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Why is the White Housing picking a fight with Amazon? · The Financial Exchange Show

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1:03
Speaker 1: Face is the Financial Exchange with Paul Lane and Mark Vandetti.
1:10
Speaker 2: Welcome to this Tuesday edition of the Financial Exchange, and
1:14
Speaker 2: what is shaping up to be a very busy week
1:17
Speaker 2: in terms of economic reports. We've got a lot to
1:20
Speaker 2: get into. We've got the Job Support that will be
1:22
Speaker 2: coming out this Friday. GDP will be coming out tomorrow.
1:26
Speaker 2: We've got a Jolt Support that we're gonna be talking
1:28
Speaker 2: about today. And we're in the midst of earning season
1:31
Speaker 2: as well. So a very busy, busy week on the
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Speaker 2: economic front. Paul Lane, Mark Vendetti, and Tucker Silva here
1:37
Speaker 2: with you. We'll start the program with a little bit
1:40
Speaker 2: of an update on the tear front, specifically talk talking
1:45
Speaker 2: about the automotive industry. President Trump set out to soften
1:51
Speaker 2: the impact of some of the automotive tariffs in place. Basically,
1:54
Speaker 2: what he will be doing is easing some of the
1:56
Speaker 2: levies on foreign parts that are used to manufacture car
2:00
Speaker 2: domestically in the United States, so that they are not
2:03
Speaker 2: basically having to double dip in terms of what they
2:06
Speaker 2: pay on tariffs. They won't have to pay on duties
2:10
Speaker 2: for aluminum and steel on top of the parts that
2:14
Speaker 2: they will be importing from outside of the country. Also,
2:18
Speaker 2: some other modifications in place here that they'll be looking
2:23
Speaker 2: to try and ease the burden on some of these
2:26
Speaker 2: US auto manufacturers here, to allow them a little bit
2:29
Speaker 2: more time. There hasn't been We've only been a couple
2:33
Speaker 2: months into.
2:33
Speaker 3: This, but to the other day, this could change entirely the.
2:37
Speaker 2: Supply chains, basically to rework them around so that they
2:40
Speaker 2: could manufacture or produce more of these parts domestically here
2:45
Speaker 2: in the United States. I think it's worth noting that
2:48
Speaker 2: on the auto manufacturing front, while certainly sales have pushed up,
2:52
Speaker 2: if you look at the data from the month of March,
2:56
Speaker 2: there was about a thirteen percent forecast and surge of
2:59
Speaker 2: new vehicle's purchase. Will get more of that information as
3:02
Speaker 2: become available. It did seem like consumers did get out
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Speaker 2: there and sort of try and get ahead some of
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Speaker 2: some of these tariffs, because Morgan Stanley estimates that the
3:11
Speaker 2: twenty five percent tariff in place could increase the average
3:15
Speaker 2: cost of a car by about six thousand dollars, which
3:17
Speaker 2: would trickle down to the end consumer in the form
3:20
Speaker 2: of a ten to twelve percent price.
3:23
Speaker 3: And that is the point. The point is either to
3:25
Speaker 3: raise revenue and I've about lost it with tariffs, So
3:28
Speaker 3: forgive me. I was willing to tolerate, by my standards anyway,
3:33
Speaker 3: the first few months of erratic behavior. But I'm way
3:36
Speaker 3: past the point of wasting brain cells on trying to
3:38
Speaker 3: make heads or tails out of this. The point is
3:44
Speaker 3: either going to be raising revenue to say, replace the
3:46
Speaker 3: income tax, which I actually think is a terrific idea.
3:49
Speaker 3: The president's instincts seemed to be to push for consumption taxes,
3:52
Speaker 3: which I think is fantastic. I don't know whether he's
3:55
Speaker 3: not getting nudged further in the right direction by his
3:57
Speaker 3: advisors by because they're muddled, or they're or they're fearful.
4:01
Speaker 4: Elaborate on why you think it's fantastic.
4:03
Speaker 3: Just okay, So consumption taxes in theory, like Europeans have
4:08
Speaker 3: a value added tax, technically a form of consumption tax
4:11
Speaker 3: sales taxes, or consumption taxes, we do have consumption taxes.
4:14
Speaker 3: Some states only tax consumption and not income personally, and
4:19
Speaker 3: this comes down to judgment because the evidence is mixed.
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Speaker 3: I think the effects of a consumption tax, well, while
4:24
Speaker 3: they would be regressive, and by that I mean a
4:27
Speaker 3: national sales tax or something like it, they'd probably be,
4:31
Speaker 3: though I can't say the evidence is strong here, less distortionary,
4:35
Speaker 3: less likely to change people's behavior. There incentives. Now, this
4:39
Speaker 3: is gonna make me sound like an old fashioned supply sider,
4:41
Speaker 3: which I am, so I concede that less likely to
4:45
Speaker 3: change people's behavior in unproductive ways than an income tax,
4:48
Speaker 3: and a heck of a lot easier to administer and collect. Personally,
4:51
Speaker 3: I just don't like the income tax. I think it's intrusive.
4:54
Speaker 3: I think it distorts behavior. I think consumption taxes are again,
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Speaker 3: personally the empirical and here I have to admit is
5:01
Speaker 3: mixed a week. Personally, I find it more palatable. My
5:05
Speaker 3: frustration comes from the fact that the President seems too
5:07
Speaker 3: as well he wants. He talks about replacing the income
5:09
Speaker 3: tax with effectively consumption taxes, tariffs, and national sales tax.
5:13
Speaker 3: He's mentioned that once or twice, yet there's never any
5:16
Speaker 3: follow through, which kind of drives me crazy because it's
5:20
Speaker 3: a wonderful idea that I'd like to see experimented with,
5:22
Speaker 3: but probably not going to happen. I don't understand what
5:26
Speaker 3: the purpose, and Chuck and Mike and you talk about
5:28
Speaker 3: this a lot. I don't understand what the purpose of
5:30
Speaker 3: these tariffs is if it's to raise revenue, then you
5:32
Speaker 3: stick with them, stop it with the exceptions. If it's
5:35
Speaker 3: to redirect production to domestic sources, again you got to
5:40
Speaker 3: stick with them and swallow the pain in the short term.
5:45
Speaker 4: I think it's probably more my two cents on it is.
5:47
Speaker 2: It's probably more the latter, which I question as if
5:51
Speaker 2: to that is the most effective way to go about
5:54
Speaker 2: it to encourage US manufacturing, I think all I agree.
5:57
Speaker 2: I think all it does is just have companies bartering
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Speaker 2: and negotiating for exceptions and trying way to find ways
6:04
Speaker 2: to circumvent the tariffs in place, rather than focusing on
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Speaker 2: actually developing US manufacturing or creating sort of fluffy headlines
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Speaker 2: that don't really amount to anything, like oh, we're going
6:14
Speaker 2: to invest billions of dollars to build out these factories
6:17
Speaker 2: in Ohio. But if we revisit that story five years
6:21
Speaker 2: from now, nothing really happens. You know, it's like it's
6:23
Speaker 2: just something that you can chalk up in the wind column,
6:25
Speaker 2: but there's not actually a material impact.
6:27
Speaker 1: Now.
6:27
Speaker 3: I agree it's a second best solution. The first best
6:31
Speaker 3: solution is just subsidized. If that's what you believe, and
6:33
Speaker 3: I don't, but some people do. If you want more
6:36
Speaker 3: manufacturing jobs, just subsidize manufacturing.
6:38
Speaker 4: Biden did it.
6:39
Speaker 3: I didn't like it, but that's one way to do it.
6:41
Speaker 3: It's a far more effective way to get a desired result.
6:44
Speaker 3: I may disagree with the result, but it's more effective.
6:46
Speaker 3: Tariffs are second best because they have all of these
6:49
Speaker 3: undesirable knock on effects, distorting behavior, creating confusion from.
6:55
Speaker 2: A financial, physical, physical buzzet perspective. The idea of the
6:59
Speaker 2: National Sales Tax again, I'm sure I'm putting you on
7:02
Speaker 2: the spot here in terms of how much how much
7:05
Speaker 2: of that could it make up lessening some of the
7:07
Speaker 2: income tax burden.
7:08
Speaker 3: Well, you just have to structure so that it raises
7:11
Speaker 3: the four trillion or so three trillion somewhere between three
7:13
Speaker 3: and four that we raise from income taxes. So if
7:16
Speaker 3: the GDP is about thirty trillion, this is easy math.
7:19
Speaker 3: We'd have to tax our output of goods and services
7:22
Speaker 3: at ten percent. Okay, you can put that on the
7:24
Speaker 3: point of because you want to raise about three trillion.
7:26
Speaker 3: That's how I got that number, very simple, and someone
7:28
Speaker 3: who is better at fiscal policy then me, would tell
7:31
Speaker 3: me why that's too simplistic, probably, but for purposes of this.
7:35
Speaker 4: It's just a back of the envelope, right, Yeah, I
7:36
Speaker 4: think it's fine. I think it's a couple guys. You'd
7:38
Speaker 4: have to just a couple of idiots.
7:42
Speaker 3: You're going where angels fear to tread because they're not
7:46
Speaker 3: aware of their own ignorance. We aren't. You have to
7:49
Speaker 3: raise between three and four trillion. It's just a question
7:51
Speaker 3: of how to make it equitable, because sales taxes are not.
7:54
Speaker 3: If you make ten times as much as I do,
7:58
Speaker 3: your your tax burden is proportionally a lot lower.
8:03
Speaker 2: Yeah, So to play out the string from that, you know,
8:05
Speaker 2: the person making a million dollars would actually net close
8:08
Speaker 2: to a million dollars. I'm just sure there's some of
8:09
Speaker 2: the stuff we'd have to still keep in place there
8:12
Speaker 2: on the tax front. But let's just for conjecture sake, say, hey,
8:14
Speaker 2: you you actually you make a million. You walk away
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Speaker 2: with a million, But as a result of that, many
8:19
Speaker 2: goods that you purchase are going to be more expensive
8:21
Speaker 2: than they were.
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Speaker 4: Previously because of this added tax on there.
8:24
Speaker 2: But for the person making one hundred thousand, that has
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Speaker 2: a distortionary a disproportionate impact obviously for the person making
8:33
Speaker 2: more money versus the person making Yeah.
8:35
Speaker 3: They're going to be paying proportionally a lot less, right
8:39
Speaker 3: because right now our tax system is graduated. If you
8:42
Speaker 3: make more than five hundred thousand dollars, you're at nearly
8:47
Speaker 3: a forty percent rate on every dollar over that amount, Right,
8:50
Speaker 3: so your average tax rate is greater than somebody who
8:54
Speaker 3: makes a lot less. The problem with the consumption tax
8:57
Speaker 3: is that some would have you it. I don't personally,
9:00
Speaker 3: But this comes down to political preference, not really economics,
9:03
Speaker 3: because the evidence here is ambiguous. There are ways to
9:08
Speaker 3: make it more equitable. You can compensate, say, lower earners,
9:12
Speaker 3: for the disproportionate share of the tax burden they have
9:14
Speaker 3: to bear under a consumption tax system. So my point
9:18
Speaker 3: in bringing that up is that the president flirts with
9:20
Speaker 3: the idea, and people like me we perk up and
9:22
Speaker 3: say this is great. Eliminate the income tact. That'd be wonderful.
9:25
Speaker 3: I hate it, not just because I don't like behaving them,
9:27
Speaker 3: but because I hate the way it's administered. And this
9:29
Speaker 3: again all comes down to preference and ideology. But I
9:31
Speaker 3: think that's okay, And then they never follow through on it,
9:34
Speaker 3: and we get we get caught up in this morass
9:37
Speaker 3: of who's going to get exceptions to what changing applicability
9:41
Speaker 3: and rates on tariffs and so forth. And if you're
9:44
Speaker 3: not exhausted from all of this, then then God bless you.
9:47
Speaker 3: You've got great stamina.
9:48
Speaker 4: No I am no, I mean anybody.
9:51
Speaker 2: Just to close out on the auto manufacturing side of things,
9:54
Speaker 2: GM is going to be pulling their profit guidance for
9:57
Speaker 2: the year. This falls in line with many other company
10:00
Speaker 2: out there. They're not the only one to do. Is
10:01
Speaker 2: the airlines have done this and others in the auto
10:05
Speaker 2: manufacturing space as well. They are anticipating. For Q one,
10:10
Speaker 2: they saw that their net income was down six and
10:12
Speaker 2: a half percent. Some of that is due to strong
10:15
Speaker 2: comps against Q one of twenty twenty four, which was
10:17
Speaker 2: post after the auto Workers' union strike, where they had
10:21
Speaker 2: a tremendous amount of rebound in shipments that led to
10:24
Speaker 2: a year over year comparison that was a little bit weaker.
10:28
Speaker 2: They're going to continue to be monitoring the impacts of
10:32
Speaker 2: tariffs and what it will do to their business. So
10:36
Speaker 2: we'll continue to follow what comes out from the auto
10:39
Speaker 2: manufacturers here as we progressed along. We're going to take
10:42
Speaker 2: a quick break here, but we've got a tremendous amount
10:45
Speaker 2: of more things to cover. We had a jolt support
10:48
Speaker 2: come out earlier this morning that we'll talk about, and
10:50
Speaker 2: we'll also talk a little bit about some of the
10:52
Speaker 2: retail giants and how they've managed to keep a lid
10:55
Speaker 2: on prices, but they've warned that's not going to last long.
10:58
Speaker 2: Quick break right after this, we'll have more on the
11:00
Speaker 2: Financial Exchange.
11:02
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12:02
Speaker 2: President g Ggping is trying to turn the world against
12:07
Speaker 2: the US against Trump. As Trump is out there seeking
12:12
Speaker 2: deals with many other countries over this ninety day pause,
12:15
Speaker 2: the president of China, apparently many of his diplomats are
12:18
Speaker 2: going out there and spreading a message to other countries
12:21
Speaker 2: that the US is a bully that cannot be trusted,
12:24
Speaker 2: and they're trying to turn foreign governments against the US
12:28
Speaker 2: within this ninety day window, putting some of these other
12:31
Speaker 2: countries in a challenging position. Obviously, the EU is opposed
12:35
Speaker 2: to tariffs, but also you have just mixed interests here
12:40
Speaker 2: across many of these countries, with some aging countries surrounding
12:45
Speaker 2: China sort of uncertain which side to take, likely leaning
12:49
Speaker 2: towards trying to play the middle ground. And ultimately I
12:53
Speaker 2: don't have a tremendous amount of insight to provide on
12:56
Speaker 2: this story other than that it's very clear that this
12:59
Speaker 2: is shaping up to be a trade war. You have
13:01
Speaker 2: sort of the two sides here. The United States and China,
13:05
Speaker 2: and ultimately the main takeaway I just want to sort
13:08
Speaker 2: of put out there's no one, no one benefits from
13:11
Speaker 2: this at all. It's it is a tremendous amount of
13:14
Speaker 2: time spent to not really drive a whole lot of
13:20
Speaker 2: economic benefit for any of the countries involved here. This
13:25
Speaker 2: is just the beginning of it, but it is, you know,
13:28
Speaker 2: hopefully there's there's some negotiations made and this has resolved swiftly.
13:32
Speaker 2: I'm a little skeptical of that. If it can be,
13:35
Speaker 2: that's fantastic. But the longer it drags on, consumers do
13:39
Speaker 2: not benefit from this, and neither do businesses. And that's
13:42
Speaker 2: you know, ultimately sort of my thoughts here.
13:44
Speaker 3: Yeah, when China is positioning itself as the paragon of
13:48
Speaker 3: law and order in the world, you know you need
13:50
Speaker 3: a new PR firm. Yeah, I mean, we really says
13:53
Speaker 3: our reputation sunk that low. That's what starting trade wars do.
13:57
Speaker 3: I'm not saying that the goal is not legitimate more manufacturing.
14:03
Speaker 4: If that's the goal, maybe it's to replace it. Do
14:04
Speaker 4: you think that is a goal?
14:06
Speaker 3: Yeah, sure, we talked about in the last seventy there
14:08
Speaker 3: are other ways. I'm not for it, by the way,
14:10
Speaker 3: But I'm honest, people can disagree. I just don't know
14:13
Speaker 3: what the objective of the current set of policies, and
14:16
Speaker 3: I'm putting those in huge quotes because they're changing every day.
14:19
Speaker 3: There's no case, no serious case that can be made
14:21
Speaker 3: that what we're seeing here is the execution of a
14:23
Speaker 3: coherent policy. Everything is whimsical. And they would say, well,
14:28
Speaker 3: that's the art of the deal. I'm sorry, the art
14:30
Speaker 3: of the deal ain't working. We got to find a
14:31
Speaker 3: new book or whatever. So there's this underlying confused there's
14:36
Speaker 3: this overriding, I should say, because that's really the crux
14:40
Speaker 3: of the problem. We don't know what the objective is,
14:43
Speaker 3: and the means to achieve that unknown objective, assuming the
14:48
Speaker 3: objective is constant, don't seem to be consistent. So we
14:52
Speaker 3: got to get our own, obviously house in order.
14:56
Speaker 4: I would be certainly more in favor.
14:57
Speaker 2: There are certainly issues of national secure from a manufacturing side,
15:01
Speaker 2: when you talk about semiconductors and other items out there
15:04
Speaker 2: that I can understand the argument for having the need
15:07
Speaker 2: for US manufacturing capabilities, but that's not what but as
15:11
Speaker 2: the presidents it's been so broad, it's been this is
15:14
Speaker 2: broader based. And so when it comes down to items
15:17
Speaker 2: like I'm throwing these out there hypothetically Lincoln logs, as
15:21
Speaker 2: you know, toys kids, toys and shoes and T shirts
15:25
Speaker 2: and some of these other ones that aren't a threat
15:28
Speaker 2: to national security to me from an economic standpoint, I'm
15:32
Speaker 2: not going to sit here and pound the table and
15:34
Speaker 2: say I want those to be manufactured in the US
15:37
Speaker 2: because or if the people who are gonna make that
15:39
Speaker 2: counting argument that they do want it manufactured in the US,
15:42
Speaker 2: that's that's fine. They can absolutely have that opinion, but
15:45
Speaker 2: you just better be willing to pony up because it's
15:48
Speaker 2: gonna cost a whole heck of a lot more if
15:50
Speaker 2: you want it manufactured here.
15:52
Speaker 3: It's it's hard to know what to object to here
15:55
Speaker 3: because the objectives keep changing. I know I'm repeating myself,
15:59
Speaker 3: but I would these exceptions that you talked about in
16:01
Speaker 3: the last segment two inputs to building cars. Wait a minute,
16:05
Speaker 3: I thought the point was to have everything made here.
16:08
Speaker 3: At least that's the sense I got from listening to
16:12
Speaker 3: Trump advance during their.
16:13
Speaker 2: Counter argument, would be allowing time for the parts to
16:17
Speaker 2: be made here.
16:18
Speaker 4: I'm just saying that that would probably I.
16:20
Speaker 3: Think you're saying washing. I love this need. What is
16:24
Speaker 3: it called the neologism when somebody invents a word, I
16:26
Speaker 3: think that's what it's called. Chuck would know. But anyway,
16:28
Speaker 3: I love this new word sain washing. It's we try
16:31
Speaker 3: to make sense of something that is inherently stupid. And
16:34
Speaker 3: this whole Oh no, this is all part of Now
16:36
Speaker 3: we're going to phase this in. Why didn't you say
16:38
Speaker 3: that two weeks ago? It's just I don't sense any
16:42
Speaker 3: consistency coherency. And this isn't just me, it's everybody. If
16:46
Speaker 3: you turn on Bloomberg, CNBC, if you read the Wall
16:48
Speaker 3: Street Journal, the Financial Times, the Economist, What am I
16:51
Speaker 3: leaving out here? Nobody can make heads or tails out of.
16:54
Speaker 3: This is changing every day, and this argument that it's oh,
16:56
Speaker 3: it's five dimensional chess, it's the art of the deal
16:59
Speaker 3: that's just excusing away the incoherency of it. And it's
17:02
Speaker 3: having real economic effects. Thankfully, stocks have bounced back somewhat,
17:07
Speaker 3: but we see the testimony every day from business people
17:11
Speaker 3: who say they can't plan.
17:13
Speaker 2: On the retailer side of things, We've got ten thousand
17:16
Speaker 2: everyday items from some of the big retailers that have
17:18
Speaker 2: been tracked across Walmart, Target, and Amazon, and since the
17:22
Speaker 2: announcement of the initial reciprocal tariff plan on April second,
17:27
Speaker 2: those items across the three major retailers have held steady
17:31
Speaker 2: the ten thousand everyday household items that I'm alluding to there. However,
17:36
Speaker 2: many of the executives from these companies have mentioned that
17:39
Speaker 2: they can only keep prices at the same level for
17:43
Speaker 2: so long. There have been tremendous efforts from them to
17:47
Speaker 2: insist that the suppliers continue to absorb some of the
17:51
Speaker 2: cost increase. You've got data coming out that on Amazon
17:55
Speaker 2: side of things, sixty percent of their sales are from
17:58
Speaker 2: third party sellers, and a large percentage of those those
18:00
Speaker 2: do come from China. We've seen shipments from China plummet.
18:04
Speaker 2: If you look at the Port of Los Angeles, which
18:06
Speaker 2: is a major gateway for imports from China, they saw
18:09
Speaker 2: thirty five percent drop in import volume. A lot of
18:12
Speaker 2: the shipments.
18:13
Speaker 3: From what Amazon's going to start doing.
18:15
Speaker 2: That's something that we talk about that next year should
18:18
Speaker 2: we should get into. Yeah, is that Amazon, just as
18:20
Speaker 2: recently as today announced that they were or it just
18:23
Speaker 2: came out that they were going to list on their
18:25
Speaker 2: site the impact of tariffs on a particular item. The
18:30
Speaker 2: Trump administration Press Secretary Caroline Levitt coming out criticizing them
18:36
Speaker 2: for listing this, calling it a hostile and political act.
18:40
Speaker 5: I'm pretty sure Amazon has come out and refuted that, already.
18:43
Speaker 2: Refuted that it's a it's hostile, or just refuted that
18:46
Speaker 2: they won't do that.
18:49
Speaker 3: But they deal with a sales tax. That's like hiding
18:51
Speaker 3: the sales tax. It's just it's just a tax.
18:54
Speaker 2: The the problem that I had with her rebuttal was
18:57
Speaker 2: that Amazon claiming that Amazon wasn't for frustrated with President
19:00
Speaker 2: Biden win inflation was occurring during his presidency. But we're
19:05
Speaker 2: coming up close to break, so we'll have to dive
19:08
Speaker 2: more into this story because it's reeveloping. It's developing. It's
19:12
Speaker 2: really heated.
19:13
Speaker 4: Up over the course of Stupid too stupid air.
19:16
Speaker 2: The last couple hours here taking a look at markets
19:19
Speaker 2: in relatively mixed territory. Not a tremendous amount, oh slightly down.
19:23
Speaker 2: As we head into the first hour of trading being completed,
19:26
Speaker 2: we'll have a lot more information on the markets and
19:28
Speaker 2: much more with Wall Street Watch right after this break,
19:42
Speaker 2: Like US.
19:42
Speaker 1: On Facebook and follow us on Twitter at TFE show.
19:46
Speaker 1: Breaking business news is always first right here on the
19:50
Speaker 1: Financial Exchange Radio Network. Time now for Wall Stream watch
19:55
Speaker 1: a complete look at what's moving markets so far today
19:58
Speaker 1: right here on the Financial Exchange Radio Network.
20:04
Speaker 5: Well, markets are mixed territory relatively unchanged at the moment
20:08
Speaker 5: as traders monitor ongoing developments on tariffs, including a new
20:12
Speaker 5: report from The Wall Street Journal that President Trump is
20:14
Speaker 5: expected to soften the impact of auto tariffs. Investors are
20:18
Speaker 5: also digesting a new batch of first quarter earnings, including
20:22
Speaker 5: General Motors this morning. Right now, the Dow is up
20:26
Speaker 5: by sixty eight points, s and P five hundred is
20:29
Speaker 5: down by only four points in the NASDAC down by
20:32
Speaker 5: merely eleven points. Russell two thousand is off by about
20:35
Speaker 5: a half a percent, or nine points. Ten yar treasure
20:38
Speaker 5: yield down three basis points and is now at four
20:41
Speaker 5: point one point eight percent, and crude oil is down
20:46
Speaker 5: two percent so far today, trading at sixty dollars in
20:50
Speaker 5: eighty one cents a barrel. General Motors down by three
20:53
Speaker 5: percent after the automaker posted a better than expected profit
20:56
Speaker 5: for the first quarter. However, GM said it was reassessing
21:00
Speaker 5: future guidance and suspending more share buybacks as it awaits
21:05
Speaker 5: clarity on the impact from tariffs. JAM joined several other
21:09
Speaker 5: major companies who recently have withdrawn their full year forecast
21:13
Speaker 5: sighting tariffs. Meanwhile, Coca Cola also reported earnings this morning,
21:18
Speaker 5: beating expectations for the first quarter. The food and beverage
21:22
Speaker 5: Shine also reaffirmed its full year outlook, saying the effects
21:26
Speaker 5: of global trade conflicts should be manageable. Coke is up
21:29
Speaker 5: by about half a percent. Elsewhere a UPS shares down
21:33
Speaker 5: by a third of a percent after the delivery giant
21:35
Speaker 5: beat earning zan revenue expectations for the previous quarter. UPS
21:40
Speaker 5: said it is cutting twenty thousand jobs this year and
21:43
Speaker 5: also declined to update its full year outlook due to
21:46
Speaker 5: you guessed it, macroeconomic uncertainty. Some big news in the
21:50
Speaker 5: drug maker space this morning, where Nova Nordisk said it
21:53
Speaker 5: will offer its weight its weight loss drug we go
21:56
Speaker 5: Vi through telehealth providers Hymns and Hers, RROW and Life
22:00
Speaker 5: MD to expand access to the blockbuster treatment. Hymns and
22:05
Speaker 5: Hers jumping by over nineteen percent, while Novo nor Disc
22:09
Speaker 5: shares are up by three percent. Sticking with that sector,
22:12
Speaker 5: where Pfiser is up by one percent after the pharmaceutical
22:16
Speaker 5: giant revealed it expanded its cost cutting efforts and reported
22:19
Speaker 5: first quarter profit that beat estimates. Pfizer maintained its twenty
22:23
Speaker 5: twenty five guidance but noted it's unable to predict the
22:27
Speaker 5: impact from tariffs at this time. Spotify retreating by seven
22:31
Speaker 5: percent after the music streaming giant added more subscribers than
22:35
Speaker 5: expected but missed earnings expectations, and after today's closing bell,
22:40
Speaker 5: we'll see more earnings, this time from Visa. I'm Tucker
22:44
Speaker 5: Silva and that's Wall Street Watch.
22:46
Speaker 2: Circling back to retail giants. We were covering a breaking
22:50
Speaker 2: story prior to the break where initially there were reports
22:53
Speaker 2: coming out that I believe it was from punch Bowl
22:58
Speaker 2: News is I'm trying to find the source of the
23:00
Speaker 2: initial reports.
23:01
Speaker 3: That how many Pulitzers did the people have.
23:04
Speaker 4: That I AM cleaned up last year.
23:05
Speaker 2: Amazon would be posting the impact of Trump's tariffs and
23:09
Speaker 2: next to the total price of products on their site.
23:11
Speaker 2: The White House Press Secretary coming out and saying that
23:14
Speaker 2: this is a hostile and polk lock by Amazon. But
23:16
Speaker 2: the most recent update to this is that Amazon is
23:19
Speaker 2: fully disputing that notion. So like I, like Tucker mentioned
23:23
Speaker 2: before the break, it's an ongoing story. We'll continue to
23:26
Speaker 2: update listeners as we get more information than that.
23:29
Speaker 5: It's like like exact statement from Amazon. Let's hear the
23:34
Speaker 5: team that runs our ultra low cost Amazon Haul store
23:37
Speaker 5: has considered listening import charges on certain products. This was
23:41
Speaker 5: never a consideration for the main Amazon site, and nothing
23:46
Speaker 5: has been implemented on any Amazon properties.
23:49
Speaker 1: End quote.
23:50
Speaker 3: So if you're the press secretary for the White House,
23:52
Speaker 3: maybe you want to take a step back, take a breath,
23:55
Speaker 3: and say I haven't seen that confirmed by an authoritative source.
23:59
Speaker 3: We have no comment at this time, instead of attack, Yeah,
24:04
Speaker 3: I understand. That's that's the new thing, and that's this is.
24:07
Speaker 3: It doesn't matter what political party you belong to. You
24:10
Speaker 3: try to destroy the credibility of the person asking the question,
24:13
Speaker 3: or deflect and answer it with a slightly different question,
24:17
Speaker 3: like well what about the last guy he did this too.
24:20
Speaker 3: Just just say I haven't seen that anywhere, and we'll
24:23
Speaker 3: comment if appropriate once confirmed.
24:25
Speaker 4: Thank you. Yeah, you learn over it.
24:28
Speaker 2: You learn over your life in relationships, work, environment, and
24:32
Speaker 2: just why significant others that sometimes the best thing is
24:36
Speaker 2: not is not saying anything at all that you don't know.
24:40
Speaker 3: Yeah, exactly, we can't do that here because we're supposed
24:43
Speaker 3: to fill two hours.
24:44
Speaker 4: But you know, you can only go off.
24:48
Speaker 2: You can only go off of what you what you
24:50
Speaker 2: know or what you you know believe to be.
24:54
Speaker 4: You got to get all the information available.
24:55
Speaker 2: You can't have a quick reaction to to anything, so,
25:00
Speaker 2: you know, regardless of that story, in general, I was
25:02
Speaker 2: mentioning before the break that retailers find themselves in a
25:06
Speaker 2: very precarious position where a lot of their goods are
25:09
Speaker 2: imported from overseas, and the behemoths out there, the Walmart
25:13
Speaker 2: Targets and Amazon of the world, have been holding prices
25:17
Speaker 2: study but mentioning that they can only do it for
25:21
Speaker 2: so long before we start to see the impact of
25:24
Speaker 2: higher prices push through to this consumers.
25:28
Speaker 3: This is the point of tariffs. It's supposed to become
25:31
Speaker 3: punitively prohibitively expensive to buy imported stuff. Yep, So you
25:35
Speaker 3: switch to and by the way, the price of substitutes
25:37
Speaker 3: will go up to because our demand for things produced
25:40
Speaker 3: here to the extent that they are, and they aren't yet.
25:42
Speaker 3: But this is the whole point of tariffs to raise revenue,
25:45
Speaker 3: they have to cost They have to raise costs. Now,
25:48
Speaker 3: some would say, no, no, that's paid by suppliers, but
25:50
Speaker 3: we know that's actually not the case. People who've invented,
25:53
Speaker 3: people have looked extensively at tariffs over the decades, know
25:58
Speaker 3: that ultimately consumers pay them the sales taxes.
26:01
Speaker 4: And that's the whole point.
26:02
Speaker 2: In addition to concerns about potentially inflationary price increases over
26:07
Speaker 2: the course of the next several months, the focus has
26:10
Speaker 2: also been on trying to glean anything from hard economic data.
26:14
Speaker 2: A lot of what we've talked about, it feels like
26:16
Speaker 2: for the last month plus has been more sentiment based,
26:19
Speaker 2: where obviously, if you look at polling, whether it's the
26:22
Speaker 2: University of Michigan Consumer Sentiment Survey and others out there,
26:26
Speaker 2: there's a lot of pessimism around surrounding investors and business
26:30
Speaker 2: owners around the country, but we haven't seen any hard
26:33
Speaker 2: economic impacts as to a deterioration of the economy. Now
26:37
Speaker 2: we're going to get tomorrow the reporting from the first
26:41
Speaker 2: quarter GDP numbers, which a lot of that won't fully
26:45
Speaker 2: assume some of the tariff information that we've seen in
26:47
Speaker 2: the month of April necessarily, but we did get a
26:51
Speaker 2: Joltz report today, So this is a job's opening report.
26:54
Speaker 2: This data is based on what we saw for the
26:58
Speaker 2: month of March. It was in tis pated that there
27:00
Speaker 2: would be seven point five million jobs job openings for
27:04
Speaker 2: the month of March. The number that posted this morning
27:07
Speaker 2: was seven point two million. That's the lowest in the
27:10
Speaker 2: last six months, and of course well below market expectations
27:13
Speaker 2: of seven and a half million. This number peaked back
27:16
Speaker 2: in March of twenty twenty two at twelve million. In
27:19
Speaker 2: terms of the number of jobs openings across the country,
27:22
Speaker 2: more recently, over the course of the last several months,
27:25
Speaker 2: it was sitting around seven point seven million in the
27:28
Speaker 2: month of January, and the most recent peak would be
27:32
Speaker 2: cresting over eight million for November of twenty twenty And this.
27:35
Speaker 3: Is one of those numbers that you may be wondering
27:37
Speaker 3: when did people start talking about jolts. I don't remember
27:40
Speaker 3: learning about this in college when they told us about
27:42
Speaker 3: the unemployment right. And you're absolutely right if that's your reaction.
27:46
Speaker 3: Unemployment is the traditional labor market slack, if you will,
27:51
Speaker 3: a variable that economists use in their models that explain
27:56
Speaker 3: and attempt to predict for those who do that type
27:58
Speaker 3: of thing, inflation. At some point this job opening's labor
28:02
Speaker 3: turnover survey that Paul you talked about started to do
28:05
Speaker 3: a little bit better job keeping up with the change
28:07
Speaker 3: in inflation than the traditional unemployment rate, so it improved
28:13
Speaker 3: forecasting ability that relationship could break down. By the way,
28:16
Speaker 3: it's these forecasting models that researchers use are notorious for
28:22
Speaker 3: just stopping in terms of effectiveness, ceasing to work well
28:26
Speaker 3: at some point. But the reason we talk about it
28:28
Speaker 3: is that at some point in the last several years
28:30
Speaker 3: actually goes back a little bit farther than that, it
28:32
Speaker 3: became apparent that job openings do a slightly better job
28:36
Speaker 3: in terms of their relationship with inflation of representing how
28:40
Speaker 3: much slack there is in the labor market than unemployment.
28:43
Speaker 3: That's why it's closely watched. But as you suggested, one
28:48
Speaker 3: months or even three months worth of data is often
28:51
Speaker 3: not enough to discern a trend from, so a lot
28:55
Speaker 3: of this data, like you're going to talk about GDP
28:58
Speaker 3: tomorrow morning, or Chuck and Mike whoever ends up talking
29:00
Speaker 3: about it, will very hard to read too much into
29:04
Speaker 3: that we won't really understand the full impact of tariffs,
29:08
Speaker 3: how severe or not they are, for several months, maybe
29:11
Speaker 3: a year.
29:12
Speaker 2: I want to take a quick break here, but when
29:15
Speaker 2: we come back from break, I want to talk a
29:16
Speaker 2: little bit about what to expect from Friday's jobs report.
29:19
Speaker 2: This is going to be the unemployment report that categorizes
29:23
Speaker 2: all the activity that we've seen in the month of April.
29:25
Speaker 2: Really important for us to see what that looks like
29:28
Speaker 2: come Friday, so we're going to preview that right after
29:30
Speaker 2: this break here on the Financial Exchange.
29:32
Speaker 4: Stick with us.
29:34
Speaker 1: The global trade war has royal markets and a recession
29:37
Speaker 1: could be next. Keep it here for breaking business news
29:40
Speaker 1: and complete market updates on the Financial Exchange Radio Network.
29:45
Speaker 1: The Financial Exchange is now available on your Alexis smart
29:48
Speaker 1: speaker has to play the Financial Exchange and catch up
29:51
Speaker 1: on anything you might have missed. This is the Financial
29:54
Speaker 1: Exchange Radio Network.
30:06
Speaker 2: Coming back from break here, I mentioned that we have
30:09
Speaker 2: an important jobs report that will be released on Friday morning,
30:13
Speaker 2: which will give us an insight as to what the
30:16
Speaker 2: labor market looked like in the month of April. We
30:20
Speaker 2: talked prior to the break about the Jolts Report, The
30:23
Speaker 2: jobs opening report that was just released this morning coming
30:26
Speaker 2: in lower than anticipated seven point two million jobs versus
30:30
Speaker 2: the estimates of seven point five million. Coming up for Friday,
30:34
Speaker 2: we had two hundred and twenty eight thousand jobs added
30:37
Speaker 2: in the month of March. The projections from economists for
30:41
Speaker 2: the month of April will be for one hundred and
30:44
Speaker 2: thirty three thousand jobs to be added. It is anticipated
30:47
Speaker 2: that the unemployment rate will continue to hold steady at
30:51
Speaker 2: four point two percent. There are concerns out there though,
30:54
Speaker 2: if we were to show a number significantly lower than
30:57
Speaker 2: the one hundred thirty three thousand that has anticipated, that
31:00
Speaker 2: could stoke further fears that we are in fact in
31:04
Speaker 2: a economic slowdown. I think it's always important to point
31:08
Speaker 2: out that this may just be one data point, and
31:12
Speaker 2: it's not necessarily something that.
31:14
Speaker 4: With all these reports.
31:16
Speaker 2: You have to look for a trend over multiple reports
31:19
Speaker 2: rather than just saying, oh, tomorrow is make or break.
31:22
Speaker 4: Necessarily, however, it could be the start of a.
31:25
Speaker 2: Trend for a data series to point to the fact
31:28
Speaker 2: that the labor market is weakening. We don't know what
31:30
Speaker 2: the numbers are going to look like, but if the
31:32
Speaker 2: numbers come in weak and then that persists over the
31:36
Speaker 2: course of subsequent months, for the month of May and June.
31:39
Speaker 2: Then you begin to create a bunch of ammo to
31:42
Speaker 2: indicate that the labor market is perhaps slowing down. The
31:47
Speaker 2: sentiments that you're getting from a lot of executives out
31:50
Speaker 2: there and surveys that are done that businesses are tidening
31:55
Speaker 2: their belts, holding back on investment, not being as ambitious
31:59
Speaker 2: in terms of the hiring goals. Again, like I talked
32:02
Speaker 2: about earlier in the show, this is all sentiments. So
32:04
Speaker 2: when you get these types of reports, that's when you
32:06
Speaker 2: can actually put some numbers behind what is general economic
32:10
Speaker 2: sentiment at the moment.
32:12
Speaker 3: Yeah, the point you made, I think about extracting a
32:15
Speaker 3: trend from data being a tricky exercise is probably the
32:19
Speaker 3: best one. A big enough movement might be suggestive of
32:23
Speaker 3: a change, and unemployment doesn't have a trend, so I
32:27
Speaker 3: should qualify my language there a little bit. The unemployment
32:30
Speaker 3: rate just kind of bunces around. There can be years
32:31
Speaker 3: like the seventies when it goes up, or like the
32:33
Speaker 3: eighties when it comes down, but it's pretty trendless over
32:36
Speaker 3: the decades. But over the short term there are tendencies
32:40
Speaker 3: that can be indicative of where we are in the
32:42
Speaker 3: business cycle, that relationship between growth and recession, the phases
32:48
Speaker 3: of which we call the business cycle. But unemployment is
32:51
Speaker 3: backward looking, so it's not all that helpful, and as
32:55
Speaker 3: you suggested, it'll be several months before we know what
32:57
Speaker 3: the impact of recent policy the chaos has been on
33:02
Speaker 3: the job market.
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34:08
Speaker 2: We spent a lot of the show talking about just
34:10
Speaker 2: some of the major economic reports that we're seeing this
34:14
Speaker 2: week that we're really focused on, whether it be a
34:16
Speaker 2: little bit of an update on the inflationary front. We'll
34:19
Speaker 2: get a report tomorrow on PCE, which is the preferred
34:23
Speaker 2: measure for the Fed on inflation. We talked about the
34:26
Speaker 2: labor market report set to come out on Friday, as
34:28
Speaker 2: well as GDP to come out tomorrow. We're also in
34:30
Speaker 2: the midst of a very important earnings week where we
34:34
Speaker 2: have some of the biggest contributors to the S and
34:36
Speaker 2: P five hundred reporting this week. We will get Microsoft
34:40
Speaker 2: and Meta reporting earning their earnings tomorrow, as well as
34:44
Speaker 2: Amazon and Apple on Thursday. And Tucker had posed us
34:49
Speaker 2: this question as to because there's so many significant reports
34:52
Speaker 2: coming out this week, what each you and I feel
34:56
Speaker 2: is the most significant one this week? And I'll kick
34:58
Speaker 2: off that with the job support that we were speaking
35:01
Speaker 2: about previously, in my opinion, is the one that I
35:04
Speaker 2: will be most focused on because a lot of the
35:06
Speaker 2: other reports that we're mentioning here, whether it be the
35:08
Speaker 2: Q one GDP numbers are sort of backward looking where
35:11
Speaker 2: you can't really fully assess the impact of all the
35:15
Speaker 2: tariff policy changes. And not to say that the job
35:17
Speaker 2: report is going to capture all of that, but it
35:19
Speaker 2: will capture some of that. So that's what I will
35:22
Speaker 2: be most keen to focus on in terms of what
35:26
Speaker 2: number comes out there on the jobs report front?
35:29
Speaker 4: Was that was that? The question?
35:30
Speaker 1: Was it?
35:31
Speaker 3: What of this week's releases, everything we're seeing during this
35:35
Speaker 3: busy week, whether it's economic data points or or one compact,
35:40
Speaker 3: what is the most important in your point of view?
35:43
Speaker 3: M I'm not sure it's the right question, to be honest,
35:46
Speaker 3: what's the right I always answer a question by telling
35:48
Speaker 3: you it's not the right question.
35:49
Speaker 4: Thanks.
35:49
Speaker 3: It's probably a very bad trait, not a very endearing
35:53
Speaker 3: trait here, So what is Yeah? I just I don't
35:56
Speaker 3: know that any of them should matter any more than
35:58
Speaker 3: any others unless there's a big surprise for reasons that
36:02
Speaker 3: we've been discussing it will take a lot more data
36:05
Speaker 3: to extract uh a signal, if you will. As some
36:09
Speaker 3: researchers like to say, from the noise of the month
36:11
Speaker 3: to month, my answer is going to be just look
36:14
Speaker 3: at the stock market, because it's updated every millisecond with
36:17
Speaker 3: everybody's best guess about future profits. So my sort of
36:22
Speaker 3: pre prepared answer, not realizing that what you meant was
36:25
Speaker 3: of this week's releases, would have just been keep looking
36:28
Speaker 3: at equities. There's a lot of information contained in the
36:32
Speaker 3: overall price of the market as proxied by say the
36:35
Speaker 3: S and P five hundred. But that said gun to
36:37
Speaker 3: my head, I don't know. Maybe GDP, but that is
36:41
Speaker 3: expected to be so contaminated with one offs as to
36:46
Speaker 3: be useless by people who follow it closely.
36:49
Speaker 4: So I don't know. Tucker and Paul great answer.
36:53
Speaker 3: Well, you want the honest answer you want, you want
36:57
Speaker 3: from the from the radio host said, but more, we
36:59
Speaker 3: can not say that on the progress. What do you
37:02
Speaker 3: want phony certain you want phony certainty? Go to church.
37:06
Speaker 3: This is this is a place for economic I'm sorry,
37:09
Speaker 3: I do.
37:10
Speaker 4: No, but you can That's what I reserve.
37:11
Speaker 2: I can always say, we will see the way I
37:15
Speaker 2: phrased mind was that you're saying basically, hey, we'll we'll
37:19
Speaker 2: see you have to see if it's a longer trend series.
37:22
Speaker 2: And I kind of preface the job support by saying, hey,
37:24
Speaker 2: I'm most interested in this one because it could be
37:27
Speaker 2: the start of a trend of something on the employment front.
37:29
Speaker 2: Not saying that this is the end all, be all
37:31
Speaker 2: job support, but I'm interested in it because it could
37:34
Speaker 2: point to a trend that you could maybe make that
37:37
Speaker 2: argument for any other month, but I would argue that
37:39
Speaker 2: perhaps in this month, don't more sensitive than others.
37:42
Speaker 3: I don't know is that I don't think any anyone
37:44
Speaker 3: data point as a forecaster or someone who does it
37:46
Speaker 3: sort of on the side, no one data point jumps
37:48
Speaker 3: out at you and you say, unless you're looking for
37:50
Speaker 3: a break in a series, there are methods you can
37:52
Speaker 3: use to find a break in a series. They're a
37:55
Speaker 3: statistical method you can use that ask was it different
37:58
Speaker 3: before than after? You need it before and after? What
38:01
Speaker 3: about identify a break.
38:02
Speaker 4: In March March of twenty twenty during COVID that's a
38:05
Speaker 4: labor You only know.
38:06
Speaker 3: That because well number one, there was a big event
38:09
Speaker 3: happening around it.
38:10
Speaker 1: We can talk more about it after the break.
38:12
Speaker 4: So all the time that we have for the first
38:13
Speaker 4: hour here the financial exchange. But stick with us.
38:15
Speaker 2: We have a lot more material to cover in the
38:17
Speaker 2: second hour of the show, right after this break.