Latest / Money Matters with Greg / Episode 170: Rare Earth Hype, Shutdown Noise, And Smart Investing

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Episode 170: Rare Earth Hype, Shutdown Noise, And Smart Investing · Money Matters with Greg

• 0:02
  SPEAKER_00: Welcome to Money Matters with Greg, where we dive into the money conversations shaping your life.
• 0:08
  SPEAKER_00: From investments to estate planning, insurance to taxes, we cover it all with a fresh perspective.
• 0:14
  SPEAKER_00: Join Greg and his guests each week to get inspired and take control of your financial future.
• 0:20
  SPEAKER_00: Let's get started.
• 0:22
  SPEAKER_01: Securities and investment advisory services offered through LPL Financial Registered Investment Advisor, member from Red S IPC.1 FM WVLP.
• 0:58
  SPEAKER_01: The show's Money Matters with Greg.
• 1:00
  SPEAKER_01: You can find us on anywhere you pod as well.
• 1:02
  SPEAKER_01: And we're just excited to be here.
• 1:04
  SPEAKER_01: So um looking forward to another episode.
• 1:08
  SPEAKER_01: This will be our 170th episode here today.
• 1:11
  SPEAKER_01: And you can find us uh anywhere on socials as well as just email me, Greg at farowalth.com, if you have any questions, um, and any updates or anything else you'd like to cover here that has to do with money.
• 1:25
  SPEAKER_01: We talk about money on the show.
• 1:27
  SPEAKER_01: We have a number of guests on the show that talk about money, everything from their um expertise or their forte in different uh industries, as well as real estate, mortgage uh uh mortgages, uh you talk about credit card debt, you name it here.
• 1:41
  SPEAKER_01: Uh really talk about financial literacy as well as the markets.
• 1:47
  SPEAKER_01: With that being said, I want to be able to review kind of what's been going on with the stock market just because it keeps on hitting all-time highs, and we've just been on such a rip and uh on such a tear uh this uh this year.
• 1:58
  SPEAKER_01: Uh knock on wood to keep keeps on continuing here through October.
• 2:02
  SPEAKER_01: And I want to fill you in on that.
• 2:03
  SPEAKER_01: I also want to fill you in on some of the government shutdown conversation uh as far as what's been going on with that and how that affects or might affect your investments and what it has done in the past, um, and what a little historical take.
• 2:20
  SPEAKER_01: And then I'm gonna talk about my upcoming trip to Washington, D.C.
• 2:24
  SPEAKER_01: I'm very excited to meet with many of our lawmakers here in the state of Indiana, uh, along with uh about a thousand uh graduates of the Goldman Sachs 10KSB um membership that I'm a part of as a graduate.
• 2:41
  SPEAKER_01: So uh very excited to do that, and I want to fill you in on that as well.
• 2:47
  SPEAKER_01: So, as I mentioned before, we are broadcasting here at 103.1 FMWVLP, and uh we broadcast on Thursdays at 11 o'clock, and then it's replayed on Saturdays at 1 o'clock as well.
• 2:58
  SPEAKER_01: Uh, and then you can find us also as far as uh podcasting uh any pods uh out there, uh Apple, Spotify, and the like.
• 3:07
  SPEAKER_01: So let's get to it.
• 3:09
  SPEAKER_01: Uh I want to just talk about uh the markets here real quick as far as equities.
• 3:13
  SPEAKER_01: Uh recently, after two days of a solid back-to-back gains uh that were really fueled by a trade deal, uh hopes and earnings uh momentum uh overall.
• 3:24
  SPEAKER_01: The earnings have been really solid.
• 3:27
  SPEAKER_01: Third quarter earnings are coming in uh weekly and uh well daily, and uh started just last week.
• 3:35
  SPEAKER_01: Equity markets really kind of took a breather here uh yesterday, um, kind of rocking back from their all-time highs, but uh there's a lot of sideways trade overall just just recently.
• 3:47
  SPEAKER_01: Uh today we're down a little bit uh in regards to the markets, but nothing terrible.
• 3:53
  SPEAKER_01: It really seems like we're just following on what's going on with the trade deals.
• 3:56
  SPEAKER_01: Uh, as trade deals are said, uh, so goes the market as far as volatility.
• 4:01
  SPEAKER_01: You have seen a number of rare earth uh uh prices drop.
• 4:06
  SPEAKER_01: You've seen gold get hit recently.
• 4:09
  SPEAKER_01: Uh so it's been interesting to see what comes about with that because the negotiations with China are really pushing that um uh that narrative for sure.
• 4:19
  SPEAKER_01: But uh again, we hit all-time highs uh overall as far as the stock market.
• 4:23
  SPEAKER_01: I think the SP 500 is up close to 15% for the year.
• 4:27
  SPEAKER_01: Um, and really we are just watching uh trade war government shut down.
• 4:34
  SPEAKER_01: Stocks began to really kind of lose momentum yesterday uh with President Trump starting to talk about the trade war uh from the rose garden and basically said this comment of, you know, maybe the meeting won't happen with China um at all.
• 4:50
  SPEAKER_01: And that really that comment obviously triggered uh a lot of nervousness and profit taking um across the board.
• 4:57
  SPEAKER_01: So you really are seeing a lot of rare earths uh and and rare earth materials uh as far as investments and as far as things that are owned out there are um are very important here because uh as as you know, US China this trade spat really does have to do with China controlling nearly 70% of global production of rare earths, and more importantly, 90% of the refining capacity of those uh as well.
• 5:36
  SPEAKER_01: So uh that is something that we don't have as a as a nation have something to negotiate with because they hold uh the cards in regards to um you know that market cap and that that those markets and owning so much of it.
• 5:53
  SPEAKER_01: But starting about uh two and a half years ago, really kind of starting with the explosion of Chat GPT, it's a sort of an interesting thing began to happen in earnings calls.
• 6:05
  SPEAKER_01: And if a company simply mentioned that they were investigating incorporating AI into their business, the stock would typically jump uh regardless of the details of the plan uh at all.
• 6:19
  SPEAKER_01: Um and this phenomenon really continued to point and still to this day.
• 6:26
  SPEAKER_01: Walmart rallied last week just because uh they said they were working with open AI just to create a shopping bot.
• 6:35
  SPEAKER_01: Uh and now similar to kind of what could be this kind of what's happening with rare earth materials.
• 6:42
  SPEAKER_01: Cleveland Clips company just came out and announced earnings on Monday, and the stock surged 20%.
• 6:48
  SPEAKER_01: Interesting, it wasn't really because of the results, uh, which were good results, um, but not really worth a 20% rally.
• 6:57
  SPEAKER_01: Instead, it was because of rare earth materials uh and the CLF management announced it as exploring commercial rare earth mines at two properties in Minnesota um and Michigan, and two regions obviously more friendly with US uh demand um than China for sure.
• 7:19
  SPEAKER_01: So that mention alone had the stock pop um and it really set to boost earnings overall as far as future earnings, so they were full able to forecast.
• 7:32
  SPEAKER_01: But as we begin to investigate these rare earth materials, the mining, the refining, adding sort of another tailwind to to companies, you really have to be uh cognizant of the fact that um it's it's it's important that this issue is is is important and it's gonna affect your your investments.
• 7:50
  SPEAKER_01: So now nearly anything rare earth specific has been sort of uh had a substantial run up.
• 7:57
  SPEAKER_01: Um so you really want to watch out for those that this lot a lot of it is just based on hypothetical.
• 8:04
  SPEAKER_01: So just kind of sending out a little bit of a warning here.
• 8:08
  SPEAKER_01: Um that you know, before it was AI and anything AI, now anything rare earth.
• 8:14
  SPEAKER_01: Now obviously we talk about diversification on this uh on this uh show, and any uh thing you do as far as investments, you should be considering your team, your tax team, your investment team, uh, and your financial advisors uh as well uh with these conversations.
• 8:34
  SPEAKER_01: But it's just something to bring up here uh as we look at this.
• 8:38
  SPEAKER_01: I hope you're able to get rid of gather some things on the show that you wouldn't necessarily see coming.
• 8:44
  SPEAKER_01: Uh, and that's really what we try to do as investors for our clients is find the trend and then ride the trend.
• 8:52
  SPEAKER_01: Um, some of these trends, you know, they've moved so fast and furious, it's been tough to really kind of catch on.
• 8:59
  SPEAKER_01: You've had some great runs and some things, and you just want to make sure you're cognizant of the fact that uh of what you're buying and what you're investing in, and that you're making prudent investments.
• 9:11
  SPEAKER_01: And it's not just a bunch of gobbledygoop um and just sort of uh fake run-up on potentially a deal um uh uh or some sort of whisper.
• 9:25
  SPEAKER_01: So I always like to be able to make sure you you're being conservative in your investments and uh and doing your research.
• 9:33
  SPEAKER_01: And hopefully one of this our show is one of those um one of those chances to be able to learn something and learn something new as far as what's out there.
• 9:44
  SPEAKER_01: And right now we're seeing uh just a huge move in rare earths.
• 9:49
  SPEAKER_01: All right, so that's my update on that.
• 9:51
  SPEAKER_01: As far as the markets go, I really want to dig into um what's going on with the government shutdown and how that affects your investments and how that affects the markets.
• 10:01
  SPEAKER_01: Uh so far it hasn't affected at all.
• 10:03
  SPEAKER_01: Everything's done is everything's gone up.
• 10:06
  SPEAKER_01: So um, hey, uh most people have yawned about this whole thing, and it's gone on now, uh, even though it's gone on three weeks, and it's becoming one of the longest ones as far as the shutdown in history.
• 10:21
  SPEAKER_01: And really, as we look back and we look at markets and look at the economy, uh really our goal is to provide a perspective to to all clients and just sort of uh help with getting through the noise as much as we can.
• 10:37
  SPEAKER_01: And we understand that the news headlines can send uh mixed messages for sure.
• 10:43
  SPEAKER_01: Uh so I just want to make sure that you're inform informed and you can take this information and process it however you like uh about what's really most important um to your financial progress and your money uh here on the show Money Matters with Greg.
• 11:01
  SPEAKER_01: And the government shutdown is certainly at the forefront of current news cycles.
• 11:07
  SPEAKER_01: Uh it's now entering its third week.
• 11:09
  SPEAKER_01: And I really expect that these headlines uh to grow louder and louder as they move along, adding more political noise and perhaps even polarization uh overall.
• 11:22
  SPEAKER_01: But for investors, um there's also growing concern of a possible recession.
• 11:29
  SPEAKER_01: We're not seeing that, but that's what you're hearing uh in the news.
• 11:32
  SPEAKER_01: Um to be clear, the goal of the financial planning of the goal of financial planning is to not take sides on which side of Washington um is right or wrong, uh, or wrong or right, uh, but rather to just sort of make sense of it all, especially with the eye towards the risk and the opportunities uh that you might have in regards to you know the investments.
• 11:57
  SPEAKER_01: So some of the key points to consider I want to bring up is you know, current government shutdown is now uh in the top five longest uh shutdowns ever.
• 12:07
  SPEAKER_01: Um so it's getting there, primarily affecting uh government workers and their families, of course, and as well as those that depend on government services for sure.
• 12:16
  SPEAKER_01: By law, any furloughed employees will receive all back pay uh once the shutdown ends.
• 12:24
  SPEAKER_01: But what makes this shutdown unique is that the federal government is pursuing layoffs, uh uh also referred as quote-unquote reductions in force or RIFs.
• 12:39
  SPEAKER_01: Um without minimizing the impact of lives on the government workers and their families, the reality is that the federal government employment makes up about 1.8% of the entire work workforce in America.
• 12:53
  SPEAKER_01: And recent reduction in in uh forced notices represent just 0.0018% of the total labor market in America.
• 13:04
  SPEAKER_01: And just so you know, it's that's a pretty small slice of the entire economy.
• 13:09
  SPEAKER_01: Uh historically, government shutdowns have really never had a long-term effect on the stock market.
• 13:16
  SPEAKER_01: Uh, the longest shutdown in history lasted 35 days uh during President Trump's first term in 2018 and uh to early 2019.
• 13:27
  SPEAKER_01: And while the past is no guarantee of the future, the SP went up to gain 31 and a half percent uh with dividends in 2019.
• 13:37
  SPEAKER_01: So uh there's that.
• 13:39
  SPEAKER_01: Uh there have also been extended shutdowns under Clinton, under Obama, uh in the past as well.
• 13:47
  SPEAKER_01: Um were much shorter than uh you know the current one.
• 13:51
  SPEAKER_01: Uh some were about the same.
• 13:54
  SPEAKER_01: Um, but just a historical reference more than anything.
• 13:58
  SPEAKER_01: Uh extended shutdowns can create uh modest economic growth headwinds as federal employees sort of postpone spending and government services um experience these disruptions, but most of the lost economic growth is simply postponed until the government reopens.
• 14:19
  SPEAKER_01: And the key drivers of the investments, such as corporate earnings, valuations, interest rates, and inflation are really unlikely to significantly shift ever as a result of the government shutdown.
• 14:33
  SPEAKER_01: And the shutdown is also uh distinct from the debt ceiling, which has led to credit downgrades in the past.
• 14:44
  SPEAKER_01: So it's different than that for sure.
• 14:46
  SPEAKER_01: But altogether, uh taking government slowdowns and shutdowns will likely attract media attention for sure.
• 14:57
  SPEAKER_01: Uh they're gonna present difficulties uh for federal employees and even small businesses, as small business loans have halted uh with the SBA and a number of different things in regards to um government services.
• 15:12
  SPEAKER_01: So they're gonna interrupt those essential services, but they historically represent a temporary interruption and have a minimal financial market effect.
• 15:23
  SPEAKER_01: Um so just be calm.
• 15:26
  SPEAKER_01: Uh as investors, look for opportunities here.
• 15:29
  SPEAKER_01: The government shut down is really not a reason to make a change to your financial plan.
• 15:33
  SPEAKER_01: Um, and that said, uh, if your financial uh really your situations or objectives have shifted, you don't hesitate to reach out to your advisors uh and have a conversation with them and um see what they think about what's going on out there.
• 15:48
  SPEAKER_01: Uh but for us right now uh it's much ado about nothing.
• 15:59
  SPEAKER_01: All right, again, the show's Money Manager with Greg.
• 16:01
  SPEAKER_01: I'm Greg Farrell, CEO and owner of uh wealth management firm Farrell Wealth here in Valparaiso, Indiana.
• 16:08
  SPEAKER_01: And we podcast here on uh Apple and Spotify where anyway where you pod.
• 16:14
  SPEAKER_01: We're at uh 103.1 FM W VLP uh and broadcast on Thursdays at one o'clock and then Saturdays at one o'clock on a repeat.
• 16:23
  SPEAKER_01: And uh just wanted to be able to kind of transition from uh what we're talking about as far as the markets and everything else and just kind of go to um something that I'm really excited about uh for next week.
• 16:36
  SPEAKER_01: And I just want you to have the opportunity to kind of uh reach out to me and let me know if you have any questions as business owners and as fellow business owners, if you have any questions for your legislators and your representatives in Washington, D.C.
• 16:52
  SPEAKER_01: I am uh very excited to be representing the state of Indiana um with my graduates from the Goldman Sachs 10,000 Small Businesses 10KSB program uh that I was uh privy to.
• 17:07
  SPEAKER_01: And uh honestly, if I had known how much work was involved, I probably never would have done the program.
• 17:13
  SPEAKER_01: But it's well worth it.
• 17:14
  SPEAKER_01: I highly recommend uh that you uh be a cohort uh wherever you might be, uh whatever state you're in, uh, and represent your state.
• 17:26
  SPEAKER_01: Uh we had the first cohort here in Indiana.
• 17:28
  SPEAKER_01: I did a podcast on it.
• 17:30
  SPEAKER_01: I won't go into everything that we did uh overall.
• 17:33
  SPEAKER_01: You can go to that podcast and find out more, but I have an opportunity here coming up that nearly a thousand of the 16,000 or 17,000 now graduates are um have been in uh offered a chance to go to Washington, D.C.
• 17:52
  SPEAKER_01: and have a summit.
• 17:53
  SPEAKER_01: It is the Goldman Sachs 10,000 Small Businesses Summit um in Washington, D.C.
• 17:59
  SPEAKER_01: next week.
• 18:00
  SPEAKER_01: And I'm lucky enough to be meeting with our two state senators um and also uh congressman uh here's local to our district in Valparaiso.
• 18:12
  SPEAKER_01: So very excited to be able to represent the small business community uh in the state of Indiana as a business owner myself.
• 18:21
  SPEAKER_01: And from this great state, I'll be meeting with uh Senator Jim Banks, Congressman uh Frank Marvan, um Mervan, and then uh Senator Todd Todd Todd Young uh as well.
• 18:35
  SPEAKER_01: So really excited to be able to do that.
• 18:37
  SPEAKER_01: I just wanted to be able to give you an opportunity that if you've got a question as a small business owner or uh something that really is a high-level, it's a bipartisan conversation.
• 18:47
  SPEAKER_01: Um I'm representing you know small businesses for growth, and I really want to talk about that as a high-level.
• 18:56
  SPEAKER_01: This is not a political thing, this is not um uh one side, you know, wrong or right, back to that whole conversation.
• 19:05
  SPEAKER_01: But uh I just wanted to reach out and let my audience know, hey, look, if you've got a question, I want to be able to ask it on your behalf, and I will definitely get back to you as to what was said and how uh that went down.
• 19:18
  SPEAKER_01: I'm gonna chronicle my efforts uh next week when I travel to DC and really looking for any sort of uh opportunity to promote small businesses and their mission in the state of Indiana.
• 19:34
  SPEAKER_01: And then really for any state, if you have if you're from another state and you want me to ask a question based on your specific state, I am happy to go to one of my cohorts uh and that's gonna be representing your state and meeting with the administrators and the legislators uh from that state specifically because we have team captains.
• 19:56
  SPEAKER_01: So I will be a team captain for uh I think two out of the three meetings, uh and then uh very excited about that.
• 20:05
  SPEAKER_01: And really just trying to ask some questions about uh, I mean, really everything's on the table uh in regards to uh what's affecting you as a small business and how um Washington and your legislators that are your representatives, um, how they can help you uh grow your business.
• 20:27
  SPEAKER_01: So with that being said, just email me, Greg at FeralWellth.com.
• 20:31
  SPEAKER_01: Uh it's really the best way to get a hold of me or any socials, uh Instagram, LinkedIn, uh Facebook, and X.
• 20:38
  SPEAKER_01: Uh you can DM me on any of those.
• 20:41
  SPEAKER_01: And I would be happy to uh either pass your question on to uh one of those representatives in the state or ask the question myself if it's in the state of Indiana.
• 20:51
  SPEAKER_01: So um please uh reach out to me and let me know if there's anything you have an opportunity to ask some really important people that represent you uh about that concerns you, uh please um uh let me know.
• 21:08
  SPEAKER_01: Okay.
• 21:08
  SPEAKER_01: So the show's Money Manager, Greg, again, thanks for a great show.
• 21:11
  SPEAKER_01: Uh great opportunity to be able to provide some value.
• 21:14
  SPEAKER_01: We talked about the stock market and reviewed that.
• 21:16
  SPEAKER_01: We talked about uh the government shutdown and how that might affect your investments, and then we also um I'll let you know how it goes in DC.
• 21:24
  SPEAKER_01: I should be able to broadcast uh next week and do a 171st episode.
• 21:29
  SPEAKER_01: And again, we're on WVVLP 103.1 FM.
• 21:33
  SPEAKER_01: Uh once again, always recommend that you could do the opinions are those of my own um and not of LPL Financial, which is my broker dealer.
• 21:43
  SPEAKER_01: And uh make sure you always consult with your um tax attorneys, your investment advisors uh before you do anything off the information from this show.
• 21:52
  SPEAKER_01: But I hope I was helpful in some way.
• 21:54
  SPEAKER_01: Again, money matters with Greg.
• 21:55
  SPEAKER_01: I'm Greg Farrell, CEO and owner of Ferrell Wealth, and the show is about money, and we're excited to um have our 170 uh episode.
• 22:04
  SPEAKER_01: I'll let you know how DC goes.
• 22:06
  SPEAKER_01: And um, thanks for being here today, and we'll talk soon.
• 22:09
  SPEAKER_01: See ya.
• 22:09
  SPEAKER_01: Bye.
• 22:13
  SPEAKER_00: Thanks for tuning in to Money Matters with Greg.
• 22:16
  SPEAKER_00: We hope you gained some valuable insights today.
• 22:18
  SPEAKER_00: Remember, your financial journey is personal, but you don't have to go it alone.
• 22:23
  SPEAKER_00: If you enjoyed the show, be sure to subscribe and share.
• 22:26
  SPEAKER_00: Until next time, here's to making your money work for you.
• 22:30
  SPEAKER_00: Journeys and investment advisory services offered through LPL Financial, a registered investment advisor, member FINRA SIPC.