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Are huge stock swings the new normal? · The Financial Exchange Show

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  Speaker 1: and faw Lane.
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  Speaker 2: Good morning, Welcome back to the Financial Exchange. Our top
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  Speaker 2: story the day continues to be the ongoing trade war
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  Speaker 2: between the United States and China and the fallout on
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  Speaker 2: corporate earnings and elsewhere from that possibility. But today equity
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  Speaker 2: markets moving strongly to the upside. We've got the Dow
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  Speaker 2: Jones Industrial average up two hundred sixty nine points or
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  Speaker 2: two thirds of one percent, the S and P five
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  Speaker 2: hundred up seventy two or one to third percent, in
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  Speaker 2: the NASDA c up three hundred five points one point
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  Speaker 2: eight percent this morning, yield on the ten year treasury
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  Speaker 2: down slightly to four point three two seven, so some
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  Speaker 2: calm there in the bond market for the time being.
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  Speaker 2: And oil, which has obviously been dropping substantially, now sitting
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  Speaker 2: at sixty two dollars and seventy cents a barrel. That
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  Speaker 2: brings our national average for gas prices across the country
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  Speaker 2: out down to three dollars and seventeen cents as of today.
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  Speaker 2: Across the New England region, you're largely seeing that a
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  Speaker 2: little bit lower, with Maine sitting at two ninety eight,
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  Speaker 2: New Hampshire sitting at two eighty five, Massachusetts sitting at
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  Speaker 2: two ninety six, Rhode Island at two ninety five, Connecticut
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  Speaker 2: at three oh six, and Vermont at three oh nine. Uh.
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  Speaker 2: The only other thing I want to check on is
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  Speaker 2: where we are now sitting at for the thirty year
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  Speaker 2: fixed rate mortgage. Yeah, sitting still just below that seven
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  Speaker 2: percent mark on the general thirty year fixed and slightly
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  Speaker 2: above that seven mark on the thirty year jumbo. Anything
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  Speaker 2: else catching your eye in terms of market. Obviously we're
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  Speaker 2: in the midst of that spring home buying season that
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  Speaker 2: will really continue right through July fourth holiday and then
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  Speaker 2: you know, see another uptick in the fall in all likelihood,
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  Speaker 2: so you know that that thirty year mortgage story continues
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  Speaker 2: to dominate, and we're starting to see inventory tick up
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  Speaker 2: in large swaths of the country, just not here in
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  Speaker 2: New England, but with mortgages up at seven percent, one
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  Speaker 2: of two things is going to happen. Either people are
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  Speaker 2: going to delist homes because they're not moving, or prices
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  Speaker 2: are coming down.
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  Speaker 3: Yeah. We saw a report come out this morning where
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  Speaker 3: the sales of previously owned homes in March fell five
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  Speaker 3: point nine percent from February to an annualized rate of
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  Speaker 3: four million on a seasonally adjusted basis, they were lower
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  Speaker 3: two and a half percent lower than March of last year.
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  Speaker 3: So kind of furthering your point, Mike. Increase in inventory,
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  Speaker 3: it was up twenty percent from a year earlier, but
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  Speaker 3: the amount of sales seemed to be slowing down, a
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  Speaker 3: combination of the higher mortgage rates than the concern of
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  Speaker 3: the broader economy.
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  Speaker 2: Back to the subject of Chinese tariffs, the Ministry of
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  Speaker 2: Commerce spokesperson for China, he Ha Dong said, at present,
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  Speaker 2: there are absolutely no negotiations on the economy and trade
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  Speaker 2: between China and the United States. So again this is
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  Speaker 2: going to be the dominant story here and thus far,
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  Speaker 2: in spite of the commentary this week, every time the
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  Speaker 2: President has announced tariffs on China, there has been no
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  Speaker 2: hint of negotiation or hint of reconciliation. It has been
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  Speaker 2: China responding in kind and with ford maybe not necessarily
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  Speaker 2: in kind because they have different tools in their belts,
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  Speaker 2: but responding very differently than, for instance, what you got
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  Speaker 2: out of the European Union, Vietnam or other countries that
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  Speaker 2: have largely come to negotiating table. We will kick off
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  Speaker 2: Megacap earnings this afternoon after the bell with Alphabet reporting,
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  Speaker 2: What are we expecting to hear from Apple s I
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  Speaker 2: keep saying Apple, Apple, not Apple Alphabet.
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  Speaker 3: It is Google.
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  Speaker 2: Let's just call it Google. I'm done with this, Google's
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  Speaker 2: parent company. What do we expected to hear and will
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  Speaker 2: it really tell us any thing larger about the state
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  Speaker 2: of the economy. I mean, very few companies get a
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  Speaker 2: better idea of advertising revenue, I suppose, so that that'll
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  Speaker 2: be compelling.
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  Speaker 3: Yeah, one could argue that they have a monopoly on
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  Speaker 3: online advertising. In fact, many federal judges are making that argment.
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  Speaker 2: This week.
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  Speaker 3: They are battling the Justice Department over the potential breakup
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  Speaker 3: of Alphabet, you know, decoupling. Perhaps it's Google Cam browser
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  Speaker 3: or some of its advertising technology. Those are some of
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  Speaker 3: the things that have been potentially rumored to have occurred
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  Speaker 3: or something that the Justice Department would like, but that
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  Speaker 3: still has to go through the court process. They also
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  Speaker 3: have had two federal judges ruling that they have illegally
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  Speaker 3: monopolized some online advertising technology markets. So that's kind of
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  Speaker 3: the backdrop on what they're dealing with on the legal front.
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  Speaker 3: Of course, as you mentioned, they're on the forefront of
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  Speaker 3: the advertising for online If you have any sort of
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  Speaker 3: recessionary impacts to a decline in e commerce an averageing spending,
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  Speaker 3: they could be significantly impacted there. The numbers that they're
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  Speaker 3: going to report obviously are on the prior quarter, so
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  Speaker 3: they're anticipating a twelve percent revenue growth for the quarter.
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  Speaker 3: Some pretty strong numbers. But ultimately the I for all
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  Speaker 3: investors out there will be any type of commentary they
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  Speaker 3: may have on the current economic backdrop. They find themselves
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  Speaker 3: in a difficult place. When you're in the hore of
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  Speaker 3: the Justice Department. Microsoft can sort of relate to this
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  Speaker 3: back in the late nineties, where it is a period
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  Speaker 3: of significant innovation and AI. It's extremely competitive as to
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  Speaker 3: who is going to grab the biggest foothold there. And
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  Speaker 3: I talked about this on the show the other day. Chat,
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  Speaker 3: GPT and other models like that to me serve as
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  Speaker 3: a big risk to Google's search business.
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  Speaker 2: Explain that a little bit better, because you know, I've
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  Speaker 2: been watching the two of us right I'm ongoing right
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  Speaker 2: now googling different things, looking up different items. You've got chat,
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  Speaker 2: GPT open, and you know are also summarizing some things.
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  Speaker 2: But that's some pretty serious headline risk for Google. Outside
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  Speaker 2: of all of the anti trust concerns that have been
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  Speaker 2: dominating Google story over the last few years. This this
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  Speaker 2: AI risk spell it out word for word in terms
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  Speaker 2: of how it poses a threat to Google.
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  Speaker 3: Yeah. So Google has about ninety percent of the search market.
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  Speaker 3: If you look at the other competitors that it is
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  Speaker 3: in the same arena with, they just absolutely pale in comparison.
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  Speaker 3: They are dominant in that space. And how Google makes
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  Speaker 3: its money is that Mike or myself if we're out
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  Speaker 3: traveling on vacation, we're looking up, Hey, good restaurants in
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  Speaker 3: the Charleston area or where I was, or whatever the
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  Speaker 3: case may be. They are generating Google that is revenue
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  Speaker 3: from advertisers for local restaurants to be at the top
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  Speaker 3: of their search. There. If that were to deviate where now,
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  Speaker 3: as you mentioned, I'm on shat Gibt searching things, there's
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  Speaker 3: other competitors out there. Meta is going to have its
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  Speaker 3: own one and Google, to be fair, it does have
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  Speaker 3: its Gemini service. But there is the potential for fragmentation
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  Speaker 3: the search market where my go to for looking things
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  Speaker 3: up may not be Google going forward, And in particular,
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  Speaker 3: when you have the backdrop of a lot of antitrust
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  Speaker 3: pressure on Google. What happened to Microsoft, This was a
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  Speaker 3: different technology trend is more specific to the PC market,
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  Speaker 3: But they took their eye off the ball or just
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  Speaker 3: were all consumed by the anti trust allegations, and as
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  Speaker 3: a result, they missed a lot of technology trends over
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  Speaker 3: the next decade, particularly in mobile and others. The same
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  Speaker 3: thing could potentially happen to Google. It's just a risk
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  Speaker 3: that loom.
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  Speaker 2: Yeah. I mean, if you're sitting there in I don't know
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  Speaker 2: when did the BlackBerry come.
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  Speaker 3: Out early two thousands six, Yeah.
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  Speaker 2: If you're sitting there in nineteen, it's earlier than that.
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  Speaker 2: If you're sitting there in nineteen ninety nine and saying, hey,
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  Speaker 2: who's going to be the dominant player in the you know,
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  Speaker 2: consumer hardware market for electronics, you're one of the biggest
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  Speaker 2: bets out there, would have had to be Microsoft. I
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  Speaker 2: remember that came out with a smartphone very early on
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  Speaker 2: that completely failed across the board. You probably wouldn't have
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  Speaker 2: put a whole bunch of money on Apple, and you
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  Speaker 2: certainly wouldn't put any money on some tiny Canadian company
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  Speaker 2: called BlackBerry. But yeah, with Google, that threat to their
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  Speaker 2: search business, is it could be overstated because they are investing,
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  Speaker 2: you know, billions upon billions into their own artificial intelligence
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  Speaker 2: and are looking for ways to monetize it as well,
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  Speaker 2: and they can afford to do so, so they do
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  Speaker 2: have a leg up there. But I think about it.
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  Speaker 2: Just think about it. Actually, how when you went to school,
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  Speaker 2: I distinctly remember having classes with librarians on how to
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  Speaker 2: properly use search when doing a research paper. When when
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  Speaker 2: you know, when utilizing search, because you know, they were
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  Speaker 2: going from he here is how you used to look
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  Speaker 2: it up in an encyclopedia to here's how you accurately
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  Speaker 2: use search and Google and get rid of bad results
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  Speaker 2: and find the stuff that you actually need and cite
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  Speaker 2: it properly, et cetera. That same exact process, I guarantee
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  Speaker 2: you is occurring already or is being planned out in
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  Speaker 2: public schools across the country. When it comes to the
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  Speaker 2: use of artificial intelligence, it can do really compelling things,
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  Speaker 2: stuff that I have no idea how to do as
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  Speaker 2: somebody who's only one generation removed from it. But you know,
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  Speaker 2: I'm sure you guys have heard of this too. But
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  Speaker 2: there's another AI system out there. You can basically feed
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  Speaker 2: a whole bunch of different sources that you want to
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  Speaker 2: learn about, like, okay, you know these five articles. Obviously
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  Speaker 2: you can do things where you summarize them, but there's
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  Speaker 2: another AI service where you say, okay, you know, read
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  Speaker 2: these seven different pieces and create a thirty minute podcast
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  Speaker 2: for me. So I want to listen to it on
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  Speaker 2: my way home, and I want to just get it
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  Speaker 2: that way instead of having to read through something, and
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  Speaker 2: it will create a personalized podcast based on the sources
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  Speaker 2: that you used. That is not something that Google is
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  Speaker 2: going to be prepared to deal with. They could because
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  Speaker 2: if they can sell advertisements on those podcasts, then they
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  Speaker 2: can crush it. But that is a real threat to
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  Speaker 2: the entirety of Google's business that didn't exist before. And
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  Speaker 2: we're not even getting into the fact that two judges
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  Speaker 2: have now called them a monopoly and are looking for
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  Speaker 2: some form of breakup when it comes to their business.
• 11:21
  Speaker 2: So it'll be interesting to hear from a number of
• 11:24
  Speaker 2: different perspectives about alphabets earnings. I don't think it's going
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  Speaker 2: to tell us much about the state of the consumer
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  Speaker 2: and their concerns about recession and trade war, but I
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  Speaker 2: do think it tells you a lot about where they
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  Speaker 2: see threats coming down the highway. Let's take a quick break.
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  Speaker 2: When we come back, a little bit trivia for you
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  Speaker 2: next year on the Financial Exchange, Tara.
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  Speaker 1: business and financial news in New England and around the country.
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  Speaker 1: This is the Financial Exchange Radio Network.
• 12:16
  Speaker 4: All right time for trivia here on the Financial Exchange.
• 12:19
  Speaker 4: And today is Kelly Clarkson's forty third birthday. Clarkson rose
• 12:25
  Speaker 4: to fame when she became the first winner of American Idol.
• 12:30
  Speaker 4: Clarkson has since gone on to sell over thirty million
• 12:33
  Speaker 4: albums and has won three Grammy Awards. So trivia question today,
• 12:38
  Speaker 4: what year did Kelly Clarkson win American Idol? Once again?
• 12:43
  Speaker 4: What year did Kelly Clarkson win American Idol? Be the
• 12:48
  Speaker 4: seventh person today to text us at six one, seven, three, six,
• 12:51
  Speaker 4: two thirteen eighty five with the correct answer and you
• 12:54
  Speaker 4: get a brand new Financial Exchange Showed T shirt and
• 12:57
  Speaker 4: once again the seventh correct response text us at six one, seven, three, six,
• 13:02
  Speaker 4: two thirteen eighty five will win that T shirt. See
• 13:04
  Speaker 4: complete contest rules at Financial Exchange Show dot com.
• 13:08
  Speaker 3: What percent of our listeners could rattle off of Kelly
• 13:10
  Speaker 3: Clarkson song?
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  Speaker 2: All of them? I'll see. Uh. We did receive an
• 13:16
  Speaker 2: economic data point this morning that we have not yet discussed,
• 13:19
  Speaker 2: which was the weekly jobless claims. As a reminder, we
• 13:22
  Speaker 2: get a monthly Job's Report that surveys both businesses as
• 13:25
  Speaker 2: well as consumers. We also get a weekly read from
• 13:29
  Speaker 2: states who submit data to the federal government on pardon me,
• 13:34
  Speaker 2: how many people are signing up for unemployment. And it
• 13:36
  Speaker 2: is as close as you can get to a real
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  Speaker 2: time indicator on the state of the labor market. And
• 13:42
  Speaker 2: so we've been keeping an eye on it because look,
• 13:44
  Speaker 2: CEOs have not been talking very optimistically about this year
• 13:48
  Speaker 2: and they have been pulling back on new hiring. But
• 13:50
  Speaker 2: the weekly jobless claims came in at two hundred and
• 13:53
  Speaker 2: twenty two thousand. That's up about six thousand from the
• 13:56
  Speaker 2: month prior and right in line with expectations. So the
• 14:01
  Speaker 2: firing story continues to be a non story to this point.
• 14:06
  Speaker 2: I think there's a few things you can point to here. One,
• 14:10
  Speaker 2: if you're a government worker who has been laid off
• 14:12
  Speaker 2: to this point, you are likely receiving severance, so you
• 14:14
  Speaker 2: cannot file for unemployment anyway. And you also don't show
• 14:17
  Speaker 2: up in these numbers in the first place because you
• 14:19
  Speaker 2: have a different unemployment system that you file through. And
• 14:22
  Speaker 2: if you're a government contractor, same story. To this point,
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  Speaker 2: you haven't really seen those job cuts come yet because
• 14:28
  Speaker 2: the funding hasn't been fully cut off, and the Trump
• 14:31
  Speaker 2: administration is winning and losing some court cases when it
• 14:34
  Speaker 2: comes to all of that, and so, yeah, there have
• 14:37
  Speaker 2: been stories here and there of doze cuts and how
• 14:39
  Speaker 2: that might play out, but it certainly has not affected
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  Speaker 2: the labor market to this point. And likewise, you know,
• 14:46
  Speaker 2: if you had asked me late last year when we
• 14:49
  Speaker 2: were talking about the things that Amazon and Google and
• 14:52
  Speaker 2: Microsoft we're all talking about, I would have told you, yeah,
• 14:54
  Speaker 2: it looks like layoffs might be around the corner, but
• 14:57
  Speaker 2: to this point they haven't really occurred. But I want
• 14:59
  Speaker 2: to cover some of those actions that Google and the
• 15:02
  Speaker 2: big tech companies have been taking pardon me, Google, for one,
• 15:06
  Speaker 2: is forcing some remote workers to come back three days
• 15:09
  Speaker 2: a week or lose their jobs. It's a pretty far
• 15:13
  Speaker 2: cry from where they were a few years ago during
• 15:15
  Speaker 2: the COVID pandemic, and offering those employees remote work, you know,
• 15:19
  Speaker 2: substantially falls right in line with what their competitors have
• 15:23
  Speaker 2: been doing, though, because you know, Amazon did this, I
• 15:26
  Speaker 2: think it was late last year, kind of blew up
• 15:28
  Speaker 2: in their face because they were hoping a bunch of
• 15:30
  Speaker 2: people quit and turned out they didn't have enough office
• 15:32
  Speaker 2: space for those people. So we'll see if Google falls
• 15:34
  Speaker 2: for the same problem here. But I'm seeing Microsoft too.
• 15:39
  Speaker 2: Microsoft is apparently kind of taking a page out of
• 15:42
  Speaker 2: Amazon's playbook here, which is, hey, you low performing employee
• 15:49
  Speaker 2: based on these metrics, We're going to put you on
• 15:51
  Speaker 2: a performance improvement plan, and if you don't improve, you
• 15:54
  Speaker 2: are fired. But as an added incentive, like here's ten
• 15:57
  Speaker 2: thousand bucks if you just want to walk away, and
• 16:00
  Speaker 2: I don't think that's actually gonna be successful for them
• 16:03
  Speaker 2: in this economy to get rid of some of those
• 16:05
  Speaker 2: low improves. The reason they do this is because you know,
• 16:08
  Speaker 2: if you take that money, you're far less to end
• 16:10
  Speaker 2: up in a lawsuit with the with the employer, and
• 16:13
  Speaker 2: so it's you know, on average, probably just cheaper for
• 16:15
  Speaker 2: Microsoft to go and look at something like that, and
• 16:18
  Speaker 2: the package is probably a heck of a lot more
• 16:20
  Speaker 2: than ten grand. But in any case, it's another company,
• 16:24
  Speaker 2: you know, Microsoft, Amazon, Google, some of the biggest tech
• 16:27
  Speaker 2: employers out there that seem to be speaking from the
• 16:30
  Speaker 2: same playbook here. I don't. I'm sure there are some
• 16:34
  Speaker 2: at Google who are really seeing the benefit of being
• 16:37
  Speaker 2: in office. But what I buy and large see here
• 16:40
  Speaker 2: is a company that wants to reduce headcount and wants
• 16:45
  Speaker 2: to do so in the least controversial way they can,
• 16:48
  Speaker 2: which is saying, hey, get back to the office.
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  Speaker 3: The path of least resistance, sort of not a layoff,
• 16:54
  Speaker 3: but sort of trying to usher people out the door
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  Speaker 3: as nicely as possible. And that that was the Amazon
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  Speaker 3: story too. You know, they can make the veiled argument
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  Speaker 3: of oh, it's to increase productivity and you know, communication
• 17:07
  Speaker 3: between teammates that you come back into the office. But
• 17:09
  Speaker 3: ultimately we know what the real story is here, and
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  Speaker 3: it's pointed out by them offering voluntary biots. You know,
• 17:15
  Speaker 3: if you're doing that and you're coupling that with bringing
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  Speaker 3: someone into the office three days a week. That is
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  Speaker 3: the intention behind these moves.
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  Speaker 2: I struggle with the employment picture because on one hand,
• 17:26
  Speaker 2: it is very much good news that the unemployment right
• 17:28
  Speaker 2: still sits at the low fours and you know, we
• 17:30
  Speaker 2: are still not seeing any sort of uptick and jobless
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  Speaker 2: claims or really any indication of mass layoffs is just
• 17:37
  Speaker 2: not there. And I find that quite encouraging, because you know,
• 17:40
  Speaker 2: we're at such a healthy stand starting point from the
• 17:43
  Speaker 2: labor market. And look, I know, if you are listening
• 17:46
  Speaker 2: with a college student who's graduating in May at home,
• 17:49
  Speaker 2: you're probably experiencing something very different, and I acknowledge that,
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  Speaker 2: but you know, compared to other times in history, this
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  Speaker 2: starting point is pretty good. The downside to that is
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  Speaker 2: cuts to the job market never come early in an
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  Speaker 2: economic downturn. They're one of the last things that you
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  Speaker 2: see in terms of that overall downturn. And I'm wondering,
• 18:13
  Speaker 2: if I can quickly pull it up here unemployment rate,
• 18:19
  Speaker 2: I want to look it up back in eight just
• 18:21
  Speaker 2: so we can there we go. So the unemployment rate
• 18:24
  Speaker 2: during the downturn in two thousand and eight, it started,
• 18:31
  Speaker 2: you know, May of seven was sitting at four point
• 18:33
  Speaker 2: four percent. You didn't hit that peak until October of
• 18:36
  Speaker 2: two thousand and nine. The stock market had already bought
• 18:39
  Speaker 2: them back in March of nine. You had already been
• 18:41
  Speaker 2: in a recession for a good year prior to that.
• 18:44
  Speaker 2: The unemployment rate, which by the way, topped out at
• 18:46
  Speaker 2: ten percent during that recession, did not hit that peak,
• 18:50
  Speaker 2: and you did not see those big layoffs really until
• 18:53
  Speaker 2: you know, midway through eight and laid into nine when
• 18:57
  Speaker 2: those things really started taking place. And so the unemployment
• 19:00
  Speaker 2: rate is very important. It is an indicator of a
• 19:03
  Speaker 2: lot of different things. It is not a leading indicator
• 19:06
  Speaker 2: of recession. Is the important thing to notice here. If anything,
• 19:09
  Speaker 2: it tells you you're already in a recession once you
• 19:11
  Speaker 2: start seeing it going up.
• 19:13
  Speaker 3: I'm interested to see. I believe it's probably next Friday
• 19:15
  Speaker 3: that we get the month of April jobs for in
• 19:18
  Speaker 3: terms of what the numbers come out, because I just
• 19:21
  Speaker 3: can't imagine, like you were mentioning on the hiring front,
• 19:24
  Speaker 3: I could see the job ascames we've talked about that
• 19:27
  Speaker 3: data not be an issue, but I can't see too
• 19:28
  Speaker 3: many new jobs being added. But we'll see.
• 19:30
  Speaker 2: Quick break trivia winner and then Stock Investors and the
• 19:34
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• 19:42
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• 20:16
  Speaker 2: All right.
• 20:17
  Speaker 4: Trivia question today was what year did Kelly Clarkson win
• 20:22
  Speaker 4: American Idol? Well, that would be back in two thousand
• 20:27
  Speaker 4: and two. Scott from Chelmsford, mass was our winner today,
• 20:32
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• 20:37
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• 20:40
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• 20:43
  Speaker 2: Paul I oftentimes pooh pooh folks when they tell me
• 20:48
  Speaker 2: about volatility in the markets, because I've hired people describe
• 20:51
  Speaker 2: twenty twenty four as a volatile market and it just
• 20:55
  Speaker 2: plain old wasn't. But you know, there's a lot of
• 20:58
  Speaker 2: different things that affect people perceptions of volatility. One of
• 21:02
  Speaker 2: them is the Dow Jones Industrial average because it's just
• 21:05
  Speaker 2: always been a part of market reporting, and these days,
• 21:08
  Speaker 2: you know, today we're having a two hundred and fifty
• 21:10
  Speaker 2: point swing. That represents about two thirds of a percent,
• 21:14
  Speaker 2: and it's not that significant. However, this year you can
• 21:17
  Speaker 2: absolutely claim volatility is back in fashion. And you know,
• 21:22
  Speaker 2: we whether you want to measure with the VIS which
• 21:25
  Speaker 2: you know reached thirty four back in April, which is
• 21:29
  Speaker 2: you know, highest you saw since COVID levels, whether you
• 21:33
  Speaker 2: want to you know, talk about any other measure in
• 21:35
  Speaker 2: the bond market, et cetera. It is certainly the case
• 21:38
  Speaker 2: that volatility is back in markets right now. It is
• 21:42
  Speaker 2: higher in many ways than we've seen for several years.
• 21:46
  Speaker 2: And I think investors, especially newer investors, are having a
• 21:52
  Speaker 2: tough time kind of digesting that because honestly, even in
• 21:57
  Speaker 2: twenty twenty two when we saw some volatility there, it
• 22:01
  Speaker 2: was not it was very short lived. COVID was very
• 22:05
  Speaker 2: short lived in terms of volatility we saw there, right,
• 22:08
  Speaker 2: you had market breakers back in circuit breakers on the
• 22:11
  Speaker 2: markets back in twenty twenty that hit, And so yeah,
• 22:16
  Speaker 2: I kind of shake this moment off because it wasn't
• 22:18
  Speaker 2: as bad as that. But if it continues, I just
• 22:23
  Speaker 2: I'm seeing it play out with people I speak to
• 22:26
  Speaker 2: about their lack of confidence that they had gained over
• 22:28
  Speaker 2: the last few years when it came to invest investing
• 22:31
  Speaker 2: when markets are down, et cetera, et cetera. I think
• 22:33
  Speaker 2: all that's being challenged this year.
• 22:35
  Speaker 3: It is it's been a year that's been just marred
• 22:38
  Speaker 3: by up and down days. It just is something that
• 22:42
  Speaker 3: really that you couldn't remember since twenty twenty, that is
• 22:44
  Speaker 3: the last period of time the SMP had gained or
• 22:46
  Speaker 3: lost at least one percent in seven of the last
• 22:50
  Speaker 3: ten sessions. In April is going to be the most
• 22:53
  Speaker 3: volatile calendar month. So it comes to a point when
• 22:56
  Speaker 3: you're dealing with clients that you just want to make
• 22:58
  Speaker 3: sure that their allocation is positioned appropriately during this period
• 23:02
  Speaker 3: of volatility, because that's what you lean on in these times,
• 23:05
  Speaker 3: and people who do not have an allocation that they're
• 23:07
  Speaker 3: comfortable with usually these periods of volatility leads to them
• 23:12
  Speaker 3: questioning the strategy or getting emotionally upset by the ongoings
• 23:16
  Speaker 3: of the market that we've seen over the last month.
• 23:18
  Speaker 2: And what worries me the most when I think about
• 23:21
  Speaker 2: this overall situation is there's a lot of people that
• 23:24
  Speaker 2: I've talked to over the course of the last year
• 23:26
  Speaker 2: or so who may be messed out on some of
• 23:29
  Speaker 2: the big gains in twenty three and twenty four because
• 23:31
  Speaker 2: they just didn't think they were possible. They maybe thought
• 23:33
  Speaker 2: we were going into recession, or the taxes were going up,
• 23:36
  Speaker 2: or any number of things might have played out. They
• 23:38
  Speaker 2: are feeling like they are playing catch up perhaps, And
• 23:41
  Speaker 2: in many cases, the story I've heard is, you know,
• 23:45
  Speaker 2: I really thought, whether I agree with his policies or not,
• 23:47
  Speaker 2: I really thought that Donald Trump would be good for
• 23:49
  Speaker 2: the stock market. And I might have gotten more aggressive
• 23:53
  Speaker 2: because of that with my investment portfolio than I otherwise
• 23:56
  Speaker 2: would have. And now I'm kind of sitting here. I'm
• 23:59
  Speaker 2: not ruined. Most people haven't been ruined by this type
• 24:02
  Speaker 2: of volatility unless you're all sorts of levered up into
• 24:05
  Speaker 2: concentrated concentrated bets. But maybe just getting a little bit
• 24:10
  Speaker 2: concerned about, Okay, if this were to continue, if this
• 24:13
  Speaker 2: does result in a recession, if the tariffs are back
• 24:16
  Speaker 2: on play, as they seem to be changing week to week,
• 24:19
  Speaker 2: how am I positioned for something like that? And that's
• 24:24
  Speaker 2: that's the good question to ask. It's it's not a
• 24:27
  Speaker 2: great question to ask, like, Hey, when should I When
• 24:29
  Speaker 2: should I sell all this and go to cash, trying
• 24:32
  Speaker 2: to time that maybe somebody out there can do it,
• 24:34
  Speaker 2: But I've never met them, and I certainly know that
• 24:36
  Speaker 2: I can't try and figure out the timing of all
• 24:38
  Speaker 2: of this because the news story is changing every day.
• 24:42
  Speaker 2: The question to be asking yourself is if we do
• 24:45
  Speaker 2: get that worst case for stock markets. I'm not saying
• 24:48
  Speaker 2: about the employment situation or manufacturing, but like, let's talk
• 24:51
  Speaker 2: about the worst case for the stock market, which is
• 24:53
  Speaker 2: a drawn out, protracted recession with a deep draw down
• 24:57
  Speaker 2: in stocks. Will I be a to withstand that? And
• 25:02
  Speaker 2: I don't just mean that from your portfolio, but hey,
• 25:05
  Speaker 2: if I lose my job, what sort of situation would
• 25:07
  Speaker 2: I be? And if I was without an income for
• 25:09
  Speaker 2: six months, would I be able to make an emergency
• 25:13
  Speaker 2: repair to my home or on my car if something happened?
• 25:16
  Speaker 2: And then yes, of course, if I did see a
• 25:19
  Speaker 2: stock market downturn that lasted four or five years, which
• 25:24
  Speaker 2: I know is a foreign concept to some people listening
• 25:26
  Speaker 2: right now, but oh wait, that downturn lasted about five
• 25:28
  Speaker 2: and a half years. Dot Com bobble that during downturn
• 25:32
  Speaker 2: in stocks lasted a good six years. If you were
• 25:34
  Speaker 2: diversified and a lot longer if you weren't. If you
• 25:38
  Speaker 2: can't answer those questions of hey could I withstand that?
• 25:42
  Speaker 2: And how would I do it? Please give the folks
• 25:44
  Speaker 2: at Armstrong Advisory Group a call. We offer free consultations.
• 25:48
  Speaker 2: We'll sit down with you to address your specific issues
• 25:52
  Speaker 2: with your specific portfolio and your specific lifestyle, because it
• 25:55
  Speaker 2: is different for every single individual and simply filling out
• 25:59
  Speaker 2: a survey online is not going to answer all those
• 26:02
  Speaker 2: questions for you. Give us a ring at eight hundred
• 26:05
  Speaker 2: three nine three for zero zero one. That's the number
• 26:08
  Speaker 2: for the Armstrong Advisory Group. We've got a presence across
• 26:10
  Speaker 2: New England, but we sit down with our clients across
• 26:12
  Speaker 2: the country, across the world, So if you have questions
• 26:15
  Speaker 2: or you know somebody who does, the number again is
• 26:18
  Speaker 2: eight hundred three nine three four zero zero one.
• 26:22
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 26:24
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 26:27
  Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
• 26:30
  Speaker 1: your own financial tax into state planning advisors before making
• 26:33
  Speaker 1: any investment decisions. Armstrong make contact you to offer investment
• 26:36
  Speaker 1: advisory services.
• 26:37
  Speaker 2: In the backdrop of everything going on with tariffs, there's
• 26:40
  Speaker 2: also been competing tax bills that have been making their
• 26:43
  Speaker 2: way through the House and Senate via the reconciliation process
• 26:47
  Speaker 2: because they do not have the votes to pass them
• 26:49
  Speaker 2: via a regular bill. The conjecture out there has been
• 26:55
  Speaker 2: throughout all of this, where are the cuts going to come?
• 26:58
  Speaker 2: And how are you going to pay for them? Because
• 27:01
  Speaker 2: there are limitations in terms of what they're able to do,
• 27:04
  Speaker 2: And frankly, the limitations that I'm most concerned about today
• 27:07
  Speaker 2: is how is the bond market going to treat some
• 27:11
  Speaker 2: sort of giant tax cut with big deficit spending if
• 27:14
  Speaker 2: that's what we get. I'm not convinced that that's where
• 27:16
  Speaker 2: we're going to end up. But if we get that,
• 27:19
  Speaker 2: will you see yields rise? Because international investors are just
• 27:22
  Speaker 2: a bit fed up with the US story, both in
• 27:25
  Speaker 2: terms of trade as well as deficits. The possible outcome
• 27:31
  Speaker 2: of what had been discussed is hey, in order to
• 27:33
  Speaker 2: fund some of these big tax cuts on social security,
• 27:36
  Speaker 2: on over time, on tips, would be bumping up the
• 27:40
  Speaker 2: tax rates for top income earners, for millionaires and other groups.
• 27:44
  Speaker 2: Steve Bannon had pushed for this quite a bit behind
• 27:48
  Speaker 2: closed doors. President Trump over the last few days seemed
• 27:52
  Speaker 2: to have tossed some cold water on that one, saying
• 27:57
  Speaker 2: that a potential millionaire's tax was quote very disruptive. That
• 28:01
  Speaker 2: was after House Speaker new former House Speaker New Gingrich
• 28:05
  Speaker 2: circulated message from Trump saying the President loves the idea
• 28:07
  Speaker 2: of a small tax increase on the Ridge, but was
• 28:10
  Speaker 2: counseling Republicans against it for a number of political reasons.
• 28:13
  Speaker 2: This is all reporting from the Wall Street Journal. So
• 28:16
  Speaker 2: this makes two things more likely to me. One, I
• 28:19
  Speaker 2: don't think that that top income bracket is moving much
• 28:22
  Speaker 2: at all, which is currently sitting at thirty seven percent.
• 28:25
  Speaker 2: So if you're earning I think it's as a married
• 28:27
  Speaker 2: couple over three quarters of million dollars, you're hitting that
• 28:29
  Speaker 2: thirty seven percent rate, probably not going anywhere during this bill.
• 28:34
  Speaker 2: It also makes it more difficult to pass some of
• 28:36
  Speaker 2: those priorities though that he campaigned on, such as the
• 28:39
  Speaker 2: tax on tips, social Security, and other items that would
• 28:42
  Speaker 2: be more main street focused. So I'll be very interesting
• 28:46
  Speaker 2: to see where this all comes out. They are not
• 28:50
  Speaker 2: finding much success in finding the cuts that they want
• 28:53
  Speaker 2: to do to offset all of this, and so in
• 28:55
  Speaker 2: the absence of tariff revenue offsetting it, in the absence
• 28:58
  Speaker 2: of massive government cuts to Medicare, Medicaid, so security and defense,
• 29:04
  Speaker 2: which are not coming either. I don't know how much
• 29:07
  Speaker 2: of a tax bill you're really going to be able
• 29:09
  Speaker 2: to put together here without that tax income on millionaires.
• 29:12
  Speaker 3: Yeah, well, I'm surprised that this is something that the
• 29:15
  Speaker 3: Republican Party was potentially learning option. Yeah, it just seems
• 29:20
  Speaker 3: so counterintuitive.
• 29:21
  Speaker 2: But frankly, look, I mean the political norms have changed,
• 29:25
  Speaker 2: of course, they have changed significantly. They've been changing over
• 29:29
  Speaker 2: the last eight years. But the Republican Party is not
• 29:33
  Speaker 2: the party of free trade anymore. They are not necessarily
• 29:37
  Speaker 2: the always pro business party as they were, you know,
• 29:41
  Speaker 2: prior to twenty sixteen, and that has been there's been
• 29:44
  Speaker 2: a general push away from free markets from both Democrats
• 29:48
  Speaker 2: and Republicans over the last few years. But this did
• 29:51
  Speaker 2: surprise me quite a bit. It's pretty unrecognizable from the
• 29:55
  Speaker 2: Republican mantra over the last fifty years, but was kind
• 29:58
  Speaker 2: of in line with stuff like tariffs and other policies
• 30:02
  Speaker 2: that have been coming out of the Republican Party this
• 30:04
  Speaker 2: time around.
• 30:05
  Speaker 3: Not that I agree with the idea of increasing the
• 30:08
  Speaker 3: highest bracket, but Trump mentioning that the reason that he
• 30:12
  Speaker 3: shouldn't proceed they shouldn't proceed with it is it would
• 30:15
  Speaker 3: be very disruptive and a lot of millionaires would leave
• 30:18
  Speaker 3: the country. That I sort of scratched my head on
• 30:20
  Speaker 3: just because the whole idea of renouncing citizenship and you know,
• 30:23
  Speaker 3: moving out of the United States to me, just because
• 30:26
  Speaker 3: of an increase of thirty seven to thirty nine points
• 30:28
  Speaker 3: six percent, to me, feels rather unlikely.
• 30:32
  Speaker 2: I would agree there. I would be much more concerned
• 30:35
  Speaker 2: about a bump up of the corporate tax rate and
• 30:37
  Speaker 2: company's abilities to relocate their headquarters. Go show me which
• 30:42
  Speaker 2: country that you actually would feel comfortable living in that's
• 30:45
  Speaker 2: going to tax you on your income if you're making
• 30:48
  Speaker 2: you know, three million dollars a year at less than
• 30:50
  Speaker 2: forty percent. Yeah, it's a pretty limited list, right, It's
• 30:54
  Speaker 2: a fairly limited list. And so I'm with you there.
• 30:56
  Speaker 2: I don't know to what degree it actually drives investment
• 30:59
  Speaker 2: out of the United States. Let's take a quick break
• 31:02
  Speaker 2: when we come back, bit of stack roulette. Here on
• 31:04
  Speaker 2: the financial exchange.
• 31:06
  Speaker 1: Market, volatility is at its highest point since the pandemic.
• 31:09
  Speaker 1: Keep it here for the most comprehensive coverage of the
• 31:12
  Speaker 1: global trade war. This is the Financial Exchange Radio Network.
• 31:16
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• 31:32
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• 32:03
  Speaker 2: Time for bid of stack eru let here, Paul, What
• 32:05
  Speaker 2: do you have for us?
• 32:07
  Speaker 1: Mike?
• 32:07
  Speaker 3: The US fertility rate remains at near record lows. More
• 32:12
  Speaker 3: than three point six million babies were born in the
• 32:14
  Speaker 3: US in twenty twenty four. I don't shout out to
• 32:16
  Speaker 3: me for one of them. I don't know my life really.
• 32:18
  Speaker 2: But you know, when we talk about parentings in such
• 32:20
  Speaker 2: a flattering fashion, why we don't have more people out
• 32:24
  Speaker 2: there going for it.
• 32:26
  Speaker 3: It's an issue that in terms of the fertility rate,
• 32:31
  Speaker 3: you know, all jokes aside in terms of wanting to
• 32:33
  Speaker 3: grow your population as the country going forward, it does
• 32:36
  Speaker 3: present a long term problem if you're talking about economic
• 32:39
  Speaker 3: growth going forward. You know, we're projecting out on demographics,
• 32:43
  Speaker 3: you know, generations that are yet to come. But there
• 32:47
  Speaker 3: is a lot of people out there that are forgoing
• 32:49
  Speaker 3: or delaying having children. And this pair is kind of
• 32:51
  Speaker 3: nicely with the story from the Boston Globe where the
• 32:54
  Speaker 3: average childcare cost in the state of Massachusetts has reached
• 32:59
  Speaker 3: almost twenty thousand dollars annually. And I'm sure a lot
• 33:01
  Speaker 3: of listeners will tell you out there that you can
• 33:04
  Speaker 3: find even more expensive options than that twenty thousand average
• 33:08
  Speaker 3: that's listed here. It's twice the national average for the
• 33:11
  Speaker 3: state of Massachusetts. And that is part of the problem.
• 33:14
  Speaker 2: I mean, number one.
• 33:16
  Speaker 3: Ultimately, the decision to have a child or not, you know,
• 33:19
  Speaker 3: that is completely up to the parents there, and that
• 33:23
  Speaker 3: is something that is more social than purely economic. I
• 33:27
  Speaker 3: think the economic reasons do get paired with the decision,
• 33:31
  Speaker 3: but it is not ultimately the end all be all,
• 33:34
  Speaker 3: but it certainly doesn't help the case that you have
• 33:37
  Speaker 3: nationally an issue of childcare costs that are really expensive,
• 33:40
  Speaker 3: you know, most prohibitially here in the New England area.
• 33:43
  Speaker 3: And the difficult part is there's not a real easy
• 33:45
  Speaker 3: way to solve that problem because the biggest expense is
• 33:49
  Speaker 3: staff and they're only making eighteen bucks an hour on
• 33:52
  Speaker 3: the childcare front, and that job, as we can all
• 33:55
  Speaker 3: attest having younger kids, it's not an easy one.
• 33:58
  Speaker 2: There's just not a market based solution. Either you continue
• 34:01
  Speaker 2: the current path, or you subside through taxes like we
• 34:06
  Speaker 2: do K through twelve education, right, and that's that's just
• 34:09
  Speaker 2: going to be after you know, that'll be a decision
• 34:11
  Speaker 2: that we have to make. But to this point it's
• 34:13
  Speaker 2: been no, it's private until your kids go to kindergarten,
• 34:16
  Speaker 2: and that's certainly a contributing factor. However, I can't point
• 34:21
  Speaker 2: to any country that has successfully affected the birth rate
• 34:26
  Speaker 2: by imposing cheaper costs on parents, So that would be
• 34:31
  Speaker 2: the biggest way around.
• 34:32
  Speaker 3: Yeah, that would be the biggest waste of money to try.
• 34:35
  Speaker 2: And I don't know, but you know, certainly there's no
• 34:38
  Speaker 2: evidence out there.
• 34:39
  Speaker 3: There's numerous case studies in trying this and it hasn't right.
• 34:42
  Speaker 1: Really.
• 34:42
  Speaker 2: I will also say that while I am, you know,
• 34:46
  Speaker 2: concerned about the United States birth rate, the Central Intelligence
• 34:51
  Speaker 2: Stages of CIA puts together these birth rates and it's
• 34:54
  Speaker 2: slightly different than the Wall Street Journal numbers. So maybe
• 34:56
  Speaker 2: this was estimates that I was working on. But the
• 34:58
  Speaker 2: United States, according to the CIA, you can go to
• 35:00
  Speaker 2: CIA doc of the World Factbook and look at this stuff.
• 35:04
  Speaker 2: Was one point eighty four was the fertility rate in
• 35:07
  Speaker 2: the United States, which isn't great. It puts US at
• 35:09
  Speaker 2: the one hundred and thirty third in terms of all
• 35:12
  Speaker 2: countries out there that they were able to measure, and
• 35:15
  Speaker 2: that's one thirty three out of two hundred and twenty
• 35:19
  Speaker 2: seven countries, So obviously not great. But go take a
• 35:23
  Speaker 2: look around the rest of the developed world. South Korea
• 35:26
  Speaker 2: second worst at one point one to two. That puts
• 35:29
  Speaker 2: South Korea in a position where quite honestly, thirty forty
• 35:32
  Speaker 2: years from now, I have no idea what that country
• 35:35
  Speaker 2: looks like, and that's a shrinking population. They were one
• 35:38
  Speaker 2: of the ones.
• 35:38
  Speaker 3: That did try financial incentives to try and boost that rate.
• 35:41
  Speaker 2: China most recent data, which I don't believe at all,
• 35:45
  Speaker 2: was one point five to five, and you know, quite honestly,
• 35:49
  Speaker 2: there could be a few million missing babies in that number.
• 35:52
  Speaker 2: Let's just call you know, call a spat a spade here.
• 35:54
  Speaker 2: I don't believe those numbers at all. Germany sitting at
• 35:57
  Speaker 2: one point five eight. There are a very few developed
• 35:59
  Speaker 2: countries in the world that are experiencing a higher birth
• 36:03
  Speaker 2: rate in the United States. France is one of them
• 36:06
  Speaker 2: that is demographically looking a little bit better than the
• 36:08
  Speaker 2: United States.
• 36:09
  Speaker 3: Who's number one? Does it?
• 36:11
  Speaker 2: It's all African countries. So the birth rates in Nize
• 36:15
  Speaker 2: are six point six four, Angola five point seven, d
• 36:19
  Speaker 2: r C five and a half. A couple of countries
• 36:22
  Speaker 2: that I'm not familiar with, Chad is sitting at five
• 36:25
  Speaker 2: and a quarter to Uganda over five. So the entire
• 36:28
  Speaker 2: African continent is seeing much higher birth rates and has
• 36:32
  Speaker 2: for quite some time, and massive population growth, which is
• 36:36
  Speaker 2: you know, obviously creating other problems there. But demographically, if
• 36:39
  Speaker 2: we're talking about you know, some of the Asian countries
• 36:43
  Speaker 2: China included in all of this, and large twasts of Europe,
• 36:49
  Speaker 2: they're entirely. Look, we are not the only country in
• 36:52
  Speaker 2: the world facing the problem facing the problem. There are
• 36:54
  Speaker 2: many countries that are. In fact, I would make the
• 36:57
  Speaker 2: argument that the United States looks in a far better
• 36:59
  Speaker 2: scenario because of two factors. One, our fertility rates actually
• 37:03
  Speaker 2: pretty good, and two, we are generally more comfortable with
• 37:08
  Speaker 2: the idea of immigration in this country than many other
• 37:11
  Speaker 2: countries are. Right, Like you talk about Japan and Korea
• 37:16
  Speaker 2: and China and just societally, the resistance to immigration in
• 37:21
  Speaker 2: order to fill jobs and grow the population there, it's
• 37:23
  Speaker 2: just not something that's even really considered. And so I'm
• 37:27
  Speaker 2: not saying that we will see massive immigration reform. I'm
• 37:30
  Speaker 2: just saying that I think the United States would be
• 37:32
  Speaker 2: more receptive to it than many other countries that are
• 37:34
  Speaker 2: facing similar problems. And so, yeah, I don't know what
• 37:37
  Speaker 2: those countries end up doing with their social programs that exist.
• 37:40
  Speaker 2: China doesn't have much of one. But you know, United
• 37:43
  Speaker 2: States is already facing huge issues with our social security
• 37:46
  Speaker 2: and Medicare funding plans. And that's when we have one
• 37:50
  Speaker 2: of the better fertility rates in the entire world when
• 37:53
  Speaker 2: it comes to developed nations.
• 37:55
  Speaker 3: It peaked back in nineteen fifty seven, the US fertility
• 37:58
  Speaker 3: rate at three point seventy six berth per woman. We
• 38:01
  Speaker 3: sit at one point six y two or I guess,
• 38:04
  Speaker 3: Mike you had seen three UH.
• 38:06
  Speaker 2: Markets remain strongly in positive territory, with the S and
• 38:09
  Speaker 2: P five hundred up about one and a half percent.
• 38:11
  Speaker 2: As we close out the show, We'll be back at
• 38:13
  Speaker 2: it tomorrow with alphabets, Google's parents companies earnings tomorrow on
• 38:18
  Speaker 2: the show. Have a great rest of your day, folks,