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Why Is the New England Economy Falling Behind the Rest of the U.S.? · The Financial Exchange Show

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Speaker 1: a donation today. This is the Financial Exchange with Mike Armstrong,
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Speaker 1: and fall Lane.
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Speaker 2: Good morning.
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Speaker 3: You made it to Friday here on the Financial Exchange
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Speaker 3: off honestly one of the busiest news and market weeks
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Speaker 3: that we have, certainly the most busy week that we've
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Speaker 3: seen in markets in twenty twenty six, and one of
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Speaker 3: the busiest we've seen in quite some time. It's Mike
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Speaker 3: Paul and been with you here on Friday, where we've
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Speaker 3: got equity markets selling off strongly but improving off of
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Speaker 3: earlier losses. The Dow Jones Industrial Average now down four
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Speaker 3: hundred and forty two points, nine tenths of percent, SMP
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Speaker 3: similar percentage wise nine tens of percent or fifty nine points,
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Speaker 3: and the NASDAC down one hundred and fifty nine points
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Speaker 3: seven tenths of one percent. The Russell two thousand, those
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Speaker 3: smaller cap less profitable on average names down a full
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Speaker 3: two percent in early trading.
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Speaker 2: Across the pond.
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Speaker 3: In Europe, you've got equities off about one in a
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Speaker 3: third percent as markets closed there, and in Asia mixed
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Speaker 3: markets the nie K was up six tensive a percent.
2:05
Speaker 3: In terms of interest rates and bonds, we've seen big moves,
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Speaker 3: but not today. The ten year treasury yield standing pat
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Speaker 3: at four point one four eight percent so far this morning,
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Speaker 3: but oil prices moving and not coming back down as
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Speaker 3: of yet. Oil prices topping at one point earlier ninety
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Speaker 3: dollars a barrel, we're now sitting at eighty eight point
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Speaker 3: fifty per barrel on the West Texas crude. That's up
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Speaker 3: another nine point three percent today and a total of
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Speaker 3: thirty two percent from where prices sat just on Friday
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Speaker 3: of last week. We're all seeing that now at the pump.
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Speaker 3: Varies obviously state by state, but on a national average,
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Speaker 3: we're sitting at three dollars and thirty two cents according
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Speaker 3: to Triple A and mortgage rates which are tied to
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Speaker 3: that thirty sorry, that ten year treasury that I was mentioning,
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Speaker 3: they had been below six percent as of last week,
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Speaker 3: prior to oil prices spiking, and prior to the strikes
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Speaker 3: in Iran. As of yesterday, according to Mortgage News Daily,
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Speaker 3: the average rate on a thirty year fixed rate mortgage
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Speaker 3: was sitting at six point one three percent. Paul, anything
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Speaker 3: else catching your eye in terms of markets?
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Speaker 4: Not markets, but no school for the kids to say
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Speaker 4: around here? Has my wife.
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Speaker 2: Quite up there? You're kidding me? You guys had cancelation
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Speaker 2: two hour.
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Speaker 4: Delay which impacts preschool to just be canceled. People are
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Speaker 4: it's kind of getting soft around here. Well.
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Speaker 3: The big news out this morning, other than the continued
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Speaker 3: conflict in Iran and strikes across the Middle East, was
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Speaker 3: the job's report at eight thirty this morning, Expectations were
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Speaker 3: for around forty thousand jobs created. Instead, we received a
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Speaker 3: report from the bl last the Bureau of Labor Statistics
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Speaker 3: ninety two thousand jobs lost in the month of February.
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Speaker 3: That's after a very solid job creation month for January
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Speaker 3: that had a lot of folks scratching their heads been
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Speaker 3: and saying, hey, maybe we are on a different trend
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Speaker 3: line from where we were in twenty twenty five. This one,
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Speaker 3: I think weakens those expectations a fair bit. It gets
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Speaker 3: us back in line to the narrative that we've been
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Speaker 3: talking about for all of twenty twenty five, which is
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Speaker 3: job creation has slowed. Demand for labor from US employers
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Speaker 3: has slowed dramatically, and that is being reflected again in
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Speaker 3: this February jobs report, where the unemployment rate ticked up
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Speaker 3: to four point four percent. We saw a bit of
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Speaker 3: a reversal in terms of the healthcare hiring that we saw,
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Speaker 3: and we saw big revisions too, at least the December
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Speaker 3: Jobs report from last year, which was revised into the
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Speaker 3: red that brought the pace of job creation for all
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Speaker 3: of twenty twenty five, all twelve months of twenty twenty five,
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Speaker 3: when you know net them all out, just over one
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Speaker 3: hundred thousand jobs were created in twenty twenty five, amid
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Speaker 3: the confusion for employers around tariffs, and in spite of
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Speaker 3: all of the again, I have to bring up this
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Speaker 3: labor market point here. The weak job creation is in
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Speaker 3: spite of stocks hitting all time highs and massive obsession
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Speaker 3: and construct like real economic activity related to the AI.
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Speaker 2: Boom that we are seeing here.
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Speaker 3: And if there's one big risk that's out there too
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Speaker 3: the US economy and markets as a whole, it is
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Speaker 3: this newish story of concentration that's playing out all over
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Speaker 3: the US economy. There's a higher concentration of spending among consumers,
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Speaker 3: there's a higher concentration among stock market investments when you
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Speaker 3: look at the S and P five hundred and so
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Speaker 3: that does not necessarily mean that it's a bad thing
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Speaker 3: for the economy as a whole. If you're hoping for
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Speaker 3: higher GDP, more spending to drive stock prices. Higher concentration
5:50
Speaker 3: isn't a risk in that regard, where it is a
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Speaker 3: potential problem and risk is the ability for any one
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Speaker 3: thing to change the narrative quickly. Because of that concentration
6:05
Speaker 3: is higher, there's more risk associated with things continuing to
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Speaker 3: go well because if something does happen that impacts that
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Speaker 3: top five percent of income earners specifically, if something does
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Speaker 3: happen that impacts the AI industry specifically, then yeah, more
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Speaker 3: of the economy is tied to those very concentrated bets
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Speaker 3: that we have all been you know, as society making
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Speaker 3: over the last few years.
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Speaker 4: Concentration can be great on the way up for people
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Speaker 4: who have hold a lot of stock in one company.
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Speaker 4: It can really help you in the stories of you know,
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Speaker 4: pick your company, Berks your healthaway Microsoft over the years,
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Speaker 4: but there's a lot of other areas of companies that
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Speaker 4: have failed and not to make it the exact same
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Speaker 4: parallel with the economy, But concentration has the risks on
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Speaker 4: the downside and also significant upside potential.
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Speaker 3: I mean, amid all of this, we also have updates
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Speaker 3: on tariffs and the order to start refunding them. US
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Speaker 3: Customs and Borne or Protection appeared in front of a
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Speaker 3: trade court judge today and informed the judge that they
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Speaker 3: cannot comply with his order to begin refunding reciprocal tariffs
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Speaker 3: imposed by President Trump. I don't know what that's going
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Speaker 3: to mean.
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Speaker 4: That was my next guest, is like, Okay, I just
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Speaker 4: picked some shot. Yeah, you know, we just can't do it.
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Speaker 2: We just can't do it. So again, what that means for.
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Speaker 3: I don't know how you hold customs in border protection
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Speaker 3: and contempt. I don't think you can. I don't know
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Speaker 3: what it means for the pace of reimbursements. But this
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Speaker 3: is continuing to be a developing story that I think
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Speaker 3: continues to sow confusion for businesses of all sizes when
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Speaker 3: it comes to tariffs.
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Speaker 2: We've got to take a quick break.
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Speaker 3: When we come back, we're going to be joined by
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Speaker 3: Mary Burke from the Boston Federal Reserves. She's me talking
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Speaker 3: to us about the recent Fedbaige book that was released
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Speaker 3: just Wednesday of this week. She'll be right back with
7:54
Speaker 3: us next on the Financial exchange.
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Speaker 2: Joining us now is Mary Burke.
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Speaker 3: She's principal economist and policy advisor with the New England
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Speaker 3: Public Policy Center within the Federal Reserve Bank of Boston.
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Speaker 3: And Mary, thank you so much for joining us. Appreciate it.
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Speaker 2: Morning, Mike, thank you forgive me this week.
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Speaker 3: I knew that the Beige Book was coming out, and
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Speaker 3: due to a couple other things going on across the globe,
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Speaker 3: it it came and went without me paying as close
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Speaker 3: attention to it as I normally would. But the timing
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Speaker 3: is perfect for you to join us to talk about it.
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Speaker 3: For those listening, can you describe the Beige Book, the
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Speaker 3: timing of its release, and just what precisely it covers
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Speaker 3: region to region from the Federal Reserve Sure.
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Speaker 5: So, the Beige Book, it's a Federal Reserve System publication.
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Speaker 5: It comes out eight times per year. It's timed about
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Speaker 5: two weeks before each of the FOMC or Federal Open
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Speaker 5: Market Committee meetings. It discusses current economic conditions across the
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Speaker 5: twelve Federal Reserve Regions or districts as we call them.
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Speaker 5: The Boston Fed publishes its own Beige Book, which covers
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Speaker 5: the economy in the New England States.
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Speaker 6: And what the Beige.
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Speaker 5: Book does is it characterizes the conditions in each region
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Speaker 5: based on qualitative information, mostly qualitative direct gathered directly from
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Speaker 5: our local sources. So each FED bank has its own
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Speaker 5: sources that it relies on to inform its Beige Book report.
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Speaker 5: We use telephone calls and surveys, and this complements other forms.
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Speaker 5: The FED collects lots of quantitative data, but the Beige
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Speaker 5: Book really complements by providing stories and gets you behind
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Speaker 5: what's happening in the economy in terms of you know
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Speaker 5: what's going on, what's behind the data, and it can
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Speaker 5: inform monetary policy decisions.
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Speaker 6: It's also not a commentary on the views of federals or.
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Speaker 3: Officials, understood, So Mary, I would just speak with my
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Speaker 3: co host here whose kids are out of daycare or
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Speaker 3: preschool this morning because of winter weather, and I'm curious
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Speaker 3: about the timing of collection of this information. How much
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Speaker 3: did winter weather perhaps play an effect on the survey
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Speaker 3: respondent's views on the economy this most recent survey, So
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Speaker 3: we did hear.
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Speaker 5: Some weather related impacts, but mostly based on the January
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Speaker 5: storms because that most recent storm was after we stopped
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Speaker 5: collecting data. But in terms of weather impacts that we
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Speaker 5: did hear, it affected home sales in January, which were
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Speaker 5: down from the previous January, and context did believe that
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Speaker 5: snow storms played a role in that you're not going
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Speaker 5: to go out and look for a house if it's
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Speaker 5: you know, three, you just know on the ground we
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Speaker 5: heard kind of on the plus side, this was interesting.
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Speaker 5: A grocery store change said that alcohol sales had increased
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Speaker 5: because of the storms in January. They also said, however,
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Speaker 5: that the Patriots' playoff run probably also contributed to those
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Speaker 5: increased alcohol sales. And this sort of uptic and alcohol
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Speaker 5: sales is sort of counter to a longer run trend
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Speaker 5: of declining alcohol sales, which is being seen both in
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Speaker 5: the region, I'd say also nationally.
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Speaker 3: Okay, so beside alcohol sales, though from what I saw
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Speaker 3: in the Beige Book for the region was a bit
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Speaker 3: of a flat lining of economic activity.
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Speaker 2: Am I reading that correctly in terms of your.
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Speaker 6: Take, that's absolutely correct. So we try to sum up,
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Speaker 6: you know, overall.
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Speaker 5: Economic activity averaged across our contacts, and we really found
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Speaker 5: that it was flat. You know, there's some mixed results.
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Speaker 5: Different industries had different results. We had some you know,
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Speaker 5: increased activity in manufacturing and non financial services, but consumer
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Speaker 5: spending was flat. And consumer spending is a big part
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Speaker 5: of the economy. So when consumer spending is flat, that
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Speaker 5: really you know, cuts into growth in general real estate markets.
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Speaker 5: As I said, home sales were down. Employment was down
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Speaker 5: a bit as well. So yeah, it was not a
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Speaker 5: strong report, I would say, but it also.
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Speaker 6: Wasn't It wasn't the worst report we've ever had.
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Speaker 3: Sure, I'm interested in your take further on that labor
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Speaker 3: market story, because one piece that I've just found interesting
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Speaker 3: has been, you know, the New England region's most populated state, Massachusetts,
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Speaker 3: had seen over the course of the last i think
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Speaker 3: a year and a half or so, their unemployment rate
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Speaker 3: increase faster than the national unemployment rate.
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Speaker 2: What you know, what are.
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Speaker 3: We seeing regionally in terms of job opportunities in hiring
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Speaker 3: right here in New England.
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Speaker 5: So yeah, i'd say the region overall the labor market
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Speaker 5: has definitely been a weak point. We know that job
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Speaker 5: growth has slowed nationally, but in the region we've had
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Speaker 5: basic flat employment over the entire past year, and some
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Speaker 5: signs in the in the in the Beige Book recently
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Speaker 5: that we've lost jobs. It was a slight decline in
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Speaker 5: jobs in the most recent Beige Book relative to the.
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Speaker 6: Previous Again, that's not hard data.
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Speaker 5: We're still waiting on sort of hard data unemployment in
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Speaker 5: the region. But I'd say, if anything, you know, we're
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Speaker 5: pretty confident that jobs are not you know, the number
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Speaker 5: of jobs has not increased over the past year and.
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Speaker 6: Certainly not in the past couple of months.
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Speaker 5: A lot of that has been employers saying they're just
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Speaker 5: there's so much uncertainty, especially like last spring with the
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Speaker 5: announcements about the tariffs that raised uncertainty.
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Speaker 6: They just too cautious, they didn't want to hire.
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Speaker 5: Some people are starting to say that some of that
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Speaker 5: uncertainty has been resolved, they have a sense of where
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Speaker 5: tariffs are going to land, and so they might be starting,
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Speaker 5: you know, they.
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Speaker 6: Might be ready to hire again.
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Speaker 5: The AI story, we didn't really hear anything about that
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Speaker 5: sort of putting a damper on hiring this time. We
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Speaker 5: did hear about that last time, saying that it was
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Speaker 5: sort of depressing the number of entry level openings.
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Speaker 6: The story there has been that.
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Speaker 5: Firms are not really sure yet if AI is going
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Speaker 5: to displace workers, but there's a possibility that they won't need.
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Speaker 6: As many workers.
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Speaker 5: So again it's just contributing to caution. So hiring has
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Speaker 5: been muted. There haven't been widespread layoffs, but there's just
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Speaker 5: not been hiring.
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Speaker 6: So an unemployment rate, you know.
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Speaker 5: Such as increased in Massachusetts, that can tick up even
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Speaker 5: if just people don't rehire. When people sort of naturally,
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Speaker 5: you know, people retire or there's some turnover in the
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Speaker 5: labor market, if you just don't replace the people who
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Speaker 5: have left, then you're going to see a rise in
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Speaker 5: unemployment because the people who are coming in and want
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Speaker 5: jobs are not finding them, and they're contributing to that unemployment.
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Speaker 3: Right Mary, Affordability has been dominating the news cycle, I
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Speaker 3: think really since the fourth quarter. We frankly since twenty
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Speaker 3: twenty two, but very much since the fourth quarter of
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Speaker 3: last year. I know this survey very much, you know,
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Speaker 3: entirely took place prior to this week, of course, but
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Speaker 3: what sort of you know, buzzwords and survey responses. Did
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Speaker 3: you get surrounding the topic of affordability here in New England?
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Speaker 5: Yeah, so we speak to leaders of nonprofit organizations and
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Speaker 5: what they're reporting is that, you know, obviously affordability concerns
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Speaker 5: among low and moderate income households tend to be high.
15:17
Speaker 5: But they've just reported these concerns have and intents and
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Speaker 5: they're not letting up, and people are having trouble just
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Speaker 5: paying for basic necessities such as food rent. This winter,
15:28
Speaker 5: energy costs have been huge because of the demand the
15:31
Speaker 5: cold weather. People are having to rely more and the
15:34
Speaker 5: rates are up, So home heating has been a big
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Speaker 5: affordability concern in this round.
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Speaker 3: That makes sense, Mary, final question here we alluded to
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Speaker 3: the differences in unemployment nationally versus the Massachusetts region. Just
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Speaker 3: in your opinion, how does New England compare at the
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Speaker 3: moment to other regions of the United States using the
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Speaker 3: survey's responses that you're getting from the Beige Book.
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Speaker 6: So, I'd say our growth is a bit weaker than average.
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Speaker 5: So we had, as I said, flat activity, and on
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Speaker 5: average in the US it was sort of economic activity
16:09
Speaker 5: was up a bit, so our growth seems to be
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Speaker 5: slowing and lagging behind the average a bit, and our
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Speaker 5: labor force tends to grow more slowly than other regions
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Speaker 5: because we just have slower population growth. We've seen some
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Speaker 5: domestic migration out of the region because of high cost
16:25
Speaker 5: of living. We rely heavily on international immigration to support
16:29
Speaker 5: our labor force, and the ability to grow the labor
16:32
Speaker 5: force also supports economic growth. So since there's been increased
16:36
Speaker 5: immigration enforcement, international immigration into the region has gone down,
16:40
Speaker 5: and so that's also putting a constraint on the ability
16:43
Speaker 5: of the labor force to grow and to support more
16:47
Speaker 5: hiring and economic activity.
16:49
Speaker 3: Mary Burke is the principal economist and policy advisor with
16:52
Speaker 3: the New England Public Policy Center within the Federal Reserve
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Speaker 3: Bank of Boston. Mary, thank you so much for joining
16:58
Speaker 3: us in your commentary on this recent release. Really helpful
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Speaker 3: for better understanding our region here in New England and
17:05
Speaker 3: just how we are continuing along.
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Speaker 6: Thank you so much, Mike Pleasure. Bye.
17:12
Speaker 7: Time now for trivia on the Financial Exchange. Today is
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Speaker 7: Alan Greenspan's one hundredth birthday. Alan Greenspan is an American
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Speaker 7: Alan Greenspan as Chairman of the Federal Reserve? Which President
17:33
Speaker 7: appointed Alan Greenspan as Chairman of.
17:36
Speaker 2: The Federal Reserve?
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17:57
Speaker 2: One hundred Yeah, man.
18:02
Speaker 7: Uh, the doesn't look a day over ninety eight.
18:06
Speaker 3: The uh piece from Mary here or the interview with
18:11
Speaker 3: Mary here here just makes me continue to reflect on
18:14
Speaker 3: the New England regional economy and where we go from here.
18:18
Speaker 3: Like I mentioned, the last year and a half or
18:20
Speaker 3: so has been very clearly defined by an unemployment rate
18:24
Speaker 3: that increased faster in Massachusetts at least than the rest
18:28
Speaker 3: of the country. And the key benefit that I can
18:31
Speaker 3: think of for the New England region back during eight
18:35
Speaker 3: when the economy truly fell apart, was the makeup of
18:39
Speaker 3: our labor market.
18:40
Speaker 1: Right.
18:40
Speaker 3: We have such an intensity of education and government and
18:46
Speaker 3: healthcare jobs, jobs that are not very directly attributable to
18:51
Speaker 3: you know, turned downs in the economy quite as much
18:54
Speaker 3: as other regions such as Florida, Las Vegas, et cetera,
18:58
Speaker 3: that we withstood that a lot better. This moment that
19:01
Speaker 3: we're in economically is being defined by a very different
19:04
Speaker 3: set of circumstances, right. It is white collar jobs that
19:07
Speaker 3: are being harder to find than others. It is cuts
19:10
Speaker 3: to education and government spending on healthcare research. And I
19:15
Speaker 3: guess I'm not surprised by the changes that we are seeing,
19:18
Speaker 3: but I'll be very interested to see if they continue
19:21
Speaker 3: to develop in that same way, or if the resilience
19:25
Speaker 3: of that New England economy because of those factors continues
19:27
Speaker 3: through twenty twenty six. We've got to take a quick
19:29
Speaker 3: break when we come back. Full Market update with Wall
19:32
Speaker 3: Street Watch next.
19:40
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Speaker 1: Tell you out full whoa Street Watch treking the stocks,
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19:57
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20:01
Speaker 7: Markets are still struggling as we get to eleven thirty four,
20:06
Speaker 7: the Dow Jones is off five hundred and eighty six points,
20:08
Speaker 7: or one point two percent. That SMP five hundreds off
20:11
Speaker 7: eighty points or one point one eight percent, NASDAK off
20:14
Speaker 7: two one hundred and twenty eight points or one percent.
20:19
Speaker 7: Oil prices are up nine point three percent, topping over
20:22
Speaker 7: eighty eight dollars and fifty seven cents, and Brent crude
20:25
Speaker 7: has passed ninety dollars. It's currently at ninety dollars and
20:28
Speaker 7: ninety two cents after raising by six and a half
20:31
Speaker 7: percent today. GAP stock is off by thirteen percent after
20:35
Speaker 7: Gap reported fourth quarter earnings of forty five cents per
20:38
Speaker 7: share just shiv analysts forecast of forty six cents a share.
20:42
Speaker 7: GAP's revenue came in line with expectations at four point
20:45
Speaker 7: two four billion dollars. Marvel Technology, which makes integrated circuits
20:49
Speaker 7: and semiconductor products, saw shares rise by eighteen percent on
20:53
Speaker 7: the back of strong quarterly results led by artificial intelligence
20:57
Speaker 7: demand Management said Marvel expects it's year over year revenue
21:01
Speaker 7: growth to increase each quarter in fiscal twenty twenty seven.
21:05
Speaker 7: Guideware software shares are up three percent after the software
21:09
Speaker 7: company for property and casualty insurers posted second quarter results
21:13
Speaker 7: that exceeded expectations. Guideware Software posted earnings of a dollar
21:18
Speaker 7: seventeen per share on an adjusted basis on revenue of
21:21
Speaker 7: three hundred and fifty nine point one million dollars. And finally,
21:25
Speaker 7: medical device company Hooper Companies is off three percent after
21:28
Speaker 7: reporting revenue of one point oh two billion dollars for
21:31
Speaker 7: the fourth quarter that match but did not top analyst expectations. However,
21:36
Speaker 7: Cooper raised guidance for the full year, calling for adjusted
21:39
Speaker 7: earnings of four dollars and fifty six or fifty eight
21:42
Speaker 7: two four dollars and sixty six cents per share. That
21:45
Speaker 7: tops the fact Set consensus for four dollars and fifty
21:48
Speaker 7: two cents per share. I am Ben Kitchen and that
21:51
Speaker 7: was Wall Street Watch. Today's trivia question was which President
21:55
Speaker 7: appointed Alan Greenspan as Chairman of the Federal Reserve. Your answer,
22:00
Speaker 7: Resident Reagan. Your winner today is Tom from Saco, Maine.
22:04
Speaker 7: He will be taking home a Financial Exchange.
22:06
Speaker 2: Show T shirt.
22:06
Speaker 7: We played trivia every day here on the Financial Exchange.
22:10
Speaker 7: See complete contest rules at Financial Exchange Show dot com.
22:13
Speaker 3: The race to Season lower Terraffs has businesses rushing in shipments.
22:17
Speaker 3: Here's what we are seeing which again which muddies the
22:21
Speaker 3: waters a little bit for me in terms of the
22:23
Speaker 3: inflation picture, along with a few other factors. But we
22:25
Speaker 3: talked about earlier in the program, Paul, how the possibility
22:31
Speaker 3: for inflation requires a few things, and one of which
22:34
Speaker 3: is enough money in the system to go and buy
22:37
Speaker 3: goods and services at those elevated prices that we are
22:41
Speaker 3: now expecting because of higher gas prices. And this leads
22:45
Speaker 3: into all of that because you've had a lot of
22:48
Speaker 3: delayed It seems to me at least that you've had
22:50
Speaker 3: a bunch of delayed activity. Buy businesses of all shapes
22:54
Speaker 3: and sizes based on the tariffs, and this is an
22:57
Speaker 3: example of one of those. So Michael Burns, who owns
23:01
Speaker 3: an auto products maker called Valvo Max, decided to hold
23:05
Speaker 3: parts for the company's oil change kits. They're made back,
23:09
Speaker 3: they're made in India, and he said in October, look
23:12
Speaker 3: hold on to these, don't send them to the US.
23:14
Speaker 3: I want to see what happens with the Supreme Court.
23:17
Speaker 3: Lo and behold, Supreme Court throws out the tariffs. He
23:19
Speaker 3: calls up his supplier and says, get me that stuff
23:23
Speaker 3: into the country as soon as possible, and he expects
23:25
Speaker 3: to pay a tariff now of fifteen thousand dollars instead
23:29
Speaker 3: of the fifty thousand dollars tariff he would have faced
23:31
Speaker 3: on that same shipment. A big win for a small business.
23:35
Speaker 3: The question that I have now is is there a
23:38
Speaker 3: lot of this economic activity that was paused and will
23:42
Speaker 3: they actually do it given that there's still a fair
23:44
Speaker 3: bit of uncertainty around tariffs. Right, Yes, the Supreme Court
23:48
Speaker 3: threw out a bunch of stuff, but immediately the Trump
23:51
Speaker 3: administration implemented a ten percent tariff. I believe that it
23:54
Speaker 3: is still ten percent and hasn't been upped to fifteen percent,
23:58
Speaker 3: but they have thrown out the fifteen percent numbers several
24:01
Speaker 3: times now. We believe that the average effect of tariff
24:05
Speaker 3: rate is now quite a bit lower, but for some
24:07
Speaker 3: countries could be substantially lower now, and so you know,
24:12
Speaker 3: there would be hypothetically, even if all the money is
24:15
Speaker 3: going towards you know, foreign suppliers of goods, it does
24:20
Speaker 3: still create economic activity when if, and when these suppliers
24:23
Speaker 3: are rushing to get goods inside the country and then
24:26
Speaker 3: sell them to their send them to their customers who
24:29
Speaker 3: may have had delays on the final products so I
24:33
Speaker 3: just this is one of those forces that I say, Okay,
24:36
Speaker 3: maybe this does lead to higher potential inflation, given that
24:40
Speaker 3: we're talking about this pent up demand for stuff being
24:44
Speaker 3: released due to the tariff changes.
24:46
Speaker 4: And you'd assume obviously that they're not going to pass
24:49
Speaker 4: down lower pricing from the fact that their costs of
24:52
Speaker 4: goods have changed, would.
24:54
Speaker 3: You No, No, that's my guess. Yeah, once you raise prices,
24:58
Speaker 3: do you ever lower them again? If your gas stations, yes,
25:01
Speaker 3: if you're just about any other good The answers usually know.
25:04
Speaker 4: Yeah, particularly in this instance where you don't know what
25:06
Speaker 4: the You don't know what the future is gonna look like,
25:08
Speaker 4: So why not just stash away some of that extra
25:11
Speaker 4: margin for a rainy day or change in tariffs?
25:14
Speaker 1: Again?
25:14
Speaker 3: Yeah, I tend to think that way, but only time
25:20
Speaker 3: will tell.
25:21
Speaker 2: Paul.
25:22
Speaker 3: Investors in moments like this oftentimes do start to look
25:27
Speaker 3: around panic and look for stability. And that panic word
25:32
Speaker 3: is a scary one because it almost always leads to
25:36
Speaker 3: mistakes if that panic is turned into action when it
25:38
Speaker 3: comes to investing. But there's a piece from CNBC Today
25:42
Speaker 3: talking about this topic and where sometimes people push their
25:47
Speaker 3: money to in times of turmoil and we're certainly getting
25:52
Speaker 3: a healthy dose of it right now with the actions
25:55
Speaker 3: in the Middle East.
25:56
Speaker 4: Yeah, Ultimately, what it comes down to when you're investing,
26:00
Speaker 4: it's really important to create all of the foundational pieces
26:04
Speaker 4: of your portfolio and just your overall investment well being,
26:08
Speaker 4: and a big part of that is having that emergency
26:11
Speaker 4: fund set aside, because that can help alleviate some of
26:15
Speaker 4: the concerns that you have by being too overly invested
26:20
Speaker 4: in the market. If you're able to say, gee, I've
26:22
Speaker 4: set aside six to twelve months of expenses. However you
26:26
Speaker 4: want to frame it can depend on your industry, whether
26:28
Speaker 4: you want to lean more into the twelve month versus
26:31
Speaker 4: the three to six month range there. But having that
26:34
Speaker 4: built in allows you to better weather volatility when it
26:37
Speaker 4: comes to retirement accounts, particularly for those people who are
26:41
Speaker 4: under age fifty nine and a half and perhaps just
26:43
Speaker 4: an active participant in four m K. Those ones can
26:46
Speaker 4: be easier to weather the volatility because you know it's
26:49
Speaker 4: an arms length the way. You can't really get to
26:51
Speaker 4: it till after you're over fifty nine and a half.
26:53
Speaker 4: But the other side of it is making sure that
26:56
Speaker 4: you have money set aside for that roof that goes
26:59
Speaker 4: again for the vehicle. That is really important, and it
27:03
Speaker 4: makes it more palatable. It's not easy when the market
27:06
Speaker 4: is in volatile times, but makes it easier to handle.
27:09
Speaker 3: I love when articles like this speak in generality. So,
27:12
Speaker 3: quoting from the CNBCPS financial advisors generally recommend keeping six
27:16
Speaker 3: to twelve months worth of expenses in emergency fund.
27:19
Speaker 2: Yeah. I agree there.
27:20
Speaker 3: Maybe you could get as low as three percent depending
27:22
Speaker 3: on your circumstances, but sure, and two to ten percent
27:25
Speaker 3: of a portfolio in cash, depending on your individual circumstances,
27:29
Speaker 3: life stage and goal. Do you know anybody who recommends
27:31
Speaker 3: keeping ten percent of your investment portfolio and cash?
27:34
Speaker 4: No?
27:35
Speaker 3: No, do use anybody know what cash pays at most
27:39
Speaker 3: brokerage platforms out there like Schwab, Fidelity, Oh.
27:42
Speaker 2: Cash, GD and E trade.
27:43
Speaker 4: That's how they make money.
27:44
Speaker 2: It ain't a whole lot.
27:47
Speaker 3: I don't know anybody that genuinely recommends that type of action.
27:51
Speaker 3: So look, there are events like the one we're experiencing
27:56
Speaker 3: right now that I fully understand why it can make
28:00
Speaker 3: people nervous about the state of things. Fortunately, equity markets
28:03
Speaker 3: have not had a terrible bout of volatility during all
28:06
Speaker 3: of this, but it is very early stages. The point
28:08
Speaker 3: that Paul made is the most important one. You need
28:11
Speaker 3: to set up your portfolio in a way that the
28:15
Speaker 3: timeframe of your investments is tied to the timeframe of
28:19
Speaker 3: your life. It does not, oftentimes make a whole lot
28:23
Speaker 3: of sense to keep money that you are expecting to
28:25
Speaker 3: use in the next six months and incredibly risky assets,
28:27
Speaker 3: and you're seeing that today. It is the most important
28:32
Speaker 3: factor when investing. If you have money that you don't
28:35
Speaker 3: expect to use for ten years, that should and almost
28:39
Speaker 3: always definitely be invested differently than money that you expect
28:43
Speaker 3: to use in the next ten months. If you're uncertain
28:47
Speaker 3: about how your investments are lining up with your personal timeline,
28:50
Speaker 3: and it is a personal timeline, it's not, in my
28:53
Speaker 3: mind good enough to trust it to a target date
28:57
Speaker 3: retirement fund that uses averages. Talk through your specific timeline
29:02
Speaker 3: and how it is going to interact with your specific
29:05
Speaker 3: portfolio and retirement strategy. Give the folks at Armstrong Advisor
29:08
Speaker 3: Group a call to do it. You can give us
29:10
Speaker 3: a ring at eight hundred three nine three for zero
29:12
Speaker 3: zero one. We'll work with you one on one to
29:14
Speaker 3: develop your own strategy. That number again for the Armstrong
29:18
Speaker 3: Advisory Group is eight hundred three nine three for zero
29:21
Speaker 3: zero one.
29:22
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
29:25
Speaker 1: registered investment advisor. Nothing in the ad or in any
29:27
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
29:31
Speaker 1: your own financial tax into state planning advisors before making
29:33
Speaker 1: any investment decisions. Armstrong make contact you to offer investment
29:36
Speaker 1: advisory services.
29:37
Speaker 3: As we close in on the noon hour, the SMP
29:40
Speaker 3: five hundred is down almost exactly one percent. Oil prices
29:44
Speaker 3: remain elevated for the day, up a good nine percent
29:46
Speaker 3: and thirty plus percent since the close on Friday, now
29:49
Speaker 3: closing it on ten percent on that West Texas crewed benchmark.
29:52
Speaker 3: We've got to take a quick break. Paul Lamonica from
29:54
Speaker 3: Baron's joining us next on the Financial Exchange.
29:57
Speaker 1: Follow the Financial Exchange Show on Instagram and see what's
30:01
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30:05
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30:13
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30:16
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30:19
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30:29
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30:38
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31:09
Speaker 4: As promised, we were joined by Paulamayer Lamonica from Barons
31:13
Speaker 4: to talk a little bit about Intercontinental Exchange. They are
31:16
Speaker 4: the parent company of the New York Stock Exchange. So Paul,
31:20
Speaker 4: thanks so much for joining us. We appreciate it.
31:22
Speaker 8: Thank you appreciate it as well.
31:23
Speaker 2: Well.
31:24
Speaker 4: I think the first place to start maybe is maybe
31:26
Speaker 4: giving the listeners a sense for everyone of course has
31:28
Speaker 4: heard of the New York Stock Exchange, but could you
31:30
Speaker 4: maybe just inform a little bit about what the business
31:33
Speaker 4: of intercon exchange looks like, like how do they make
31:36
Speaker 4: money to start before we dive into them specifically.
31:40
Speaker 8: Yeah, yeah, I mean, this is a company that obviously
31:43
Speaker 8: owns the miyic, so you know, they make money from
31:46
Speaker 8: the trading activity, the listings on the exchange, you know.
31:50
Speaker 8: But what's fascinating is that I think they realize that
31:54
Speaker 8: this is the world where a lot of younger investors
31:57
Speaker 8: aren't necessarily just buying selling stocks. We've got, you know,
32:03
Speaker 8: an explosion of demand for various crypto related assets, and
32:08
Speaker 8: I think that's the reason why the NYC parent company
32:11
Speaker 8: made the move that they announced this week where they're
32:13
Speaker 8: investing in okx, big crypto trading platform, and for okax,
32:19
Speaker 8: which is not publicly traded. This investment values that company
32:23
Speaker 8: at twenty five billion dollars. That's makes them a pretty
32:27
Speaker 8: large unicorn if they ever.
32:29
Speaker 1: Look to go public.
32:30
Speaker 4: So from what you outlined here, the New York Stock
32:32
Speaker 4: Exchcene is going to license okx's spot crypto prices and
32:37
Speaker 4: put together more futures conscious man, every everybody in their
32:40
Speaker 4: brother is putting out futures contracts now.
32:43
Speaker 8: Yes, and it's also tokenized equities is also another big
32:47
Speaker 8: you know, having assets trading on the blockchain, which can
32:50
Speaker 8: allow for you know, more seamless maybe twenty four to
32:54
Speaker 8: seven trading.
32:55
Speaker 4: Maybe simplify that for for the what does it what
32:58
Speaker 4: would a tokenized equity look like in terms of an offering?
33:02
Speaker 8: Yeah, it's just basically it's it's similar to you know,
33:05
Speaker 8: buying and selling a stock. It's you know, it's just
33:08
Speaker 8: trades you know, on the blockchain, lives in that you
33:12
Speaker 8: know digital world of you know, in many respects, it
33:16
Speaker 8: does make it easier for more seamless kind of twenty
33:20
Speaker 8: four to seven trading, which is I think what the
33:23
Speaker 8: NYC and many other exchanges are looking to eventually, you know,
33:27
Speaker 8: move towards, you know, particularly with younger investors who may
33:30
Speaker 8: not look to be constrained by an eight a nine,
33:35
Speaker 8: thirty to four type schedule, but also you know, a
33:38
Speaker 8: growing international audience. If you're someone you know in Asia
33:42
Speaker 8: and the Middle East, Australia, you know, your day is
33:46
Speaker 8: a lot different in terms of when you're online and
33:49
Speaker 8: trading than you know New York Hours.
33:52
Speaker 4: Selfishly, I enjoy the nine thirty four structure that we have,
33:57
Speaker 4: but I certainly understand the idea of the twenty four
34:01
Speaker 4: to seven thing. Any other big takeaways on Internet, Intercontinental Exchange.
34:06
Speaker 4: In terms of other forays that they've jumped into, we
34:09
Speaker 4: mentioned futures contracts. They also are have an investment in
34:13
Speaker 4: poly Market as well.
34:13
Speaker 2: Is that right exactly?
34:15
Speaker 8: Yeah, they just announced recently the Polymarket deal, and we
34:19
Speaker 8: know that predictions markets are very significant, growing business. Full disclosure.
34:25
Speaker 8: Polymarket has a relationship with Dad Jones, the owner of Barons,
34:31
Speaker 8: but both Polymarket and call Sheep very very popular in NYC,
34:35
Speaker 8: trying to capitalize on that. They also in the crypto
34:38
Speaker 8: world have a twenty seven percent stake in another publicly
34:43
Speaker 8: traded crypto platform called backed ba KKT. So I think
34:48
Speaker 8: the New York Stock Exchange and ICE they recognize that
34:50
Speaker 8: they need to diversify. Then you know whether or not
34:54
Speaker 8: that is successful. Maybe that brings up there. They're multiple
34:58
Speaker 8: because right now, you know, NYC shares have been relatively
35:01
Speaker 8: flat for the past year. Stock is trading at a
35:03
Speaker 8: bit of a discount on a price to earnings ratio
35:06
Speaker 8: to its main rivals, NASDAK, the CBOE and the CME,
35:10
Speaker 8: the other big exchange companies. So we'll be interesting to
35:13
Speaker 8: see whether or not these these investments wind up producing
35:18
Speaker 8: enough growth to maybe, you know, make investors a little
35:21
Speaker 8: bit more excited in the stock. You know, Wall Street
35:25
Speaker 8: loves it, you know, fifteen of the seventeen analysts recommended
35:28
Speaker 8: as a buy and one of the top members of
35:30
Speaker 8: the Barons round Table, you know, you know, top fund
35:34
Speaker 8: managers that we talk to pretty frequently. He's very bullish
35:37
Speaker 8: as well. Todd Austin at Parnassas.
35:39
Speaker 4: Paul A Monica from Baron's talking to us about Internet
35:42
Speaker 4: Inner Continental Exchange. Paul, So, thanks so much for the
35:44
Speaker 4: time and have a great weekend.
35:46
Speaker 8: Thanks you too.
35:48
Speaker 3: Locally, the FIFA World Cup games getting called a bit
35:53
Speaker 3: into question here in New England as Foxborough, Massachusetts, the
35:57
Speaker 3: town where Slatt Stadium is, is in f federal funding
36:00
Speaker 3: fight over seven point eight million dollars in public safety
36:03
Speaker 3: and security costs for the twenty twenty six World Cup.
36:07
Speaker 3: The Crafts Group had come in and said, look at
36:09
Speaker 3: the funding is not secured by June, that they would
36:12
Speaker 3: step in. Foxborough basically replied and said June is too late.
36:15
Speaker 3: That would be days away from the from the event itself.
36:20
Speaker 3: And I don't know. This seems to me like it
36:24
Speaker 3: has to be resolved. Seven point eight million dollars is
36:27
Speaker 3: a lot of money for Foxborough, but not a lot
36:29
Speaker 3: of money when it comes to the Crafts Group, the
36:31
Speaker 3: Federal government and FIFA most certainly. But this is a
36:37
Speaker 3: massive local event that will be taking place here in
36:40
Speaker 3: New England among other parts of the country, attracting people
36:43
Speaker 3: from all across the world. And yeah, I'll be interested
36:48
Speaker 3: to see where it goes. There's another meeting scheduled I
36:50
Speaker 3: think for the fifteenth of March in Foxborough where they
36:53
Speaker 3: will vote on it again. But you know, to be
36:57
Speaker 3: clear here eight million bus it's like ten percent of
37:01
Speaker 3: fox Borrow's annual budget and not exactly something that they
37:04
Speaker 3: are just going to stomach and deal with.
37:07
Speaker 4: I was just trying to see what the prices look
37:10
Speaker 4: like for for the geel Out Games. It looks like anywhere.
37:13
Speaker 7: Its about seven million bucks.
37:15
Speaker 2: You have to luck, you can't afford it.
37:18
Speaker 4: You're right, You're right. Maybe I should just cough up
37:21
Speaker 4: all my salary to figure what are we talking for
37:24
Speaker 4: an actual seven hundred bucks at the lowest. Again, I'm
37:27
Speaker 4: just looking at Sea Geek here really quickly to see
37:30
Speaker 4: the lowest for some of these matchups. Haiti versus Scotland
37:34
Speaker 4: is June thirteenth at nine o'clock. That's it says from
37:37
Speaker 4: seven hundred nineteen dollars here on Sea Geek and Norway
37:42
Speaker 4: versus TBD a little bit cheaper, that's Tuesday at six pm.
37:46
Speaker 4: Bottom line, they are a lot of money. And then
37:48
Speaker 4: if you go down to the quarter final round, which
37:52
Speaker 4: is as they advance through, you're talking about fifteen hundred
37:55
Speaker 4: on the low end.
37:56
Speaker 3: So long as we're talking about sports, I'm going to
37:58
Speaker 3: finish with this. The Boston Fleet Sational Women's Hockey League team,
38:01
Speaker 3: which plays traditionally at Songus Arena and Lowell, is playing
38:04
Speaker 3: in the Garden in April. They sold out the garden.
38:07
Speaker 3: The cheapest resale tickets you can get right now three
38:10
Speaker 3: hundred and ninety four bucks a pop.
38:11
Speaker 4: That's impressive.
38:12
Speaker 1: Good for them.
38:13
Speaker 3: That's all the time we have for the Financial Exchange
38:15
Speaker 3: this week. Market strongly in negative territory, selling off to
38:19
Speaker 3: the tune of one percent as we close out the show.
38:21
Speaker 3: We'll be back at it next week with more, have
38:23
Speaker 3: great weekend. Everybody