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Will Trump force Apple to make iPhones in the US? · The Financial Exchange Show

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Speaker 2: Good morning, Happy Friday, Happy Friday before Memorial Day. Hope
1:15
Speaker 2: everybody made it out of the storms last night with
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Speaker 2: electricity and no downs trees in their neighborhood. I woke
1:23
Speaker 2: up this morning figuring, hey, it's the Friday before Memorial
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Speaker 2: Day weekend. It's a long weekend. Traders are taken the
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Speaker 2: day off, writers are taken the day off. We're gonna
1:35
Speaker 2: be talking about the penny. We're gonna be talking about
1:37
Speaker 2: the Supreme Court case that you know, preserves some independence
1:41
Speaker 2: at the Fed seemingly. But there's not gonna be a lot.
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Speaker 3: Of market news, veggie burgers.
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Speaker 2: Ers, how much traffic is going to be between New
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Speaker 2: York and Boston. How long's it gonna take to get
1:54
Speaker 2: up to the Lakes region of New Hampshire this weekend. Butny,
1:58
Speaker 2: the Trump administration has come out and given us all
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Speaker 2: the story that we need for this morning with new
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Speaker 2: announcements on tariffs after six or seven weeks of de
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Speaker 2: escalation on the tariff front. Let's see, I think it's
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Speaker 2: six April eleventh was the first day that the Trump administration,
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Speaker 2: or no think recently, I think it was the ninth
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Speaker 2: that they walked back the reciprocal tariffs rather, and since
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Speaker 2: then it's all been de escalatory in one direction. But
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Speaker 2: today heat and things back up. First, we had an
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Speaker 2: announcement come out when it came to Apple products manufactured
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Speaker 2: outside of the United States, the President pushing a twenty
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Speaker 2: five percent tariff, seemingly just on Apple, but presumably on
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Speaker 2: all electronic devices made outside the United States. I would
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Speaker 2: think this applies to semiconductors and other technological products that
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Speaker 2: aren't already subject to Chinese tariffs for example. Unclear to
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Speaker 2: me whether or not that is on top of ten
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Speaker 2: percent universal tariffs that are baseline on every but I
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Speaker 2: would assume so. So in any case, we will see
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Speaker 2: where that goes. But they had specifically carved out semiconductors
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Speaker 2: and electronics when it came to Apple, when it came
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Speaker 2: to the first China tariffs that were announced at one
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Speaker 2: hundred that ultimately came to one hundred and forty five percent,
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Speaker 2: now are sitting at thirty Will this be a separate
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Speaker 2: twenty five percent rate? In addition, we will find out
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Speaker 2: on top of that, we've learned this morning that the
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Speaker 2: Trump administration is looking to impose tariffs of fifty percent
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Speaker 2: on goods coming from the European Union. This is another
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Speaker 2: set of big news as the seeming negotiations have been
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Speaker 2: going on between members of the U and the Trump
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Speaker 2: administration and members of just about every government across the
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Speaker 2: world and the Trump administration, and an indication that those
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Speaker 2: negotiations perhaps are not going terribly well in the President's eyes.
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Speaker 2: Where do you want to start, Mark Apple?
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Speaker 3: All I can say is if a Democrat president had
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Speaker 3: in the past two weeks told Walmart what they can
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Speaker 3: charge about a week before that, told Amazon you better
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Speaker 3: not print real you better not decompose prices on your website,
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Speaker 3: and this morning told Apple where they can produce and
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Speaker 3: where they can If this were Democrat president, free market
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Speaker 3: Republicans would be rightly screaming bloody murder. The real story
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Speaker 3: here to me is the deviation from the institutions and
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Speaker 3: the norms that have made this country what it is,
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Speaker 3: at least economically. This cannot this pattern of behavior, and
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Speaker 3: maybe this is Trump just trying to dominate the news,
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Speaker 3: trying to shift attention away from an unpopular tax plan,
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Speaker 3: trying to shift attention away from the dinner he had
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Speaker 3: with crypto donors to his personal wallet, not to any
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Speaker 3: party or certainly not to the government last night, So
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Speaker 3: you never know. With him, he's very good at changing
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Speaker 3: the story. This could just be changing the story, but
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Speaker 3: we have to interpret it as new policy. The departure
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Speaker 3: from traditional free market principles here is sad to me
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Speaker 3: personally appalling. And where is the free market wing of
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Speaker 3: the Republican Party on this, Mike, That's the first thing
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Speaker 3: that comes to mind to me, And by that I
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Speaker 3: mean Ran Paul and Massy, both from Kentucky. They've got
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Speaker 3: to be others. If not, we're doomed.
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Speaker 2: Well, this has been a pretty consistent move. But where
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Speaker 2: I want to focus this for a moment here is
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Speaker 2: on a question that I received from mac gannon. He's
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Speaker 2: the host of the Portland Show Portland main show that
5:30
Speaker 2: we broadcast our show on up in Portland, and he
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Speaker 2: asked an interesting question, which is is this credible? Does
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Speaker 2: anyone believe it? Of course not, and I think question, well,
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Speaker 2: I mean, to some degree somebody trusts it because the
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Speaker 2: S and P five hundred's off nine tenths of one percent.
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Speaker 2: European markets are off closer. It depends on which one
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Speaker 2: you're looking at. But the DAX is off one point
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Speaker 2: seven percent, the European Auto index is down three point
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Speaker 2: six percent, and Apple stock this morning is down about
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Speaker 2: two and a quarter percent and a third percent. And
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Speaker 2: so's not.
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Speaker 3: Somebody's a proportional reaction.
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Speaker 2: It's not. And that's what I come back to. You're right, is, yes,
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Speaker 2: these stocks are down. Some investors are buying it, some
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Speaker 2: investors are on vacation and are not trading today. And
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Speaker 2: so I don't want to read too much into the
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Speaker 2: Friday before Memorial Day in terms of price movements. But
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Speaker 2: there's some credibility lacking on this. If we actually believe
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Speaker 2: that tariffs were going to be hitting every Apple product
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Speaker 2: other than the one thing they make in Texas, I
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Speaker 2: think at a rate of twenty five percent, would Apple
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Speaker 2: stock be down two point four percent? Of course not,
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Speaker 2: it would be down massively more because this is a
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Speaker 2: huge change to their business that will add billions of
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Speaker 2: dollars of cost to iPhones. There's been estimates out there
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Speaker 2: that would cost thirty five hundred dollars to manufacture the
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Speaker 2: iPhone here in the United States. This would add what's
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Speaker 2: what's the newest iPhone? Go for the these days?
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Speaker 4: Tucker the base one iPhone sixteen I think is seven
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Speaker 4: ninety nine, and.
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Speaker 2: I think they've got something like a forty percent profit
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Speaker 2: margin on there, So you know, tack on, let's see
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Speaker 2: a few hundred dollars to just the import cost of
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Speaker 2: these things. It's clear to me that investors aren't buying it.
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Speaker 3: You've already done more analysis than the Trump administration has
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Speaker 3: done on this in the past thirty seconds in your head,
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Speaker 3: off the top of your head, that the point of
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Speaker 3: this is not to be serious. This is not meant
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Speaker 3: to be taking his policy. It's either meant as a
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Speaker 3: diversion from something else or just meant to impose his
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Speaker 3: will on the private sector to continue to soften them up,
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Speaker 3: to get them to accept whatever it is he wants
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Speaker 3: them to accept. That's the only there's no analytical solution
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Speaker 3: to this. Maybe it's the only conclusion I can come
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Speaker 3: to after the past couple of weeks of egregious anti
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Speaker 3: free market behavior from a supposedly republican administration. I'm sorry,
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Speaker 3: but that's the bottom lie.
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Speaker 2: What I worry about on this, frankly, is the credibility issue.
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Speaker 2: It's been It was being called into question back in
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Speaker 2: February when the president was threatening tariffs, nobody believed them.
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Speaker 2: He did impose those terraffs. Markets sank twenty percent, he
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Speaker 2: waved the terraft markets made up all of their lost
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Speaker 2: area here. And I think that genuinely nobody believes that
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Speaker 2: this is real. And so if I'm negotiators on the
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Speaker 2: European Union side, if I'm Tim Cook, I'm not sure
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Speaker 2: I'm panicked one bit right now, I'm sure they are.
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Speaker 3: I really might follow through they yeah, if they don't buckle.
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Speaker 3: So if they don't bend to his.
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Speaker 2: Will, right, and I just don't know where that goes.
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Speaker 2: In terms of imports from the European Union, in twenty
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Speaker 2: twenty four, they totaled some two point eight trillion dollars.
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Speaker 2: The largest single product category included mineral fuels, oils, distilled
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Speaker 2: distillation products. That was about one oh sorry, these are
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Speaker 2: coming from the United States, disregard. I believe the largest
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Speaker 2: category of imports dollar wise, from the European Unit Union
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Speaker 2: into the United States is largely transportation equipment between cars
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Speaker 2: and airbus planes. By the way, you know, twenty let's
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Speaker 2: just think about for a moment the reality of fifty
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Speaker 2: percent tariffs on European manufactured planes coming into the United
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Speaker 2: States is almost definitely not going to happen and is
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Speaker 2: not terribly credible. But yeah, everything from wine to agricultural products,
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Speaker 2: olive oil. There's lots of stuff that is made in
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Speaker 2: the European Union that comes into the United States, and
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Speaker 2: plenty of stuff that is made in the United States
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Speaker 2: that goes over to the EU. I suspect this is
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Speaker 2: a negotiating tactic. I suspect it's to soften them ount
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Speaker 2: but then come up with a deal that gets created.
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Speaker 2: But again, where I worry about this is the credibility
9:48
Speaker 2: side of things. I think this is putting the president
9:50
Speaker 2: in a more difficult negotiating position for the future.
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Speaker 3: I think to chase the specifics of this is probably
9:57
Speaker 3: the I'm not suggesting we shouldn't be doing it, but
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Speaker 3: I think it's actually the wrong approach. The economic implications
10:03
Speaker 3: of this stem from the erosion of rule of law
10:06
Speaker 3: and consistency. If stocks sell off and they're only doing
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Speaker 3: so very modestly, which to your point, people don't think
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Speaker 3: that we're going to follow through on the latest threats
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Speaker 3: because we've buckled each time, because we've renegged each time.
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Speaker 3: The threat here is to long term growth. There are
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Speaker 3: arguably a few things that have made the US the
10:32
Speaker 3: country that it is today. Economically, the rule of law
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Speaker 3: are institutions and the fact that no one is above
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Speaker 3: the law. That's the biggie. I think, in fact, every
10:41
Speaker 3: economist would agree that institutions are paramount. The second is
10:44
Speaker 3: our science and innovation system that's being attacked from a
10:47
Speaker 3: different angle. This could in part be an effort to
10:51
Speaker 3: distract us from that. I don't know. And then finally
10:53
Speaker 3: Mike openness to foreign talent which comes through immigration. All
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Speaker 3: three are under assault right now. Those three things were
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Speaker 3: were traditionally free market, Republican and i've mean the Republican
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Speaker 3: party principles. So I don't understand what's happening. I don't
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Speaker 3: understand why we're jeopardizing the miraculous economic growth engine that
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Speaker 3: we created.
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Speaker 2: Let's take a quick break. When we come back. I
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Speaker 2: want to move along from the terriffs, because quite honestly,
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Speaker 2: there's too much that we don't know about it at
11:22
Speaker 2: this stage. Twenty five percent announced on Apple, fifty percent
11:25
Speaker 2: announced on European Union goods. If we get new updates
11:29
Speaker 2: or press conferences on those numbers or those details as
11:32
Speaker 2: the show goes along, we will keep you updated markets
11:34
Speaker 2: selling off. Partly in response to all of this, I
11:37
Speaker 2: want to move along to what we've been seeing for
11:39
Speaker 2: the last six weeks in the bond market, and specifically
11:41
Speaker 2: what we're seeing in the bond market this morning. That's
11:44
Speaker 2: next here on the Financial Exchange.
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12:43
Speaker 2: Mark. I want to revisit our stories about the bond
12:46
Speaker 2: market because kind of just like every time long term
12:50
Speaker 2: government bonds start running up in terms of yield, all
12:53
Speaker 2: the stories come out about bond vigilantes, and hey, the
12:56
Speaker 2: vigilantes are at it again. They're starting to care about
12:59
Speaker 2: deficits and their going to start dumping US bonds and
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Speaker 2: it's the end of the world as we know it.
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Speaker 2: These stories were printed back in twenty twenty three when
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Speaker 2: yield spiked. I think they were printed back in twenty
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Speaker 2: twenty four when yield spiked, and yield spiked again. Over
13:13
Speaker 2: the last six weeks or so, and they've been getting
13:16
Speaker 2: run again. I think it's fair to say that we
13:21
Speaker 2: covered this in twenty twenty three, and I remember the
13:23
Speaker 2: conversation being could it be bond vigilantes really worried about deficits? Maybe?
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Speaker 2: And government spending, Yeah, could be. But then yields fell
13:34
Speaker 2: and you just were left sitting there saying, well, I
13:36
Speaker 2: guess not, because nothing has changed in terms of the
13:38
Speaker 2: Biden's plan for massive government spending without corresponding spending cuts
13:43
Speaker 2: or tax increases, and nothing has changed fundamentally about the
13:47
Speaker 2: state of you know, other global economic factors. And so no,
13:51
Speaker 2: it turns out it was not bond vigilantes taking a
13:53
Speaker 2: stand and saying no more will we support the United
13:56
Speaker 2: States government's debt. I hesitate to say that we should
13:59
Speaker 2: interpret it any differently this time, but those stories are
14:03
Speaker 2: coming up again. And here is the narrative as I
14:06
Speaker 2: see it, around bond yields and why it matters this time.
14:12
Speaker 2: And I have no idea whether not it turns out
14:14
Speaker 2: to be true, but for the last sixty years, but
14:18
Speaker 2: I guess let's concentrate a little bit more on the
14:20
Speaker 2: last twenty five since the Clinton administration. Presidents in the
14:25
Speaker 2: United States have run huge deficits, they have not in
14:29
Speaker 2: any meaningful way seriously considered paying for those deficits. They
14:34
Speaker 2: were substantial during the last few years of the Biden administration,
14:38
Speaker 2: huge during the last few years the Trump administration, and
14:42
Speaker 2: by all predictions will be massive this year as well.
14:46
Speaker 2: The only reason that the United States has been able
14:50
Speaker 2: to do so without seeing the type of thing that
14:55
Speaker 2: you see in Argentina and Greece and other nations where
14:58
Speaker 2: they have these types of fiscal situations and then interest
15:01
Speaker 2: rates run through the roof has been based on a
15:05
Speaker 2: few factors. But the special status of the United States,
15:09
Speaker 2: and one of those special statuses is that we send
15:11
Speaker 2: a boatload of dollars overseas when we import all sorts
15:15
Speaker 2: of stuff. We don't save a whole lot of money
15:18
Speaker 2: in this country. Compared to other countries. The savings rates
15:21
Speaker 2: are really small. And so you know, when I go
15:26
Speaker 2: and buy a whole bunch of what if I bought
15:28
Speaker 2: from China, a whole bunch of stone for my deck
15:31
Speaker 2: from China, and I send those dollars over to China,
15:35
Speaker 2: they have historically turned around and went and bought treasuries
15:39
Speaker 2: as such. According to Congress in December of twenty twenty three,
15:42
Speaker 2: the mainland China was the second largest foreign holder of
15:47
Speaker 2: US federal debt. It represented about ten percent of the
15:51
Speaker 2: foreign holders of US federal debt. Japan makes up the
15:54
Speaker 2: number one spot at fourteen percent, UK at nine, Luxembourg
15:58
Speaker 2: at five. That Luxembourg's up there at five percent. Canada
16:04
Speaker 2: buys about four Ireland buys for.
16:06
Speaker 3: I think they'sculated that that's other countries.
16:09
Speaker 2: That hiding the money. Yeah, yeah, that makes sense. So
16:13
Speaker 2: here is the theory of how the bond vigilantes are
16:16
Speaker 2: coming out this time, you continue to run massive deficits,
16:21
Speaker 2: you are proposing a massive tax cut through the Trump
16:24
Speaker 2: administration without any meaningful cuts to spending, and at the
16:28
Speaker 2: same time you are threatening our economies via trade and
16:34
Speaker 2: wanting to disrupt that global order of where dollars go.
16:37
Speaker 2: So why should we continue to support your fiscal situation
16:40
Speaker 2: which has just gotten worse and worse and worse. Which,
16:44
Speaker 2: again I'm not putting this on the feet of the
16:46
Speaker 2: Trump administration, they are contributing factor, but this has been
16:50
Speaker 2: every single president since Clinton. So you know, we've got
16:53
Speaker 2: a long history in this country of being having no
16:56
Speaker 2: fiscal order when it comes to our deficits. I guess
17:00
Speaker 2: the question is why should I buy it this time
17:02
Speaker 2: as opposed to every other time that we've talked about
17:04
Speaker 2: this potential.
17:05
Speaker 3: Well, because we're changing the set of norms by which
17:10
Speaker 3: this country has behaved. It's the point I made in
17:12
Speaker 3: my little rant in the last segment when I expressed
17:14
Speaker 3: my frustration at the lack of adherence to basic free
17:18
Speaker 3: market principles when Trump bully's companies like Apple and Amazon,
17:22
Speaker 3: and the disregard of the need for those foreign savings
17:29
Speaker 3: to finance our deficit and make investments here because we
17:32
Speaker 3: don't save enough. Interest rates are set in a global
17:35
Speaker 3: market based on the supply and demand for so called
17:39
Speaker 3: loanable funds. Companies need money, Governments need money. When the
17:43
Speaker 3: deficit goes up, we need somebody to buy those treasury bills,
17:48
Speaker 3: which are just tradable loans.
17:50
Speaker 1: If you're.
17:52
Speaker 3: Cutting off trade, there'll be fewer dollars abroad that get
17:56
Speaker 3: recycled into those loans, as you pointed out, Or you
17:58
Speaker 3: may just upset countries and investors globally with trade wars
18:03
Speaker 3: and your antics generally causing them to shun treasuries or
18:07
Speaker 3: believe that they're no longer the world's safe haven assets.
18:10
Speaker 2: So why should I mean, obviously there's implications for lawmakers,
18:13
Speaker 2: for financial institutions. Why should Main Street care?
18:17
Speaker 3: It will probably mean higher interest rates, higher all to.
18:21
Speaker 2: Come to pass in the way we're discussing.
18:23
Speaker 3: In fact, it almost has to will if we don't
18:26
Speaker 3: start saving more, which we won't, and that means both
18:29
Speaker 3: the government and US as people. Interest rates will go
18:32
Speaker 3: up if there is less foreign capital.
18:34
Speaker 2: Com car loan rates, credit card right, obviously, but all
18:39
Speaker 2: of those things go higher, and hypothetically the only way
18:43
Speaker 2: to save that is buy the Federal reserve, buying a
18:45
Speaker 2: whole bunch of that stuff, i e. Printing a whole
18:48
Speaker 2: bunch of money. So hypothetically dollar goes down and prices
18:51
Speaker 2: go still go up.
18:53
Speaker 3: You have to keep in mind rates are composed of
18:55
Speaker 3: two components. There's a real component driven by real forces.
18:58
Speaker 3: We can get into this on the other side of
19:00
Speaker 3: if you think it worthwhile, otherwise we'll just let it go.
19:02
Speaker 3: And then there's the expected inflation component. So when rates
19:05
Speaker 3: go up, you're always asking is it expected inflation that's
19:08
Speaker 3: rising or is it concern about the US's ability to
19:12
Speaker 3: maintain its full faith and credit status. You never really know.
19:16
Speaker 3: Bond vigilantes are one way of putting what's been happening
19:19
Speaker 3: in the I don't really know category.
19:21
Speaker 2: Now the counterpoint today, on the heels of these terrorf announcements,
19:25
Speaker 2: yield's moving down. We'll talk about that and more and
19:28
Speaker 2: next with Wall Street Watch. Like us on.
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19:44
Speaker 1: business news is always first right here on the Financial
19:48
Speaker 1: Exchange Radio Network. Time now for Wall Street Watch, a
19:54
Speaker 1: complete look at what's moving markets so far today. Right
19:57
Speaker 1: here on the Financial Exchange Radio Network.
20:00
Speaker 4: Markets are selling off in reaction to President Trump's latest
20:03
Speaker 4: tariff's threats this morning on Apple and the EU. In
20:08
Speaker 4: a social media post, Trump said that Apple will have
20:11
Speaker 4: to pay a tariff of twenty five percent or more
20:13
Speaker 4: for iPhones made outside of the US. Trump also said
20:17
Speaker 4: he is recommending a fifty percent tariff on the EU
20:20
Speaker 4: that would begin on June first, as trade negotiations have stalled.
20:25
Speaker 4: Right now, the Dow is down by two thirds of
20:27
Speaker 4: a percent, or two hundred and eighty one points. SMP
20:30
Speaker 4: five hundred is down about three quarters of a percent
20:33
Speaker 4: or forty five points, in the Nasdaq down by one
20:35
Speaker 4: percent or one hundred and eighty seven points. Russell two
20:39
Speaker 4: thousand is also down by three quarters of a percent.
20:41
Speaker 4: Ten year Treasure Reel down by three basis points now
20:44
Speaker 4: at four point five to two percent, and crude oil
20:47
Speaker 4: up one percent higher so far today, trading just below
20:51
Speaker 4: sixty two dollars a barrel. As I mentioned Apple, that
20:54
Speaker 4: stock is down two percent in reaction to Trump's tariff
20:58
Speaker 4: post this morning. Meanwhile, Decker's Outdoors down by twenty one
21:03
Speaker 4: percent after the maker of ug boots misquarterly outlook expectations
21:07
Speaker 4: and declined to offer full year guidance for fiscal twenty
21:10
Speaker 4: twenty six, citing macroeconomic uncertainty related to evolving global trade policies. Comparably,
21:17
Speaker 4: discount department store chain Ross Stores withdrew its annual outlook
21:22
Speaker 4: as tariffs are expected to drag on earnings as more
21:25
Speaker 4: than half of its products originate from China. That stock
21:29
Speaker 4: Row Stores is down by fourteen percent. Elsewhere, tax and
21:33
Speaker 4: Business software company into It posted better than expected adjusted
21:37
Speaker 4: earnings and revenue for the previous quarter and issued an
21:40
Speaker 4: optimistic outlook, sending shares up by eight percent. Several nuclear
21:44
Speaker 4: stocks are seeing gains after Reuters reported that Trump will
21:47
Speaker 4: sign orders to boost nuclear power.
21:49
Speaker 2: As soon as today.
21:51
Speaker 4: Aklow up by twenty five percent, New Scale up by
21:54
Speaker 4: eighteen percent, and Constaation Energy is up by one percent.
22:00
Speaker 4: And What Bush analyst Dan Ives lifted his price target
22:03
Speaker 4: of Tesla, saying he believes the golden age of autonomous
22:07
Speaker 4: is now on the doorstep for Tesla ahead of the
22:10
Speaker 4: ev makers expected robotaxi launch in Austin next month. However,
22:15
Speaker 4: Tesla is retreating by one and a half percent today.
22:19
Speaker 4: I'm Tucker Silvan ma, that's Wall Street watch.
22:21
Speaker 2: Tesla had better, so hope. So, because did you guys
22:23
Speaker 2: see that story of where those used cyber trucks are
22:27
Speaker 2: going for these days?
22:28
Speaker 1: Yeah?
22:29
Speaker 2: Yeah, So a new cyber truck was going for about
22:32
Speaker 2: one hundred thousand dollars and they took a look at
22:36
Speaker 2: a few of them, and I'm going to try and
22:38
Speaker 2: do the exact same thing here as we speak. But
22:41
Speaker 2: the depreciation on these cyber trucks is moving fast. You
22:47
Speaker 2: are seeing models now that are a year old that
22:50
Speaker 2: are falling by some forty five percent in some cases.
22:54
Speaker 2: And these are cars with like six thousand miles on them.
22:57
Speaker 2: These cyber trucks, I still see them on the roads
22:59
Speaker 2: here there, but clearly not as frequently as maybe I
23:04
Speaker 2: would have anticipated in terms of I just went on
23:08
Speaker 2: Auto Trader and just said, hey, you know, here in
23:10
Speaker 2: New England, what can I get a cyber truck for
23:14
Speaker 2: I'm not seeing any in the sixties, so maybe that's
23:17
Speaker 2: maybe that's overstated in some of these pieces. The cheapest
23:20
Speaker 2: one that I'm seeing with under twenty thousand miles is
23:23
Speaker 2: a Use twenty twenty four for sale with twelve thousand
23:27
Speaker 2: miles at seventy two thousand bucks. But again that is
23:31
Speaker 2: a thirty plus percent discount off of what it was offered,
23:34
Speaker 2: and it is a twenty twenty four No cars depreciated.
23:38
Speaker 3: That those stories about the haircut people were taking on
23:40
Speaker 3: the trade in though, so they'll market back when they resell.
23:42
Speaker 2: True. Yeah, yeah, you're seeing what you're saying. Seventy two
23:46
Speaker 2: they probably traded in for you, right eight, you're right, Yeah,
23:48
Speaker 2: that is a very good point. Mark that. Yeah, just
23:50
Speaker 2: because I can't buy one for sixty five doesn't mean
23:53
Speaker 2: the dealership can't buy one for private party. Yeah. That's uh, well,
23:58
Speaker 2: we'll see how just just how good these self driving
24:00
Speaker 2: cars are.
24:00
Speaker 3: I have to group for Tesla, right, I mean an
24:04
Speaker 3: American company, an innovative product, one that's probably environmentally necessary
24:10
Speaker 3: and pioneered a lot of interesting technology. Whatever Elon's flaws
24:15
Speaker 3: and his indulgences of things that probably weren't helpful for
24:19
Speaker 3: a visible CEO. You have to root for them, I think,
24:22
Speaker 3: don't you.
24:23
Speaker 2: Yeah, an all American made car company that's innovating more
24:27
Speaker 2: than any car company has in one hundred years. Tend
24:29
Speaker 2: I do tend to agree. It's you know, it can
24:34
Speaker 2: be sometimes entertaining to laugh at somebody's misfortunes, as Tesla
24:39
Speaker 2: has had plenty of them over the course of this year.
24:42
Speaker 2: But you're right. I mean this is there are no
24:45
Speaker 2: car companies out there that produce more American than Tesla
24:47
Speaker 2: right now, and they are very much struggling to maintain
24:52
Speaker 2: that dominance.
24:53
Speaker 3: I think you after. I don't know now I'm second
24:55
Speaker 3: guessing the way I worded that, but yeah, just keeping
24:58
Speaker 3: and it's hard to separate the company from Elon because
25:01
Speaker 3: he's so Yeah, big component of highly is valued if
25:04
Speaker 3: he weren't there, it gets valued at GM or Ford's
25:08
Speaker 3: multiples or something like that, right, which means it decreases
25:12
Speaker 3: by well, let's just say a lot. I don't want
25:14
Speaker 3: to be alarmists, so I guess you can't separate the two.
25:17
Speaker 3: I'd love to be able.
25:17
Speaker 2: To, though it is well. I mean plenty of Tesla
25:20
Speaker 2: owners are attempting to do so. I don't know how
25:22
Speaker 2: many anti anti Elon Tesla owners. I have seen bumper
25:28
Speaker 2: stickers on here in New England over the last few weeks.
25:32
Speaker 2: But sorry, that kind of went out of order there.
25:34
Speaker 2: But yeah, the Tesla cyber trucks are not selling very
25:38
Speaker 2: well and not reselling terribly well from what we are seeing.
25:42
Speaker 2: We were talking before the break mark about the new
25:45
Speaker 2: announcements on tariffs and the bond market reaction. As we mentioned,
25:49
Speaker 2: as we get updates on this, we will continue to
25:51
Speaker 2: update all of you. Scott Bessen, to the President's Treasury Secretary,
25:56
Speaker 2: was on Fox News a bit ago and was asked,
25:59
Speaker 2: of course, about the terrioff tariffs and the new threatened
26:02
Speaker 2: fifty percent tariff on EU starting on June first, and
26:08
Speaker 2: Besson's comments were, look, I think this is in response
26:10
Speaker 2: just to the EU's pace end quote. I would hope
26:13
Speaker 2: that this would light a fire under the EU because
26:16
Speaker 2: his point elsewhere was that these deals are moving quickly.
26:19
Speaker 2: This is all a quote from Bessent quote. These deals
26:22
Speaker 2: are moving quickly, and I think as we approach the
26:24
Speaker 2: end of the ninety day period, we're going to see
26:27
Speaker 2: more and more of them announced. Quote. Many of the
26:30
Speaker 2: Asian countries have come with very good deals. So the
26:34
Speaker 2: ninety day pause on reciprocal rates was announced on April ninth.
26:38
Speaker 2: That brings us to what July ninth is the approximate timeframe,
26:43
Speaker 2: so around the July fourth holiday when these suspensions would end,
26:48
Speaker 2: and we're seeing an indication from the White House that
26:52
Speaker 2: the EU negotiations are not going as well as the
26:55
Speaker 2: president would help.
26:55
Speaker 3: One way to keep your sanity rather than trying to
26:58
Speaker 3: follow every twist in turn, which again I think is
27:01
Speaker 3: done deliberately for dramatic effect and to dominate the news,
27:05
Speaker 3: and it's quite effective from that point. If your objective
27:07
Speaker 3: is to be in everybody's head twenty four to seven,
27:09
Speaker 3: then this is one way to do it. We're all
27:12
Speaker 3: gonna need we're all going to be functionally lobotomized in
27:16
Speaker 3: three years effectively, but this is one way to dominate
27:20
Speaker 3: the news. Judge this in a year. Judge these policies
27:25
Speaker 3: in two years have trade deficits full. Now, if trade
27:27
Speaker 3: deficits fall because economic growth is slowed, that's not good.
27:30
Speaker 3: Even I could do that, But judge, judge their fiscal
27:34
Speaker 3: policy in a year. Is the deficit bigger or smaller?
27:37
Speaker 3: Is the economy growing faster or slower than it was
27:40
Speaker 3: when these folks took office.
27:42
Speaker 2: Yeah, That's what I keep going back to, is were
27:46
Speaker 2: I designing a country's economic policy, I don't think I
27:49
Speaker 2: would be using tariffs to do so.
27:51
Speaker 3: But look, because it's not eighteen seventy three.
27:54
Speaker 2: Yeah, but look, I mean, the fact remains that no
27:57
Speaker 2: country has tested this out and nobody actually knows how
28:01
Speaker 2: it would play out. And so I've gone into this saying, look,
28:07
Speaker 2: let's just see how it goes. What I don't think
28:09
Speaker 2: is a good strategy in terms of see how it
28:11
Speaker 2: goes is complete lack of direction. And that is what
28:15
Speaker 2: was dissipating over the last six weeks and today has
28:19
Speaker 2: increased once again. Is that uncertainty, that lack of direction,
28:23
Speaker 2: that that cloudiness in terms of I mean, Apple is
28:29
Speaker 2: the perfect example today where can I manufacture my stuff
28:32
Speaker 2: and not make the White House extraordinarily angry? And the
28:37
Speaker 2: answer seems to be Texas, right, I mean the United States.
28:42
Speaker 2: But you see that that is seemingly the answer this morning.
28:47
Speaker 2: And I don't know, if you are Tim Cook, how
28:49
Speaker 2: you interpret that any differently.
28:51
Speaker 3: Yeah, I'm a little less inclined to give them latitude
28:55
Speaker 3: with a let's see how it goes attitude, because we okay,
28:58
Speaker 3: because anybody who's ever looked at tariffs knows they only
29:01
Speaker 3: benefit a very small number of people, namely people who
29:04
Speaker 3: make the stuff that the tariffs favor, domestic producers and
29:07
Speaker 3: people that work for them. They hurt everybody else, and
29:09
Speaker 3: they hurt economic growth on balance, so I'd be more
29:13
Speaker 3: inclined to go with a vast weight of the evidence.
29:15
Speaker 3: I don't need to see how that goes. That said,
29:19
Speaker 3: it's to keep your sanity. I think that's probably the
29:21
Speaker 3: best attitude. You can't be all wound up in a
29:23
Speaker 3: little ball every day wringing your hands about tariffs, right,
29:28
Speaker 3: you'll go crazy with respect to these others that, yeah,
29:33
Speaker 3: you drive yourself nuts. These other policies, we can give
29:37
Speaker 3: them a little. I have my doubts, but some of
29:39
Speaker 3: them are really good, like the announcement about expanding nuclear
29:42
Speaker 3: power today. Thank god a president is finally taking the
29:45
Speaker 3: lead on that. We've never had any leadership on nuclear
29:48
Speaker 3: we haven't had leadership on nuclear energy in decades. That's
29:51
Speaker 3: a very positive move. It's positive for the environment if
29:54
Speaker 3: that's your primary concern. It's certainly positive for economic growth.
29:57
Speaker 3: So that's that's that's in the plus calm. Unfortunately, it's
30:00
Speaker 3: swamped by all of this tariff policy uncertainty.
30:03
Speaker 2: Let's take a quick break when we come back. The
30:06
Speaker 2: GOP tax bill has passed the House, heads to the Senate.
30:09
Speaker 2: Now hoops are to get it done well. They've said
30:12
Speaker 2: before July fourth, I think more realistically before August. First,
30:15
Speaker 2: let's talk about what we know that's in there so far,
30:18
Speaker 2: that's next year on the Financial Exchange text us.
30:21
Speaker 1: At six one seven three, six two one three eighty
30:23
Speaker 1: five with your comments and questions about today's show, and
30:26
Speaker 1: let us know what you think about the stories we
30:28
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30:33
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30:41
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30:45
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30:48
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30:59
Speaker 2: The GOP tax bill has made its way through the
31:02
Speaker 2: House now heads over to the Senate, where I'm guessing
31:05
Speaker 2: it'll look very different than it did pass in the House.
31:07
Speaker 2: But we have a few things that are clearly going
31:10
Speaker 2: to be front and center, and the salt cap is
31:12
Speaker 2: one of them that applies, especially here in New England
31:15
Speaker 2: to a lot of taxpayers. The salt cap stands for
31:18
Speaker 2: state and local taxes. You used to be able to
31:21
Speaker 2: deduct those there was no limit on how much you
31:25
Speaker 2: could deduct them. So, you know, imagine you own a
31:28
Speaker 2: home in Boston as well on as well as on Nantucket,
31:31
Speaker 2: and you're, you know, making a million bucks a year
31:34
Speaker 2: paying I don't know, one hundred thousand dollars in property taxes,
31:38
Speaker 2: plus another one hundred thousand dollars in income taxes to
31:42
Speaker 2: the Commonwealth of Massachusetts. Because you are quite wealthy, you
31:47
Speaker 2: would deduct all of that against your federal income tax
31:49
Speaker 2: return and save quite a bit of dough on those deductions.
31:54
Speaker 2: The rules under the first Trump administration changed all that.
31:57
Speaker 2: They said, look, you are going to be able to
31:59
Speaker 2: cap that out at ten percent, sorry, at ten thousand
32:02
Speaker 2: dollars rather of state and local tax deductions. There's been
32:07
Speaker 2: a bunch of loopholes that have been created. For instance,
32:09
Speaker 2: if you own your own business, you're able to now
32:11
Speaker 2: pay your Massachusetts income tax bill personally through that business
32:15
Speaker 2: in many cases and still get the deductibility. But nonetheless,
32:20
Speaker 2: there have been a lot of lawmakers in high tax
32:24
Speaker 2: states that have pushed for some changes here, and the
32:27
Speaker 2: change seems to be that that cap is going up.
32:30
Speaker 2: Where it ultimately lands, I think is anybody's guest. But
32:33
Speaker 2: I've been getting the question of, hey, what does this
32:35
Speaker 2: actually mean for me, and quite honestly, the answer is
32:39
Speaker 2: oftentimes nothing. And so I think it's helpful to go
32:43
Speaker 2: through all of this in terms of how it works.
32:45
Speaker 2: When the first Trump tax bill passed, a lot of
32:48
Speaker 2: people that used to itemize started taking the standard deduction.
32:53
Speaker 2: And that standard deduction is pretty big these days. For
32:56
Speaker 2: a married couple under the current law, it's thirty one
33:00
Speaker 2: thousand dollars, and if it's an older married couple over
33:02
Speaker 2: the age of sixty five, it's even higher, and the
33:05
Speaker 2: House bill wants to bump that even more. So hypothetically
33:08
Speaker 2: we could end up in a place where the standard
33:10
Speaker 2: deduction for a married couple in twenty twenty six is,
33:14
Speaker 2: you know, somewhere in the high thirty thousand range for
33:18
Speaker 2: an older married couple. So if you're wondering if the
33:21
Speaker 2: salt changes make any difference for you, what you'd be
33:23
Speaker 2: asking is, Okay, what are my deductions? What sort of
33:26
Speaker 2: things might I be able to claim on my tax return?
33:30
Speaker 2: Any property taxes, sales taxes to the state, and income
33:34
Speaker 2: taxes to the state would you know, be potentially deductible
33:37
Speaker 2: up to that forty thousand dollars limit. If you had
33:40
Speaker 2: big medical expenses in any one year, there's some rules
33:43
Speaker 2: there around you know whether or not you can deduct those.
33:46
Speaker 2: You may make charitable contributions and those could be deductible.
33:50
Speaker 2: But you still have to ask yourself, Okay, if I
33:51
Speaker 2: add all that stuff up, is it going to exceed
33:54
Speaker 2: the standard deduction? And I think the answer for a
33:56
Speaker 2: lot of people is probably not. And for a lot
34:00
Speaker 2: of people, even in the New England area, they're going
34:02
Speaker 2: to continue to take that standard deduction off of their
34:05
Speaker 2: tax return, would be my guess. But yeah, there are
34:08
Speaker 2: some law there are some payers in these states that
34:10
Speaker 2: will benefit, but it's probably not that person making twenty
34:14
Speaker 2: million bucks because they also are capping this out in
34:16
Speaker 2: terms of income, so they're not going to allow the
34:19
Speaker 2: person making twenty million dollars to increase this cap. Where
34:24
Speaker 2: I bring this up, and why I think it matters
34:28
Speaker 2: is less about the salt cap in particular, but more
34:30
Speaker 2: about taxes and retirement and how to navigate these things.
34:35
Speaker 2: And look, there's been a lot of tools created over
34:39
Speaker 2: the last two decades to make investing a little bit
34:42
Speaker 2: more seamless, affordable and pretty clear right, I mean the
34:47
Speaker 2: Fidelity Vanguard. All these companies have easy to use tools
34:51
Speaker 2: where you can talk about how far away you are
34:53
Speaker 2: from retirement and they will auto select some portfolios from you.
34:56
Speaker 2: But where things get a little bit trickier is when
35:00
Speaker 2: you start taking that money out. And for a lot
35:02
Speaker 2: of retirees, especially here in New England, they might have
35:06
Speaker 2: some cash that they had received as an inheritance, or
35:09
Speaker 2: they sold a home and have some cash sitting on
35:11
Speaker 2: the sideline. They may have contributed to a roth account
35:14
Speaker 2: as well as a traditional account over time, and so
35:17
Speaker 2: they might be sitting in a position where they have
35:19
Speaker 2: three different buckets of money that have completely different tax status.
35:23
Speaker 2: And where I run into it all the time is Okay,
35:26
Speaker 2: I am finally doing that big renovation on my home
35:29
Speaker 2: and retirement, I'm going to need to come up with
35:31
Speaker 2: one hundred thousand dollars. Where do I take it from?
35:35
Speaker 2: That is a really difficult question to answer. That has
35:38
Speaker 2: almost everything to do with taxes and not investments, and
35:41
Speaker 2: these types of things come up all the time. I
35:44
Speaker 2: see it. It's one of the most common mistakes I
35:46
Speaker 2: see people seeing is where do I pull money out from?
35:50
Speaker 2: At what stage of life and where should I be
35:52
Speaker 2: contributing new money into when I am still working. It's
35:55
Speaker 2: not that people aren't great savers. We've talked about how
35:59
Speaker 2: that's not the case for the America as a whole.
36:01
Speaker 2: But plenty of people are good at setting aside the
36:03
Speaker 2: money for their retirement. But where to put it and
36:06
Speaker 2: then which order to take it out in is really
36:09
Speaker 2: really complicated and has everything to do with our ultra
36:12
Speaker 2: complex tax code, not only at the federal level, but
36:14
Speaker 2: at the state level too. If you have questions along
36:17
Speaker 2: these lines, you're trying to figure out not just how
36:19
Speaker 2: do I invest my funds for my future, but what
36:23
Speaker 2: tax strategies do I use once I get there. Give
36:26
Speaker 2: the folks at Armstrong Advisory Group a call. This is
36:29
Speaker 2: a core to any basic financial plan and it needs
36:33
Speaker 2: to be comprehensive and affect you personally. The numbers eight
36:36
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36:46
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
36:49
Speaker 1: registered investment advisor. Nothing in the ad or in any
36:51
Speaker 1: Armstrong guide a specific financial, legal or tax advice consult
36:54
Speaker 1: your own financial tax into state planning advisors before making
36:57
Speaker 1: any investment decisions. Armstrong may contact offer investment advisory services.
37:02
Speaker 2: Chuck has brought this story up a couple of times,
37:04
Speaker 2: and I'm skipping forward here a little bit, Mark, so
37:07
Speaker 2: I'm not I'm guessing you're not prepared, but I found
37:09
Speaker 2: this statistic. It's never stopped me before, Mike, I guess unsurprising,
37:16
Speaker 2: but really really concerning and disheartening. It's all about gambling,
37:20
Speaker 2: and sports gambling in particular, all relatively new to you know,
37:26
Speaker 2: to the American public. You know, we've had legalized sports
37:29
Speaker 2: gambling I think just in New Jersey and Nevada for
37:33
Speaker 2: decades now, but now some thirty plus states having legalized
37:39
Speaker 2: it is gaining traction quite quickly. According to this story,
37:45
Speaker 2: forty eight percent of American men under the age of
37:48
Speaker 2: fifty have an account on a sports betting app. Nearly
37:53
Speaker 2: half of American men have an account open on one
37:57
Speaker 2: of these sports betting apps. That is terrifying. I'm fully
38:03
Speaker 2: in favor by the way of legalized sports gambling and
38:06
Speaker 2: other types of gambling. It's kind of like a voluntary tax,
38:11
Speaker 2: but there are about to be some serious serious financial
38:15
Speaker 2: problems for those American men under fifty who are doing
38:17
Speaker 2: so quick break a lot more to cover in the
38:19
Speaker 2: second hour the Financial Exchange. We'll be right back