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What are the market narratives for 2025? · The Financial Exchange Show

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Speaker 2: If you thought that this was gonna be the first
1:12
Speaker 2: full week of trading for twenty twenty four, you're wrong.
1:16
Speaker 2: Mark's gonna be closed on Friday in observe, rather on
1:19
Speaker 2: Thursday in observance of the final day of Jimmy Carter's
1:24
Speaker 2: state funeral. And so we still cannot get to a
1:27
Speaker 2: full week of trading. Third week in a row that
1:30
Speaker 2: we do not have a full week of equity trading,
1:33
Speaker 2: at least in markets. It's Chuck, Mike and Tucker with you,
1:37
Speaker 2: and so that obviously, does, you know, disrupt the trading schedule.
1:41
Speaker 2: I know that's not really the thing we should be
1:44
Speaker 2: concerned about generally with the funeral, There's one thing that
1:46
Speaker 2: you should be concerned about, and that's paying respect to
1:49
Speaker 2: someone who's had a life well lived, and so that
1:52
Speaker 2: is ultimately the important thing.
1:55
Speaker 3: It's a weird series of closures too. So you've got
1:59
Speaker 3: these st exchange closed, the bond market is open but
2:03
Speaker 3: closes early. Banks are open, the post office is open
2:07
Speaker 3: but closing early as well, I believe, So.
2:10
Speaker 2: Continue the jobless claims data is gonna be on Wednesday
2:12
Speaker 2: instead of Thursday.
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Speaker 4: Now, so even the bls.
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Speaker 3: Getting government agencies are closed. Yeah, so you've you've got
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Speaker 3: some stuff. They still have fed.
2:21
Speaker 2: Speeches scheduled for Thursday. There's five of them. Yeah, you know,
2:26
Speaker 2: and I'm pretty sure they were a government agency, so yeah,
2:29
Speaker 2: we're pretty sure they weren't invited to speak at the funeral,
2:32
Speaker 2: so who knows what they're going to be talking about.
2:33
Speaker 4: But like.
2:36
Speaker 2: Again, this is my first day back in twenty twenty five,
2:39
Speaker 2: all fired up, and you gotta have five fed speakers
2:42
Speaker 2: on the day of an ex president's funeral.
2:44
Speaker 4: Are you kidding me? Read the room, people, You can't
2:48
Speaker 4: push them to Friday.
2:49
Speaker 3: Yeah, read the room.
2:50
Speaker 4: What are we doing here?
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Speaker 2: But in any case, so in terms of things to
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Speaker 2: actually watch this week, the big one is gonna be
2:57
Speaker 2: the job support on Friday.
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Speaker 4: We're gonna get it.
2:59
Speaker 2: AM previous jobs report just as a recap, two hundred
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Speaker 2: and twenty seven thousand jobs created, but the an employment
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Speaker 2: rate moved up to four point two percent. That's because
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Speaker 2: these are two different surveys that produce those two different results. Yeah,
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Speaker 2: consensus estimate right now between one hundred and sixty and
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Speaker 2: two hundred thousand jobs created with the unemployment rate being
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Speaker 2: at four to two or four to three. That's what
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Speaker 2: the expectation is for this job's report here.
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Speaker 3: So you know, looking top down for you know, a
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Speaker 3: general view of the labor market would be that's pretty
3:34
Speaker 3: darn good, is hey, You're creating jobs in the two
3:37
Speaker 3: hundred thousand range and the unemployment rate is sticking around
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Speaker 3: four point two percent. Interestingly, you know what markets seem
3:44
Speaker 3: most concerned about today happens to be interest rates. We've
3:48
Speaker 3: talked at length about where the ten year treasury is gone,
3:51
Speaker 3: where mortgage rates have gone. If you get a you know,
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Speaker 3: crummy jobs report this Friday, might you see yields moving
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Speaker 3: and equity markets moving up? Quite possibly, So we're back
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Speaker 3: into this mode of bad news. Might be some semblance
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Speaker 3: of good news, although I don't ever like to see
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Speaker 3: deterioration in the labor market.
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Speaker 4: No, And the question is which job market do we get?
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Speaker 2: Because from April through August, that five month reporting period,
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Speaker 2: four out of those five jobs reports showed fewer than
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Speaker 2: one hundred and fifty thousand jobs created, which is where
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Speaker 2: you start getting concerned. You start floating around like one
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Speaker 2: hundred thousand and ninety eight thousand. You had a seventy
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Speaker 2: eight thousand in August, You're kind of like, this is,
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Speaker 2: you know, approaching stall speed. The last three you've gone
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Speaker 2: two fifty five thirty six. Remember October was when we
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Speaker 2: had the hurricane, so we kind of tossed that out
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Speaker 2: and now to twenty seven. So the question is, Okay,
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Speaker 2: if you average that two twenty seven and thirty six,
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Speaker 2: which I think you kind of have to because you know,
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Speaker 2: like we talked about how the October number was hot
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Speaker 2: garbage for you know, hurricane related reasons. Okay, you're still
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Speaker 2: like one hundred and twenty five thousand on average there,
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Speaker 2: and so you've got this one outlier to the upside
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Speaker 2: in September, and other than that, it really has not
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Speaker 2: been impressive for the last six months now.
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Speaker 3: Right, So when do you start labeling this as Trump's fault?
5:11
Speaker 3: Because I was talking to Vinnie Penn the other day and.
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Speaker 2: He was saying, oh, we already have to get into
5:15
Speaker 2: that on on on I think so the third you know,
5:17
Speaker 2: business day of the year, we're already getting into like
5:20
Speaker 2: who's the blame for this?
5:21
Speaker 3: Vinny Penn was telling me that he posted on Facebook
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Speaker 3: or Instagram that his Duncan coffee went up by eleven cents,
5:28
Speaker 3: and somebody commented, welcome to the Trump economy, and he
5:32
Speaker 3: found that quite humorous.
5:34
Speaker 2: We still can't do thanks Obama. Yeah, I mean sure,
5:38
Speaker 2: you know, like I'm kind of hoping we can do.
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Speaker 4: That for like our entire life.
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Speaker 3: It's just like a nice meme that continues, you know,
5:43
Speaker 3: or I don't know, so in any case, Thanks Lincoln.
5:48
Speaker 3: There will be some Fed speakers this week, there will
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Speaker 3: be a few other data points, but really what matters
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Speaker 3: out of this week is the Friday jobs report. That's
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Speaker 3: the end all be all for the week in terms
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Speaker 3: of its impact and effect on the overall economy and markets.
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Speaker 3: For what we are looking for this.
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Speaker 2: Week, Yeah, I think everything else, as you mentioned, is
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Speaker 2: going to dovetail off of what we get in that report. Now, granted,
6:13
Speaker 2: you do still have some significant volatility in markets right now. Sure,
6:18
Speaker 2: just as an example, like you take a look at
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Speaker 2: what we saw and granted this was on very low volumes,
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Speaker 2: but you look at like what we saw last week
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Speaker 2: and the last day of twenty twenty four saw like
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Speaker 2: a two percentage point swing from high to low and closed.
6:34
Speaker 2: You know, in the middle of that range, you saw
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Speaker 2: a significant upward swing on Friday, like it's there's some
6:42
Speaker 2: volatility out there. But despite that, we get back to
6:46
Speaker 2: my favorite Shakespeare quote. This market has been full of
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Speaker 2: sound and fear, a signifying nothing. It has been within
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Speaker 2: a two percent trading range since the election. It has
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Speaker 2: not gone below fifty eight hundred actually about a call
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Speaker 2: it three and a half percent range. Now, it's not
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Speaker 2: gone below fifty eight hundred or above sixty one hundred.
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Speaker 2: It's just hanging out there and spent most of its
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Speaker 2: time really between like fifty nine hundred and six thousand,
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Speaker 2: in about a two percent range. And so you look
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Speaker 2: at this and you say, what what do you make
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Speaker 2: of this market? And the answer is, hey, there is
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Speaker 2: no catalyst driving it forward at this point. The story
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Speaker 2: that has driven the last twelve months has been, hey,
7:31
Speaker 2: people thought that twenty four was going to be, you know,
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Speaker 2: potentially a crappy year with slow growth. The growth has
7:37
Speaker 2: been fast and earnings have been good, and that's driven markets,
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Speaker 2: and earnings expectations have expanded as well.
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Speaker 3: So let's yeah, let's define that. Because I was asking
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Speaker 3: Paul this as well going into twenty twenty four, it
7:48
Speaker 3: seemed to me that the expectation was for let me
7:53
Speaker 3: think about the risk to the twenty twenty four economy
7:56
Speaker 3: was do we get that recession that people were worried
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Speaker 3: about since twenty twenty two.
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Speaker 2: We talked aout heading into Q four of twenty three, yep,
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Speaker 2: where we were entering that tipping point, and the data
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Speaker 2: that we got in Q four, you and I said, Hey,
8:07
Speaker 2: this is good enough. The recession is not going to
8:09
Speaker 2: be here. And the market picked that up over the
8:11
Speaker 2: course of the year.
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Speaker 3: And the excitement about twenty twenty four was, Oh, we've
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Speaker 3: got you know, some companies that are doing some really
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Speaker 3: innovative stuff on artificial intelligence, and you know, a lot
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Speaker 3: of different growth in terms of you know, a market
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Speaker 3: that can continue to chug along there, but with that
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Speaker 3: tail risk of recession. If we define the narrative going
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Speaker 3: into twenty twenty five, how do you see it, Chuck,
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Speaker 3: Because I see it as a investors taking a look
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Speaker 3: at twenty five and seeing enormous opportunity from deregulation, tax
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Speaker 3: cuts with a tail risk of inflation, I think is
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Speaker 3: the overall narrative. And so if I think of that
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Speaker 3: wall of worry that you need to climb in order
8:51
Speaker 3: for markets to surprise, you to the upside again, it
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Speaker 3: would be Okay, do you get some of those positives
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Speaker 3: without that inflationary tail risk?
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Speaker 4: Yeah, I think ultimate.
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Speaker 2: I look at, hey, what's projected for earnings growth? Because
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Speaker 2: as good friend Larry a couple of likes say, earnings
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Speaker 2: are the mother's milk of stocks. Calendar youar twenty twenty
9:09
Speaker 2: five fact set, which is a data aggregator consensus earnings
9:15
Speaker 2: estimate growth is at fourteen point eight percent. So it's saying, yeah,
9:20
Speaker 2: you are going to see like some steep earnings growth,
9:23
Speaker 2: Like that's that's fast. If you look at the long
9:25
Speaker 2: term historical average for earnings growth, it's half that. It's
9:30
Speaker 2: less than half that. Actually it's around seven percent. And
9:34
Speaker 2: so actually I think it's around four percent. Like I'll
9:37
Speaker 2: get into it later, but this is projecting a really
9:40
Speaker 2: fast year of earnings growth. And the risk is that
9:44
Speaker 2: for whatever reason, that doesn't develop. Because you're priced for
9:49
Speaker 2: you're priced right now, sitting here today, and this was
9:53
Speaker 2: at this was on January third, so it was Friday.
9:57
Speaker 2: Forward pe ratio for the S and P five hundred,
10:00
Speaker 2: So S and P price divided by next twelve months
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Speaker 2: projected earnings.
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Speaker 4: It was twenty one point four x.
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Speaker 2: Which is steep. Yeah, okay, it's it's a steep valuation.
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Speaker 2: Doesn't mean that you know, things fall apart tomorrow.
10:12
Speaker 4: I've said this before.
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Speaker 2: Evaluation is a horrible predictor of what's going to happen.
10:16
Speaker 2: You know, in markets, they can remain in the short term,
10:19
Speaker 2: medium term, it can be.
10:20
Speaker 4: Long term, it can be more predictive.
10:22
Speaker 3: Yeah, but yeah, short term kind of useless.
10:25
Speaker 2: So ultimately you look at this and you say, Okay,
10:28
Speaker 2: it's a steeply priced market with high expectations for earnings growth.
10:32
Speaker 2: If something causes that to falter, and that something could
10:36
Speaker 2: be higher inflation, lower margins, lower sale like whatever it is.
10:41
Speaker 2: You know, recession. You can play out a million different things,
10:45
Speaker 2: both getting stuck in the Suez Canal. Sure, weird stuff happens.
10:50
Speaker 2: We know this at this point. The risk here is that, hey,
10:53
Speaker 2: those earnings projections have to come in and that multiple
10:56
Speaker 2: needs to come in, and so you end up with
10:58
Speaker 2: a potential downturn as as a result of it. Do
11:01
Speaker 2: stock market downturns last forever?
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Speaker 4: Generally?
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Speaker 1: No?
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Speaker 2: I say generally, because I leave open the possibility that
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Speaker 2: there's something we haven't seen yet. Because you never know
11:10
Speaker 2: what you're gonna get, but generally, no, they don't last forever.
11:15
Speaker 2: So again, this is the stage with which we're entering,
11:20
Speaker 2: you know, twenty twenty five, and we've got a wide
11:24
Speaker 2: range of outcomes here because you've got policy uncertainty on
11:28
Speaker 2: the Fed side, no one quite knows what the Fed's
11:31
Speaker 2: gonna do this year, sure, And on the fiscal and
11:35
Speaker 2: trade side of things, you got a new administration that
11:37
Speaker 2: starts two weeks from today, and we're still searching for
11:40
Speaker 2: clues as to exactly what policy is going to be implemented.
11:43
Speaker 2: Washington Post was out with a report today, Hey, Trump
11:46
Speaker 2: administration is considering tariffs on all countries, but targeted at
11:50
Speaker 2: a few, you know, small areas. Trump comes out with
11:53
Speaker 2: a tweet Washington Post is lying, they don't know what
11:56
Speaker 2: I'm gonna do, So like, yeah, we don't know what's
12:01
Speaker 2: going to happen right now, and we need a little
12:03
Speaker 2: bit of humility as a result of that.
12:05
Speaker 4: Let's take a quick break here.
12:06
Speaker 2: When we come back, we'll talk about what is going
12:08
Speaker 2: on in the job market.
12:10
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13:10
Speaker 4: Piece from the Wall Street Journal.
13:13
Speaker 2: Unemployed office workers, we're having a harder time finding new jobs.
13:16
Speaker 4: This messages with the data and.
13:19
Speaker 2: Stories that we've been seeing over the past really like
13:23
Speaker 2: nine months, I think probably since like the start of
13:25
Speaker 2: Q two in that people are reporting staying on unemployment longer.
13:31
Speaker 2: They're having a harder time finding new work.
13:35
Speaker 4: And this is.
13:38
Speaker 2: This is I think the main evidence that we have
13:41
Speaker 2: of the slowdown in the labor market right now, because
13:44
Speaker 2: the unemployment rate, even though it you know, moved up
13:46
Speaker 2: last month, that's kind of stabilized over the last four
13:49
Speaker 2: or five at least. There's no clear trend there right now,
13:52
Speaker 2: and we're not seeing an uptick in new unemployment claims.
13:56
Speaker 4: It's just people are longer.
13:59
Speaker 3: Yes, that stagnant is the word that I've used a
14:01
Speaker 3: few times now. And you know the stats behind this.
14:04
Speaker 3: More than one point six million of those jobless workers
14:07
Speaker 3: that are out there, there's seven million people who are unemployed.
14:09
Speaker 3: One point six million are saying that it's taken them
14:13
Speaker 3: at least six months, so they've been they've been unemployed
14:15
Speaker 3: for six months or more. And that's a big number
14:20
Speaker 3: in recent history. That numbers up more than fifty percent
14:23
Speaker 3: since the end of twenty twenty two, that portion of
14:25
Speaker 3: or that number of workers who have been unemployed for
14:27
Speaker 3: six months or more. We're seeing it in a few
14:30
Speaker 3: concentrated areas, but you know some that I think would
14:32
Speaker 3: find surprising, Like certainly, if you work in recruiting for tech,
14:36
Speaker 3: it's going to be it's been a tough time to
14:38
Speaker 3: find to find work, but really across the board, in
14:42
Speaker 3: a few specific areas you're not seeing as much hiring.
14:45
Speaker 3: So job postings on DEED for software development, data science,
14:49
Speaker 3: marketing roles, those are all at least twenty percent below
14:52
Speaker 3: the pre pandemic levels of job openings.
14:55
Speaker 4: Can we talk.
14:55
Speaker 2: About something there that I just yes, it struck me recently.
15:01
Speaker 2: What's the main thing that big tech is working on
15:03
Speaker 2: right now? And in the places that like big tech
15:08
Speaker 2: is talking about using it? Isn't it in those exact workers?
15:12
Speaker 3: So, like, isn't there this horrible thing where like science
15:15
Speaker 3: and marketing rules?
15:16
Speaker 2: Yeah, isn't there a horrible thing where the company that
15:19
Speaker 2: you're working for is building your extinction?
15:24
Speaker 3: Yeah, it's not fun. Like isn't that just like wild?
15:28
Speaker 1: Yeah?
15:29
Speaker 2: Not like outsourceing, but like no, we're building things that
15:32
Speaker 2: can you know, write stuff for marketing handle data science,
15:36
Speaker 2: and you know, like they're building their replacement they are. Yeah,
15:42
Speaker 2: and what if those jobs don't come back? Well, that's
15:45
Speaker 2: the entire promise of artificial intelligence.
15:47
Speaker 4: I know.
15:48
Speaker 2: But what if this is like the cutting edge of
15:51
Speaker 2: what we're seeing here and what does it mean over
15:56
Speaker 2: the next decade. I'm not saying that that will be
15:58
Speaker 2: the case, but I.
16:00
Speaker 3: Refuse to believe that definitively at least that you know,
16:03
Speaker 3: what we are seeing here is purely the effect of
16:06
Speaker 3: artificial intelligence. Yet again, evidence starts to stack up, and
16:11
Speaker 3: you know, it's still early on, but it very well
16:13
Speaker 3: could be. You know, the overall hiring rate in the
16:17
Speaker 3: information industry generally it's thirty percent below the pandemic. Finance
16:22
Speaker 3: hiring twenty eight percent below the pandemic. That's an area
16:27
Speaker 3: in finance, at least where I have a tougher time
16:30
Speaker 3: drawing the AI line.
16:32
Speaker 4: I know there falls into that category because.
16:34
Speaker 3: Like investment banking would I'm sure corporate finance roles at
16:38
Speaker 3: most companies, accounting roles at most companies would account there.
16:42
Speaker 3: So I believe that it might be happening in areas
16:45
Speaker 3: like investment banking to some degree. But generally, speaking from
16:49
Speaker 3: what I have heard, if you are a large banker
16:51
Speaker 3: financial institution, your approach to the use of artificial intelligence
16:55
Speaker 3: is very conservative and slow.
16:57
Speaker 4: Right now, I.
16:58
Speaker 2: Guess I'm wondering more, you know, finance, does that get
17:02
Speaker 2: wrapped up in like mortgage origination, because if that does
17:05
Speaker 2: how much of that is just because rates are high
17:07
Speaker 2: in no one's refinancing right now.
17:09
Speaker 3: Yeah. So, where you have seen a lot of the
17:12
Speaker 3: job growth over the last twelve months, health care and government.
17:16
Speaker 3: That's where on the government side, it's not as though
17:18
Speaker 3: the total number of employee employees have greatly expanded over
17:21
Speaker 3: the last six years. It's merely that those jobs could
17:26
Speaker 3: not be hired for during the crazy stages of COVID,
17:29
Speaker 3: when people were getting wage increases all over the place.
17:33
Speaker 3: Guess what government jobs were not getting big wage increases.
17:35
Speaker 3: They lost a lot of people. Healthcare, same story, big
17:38
Speaker 3: catch up period of time. A lot of nurses got
17:40
Speaker 3: burnt out and retired, or a lot of people just
17:42
Speaker 3: in the healthcare sector in general moved out during the
17:46
Speaker 3: last five years, and they're making up for the last
17:48
Speaker 3: time there. But at some point you do make up
17:51
Speaker 3: for that lost time, and you cannot. I would assume
17:56
Speaker 3: that government jobs are not going to be the uh,
18:00
Speaker 3: the tide that lifts all boats for the next three
18:03
Speaker 3: years in terms of jobs.
18:05
Speaker 4: You wouldn't expect it to be.
18:06
Speaker 3: No, nor would you really want it to be if not,
18:09
Speaker 3: I'm being honest.
18:10
Speaker 2: No, So I think the message on the job market
18:14
Speaker 2: that I continue to get is there's no signs of
18:19
Speaker 2: the bottom falling out, but there's also no real sign.
18:24
Speaker 4: Of improvement there either.
18:26
Speaker 2: I mean, it's just it's very messy and very slow,
18:31
Speaker 2: and I think people are generally hunkering down and saying, look,
18:36
Speaker 2: I'm comfortable where I am, and even if I'm not,
18:38
Speaker 2: I can't really find much else. And if you are
18:41
Speaker 2: looking for work, it's a slog right now. Yeah, and
18:47
Speaker 2: this is this is before we even get to Hey,
18:50
Speaker 2: you've started to see residential construction, you know, numbers as
18:54
Speaker 2: far as units under construction dropping the last six months,
18:58
Speaker 2: but residential construction and plot has not dropped off yet.
19:02
Speaker 4: That's a strange.
19:03
Speaker 2: Divergence that you don't normally see, so that I'm trying to,
19:07
Speaker 2: you know, also look at that and say, hey, there
19:10
Speaker 2: is another shoe that hasn't maybe dropped here. But I
19:15
Speaker 2: can't reconcile a lot of this right now.
19:16
Speaker 4: It's still just messy. Let's take a quick break here.
19:21
Speaker 2: When we come back, we're gonna do a little bit
19:24
Speaker 2: of Wall Street Watch, and then we're talking a Social
19:28
Speaker 2: Security update right after this.
19:42
Speaker 1: Like us on Facebook and follow us on Twitter at
19:45
Speaker 1: TFE show. Breaking business news is always first right here
19:49
Speaker 1: on the Financial Exchange Radio Network. Time now for Wall Street.
19:55
Speaker 1: Watch a complete look at what's moving market so far
19:58
Speaker 1: today right here on the Financial Exchange Radio Network.
20:01
Speaker 5: All markets are rallying to begin the week as investors
20:04
Speaker 5: ready for a big week ahead, including jolts tomorrow, FED
20:07
Speaker 5: meet in minutes on Wednesday in the December jobs report
20:11
Speaker 5: on Friday.
20:12
Speaker 4: At the moment, the Dow is up by.
20:15
Speaker 5: Six tenths of a percent, or two hundred and fifty
20:17
Speaker 5: nine points, SMP five hundred up over one percent or
20:20
Speaker 5: sixty eight points in the NASDAC rallying big time today,
20:25
Speaker 5: up one in three couarters of a percent or three
20:28
Speaker 5: hundred and forty nine points. Russell two thousand is up
20:31
Speaker 5: by nearly three quarters of a percent as well. Ten
20:33
Speaker 5: year treasure yield up by four basis points at four
20:35
Speaker 5: points sixty three percent, and crude oil up about one
20:39
Speaker 5: percent higher today at seventy four dollars and sixty nine
20:43
Speaker 5: cents a barrel. Several chip makers are seeing gains today
20:47
Speaker 5: after fox Conn, who is a key assembler of Nvidia
20:50
Speaker 5: and Apple products, reported record revenue for the fourth quarter.
20:54
Speaker 5: In Nvidia up by five percent, Micron Technology shares up
20:57
Speaker 5: by ten percent in broadcast, and AMD are up by
21:02
Speaker 5: three percent.
21:03
Speaker 4: Meanwhile, news out.
21:04
Speaker 5: Of the media world this morning where Disney's Hulu plus
21:06
Speaker 5: Live TV will be combined with streamer Fubo, merging together
21:11
Speaker 5: two internet TV bundles. The two companies announced this morning
21:15
Speaker 5: the venture will be thirty percent on by Fubo and
21:18
Speaker 5: seventy percent by Disney and form the second largest digital
21:22
Speaker 5: pay TV provider after YouTube TV. Fubo shares rallying one
21:27
Speaker 5: hundred and sixty percent, while Disney shares up by one percent. Elsewhere,
21:32
Speaker 5: Bueing was upgraded to overweight a Barclays, where the firm
21:35
Speaker 5: said a tough twenty twenty four for Boeing stock could
21:39
Speaker 5: give way for a rebound in the new year on
21:41
Speaker 5: strong deliveries and production. Boeing shares are up by about
21:44
Speaker 5: a half a percent and as reminder, equity markets will
21:47
Speaker 5: be closed on Thursday to mourn the death of former
21:50
Speaker 5: President Jimmy Carter.
21:52
Speaker 4: I'm Tucker Silvan.
21:53
Speaker 1: That's Wallstreet Watch.
21:54
Speaker 2: Talk a little bit about the Social Security Fairness Act,
21:59
Speaker 2: which was signed into law by President Biden yesterday. This
22:05
Speaker 2: is the bill that Basically what it does is it
22:08
Speaker 2: gets rid of the Windfall Elimination Provision and the Government
22:12
Speaker 2: Pension Offset, the WEB and the GPO that have been
22:16
Speaker 2: in place since the nineteen eighties when they were put
22:19
Speaker 2: in place to try to shore make some security more sustainable.
22:23
Speaker 3: So by Reagan, yes, or under Reagan. Under Reagan, I
22:27
Speaker 3: don't think he drafted the bill.
22:29
Speaker 2: People always forget that Reagan actually like raised taxes, Like
22:32
Speaker 2: this wasn't a tax raised, but it kind of was
22:34
Speaker 2: because you ended up paying into the system and not
22:36
Speaker 2: getting anything. So by default it's kind of the same thing.
22:39
Speaker 2: But Reagan, Bush and Clinton all raised taxes. This was
22:42
Speaker 2: back when we actually, you know, dealt with the deficit sensibly.
22:46
Speaker 2: And since then you've had Bush two who cut taxes,
22:52
Speaker 2: Obama who let some of the Bush tax cuts expire
22:55
Speaker 2: but not all of them. Yeah, and then also pushed
22:58
Speaker 2: you know, a whole bunch of other spending through the
22:59
Speaker 2: Affordable Care Act Sure, and then Trump who cut taxes,
23:03
Speaker 2: Biden who campaigned on raising taxes but didn't raise taxes
23:07
Speaker 2: and in fact added more.
23:08
Speaker 3: Spending, gramatically added more spending.
23:09
Speaker 2: And now you have Trump coming in saying I'm going
23:12
Speaker 2: to cut taxes again and hopefully try to manage it
23:15
Speaker 2: based on lowering government spending. But there's not really a
23:18
Speaker 2: great track record of lowering government spending research.
23:20
Speaker 3: So, if we may, let's spend a minute, assuming that
23:23
Speaker 3: some of our listeners have no idea what the WEB
23:25
Speaker 3: or GPO are. If you live in the state of Alaska, Colorado, Louisiana, Maine, Massachusetts, Nevada,
23:33
Speaker 3: or Ohio, listen up in particular, because pretty much all
23:36
Speaker 3: of the state employees in those seven states do not
23:40
Speaker 3: pay into Social Security while they work.
23:43
Speaker 4: Correct.
23:44
Speaker 3: There are many other states where some of those workers do,
23:47
Speaker 3: some of them don't. Maybe the firefighters or cops in
23:50
Speaker 3: your state do or don't pay into Social Security. But
23:52
Speaker 3: here's the deal. Let's imagine for a moment that you
23:55
Speaker 3: are a Massachusetts police officer who worked for the force
23:59
Speaker 3: for thirty years. You worked for the Commonwealth of Massachusetts,
24:02
Speaker 3: you get a pension. You did not pay into Social
24:05
Speaker 3: Security for any of that period of time.
24:06
Speaker 4: Yep.
24:07
Speaker 3: You then leave the police force and you go work
24:09
Speaker 3: in private security for the last fifteen years of your
24:12
Speaker 3: career because you had a forty five year career, and
24:15
Speaker 3: during those fifteen years you do pay into Social Security
24:17
Speaker 3: for a period of time. Under the windfall lamination provision,
24:21
Speaker 3: your social Security benefits would be dramatically lowered because you
24:24
Speaker 3: spent thirty years in the public sector. Even though hey,
24:28
Speaker 3: I worked, I paid into Social Security. My social Security
24:31
Speaker 3: benefit already accounts for the fact that I only spent
24:35
Speaker 3: fifteen years in the private sector. It uses an average
24:37
Speaker 3: of my highest thirty earnings years, and so it's already
24:39
Speaker 3: lower because of that. But the web hit my benefit
24:43
Speaker 3: and lowered it because of my work in the public sector.
24:45
Speaker 2: And a lot of times that the impact you're talking
24:47
Speaker 2: like seventy to ninety percent.
24:49
Speaker 4: Of the benefit is reduced.
24:50
Speaker 3: The GPO, the government pitchan offset works in a different way.
24:53
Speaker 3: Let's assume here for a minute that you spent your
24:55
Speaker 3: entire career in the workforce, never paid into Social Security yep.
24:58
Speaker 3: But your but your husband did husband worked in whatever
25:03
Speaker 3: accounting for a private firm. You would be normally eligible
25:07
Speaker 3: for a spousal Social Security benefit off of your husband's
25:11
Speaker 3: work as a police officer for the state of Massachusetts.
25:15
Speaker 3: You would have that benefit in most cases entirely eliminated yep.
25:19
Speaker 3: Because of that government pension offset. Both of those things
25:22
Speaker 3: going away. So in particular for workers in Maine, Massachusetts.
25:27
Speaker 3: I mean, look, everybody knows somebody who worked for the state,
25:30
Speaker 3: and so a teacher, a police officer, a firefighter, like,
25:33
Speaker 3: we all know those people, and those people are in
25:35
Speaker 3: particular are going to be benefited a lot by this,
25:38
Speaker 3: and it's going to really reshape a lot of their
25:40
Speaker 3: retirement because in many cases, this is not twenty bucks
25:44
Speaker 3: a month, right, this is hundreds of dollars a month,
25:47
Speaker 3: if not thousands of dollars in a month in so
25:49
Speaker 3: security benefits that are suddenly going to be eligible for
25:52
Speaker 3: starting in twenty twenty five, actually before that, So this
25:57
Speaker 3: impacts all benefits after December of twenty twenty three.
26:01
Speaker 2: So you're actually going to see people impacted by this.
26:03
Speaker 2: They will receive a lump sum check orm sum payment
26:07
Speaker 2: for all of twenty twenty four to make up that
26:09
Speaker 2: shortfall and then start receiving the benefits again basically effective immediately.
26:15
Speaker 3: So obvious good news. If you are affected by one
26:18
Speaker 3: of these eliminations that are no longer going to be
26:21
Speaker 3: in place, bad news. I don't think we already spelled
26:24
Speaker 3: it out for you. So Security Trust Fund is going
26:26
Speaker 3: to run out in like eight or nine years. Anyway,
26:28
Speaker 3: this just shortens the lifespan, not significantly. There's not you know,
26:31
Speaker 3: there's not twenty million workers that are subject to this
26:34
Speaker 3: in one way, shape or form. It's a relatively small
26:36
Speaker 3: group because, like I said, only seven states predominantly play
26:39
Speaker 3: to this. But for those that are impacted, it can
26:43
Speaker 3: have a pretty massive change on your overall financial scenario
26:47
Speaker 3: in retirement. And so if you're out there evaluating what
26:51
Speaker 3: this might mean for you, maybe you are currently working
26:54
Speaker 3: as a teacher and have been hesitant to go work
26:57
Speaker 3: in the private sector because of this, or or vice versa.
27:00
Speaker 3: You're working in the private sector and didn't want to
27:02
Speaker 3: be subject to one of these, or you're already retired
27:04
Speaker 3: and being subject to one of these and trying to
27:06
Speaker 3: figure out what it means for you. Please give the
27:08
Speaker 3: folks at Armstrong Advisory Group a call. Our advisors are
27:12
Speaker 3: experts on the subjects of social security and pensions. We
27:15
Speaker 3: work with clients all the time who are subject to
27:17
Speaker 3: this sort of thing and can help you work through
27:20
Speaker 3: what it will mean for your financial future. Give us
27:23
Speaker 3: a call at eight hundred three nine three four zero
27:25
Speaker 3: zero one. Again that's the number for the Armstrong Advisory Group.
27:28
Speaker 3: You can give us a ring so we can talk
27:30
Speaker 3: this through with you on how your social security benefits
27:33
Speaker 3: might be impacted. Again that number eight hundred three nine
27:36
Speaker 3: three four zero zero one.
27:39
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
27:41
Speaker 1: registered investment advisor. Nothing in the ad or in any
27:44
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
27:47
Speaker 1: your own financial, tax and too state planning advisors before
27:49
Speaker 1: making any investment decisions. Armstrong make contact you to offer
27:52
Speaker 1: investment advisory services.
27:54
Speaker 2: Mike, why will Japan can? Why does Japan continue trying
27:59
Speaker 2: to invest in the United Slime States?
28:02
Speaker 3: Because it's one of the most attractive places to invest
28:04
Speaker 3: for just about any investor, and we also have fairly
28:08
Speaker 3: good relations with Japan.
28:09
Speaker 2: Let me give you a different question, just because this
28:12
Speaker 2: is the title of this New York Times piece, was
28:14
Speaker 2: why Japan won't stop trying to invest in the US?
28:17
Speaker 3: Yeah, I guess. The The piece here also was, hey,
28:19
Speaker 3: will the nip On Steel deal getting rejected change Japanese
28:25
Speaker 3: views on investment in the United States? And my answer
28:28
Speaker 3: would be almost certainly.
28:29
Speaker 4: Not, probably not.
28:30
Speaker 2: They want to generate investment returns, and ultimately they view.
28:34
Speaker 2: One way to do so, as you know, taking stakes
28:37
Speaker 2: in American companies or buying them outright. Let me ask
28:40
Speaker 2: you a different question, why did nip On Steel want
28:44
Speaker 2: to buy us Steal given the fact that US Steal
28:48
Speaker 2: has basically said, look, without this merger, we're not sure
28:51
Speaker 2: we're going to be able to continue to exist.
28:54
Speaker 3: I don't have an answer that question.
28:55
Speaker 2: Can you tell me no other than hey, we you know,
28:58
Speaker 2: we can operate economy of scale and sure, but when
29:02
Speaker 2: you talk about, hey, there's better opportunities for growth, yeah,
29:06
Speaker 2: US steel is not one of.
29:07
Speaker 3: The manufacturing in the United States. Doesn't seem like a
29:10
Speaker 3: great growth opportunity, I suppose, But I suppose one way
29:15
Speaker 3: to look at it would be I'd be willing to
29:17
Speaker 3: bet that if there were one industry the United States
29:20
Speaker 3: government is willing to protect and to subsidize and to fund,
29:23
Speaker 3: it would be manufacturing of steel products within its borders.
29:27
Speaker 3: And so maybe nip On was looking at it from
29:29
Speaker 3: that perspective as, Hey, it might not be a huge,
29:31
Speaker 3: huge growth industry, but we're likely to receive subsidies and
29:34
Speaker 3: basically be guaranteed to find a way to exist in
29:37
Speaker 3: this industry. Should we stay on the right side of
29:40
Speaker 3: the US government, which won't happen because the US government
29:43
Speaker 3: has now blocked the deal.
29:45
Speaker 4: Let's take a quick break here.
29:46
Speaker 2: When we come back, let's discuss a little bit more
29:50
Speaker 2: detail what the Washington Post is reporting about Trump and
29:55
Speaker 2: tariffs right after this.
29:57
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30:01
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30:05
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30:09
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30:17
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30:20
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30:35
Speaker 2: Washington Post, citing three people familiar with discussions but who
30:40
Speaker 2: all contributed anonymously, indicated this morning that President elect Trump
30:46
Speaker 2: is considering a tariff plan that would only tariff targeted industries,
30:53
Speaker 2: but would apply to all imports from all countries. Now, obviously,
30:57
Speaker 2: this would be a departure from the Broad Bay tariffs
31:02
Speaker 2: that the Trump campaign had been discussing previously. This piece,
31:07
Speaker 2: he says, Trump's transition team didn't immediately respond to a
31:10
Speaker 2: request for comment. I can however, tell you that the
31:13
Speaker 2: president himself or the President elect himself did respond via
31:18
Speaker 2: I don't know what online portal this was, just because
31:21
Speaker 2: I'm not snapchat. It was, yes, snapface, I believe, or
31:26
Speaker 2: maybe my chat. But in any case, the president did respond,
31:31
Speaker 2: and I want to get his exact quote right, just
31:33
Speaker 2: because it's important to Here we go, the story in
31:35
Speaker 2: the Washington Post, quoting so called anonymous sources which don't exist,
31:39
Speaker 2: incorrectly states that my tariff policy will be paired back.
31:42
Speaker 2: That is wrong. The Washington Post knows it's wrong. It's
31:45
Speaker 2: just another example of fake news. So nobody knows anything.
31:53
Speaker 4: Yeah, I mean, like.
31:54
Speaker 3: This isn't a typical, especially of a Trump administration. And
32:00
Speaker 3: I mean, would anybody be shocked if this did come
32:04
Speaker 3: to come to pass?
32:06
Speaker 1: I mean, I.
32:06
Speaker 3: Guess part yes, the a paired down version of the tariffs.
32:10
Speaker 3: It would not shock me one little bit were that
32:12
Speaker 3: the case. But clearly, incoming President Donald Trump wants to
32:18
Speaker 3: go to the negotiating table with the assumption that there
32:20
Speaker 3: will be universal tariffs on all countries of ten to
32:22
Speaker 3: twenty percent. And if he walks that back a little
32:24
Speaker 3: bit as a negotiating tactic, great, But I'm certain he
32:28
Speaker 3: doesn't want that being reported on and anybody going into
32:31
Speaker 3: negotiations with that presumption. But again, I think you should really,
32:36
Speaker 3: as we've talked about, take somebody at their word. If
32:39
Speaker 3: he's saying I've said this for a while, I intend
32:40
Speaker 3: to impose tariffs at ten to twenty percent on every
32:42
Speaker 3: country for all products coming into the United States. That
32:45
Speaker 3: assume that that's going to be.
32:46
Speaker 2: The case, right, I think that there's a baseline assumption,
32:49
Speaker 2: assumption that you need to work from. Now, whether it's
32:52
Speaker 2: the exact amount or whether it's phased in or how
32:55
Speaker 2: it you know, exactly it ends up playing out. Okay,
32:58
Speaker 2: there's room for interpretation there, but the guy's been pretty
33:02
Speaker 2: consistent on this for the last year. The rate has
33:06
Speaker 2: differed the implementations there. Like, I'm not saying we know
33:09
Speaker 2: any of the specifics, but also look at the people
33:13
Speaker 2: that are coming on board and what they've talked about.
33:16
Speaker 2: The incoming Treasury Secretary has talked about using broad based
33:20
Speaker 2: tariffs to you know, try to rebalance things from a
33:23
Speaker 2: trade perspective. The incoming head of the Council of Economic
33:27
Speaker 2: Advisors has talked about how broad based tariffs can you know,
33:30
Speaker 2: help to reverse decades of trade imbalances. When people tell
33:36
Speaker 2: you who they are, you have to believe them. Now,
33:40
Speaker 2: whether it's going to work or not, I don't know.
33:42
Speaker 2: I'll be the first to admit I'm not gonna sit
33:45
Speaker 2: here and be like, no, this can never work, because
33:48
Speaker 2: I admit that I'm not a super genius who knows everything.
33:53
Speaker 2: It could work, it could go very badly, or it
33:55
Speaker 2: could not be implemented and will never know.
33:57
Speaker 4: I don't know. But everyone has this rush to like
34:03
Speaker 4: stake out.
34:04
Speaker 2: Their their claim of like where they're gonna be and
34:06
Speaker 2: what's gonna Nobody knows anything.
34:08
Speaker 3: I'll stake Wait, I'll stake some sort of claim. Should
34:12
Speaker 3: the seriousness of these tariffs get to the point where
34:15
Speaker 3: markets begin to react negatively, and by that I mean
34:18
Speaker 3: like a signet. I'm not talking about, oh, the stock
34:20
Speaker 3: market went down by half percent for a day.
34:21
Speaker 2: You're talking like ten to fifteen percent pullback or more.
34:24
Speaker 3: Then I suspect that there will be some real conversation
34:26
Speaker 3: about watering them down. Until something like that happens. Then
34:29
Speaker 3: we're going to continue to get this narrative from the
34:31
Speaker 3: incoming Trump administration, and I think they'll stick that way
34:34
Speaker 3: until there is evidence of people being genuinely concerned about it.
34:37
Speaker 3: And I don't see any evidence of that today.
34:40
Speaker 4: I'm not sure.
34:41
Speaker 2: I hear you, I I everyone that I talk to
34:45
Speaker 2: who is plugged into that universe. Yep, it's talking about
34:50
Speaker 2: how they're they're resolute, and they're emboldened and and YadA YadA, yep.
34:54
Speaker 2: And maybe maybe I'm getting Charlie browned, but I'm that
35:01
Speaker 2: I'm buying that people are underestimating what's going to happen here.
35:05
Speaker 2: The underestimation has like has me potentially overestimating in the
35:09
Speaker 2: opposite direction. It's possible, but uh, two weeks, well, I
35:15
Speaker 2: don't know.
35:16
Speaker 4: If we'll know in two weeks.
35:17
Speaker 3: No, we won't know anything about terrorists.
35:19
Speaker 2: They're probably not gonna announce it, like the evening of
35:21
Speaker 2: the inauguration would be my guess.
35:24
Speaker 4: Maybe during a speech, first just.
35:32
Speaker 3: List every country individually.
35:35
Speaker 4: Wouldn't it be.
35:35
Speaker 3: Great if just the incoming president, Donald Trump listing countries
35:39
Speaker 3: for the last forty minutes, one.
35:40
Speaker 2: Hundred ninety three countries, and then at the end just
35:44
Speaker 2: ten percent.
35:47
Speaker 4: I don't know.
35:49
Speaker 2: I get kind of a kick out of it, But again,
35:51
Speaker 2: I'm the one who wanted the Fed to just raise
35:53
Speaker 2: rates five percent right at the beginnings. Indeed, let's see
35:57
Speaker 2: US yields hit fourteen month high before one hundred nineteen
35:59
Speaker 2: billion dollars in debt sales. So we've got bond yields
36:03
Speaker 2: that have been moving up over the last two months now,
36:06
Speaker 2: pretty much since the election. They had a brief break
36:09
Speaker 2: in late November where they moved lower, but have you know,
36:12
Speaker 2: resumed their upward move over the last month now. And
36:17
Speaker 2: this is a place where I do think yields maybe
36:20
Speaker 2: off sides to the upside a little bit, because everyone's
36:23
Speaker 2: talking about like, oh, the debt's unsustainable and this and that,
36:26
Speaker 2: and there's so much debt that needs to be rolled over,
36:29
Speaker 2: and there's gonna be inflation because of tariffs and YadA, YadA, YadA.
36:33
Speaker 2: The number one thing that tends to drive yields in
36:38
Speaker 2: the long run, not like at every you know, week,
36:40
Speaker 2: month or whatever, is the overall growth rate of the
36:42
Speaker 2: United States. And Michael, I don't know if you've taken
36:46
Speaker 2: a look at the Atlanta Fed's GDP now number lately.
36:49
Speaker 4: No I have.
36:51
Speaker 2: I was Actually I'm the idiot who on his vacation
36:55
Speaker 2: gets push notifications from the Atlanta Fed as to what
36:59
Speaker 2: GDP now is currently reading.
37:02
Speaker 3: That might be the nerdiest thing I know about it.
37:04
Speaker 2: If you think I'm joking, Mike, If you think I'm joking,
37:07
Speaker 2: I'm not.
37:10
Speaker 4: What is that moment that you like?
37:11
Speaker 2: What is this one from Friday eleven, twenty nine, Am
37:14
Speaker 2: read right here? Just read It's the second from the bottom.
37:19
Speaker 2: Your screen blank out, so I can't so OKAYT try
37:21
Speaker 2: that again?
37:21
Speaker 4: No, no, here you go, Here you go.
37:23
Speaker 2: It's uh, it's it's coming up in just a second.
37:25
Speaker 5: I'm more surprised they send out notifications in the first place.
37:27
Speaker 3: Here you go, the one that says Q four GDP
37:29
Speaker 3: growth Q four GDP growth On January third, the GDP
37:32
Speaker 3: now model estimate for real GDP growth in the fourth
37:35
Speaker 3: quarter of twenty twenty four is two point to four percent,
37:37
Speaker 3: down from two six on January second.
37:39
Speaker 4: Thank you.
37:39
Speaker 3: That is exciting stuff.
37:41
Speaker 2: So that's what I get when I'm sitting by the pool, Yes,
37:43
Speaker 2: is which I kind of like because it keeps me
37:46
Speaker 2: plugged in. I turn all my other notifications off, but
37:48
Speaker 2: I keep the Atlanta Fed Really like those guys.
37:51
Speaker 3: Yeah, anyways, true super fan.
37:54
Speaker 2: So actually I don't want one of them, but the
37:56
Speaker 2: Saint Louis fed does make t shirts. Yeah, any time
38:00
Speaker 2: to get In early December, GDP now was showing three
38:04
Speaker 2: point four percent growth. It's now at two four. There
38:07
Speaker 2: has been a deceleration in the data over the last
38:11
Speaker 2: month and bonds are not picking up on it. Whether
38:15
Speaker 2: that's proven right or wrong.
38:17
Speaker 4: We'll see.
38:18
Speaker 2: But growth does appear to be slowing now and bonds
38:21
Speaker 2: are moving.
38:21
Speaker 4: The other way.
38:22
Speaker 2: Quick break here. We've got more financial exchange coming up.