Latest / The Financial Exchange Show / How to approach markets moving forward

Transcript

How to approach markets moving forward · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:02
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:08
Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:17
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
Speaker 1: this program do not endorse each other or their services.
0:26
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:28
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Chuck Zada and Mike Armstrong, Your exclusive look
0:38
Speaker 1: at business and financial news affecting your day, your city,
0:42
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends plus breaking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:53
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:57
Speaker 1: heroes by visiting dav five K Boston and making a
1:01
Speaker 1: donation today. This is the Financial Exchange with Chuck Zada,
1:06
Speaker 1: and Mike Armstrong.
1:09
Speaker 2: Chuck, Mike and Tucker with you. In a pretty quiet
1:14
Speaker 2: week so far. We've got weekly jobless claims coming into
1:18
Speaker 2: two hundred and twenty three thousand, and that's kind of
1:22
Speaker 2: the big story. There's not really much going on, and
1:25
Speaker 2: so we're gonna take the next couple hours and just
1:29
Speaker 2: oh no, we're sorry.
1:30
Speaker 3: We were thinking about doing some reruns from like the
1:32
Speaker 3: Christmas time period.
1:33
Speaker 2: So here is what we actually saw yesterday, because golly,
1:38
Speaker 2: g Willaker's wild stuff. So the SB five hundred yesterday,
1:44
Speaker 2: for much of the day until around one fifteen PM,
1:49
Speaker 2: was just kind of hanging out tread and water, you know,
1:52
Speaker 2: trading half percent up, one percent down, one percent up,
1:56
Speaker 2: half percent down, not not really moving anywhere, just hanging out.
1:59
Speaker 2: Right around five thousand and at one fifteen, we got
2:04
Speaker 2: the post from President Trump announcing the pause in all
2:09
Speaker 2: reciprocal tariffs beyond the ten percent baseline, except for China,
2:15
Speaker 2: which has seen its tariff rate increased to one hundred
2:18
Speaker 2: and twenty five percent. As a result of that, we
2:23
Speaker 2: saw the stock market and those of you who listened
2:26
Speaker 2: a while, you know, we don't use these terms loosely.
2:28
Speaker 2: We usually you know, kind of poop poo things. It
2:31
Speaker 2: exploded upwards, and what we saw was the S and
2:34
Speaker 2: P five hundred went from around five thousand two closing
2:37
Speaker 2: the day yesterday at fifty four fifty six. It was
2:42
Speaker 2: a nine and a half percent gain. There the Nasdaq
2:44
Speaker 2: was up twelve percent. Just a monster relief rally that
2:49
Speaker 2: you saw in a span of less than three hours.
2:52
Speaker 2: And for those that might not follow the stock market
2:55
Speaker 2: every day, just how rare is it to see the
2:58
Speaker 2: S and P five hundred increase by what did.
3:01
Speaker 3: You say was ten percent? Nine point seven or it
3:04
Speaker 3: was nine point five two.
3:05
Speaker 2: To put us in perspective, this is a tie for
3:08
Speaker 2: the eighth largest percentage gained by the S and P
3:11
Speaker 2: five hundred in history. Here are the other days that
3:13
Speaker 2: were bigger. March fifteenth, nineteen thirty three. Raise your hand.
3:18
Speaker 2: If you were alive, then I was not. October thirtieth,
3:23
Speaker 2: nineteen twenty nine. Also not October sixth, nineteen thirty one,
3:29
Speaker 2: September twenty first, nineteen thirty two, October thirteenth, and twenty
3:35
Speaker 2: eighth of two thousand and eight was alive For those no.
3:38
Speaker 2: September fifth, nineteen thirty nine, and April twentieth nineteen thirty three, So.
3:44
Speaker 3: Not a lot of context for something like this.
3:46
Speaker 2: Huh this like again we talk about you know, a
3:49
Speaker 2: lot of times you get like a two percent rally
3:51
Speaker 2: and people are like, oh, the market's really moving. It's like, no, guys,
3:53
Speaker 2: that happens like ten to fifteen times a year. Like
3:56
Speaker 2: a two percent rally is not worth writing about a
3:59
Speaker 2: nine percent movement stocks in a single day. Now, it's
4:02
Speaker 2: worth talking about a little bit people. And so I
4:05
Speaker 2: think that obviously you just saw this huge relief in
4:09
Speaker 2: markets because quite honestly, things were getting pretty dodgy in
4:16
Speaker 2: some of the underpinnings. Even though the S and P
4:18
Speaker 2: wasn't really moving very much, the bond market was screaming
4:24
Speaker 2: about as much as it could. We'll talk more about
4:27
Speaker 2: that as we go and what we saw there, but
4:30
Speaker 2: just this this huge relief rally that hey, you are
4:33
Speaker 2: not going to have these massive tariffs imposed that in
4:37
Speaker 2: a number of cases would make it kind of untenable
4:42
Speaker 2: for business to continue to operate in any meaningful fashion
4:46
Speaker 2: if these were imposed for any extended period of time,
4:49
Speaker 2: which is why you got such a big relief rally.
4:51
Speaker 2: Here the question and look now that we have this
4:54
Speaker 2: ninety day pause in place. The question is where do
4:58
Speaker 2: we go from here? And and this is where we're
5:01
Speaker 2: gonna We're gonna pick at that one for probably quite
5:04
Speaker 2: a while because that's where all of the juices right
5:08
Speaker 2: now is what does the next three, six, nine, twelve
5:11
Speaker 2: months look like in markets? Here's my opinion just right
5:15
Speaker 2: off the bat as to how you can approach things differently. Now,
5:21
Speaker 2: the first three months of this year, we're all about
5:26
Speaker 2: the potential headline risk related to tariffs. There still is
5:32
Speaker 2: some of that, but we have the course of travel
5:35
Speaker 2: kind of map for the next ninety days now, like
5:37
Speaker 2: there's no April second isn't circled on our calendar, Like
5:41
Speaker 2: what are we gonna get for reciprocal tariffs. It's kind
5:43
Speaker 2: of hey, this is what it is for ninety days
5:46
Speaker 2: at least, and there's there's nothing that can spook the
5:49
Speaker 2: market as badly as it was just spooked from a
5:53
Speaker 2: tariff perspective, because they're not gonna just go right back
5:55
Speaker 2: to that agreed fair. Yeah, so I think there's less
6:00
Speaker 2: headline risk over the next couple months. It now is
6:04
Speaker 2: something where we're very much into again all the data
6:08
Speaker 2: that we're gonna get This month is backwards looking, so
6:10
Speaker 2: I'm not sure how much it's actually gonna tell us,
6:12
Speaker 2: but starting May first, even before then, so the next
6:16
Speaker 2: three weeks we're getting into earning season. Hey, what are
6:19
Speaker 2: companies telling us about their margins, their sales? Are they
6:23
Speaker 2: maintaining guidance, are they pulling guidance? Are they reducing it?
6:27
Speaker 2: What are we gonna hear from them? That's the next
6:28
Speaker 2: three weeks or so. You get into May and it's hey,
6:32
Speaker 2: what's the April economic data actually showing day people?
6:36
Speaker 3: So back on spending? Did prices go up or come down?
6:41
Speaker 3: Are our consumer is just nervous generally speaking? And does
6:46
Speaker 3: that get reflected in the data. That's kind of what
6:47
Speaker 3: we're looking at here. Yeah, for the May for the
6:50
Speaker 3: May release data.
6:51
Speaker 2: Correct, So I think there is less event risk of hey,
6:57
Speaker 2: are you gonna have like one day where you have
7:00
Speaker 2: like these huge drops of you know, seven eight, nine
7:03
Speaker 2: percent things like that. There's less of that. But now
7:06
Speaker 2: it's hey, how does the market build a new trend?
7:08
Speaker 2: Is it up down sideways? Because now you are into
7:11
Speaker 2: that new world and still searching for direction as to
7:14
Speaker 2: what exactly it looks like. And so each data point
7:16
Speaker 2: that we get, whether it's a corporate earnings call, whether
7:19
Speaker 2: it's a jobless claims number, those are going to help
7:22
Speaker 2: to build the picture of what's the world that we're
7:25
Speaker 2: now living in actually look like. And I think that
7:29
Speaker 2: there is, you know, again, kind of a wide range
7:32
Speaker 2: of where this can can go. But here here's the
7:34
Speaker 2: piece that I do come back to is ultimately, when
7:37
Speaker 2: we entered the year this year, when we started the
7:40
Speaker 2: year this year, Mike, we had some tariffs that the
7:43
Speaker 2: Trump administration had put on during Trump's first term back
7:46
Speaker 2: in you know, twenty eighteen, twenty nineteen. Those were in
7:50
Speaker 2: place on China and other than that, Aside from like
7:53
Speaker 2: some sporadic little things that no one ever covered because
7:55
Speaker 2: they weren't very big, there basically were no major tariffs
7:59
Speaker 2: that were in place coming into this year. As we
8:02
Speaker 2: sit here right now, we got blanket ten percent tariffs
8:05
Speaker 2: on everything, twenty five percent on aluminum steel, twenty five
8:10
Speaker 2: percent on autos, twenty five percent on non USMCA compliant
8:15
Speaker 2: goods from Mexico and Canada, and one hundred and twenty
8:18
Speaker 2: five percent on China. That still is a significant deviation
8:23
Speaker 2: from where we were previously and I think part of
8:26
Speaker 2: what we're seeing today where markets you know, open down
8:29
Speaker 2: and now we're still down, you know, two and a
8:30
Speaker 2: half to four percent is okay, Like you had the
8:34
Speaker 2: relief rally of yes the the extreme case is off
8:38
Speaker 2: the table from the perspective of how bad could the
8:42
Speaker 2: tariff damage be to the economy? Now it's sorting through, Hey,
8:47
Speaker 2: here's what's still in place, what's the lay of the
8:49
Speaker 2: land to look like going forward? And it still is
8:53
Speaker 2: likely a scenario where the direction of travel is towards
8:57
Speaker 2: a slower economy over the next three twelve months.
9:01
Speaker 3: Yeah, I think a few things you have to remember
9:03
Speaker 3: probably didn't change as a result of yesterday, one of
9:06
Speaker 3: which was all the forecasts of recession. If you take
9:10
Speaker 3: a look at Goldman's predictions, they were basically saying, hey, look,
9:13
Speaker 3: it's like a coin toss here on recession if all
9:17
Speaker 3: of the reciprocal tariffs are waived prior to the deadline,
9:20
Speaker 3: which they did. But even then, Goldman and many others
9:25
Speaker 3: have been saying gross slow down recession kind of you know,
9:30
Speaker 3: pretty much a coin toss without all of these and
9:34
Speaker 3: so you got rid of them, but you did not
9:37
Speaker 3: You did not wave a wand and fix all of
9:39
Speaker 3: the nation's economic concerns going forward.
9:43
Speaker 2: So still have you know a number of questions that
9:45
Speaker 2: are out there as to again, these China tariffs. I
9:50
Speaker 2: think let's take a quick break and then let's dig
9:52
Speaker 2: in on the tariffs that have been applied to China
9:55
Speaker 2: for you know, Chinese imports to the US, but also
9:58
Speaker 2: the retaliatory tariffs from China applied to goods that China
10:02
Speaker 2: imports from the US. Let's talk a little bit about
10:05
Speaker 2: what this means for one of the US's biggest trading
10:08
Speaker 2: partners and how it could impact the broader US and
10:12
Speaker 2: Chinese economies. Because this is and look, I've been saying
10:17
Speaker 2: this all along to toot my own horn, love to
10:20
Speaker 2: do it. I've been saying all along that the stealthy
10:24
Speaker 2: thing that's been going on here has been raising tariffs
10:26
Speaker 2: on China while everyone's been paying attention to other things.
10:29
Speaker 2: This is where the juice is, is that relationship between
10:33
Speaker 2: the US and China. Let's take a quick break. We're
10:35
Speaker 2: gonna spend a bunch of time focused on that. When
10:39
Speaker 2: we return.
10:41
Speaker 1: Market volatility is at its highest point since the pandemic.
10:44
Speaker 1: Keep it here for the most comprehensive coverage of the
10:47
Speaker 1: global trade war. This is the Financial Exchange Radio Network,
10:51
Speaker 1: breaking business and financial news first throughout the day, only
10:55
Speaker 1: here on the Financial Exchange Radio Network.
11:04
Speaker 2: All Right, So, as I noted, the real meat, the
11:09
Speaker 2: prime rib in this puppy is what's going on between
11:13
Speaker 2: the US and China. Everything else, like, look, it still matters.
11:16
Speaker 2: I'm not trying to say that ten percent tariffs are nothing.
11:19
Speaker 2: They're still going to have an economic impact, that twenty
11:21
Speaker 2: five percent auto tariffs are going to be meaningful. But
11:25
Speaker 2: when you slap one hundred and twenty five percent tariffs
11:27
Speaker 2: on China and they respond with an eighty four percent
11:29
Speaker 2: tariff on to you, it's like, Okay, what does this
11:31
Speaker 2: actually mean? And where are we going? There's a couple
11:35
Speaker 2: different paths that this can take. There's actually lots of them,
11:37
Speaker 2: but ultimately, the US and China are now in a
11:40
Speaker 2: game of chicken. It's a two person game, and if
11:43
Speaker 2: you look at this from a game theory perspective, the
11:45
Speaker 2: game of chicken is inherently an unstable one because there's
11:48
Speaker 2: no defined outcome that you get to based on it
11:52
Speaker 2: being the best possible outcome for both participants. It's one
11:56
Speaker 2: where it's pretty much who is going to blink first?
12:00
Speaker 2: And here's the lay of the land if these tariffs
12:05
Speaker 2: at these rates stay in place. Most commentary that I've seen,
12:10
Speaker 2: and also just from talking with you know, business owners
12:14
Speaker 2: on this who import from China, most commentary gets to
12:17
Speaker 2: the point where it's like, hey, by Q three or
12:19
Speaker 2: Q four of this year, trade with China is probably
12:23
Speaker 2: down eighty to ninety percent. Yeah, and that's a common misconception, right.
12:26
Speaker 2: Everybody talks about the four thousand dollars iPhone as a
12:29
Speaker 2: result of this, it's not really what happens. It's just
12:31
Speaker 2: that there aren't iPhones for sale in the United States
12:34
Speaker 2: for a period of time until Apple goes and manufactures elsewhere.
12:37
Speaker 2: They're not going to go.
12:38
Speaker 3: And maybe that's a bad example, but whether it's Walmart,
12:41
Speaker 3: whether it's a good example, whether it's any of these companies,
12:43
Speaker 3: they don't import it and pay the one hundred and
12:46
Speaker 3: twenty five percent. They just say, we're going to have
12:50
Speaker 3: to relocate factories. We're gonna have to reroute all of
12:53
Speaker 3: this and figure out how to sell different iPhones that
12:56
Speaker 3: are manufactured elsewhere to the American public. And we'll sell
12:59
Speaker 3: these ones somewhere else.
13:01
Speaker 2: And so it's something where I've talked before. I've you know,
13:06
Speaker 2: Buddy runs this board game company, and again this is
13:08
Speaker 2: my my window into like what's going on. So it's
13:11
Speaker 2: not that I'm like this huge board game fan. I
13:13
Speaker 2: do enjoy them, but it's just hey, I ask him
13:16
Speaker 2: because he imports from China, and basically he's like, look,
13:20
Speaker 2: I'm holding all of my shipments in China because I
13:23
Speaker 2: can't be profitable bringing this stuff over from China at
13:27
Speaker 2: these tariff rates. So I'm either going to hold out
13:30
Speaker 2: and wait for you know, some kind of reduction in
13:33
Speaker 2: tariffs that gets negotiated, or I'm just not gonna bring
13:36
Speaker 2: this stuff over. I'll pay for it, you know, I
13:38
Speaker 2: have to pay the invoice to the factory over there,
13:41
Speaker 2: but I've canceled all my future orders for now because
13:44
Speaker 2: I don't know what the lay of the land is
13:46
Speaker 2: and if this goes on for too long, I'm gonna
13:48
Speaker 2: have to lay off my employees. He's got about nineteen
13:50
Speaker 2: twenty employees and he's like, I'm gonna have to lay
13:52
Speaker 2: my employees off because I can't source this stuff somewhere else,
13:56
Speaker 2: and like that's that's his reality. Is like, I've looked
13:59
Speaker 2: around and interesting thing. A few years back. He looked
14:04
Speaker 2: at it during the first Trump administration, He's like, do
14:06
Speaker 2: I look into moving my production to Vietnam? And so
14:10
Speaker 2: he reached out to a couple factories in Vietnam to
14:12
Speaker 2: be like, hey, can you make the stuff that I
14:14
Speaker 2: need for my board games. A few days later, he
14:17
Speaker 2: gets a call from his supplier in China asking why
14:21
Speaker 2: are you doing it and run around trying to buy
14:23
Speaker 2: stuff from Vietnam because you know what the Vietnam factories did.
14:26
Speaker 2: They weren't going to quote it on their own basis.
14:28
Speaker 2: They reached out to China and were like, hey, can
14:31
Speaker 2: you make this for us so that we can send
14:33
Speaker 2: it to the US. So this is kind of where
14:38
Speaker 2: we are now. I want to talk about the Apple
14:40
Speaker 2: situation because you mentioned them. One of the things that
14:42
Speaker 2: President Trump mentioned yesterday was the possibility for companies to
14:46
Speaker 2: be able to get waivers on these tariffs. He was
14:51
Speaker 2: asked about it and very directly said yes, like we
14:53
Speaker 2: might be able to negotiate some exemptions. I gotta believe
14:58
Speaker 2: that Tim Cook's got a pretty good line into the
15:00
Speaker 2: White House in terms of hey, can you help me
15:04
Speaker 2: out a little bit.
15:05
Speaker 3: And I would think so he did during the first
15:07
Speaker 3: administration anyway, you would think so.
15:09
Speaker 2: But so that this is where one of the potential
15:12
Speaker 2: paths is, Okay, do you keep these tariffs on at
15:14
Speaker 2: these levels but try to negotiate individual exemptions. On one hand,
15:18
Speaker 2: I look at it, I'm like, man, that is really
15:22
Speaker 2: like playing, you know, picking winners and losers, because it's
15:24
Speaker 2: gonna be the companies with the most lobbying power and
15:26
Speaker 2: lever and you know, the most important companies are going
15:29
Speaker 2: to get the exemptions. The smallest ones will will not.
15:32
Speaker 2: So I'm like, man, that that feels kind of ugly.
15:34
Speaker 2: But the other part of this is, Okay, remember that
15:37
Speaker 2: China's on the other side of this, and they're they're
15:39
Speaker 2: playing their side of the game too. So it's it's
15:43
Speaker 2: not just Tim Cook having to go to the US
15:46
Speaker 2: and say, hey, give me an exemption on these tariffs.
15:49
Speaker 2: He's also got to be able to not get swamped
15:52
Speaker 2: up in whatever the Chinese government does his retaliation, because
15:54
Speaker 2: the Chinese government may very well say, okay, you think
15:58
Speaker 2: you're carving out an exemption, Hey, we think there's some
16:01
Speaker 2: you know, corruption or unfair labor practices. At your factories.
16:05
Speaker 2: We're gonna shut him down for a couple of weeks
16:07
Speaker 2: while we investigate. Right.
16:09
Speaker 3: That's that's the difference between the US and China. We
16:12
Speaker 3: don't do that sort of thing. They absolutely will or
16:16
Speaker 3: they'll say, yeah, sounds good, you want to continue manufacturing
16:19
Speaker 3: and that I know. We didn't previously require you to
16:22
Speaker 3: partner with a domestic company where you share IP intellectual property,
16:26
Speaker 3: but this time we are, so you know, weigh out
16:29
Speaker 3: that decision a little.
16:30
Speaker 2: Bit, right, And so this is where you know, Tim
16:32
Speaker 2: Cook might be able to get a favorable you know
16:35
Speaker 2: deal from the United States to bring iPhones back, but
16:39
Speaker 2: China might be like, no, we're gonna pressure you from
16:41
Speaker 2: this side, and we're gonna make things challenging until you
16:45
Speaker 2: you know, get the administration to back off on all
16:47
Speaker 2: of this. And so you know that's you know, part
16:49
Speaker 2: of how this could go as well. Ultimately, like you
16:52
Speaker 2: look at this and you go, where is this going
16:54
Speaker 2: to land? I have I have no idea where the
16:57
Speaker 2: China stuff lands. There's a convincing case, Mike that you
17:00
Speaker 2: could be here six months from now and I wouldn't
17:05
Speaker 2: be entirely surprised if the Trump administration, you know, tries
17:09
Speaker 2: to hold firm on these teriff rates because I do
17:12
Speaker 2: think that China is the primary target. There's also part
17:16
Speaker 2: of me that looks at it and goes, Look, when
17:17
Speaker 2: you think about like what China actually produces in terms
17:21
Speaker 2: of it's not so much like the highest tech components.
17:26
Speaker 2: You know, we're not talking like critical server chips and
17:29
Speaker 2: stuff like that, but think of all like the stuff
17:32
Speaker 2: that goes into electronics that is pretty much, hey, just
17:37
Speaker 2: make me the cheapest component that you can for you know,
17:39
Speaker 2: modems or splitters or you know this, like all the
17:43
Speaker 2: stuff that just provides like this costs half a cent
17:47
Speaker 2: in China, and so it goes into everything that uses
17:49
Speaker 2: double A batteries as an example, Like I don't know
17:52
Speaker 2: I'm making this this up, but it's all the stuff
17:55
Speaker 2: that's just not complicated to make but goes in everywhere
17:58
Speaker 2: and needs to be low cost. If companies can't import
18:03
Speaker 2: those parts, how much to like, what's the drag on
18:07
Speaker 2: the US economy when we start seeing, hey, all, you
18:11
Speaker 2: know x percentage of the of the electrical meters in
18:19
Speaker 2: the US use parts that come from China, and now
18:21
Speaker 2: we can't get those right.
18:23
Speaker 3: I think the other big question You always think about
18:26
Speaker 3: this stuff in terms of, hey, what's the status quote
18:28
Speaker 3: today and all else held equal? This is how it
18:30
Speaker 3: plays out. The very big question on all else held
18:34
Speaker 3: equal now would be like, let's say this trade war
18:36
Speaker 3: does stay in place, in trade between the US and
18:38
Speaker 3: China effectively halts or it reduces eighty to ninety percent.
18:44
Speaker 3: China doesn't just stop making stuff. That stuff goes somewhere
18:47
Speaker 3: else now, And so how does Europe, How does Latin
18:50
Speaker 3: America respond if all of a sudden there's a giant
18:54
Speaker 3: dumping of Chinese manufactured goods that the US used to
18:57
Speaker 3: purchase and no longer is onto their shores, And how
19:01
Speaker 3: do those countries then react in response to it. There's
19:05
Speaker 3: so many open questions.
19:06
Speaker 2: To all that, and part of this is also can
19:08
Speaker 2: the US now marshall, you know, a robust international response
19:12
Speaker 2: to what is likely that that action from China, that
19:16
Speaker 2: that's gonna be something that we watch over the next
19:18
Speaker 2: few months as well. It's there are so many balls
19:21
Speaker 2: in the air that you know, we talk about like
19:22
Speaker 2: the status quo, like it's this stable thing. There's a
19:26
Speaker 2: lot of movements still happening. Even though this part is resolved,
19:29
Speaker 2: there are a lot of unanswered questions that we're going
19:31
Speaker 2: to see how they play out over the next three,
19:34
Speaker 2: six twelve months. Geopolitically quick break Wall Street watches next,
19:38
Speaker 2: and then I want to talk a little bit about
19:39
Speaker 2: the bond market after this.
19:41
Speaker 1: Like us on Facebook and follow us on Twitter at
19:44
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.
19:54
Speaker 1: Watch a complete look and what's moving market so far
19:57
Speaker 1: today right here on the Financial Exchange Radio Network.
20:01
Speaker 4: Well, following yesterday's historic market rally after President Trump pause
20:05
Speaker 4: tariffs in all countries except for China for ninety days,
20:09
Speaker 4: markets are retreating slightly. This morning. We also saw the
20:14
Speaker 4: latest measure of inflation in the consumer price in next,
20:17
Speaker 4: where consumer prices fell zero point one percent, lower than
20:21
Speaker 4: forecasts of a zero point one percent increase. More in
20:25
Speaker 4: that coming up on the show. At the moment, the
20:27
Speaker 4: Dow is down by eight hundred and thirteen points, two
20:30
Speaker 4: percent lower, s and P five hundred is down nearly
20:33
Speaker 4: two and a half percent, or one hundred and thirty
20:34
Speaker 4: four points, and the NASDAC down by three percent or
20:38
Speaker 4: five hundred and fourteen points or ELSEI two thousand, selling
20:41
Speaker 4: off by three point seven percent, ten Yere treasure Reel
20:45
Speaker 4: down by eight basis points at four point three one percent,
20:48
Speaker 4: and crude oil down four and a quarter percent, trading
20:52
Speaker 4: just below sixty dollars a barrel. Several tech stocks are
20:55
Speaker 4: retreating from yesterday's massive rally after the tariff pause. Tesla
20:59
Speaker 4: down by over six percent after several Wall Street firms
21:03
Speaker 4: reduced their price targets of the ev maker stock, Apple
21:06
Speaker 4: pulling back by three percent and after surging eighteen percent yesterday,
21:10
Speaker 4: and Video shares are down by four percent today. Meanwhile,
21:14
Speaker 4: auto stocks continue to garner attention on Wall Street. G
21:17
Speaker 4: parent company Stillantis down by twelve percent after jumping eighteen
21:21
Speaker 4: percent yesterday, while shares in Ford and General Motors are
21:25
Speaker 4: down over four percent. Elsewhere. Carmacks down by nineteen percent
21:30
Speaker 4: after the used car retailer posted disappointing fiscal fourth quarter earnings.
21:35
Speaker 4: US Steal down by seven percent after President Trump said
21:38
Speaker 4: he did not want the steel maker to go to Japan.
21:42
Speaker 4: Breaking news from the fashion world today after Prada agreed
21:44
Speaker 4: to buy Versace from fashion conglomerate Capri Holdings for one
21:49
Speaker 4: point three eight billion dollars, Prada up by two percent,
21:52
Speaker 4: while Capri retreating by eleven percent, And tomorrow morning we'll
21:57
Speaker 4: see the ramp up to first quarter earning season with
21:59
Speaker 4: several banks ready to report, including JP, Morgan Chase, Wells Fargo,
22:05
Speaker 4: and Morgan Stanley. I'm Tucker Silvan.
22:07
Speaker 1: That's Wallstreet Watch.
22:09
Speaker 3: Can we just talk real quickly about how quickly Tucker's
22:11
Speaker 3: definition of slightly changes sarcastic.
22:17
Speaker 2: Any other day?
22:17
Speaker 3: A two and a half percent sell off of the
22:19
Speaker 3: S and P five hundred yesterday, pulling.
22:21
Speaker 2: His hair out compared yesterday.
22:24
Speaker 3: That's not comparing yesterday.
22:27
Speaker 2: This is the thing. I've had a few people ask
22:29
Speaker 2: me in the last week. They're like, Hey, how are
22:31
Speaker 2: you holding up with all this? And my answer is fine,
22:34
Speaker 2: honestly after March of twenty twenty, Yeah, Like you just
22:39
Speaker 2: what do you Being in financial markets during times like
22:45
Speaker 2: this really forces you to have a reckoning with understanding
22:48
Speaker 2: what you can control and what you can't, right, and
22:53
Speaker 2: you just have to make your plan and go about
22:56
Speaker 2: it and figure it out the best that you can
22:58
Speaker 2: because everything else is out of your control and you
23:02
Speaker 2: can't get all caught up in the hype. It's not
23:05
Speaker 2: to say that, like there aren't things that spook you
23:08
Speaker 2: or excite you, but it's much more all right, like
23:12
Speaker 2: this is it. Figure it out, you know, set up.
23:15
Speaker 3: Your plan, say the serenity prayer, and move along.
23:20
Speaker 2: Correct. So I do want to talk a little bit
23:22
Speaker 2: about the bond market because this is another place that
23:25
Speaker 2: I think is juicy when it comes to what happened
23:29
Speaker 2: in the last couple of days. So I talked to
23:31
Speaker 2: yesterday on the show that when I went to bed
23:34
Speaker 2: on Tuesday night again, I just said, hey, there's not
23:37
Speaker 2: much that really, like, you know, spooks me too much.
23:40
Speaker 2: The bond market on Tuesday night scared the heck out
23:43
Speaker 2: of me. And what I was seeing is it was
23:46
Speaker 2: around eight thirty or so and less. Number One, when
23:49
Speaker 2: you're reading yourself a bedtime story, don't read yourself the
23:51
Speaker 2: bond market. That's just it's a horrible bedtime story. Like
23:55
Speaker 2: the only thing you can do is make you feel worse.
23:56
Speaker 2: It never makes you feel better. Yields to going downgreat,
23:58
Speaker 2: the economy song yield to go up great. No one
24:00
Speaker 2: wants to buy the bonds, Like, no matter what, you're
24:02
Speaker 2: gonna be scared. So I'm going to bed and the tenure.
24:06
Speaker 2: Treasury is up twenty basis points to four and a
24:09
Speaker 2: half percent. Normally, when rates go up, the dollar goes
24:13
Speaker 2: up along with it, because if you have higher rates,
24:15
Speaker 2: more people internationally want to buy your bonds, and so
24:17
Speaker 2: the dollar strengthened. Instead, what we had was the dollar
24:21
Speaker 2: was selling off about one percent, and I'm sitting there,
24:23
Speaker 2: I'm going, hmm, that looks an awful lot like the
24:27
Speaker 2: UK back when Liz Truss didn't last as long as
24:31
Speaker 2: a head of Lettuce because she proposed a budget that
24:33
Speaker 2: was completely unreasonable. And if you look back at that period,
24:36
Speaker 2: it's exactly what happened in the UK. The pound sold
24:39
Speaker 2: off and British bonds sold off because investors basically said, hey,
24:44
Speaker 2: there's no way that this is going to be tenable
24:47
Speaker 2: from a currency perspective, and if that's the case, we
24:50
Speaker 2: don't want to own your bonds because we're going to
24:52
Speaker 2: demand more because of the potential for your currency falling.
24:55
Speaker 2: We're backing off bond vigilantes. So I saw that on Tuesday,
25:00
Speaker 2: by bye. By Wednesday morning, I was like, Okay, things
25:02
Speaker 2: look a little bit better there, but it was like
25:06
Speaker 2: still kind of dodgy, Like the dollar was off like
25:08
Speaker 2: half percent. The tenure was up fifteen basis points instead
25:11
Speaker 2: of twenty. But globally yields were moving up also, and
25:14
Speaker 2: so I was like, Okay, maybe there's just like more
25:15
Speaker 2: of a global thing going on this. And that Charlie
25:19
Speaker 2: Gasparino who we had on was it Monday that we
25:22
Speaker 2: talked with him to direct Yes, So we talked to
25:25
Speaker 2: Charlie on Monday.
25:26
Speaker 4: And he was a good phone mine too.
25:28
Speaker 1: It was great.
25:28
Speaker 2: He was on Fox Business yesterday and he reported that
25:33
Speaker 2: his sources said that the source of the bond market
25:36
Speaker 2: instability was not the Chinese government selling, you know, any
25:41
Speaker 2: holdings in US treasuries, but rather the Japanese government as
25:45
Speaker 2: they were going through negotiations with Scott Bessen, was you know,
25:49
Speaker 2: kind of signaling to Japanese banks, hey, you might want
25:51
Speaker 2: to do some liquidations on this side treasuries. So again
25:56
Speaker 2: we're still trying. There's fog of war and all this.
25:59
Speaker 2: You don't know exactly what's going on and what isn't.
26:02
Speaker 2: But I can tell you that the bond market sure
26:06
Speaker 2: spooked me in the reporting, not just you know, from
26:10
Speaker 2: secondary sources like what Charlie said, but if you listen
26:12
Speaker 2: to what President Trump said yesterday he mentioned, Yeah, the
26:16
Speaker 2: bond market got a little bit scared. The term he
26:19
Speaker 2: used was yippie, and so like the President admitted, yeah,
26:24
Speaker 2: there were some things going on in the bond market
26:25
Speaker 2: that we didn't like.
26:27
Speaker 3: Is I think the Chairman of the Economic Council this
26:30
Speaker 3: morning said something very similar.
26:32
Speaker 2: By the way, yes, Kevin Hassett said said basically the
26:34
Speaker 2: same thing, so that they were spooked by the bond market.
26:37
Speaker 2: I can also tell you I was talking to a
26:40
Speaker 2: buddy of mine yesterday like after like all this had happened,
26:45
Speaker 2: and he is he does some stuff with municipal bonds.
26:48
Speaker 2: So think towns that are trying to do a bond
26:51
Speaker 2: issuance for a new school they're building, or states doing
26:53
Speaker 2: issuance for construction project, you know, roads and subways and
26:57
Speaker 2: stuff like.
26:58
Speaker 3: That's how we fund a large portion of infantry structure
27:00
Speaker 3: projects in the United States.
27:01
Speaker 2: Correct. Municipal bonds are states, counties, and cities that borrow
27:05
Speaker 2: money in order to fund local development, typically schools, hospitals,
27:11
Speaker 2: and transportation projects. It's the vast majority of them. And
27:15
Speaker 2: I was talking to him and I'm like, like, how's
27:17
Speaker 2: everything been going, because I hadn't talked to this guy
27:19
Speaker 2: in you know, years, and he was like, honestly, this
27:23
Speaker 2: has been the worst week that I've ever been in
27:26
Speaker 2: the municipal bond market. I'm like, what's going on? He goes,
27:28
Speaker 2: I was talking with my boss who's been in this
27:31
Speaker 2: for forty years, and he says he's never seen anything
27:33
Speaker 2: like this. I'm like, well, give me some context. And
27:35
Speaker 2: he's like, we had basically liquidations that we weren't sure
27:39
Speaker 2: if we were going to be able to fill by
27:41
Speaker 2: the after Like the municipal bond market basically was starting
27:43
Speaker 2: to break down yesterday, and so I like, this is
27:47
Speaker 2: one of those where you ended up with a story
27:51
Speaker 2: that Okay, great, like you know, these tariffs are off,
27:54
Speaker 2: and you know, we can move forward with what we
27:56
Speaker 2: have now. But I want people to appreciate how close
28:01
Speaker 2: things got to getting really ugly in financial markets.
28:06
Speaker 3: I mean, listen, I was following this all yesterday morning
28:11
Speaker 3: as well, and the questions that were being raised in
28:13
Speaker 3: live interviews with financial media was, hey, at what point
28:17
Speaker 3: does the Federal Reserve need to step in and backstop
28:19
Speaker 3: the treasury market here?
28:20
Speaker 2: They got close?
28:21
Speaker 3: I think I think so too, and that that would
28:23
Speaker 3: have been. I guess we need more context here, Chuck.
28:27
Speaker 3: Why why does this matter so much? Why did it
28:30
Speaker 3: spook the White House so much to see lack of
28:33
Speaker 3: liquidity and bond markets, because that's kind of the holy
28:36
Speaker 3: grail to what the United what makes the United States
28:39
Speaker 3: special in financial markets? Is this reserve currency, you know,
28:43
Speaker 3: the lowest possible risk out there status? And was that
28:49
Speaker 3: seemingly challenged a little bit yesterday.
28:51
Speaker 2: Uh, I'm not gonna I don't want to go like
28:54
Speaker 2: and say like the reserve currency or anything like that.
28:56
Speaker 2: I don't know that necessarily is is about that, because that, like,
29:00
Speaker 2: that's something that takes decades to play out. This is
29:03
Speaker 2: much more, in my opinion, if things had gone too
29:07
Speaker 2: much further, I don't know how banks could have made
29:12
Speaker 2: loans to people trying to close on houses because they
29:15
Speaker 2: wouldn't know what their collateral is worth, and not the
29:18
Speaker 2: collateral of hey, what's that house worth? But more Hey,
29:25
Speaker 2: if a bank doesn't have a loan to make, what
29:29
Speaker 2: do they do? They send it to the US government.
29:30
Speaker 2: They park it with a US treasury. It could be
29:33
Speaker 2: a short term, long term, whatever it might be. But
29:35
Speaker 2: that's what banks do because ultimately banks are in the
29:37
Speaker 2: business of they take deposits in, they loan money out.
29:40
Speaker 2: If they don't have enough loans they can make right now,
29:42
Speaker 2: they get interest paid to them by the US government
29:44
Speaker 2: for the privilege of loaning the US government money. And
29:47
Speaker 2: so the question that you run into if you are
29:49
Speaker 2: a bank is, Okay, if you start to see your
29:52
Speaker 2: treasury holding selling off, what do you do, Like, are
29:58
Speaker 2: you going to be comfortable lending money to someone at
30:02
Speaker 2: six percent six and a half percent? If you're sitting
30:05
Speaker 2: there going gee, could our treasuries be yielding five and
30:08
Speaker 2: a half a week from now? Right? And so like
30:12
Speaker 2: it starts to impact day to day stuff like that potentially.
30:17
Speaker 2: And again it's we were probably like a few days
30:22
Speaker 2: from that becoming an issue like that wasn't you know,
30:24
Speaker 2: a yesterday afternoon thing. But you basically were getting to
30:27
Speaker 2: the point where bond markets and lending markets were starting
30:30
Speaker 2: to lock up somewhat. And I mean just look like that.
30:33
Speaker 2: There's no corporate depth that's been issued in the last
30:35
Speaker 2: few days. It's because no one could place it, Like,
30:39
Speaker 2: no one had any idea what the landscape was going
30:42
Speaker 2: to look like. You're if you're a company trying to
30:44
Speaker 2: raise money. Who is going to lend you money not
30:47
Speaker 2: knowing what your profit margins are going to look like.
30:52
Speaker 2: And so this is the other part that I think
30:53
Speaker 2: still isn't fully resolved. Here is and this is gonna
30:56
Speaker 2: be interesting to watch during earnings. If you want the
30:58
Speaker 2: thing to watch during earnings, it's not what stocks do
31:01
Speaker 2: for the next month. It's what corporate bonds do for
31:04
Speaker 2: the next month. Because most companies, I think, are gonna say,
31:10
Speaker 2: I suspect the vast majority of companies are probably gonna
31:13
Speaker 2: pull their guidance if they have any, because they're just
31:16
Speaker 2: gonna say, look, we don't know what the landscape is
31:18
Speaker 2: gonna be for imports and exports. We're still, you know,
31:21
Speaker 2: gonna see how it plays out. We're optimistic that we'll
31:23
Speaker 2: be able to manage this the best we can, but
31:25
Speaker 2: we're not comfortable giving you know, full year financial guidance anymore,
31:29
Speaker 2: just like Delta did yesterday. By the way, I think
31:31
Speaker 2: that'll be kind of the norm. What's gonna be interesting
31:34
Speaker 2: is okay, especially as you get towards like the high
31:38
Speaker 2: yield bond market, what is that market saying about how
31:42
Speaker 2: comfortable it feels that these companies are going to be
31:44
Speaker 2: able to pay their debt obligations because equities I equities,
31:48
Speaker 2: there's a case to be made. Look, they could rally
31:50
Speaker 2: another five to ten percent from here. They could also
31:52
Speaker 2: puke another five ten like you have no idea. I'm
31:55
Speaker 2: interested to see what the bond market thinks of this
31:57
Speaker 2: because now that the immediate you know, massive moves are
32:01
Speaker 2: gone and things can normalize, when people start, you know,
32:04
Speaker 2: picking through everything and saying, huh, I wonder why this
32:07
Speaker 2: is valued? What does this look good? When people start
32:11
Speaker 2: getting back to normal analysis and not just having to
32:13
Speaker 2: like sell or buy based on headlines, what do they think?
32:16
Speaker 2: And so I'm very interested to see what the bond
32:19
Speaker 2: market thinks of this over the next month or two.
32:22
Speaker 2: That's that's my thought. Anything else that you want to
32:24
Speaker 2: add when as it relates to bonds.
32:26
Speaker 3: No, no, but it's important. I think that recognition of
32:31
Speaker 3: equity markets didn't force the Trump administration to do this.
32:34
Speaker 2: Bonds did? It was bonds? Yeah, it was boring old bonds,
32:38
Speaker 2: boring old bonds. Let's take a quick break here. When
32:42
Speaker 2: we come back, should we do CPI when we come back, Yeah,
32:47
Speaker 2: let's talk a little bit inflation when we return.
32:50
Speaker 1: Tara's fears continue to grip markets. Get the latest straight
32:53
Speaker 1: from Wall Street right here on the Financial Exchange Radio Network.
32:59
Speaker 1: Miss any of the show, catch up in your convenience
33:01
Speaker 1: by visiting Financial Exchange Show dot com and clicking the
33:04
Speaker 1: on demand icon, where you'll find all of our interviews
33:07
Speaker 1: and full shows. This is your home for the latest
33:10
Speaker 1: business and financial news in New England and around the country.
33:14
Speaker 1: This is the Financial Exchange Radio Network.
33:22
Speaker 2: Mike, we got an inflation report for the month of March,
33:26
Speaker 2: which again kind of out a date given the new
33:29
Speaker 2: tariff landscape since April second, but we do have to
33:33
Speaker 2: acknowledge look good inflation report largely driven by falling gas
33:38
Speaker 2: prices during the time that certainly helped out quite a bit.
33:41
Speaker 2: We came a negative point one percent for the month.
33:46
Speaker 2: That was compared to expectations that we were going to
33:49
Speaker 2: see a point one percent rise in the inflation rate.
33:52
Speaker 2: The core inflation rate also coming down at point one
33:56
Speaker 2: percent for the month compared to expectations of point three percent.
34:01
Speaker 2: So both headline and core coming in better than anticipated.
34:06
Speaker 2: Good news, but obviously something that you say, Okay, it's
34:10
Speaker 2: not entirely relevant to where we are now.
34:13
Speaker 3: But still something that was a good report. It was
34:17
Speaker 3: a few weird things. Used cars and trucks have been
34:19
Speaker 3: on a just tear recently in terms of price increases.
34:23
Speaker 3: You saw a drop in the month of March by
34:24
Speaker 3: seven ten percent after last three readings were up point eight,
34:28
Speaker 3: up two point two, and up point nine. So again,
34:32
Speaker 3: just what happened there in the month of March with
34:35
Speaker 3: car prices. I don't have a great story there. Like
34:38
Speaker 3: any other data point that we've been discussing, this is
34:41
Speaker 3: backwards looking by its very nature. It's encouraging to see
34:45
Speaker 3: that prices are cooling ahead of tariff implementation. Right, these
34:51
Speaker 3: ten percent tariffs were not in place at the time,
34:53
Speaker 3: so good to see that shelter costs came down. I'm
34:57
Speaker 3: very encouraged to see they didn't come down, but they
35:00
Speaker 3: they moderated in terms of their increases. So like to
35:02
Speaker 3: see that as well. But as we said, with many
35:05
Speaker 3: of these data points, they're only relevant to a degree
35:10
Speaker 3: because we don't know how consumers are behaving now that
35:12
Speaker 3: tariffs are in place.
35:14
Speaker 2: Yeah, so I think good report. It's not gonna be
35:17
Speaker 2: one that I place a ton of importance on just
35:20
Speaker 2: because the landscape has changed. In you know, the last
35:23
Speaker 2: week and a half. But obviously it's look, it's always
35:27
Speaker 2: better to have good data heading into changes that could
35:31
Speaker 2: be you know, negative, better, much better than having bad data.
35:35
Speaker 2: So that was encouraging. Another place where we continue to
35:37
Speaker 2: have some encouraging signs, we also got jobless claims this
35:40
Speaker 2: morning came in at two hundred and twenty three thousand,
35:43
Speaker 2: right in line with expectations, basically the same as the
35:46
Speaker 2: prior week. Continuing jobless claims also fell from one point
35:50
Speaker 2: eight nine to three million to one point eight five million,
35:52
Speaker 2: so encouraging on that side too. There still is nothing,
35:56
Speaker 2: there's nothing in the data indicating any kind of shift
35:59
Speaker 2: in layoffs or anything on those On that side of things,
36:03
Speaker 2: we do still have a very slow hiring market, which
36:05
Speaker 2: is why if anyone listening happens to be twenty three
36:09
Speaker 2: years old, or if you've got kids or grandkids that
36:11
Speaker 2: you know are graduating high school or graduating college, you'll
36:14
Speaker 2: probably hear from them that they're having a hard time
36:16
Speaker 2: breaking into this job market because there's not much hiring
36:20
Speaker 2: going on, especially at the entry level. But it continues
36:24
Speaker 2: to be a case where if you have a job,
36:26
Speaker 2: there's nothing really suggesting that there's any kind of meaningful
36:29
Speaker 2: shift towards staff reductions at this point.
36:33
Speaker 4: Consistently voted one of the top Caribbean destinations. The United
36:37
Speaker 4: States Virgin Islands is the perfect place for your next vacation.
36:40
Speaker 4: Whether you're looking for a romantic get away, a long
36:43
Speaker 4: weekend with friends, or a family vacation. San Croix, Saint Thomas,
36:46
Speaker 4: and Saint John have everything you need to enjoy that
36:49
Speaker 4: special time away from home. Take advantage of a variety
36:52
Speaker 4: of incredible promotions that are available right now. Go to
36:56
Speaker 4: visit USVII dot com slash promotions, where you find details
36:59
Speaker 4: about all of these amazing experiences, including a stay at
37:02
Speaker 4: the Davy Karina Bay all inclusive beach resort in Casino
37:06
Speaker 4: on Saint Croix. From the moment you arrive, you'll fall
37:09
Speaker 4: naturally in rhythm with the heartbeat of the islands. There's
37:11
Speaker 4: no money to exchange, and travel from New England could
37:14
Speaker 4: not be easier. Don't miss your chance to enjoy America's
37:17
Speaker 4: Caribbean paradise the United States Virgin Islands. Had to visit
37:20
Speaker 4: USVII dot com slash promotions for more information and to
37:24
Speaker 4: book your trip today. That's visit USVII, dot com, slash promotions.
37:30
Speaker 2: Mike, anything else that you want to touch on as
37:32
Speaker 2: it relates to the economic data CPI or claims that
37:35
Speaker 2: we got no I.
37:36
Speaker 3: Think the key thing is just keep in mind that
37:39
Speaker 3: people's behavior probably shifted in the month of April, and
37:43
Speaker 3: we won't see that shift play out in data until
37:47
Speaker 3: May or June.
37:48
Speaker 2: And we also don't know.
37:48
Speaker 3: How long that shift in the way things were behaving
37:52
Speaker 3: will play out. But the data January and February, as
37:55
Speaker 3: a reminder, was not all that great on the spending side,
37:59
Speaker 3: and we were kind of looking for March data to
38:01
Speaker 3: give some clarity in terms of how is the consumer
38:04
Speaker 3: feeling in twenty twenty five, might be a little while
38:07
Speaker 3: before we can definitively say that.
38:09
Speaker 2: Just take a quick break. We still got a bunch
38:11
Speaker 2: to get to here, and so fortunately we got a
38:14
Speaker 2: whole nother hour coming up. Stick around