that corporate leaders,
26:49
Speaker 3: and this is something that people who are down on
26:51
Speaker 3: the economy. But I guess, as you said in the
26:54
Speaker 3: last hour, that's either a that's that's that's the result
26:57
Speaker 3: of viewing the world to very strictly political lens or
27:00
Speaker 3: being politically opportunistic. No one seriously, I submit, no one
27:03
Speaker 3: seriously thinks the economy is bad unless their personal situation
27:06
Speaker 3: is really rough. I don't want to sound totally insensitive,
27:09
Speaker 3: but I don't think anybody seriously thinks the economy is bad.
27:11
Speaker 3: I think they're just performing for family friends in the media.
27:16
Speaker 2: Southwest Airlines, in fact, is taking an actual approach to
27:20
Speaker 2: their concerns about the future, and so this is actually
27:22
Speaker 2: interesting to me. So Southwest Airlines has paused all corporate hiring.
27:26
Speaker 2: They have paused most summer internships.
27:29
Speaker 4: How much are you.
27:30
Speaker 2: Paying your summer interns that that this is a headline
27:33
Speaker 2: that we need to make. That's my first question. But
27:36
Speaker 2: the company has been under a lot of pressure from
27:39
Speaker 2: activist investors to improve their returns, and they have done
27:44
Speaker 2: so with some strategic shifts on their business strategy. No,
27:48
Speaker 2: they're changing their boarding plan. I suspect that they are
27:51
Speaker 2: going to start marketing their flights on third party sites
27:54
Speaker 2: like Expedia and Google Flights. I also suspect that some
27:58
Speaker 2: of the things that they haven't previously nick than dimed
28:00
Speaker 2: for are going to start nickel and diming baggage fees,
28:03
Speaker 2: things along those lines where a lot of these airlines
28:06
Speaker 2: are making an absolute killing. I would suspect that Southwest
28:09
Speaker 2: goes for the question. The question will be, well do
28:12
Speaker 2: they just mimic every other large airline out there because
28:15
Speaker 2: they are the only large airline out there now to
28:18
Speaker 2: not have a first class cabin, to not have those
28:21
Speaker 2: more luxury type items that are clearly boosting profits right
28:25
Speaker 2: now at American, Delta, United and others, even Jet Blue.
28:30
Speaker 2: I don't know if they will shift quite that significantly
28:32
Speaker 2: because it seems to me that.
28:34
Speaker 4: Their brand, it's not their brand, and it's not there.
28:37
Speaker 4: It's not what they Their.
28:39
Speaker 3: Seats are pretty spacious and comfortable.
28:40
Speaker 2: Yeah, and yeah, that's been their other problems.
28:45
Speaker 4: They only buy, they only fly by.
28:47
Speaker 3: My point is those those are those are generous, generously
28:51
Speaker 3: apportioned to think about it, you know what I mean.
28:54
Speaker 3: You get a lot of space on those, The seats
28:56
Speaker 3: are comfortable on they're fine wide.
28:58
Speaker 2: They're fine, but you can't pay. You can't buy a
29:01
Speaker 2: lay down seats. You can't do the things that Delta
29:04
Speaker 2: and others have really taken advantage over the last few years.
29:07
Speaker 4: Let's take a quick break. When we come back, going
29:10
Speaker 4: to have a bit of stack Roulette for you. Next
29:11
Speaker 4: on the Financial Exchange.
29:13
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30:24
Speaker 2: End of an era at Starbucks across the country is
30:27
Speaker 2: they will be rolling out some new policies of not
30:30
Speaker 2: just sitting there and not buying anything when you go
30:33
Speaker 2: to a Starbucks, which just seems like a very baseline yeah,
30:39
Speaker 2: nicety that you would have when visiting any business, But
30:42
Speaker 2: apparently people felt that, hey, it's Starbucks, who'll.
30:44
Speaker 4: Take advantage of it, and they won't care.
30:47
Speaker 2: No longer will you be able to just use the
30:48
Speaker 2: bathroom without buying anything. No longer will you be able
30:51
Speaker 2: to sit there for hours on end without making a
30:53
Speaker 2: single purchase, or show up with your typewriter and write
30:56
Speaker 2: your manuscript without buying a coffee.
30:58
Speaker 4: They are going to.
31:00
Speaker 2: Set out some new rules, some new policies that they'll
31:02
Speaker 2: expect their people to enforce, including adding signs that would
31:07
Speaker 2: ban harassment, violence, threatening language outside out who's bringing outside
31:11
Speaker 2: alcohol to a Starbucks?
31:12
Speaker 5: Sorry?
31:13
Speaker 2: What sort of degenerate are you where you got to
31:15
Speaker 2: pour alcohol into. Maybe they're not even buying anything to
31:19
Speaker 2: pour the alcohol into. Was that you, Tucker? Is that
31:21
Speaker 2: what you said?
31:22
Speaker 4: Sorry?
31:24
Speaker 5: Apparently Mike has never heard of an Irish coffee.
31:26
Speaker 2: Yeah, I make them at home like a normal adult,
31:29
Speaker 2: and panhandling in their stores. According to employees who have
31:32
Speaker 2: viewed that notice, it's most certainly going to cause a
31:36
Speaker 2: fight somewhere and result in some problems. But honestly, like
31:41
Speaker 2: going to a Starbucks and sitting down has gotten to
31:46
Speaker 2: the point where I have no interest in it in
31:48
Speaker 2: some parts of the country because I know it's just
31:51
Speaker 2: going to be jam packed with people that are going
31:53
Speaker 2: to be sitting there for hours on end. And I
31:55
Speaker 2: can't think of a worse environment to be in than
31:59
Speaker 2: somebody who's just sitting there only asking for water from
32:03
Speaker 2: the front desk of the Starbucks and sitting there for
32:05
Speaker 2: hours on ends trying to get work done.
32:08
Speaker 4: That's that's just.
32:08
Speaker 2: My absolute nightmare in terms of a shopping experience. Like
32:11
Speaker 2: as another customer, I would intentionally avoid it because I'd
32:13
Speaker 2: be worried about that sort of thing.
32:15
Speaker 3: It is funny how, with the turning of the political tide,
32:20
Speaker 3: all these pent up frustrations, Zuckerberg gets a perm and
32:23
Speaker 3: starts talking about randomly punching people in the face before
32:26
Speaker 3: sharing them on going on Joe Rogan shirtless, and they're all.
32:29
Speaker 4: Who what did he add to his board again?
32:31
Speaker 3: It was uh oh, Danaebody get really macho and bulky.
32:37
Speaker 3: You get back to work and you get out of Starbucks.
32:40
Speaker 3: It's almost like there's a little bit of, you know,
32:42
Speaker 3: Dad's back. There's a bit of a Dad's back in
32:44
Speaker 3: charge feeling geist, feeling whatever you want to call it,
32:47
Speaker 3: floating around out there in the ether. Is there a
32:50
Speaker 3: common thread, are you guys, detective?
32:51
Speaker 4: I guess I am.
32:52
Speaker 2: Yeah, Well, I think the common thread that I'm seeing
32:55
Speaker 2: is that people companies in particular are doing away with
32:59
Speaker 2: policies that have anything to do with ESG is not
33:05
Speaker 2: even the right word, but like overt friendliness and problem
33:09
Speaker 2: You know, this all came from the reason that you
33:11
Speaker 2: could use the Starbucks bathrooms even if you didn't buy anything.
33:14
Speaker 4: Was back in twenty eighteen.
33:16
Speaker 2: In a Philadelphia location, two black men went into one
33:19
Speaker 2: of the stories tried to use the bathroom. They told
33:21
Speaker 2: them no, there's a big fight, and Starbucks literally closed
33:24
Speaker 2: their company for a day while they did employee training
33:27
Speaker 2: on sensitivity. And so that's the history of this whole
33:33
Speaker 2: yeah problem here and why I think a lot of
33:35
Speaker 2: these companies are also rolling these things back.
33:37
Speaker 4: But yeah, it's the pendulum, all.
33:39
Speaker 3: These touchy feely things. Yeah, and companies, it couldn't wait.
33:43
Speaker 4: Walmart's doing away with their deal right now.
33:46
Speaker 3: They don't have to be nice. They don't have to
33:47
Speaker 3: pretend to give a crap about anything anymore. And by
33:49
Speaker 3: the way, I'm in that camp. Milton Freeman a long
33:51
Speaker 3: time ago said companies should be concerned with generating profits
33:54
Speaker 3: full stop. End of story. Leave the other stuff to
33:56
Speaker 3: churches and community groups. I'm going to test this healthy.
33:59
Speaker 2: But there when whenever I really desperately need to go
34:01
Speaker 2: to the bathroom, I just grab my youngest child and
34:04
Speaker 2: walk in there and say, and I look at them
34:06
Speaker 2: and I go, is there any chance we can use
34:08
Speaker 2: your bathroom? So, and it works one hundred percent of
34:10
Speaker 2: the time, regardless of whether the bathroom.
34:15
Speaker 4: So I'm gonna test this out with Starbucks and see
34:17
Speaker 4: if I need to go buy And.
34:18
Speaker 3: Know your face, I mean, you're maybe not the right
34:21
Speaker 3: candidate for testing this, but you do sense this swinging,
34:25
Speaker 3: as you say of the bendulum in company, I couldn't
34:28
Speaker 3: wait to get focused.
34:29
Speaker 5: I have no issues going into any very popular fast
34:31
Speaker 5: food establishment using the bathroom, if theft to use in,
34:34
Speaker 5: walking out a zero problem. But if you're sitting there
34:37
Speaker 5: hanging out at a Starbucks and like just drinking water, like,
34:40
Speaker 5: come on, what do you buy a coffee?
34:42
Speaker 2: This now has me on a different tangent. We brought
34:45
Speaker 2: our children out in I think we're technically in Indiana,
34:48
Speaker 2: but it might have been Chicago.
34:50
Speaker 4: Is the Chicago area actually to one of those altitude.
34:52
Speaker 2: Trampoline parks where kids hang out for hours, They eat
34:56
Speaker 2: candy and drink sodas and jump on trampolines and generally
35:00
Speaker 2: injure themselves. If you haven't been to one yet, it's
35:02
Speaker 2: great market. It's a fantastic way to watch your child.
35:05
Speaker 4: To get it.
35:05
Speaker 3: If I went to look at kids in a trampoline park.
35:07
Speaker 4: You would have some problems.
35:08
Speaker 3: Yeah, you would get LA enforcement, to be honest.
35:12
Speaker 4: Good point, so don't go.
35:15
Speaker 2: But in any case, we were there, and we walked
35:18
Speaker 2: right in, and they were fortunate enough to disclose this
35:20
Speaker 2: to us ahead of time, that their bathrooms were broken.
35:25
Speaker 3: But I would have walked right out.
35:27
Speaker 2: But my my question is how as a business that
35:32
Speaker 2: that's that model, Like, Okay, if you're a Starbucks or
35:35
Speaker 2: a gas station, your bathroom's broken, like I'm willing for.
35:38
Speaker 3: Me, the bathroom's broken.
35:41
Speaker 4: It was. They clearly had a clog that flooded everywhere.
35:44
Speaker 3: Okay, somebody clogged the toil.
35:45
Speaker 4: There were a bunch of people saying somebody cloged the
35:47
Speaker 4: toy yes, or there.
35:49
Speaker 2: Was some other backup sewage issue, but there was clearly
35:52
Speaker 2: an issue, and they didn't close their business. Your business
35:56
Speaker 2: is catering to little kids who can't hold it, and
35:58
Speaker 2: you're going to pump them with a bunch of slushies
36:01
Speaker 2: and sodas and not have functional bathrooms. It was the
36:05
Speaker 2: most disgusting thing that I had been to and quite
36:07
Speaker 2: some time. So we did not stay there for very long,
36:10
Speaker 2: but the entire thing was just and I sat there
36:13
Speaker 2: and thought and watched, like, all right, I've seen that
36:16
Speaker 2: kid here for at least an hour. There's no way
36:19
Speaker 2: he's not peeing somewhere. What is happening here? So that
36:22
Speaker 2: that was my discussing experience of the holiday season.
36:25
Speaker 4: What do you have for us?
36:26
Speaker 2: For stack relet bark because I went on a wild
36:28
Speaker 2: tangent there that started with Starbucks and led to a trampoline,
36:33
Speaker 2: parks bathrooms, So apologies to all those who were.
36:36
Speaker 3: Kind of a shocking story. In the Wall Street Journal,
36:39
Speaker 3: they report that the Congressional Budget Office, which updates population
36:43
Speaker 3: growth estimates every year, is dramatically downgrading forecasts for population
36:48
Speaker 3: growth based on decreased fertilities. Are long term trends, but
36:52
Speaker 3: they seem to have accelerated, people having fewer kids, less
36:56
Speaker 3: immigration the up show.
36:57
Speaker 2: So it does account for immigration. I wonder how big
37:00
Speaker 2: adjustment they're making on the immigration side of Some.
37:02
Speaker 3: Of it could be an overreaction to talk of more
37:06
Speaker 3: restrictive immigration policy. Hard to say, but we're looking at
37:10
Speaker 3: almost no population growth. I think that's a safe way
37:13
Speaker 3: to summarize up from not much to none over the
37:16
Speaker 3: next thirty years. And the reason that matters if they're right,
37:20
Speaker 3: is that translates in a lower overall economic growth, though
37:23
Speaker 3: not necessarily per capita economic growth. It's important to make
37:26
Speaker 3: that distinction. Doesn't mean people aren't getting wealthier, It just
37:28
Speaker 3: means overall the economy will not grow as quickly. And
37:31
Speaker 3: it also of course makes it much easier to support
37:34
Speaker 3: and sustain social insurance programs like Social Security and things.
37:37
Speaker 4: Like that, which we're long sure harder.
37:39
Speaker 3: What did I say, it makes it harder. I should
37:40
Speaker 3: have said harder.
37:41
Speaker 2: Yeah, yeah, at least based on the way that we
37:44
Speaker 2: fund our programs today.
37:46
Speaker 3: If this is right, Mike, see change in thinking on geez.
37:50
Speaker 3: Anything actuarial is required in a serious ratcheting down of
37:54
Speaker 3: long term growth expectations.
37:57
Speaker 2: And I hope that if we decide to attack this
38:00
Speaker 2: as a problem, that we don't go for the let's
38:03
Speaker 2: try and make more births because that has never worked anywhere.
38:06
Speaker 4: In the world. Quick break.
38:08
Speaker 2: We will be back at it in twenty two hours
38:10
Speaker 2: here on the financial exchange markets have all turned negative,
38:13
Speaker 2: with the Nasdaq leading the way down, off four tenths
38:15
Speaker 2: of a percent. As we close out the show, CPI
38:18
Speaker 2: inflation is tomorrow. Tune in, folks,