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Can earnings season reverse the current market dip? · The Financial Exchange Show

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Speaker 1: Zada and Mike Armstrong.
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Speaker 2: Our two of the Financial Exchange. Chuck, Mike and Tucker
1:12
Speaker 2: with you. We got mixed trading today. The Dow is
1:14
Speaker 2: up one hundred and thirty nine points, so that's fun.
1:17
Speaker 2: The SMP is down thirty four points, not quite as fun.
1:21
Speaker 2: The NASDAK down two hundred and fifty six points, about
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Speaker 2: one point three percent, and so Tech largely feeling the
1:29
Speaker 2: bulk of the pain today in particular, and Nvidia and
1:32
Speaker 2: Apple both down about two and a quarter percent as
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Speaker 2: we speak right now. But Google, Meta, Tesla, Microsoft all
1:39
Speaker 2: in negative territory as well, and so you've got kind
1:43
Speaker 2: of this funky thing happening, which again it's not like crazy,
1:46
Speaker 2: This stuff does happen occasionally. But right now, if you'll
1:49
Speaker 2: get the S and P five hundred, you actually have
1:50
Speaker 2: forty six more issues that are advancing compared to declining,
1:54
Speaker 2: and yet the index is down point six percent because
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Speaker 2: the big names are getting whacked and they of such
2:00
Speaker 2: an outsize importance in that index at the moment. So
2:04
Speaker 2: that's what's going on in equity markets. Ten year US
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Speaker 2: Treasury is up one point six basis points right now
2:10
Speaker 2: to four point seventy nine percent. Oil up another dollar
2:14
Speaker 2: eighty three a barrel, sitting at seventy eight forty on
2:19
Speaker 2: West Texas intermediate triple a national average for gas prices,
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Speaker 2: though falling somehow over the weekend, down one two tenths
2:26
Speaker 2: of ascent to three zero six and five tenths, So
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Speaker 2: even with rising oil prices, gas prices as a whole
2:32
Speaker 2: falling for the nation. And then when we take a
2:36
Speaker 2: look at gold, we've got gold off thirty one sixty
2:39
Speaker 2: an ounce right now to twenty six eighty three and
2:42
Speaker 2: forty cents. Mike Stephen Meron, who is the chair of
2:48
Speaker 2: the Council of Economic Advisors for incoming President Trump, is
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Speaker 2: someone who I've followed on social media for I don't know,
2:56
Speaker 2: probably five six seven years at this point. Smart dude,
2:59
Speaker 2: you know, he knows his stuff and has kind of
3:02
Speaker 2: an unorthodox approach to the potential for implementing tariffs. Was
3:08
Speaker 2: talking about it is, you know, as long ago, as
3:11
Speaker 2: far back as you know, at least a year or
3:13
Speaker 2: two from the readings that I did on kind of
3:16
Speaker 2: what he was talking about then. But he's pretty much,
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Speaker 2: and I've said this over and over, he is making
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Speaker 2: a case for implementing widespread broad based tariffs as a
3:30
Speaker 2: way to help rectify some of the trade imbalances that
3:35
Speaker 2: have popped up over the last thirty forty years. What
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Speaker 2: is the case that he makes for them.
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Speaker 3: Well, before we get there, I do want to make
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Speaker 3: one two points about this. One clearly a trusted advisor
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Speaker 3: to Trump. Two know, like you mentioned PhD trained economists
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Speaker 3: from Harvard University. I'm guessing you can count the number
3:54
Speaker 3: of PhD economists trained at Harvard who believe in tariffs
3:59
Speaker 3: as like a core, fundamental good thing for the economy
4:03
Speaker 3: on like one or two hands. It's probably a small minority.
4:07
Speaker 3: But his argument is pretty clear that yeah, you go,
4:12
Speaker 3: you implement tariffs, and you use the income to support
4:16
Speaker 3: the development of certain industries and protect certain industries as well.
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Speaker 3: And so he very much. I don't think he's got
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Speaker 3: the blinders on right. Frequently we talk about people who
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Speaker 3: speak about tariffs and don't really acknowledge the fact that
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Speaker 3: they can be a tax on goods for the American people,
4:36
Speaker 3: that Americans end up paying that in higher prices.
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Speaker 4: And I don't think he has any.
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Speaker 3: Sort of blinders on that on that reality when it
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Speaker 3: comes to the use of tariffs.
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Speaker 4: I think His argument is mainly that it's worth.
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Speaker 2: It, and I think he's in a very realistic spot
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Speaker 2: on this, and it kind of shares I think he
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Speaker 2: shares my view in that I'll quote him here on this.
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Speaker 2: He says, Look, there's a path by which these policies
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Speaker 2: can be implemented without material adverse consequences, but it's narrow,
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Speaker 2: and so he's saying, look, this is something where there
5:07
Speaker 2: is risk to this. It's not just Hey, this is
5:09
Speaker 2: going to be all pie in the sky and it'll
5:11
Speaker 2: all be fine and there will be no problems. He's saying, yeah,
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Speaker 2: that there might be and most likely are some adverse
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Speaker 2: consequences that occur as a result of this. It's not
5:21
Speaker 2: trying to pretend that nothing bad happens if you implement this,
5:26
Speaker 2: but much more, Hey, this is something that he believes
5:29
Speaker 2: is important to try to do. And this is also
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Speaker 2: something where we've heard the President elect talk about this
5:36
Speaker 2: as well. And I can't stress enough I've said this
5:39
Speaker 2: over and over for the last two months now that
5:43
Speaker 2: all of the chatter that you are hearing out there
5:47
Speaker 2: from members of the incoming president's team on the economy
5:52
Speaker 2: are talking about doing this stuff very seriously. And it's
5:56
Speaker 2: not to say that it's going to be easy. It's
5:58
Speaker 2: not to say that it's it's definitely going to work.
6:00
Speaker 2: We don't know, But I think you have to believe
6:05
Speaker 2: them that they are going to try and if not,
6:09
Speaker 2: like if if they get in and it's like, well,
6:11
Speaker 2: we thought about it and we decided not to okay,
6:14
Speaker 2: then we can actually have the conversation about what are
6:16
Speaker 2: we doing here. But otherwise, I think that you really
6:19
Speaker 2: need to believe that there's something coming here, because that's
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Speaker 2: what they're telling you. That's what they are, you know,
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Speaker 2: showing you in terms of who they're putting in different positions,
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Speaker 2: And I think that you have to believe that it's
6:33
Speaker 2: it's something that's going to come to fruition, and we're
6:35
Speaker 2: just gonna have to see how it works out based
6:37
Speaker 2: on the implementation and subsequent responses and how it evolves
6:41
Speaker 2: over time. Remember this isn't just going to be well,
6:45
Speaker 2: we implemented tariffs on day one and we just let
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Speaker 2: them sit for four years. There are going to be
6:50
Speaker 2: responses by other countries. There will be counter responses by
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Speaker 2: the US, there will be counter counters by you know,
6:57
Speaker 2: the other countries. It's going to be a state of
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Speaker 2: evolution throughout the term, and I think that we need
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Speaker 2: to be aware of that. It's not just well we
7:06
Speaker 2: did this and now like we'll just see how it goes. No,
7:08
Speaker 2: like it's it's gonna be changing quite frequently. I think
7:11
Speaker 2: in terms of companies and other countries that you know,
7:15
Speaker 2: you try to gain the system. Okay, can we in
7:17
Speaker 2: order to get around these tariffs? Can we you know,
7:19
Speaker 2: set up a subsidiary here that can do this? These
7:23
Speaker 2: are the things that every big company is talking about
7:26
Speaker 2: right now, and we're just gonna have to see how
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Speaker 2: it plays out. But there's there is something here that's
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Speaker 2: going to be happening. And I don't think this is
7:36
Speaker 2: just for show, Chuck.
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Speaker 3: We've talked a little bit about, you know, policies from
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Speaker 3: an incoming Trump administration to US at least have read
7:44
Speaker 3: as short term.
7:46
Speaker 4: Pain for long term gain.
7:47
Speaker 3: And yes, forge some of Trump's closest advisors talk about that.
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Speaker 4: Elon Musk had a tweet about it.
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Speaker 3: Is there anything I guess first, is there anything about
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Speaker 3: Moran's statements or viewpoints that read differently on that to you?
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Speaker 3: Because again, my sense is that he's going in eyes
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Speaker 3: wide open, and acknowledges that it's going to be a challenge.
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Speaker 2: No, I mean, I think that's that's very much what
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Speaker 2: he is saying here. And again, just as an example,
8:17
Speaker 2: one of the things he talks about is, look what
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Speaker 2: happens if another country retaliates against the US with other tariffs.
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Speaker 2: And this is from Miron's own writing. He said that
8:27
Speaker 2: the Trump administration could declare that it views Joint Defense
8:30
Speaker 2: Obligations and the American Defense Umbrella as less binding or
8:33
Speaker 2: reliable for nations which implement retaliatory tariffs, So basically saying,
8:37
Speaker 2: find if you tariff us, then we're not going to
8:40
Speaker 2: necessarily defend you militarily. Now that this gets at a
8:44
Speaker 2: whole host of other questions and potential issues, then as
8:47
Speaker 2: far as okay, if you're not going to defend us militarily,
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Speaker 2: what kind of economic cooperation do we want? So again,
8:53
Speaker 2: this is how you kind of have to, you know,
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Speaker 2: play this all out and see how it ends up
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Speaker 2: working here, because you don't know what actually ends up
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Speaker 2: coming out of this in terms of policy. But Moran
9:07
Speaker 2: is going in saying, look, these are things that we
9:09
Speaker 2: are going to potentially consider. Are they going to work?
9:13
Speaker 2: Are they the best solutions. There's so many permutations of
9:17
Speaker 2: where this could go. I have no idea. I have
9:20
Speaker 2: absolutely no idea it's but when it does.
9:23
Speaker 3: We can say definitely, it's very different from the last
9:26
Speaker 3: fifty years of economic policy.
9:28
Speaker 2: When you see things implemented, then we will be able
9:30
Speaker 2: to say, Okay, here's our baseline, here's how things evolved,
9:33
Speaker 2: and here's what happened. But as to like exactly what's
9:37
Speaker 2: gonna go down or exactly whether it's gonna work or not,
9:40
Speaker 2: I've got no clue. And I'm not afraid to say that.
9:43
Speaker 2: I'm not gonna sit here and be like, no, this
9:44
Speaker 2: could never work. I'm also not gonna sit here and say, yes,
9:47
Speaker 2: this is definitely going to and it's gonna be great.
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Speaker 2: Like wide range of outcomes here, it's it is, it
9:54
Speaker 2: is going to be. It's gonna be a wild ride,
9:59
Speaker 2: and I think what we have to be prepared for
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Speaker 2: and we'll see where things go. To take a quick break.
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Speaker 2: When we come back, we've got trivia, and then we'll
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Speaker 2: touch on the upcoming earning season kicking off later this week.
10:11
Speaker 2: What are expectations looking like. We'll fill you in after this.
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Speaker 5: Let's do a little bit of trivia here on the
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11:37
Speaker 2: Mike, if we take a look at the upcoming earning season,
11:40
Speaker 2: which by the way, kicks off pretty much like later
11:43
Speaker 2: this week, a out of the bank start to report.
11:45
Speaker 2: We got JP Morgan and Wells Fargo on Wednesday, Bank
11:48
Speaker 2: of America, Morgan Stanley, Pncio's Bancorp on Thursday, so you're
11:52
Speaker 2: kind of getting right into it. The next couple weeks
11:55
Speaker 2: after that is when you start to get the heavy hitters,
11:57
Speaker 2: So last week in January and then first two and
11:59
Speaker 2: five February, or really the core of the earning season.
12:03
Speaker 2: But in terms of the projections, in terms of what's
12:07
Speaker 2: expected right now for Q four of last year, and
12:10
Speaker 2: this according to fact Set Earnings Insight, the estimated earnings
12:15
Speaker 2: growth rate for the S and P five hundred is
12:17
Speaker 2: eleven point seven percent. If it comes in at that number,
12:21
Speaker 2: it's gonna be the fastest year over year growth rate
12:24
Speaker 2: since Q four of twenty twenty one, So quick clip.
12:28
Speaker 2: The long term historical average, just in case anyone is wondering,
12:33
Speaker 2: is right around seven percent. I don't know exactly where
12:35
Speaker 2: it's like plus or minus, you know, a quarter percent
12:37
Speaker 2: or something, but seven percent is kind of the long term,
12:40
Speaker 2: like seventy eighty year trend in earnings growth, So you're
12:45
Speaker 2: expecting eleven point seven percent. Of companies that have talked
12:49
Speaker 2: about their Q four innings beforehand, seventy one have issued
12:53
Speaker 2: negative EPs guidance, thirty five have issued positive EPs guidance.
12:58
Speaker 2: So it is something where you've had some companies coming
13:01
Speaker 2: out and saying, yeah, this is gonna be a little
13:02
Speaker 2: bit worse than you know, maybe we expected here. But overall,
13:06
Speaker 2: the other thing is that earnings expectations. I know this
13:09
Speaker 2: is not for this quarter, but for calendar year of
13:12
Speaker 2: twenty five. Analysts, and this is again from facts at
13:16
Speaker 2: Earnings Insight, analysts are projecting earners you're worth a fourteen
13:19
Speaker 2: point eight percent and for calendar yar twenty six thirteen
13:22
Speaker 2: point six. So you're talking that the growth that is
13:26
Speaker 2: projected the next two years is extremely, extremely high. And
13:33
Speaker 2: I think the only question that matters for the stock
13:37
Speaker 2: market is can it deliver those Because if it can,
13:43
Speaker 2: then you know it's gonna be just fine, Like, yeah,
13:45
Speaker 2: you have hiccups in this and that, but it'll be fine.
13:48
Speaker 2: If it can't, then you got some real dodginess here,
13:51
Speaker 2: because you got a stock market that's priced expensively still,
13:54
Speaker 2: and so earnings and being able to deliver them is
13:58
Speaker 2: huge right now in a market that has priced this
14:00
Speaker 2: expensively with those kinds of projections baked in, so, as.
14:05
Speaker 3: You pointed out, these are well above long term trend
14:09
Speaker 3: and will be certainly difficult to deliver on. In addition,
14:13
Speaker 3: there's this fun game we play where earnings expectations for
14:17
Speaker 3: the long term are always higher than they end up
14:19
Speaker 3: being when we get closer. I know, for Q four
14:22
Speaker 3: back in September, we were expecting fourteen and a half
14:24
Speaker 3: percent earnings growth. Now it's down to what do you
14:26
Speaker 3: say below twelve? Yes, So there is that fun game
14:30
Speaker 3: we play. So it probably won't.
14:31
Speaker 4: Live up to those expectations.
14:33
Speaker 3: If you're going to take the positive outlook on this look,
14:35
Speaker 3: Consumers are still clearly out there spending. It was a
14:39
Speaker 3: good holiday shopping season. Unemployment once again dipped a little
14:42
Speaker 3: bit lower, and the big loud complaints that I had
14:46
Speaker 3: heard about inflation and prices and a real backlash against
14:49
Speaker 3: retail over the last few years is still continuing, but
14:54
Speaker 3: not in the same way that I think we saw
14:55
Speaker 3: it in say twenty two and twenty twenty three. On
15:01
Speaker 3: the big picture side of you know, some of the
15:03
Speaker 3: largest companies out there, I don't see any signs of
15:06
Speaker 3: slow down and demand for semiconductors.
15:09
Speaker 4: There's certainly a slow down.
15:10
Speaker 2: You had a story this morning, but say again, you
15:14
Speaker 2: had a story this morning. It's a report that was
15:17
Speaker 2: out that some customers are starting to pull back on
15:21
Speaker 2: in vidio orders. So that was floating around this morning.
15:25
Speaker 2: I don't know if there's any like there was very
15:27
Speaker 2: little detail in it in terms of, uh, you know,
15:31
Speaker 2: exactly what was going on there, but it was something
15:36
Speaker 2: where again I'll just it wasn't even in vidio orders specifically.
15:41
Speaker 2: This is from Reuter's in Video's top customers are delaying
15:43
Speaker 2: orders of the AI chip leader's latest Blackwell racks due
15:46
Speaker 2: to overheating issues. So not necessarily a demand thing, but
15:49
Speaker 2: maybe a performance thing. And so that's part of the
15:53
Speaker 2: reason why in video has been down today in trading.
15:56
Speaker 3: But aside a counterpoint to what I just said too,
15:58
Speaker 3: I mean, the Biden Ministry in its last few days
16:01
Speaker 3: here just issued a whole bunch of new curbs on
16:04
Speaker 3: the latest AI chips and basically carved out exemptions for
16:08
Speaker 3: eighteen of our closest allies, but for pretty much every
16:11
Speaker 3: other country out there put in this new series of
16:13
Speaker 3: rules when it comes to developing AI data centers and
16:18
Speaker 3: the chips that they would need to power them. So yeah,
16:21
Speaker 3: they again, I don't think we honestly know. I don't
16:24
Speaker 3: think anybody honestly knows what the Trump administration's approach is
16:27
Speaker 3: going to be to these to these same sectors.
16:31
Speaker 2: And so look, this has been something where this is
16:36
Speaker 2: kind of the weird stuff that you might see this year.
16:39
Speaker 2: This is something that's a possibility. Is Hey, the market
16:43
Speaker 2: leadership for the last couple of years, absent you know,
16:45
Speaker 2: a brief period in the second half of last year,
16:48
Speaker 2: has been tech stocs specifically like AI and semiconductor. And
16:53
Speaker 2: so you have this thing. If you look at what's
16:55
Speaker 2: going on today, the S and P five hundred is
16:57
Speaker 2: down a little over half percento point five to four
17:00
Speaker 2: percent right now. If you look at the equal weight
17:03
Speaker 2: at S and P five hundred at this very moment,
17:07
Speaker 2: right now today, it is actually up a quarter percent.
17:13
Speaker 2: Because that is yes, So that's probably here's the premise
17:18
Speaker 2: the S and P five hundred is what we call
17:19
Speaker 2: a market cap weighted index, which means that in Video,
17:23
Speaker 2: which has a market cap of like three trillion dollars,
17:26
Speaker 2: makes up a whole lot more than Let's see, what's
17:30
Speaker 2: the smallest one I can find here just looking at it,
17:32
Speaker 2: Alliant Energy Corp. Okay, which is, let's see how big
17:37
Speaker 2: they are. They are a fourteen billion dollar company. There's
17:42
Speaker 2: way more in Vidia in the S and P five
17:44
Speaker 2: hundred than Alliant, just because they are bigger by market cap.
17:48
Speaker 2: But what you can also do if you want, is
17:50
Speaker 2: you can say, look, I don't want to look at
17:51
Speaker 2: you know, the S and P five hundred by market capitalization.
17:55
Speaker 2: Just give each company one five hundredth of a waiting
17:58
Speaker 2: and show me what the index does. And if you
18:01
Speaker 2: do that today, where your big companies like Nvidia and
18:03
Speaker 2: Apple and Meta are down so much, if you look
18:07
Speaker 2: at it on an equal weighted basis, where each one
18:09
Speaker 2: is just one five hundredth of the index instead of
18:11
Speaker 2: you know, market cap weighted, the S and P five
18:14
Speaker 2: hundred today would actually be up about a quarter of
18:18
Speaker 2: a percent right now. And so this could be one
18:21
Speaker 2: of the paths that you potentially end up taking this
18:23
Speaker 2: year where you say, look, the things that have done
18:26
Speaker 2: well for you in the last couple of years, they're
18:28
Speaker 2: going to struggle, and so the index as a whole
18:30
Speaker 2: may struggle, but some of the other stuff that may
18:34
Speaker 2: have lagged the last couple of years, maybe that's finally
18:37
Speaker 2: like management's gotten its act together and they start doing
18:40
Speaker 2: a little bit better. And so you might have something
18:42
Speaker 2: where hey, last year, it was one of the worst
18:45
Speaker 2: years ever for S and P five hundred components to
18:48
Speaker 2: actually beat the index. I think it was fewer than
18:50
Speaker 2: twenty percent of components actually beat the index because it
18:54
Speaker 2: was again just a handful of stocks that in the
18:57
Speaker 2: first half of last year really drove performance this year.
19:01
Speaker 2: What if you end up seeing the oppostion. I'm not
19:03
Speaker 2: saying you will, but what if you say, look, what
19:05
Speaker 2: if eighty percent of S and P five hundred components
19:08
Speaker 2: beat the index this year, but the index gets dragged down.
19:11
Speaker 2: So you see like S and P down like five
19:14
Speaker 2: percent this year, but the average SMP stock is up
19:17
Speaker 2: three Like what if that's a possibility. I'm just putting
19:21
Speaker 2: it out there. I'm not saying it will happen, but
19:24
Speaker 2: this is what's happening today is that kind of path
19:26
Speaker 2: Actually quick break here. When we come back, we get
19:29
Speaker 2: the trivia answer and then we are going to be
19:33
Speaker 2: talking something that Mike sent me that I can't remember
19:35
Speaker 2: after this.
19:42
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20:11
Speaker 5: Hey, trivia question today was which show helped earn Julia
20:15
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20:19
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20:23
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20:31
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20:44
Speaker 2: Mike piece here in Bloomberg opinion titled private Equity is
20:47
Speaker 2: not belonging your four to one K. We talked briefly
20:49
Speaker 2: last week about what was being lobbied for, what exactly
20:54
Speaker 2: is being talked about, and what does this piece say
20:56
Speaker 2: about it?
20:57
Speaker 3: Yeah, so, I mean one that the piece does acknowledge, like, hey,
21:00
Speaker 3: there are some reasons that it could make sense. And
21:02
Speaker 3: for those unfamiliar, some of the problems with private equities
21:06
Speaker 3: for retail investors is that they're generally a liquid you
21:10
Speaker 3: put money in there, there's not a lot of disclosure
21:14
Speaker 3: around how the funds are invested. There can be high
21:17
Speaker 3: fees that are somewhat difficult for the average person to
21:20
Speaker 3: interpret how they work, and you have a long hold
21:23
Speaker 3: period without a lot of liquidity like you would get
21:25
Speaker 3: from the average stock. The point that's made, you know,
21:29
Speaker 3: in favor of this is well, look, that kind of
21:31
Speaker 3: fits a young four oh one K investor fairly well, right.
21:35
Speaker 3: You know, if you are thirty years old and contributing
21:37
Speaker 3: to your four oh one k, liquidity is probably not
21:40
Speaker 3: your top concern.
21:41
Speaker 4: Rather, it's long term investment return.
21:43
Speaker 3: The conclusion that the author comes to, however, is look, actually, no,
21:48
Speaker 3: I'm not even a concluding chuck. What would you say
21:51
Speaker 3: other than you know, just going with the default option
21:54
Speaker 3: of a target fund in someone's four oh one K,
21:57
Speaker 3: what would you define as the most common method that
21:59
Speaker 3: you you see and talk to people about selecting investments
22:02
Speaker 3: in their four to one K because I don't know
22:03
Speaker 3: if you said, see the same thing I.
22:05
Speaker 2: Do on this you ask people, Hey, how'd you pick
22:07
Speaker 2: what you had? I look through the list, this one
22:10
Speaker 2: had the highest return, so I picked that.
22:12
Speaker 4: Yep, yeah, exactly.
22:15
Speaker 3: And that's in spite of the fact that every single
22:17
Speaker 3: disclosure that you have ever received about any investment ever
22:21
Speaker 3: is that past performance is not indicative of future results.
22:24
Speaker 3: And yet I would agree with you that is by
22:26
Speaker 3: far the most common method of selecting investments in a
22:29
Speaker 3: four to one K plan, and so quite frankly, I
22:31
Speaker 3: think the conclusion that the author comes to is, Look,
22:34
Speaker 3: these are really highly complex products that are quite sophisticated,
22:38
Speaker 3: and the average four oh one K investor invests just
22:41
Speaker 3: the way the Chuck and I described, and that could
22:43
Speaker 3: be a huge downfall or pitfall for the average person
22:46
Speaker 3: out there. I do think personally that the restrictions on
22:50
Speaker 3: who can invest in this type of thing are maybe
22:52
Speaker 3: a bit overburdensome, and there's some arbitrary dollar amounts that
22:56
Speaker 3: people have to have in order to invest. But just
23:00
Speaker 3: blanket saying, hey, this is appropriate for most four h
23:02
Speaker 3: one K holders. It seems like a the wrong direction
23:06
Speaker 3: on this one.
23:06
Speaker 2: Yeah, I think here's something. Here's something that I think
23:13
Speaker 2: I would look at, Mike. If someone is working in
23:16
Speaker 2: the financial industry, and let's say, let's say that they're
23:19
Speaker 2: working in the financial industry as a financial advisor, if
23:24
Speaker 2: they want to go and sell product X, Y or Z,
23:28
Speaker 2: they typically have to take some kind of course of
23:30
Speaker 2: study or this and that in order to be able
23:32
Speaker 2: to sell it to other people, which is I'm totally reasonable, Like,
23:36
Speaker 2: you don't want people that are uneducated about what they
23:38
Speaker 2: are selling. I guess my question is, look, ultimately, if
23:43
Speaker 2: we're deciding that, you know, financial advisors should have to
23:47
Speaker 2: know something about what they are, you know, selling that
23:50
Speaker 2: is listed as a security. Hey, if rather than just
23:54
Speaker 2: being like, no, you can only buy this if you
23:56
Speaker 2: have you know, X, Y Z dollars. Okay, here's the
24:00
Speaker 2: two hour educational course on this product or the six
24:03
Speaker 2: hour however, long like fine, whoever wants to as long
24:07
Speaker 2: as you can pass the like as long as you
24:10
Speaker 2: read through this and pass whatever the baseline exam is.
24:14
Speaker 2: You know ten questions, you got to get at least seven, Fine,
24:17
Speaker 2: go buy it. I don't care if you have one
24:18
Speaker 2: dollar five And the firms can set their own minimums
24:22
Speaker 2: just as they do today, So you know it's not
24:24
Speaker 2: gonna be like, let's be honest, Blackstone Group doesn't want
24:28
Speaker 2: your ten dollars investment. No, it's it's not.
24:31
Speaker 3: Because they contribute on a bi weekly basis, right, It's
24:33
Speaker 3: not because they don't like you.
24:35
Speaker 2: It's just they don't want to deal with that. Like,
24:37
Speaker 2: they're just not interested in dealing with that. So I'm
24:41
Speaker 2: very much of the opinion. Look, I don't have a
24:44
Speaker 2: problem if someone wants to own private equity inside their
24:48
Speaker 2: four oh one K, Fine, but make like, because the
24:52
Speaker 2: risks are so much different and so much greater than
24:56
Speaker 2: the investments that are currently in there, fine, make them
25:00
Speaker 2: learn something about it first. I'm not saying like for
25:02
Speaker 2: all investors anywhere. I'm saying, if you want to buy
25:04
Speaker 2: this stuff in your four O one K, which remember
25:07
Speaker 2: that the four to one K in its creation through
25:10
Speaker 2: a risk Like it's kind of a very special vehicle
25:14
Speaker 2: in terms of what it allows you to actually do.
25:17
Speaker 2: And so, yeah, if private equity wants to get into
25:21
Speaker 2: four oh one k's, then the people that are gonna
25:24
Speaker 2: buy it inside there should have to do some basic
25:27
Speaker 2: due diligence on what they're buying and prove that they've
25:29
Speaker 2: done it, in my opinion, and then whether you have
25:33
Speaker 2: one dollar, ten dollars, a million, however much it is, fine,
25:36
Speaker 2: have at it. Like I don't have any problem with that,
25:41
Speaker 2: but yeah, I do kind of have a problem with Hey,
25:44
Speaker 2: let's just unload this on the retail masses who just
25:46
Speaker 2: look at you know, what what the performance is and
25:48
Speaker 2: they won't notice. Well, yeah that that that doesn't feel
25:52
Speaker 2: great to me.
25:53
Speaker 3: Yeah, if you are, you know, on a show of
25:55
Speaker 3: hands here, if you are in that bucket that I
25:57
Speaker 3: just spoke of, which I just said, I think is
25:59
Speaker 3: the most common way of selecting investments in general, is
26:02
Speaker 3: purely just looking at the previous returns and saying, oh, yeah,
26:07
Speaker 3: I like that.
26:07
Speaker 4: One because look how well it did.
26:10
Speaker 3: Honestly think about that, because one of the first things
26:13
Speaker 3: that Chuck and I have talked about when it comes
26:15
Speaker 3: to investing is understand what it is that you own,
26:18
Speaker 3: and if you can honestly look at your own portfolio
26:21
Speaker 3: and say yeah, I understand what it is that I
26:23
Speaker 3: own and how that needs to adjust as my personal
26:26
Speaker 3: situation change.
26:27
Speaker 4: Then I'm here to tell you you are way ahead
26:29
Speaker 4: of the curve.
26:30
Speaker 1: Yeah.
26:30
Speaker 3: That is an excellent first step of saying yeah, I
26:33
Speaker 3: have a general understanding of my asset allocation and how
26:36
Speaker 3: that needs to adjust with my long term outlook on things.
26:42
Speaker 3: If you're falling into that first bucket though, of saying yeah,
26:44
Speaker 3: I kind of blindly selected or I just let my
26:46
Speaker 3: employer do it for me and I don't really understand
26:49
Speaker 3: how it works, or what the difference is between the
26:51
Speaker 3: four the traditional versus the ROTH contributions, or how my
26:54
Speaker 3: employer match truly functions, or how this new rule on
26:58
Speaker 3: catch up contributions might affect me as a sixty year old.
27:02
Speaker 4: I beg you to please.
27:03
Speaker 3: Call the experts at Armstrong Advisory Group and let us
27:06
Speaker 3: walk you through how that four oh one K, how
27:08
Speaker 3: that retirement plan or that bucket of money that you
27:11
Speaker 3: have to invest is going to work with your personal
27:14
Speaker 3: financial strategy. Because I can guarantee you that you and
27:17
Speaker 3: your coworker don't look exactly alike in every single way.
27:21
Speaker 3: Give the folks at Armstrong Advisory Group a call. We
27:24
Speaker 3: offer free consultations throughout New England. The numbers eight hundred
27:27
Speaker 3: three nine three four zero zero one. Again that's the
27:31
Speaker 3: Armstrong Advisory Group at eight hundred three nine three for
27:34
Speaker 3: zero zero one.
27:36
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
27:38
Speaker 1: registered investment advisor. Nothing in the ad or in any
27:41
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
27:44
Speaker 1: your own financial tax into state planning advisors before making
27:47
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
27:50
Speaker 1: advisory services.
27:52
Speaker 2: Mike, I'm here for the billionaires taking on other billionaires,
27:55
Speaker 2: So I want to talk a little bit about some
27:59
Speaker 2: some zuck here. So the zuck went on Joe Rogan's
28:03
Speaker 2: podcast and talked about a whole bunch of different things
28:07
Speaker 2: and spent some time beating up on Apple pretty good,
28:12
Speaker 2: I'll quote here. On one hand, the iPhone has been
28:14
Speaker 2: great because now pretty much everyone in the world has
28:16
Speaker 2: a phone, and that's kind of what enables pretty amazing things.
28:18
Speaker 2: But on the other hand, they've used their platform to
28:20
Speaker 2: put in place a lot of rules I think feel
28:22
Speaker 2: that I think feel arbitrary, and they haven't really invented
28:24
Speaker 2: anything great in a while. It's like Steve Jobs invented
28:27
Speaker 2: the iPhone and now they're just kind of sitting on
28:29
Speaker 2: it twenty years later. So them's fighting words, at least
28:34
Speaker 2: for you know, tech billionaires and a couple things here. First,
28:43
Speaker 2: what exactly has Meta invented?
28:47
Speaker 4: I was going there too.
28:49
Speaker 3: I will say that I think Meta has perhaps innovated
28:54
Speaker 3: more over the recent years than Apple.
28:57
Speaker 4: But if we just get into the.
28:58
Speaker 3: Business of rewarding in innovation that nobody uses, then that
29:04
Speaker 3: seems kind of silly. They've invaded and poured tons of
29:08
Speaker 3: money into the metaverse, which very few others are doing.
29:11
Speaker 3: They have is that even that money into virtual reality.
29:15
Speaker 3: I think it's somewhat innovative, but guess what, nobody bought it.
29:19
Speaker 3: So I don't think you have any have any right
29:22
Speaker 3: to be knocking other companies for their failure to innovate
29:25
Speaker 3: when you did and nobody actually bought it.
29:28
Speaker 2: It comes off as a little bit of sour grapes.
29:30
Speaker 2: But what it does get out I want to read
29:32
Speaker 2: this other quote here. He says, you know, they build
29:35
Speaker 2: stuff like AirPods, which are cool, but they've just thoroughly
29:38
Speaker 2: hamstrung the ability for anyone else to build up on
29:41
Speaker 2: the platform that they're on. And this is really.
29:44
Speaker 4: Where that's intentional. Mark.
29:46
Speaker 2: Well, but here's the other thing. This is why Meta
29:49
Speaker 2: is building the metaverse is it's not because they want
29:52
Speaker 2: you to be like in this virtual world. It's because
29:55
Speaker 2: they want to own the hardware through which you connect
29:59
Speaker 2: to it. Because here's the secret that Zuck didn't tell
30:02
Speaker 2: you on this. Here's the secret. I'm gonna whisper it.
30:05
Speaker 2: So listen close, listen close. Zuck wants to do what
30:10
Speaker 2: Apple's doing like that. That's what he's so upset about
30:14
Speaker 2: here is he's looking at this saying, Apple's taking a
30:17
Speaker 2: thirty percent cut of my revenue just because I have
30:22
Speaker 2: to sell through their store because I'm on their hardware.
30:25
Speaker 2: I don't want to do that. I want to take
30:27
Speaker 2: thirty percent of everyone else's revenue on my hardware. And
30:31
Speaker 2: that's why they want you to be in their VR
30:33
Speaker 2: goggles and stuff like that. It's not because Zuck is
30:35
Speaker 2: this big believer in VR. I if you gave Zuck
30:38
Speaker 2: forty three beers and said, hey, do you believe in
30:42
Speaker 2: VR or not, he'd be like, no, I don't care
30:44
Speaker 2: about VR. I just want people to be on my
30:46
Speaker 2: hardware so I don't have to pay Apple. That's the
30:49
Speaker 2: truth of the matter. This is why he doesn't like them.
30:52
Speaker 2: It's it's not that he has something against what Apple's doing,
30:55
Speaker 2: It's that he wants to be Apple.
30:57
Speaker 3: And you know, just objectively here, just taking a step back,
31:01
Speaker 3: do we think the metaverse and Facebook's VR stuff is
31:05
Speaker 3: fundamentally more innovative.
31:07
Speaker 4: Than air pods?
31:09
Speaker 3: Whatever Apple's doing in the TV space, their watch and
31:12
Speaker 3: their health stuff.
31:13
Speaker 2: Well, again, a competition on like innovative.
31:17
Speaker 3: That's my point is, Zuck, I don't know that you
31:20
Speaker 3: have much of a leg to stand on.
31:23
Speaker 2: But even if, like, how do you measure who's more innovative?
31:27
Speaker 4: Right?
31:27
Speaker 2: What does that even mean? You know, it's especially in
31:32
Speaker 2: the context of consumer facing technology, where all that we
31:36
Speaker 2: care about is does it work? And can I text
31:38
Speaker 2: my friends and send pictures of cats and stuff? So anyways,
31:44
Speaker 2: I thought this was really funny because to me, when
31:47
Speaker 2: when I boiled it down, it was Zuck's just upset
31:51
Speaker 2: that he's not in Apple's position. He wants that seat.
31:54
Speaker 2: It's not that he he doesn't care about any of
31:57
Speaker 2: this stuff from like a moral or ethical standpoint, it's
31:59
Speaker 2: just no. He wants that thirty percent that Apple can
32:04
Speaker 2: charge and he's not getting it right now, and he
32:07
Speaker 2: can't and they can't get the advertising data because Apple
32:11
Speaker 2: walled that off. That's the other piece. Quick break here.
32:14
Speaker 2: When we come back, we got stack Roulette.
32:15
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33:34
Speaker 2: Mike, what do you got for me? For stack Roulette?
33:37
Speaker 3: Twenty twenty three was the first year that it's been
33:40
Speaker 3: tracked where Bourbon sales were on the decline, showing a
33:44
Speaker 3: downward trend of purchases of bourbon by about one point
33:48
Speaker 3: two percent in twenty twenty three. It's estimated that volumes
33:50
Speaker 3: turned down turned down four percent in the first nine
33:54
Speaker 3: months of twenty twenty four, so we'll see where that
33:56
Speaker 3: ends the year. For a similar trend has been going
33:59
Speaker 3: on with sales across the world, and maybe for a
34:02
Speaker 3: little bit longer than Bourbon, because Bourbon was having a
34:04
Speaker 3: bit of a research over the last few years. But
34:07
Speaker 3: it just reminds me of how rapidly the beverage market changes.
34:10
Speaker 3: You know, just a few years ago we were talking
34:12
Speaker 3: about hard seltzers eating up beer volumes. Now we're talking
34:16
Speaker 3: about non alcoholic beverages and microdosed beverages taking up some
34:23
Speaker 3: of the alcohol space.
34:24
Speaker 4: And it is a I don't know, it's a dangerous
34:27
Speaker 4: market to play in.
34:28
Speaker 3: Certainly, the big names that are backed by huge brands
34:31
Speaker 3: will be out there for a while, but even small
34:34
Speaker 3: declines like this will hurt small producers of bourbon most certainly.
34:38
Speaker 3: And as I've said before, with wine sounds good more
34:42
Speaker 3: out there for the rest of us.
34:43
Speaker 2: What do you make of this? Is this something that's
34:45
Speaker 2: that's new? I mean, look, I'm not that old, but
34:49
Speaker 2: I guess it strikes me that I'm not really sure
34:54
Speaker 2: how much innovation there was in alcoholic beverages over I
34:59
Speaker 2: don't know, maybe like the last one hundred hundred and
35:01
Speaker 2: fifty years, you know, like you made beer, you made bourbon,
35:06
Speaker 2: you made you know whatever. And now it feels like
35:09
Speaker 2: every year or two there's some new fad. But and
35:13
Speaker 2: not just like a new fad, but like again, an
35:16
Speaker 2: entirely new category that's being created, Like these hard seltzers
35:19
Speaker 2: are what you say, like microdose drinks or whatever that is.
35:22
Speaker 3: And that's the new thing that I see out there,
35:25
Speaker 3: is like microdos cannabis drinks.
35:28
Speaker 2: So I guess my question is to to older drinkers,
35:33
Speaker 2: has it always been like this?
35:35
Speaker 4: This volatile?
35:36
Speaker 3: I mean, I was talking to Jim today Polito, who
35:39
Speaker 3: was saying, you know, back in his bartending days, he
35:41
Speaker 3: noticed that, Yeah, the trends would just shift wildly and
35:45
Speaker 3: rapidly when you know, I think one of his earlier
35:47
Speaker 3: jobs out there was bartending. But it does feel to
35:50
Speaker 3: me like but maybe the honest answer is that, yeah,
35:53
Speaker 3: what people were drinking always shifted, and now it's just
35:57
Speaker 3: new brands pop up every few weeks because it is
35:59
Speaker 3: easy year to create an entire beverage company today than
36:03
Speaker 3: it was fifty years ago.
36:05
Speaker 4: I'm not entirely sure.
36:06
Speaker 2: JP Morgeson, JP Morgeson, what the heck is that? JP?
36:11
Speaker 2: Morgan Chase They shut down comments on an internal web
36:14
Speaker 2: page that was announcing the bank's return to office policy
36:19
Speaker 2: after a bunch of employees criticized the move on that
36:23
Speaker 2: web page and at least one suggested that affected employees
36:27
Speaker 2: should unionize, and so it feels like that last one
36:32
Speaker 2: might have this in the crossers of the NRB, just
36:36
Speaker 2: because you're not really allowed to do that. If there's
36:41
Speaker 2: like a serious unionization talk going on and again online,
36:44
Speaker 2: it's how do you tell what's like serious versus not?
36:48
Speaker 2: But I'll just quote here. Many employees share concerns such
36:51
Speaker 2: as increased community costs, childcare challenges, and the impact on
36:54
Speaker 2: work life balance. One person suggested that they should consider
36:56
Speaker 2: unionizing a fight for a hybrid work schedule, people familiar
36:59
Speaker 2: with the matter said, and soon after the bank disabled
37:01
Speaker 2: the comments, this is what JP Morgan Chase wants. That
37:08
Speaker 2: they want you to leave. I am more convinced than
37:12
Speaker 2: ever that companies right now are using return to office
37:16
Speaker 2: so they don't have to lay people off and pay severance.
37:20
Speaker 2: And I'm not saying that they.
37:22
Speaker 3: Want you to unionize, though I wasn't sure what you
37:24
Speaker 3: were talking about. That they do want you to leave.
37:26
Speaker 2: They would prefer that you don't unionize, but they they
37:29
Speaker 2: they want people to leave. They're trying to reduce headcount
37:32
Speaker 2: and it's cheaper for them to do it through voluntary
37:35
Speaker 2: departures as opposed to having to lay people off. And
37:40
Speaker 2: I am more convinced of that than ever, given you
37:43
Speaker 2: know what we are seeing out there.
37:44
Speaker 3: So I think the recent example was Amazon calling all
37:47
Speaker 3: their workers back and then to your point, they didn't
37:50
Speaker 3: have enough office space for it, which can only be
37:52
Speaker 3: read as we thought more people.
37:54
Speaker 2: Would quit, right, So I suspect that's what's going on.
37:59
Speaker 2: But in a more stack labor market again, the quits
38:02
Speaker 2: rate keeps dropping. People are not quitting. I wonder. I'm
38:07
Speaker 2: wondering third quarter of this year do we start seeing
38:11
Speaker 2: layoff announcements pop up? Just a question, just a question.
38:17
Speaker 2: Let's take a quick break for the whole rest of
38:18
Speaker 2: the day. We'll see you tomorrow on the Financial Exchange.