Latest / The Financial Exchange Show / Price increases are here. Are you ready?

Transcript

Price increases are here. Are you ready? · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:02
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:08
Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:17
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
Speaker 1: this program do not endorse each other or their services.
0:25
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:28
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Chuck Zada and Mike Armstrong, your exclusive look
0:38
Speaker 1: at business and financial news affecting your day, your city,
0:42
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends plus breaking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:53
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:57
Speaker 1: heroes by visiting dav five k dot com, Bustin and
1:00
Speaker 1: making a donation today. This is the Financial Exchange with
1:05
Speaker 1: Chuck Zada and Mike Armstraw.
1:14
Speaker 2: First day I may here on the Financial Exchange, it
1:18
Speaker 2: is Chuck, Mike, and Tucker with you. And as we
1:23
Speaker 2: you know, look back on April. We've got a bunch
1:25
Speaker 2: of economic dat a bunch of earnings to get to.
1:27
Speaker 2: But I do want to look back on April a
1:29
Speaker 2: little bit, just to talk about what we saw in markets,
1:32
Speaker 2: because overall pretty colm month. The S and P five
1:36
Speaker 2: hundred ended down point seven percent for the month, the
1:40
Speaker 2: Russell one thousand down point six percent, Russell two thousand
1:44
Speaker 2: down two point three percent, the Bloomberg Aggregate bond index
1:48
Speaker 2: was up point four percent, and so overall, just another
1:53
Speaker 2: calm month in markets, not too much to get excited about.
1:56
Speaker 2: And we're on to the next one. Yeah, it's kind
2:01
Speaker 2: of wild, just like funny way you start and end
2:04
Speaker 2: at the same place, but have a whole lot of
2:05
Speaker 2: wild in between. This is why I tell people that
2:07
Speaker 2: the path matters. Like when people give their year end
2:10
Speaker 2: S and P five hundred forecasts, it's not just okay,
2:14
Speaker 2: so the S and P is gonna make eight percent,
2:15
Speaker 2: it's gonna make, you know, three quarters of a percent
2:17
Speaker 2: each month, and blah blah, blah like the path actually matters,
2:21
Speaker 2: and the path of April was nothing close to calm.
2:24
Speaker 2: It was, you know, some of the most volatile trading
2:27
Speaker 2: that we have ever seen in markets. Actually, so it
2:32
Speaker 2: clearly raises the question of you know, markets tend to
2:37
Speaker 2: It's one of the things you hear about markets is
2:39
Speaker 2: that they are forward looking. And so the question is, hey,
2:44
Speaker 2: given where stocks are now, with the market up an
2:48
Speaker 2: additional two thirds to one and a half percent today
2:51
Speaker 2: depending on the index that you're looking at, our markets
2:54
Speaker 2: signaling not quite the all clear, but hey, everything's gonna
2:58
Speaker 2: be fine? And is that true or are they missing something?
3:04
Speaker 2: And the answer is, we have no idea. Markets take
3:08
Speaker 2: into account all the information they have, and you know,
3:10
Speaker 2: some of that information ends up being right, some of
3:12
Speaker 2: it ends up being wrong. But the reason that you
3:14
Speaker 2: have high levels of volatility is because markets priced information
3:19
Speaker 2: incorrectly one way or another. You look at what we
3:23
Speaker 2: saw heading into April, markets did not price in that
3:26
Speaker 2: the stated tariff rates would be as high as they
3:30
Speaker 2: ended up being by April ninth. Markets were not pricing
3:36
Speaker 2: in a pivot to pull back from some of those
3:38
Speaker 2: tariff rates. And now, because of how you know, investors
3:43
Speaker 2: may have been positioned. You've kind of had this exacerbated
3:45
Speaker 2: with you know, a short squeeze to the upside potentially,
3:48
Speaker 2: and markets have you know, rebounded pretty much back to
3:52
Speaker 2: where they were. I mean again, I'm looking at the
3:54
Speaker 2: chart right now of the S and P five hundred,
3:58
Speaker 2: and you're at you know, fifty six twenty one. The
4:01
Speaker 2: last time we were at this level was on April second,
4:05
Speaker 2: before the Rose Garden announcement for tariff. So markets today
4:09
Speaker 2: are pretty much saying nothing from the last month mattered,
4:12
Speaker 2: which is I think surprising in both our minds, because
4:18
Speaker 2: it did matter just from every practical effect other than
4:21
Speaker 2: on markets. It mattered quite a bit that we had
4:24
Speaker 2: an announcement of reciprocal teriffs that would have increased the
4:28
Speaker 2: average effective tariff. Did we actually do that math the
4:31
Speaker 2: average effective tariff rate had those stayed in place. We
4:34
Speaker 2: didn't do the math, but a number of other people
4:36
Speaker 2: did that had it pushed up to north of twenty
4:38
Speaker 2: five percent for the average effective tariff rate, and at
4:42
Speaker 2: one point I think it even got close to like
4:44
Speaker 2: thirty as things were changing, which would have been like
4:47
Speaker 2: the highest tariff rate since the eighteen nineties. I believe.
4:50
Speaker 2: So there's plenty of things that are different than April first,
4:53
Speaker 2: on May first, when it comes to our expectations about
4:57
Speaker 2: the economy and tariffs. But let's talk about what is
5:01
Speaker 2: actually today different. Forget about expectations, but what's actually different
5:05
Speaker 2: today in terms of things that matter for the stock
5:08
Speaker 2: market now than on April first. One would be the
5:11
Speaker 2: China tariffs. Those are in place at a rate of
5:14
Speaker 2: one hundred and forty five percent. They were not there
5:16
Speaker 2: on April first, and that is a big difference between
5:19
Speaker 2: what was going on a month ago compared to today. Yeah,
5:22
Speaker 2: and so obviously look in terms of what that means
5:25
Speaker 2: for the real economy and for the stock market. Look,
5:27
Speaker 2: you have a bunch of stuff that's not being shipped
5:29
Speaker 2: out of China right now. You have other stuff that's
5:31
Speaker 2: just being routed through other countries as they try to
5:33
Speaker 2: skirt tariffs. You have companies trying to shift production to
5:36
Speaker 2: other countries. That pushes costs up because of capacity constraints there.
5:40
Speaker 2: It's not like you can just go to Vietnam and
5:42
Speaker 2: be like, hey, give us your spare factories that are
5:45
Speaker 2: perfectly tooled for what we need to make. It doesn't
5:48
Speaker 2: work like that. In fact, a lot of times what
5:50
Speaker 2: you see is okay, Vietnam then orders the product from China,
5:54
Speaker 2: it gets shipped to Vietnam and they do like some
5:56
Speaker 2: kind of finishing and then ship it on to the US.
5:59
Speaker 2: So it's there's a lot of messiness that is out there.
6:03
Speaker 2: And I think the big thing that I come back
6:05
Speaker 2: to is none of us know exactly what's going on
6:08
Speaker 2: behind the scenes with all of this, as far as
6:11
Speaker 2: you know how individual companies are dealing with these challenges.
6:16
Speaker 2: But anytime that you are having to adapt here, it's
6:20
Speaker 2: not likely that you are coming away with lower cost
6:24
Speaker 2: and higher margins given that everyone else is trying to
6:27
Speaker 2: adapt at the same time. True, And so I think
6:29
Speaker 2: what I find interesting about it is, hey, even knowing
6:33
Speaker 2: that now, the stock market's basically saying, yeah, we think
6:36
Speaker 2: you're in the clear, and it may be right, it
6:38
Speaker 2: may not. I tend to think that it's overlooking some things.
6:42
Speaker 2: But I've been wrong before and maybe I'm wrong this time.
6:46
Speaker 2: But you have, you know, a whole bunch of different
6:50
Speaker 2: companies that are now you know, basically scrapping and calling
6:53
Speaker 2: for any kind of production they can get anywhere other
6:57
Speaker 2: than China and I can't believe that that's going to
7:01
Speaker 2: in the short term result in better outcomes for those companies,
7:05
Speaker 2: even if in the long term it certainly is something
7:08
Speaker 2: that I think we want to do in terms of
7:10
Speaker 2: encouraging production to move away from China, and I think
7:13
Speaker 2: that that is absolutely a goal of the Trump administration.
7:16
Speaker 2: Second piece, in addition to China, that we didn't know
7:19
Speaker 2: on April one, that we know now pretty much every
7:22
Speaker 2: country in the world that imports something to the United
7:24
Speaker 2: States is now facing a ten percent tariff on those
7:27
Speaker 2: products coming into the US, which I think was kind
7:30
Speaker 2: of the thought is to where I think that's what
7:32
Speaker 2: markets we're pricing in as Hey, this is where we
7:34
Speaker 2: think things are going to be, you know, after April. Second,
7:40
Speaker 2: so I don't know that there's it resolved the uncertainty there,
7:44
Speaker 2: and certainly, you know, you have the potential for negotiations
7:47
Speaker 2: with individual countries to get improved deals. There have been
7:51
Speaker 2: a number of those, you know, talked about in the
7:53
Speaker 2: last couple of weeks, but we still don't have anything
7:56
Speaker 2: that is across the finish line, even though you know,
7:59
Speaker 2: this week there's been some more or chatter about deals
8:01
Speaker 2: getting closer, but there's still nothing there. Yeah, so optimistic
8:06
Speaker 2: case you do have a slew of announcements on trade
8:10
Speaker 2: deals with countries other than China. Frankly, I don't think
8:12
Speaker 2: you're going to hear a whole lot on China in
8:13
Speaker 2: the very short term, but I could be wrong. And
8:16
Speaker 2: what that would do, like right now, put yourself in
8:19
Speaker 2: Tim Cook's shoes at Apple and I keep doing this,
8:21
Speaker 2: which is probably not the best example shoes. Do you
8:23
Speaker 2: think Tim Cook wears Hookahs? Is that what they are? Yeah?
8:28
Speaker 2: The running shoes, Yeah, going Hokahs.
8:30
Speaker 1: Yeah, I can see that.
8:31
Speaker 2: I just wanted to make sure I pronounced it right.
8:33
Speaker 2: I think Tim's a Rebok dude. No, definitely, not old school.
8:38
Speaker 2: Probably wears Adidas, but it pronounces it chuck. In either case,
8:44
Speaker 2: if you suddenly have, for instance, a trade deal announced
8:47
Speaker 2: with both Vietnam and India in the next few weeks,
8:50
Speaker 2: that's the type of certainty that I'm sure a person
8:53
Speaker 2: like Tim Cook would like to have so that he
8:55
Speaker 2: can go and spend a whole bunch of money on
8:57
Speaker 2: investing elsewhere. Would that be good for their profit margins, No,
9:01
Speaker 2: but it would build some certainty around where they plan
9:05
Speaker 2: to invest and Frankly, Tim Cook might already have that
9:08
Speaker 2: certainty because he probably has a lot more connections to
9:10
Speaker 2: the White House than Chuck's friend that manufactures board games.
9:14
Speaker 2: But for businesses all across the spectrum there, I think
9:18
Speaker 2: that's in part what they are looking for too, is
9:20
Speaker 2: not only some progress with China, but just some degree
9:23
Speaker 2: of certainty that if I do move manufacturing to Mexico
9:26
Speaker 2: to India, that I will actually know with some degree
9:29
Speaker 2: of certainty what I will pay to import that stuff
9:31
Speaker 2: back into the US. So the big place where I
9:34
Speaker 2: think I land in all of this right now is
9:36
Speaker 2: we still have seen no data that reflects any meaningful
9:41
Speaker 2: economic impacts, mostly because most of the data we've been
9:43
Speaker 2: getting is from before April second. So you know, for
9:47
Speaker 2: all the hull baloo about you know, GDP data from yesterday,
9:49
Speaker 2: one of the things I said about it was, guys,
9:51
Speaker 2: this is backwards looking data. It's it's still even though
9:54
Speaker 2: it's GDP, you know, the granddaddy of all data sets,
9:58
Speaker 2: it's still not really that relevant right to what we
10:03
Speaker 2: are seeing now because companies are reacting differently than they were.
10:07
Speaker 2: Think about how much information it did it measure in
10:10
Speaker 2: April of twenty twenty five, Chucks, it does zero. The
10:14
Speaker 2: simple question on this, does the decision made by a
10:18
Speaker 2: company in January on January third of this year have
10:22
Speaker 2: any relevance to what they are to how they are
10:25
Speaker 2: making decisions now? And it's just no, like, not really
10:29
Speaker 2: a lot. As you got closer to April second, sure
10:31
Speaker 2: those decisions had more relevance, but there was still quarters
10:34
Speaker 2: a long time. It's ninety days, and so I think
10:37
Speaker 2: that the data that we start to get now and
10:40
Speaker 2: in the next couple months is going to really tell
10:42
Speaker 2: us about what's going on in the economy, because if
10:45
Speaker 2: we're being completely honest, none of us really know. Again,
10:50
Speaker 2: with even the earnings reports we've been getting all about
10:53
Speaker 2: not knowing that they're Q one, and most companies are saying,
10:56
Speaker 2: given the economic uncertainty that we're facing, we are pulling
10:59
Speaker 2: up guidance because you know, we can't project exactly where
11:03
Speaker 2: things are going to go. So I think that in
11:08
Speaker 2: terms of how this evolves, the next two months of
11:13
Speaker 2: data are gonna tell us, you know, but by July fourth,
11:16
Speaker 2: we're gonna have a pretty good sense of where things
11:18
Speaker 2: are going. And there's a chance the economic data worsens
11:22
Speaker 2: there's a chance that you know, again, we've no one's
11:26
Speaker 2: gone through this in our lifetimes. Maybe the economic data
11:30
Speaker 2: doesn't work worse than I'm open to that as a possibility,
11:33
Speaker 2: though I think it's unlikely, and we're gonna see where
11:38
Speaker 2: things go. Maybe you get some trade deals announced, maybe
11:40
Speaker 2: you don't. I there's a ton of uncertainty the next
11:44
Speaker 2: couple months. I'm gonna try to not say the word
11:47
Speaker 2: uncertainty anymore, because I just I despise that word after
11:52
Speaker 2: like the last five or six years. It's just I've
11:55
Speaker 2: one thing that we can't ever say is in these
11:57
Speaker 2: uncertain times. I forbid anyone to ever say that phrase again,
12:02
Speaker 2: because we had enough of that back in March of
12:03
Speaker 2: twenty twenty. But we're gonna have to see the next
12:05
Speaker 2: two months develop, and we're gonna get some more information there.
12:09
Speaker 2: Just take a quick break. When we come back, let's
12:11
Speaker 2: go talk about some of the economic data that we
12:13
Speaker 2: got this morning, because we did get a few key pieces.
12:16
Speaker 2: We'll talk about what matters what doesn't.
12:18
Speaker 1: Right after this, the global trade war has royal markets
12:23
Speaker 1: and a recession could be next. Keep it here for
12:26
Speaker 1: breaking business news and complete market updates on the Financial
12:29
Speaker 1: Exchange Radio Network. The Financial Exchange streams live on YouTube.
12:35
Speaker 1: Like our page and stay up to date on breaking
12:37
Speaker 1: business news. All morning Loan. This is the Financial Exchange
12:41
Speaker 1: Radio Network.
12:49
Speaker 3: This segment of the Financial Exchange is brought to you
12:51
Speaker 3: in part by the US Virgin Islands Department of Tourism.
12:55
Speaker 3: The US Virgin Islands are Saint Croix, Saint Thomas, and
12:58
Speaker 3: Saint John and are consistently voted one of the top
13:01
Speaker 3: Caribbean vacation destinations. Enjoy world class cuisine, Pristine Beach's rich history,
13:07
Speaker 3: and vibrant nightlife. Book your trip now to visit America's
13:10
Speaker 3: Caribbean paradise, the United States Virgin Islands. For reservations or
13:14
Speaker 3: more information, go to visit USVII dot com. That's visit
13:19
Speaker 3: USVII dot com.
13:21
Speaker 2: All right, I want to get some economic data before
13:23
Speaker 2: we do. I just had a couple of items cross
13:26
Speaker 2: my screen again, just in terms of what we're seeing
13:29
Speaker 2: on price increases from companies as it relates to again,
13:35
Speaker 2: whether it's because of tariffs or just using tariffs as
13:37
Speaker 2: an excuse. Either way, like it's happening, so who cares
13:41
Speaker 2: about the causality, But hint, it's probably because of tariffs. First, Cohler,
13:46
Speaker 2: the faucet and plumbing company. They announced a broad price
13:53
Speaker 2: increase that will be anywhere from twelve to eighteen percent
13:58
Speaker 2: on their goods. Actually, I'm sorry, it is a fifteen
14:01
Speaker 2: to eighteen percent weighted price adjustment. They also, I guess,
14:04
Speaker 2: have other brands under them called Callista and Roeburn. I'm
14:09
Speaker 2: not familiar with them. Those are moving up by twelve
14:11
Speaker 2: percent and these prices are effective May tenth. Microsoft this
14:16
Speaker 2: morning and just now announcing earnings last night, they announced
14:20
Speaker 2: price hikes on their Xbox consoles and games. Xbox prices
14:25
Speaker 2: going up twenty to twenty four percent. Games some of
14:29
Speaker 2: them are going to move up fourteen percent. And so
14:32
Speaker 2: you have that happening.
14:34
Speaker 3: Is that the new console or the current console or
14:37
Speaker 3: does it not.
14:37
Speaker 2: Discuss it says Xbox Series s. I don't know if
14:41
Speaker 2: that's current. I'm not a video game person anymore. I
14:44
Speaker 2: don't know. And it is it is current because it
14:47
Speaker 2: says that these are price hikes from where it was.
14:49
Speaker 2: It's primarily manufactured by Fox Con in Shenzhen, China. Okay,
14:55
Speaker 2: there you go. Other things. Lenovo, big manufacturer of laptops.
15:01
Speaker 2: Their prices are up about fifteen percent over the past
15:04
Speaker 2: two weeks. So these this is what's starting to trickle.
15:08
Speaker 2: And remember, if you have one hundred and forty five
15:10
Speaker 2: percent tariff, even if you decide to bring that good
15:12
Speaker 2: into the US, the cost of the consumer does not
15:15
Speaker 2: go up one hundred and forty five percent in most cases,
15:17
Speaker 2: unless it is a direct to consumer product that's being
15:21
Speaker 2: shipped like Shine Tamu, those types of companies, which is
15:24
Speaker 2: why you're seeing all of the you know, ridiculous surcharges
15:27
Speaker 2: that they're adding. Now, uh, let's say that I am
15:31
Speaker 2: an importer of golf balls. I get golf balls that
15:35
Speaker 2: are made in China, and it costs me a dollar
15:39
Speaker 2: per ball to import. It cost me another dollar to
15:44
Speaker 2: ship the thing to me, you know, once it's in
15:46
Speaker 2: the un the United States, and then I got a
15:48
Speaker 2: couple dollars of you know, operational expenses related to selling it.
15:52
Speaker 2: So out of you know, I sell the thing for
15:53
Speaker 2: five dollars, I end up making one dollar when it's
15:56
Speaker 2: all said and done. If my one dollar cost from
16:00
Speaker 2: China goes up to two dollars and forty five cents,
16:04
Speaker 2: it's eaten through my entire profit. And so in order
16:07
Speaker 2: for me to make the exact same profit, I have
16:10
Speaker 2: to raise my price not by one hundred and forty
16:12
Speaker 2: five percent, but buy a dollar forty five in order
16:15
Speaker 2: to make that up. So you're going from five to
16:18
Speaker 2: six dollars and forty five cents correct. So you do
16:20
Speaker 2: the math out, it's a twenty nine percent price increase
16:22
Speaker 2: that I am passing through, assuming that my cost of
16:26
Speaker 2: good sold direct from China is twenty percent of you know,
16:31
Speaker 2: my overall selling price. If my cost of good sold
16:35
Speaker 2: is lower, than the impact on my price is going
16:37
Speaker 2: to be lower. If it's higher, then the impact will
16:39
Speaker 2: be higher. But generally, when you look at, you know,
16:42
Speaker 2: cost a good sold coming from China, most businesses try
16:47
Speaker 2: to target somewhere between like eighteen and forty percent in
16:51
Speaker 2: terms of you know, where their revenue ends up. Being
16:55
Speaker 2: eighteen to forty percent of that is a good benchmark
16:58
Speaker 2: for cost of good sold. So yeah, anywhere from like
17:00
Speaker 2: fifteen to thirty five percent price increases is what you
17:04
Speaker 2: would expect to see if a company decides to keep
17:07
Speaker 2: importing from China given the tariffs that are being imposed.
17:10
Speaker 2: So silver lining here, Chuck, We did receive the PCE
17:13
Speaker 2: price index yesterday. Correct, Yes, showed really good, really good.
17:18
Speaker 2: Inflation was sitting at like two point three percent in
17:22
Speaker 2: the month of March based on this report, right, yeah, was.
17:25
Speaker 2: The monthly numbers were flat both on core and headline,
17:29
Speaker 2: and the annual numbers Again, if you look both at
17:34
Speaker 2: what we saw for core pce UH and headline. Headline
17:39
Speaker 2: came into two point three, the core came in at
17:43
Speaker 2: two point six, So still a little bit elevated on
17:45
Speaker 2: that core. But look, two six is quite honestly, it's fine,
17:48
Speaker 2: Like it doesn't need to be two percent. I've been
17:50
Speaker 2: saying this all along. Totally fine if you land at
17:53
Speaker 2: you know, two point six percent long term. So the
17:55
Speaker 2: good news is we are at a pretty reasonable starting
17:58
Speaker 2: point both from inflation and at employedoyment as we go
18:00
Speaker 2: into this period of time, like unemployments low. We'll get
18:03
Speaker 2: another jobs report tomorrow to confirm that, but unemployment has
18:07
Speaker 2: appeared to be you know, pretty manageable to this stage.
18:10
Speaker 2: Inflation has come down substantially over the course of the
18:14
Speaker 2: last two years. Really but to your point, yeah, when
18:18
Speaker 2: you see Lenovo laptops and hardware going into your home
18:22
Speaker 2: jumping up in price, this significantly, it won't take too
18:27
Speaker 2: long to start noticing that in both you know, shopping
18:31
Speaker 2: online and elsewhere, as well as in inflation reports that
18:35
Speaker 2: we start getting. Yeah, so you mentioned unemployment. Let's talk
18:39
Speaker 2: about that a little bit. And weekly unemployment claims data
18:43
Speaker 2: showed a jump from two hundred and twenty three thousand
18:47
Speaker 2: up to two hundred and forty one thousand, so it's
18:49
Speaker 2: an eighteen thousand person jumped. The continuing claims moved up
18:54
Speaker 2: from one point eight three three million to one point
18:58
Speaker 2: nine one six million. So the question is, hey, is
19:03
Speaker 2: this something that is starting to show some signs of
19:07
Speaker 2: weakness and that's a problem, or is this just some
19:12
Speaker 2: statistical noise that is happening and this is one week
19:15
Speaker 2: of claims and it's not a big deal. We're going
19:18
Speaker 2: to take a quick break right now. When we come back,
19:21
Speaker 2: we'll answer that question.
19:37
Speaker 1: Like us on Facebook and follow us on Twitter at
19:40
Speaker 1: TFE show. Breaking business news is always first right here
19:44
Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
19:49
Speaker 1: Street watch a complete look and what's moving markets so
19:52
Speaker 1: far today right here on the Financial Exchange Radio Network.
19:56
Speaker 3: We'll after roller coaster month of April, May is starting
20:01
Speaker 3: off well in positive territory as investors react to major
20:04
Speaker 3: tech earnings from Microsoft and Meta, in addition to a
20:07
Speaker 3: slightly elevated jobless claims reading, in addition to other economic
20:12
Speaker 3: data points unveiled this morning. Right now, the Dow is
20:16
Speaker 3: up by six tenths of a percent or two hundred
20:18
Speaker 3: and thirty eight points, s and P five hundred up
20:22
Speaker 3: over one percent or sixty two points, and the NASDAC
20:26
Speaker 3: up just over two percent higher three hundred and fifty
20:28
Speaker 3: three points. Russell two thousand is up by seven tenths
20:31
Speaker 3: of a percent, Tenure Treasure reeled is up by two
20:34
Speaker 3: basis points now at four point two zero percent, and
20:38
Speaker 3: crude oil up two thirds of a percent higher, trading
20:41
Speaker 3: at fifty eight dollars and fifty eight cents a barrel.
20:44
Speaker 3: Microsoft and Meta are seeing gains after posting impressive first
20:48
Speaker 3: quarter results. Microsoft saw a strong growth in revenue and
20:52
Speaker 3: earnings driven by its Azer cloud business, and also issued
20:56
Speaker 3: strong guidance for the year, Microsoft jumping by nine percent.
21:01
Speaker 3: As for Meta, the social media giant saw its sales
21:05
Speaker 3: climb sixteen percent, beating expectations and indicated growth would likely
21:10
Speaker 3: remain steady in the coming months. Meta up by five percent.
21:14
Speaker 2: Mi La General.
21:15
Speaker 3: Motors this morning cut its twenty twenty five forecasts for
21:18
Speaker 3: adjusted earnings per share and estimated a terrif related impact
21:22
Speaker 3: of up to five billion dollars. However, GM actually up
21:26
Speaker 3: by one percent. Elsewhere, McDonald's reported its first quarter results,
21:31
Speaker 3: posting a bigger than expected drop in quarterly revenue. The
21:34
Speaker 3: fast food giants US same store sales declined three point
21:39
Speaker 3: six percent, marking its largest fall since twenty twenty. That
21:43
Speaker 3: stock is retreating by three fourths of a percent. It's
21:47
Speaker 3: three quarters of a percent.
21:48
Speaker 2: Excuse me.
21:49
Speaker 3: CBS up by seven percent after its earnings and revenue
21:53
Speaker 3: beat forecast, where the company also hiked its full year guidance.
21:57
Speaker 3: Tesla up by one percent after The Wall Street Journal
22:01
Speaker 3: reported that the ev maker's board open a search for
22:04
Speaker 3: the company's next chief executive. However, Tesla has since denied
22:09
Speaker 3: that report. Apple pulling back by a third of a
22:12
Speaker 3: percent after a judge ruled that the tech giant willfully
22:15
Speaker 3: violated a twenty twenty one court order from Epic Games
22:18
Speaker 3: regarding app store fees. Amazon up by two percent after
22:22
Speaker 3: the e commerce giant announced plans to spend four billion
22:26
Speaker 3: dollars by the end of twenty twenty six and expanding
22:28
Speaker 3: its small town delivery network in rur of America. Speaking
22:32
Speaker 3: of those companies, both Amazon and Apple will report first
22:36
Speaker 3: quarter earnings after today's closing bell. I'm Tucker Silvan. That's
22:40
Speaker 3: Wallstreet Watch.
22:41
Speaker 2: So in the last segment, we were talking about the
22:44
Speaker 2: weekly jobless claims data that we saw and we noted
22:48
Speaker 2: that initial claims moved up to two hundred and forty
22:50
Speaker 2: one thousand from two twenty three. Continuing claims moved from
22:54
Speaker 2: one point eight three to three million to one point
22:56
Speaker 2: nine to one six So, first on the initial claims,
23:01
Speaker 2: if this is you know, the start of a move up,
23:06
Speaker 2: you'd say, okay, like there's you know, you're starting to
23:08
Speaker 2: see some problems develop if this were to continue for
23:10
Speaker 2: a couple of weeks. But here's the thing, Uh, the
23:14
Speaker 2: underlying data shows that the basically all of the increase
23:18
Speaker 2: in I'm gonna look at the non seasonally adjusted numbers
23:21
Speaker 2: just because that's really where the meat is. Is, Like,
23:23
Speaker 2: what are we actually seeing compared to you know, prior
23:26
Speaker 2: years since the seasonal adjustments, can you know, take some
23:29
Speaker 2: things out in the wash. The non seasonally adjusted numbers
23:32
Speaker 2: show a spike in New York State that went from
23:35
Speaker 2: fourteen thousand claims to thirty thousand claims. The speculation New
23:40
Speaker 2: York City schools were off for New York State schools
23:43
Speaker 2: were off last week. Maybe you have bus drivers that
23:45
Speaker 2: file claims. You've seen a couple of these here and there,
23:48
Speaker 2: so it could be that. But why does it not
23:51
Speaker 2: get taken out in the wash? I don't necessarily know,
23:54
Speaker 2: So I think with that Massachusetts, likewise, school vacation the
23:59
Speaker 2: same week jump of three thousand claims, it went from
24:03
Speaker 2: forty eight hundred up to eighty one hundred. So I
24:07
Speaker 2: maybe there's something there from what perspective, Yeah, there could
24:13
Speaker 2: be something here from a not indicating much in the
24:17
Speaker 2: way of unemployment. Yeah, I don't know that this necessarily
24:20
Speaker 2: has some kind of huge read through on that front.
24:22
Speaker 2: The continuing claims is more interesting to me, and this
24:29
Speaker 2: is because basically what we're seeing here is a widening
24:34
Speaker 2: increase compared to this time last year. We're now to
24:36
Speaker 2: about an eight point two percent increase year over year
24:39
Speaker 2: in continuing claims, with the ensured unemployment rate moving up
24:43
Speaker 2: a little bit as well, from one point two to
24:44
Speaker 2: one point three percent, and so you still need a
24:47
Speaker 2: few more weeks to confirm this. But this is also
24:50
Speaker 2: where I think you would see the movement first, simply
24:52
Speaker 2: because if you think about how companies behave during periods
24:55
Speaker 2: of uncertainty, the first thing that they do is slow
24:58
Speaker 2: down hiring, which results in people having to stay on
25:01
Speaker 2: unemployment longer, hence continuing claims building. The second thing companies
25:06
Speaker 2: do if that uncertainty persists, that's when they start laying
25:10
Speaker 2: people off. So these continuing claims numbers, just for reference,
25:13
Speaker 2: are the highest they've been since the end of twenty one. Yes,
25:16
Speaker 2: and that's yeah, that's been a few years. We were
25:19
Speaker 2: still rebounding from the COVID layoffs at that stage of
25:24
Speaker 2: November twenty twenty one when these were last reached this high.
25:27
Speaker 2: So yeah, I'm with you there. The one week stuff
25:31
Speaker 2: you gotta wait and see. But the continuing claims are
25:35
Speaker 2: kind of a cumulative effect of unemployment in the country
25:39
Speaker 2: and what people are seeing on a week to week
25:41
Speaker 2: basis there, So I would agree with you, I would
25:43
Speaker 2: put a little bit more stress on that one. But
25:44
Speaker 2: we will get the jobs report tomorrow at eight thirty,
25:47
Speaker 2: is it. Yeah, And I don't think that I would
25:49
Speaker 2: expect to see too much of note, I think even
25:53
Speaker 2: though this is April data, remember that the time period
25:56
Speaker 2: for collection of the monthly jobs data is usually right
26:01
Speaker 2: around the second week of the month, second full week.
26:04
Speaker 2: So I think that the data collection this on this
26:07
Speaker 2: one was the week of the fourteenth through the nineteenth.
26:12
Speaker 2: Remember that the tariffs were imposed on April ninth. So
26:18
Speaker 2: I think that if you look at this where companies making,
26:22
Speaker 2: you know, any kind of quick decisions, there no. I
26:24
Speaker 2: quite honestly, I don't think unapployment's usually a lagging indicator.
26:29
Speaker 2: I don't think you're going to see anything meaningful showing
26:31
Speaker 2: up in the job's report this month, maybe even the
26:36
Speaker 2: next couple. Like I think that the first one where
26:38
Speaker 2: it starts to maybe have some signs is either June
26:42
Speaker 2: or July, but even more realistically like maybe August, Like
26:45
Speaker 2: it's gonna be over the course of the summer where
26:48
Speaker 2: it potentially develops if it's specifically in relation to tariff.
26:53
Speaker 2: So the previous month read on this, by the way,
26:55
Speaker 2: it was two hundred and twenty eight thousand jobs created
26:57
Speaker 2: in the month of March. Expectation for this report are
27:01
Speaker 2: one hundred and thirty three thousand. That unemployment rate is
27:04
Speaker 2: expected to stay right at four point two percent, where
27:07
Speaker 2: it was previous months. So look, I think if you
27:09
Speaker 2: get something right in that general area, I would say
27:12
Speaker 2: anywhere between one hundred and two hundred thirty thousand jobs created,
27:17
Speaker 2: then I would attribute to a normal environment for what
27:21
Speaker 2: we would expect. Anything on the job lost perspective would
27:24
Speaker 2: be very concerning to me because I wouldn't have expected
27:26
Speaker 2: to see that. No, and anything above like previous months
27:31
Speaker 2: gains on employment above two hundred thirty thousand would be
27:34
Speaker 2: again surprising to me to the upside and a bit
27:37
Speaker 2: of a head scratcher. Yeah, So I think that's what
27:39
Speaker 2: we're seeing from a jobless claims perspective. Anything else that
27:45
Speaker 2: you want to touch on, We got some ism manufacturing
27:47
Speaker 2: data this morning as well. Another data set. Is it
27:50
Speaker 2: as bad as Dallas's Not as bad as Dallas's. It
27:54
Speaker 2: was still a deceleration from the previous when it went
27:57
Speaker 2: from forty nine down to forty eight point seven, but
28:00
Speaker 2: not as bad as fear. The forecast was for it
28:03
Speaker 2: to come in somewhere around forty eight, so a little
28:05
Speaker 2: bit better than expected there key components. Employment still under
28:09
Speaker 2: fifty so that indicates that people that employers in the
28:13
Speaker 2: manufacturing space are cutting jobs rather than adding them. Price
28:18
Speaker 2: is paid still very high at sixty nine point eight
28:21
Speaker 2: compared to previous one at sixty nine point four. So
28:24
Speaker 2: actually seeing companies saying, yes are prices that we are
28:27
Speaker 2: paying for raw materials and inputs, they are still very
28:30
Speaker 2: high in increasing and that makes sense. So I think ultimately, look,
28:36
Speaker 2: the soft data has now spoken and said what it said.
28:41
Speaker 2: If the hard data is what's going to matter the
28:43
Speaker 2: next few months, it's the soft data has told us
28:46
Speaker 2: businesses and people are nervous. Does it matter the last
28:52
Speaker 2: two years? It says no, because soft data has not
28:55
Speaker 2: led to weakening. Hard data matten for elections, but not
28:57
Speaker 2: for not for the stock market or the economy. Has
29:00
Speaker 2: the worm turned and maybe this is a different economy now,
29:04
Speaker 2: and so the soft data matters in ways that it
29:07
Speaker 2: didn't for the last couple of years and is more
29:08
Speaker 2: in line with historical norms possibility. But we need to
29:11
Speaker 2: see how it develops. So forgive me, if you're gonna
29:14
Speaker 2: hear me saying this an awful lot. We need to
29:16
Speaker 2: see the next few months of data. By July fourth,
29:20
Speaker 2: we're gonna have a much better sense of where things
29:21
Speaker 2: are going, and certainly, by the end of July, I
29:24
Speaker 2: think we're gonna have a conclusive direction for the economy
29:28
Speaker 2: and the market. Let's take a quick break. When we
29:32
Speaker 2: come back. Do we want to do earnings. Let's jump
29:36
Speaker 2: into earnings. Let's do some earnings right after this.
29:39
Speaker 1: Market volatility is at its highest point since the pandemic.
29:42
Speaker 1: Keep it here for the most comprehensive coverage of the
29:45
Speaker 1: global trade war. This is the Financial Exchange Radio Network.
29:49
Speaker 1: Get up to the minute market updates with Wall Street
29:52
Speaker 1: Watch Weight days at ten thirty only here on the
29:55
Speaker 1: Financial Exchange Radio Network.
30:07
Speaker 2: Microsoft reported earnings after the bell your today, and I
30:09
Speaker 2: do mean like right after the bell. I think it
30:12
Speaker 2: was four one pm when I got the alert on
30:15
Speaker 2: my phone about the earnings, And gosh, I understand why
30:20
Speaker 2: they wanted to put this out there quickly because the
30:23
Speaker 2: stock is up nine percent in trading today on the
30:26
Speaker 2: back of a really good quarter of earnings for Microsoft. Yeah,
30:31
Speaker 2: there was really not Did you find anything to complain
30:33
Speaker 2: about because revenue growth was thirteen percent, margins were down
30:37
Speaker 2: to touch. That was the only thing. Yeah, Yeah, So
30:40
Speaker 2: three forty six per share was the reported earnings, but
30:45
Speaker 2: their cloud growth was good. They were able to claim
30:48
Speaker 2: some AI contribution to that cloud growth, which investors want
30:52
Speaker 2: to see. Right now, I don't see a whole lot
30:56
Speaker 2: here to be looking at and saying, oh, I'm worried
30:59
Speaker 2: about this company in any meaningful way. I don't remember
31:04
Speaker 2: who quoted it, but somebody said that the word tariff
31:06
Speaker 2: showed up one time during the during the earnings release. Yes,
31:11
Speaker 2: it look it was a really good quarter by them.
31:16
Speaker 2: I mean, you go kind of across the board. We
31:18
Speaker 2: did report today that they are raising prices. By the
31:21
Speaker 2: way that Xbox console that they're raising their prices on,
31:25
Speaker 2: do you know it's five years old? The most recent
31:29
Speaker 2: Xbox count kind of makes sense. Why do you need
31:32
Speaker 2: a new piece of hardware these days? Well, I'm more
31:34
Speaker 2: mentioning that they're raising prices on a five year old console. Yeah, Like,
31:37
Speaker 2: typically the way asked, typically, the way that it goes
31:40
Speaker 2: is cheaper, and as you have your new iterations, you
31:43
Speaker 2: cheapen the launch version. And this is just not the case.
31:46
Speaker 2: It's not what we're seeing there. And I think again
31:48
Speaker 2: you can draw a direct line to where the thing
31:50
Speaker 2: is made. And you know, also anti competitive stances and
31:54
Speaker 2: things like that in the computer space, but that's neither
31:57
Speaker 2: here north they are, so they didn't have much to
31:59
Speaker 2: say about out you know, potential impact of a recession
32:02
Speaker 2: or anything like that. And I very much doubt that
32:03
Speaker 2: that's built into some of their core numbers that they're
32:07
Speaker 2: projecting here, But nor do I think it should be, right, Like,
32:10
Speaker 2: it's very unclear to me how they're azure business, for example,
32:15
Speaker 2: their cloud business gets affected if if we go into
32:18
Speaker 2: a recession. It's not as though it's it's not a
32:20
Speaker 2: whole bunch of upfront costs, and it's not as though,
32:24
Speaker 2: you know, Armstrong Advisory Group is going to stop paying
32:27
Speaker 2: Microsoft to store every piece of data that we own,
32:30
Speaker 2: even in the event of a recession. That is one
32:32
Speaker 2: of those we're kind of stuck, correct, everyone is, every
32:37
Speaker 2: business that exists out there is kind of stuck with Microsoft,
32:40
Speaker 2: you know, like this, This is why anti competitiveness is
32:44
Speaker 2: kind of a problem. Is when there's only one company
32:47
Speaker 2: that you know, does the stuff. Okay, they have pricing power,
32:50
Speaker 2: so it's great I for your Microsoft shareholder, but for
32:54
Speaker 2: you know, human beings and stuff like that, who aren't
32:57
Speaker 2: necessarily those shareholders can be you know something that you
33:01
Speaker 2: have to deal with, folks want to talk to you
33:03
Speaker 2: about the brand new guide from Armstrong Advisory Group for
33:07
Speaker 2: the month of May. It's all about trusts and we
33:11
Speaker 2: talk about trust on this program quite a bit when
33:13
Speaker 2: it comes to your estate plan and specifically we take
33:16
Speaker 2: the perspective of it of Okay, what does it mean
33:19
Speaker 2: for your personal finances? When we talk about a trust
33:22
Speaker 2: in your financial plan. There's obviously a lot of different
33:26
Speaker 2: types of trust, but this guy's going to help you
33:27
Speaker 2: walk through what sort of priorities you need to be
33:30
Speaker 2: thinking about when you are developing in a state plan
33:33
Speaker 2: for yourself, whether or not you might need a trust
33:35
Speaker 2: based on your personal financial situation, and then when is
33:39
Speaker 2: the right time to be considering one, and when do
33:41
Speaker 2: they maybe need to get changed. All of this is
33:43
Speaker 2: contained in our brand new guide from the Armstrong Advisory Group,
33:47
Speaker 2: again the title It's Trusts and your Financial Plan. If
33:50
Speaker 2: you want a free copy, you can call us at
33:53
Speaker 2: eight hundred three nine three four zero zero one. Trust
33:57
Speaker 2: planning estate planning in general really critical piece of overall
34:01
Speaker 2: financial planning and if you have questions about it, give
34:04
Speaker 2: us a ring eight hundred three nine three four zero
34:08
Speaker 2: zero one.
34:09
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
34:11
Speaker 1: registered investment advisor. Nothing in the ad or in any
34:14
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
34:17
Speaker 1: your own financial, tax, and estate planning advisors before making
34:20
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
34:23
Speaker 1: advisory services.
34:25
Speaker 2: Other big tech earnings yesterday, Meta, the company formerly known
34:29
Speaker 2: as Facebook, also add a really nice quarter and their
34:34
Speaker 2: stock is up currently about I call it six percent
34:39
Speaker 2: and change. So obviously again good good quarter and you know,
34:42
Speaker 2: better than expectations here, and sales came in at forty
34:46
Speaker 2: two billion dollars. They also guided for a range of
34:49
Speaker 2: sales in Q two that was pretty much, you know,
34:52
Speaker 2: right around expectations. And I think the big thing that's
34:58
Speaker 2: kind of interesting here is they said that their capex
35:02
Speaker 2: for this year would rise from a range of sixty
35:04
Speaker 2: to sixty five billion up to sixty four to seventy
35:06
Speaker 2: two billions. So it's about you know, call it like
35:08
Speaker 2: an eight to twelve percent bump in capex spending. Now
35:16
Speaker 2: here's what's what I think is what we need to
35:19
Speaker 2: try to sort through on this capex spending. In the
35:22
Speaker 2: last two years for anything in big tech relates to
35:26
Speaker 2: one thing and one thing only AI, artificial intelligence. And
35:30
Speaker 2: so in Vidia is up in sympathy today by four percent,
35:35
Speaker 2: probably on the back that this. The read through on
35:37
Speaker 2: this is, hey, we are going to be buying more
35:40
Speaker 2: AI chips. This also comes Satni Nadellas said that Microsoft
35:45
Speaker 2: was seeing, you know, some excess demand for AI, and
35:47
Speaker 2: so they still thought they had to add more capacity
35:50
Speaker 2: over the next quarter or two in order to meet that.
35:54
Speaker 2: The question here because Meta also said when when talking
35:58
Speaker 2: about the capex some of it was related to higher
36:02
Speaker 2: prices that they were going to have to pay as
36:04
Speaker 2: a result of construction costs and things like that. So
36:07
Speaker 2: the question that still is out there now is how
36:10
Speaker 2: much of this kapex bump is because of them needing
36:14
Speaker 2: to buy more chips than they originally thought, and how
36:16
Speaker 2: much of it is because construction costs and things like
36:19
Speaker 2: that have gone up more than they thoughts the fair question. Yeah,
36:21
Speaker 2: the result I don't know, right. The results from Facebook
36:24
Speaker 2: don't really surprise me given what we heard from Google
36:26
Speaker 2: last week, which was I hate calling them alphabet and Meta,
36:30
Speaker 2: but you know, Google and Facebook, can we just make
36:32
Speaker 2: up names for them. Yeah, that's fine, but their earnings
36:36
Speaker 2: are pretty closely tied together because it's all advertising dollars.
36:39
Speaker 2: And so if we had seen some pullback and advertising,
36:41
Speaker 2: it probably would have shown up in Google's numbers as well.
36:44
Speaker 2: It didn't, and so I don't think Meta's numbers are surprising,
36:47
Speaker 2: but they're also Look, there's a huge difference between Microsoft
36:51
Speaker 2: and Meta in terms of how businesses spend. Right. With Microsoft,
36:54
Speaker 2: you really have no choice if you are a customer
36:57
Speaker 2: of Microsoft's already. Yes, it's really expended to leave them.
37:01
Speaker 2: There are not a lot of operating system alternatives, and
37:03
Speaker 2: if your data is there, it's a huge pain to
37:05
Speaker 2: move it elsewhere. Yes, Meta juck. Honestly, there's not that
37:10
Speaker 2: many alternatives between MEDA and Google. They've killed most local
37:13
Speaker 2: ad markets, agreed, But if you are facing pressure on
37:17
Speaker 2: your business, it is very easy to just pull back
37:19
Speaker 2: your total advertising spend these days, because you are not
37:23
Speaker 2: tied into some three year contract with a local TV
37:26
Speaker 2: station to support that advertising for an extended period of time.
37:29
Speaker 2: With Meta, it's no, You pay for each individual impression,
37:33
Speaker 2: and it's a it's a variable rate that can change,
37:36
Speaker 2: and there's no long term contract generally correct. So I
37:39
Speaker 2: think the the read through from Q one in the
37:43
Speaker 2: tech space, everything looked pretty good, like there are no
37:48
Speaker 2: red flags out there, there's nothing that is an emergency.
37:50
Speaker 2: It's just yep, we're we're continuing on our way. And
37:53
Speaker 2: it's even after some questions emerged in the second half
37:56
Speaker 2: of last year. I don't think those questions have been
37:58
Speaker 2: fully answered with regards it's to AI. But these are
38:02
Speaker 2: really good reports that at least, you know, get part
38:04
Speaker 2: way there as far as answering them. Let's take a
38:07
Speaker 2: quick break when we come back. We had our two
38:10
Speaker 2: coming up in a bit