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Americans Are Falling Behind on Debt as Inflation Eats Into Paychecks · The Financial Exchange Show

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Speaker 1: is The Financial Exchange with Chuck Zotta and Mike Armstrong.
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Speaker 2: Chuck, Mike, and Tucker with you. And today, kind of
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Speaker 2: a mirror image from Friday where tech stocks led major
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Speaker 2: indices down. Today, you've got tech stocks leading major indices up.
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Speaker 2: The S & P is up 55 points. The Dow
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Speaker 2: is flat, but the Nasdaq composite up 407 points. So
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Speaker 2: trying to stage a bounce that Time will tell whether
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Speaker 2: this is just a relief rally and the trend has
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Speaker 2: changed or is this kind of firming up and tech
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Speaker 2: stocks have found their bottom here. So we'll see how
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Speaker 2: that develops in the coming weeks. Bonds resuming their sell-off
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Speaker 2: after yields had come in last week following the release
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Speaker 2: of hot PPI and CPI data. 10-year yield up three
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Speaker 2: basis points to 5.129%. Not a huge move, but a
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Speaker 2: little bit of an upward move there. Dollar index responding
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Speaker 2: in that direction as well. up 0.06% to $ 101. 72, and
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Speaker 2: gold is down $ 14. 60 an ounce to $ 41. 66 on that
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Speaker 2: dollar strength. Crude oil, West Texas Intermediate, down 69 cents
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Speaker 2: a barrel to 172 cents. We've got the AAA national
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Speaker 2: average for gas prices. down 3 tenths of a cent
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Speaker 2: overnight to $ 4. 29 and 5 tenths. Diesel, after moving up
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Speaker 2: a few cents last week, back down about 4 tenths
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Speaker 2: of a cent to $ 6. 31 and 8 tenths. But these
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Speaker 2: remain very tight markets and significant fluctuations in either direction
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Speaker 2: possible as we continue to go through the fall. Let's
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Speaker 2: talk about this piece from CNBC. It's titled, Debt is
2:46
Speaker 2: Eating Up a Bigger Chunk of Your Raise Research Shows.
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Speaker 2: And what are we seeing here, Michael?
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Speaker 3: Debt levels across the board are higher, and the rates
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Speaker 3: are higher on those debts. And some are resetting, some
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Speaker 3: are fixed. But in total, the share of families spending
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Speaker 3: more than 40% of income on debt payments, it's at
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Speaker 3: its highest level in the last 13 years. So the
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Speaker 3: last time we were at these levels of more than
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Speaker 3: 40% of income for families. Sorry, more than 40% of
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Speaker 3: income on debt payments. It hasn't been this high since
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Speaker 3: recovering since the great financial crisis when people loaded up
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Speaker 3: on all sorts of credit card debt and other stuff
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Speaker 3: to make it through a very difficult economic period of
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Speaker 3: high unemployment and other problems. We aren't seeing those problems
3:34
Speaker 3: right now. We are seeing the problems instead of high
3:36
Speaker 3: inflation eating into wages and people needing to borrow in
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Speaker 3: order to keep up, it seems.
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Speaker 2: Now, I think that there's still some context that's needed
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Speaker 2: here in terms of, hey, what we are seeing is
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Speaker 2: still overall debt burdens amongst the U.S. population still remain
3:52
Speaker 2: lower than basically any time since the great financial crisis.
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Speaker 4: Yeah, which is why I have, you know.
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Speaker 3: How you explain these statistics and how you measure this
4:03
Speaker 3: stuff is very important.
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Speaker 2: There are a couple things that, and again, there's all
4:06
Speaker 2: different items from this Federal Reserve survey that's being cited here.
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Speaker 2: Just as an example, the debt-to-income ratio, the median for
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Speaker 2: debtors is 94.8%, down from 107.3% 13 years ago in 2013. So, like, again,
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Speaker 2: you're comparing this to, like, coming out of the financial crisis,
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Speaker 2: and it's like, okay, like, not as bad on that
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Speaker 2: side of things. The payment-to-income ratio, though, the median today
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Speaker 2: is 15.4%. It was 15.9 back in 2013. So we're
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Speaker 2: right about there. It's because interest rates have gone up. So,
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Speaker 2: you know, on a whole, people have less debt, but
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Speaker 2: the debt is more expensive or less debt relative to
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Speaker 2: their income. Other signs of this and other things that
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Speaker 2: you see. The percentage of people that are late on payments... 19.6%
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Speaker 2: compared to 14.9% in 2013. So late on payments is higher,
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Speaker 2: but the percentage of people that took out a payday
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Speaker 2: loan in the past year, 2.6% down from 4.2% in 2013.
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Speaker 3: Also, this is not a good news scenario, but the portion,
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Speaker 3: I assume that that data on late payments would include
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Speaker 3: student loans. which are experiencing exceptionally high default rates and
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Speaker 3: late payment rates because, well, in part because of the
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Speaker 3: fact that they got turned off and turned back on
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Speaker 3: during COVID.
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Speaker 4: Yep.
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Speaker 2: So again, like you kind of have mixed data on this.
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Speaker 2: The big thing that I say is, again, the data
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Speaker 2: suggests two things to me when you look at it broadly.
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Speaker 2: Number one, You've got a lot of Americans that are
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Speaker 2: struggling to pay the bills. We see this because 19.6%
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Speaker 2: of Americans have a late payment, or 19.6% with debt
5:51
Speaker 2: outstanding have a late payment that they have had in,
5:55
Speaker 2: I think it's the past year. But the big thing
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Speaker 2: is the spending continues. There has been no slowdown in
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Speaker 2: consumer spending. This isn't impacting consumer spending negatively in the
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Speaker 2: aggregate in any way, shape, or form. And so there
6:13
Speaker 2: are two ideas that you need to, I think, separate
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Speaker 2: again here. One is, yes, there are lots of people
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Speaker 2: that are struggling, and this is not an economy that
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Speaker 2: is carrying everyone along with it. But there is no
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Speaker 2: sign that this is translating into any meaningful drag on
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Speaker 2: GDP growth.
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Speaker 1: Right.
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Speaker 3: And I think the concern would be, should the economy
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Speaker 3: turn down, resulting in higher unemployment, then the ability for
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Speaker 3: Americans to carry those debt loads would very quickly be
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Speaker 3: called into question.
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Speaker 2: Is that different from any other cycle, though?
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Speaker 3: No. We tend to run up debt when things are
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Speaker 3: going well. Inflation can kick in, causing us to run
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Speaker 3: up more debt, but we tend to continue to spend
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Speaker 3: And run up more debt until we literally are told by.
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Speaker 4: The bank that we're not allowed to anymore.
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Speaker 1: Yes.
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Speaker 4: That is the modern history of the American consumer.
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Speaker 2: Americans have never met a debt they didn't like.
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Speaker 1: Yeah.
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Speaker 2: Or they've probably met a lot of debts they didn't like.
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Speaker 2: Americans have never met a debt they wouldn't take out.
7:22
Speaker 1: Yeah.
7:23
Speaker 4: Okay.
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Speaker 2: You know, it's... They might not like it, but they
7:27
Speaker 2: will absolutely take.
7:28
Speaker 4: On that debt.
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Speaker 3: They like the thing that they are using the debt
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Speaker 3: for more than they dislike the debt.
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Speaker 2: Honestly, this was the big realization that got me when
7:36
Speaker 2: it comes to cars, personally, because I really enjoy cars,
7:43
Speaker 2: but what I freaking hate is having a car payment,
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Speaker 2: because it's like the actual funness of the vehicle, and
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Speaker 2: part of this is just because, again, I drive a
7:53
Speaker 2: I drive a Subaru Outback at this point. It is
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Speaker 2: the boring of borings when it comes to cars. I mean,
8:01
Speaker 2: the only car that's more boring than it is the
8:03
Speaker 2: Honda Accord.
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Speaker 4: Yeah.
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Speaker 2: The Accord's boring. And even that is typically driven by
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Speaker 2: a younger consumer than the Subaru Outback is. But I
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Speaker 2: can't stand having a car payment... So, like, I just,
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Speaker 2: I drive the thing into the ground because it's like, okay, like,
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Speaker 2: I don't appreciate having the debt once the fun has
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Speaker 2: worn off. And the fun on a car, for me,
8:25
Speaker 2: 45 days. I was going to say six months.
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Speaker 4: Yeah, enough of me.
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Speaker 2: Six months, you know, it's like, okay, this is cool, but,
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Speaker 2: you know, like, getting that bill in the mail every month,
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Speaker 2: it's just like, ugh. So, it's like, okay, like, once
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Speaker 2: the loan's paid off, it's like, no, I'm going to
8:40
Speaker 2: drive this into the ground. But, uh. Your mileage may vary,
8:45
Speaker 2: pun intended. Let's take a quick break. I thought you
8:49
Speaker 2: were going to do a little car crash one there
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Speaker 2: for me, Tucker. I thought that would have brought it
8:53
Speaker 2: full circle. Let's take a quick break. When we come back,
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Speaker 2: we have a piece in Barron's talking about cost of
8:58
Speaker 2: living adjustments, and we will discuss that later.
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Speaker 2: Mike, we got a piece here from Barron's titled, Why
10:03
Speaker 2: the Cola is Still the Best Inflation Protection Around. The subheader, though,
10:08
Speaker 2: it's not enough, yet it's the best we have.
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Speaker 5: Is? Yeah.
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Speaker 3: I think the cost of living adjustment on Social Security
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Speaker 3: is the single best inflation hedge that... the largest population
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Speaker 3: of Americans have.
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Speaker 2: What would be better? What can we make the case of?
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Speaker 2: Job switching, free markets.
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Speaker 4: I don't know.
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Speaker 3: I don't really have a great answer as an alternative.
10:32
Speaker 3: I'm certainly not going to go argue tips or something
10:34
Speaker 3: like that. So I think that the cost of living adjustment, yeah,
10:39
Speaker 3: it is the single best thing we have. The problem
10:41
Speaker 3: is that it only helps Americans who are on Social Security.
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Speaker 4: So If you're not, then too bad.
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Speaker 3: And then furthermore, it is also on a program that
10:53
Speaker 3: is being serious, the funding of which is seriously in
10:56
Speaker 3: question at the moment. And so, yes, fantastic. We have
11:00
Speaker 3: this great hedge against inflation, but on a program that
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Speaker 3: is rapidly running into a wall in terms of its
11:09
Speaker 3: ability to continue to pay out benefits to the same level.
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Speaker 2: And I think this does get it like this juxtaposition
11:15
Speaker 2: that we see and we feel where it's like, okay, yes,
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Speaker 2: this is helping retirees to be able to pay for
11:25
Speaker 2: what they need on a monthly basis. But how is
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Speaker 2: the program going to be funded and what does it
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Speaker 2: look like going forward is a major question facing retirees.
11:37
Speaker 2: those who are expecting to retire in the next five
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Speaker 2: to 10 years.
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Speaker 3: In any case, the COLA for next year is going
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Speaker 3: to be 3.6%. For the average beneficiary, that's an additional $ 75.
11:47
Speaker 4: A month, which is not nothing.
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Speaker 3: I recognize that it doesn't feel that great in the
11:51
Speaker 3: face of higher gas prices, especially if you live in
11:55
Speaker 3: more of the rural part of the country where you
11:57
Speaker 3: tend to drive larger vehicles and drive longer distances. But
12:02
Speaker 3: that is the change that we are seeing here. And
12:05
Speaker 3: when it comes to Social Security, because just about every
12:10
Speaker 3: working American collects it, there is a lot that goes
12:13
Speaker 3: into the decision for a married couple on the claiming strategy.
12:16
Speaker 3: There's a lot of loopholes and things like that that
12:18
Speaker 3: were canceled, but inflation plays a critical role here, right?
12:22
Speaker 4: I mean, if you're getting.
12:23
Speaker 3: A 3.6% increase, you have to think through the compounding
12:28
Speaker 3: effect of that if you pull Social Security at 62
12:31
Speaker 3: versus age 70.
12:32
Speaker 4: Yeah. Right?
12:34
Speaker 3: I mean, if your biggest concern is, hey, I'm worried
12:37
Speaker 3: about inflation really eating into things in the future, like
12:41
Speaker 3: that's my biggest concern for my retirement, then there's a
12:44
Speaker 3: pretty compelling reason to wait on pulling your Social Security
12:47
Speaker 3: because your cost of living adjustments, you know, if we
12:49
Speaker 3: forget about the percentages for a moment and just talk
12:51
Speaker 3: about dollars, you're going to have more dollars in your
12:53
Speaker 3: pocket on that cola down the road by waiting on
12:56
Speaker 3: that benefit. if there is an age gap or a
13:00
Speaker 3: real need for additional income if one of you passes away, right? Like,
13:03
Speaker 3: you know, let's say there's a married couple where there
13:06
Speaker 3: was only one working parent and therefore there's only going
13:10
Speaker 3: to be really one robust Social Security benefit. Well, okay,
13:13
Speaker 3: do we want to juice that thing as much as
13:15
Speaker 3: possible in order to protect the spouse if something happens
13:18
Speaker 3: to the other one? These are complicated strategies. And as
13:23
Speaker 3: you can probably tell from the way that I'm describing it,
13:27
Speaker 3: they're impossible to make in a vacuum. You can't just say, well,
13:31
Speaker 3: I'm 65 years old, so what should I do, Mike?
13:34
Speaker 3: The answer is, well, I need to know about your health,
13:35
Speaker 3: I need to know about your marital status, what you
13:37
Speaker 3: have saved elsewhere, your tolerance for risk, and a litany
13:40
Speaker 3: of different factors. But they are critical decisions that can
13:44
Speaker 3: lead to hundreds of thousands of dollars extra in your
13:47
Speaker 3: pocket over your lifetime if you make them correctly. And
13:51
Speaker 3: if you would like a sounding board to test those
13:54
Speaker 3: strategies out on. If you want somebody to help you
13:56
Speaker 3: design the right claiming strategy for you and your family,
14:01
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14:37
Speaker 2: Let's see.
14:38
Speaker 3: Who did this New York Times piece on the three
14:39
Speaker 3: charts that explain the economy as voters head to the polls?
14:42
Speaker 2: Yeah, what do you got?
14:44
Speaker 4: So they laid out a bunch of them.
14:45
Speaker 3: They have the hiring rate, wages compared to inflation, the
14:49
Speaker 3: job turnover rate.
14:51
Speaker 4: Business investment. And my question for you, not that any
14:55
Speaker 4: of those.
14:55
Speaker 3: Are wrong, but if you found, if you could, what
15:00
Speaker 3: are the three charts that you think would perfectly sum
15:04
Speaker 3: up what is driving voters that are going to the
15:07
Speaker 3: polls right now? Because it's always about the economy. I'll
15:11
Speaker 3: give you my three because I've thought about this. I
15:13
Speaker 3: would go gasoline prices, S & P 500 return, and
15:19
Speaker 3: wages versus inflation right now.
15:23
Speaker 2: Are you asking me what I think people are focused
15:26
Speaker 2: on or what I think they should be focused on?
15:29
Speaker 4: What they are focused on.
15:30
Speaker 3: I don't think gas prices are the single most relevant
15:32
Speaker 3: thing to the economy or to individuals' finances, but I
15:35
Speaker 3: think it's among the most important thing to voters. And
15:40
Speaker 3: while not every investor, not every American that votes is
15:43
Speaker 3: an investor, I do think that this moment in time
15:46
Speaker 3: is unique in which people are focused on, wow, the
15:49
Speaker 3: markets have been Incredible for three years.
15:52
Speaker 2: I think gas prices is one that is relevant every year.
15:55
Speaker 2: I know this year it's got a bigger focus because
15:58
Speaker 2: of how high they are, but in any particular year,
16:01
Speaker 2: it's got relevance.
16:01
Speaker 4: Always front and center.
16:04
Speaker 2: I think prices are doing a lot of work right now.
16:08
Speaker 2: I think if you talk about Americans' dissatisfaction with the economy,
16:11
Speaker 2: I think prices are doing a lot of work.
16:14
Speaker 1: Agreed.
16:15
Speaker 2: So I think gas prices, I would say grocery bills
16:18
Speaker 2: are in the conversation. Um, and I would say more
16:24
Speaker 2: than the, the stock market. Cause again, I, I don't
16:27
Speaker 2: know how many people actually pay attention to it. I
16:32
Speaker 2: know we're a financial show and like we're in our
16:34
Speaker 2: little bubble and like, it's, it's all that like we know,
16:37
Speaker 2: but I think like if you ask most Americans, like,
16:40
Speaker 2: I don't know if they could triangulate the S and
16:42
Speaker 2: P 500 to within 5% of where it is. So my,
16:45
Speaker 2: my last one that I will say mortgage rates. Think
16:49
Speaker 2: about how unhappy people are with housing right now. And
16:51
Speaker 2: I think mortgage rates are driving a ton of that.
16:53
Speaker 3: What I find interesting about yours is all three have
16:56
Speaker 3: a net negative impact on sentiment.
17:00
Speaker 2: Because people are saying they don't feel good about the economy.
17:03
Speaker 4: I hear you. I'm not saying it's wrong. Tucker, do
17:05
Speaker 4: you have anything.
17:06
Speaker 2: Different in your mind?
17:07
Speaker 5: I was in a social circle on Friday and mortgage
17:11
Speaker 5: rates came up.
17:11
Speaker 4: And it was pretty spirited. Yeah. I mean.
17:15
Speaker 3: You could convince me that 401k balances or something like that,
17:19
Speaker 3: if you could chart it out, would be maybe more
17:21
Speaker 3: relevant than the S & P 500.
17:22
Speaker 4: But I don't know. I think there's some degree of
17:25
Speaker 4: positivity out there.
17:25
Speaker 2: I don't think a lot of people know how much
17:26
Speaker 2: is in their 401k, even if they're contributing.
17:28
Speaker 3: No, you're right.
17:29
Speaker 4: You're right.
17:30
Speaker 2: I think a lot of people don't know how much
17:32
Speaker 2: is there.
17:33
Speaker 4: Yeah.
17:34
Speaker 2: I think prices is just a big thing right now.
17:38
Speaker 2: And all three of mine are prices.
17:40
Speaker 3: And there's no price more important to the American consumer than...
17:44
Speaker 3: than what that thing is up on the board at
17:47
Speaker 3: the gas station.
17:48
Speaker 4: It's true. You know, it just makes people furious.
17:53
Speaker 2: And part of like, again, it's just, it's something you
17:56
Speaker 2: see every day. Like we all drive past the same
17:58
Speaker 2: stations every day or, you know, travel past.
18:00
Speaker 4: The same ones.
18:01
Speaker 2: It's like, even if I'm grocery shopping, I might have
18:04
Speaker 2: a sense of like where things are going, but I'm
18:06
Speaker 2: never buying the exact same basket of stuff one week
18:09
Speaker 2: to the next. You know, it's like, oh, like this
18:11
Speaker 2: week had paper towels in it, so how do I
18:13
Speaker 2: compare that to last week? Or, hey, guess what? Like
18:16
Speaker 2: the olive oil ran out after a year. Like here's
18:19
Speaker 2: an extra like 20 bucks for that. But like how does,
18:23
Speaker 2: you know, you're literally comparing apples to oranges.
18:26
Speaker 3: What quantities of olive oil are you buying that you
18:29
Speaker 3: only have to purchase once a year?
18:30
Speaker 2: Two gallons.
18:33
Speaker 5: Do that in a week.
18:34
Speaker 2: Two gallons. Listen, I'm not going to get into it,
18:39
Speaker 2: but yeah.
18:41
Speaker 4: Two gallons is a big container.
18:42
Speaker 2: Here's the way I look at it. You buy the
18:43
Speaker 2: big one for like your average everyday use.
18:46
Speaker 4: We've had this conversation.
18:47
Speaker 2: And then if you need something nice, okay, now you
18:49
Speaker 2: got like the smaller one that you can, you know.
18:52
Speaker 2: Dipping oil. Intersperse in there. Yeah, exactly. You're dipping.
18:54
Speaker 4: Graza, the green top.
18:56
Speaker 2: Yeah, it's like, oh, hey, like it's the summer, like
18:58
Speaker 2: put it on the tomatoes, you know, like. Yeah, exactly.
19:02
Speaker 2: So it's you, you, it's. It's no different from anything else.
19:08
Speaker 2: It's like, oh, yeah, I've got my nice shoes that
19:10
Speaker 2: I might wear once a year, and here's the day-to-day ones.
19:14
Speaker 4: Get out the good china.
19:16
Speaker 5: I had shoes, but Chuck ate my left one.
19:21
Speaker 1: Full circle.
19:22
Speaker 2: Not yet.
19:22
Speaker 5: There it is.
19:23
Speaker 2: An hour ago. Give it four years, and we'll see
19:27
Speaker 2: if it happens. Let's take a quick break. When we return,
19:30
Speaker 2: we've got Wall Street Watch and we're talking Elon Musk
19:33
Speaker 2: donating SpaceX stock.
19:39
Speaker 1: Bringing the latest financial news straight to your radio every day.
19:44
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:49
Speaker 4: Time now for.
19:50
Speaker 1: Wall Street Watch. Tracking the stocks, the data, and the
19:54
Speaker 1: headlines driving markets so far today. Right here on the
19:57
Speaker 1: Financial Exchange Radio Network.
20:01
Speaker 5: Markets are in the green to begin the week with
20:03
Speaker 5: some dip buying in tech. With another flurry of third
20:07
Speaker 5: quarter earnings due out this week. from the likes of Netflix, Meta, Tesla, SpaceX,
20:11
Speaker 5: and many more. Right now, the Dow is up 81 points,
20:14
Speaker 5: about a tenth of a percent higher. S & P
20:16
Speaker 5: 500 is up over eight-tenths of a percent, or 65
20:20
Speaker 5: points up. NASDAQ is rallying 1.6 percent, or 441 points higher.
20:26
Speaker 5: Russell 2000 is up about two-thirds of a percent. Ten-year
20:29
Speaker 5: Treasury yield is up three basis points at 5.131 percent.
20:33
Speaker 5: Crude oil down half a percent, trading at $ 100 a barrel,
20:36
Speaker 5: while Brent.
20:37
Speaker 5: Is trading at $ 108 a barrel. Intel shares are rebounding
20:42
Speaker 5: over 5% after J.P. Morgan upgraded the chipmaker's stock, saying
20:45
Speaker 5: that while the turnaround will take years, management execution has
20:49
Speaker 5: been solid. Meanwhile, Amazon named a top pick by Morgan
20:53
Speaker 5: Stanley and raised the e-commerce giant's price target, citing accelerating
20:57
Speaker 5: growth at AWS. Amazon up over 5%. Elsewhere, Datadog upgraded
21:03
Speaker 5: by Bernstein, sending shares In the cloud monitoring company, up
21:06
Speaker 5: by 6%. The Wall Street Journal reported on Friday that
21:10
Speaker 5: investment bankers have approached Blue Owl Capital about a potential
21:14
Speaker 5: full or partial sale. Blue Owl is up over 2%.
21:19
Speaker 5: And steelmaker Cleveland Cliffs seeing its stock rally 14% after
21:24
Speaker 5: posting better than expected third quarter results.
21:27
Speaker 1: I'm Tucker Sullivan.
21:28
Speaker 5: That is Wall Street Watch.
21:34
Speaker 2: All right, let's talk a little bit about this news
21:36
Speaker 2: from Elon Musk, who this morning said that he is
21:41
Speaker 2: going to give every child in the United States one
21:44
Speaker 2: of his shares in SpaceX next year. Musk owns about 4.8
21:50
Speaker 2: billion SpaceX shares, which is quite a few. And so
21:55
Speaker 2: you're talking about 72 million children under the age of
21:58
Speaker 2: 18 as of July 1st of last year. So if
22:02
Speaker 2: you do the math out, it's about $ 10. 5 billion worth
22:05
Speaker 2: of shares that Musk would be giving away. We still
22:09
Speaker 2: don't have any specifics on exactly how this is going
22:12
Speaker 2: to happen here. But I think that you look at this,
22:19
Speaker 2: and again, like I... I apologize for being cynical on
22:23
Speaker 2: some of this stuff, but I'm cynical on some of
22:25
Speaker 2: this stuff. And I guess that I just look at
22:29
Speaker 2: it and I'm like, OK, like, what are the mechanics
22:32
Speaker 2: actually going to be? Is this going to be some
22:35
Speaker 2: of the stuff like what we saw last year or
22:39
Speaker 2: last week, rather? Or was it two weeks ago where
22:42
Speaker 2: you've got these single stock donations that are going to
22:44
Speaker 2: be happening into Trump accounts? but then you can't sell
22:47
Speaker 2: the shares for five years. So it's basically just creating
22:50
Speaker 2: like a locked up pool of stock that can't be sold.
22:54
Speaker 2: And that makes me feel like it's not necessarily accomplishing
22:59
Speaker 2: what you'd want it to be doing, but rather is
23:01
Speaker 2: being done to support, you know, share prices in some cases.
23:05
Speaker 2: So again, like, I'm not saying that this is, we
23:09
Speaker 2: don't even know how this is going to play out,
23:12
Speaker 2: but forgive me if I'm just a little bit cynical
23:14
Speaker 2: about this.
23:14
Speaker 4: Yeah.
23:15
Speaker 3: Well, you know, um, if there's one thing you can
23:19
Speaker 3: show as persistent on Elon Musk's side, it would be
23:22
Speaker 3: over promising and under delivering. Uh, no, that's not fair. Uh,
23:26
Speaker 3: He makes a lot of promises that he can't keep
23:29
Speaker 3: to the timeline. Yes, when it comes to the technology
23:31
Speaker 3: he's developing, we know this. If it's going to be promised,
23:34
Speaker 3: it's going to be slower. It might not happen at all.
23:36
Speaker 4: Sure.
23:37
Speaker 2: That's fine. He's never really done anything like this, so
23:40
Speaker 2: I'm not going to say that he's not going to
23:42
Speaker 2: do it. I'm much more looking at, hey, what's the
23:45
Speaker 2: way this is actually going to be carried out? And
23:48
Speaker 2: is it something where, hey, yes, I'll give everyone these
23:52
Speaker 2: shares of stock and they can do with them what
23:54
Speaker 2: they want... Or is it going to be, hey, I'm
23:57
Speaker 2: just trying to create an additional lockup period for additional
24:01
Speaker 2: shares that can't be sold? Because, again, you wonder about this.
24:09
Speaker 3: The shares themselves are worth about $ 150 per. Not an
24:14
Speaker 3: insignificant amount of money, obviously. And if you drew that
24:18
Speaker 3: out across every non-adult, every under 18-year-old in the country,
24:24
Speaker 3: you are talking about billions of dollars.
24:26
Speaker 2: Yes.
24:27
Speaker 1: Yes.
24:27
Speaker 4: But, yeah, it's no small part about the mechanics of
24:31
Speaker 4: all this.
24:33
Speaker 2: Peace and Market Watch. Chinese car brands wield a dramatic
24:35
Speaker 2: presence at Paris Motor Show, showing why U.S. automakers are worried. Yes,
24:40
Speaker 2: they're worried because the Chinese government subsidizes these vehicles to
24:43
Speaker 2: an insane degree, then tries to export them to undercut
24:46
Speaker 2: domestic manufacturers. And Europe has been largely blind to this
24:51
Speaker 2: and still doesn't really seem to have a clue how
24:54
Speaker 2: to deal with it in any constructive way. They did,
24:57
Speaker 2: you know, say a couple of weeks ago they were
24:59
Speaker 2: going to try to. agree on a cap for the
25:02
Speaker 2: number of vehicles that China would be able to export.
25:05
Speaker 2: I don't know if they got there on EVs or
25:07
Speaker 2: just on hybrids, but I just look at this, and
25:11
Speaker 2: everyone keeps trying to talk up Chinese cars to me
25:13
Speaker 2: and being like, look at how much you can get
25:15
Speaker 2: for how cheap they are. And I'm like, my dude,
25:17
Speaker 2: if the U.S. government subsidized our vehicles to the tune
25:20
Speaker 2: of what Chinese automakers are subsidized to.
25:23
Speaker 4: We do subsidize, but not that much.
25:25
Speaker 5: Right.
25:26
Speaker 2: Here's the other thing. I was talking about someone with this.
25:29
Speaker 2: And they were like, well, Chuck, don't, don't like us
25:31
Speaker 2: automakers get subsidies too. I'm like, yes. And they're like, okay,
25:34
Speaker 2: so like, what's the difference? I'm like two things. Number
25:36
Speaker 2: one is the degree. Yeah. And the second is Mike,
25:39
Speaker 2: how many us cars are exported from the U S
25:42
Speaker 2: to other places?
25:44
Speaker 4: Not many. Yeah.
25:46
Speaker 1: Okay.
25:46
Speaker 2: Because they're like trade agreements that govern these things and
25:49
Speaker 2: we abide by the rules of them. And so it's
25:52
Speaker 2: like almost no us vehicles are exported from the U
25:56
Speaker 2: S uh, A, because of, like, the trade agreements, and B,
25:59
Speaker 2: the U.S. is a really expensive place to make cars,
26:01
Speaker 2: so typically if we're going to export cars from somewhere,
26:04
Speaker 2: it's not from the United States, and those subsidies aren't
26:06
Speaker 2: received by those local manufacturers anyways, because they're separate divisions
26:10
Speaker 2: in many cases.
26:11
Speaker 4: All well and good. Happy to talk about the fairness
26:13
Speaker 4: of it to any length.
26:15
Speaker 3: The reality is that many Chinese vehicles are now top-selling
26:19
Speaker 3: brands in developed nations like the U.K. The Jaekoo 7
26:23
Speaker 3: compact SUV... was the UK's best-selling car overall in both
26:27
Speaker 3: March and September of this year, selling nearly 11,000 units,
26:31
Speaker 3: outperforming all sorts of rivals, including domestic manufacturers in the
26:36
Speaker 3: UK of cars. And to your point, have you seen
26:41
Speaker 3: this vehicle? I've seen exterior images of it.
26:45
Speaker 2: It literally.
26:46
Speaker 4: It's just a Land Rover.
26:47
Speaker 2: I know, it's just ironic that in the UK they, like,
26:49
Speaker 2: basically just copied a Land Rover and just, like, started
26:51
Speaker 2: selling it.
26:52
Speaker 4: Yeah, of course. And the government has no response to this. Like, yeah,
26:55
Speaker 4: let's just... I guess Land Rover's.
26:57
Speaker 3: Not even owned by a UK car company anymore, probably, but,
27:01
Speaker 3: you know, they still probably manufacture a bunch of them there, and.
27:06
Speaker 4: yeah, these, these governments are seemingly, yeah.
27:09
Speaker 2: They're, they're part of Tata now.
27:11
Speaker 3: I can't criticize them all that much because honestly, other
27:14
Speaker 3: than vehicles, we've done the same thing with Chinese manufactured
27:17
Speaker 3: goods is just say, yeah, doors open, let whatever.
27:20
Speaker 4: You want in here.
27:21
Speaker 3: And, um, with vehicles, I, I, I guess we have a,
27:25
Speaker 3: a special consideration here given the history of us automakers
27:29
Speaker 3: and their place in American society, but plenty of other
27:32
Speaker 3: places are just saying, go for it.
27:34
Speaker 4: And, and, the place it puts U.S.
27:36
Speaker 3: Car manufacturers and foreign car manufacturers is that the only
27:41
Speaker 3: real market that they can be competitive in is the
27:44
Speaker 3: United States. Which does not make for a very long-standing
27:49
Speaker 3: car company, would be my guess.
27:50
Speaker 2: No, I, you mentioned, like, hey, like, we, you know,
27:53
Speaker 2: we've kind of seeded this ground in places other than autos. Again,
28:00
Speaker 2: if you're talking about, like, from a national security perspective,
28:04
Speaker 2: and this is how I, like, Break it down. Because, like, look,
28:07
Speaker 2: do you need to have sock manufacturers in the United States?
28:12
Speaker 4: I'm with you.
28:13
Speaker 2: The answer is no. Like, I'm not saying it's not
28:15
Speaker 2: sad for the people who have their jobs outsourced.
28:17
Speaker 4: It is.
28:18
Speaker 3: The question that I have, though, is I would have
28:20
Speaker 3: made that same argument about washers and dryers a decade ago.
28:23
Speaker 3: And by the way, a Chinese company now owns GE appliances. Yeah.
28:29
Speaker 3: Can you make that same argument in a day where
28:31
Speaker 3: every piece of technology that you own is connected to
28:33
Speaker 3: the Internet?
28:34
Speaker 4: I'm not sure.
28:39
Speaker 2: My view on it is, again, just from a national
28:42
Speaker 2: securities perspective, when it comes to heavy manufacturing like this,
28:47
Speaker 2: in the event that you see a major worldwide conflict,
28:51
Speaker 2: you need this scale of domestic production available to you.
28:55
Speaker 4: The U.S.
28:56
Speaker 2: Does not win World War II if the automakers don't
28:59
Speaker 2: turn into plane makers and tank makers. I'm not rooting
29:05
Speaker 2: for this, but I'm just looking at history and saying...
29:08
Speaker 2: you need this stuff here, whereas do I care if
29:11
Speaker 2: board games are made in the U.S.? I'd prefer if
29:15
Speaker 2: you're able to do them here, but if you're not
29:16
Speaker 2: able to because of economic concerns, there's no national security
29:20
Speaker 2: reason why Parcheesi needs to be made in the U.S.
29:24
Speaker 4: Agreed.
29:25
Speaker 3: I guess this concerning piece would be, can you win
29:28
Speaker 3: World War III without domestic semiconductor manufacturing?
29:31
Speaker 2: No, but that's also why I say you need to
29:33
Speaker 2: have it here, even if it's not economically viable.
29:36
Speaker 4: And currently 90% of it's not done here.
29:38
Speaker 2: But we're getting better.
29:39
Speaker 1: We are.
29:39
Speaker 2: We're getting better. Let's take a quick break. When we return,
29:43
Speaker 2: let's do some stack roulettes.
29:59
Speaker 1: Miss the Financial Exchange? Catch up anytime on YouTube with
30:03
Speaker 1: full shows, video highlights, and shorts covering the stories that
30:06
Speaker 1: matter to your money. It's all at youtube.com slash thefinancialexchange.
30:11
Speaker 1: This is the Financial Exchange Media Network.
30:23
Speaker 2: Mike, what do you got for me for Stock Roulette today?
30:26
Speaker 4: I want to talk about.
30:29
Speaker 4: The TikTok fad of easy money.
30:33
Speaker 2: What's that?
30:33
Speaker 3: And I'm not talking about what seem to me like
30:37
Speaker 3: stock pick scams and all sorts of that stuff. But
30:40
Speaker 3: I think there is a fad on TikTok, Instagram, and elsewhere.
30:44
Speaker 4: Of, hey, buy.
30:47
Speaker 3: doing something relatively simple and mundane like owning a laundromat
30:52
Speaker 3: or buying a bunch of vending machines, you can become
30:57
Speaker 3: a millionaire and look how easy it is to do.
31:00
Speaker 3: And it turns out a bunch of people have tried
31:04
Speaker 3: to replicate that and have discovered that, oh yeah, owning...
31:08
Speaker 3: a physical laundromat that I had to pay $ 300, 000 for
31:13
Speaker 3: and operate and make sure that there's no drug dealing
31:16
Speaker 3: going on in the bathroom and that I actually have
31:19
Speaker 3: to clean these things and be there all the time
31:21
Speaker 3: and staff it so it doesn't become a problem is
31:26
Speaker 3: actually a fair bit more work than just going to
31:29
Speaker 3: the cash machine and emptying out all the quarters and
31:33
Speaker 3: just counting your money. And I don't know why anybody's
31:38
Speaker 3: surprised about this, but I do think there is this
31:40
Speaker 3: phenomenon where people believe there's easy money because I think
31:44
Speaker 3: there's nothing more enticing than the idea that there's easy
31:48
Speaker 3: money to be had. We all get scam ads all
31:51
Speaker 3: the time for, hey, you can make $ 25 an hour
31:55
Speaker 3: without ever leaving your couch. And I just have to
31:58
Speaker 3: remind people that no matter what the delivery system, there
32:01
Speaker 3: just is no free lunch.
32:04
Speaker 1: Right.
32:04
Speaker 3: The person that made their killing on putting vending. I
32:08
Speaker 3: think I've seen one where some like 19 year old
32:11
Speaker 3: made an absolute killing putting vending machines in nightclubs and like.
32:17
Speaker 4: Really has been quite successful.
32:19
Speaker 3: But by his own admission, he also has done quite
32:23
Speaker 3: well via TikTok explaining how he did all this.
32:26
Speaker 5: Sure.
32:27
Speaker 3: And also worked his rear end off in order to
32:31
Speaker 3: do this, hustled around fixing vending machines, buying them up,
32:35
Speaker 3: hand delivering them and convincing club owners that he should
32:38
Speaker 3: be allowed to put them in there, maintaining them, going
32:41
Speaker 3: to them and restocking them every day. Like, It is
32:44
Speaker 3: not a small degree of work you actually have to
32:46
Speaker 3: put into. There are plenty of mom-and-pop type businesses that
32:50
Speaker 3: are quite profitable. I'm not saying that it's not a
32:55
Speaker 3: worthy pursuit, but if you go into it thinking that
32:59
Speaker 3: it'll be a very easy lift, get-rich-quick scheme, I think
33:04
Speaker 3: you're going to be disappointed in almost every case.
33:07
Speaker 2: You will, and this is true of any business like...
33:12
Speaker 2: Part of the job of any financial advisor is sitting
33:15
Speaker 2: down with a bunch of different people and understanding their
33:18
Speaker 2: life story. And over the course of, you know, 17
33:23
Speaker 2: years in the advisory business, I've sat down with hundreds
33:26
Speaker 2: of people.
33:27
Speaker 1: Sure.
33:28
Speaker 2: And it's really interesting because, like, every single one of
33:31
Speaker 2: them will tell you the thing they hate about their business.
33:35
Speaker 2: You know, like... I've talked to the guy who sells
33:39
Speaker 2: foods that stock the hot bar at Whole Foods, and
33:42
Speaker 2: he's like, just trying to manage the logistics of it
33:45
Speaker 2: is a complete nightmare. I've talked to plumbers who are like, oh,
33:51
Speaker 2: I can't find any young help because no one has
33:54
Speaker 2: the skills, and I like my job, but I hate
33:57
Speaker 2: handling the billing. Every single business owner, every single job,
34:02
Speaker 2: there's something that someone hates there. But the interesting thing is,
34:06
Speaker 2: you ask any business owner who's owned their business for
34:09
Speaker 2: 15 or 20 years, and they'll tell you, like, oh,
34:11
Speaker 2: I can't stand this, I hate that, I hate this.
34:14
Speaker 2: And then you're like, okay, but would you trade that
34:17
Speaker 2: for someone else's problems? And every one of them is like, no,
34:20
Speaker 2: because I understand these now, and so I might complain
34:23
Speaker 2: about it, but they get it. And it's the case
34:27
Speaker 2: with all of this. On the laundromat side of things.
34:34
Speaker 3: I don't know who goes into the laundromat business thinking
34:36
Speaker 3: that's going to be easy money. Like every laundromat I've
34:39
Speaker 3: been into, you know, there's somebody staffed there at all times.
34:44
Speaker 4: And you have a general.
34:47
Speaker 2: Let me tell you what I would do if I
34:48
Speaker 2: owned a laundromat.
34:49
Speaker 4: Yeah.
34:49
Speaker 2: Okay. In terms of like, how would I boost revenue,
34:52
Speaker 2: improve the vibe? Like, you know, get like number one,
34:58
Speaker 2: I would apply for a liquor license.
34:59
Speaker 4: And get a bar. Got a bunch of people hanging
35:01
Speaker 4: out there anyway.
35:02
Speaker 2: You got a bunch of people hanging out there for
35:03
Speaker 2: a couple hours. You might as well sell some drinks
35:06
Speaker 2: to them. Especially, look, it's not the main thing you're selling.
35:10
Speaker 2: You don't need to jack prices up or anything like that.
35:13
Speaker 2: You could easily do $ 4 beers. It'll be fine. You're
35:16
Speaker 2: just trying to get a little extra there.
35:18
Speaker 4: Costco-priced hot dogs.
35:19
Speaker 2: Something like that. Yes, have a kitchen and a snack
35:21
Speaker 2: bar in there.
35:22
Speaker 4: And a cafe.
35:23
Speaker 3: Okay. you know, hot dog and a Medela for six bucks.
35:29
Speaker 3: Forget about just benches in the middle. Give me tables
35:31
Speaker 3: and booths. Like let's, let's, let's do it. Like I'm,
35:34
Speaker 3: I'm serious about this. Like you could even like you,
35:38
Speaker 3: like you could call it like the French laundry. Hmm.
35:42
Speaker 2: Yeah. That's taken, isn't it?
35:43
Speaker 4: That's taken.
35:43
Speaker 2: That's taken. Okay.
35:45
Speaker 4: Different demo.
35:45
Speaker 2: You could call it the, uh, the American laundry, whatever you,
35:50
Speaker 2: but like, so number one, I'd have like food and
35:52
Speaker 2: drink there.
35:53
Speaker 3: Number two, uh, You know, Chuck, if there's one thing
35:57
Speaker 3: I don't want to be pressured to do when going
35:59
Speaker 3: to the laundromat, it's get spiffed up to go have
36:03
Speaker 3: a social interaction.
36:04
Speaker 2: What do you mean? You don't have to. You're at
36:06
Speaker 2: a laundromat. That's the whole thing. It's like diner food.
36:09
Speaker 2: It's like just solid diner food and cheap-for-a-restaurant drinks. So
36:16
Speaker 2: I would do that. Other things, activities, I'd put an
36:19
Speaker 2: arcade in there. I would absolutely put in, like, old-school arcade.
36:23
Speaker 3: Like, none of the, like, I think you just want
36:25
Speaker 3: a speakeasy that's located inside a laundromat.
36:29
Speaker 2: Okay, so here's what I would actually do. I would
36:32
Speaker 2: buy a bar and put two laundry machines in it.
36:34
Speaker 3: Yeah, I think that's where we're getting to. You have
36:36
Speaker 3: to walk through a laundry machine in order to get
36:37
Speaker 3: to Chuck's bar.
36:38
Speaker 1: Yes.
36:39
Speaker 2: I would rather just have a bar or a diner
36:43
Speaker 2: with a couple laundry machines in it.
36:45
Speaker 5: One of them shut down because it needs repairs.
36:47
Speaker 4: Yeah. Of course.
36:49
Speaker 1: Right.
36:49
Speaker 4: Of course.
36:49
Speaker 2: You know, naturally. Uh, let's see, uh, why beef prices
36:54
Speaker 2: keep rising. Uh, so again, this is one of those
36:59
Speaker 2: pieces that I got to say is bull loony. It's titled,
37:03
Speaker 2: There's No Quick Fix for High Beef Prices, and that's true.
37:07
Speaker 2: The second piece is, as long as climate change keeps
37:09
Speaker 2: worsening droughts, ranchers will be cautious about raising more cattle. No,
37:12
Speaker 2: that's not what made them cautious about raising more cattle.
37:15
Speaker 3: Yeah, they weren't exorbitantly concerned about climate change going.
37:18
Speaker 4: Into this one.
37:18
Speaker 2: Again, it was the fact that Americans stopped buying as
37:21
Speaker 2: much beef, and so they said, hey, let's shrink the herd,
37:25
Speaker 2: and then when beef roared back, this happened. So it's
37:28
Speaker 2: important to understand what is a short-term shift... and what
37:31
Speaker 2: is a long-term one, this is not a climate change-related issue.
37:35
Speaker 2: There are plenty of other things that very well may be,
37:38
Speaker 2: but this is not one, simply because it is responding
37:43
Speaker 2: to Americans' changes in preference in time. But the problem
37:48
Speaker 2: is that in order to rebuild a beef herd, it
37:50
Speaker 2: takes five to seven years, and so when Americans' preferences
37:54
Speaker 2: turn on a dime, the herd cannot.
37:57
Speaker 3: Also, the last three months, beef prices have declined, according to...
38:00
Speaker 3: the Bureau of Labor Statistics.
38:02
Speaker 2: Where's the beef? In my belly. We'll have a good steak.
38:08
Speaker 2: Let's take a quick break. When we return tomorrow, we've
38:12
Speaker 2: got more Financial Exchange. Make sure you tune in.