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Where do markets go from here? · The Financial Exchange Show

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Speaker 2: Fall Lane, Good morning, Welcome back to the Financial Exchange.
1:13
Speaker 2: It's an interesting feature of volatility is that it does
1:19
Speaker 2: tend to move in both directions, and we're sure getting
1:22
Speaker 2: that today. Markets are ripping higher in early trading today
1:27
Speaker 2: after what do you call yesterday a seesaw? It was
1:31
Speaker 2: more than a seesaw. It was a big move yesterday.
1:35
Speaker 2: We'll talk about that as well, but our first story
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Speaker 2: of the day has to continue to be about markets
1:40
Speaker 2: which have been just all over the place. The S
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Speaker 2: and P five hundred yesterday briefly fell into bear market
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Speaker 2: territory before rallying some what do we do like rally
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Speaker 2: eight percent into midday. I believe the statistic that I
1:54
Speaker 2: saw was that the price movements on the S and
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Speaker 2: P five hundred yesterday was more substantial than what you
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Speaker 2: saw for the five month time period from October through February.
2:08
Speaker 2: So you saw more price movement in stocks yesterday than
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Speaker 2: you did for the entire five month period surrounding October
2:15
Speaker 2: through February, which again just gives you a sense of
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Speaker 2: the volatility that was out there. Trade volumes were through
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Speaker 2: the roof. Multiple investment firms disclosed that they saw record
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Speaker 2: breaking transaction volume in trading yesterday and today at least
2:32
Speaker 2: so far. At least because recall that yesterday at around
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Speaker 2: ten to ten thirty am, somewhere in that timeframe, we
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Speaker 2: saw markets up substantially. But today the Dow is up
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Speaker 2: thirteen hundred points three and a half percent, SMP up
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Speaker 2: one hundred eighty two three point six percent, in the
2:48
Speaker 2: Nasdaq early trading up six hundred and thirty nine points,
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Speaker 2: or about four percent, as we've been doing the last
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Speaker 2: several days. Just want to remind everybody of the text
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Speaker 2: line on seven three six two thirteen eighty five. You
3:03
Speaker 2: can text in questions there, Tucker, what's the what's the
3:05
Speaker 2: email address for the for the show?
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Speaker 3: If people don't worry, don't worry about it's whole thing.
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Speaker 3: You can go to Financial Exchange show dot com and
3:12
Speaker 3: you can submit a question. Yeah, I have just a
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Speaker 3: ridiculously long email, so it's not worth it.
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Speaker 2: Got it? So you can submit a question there. But
3:19
Speaker 2: we'll be diving into questions throughout the show today. I'm
3:22
Speaker 2: sure I think we got eight or nine of them
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Speaker 2: yesterday during the show and had a few come in after,
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Speaker 2: so we'll be diving in here and there. We don't
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Speaker 2: get into specific securities or anything like that, or we
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Speaker 2: really can't do that on air because we don't know
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Speaker 2: you particularly. But we will be trying to respond to
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Speaker 2: some of this stuff throughout the show. But so far,
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Speaker 2: in early trading, some optimism in markets, and there's some
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Speaker 2: rumors out there, there's some news out there in terms
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Speaker 2: of what happens next, but there's nothing really firm. I
3:52
Speaker 2: think that you can point to you to say, oh,
3:55
Speaker 2: here's what's moving markets higher. I think this is more
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Speaker 2: just a feature of Hey, when you have all of
3:59
Speaker 2: the extreme fear burn through markets so rapidly like you
4:04
Speaker 2: did if you missed yesterday's show, the downturn that you
4:07
Speaker 2: saw on Thursday and Friday combined, that ten percent downturn
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Speaker 2: on the S and P five hundred was the largest
4:14
Speaker 2: downturn that we have seen in some fifty years on
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Speaker 2: the stock market. Other than three occasions, there was twenty
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Speaker 2: three times. Twenty twenty's got to be one of those.
4:22
Speaker 2: Twenty twenty was one of them. You got another guests
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Speaker 2: oh eight, Oh wait was a second one. The third
4:27
Speaker 2: one was no eighties five Monday, yeah, seven. So those
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Speaker 2: were the three occasions where you had two day downturns
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Speaker 2: more severe than what we saw on Thursday and Friday
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Speaker 2: of last week. And so, yeah, there's a lot been
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Speaker 2: out there like, oh, you know, this is this is normal.
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Speaker 2: Markets go through ten percent corrections, that go through twenty
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Speaker 2: percent corrections quite often, and that that is true. But
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Speaker 2: we also made some history on Thursday and Friday of
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Speaker 2: last week. And the question on everyone's mind is where
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Speaker 2: do we go from here? Where do markets go from here,
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Speaker 2: where do tariffs go from here? And what does all
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Speaker 2: of that mean for me personally? So my first answer
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Speaker 2: is nobody knows. So don't believe anybody that says they
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Speaker 2: know that this market puke is over, that it's about
5:12
Speaker 2: to turn a corner. It could be. I'm not saying
5:14
Speaker 2: that we aren't there, but nobody has any idea where
5:18
Speaker 2: all this stuff goes next, and markets are going to
5:21
Speaker 2: probably continue to be volatile until we have some certainty
5:23
Speaker 2: around that. Speaking of tariffs uncertainty, there was a meeting
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Speaker 2: yesterday with Israeli Prime Minister Benjaminette Yahoo in the White House.
5:34
Speaker 2: There was no resolution on tariff's Reporters specifically asked the question,
5:39
Speaker 2: you know, did these conversations lead to any progress on
5:42
Speaker 2: tariff negotiations and the president's answer. President Trump's answer was
5:46
Speaker 2: something along the lines of we'll see this is, you know,
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Speaker 2: the tariffs threat themselves is bringing a lot of people
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Speaker 2: to the negotiating table. We're getting good offers of deals here,
5:55
Speaker 2: so I think that insinuates that there could be a
5:58
Speaker 2: deal done. It wasn't a firm nob but it was
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Speaker 2: also not a firm Yes. The President separately said that
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Speaker 2: he had a great call with South Korea and says
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Speaker 2: that China wants to make a deal as well, which
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Speaker 2: is interesting and surprising given what we've heard so far
6:11
Speaker 2: on China has been nothing but pure escalation. So let's
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Speaker 2: go to China first. Uh, the you know, massive trading partner,
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Speaker 2: the massive supplier of goods across the world, and where
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Speaker 2: that tit for tat has been going most recently. Initially,
6:25
Speaker 2: tariff slapped on China in the fifty to sixty plus
6:29
Speaker 2: percent range, depending on you know which source and what
6:33
Speaker 2: we're talking about here, because there were already existing tariffs
6:36
Speaker 2: in place, There were tariffs were regarding fentanyl in place,
6:39
Speaker 2: and then there was an additional tariff put on place
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Speaker 2: for the reciprocal piece of this China then responded saying
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Speaker 2: that they were going to be putting tariffs on US
6:48
Speaker 2: made goods being imported into China at the rate of
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Speaker 2: thirty some odd percent, at which point President Trump said, okay, well,
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Speaker 2: if that goes into place, we'll be looking at one
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Speaker 2: hundred and four percent tariffs on Chinese made goods coming
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Speaker 2: into the United States. We've talked about trade threats and
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Speaker 2: tariff threats. This isn't This is you know, the inaccurate
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Speaker 2: description of what a trade war looks like. Granted, none
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Speaker 2: of it's in effect yet, but these are the signs
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Speaker 2: of a trade war between US and China, which I
7:14
Speaker 2: would say, nowhere else has it escalated to trade war
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Speaker 2: category yet.
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Speaker 4: No, this is you know, tip for tad, trade war,
7:21
Speaker 4: whatever sort of vernacular you want to use. This is
7:24
Speaker 4: going to be something that it seems like would be
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Speaker 4: more drawn out. Obviously, we're getting news this morning that
7:31
Speaker 4: perhaps there is momentum for a deal in place, but
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Speaker 4: you'd have to project a little bit more pessimism in
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Speaker 4: terms of these negotiations here. China seems very dead set
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Speaker 4: on being pretty defiant in terms of what they're going
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Speaker 4: to do from a negotiating perspective. They had discussed internally
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Speaker 4: the idea of raising tariffs on farming imports from the
7:53
Speaker 4: United States, banning Hollywood movies, investigating American IP gains. They
7:58
Speaker 4: had gone after DuPont Chemicals, which does about nineteen percent
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Speaker 4: of their revenue in China, with.
8:05
Speaker 1: Some direct measures.
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Speaker 4: So it doesn't really seem like there would be a
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Speaker 4: tremendous amount of momentum for negotiation, but you know, you
8:13
Speaker 4: can always get surprised here over the last couple of weeks,
8:16
Speaker 4: but this seems to be the most challenging of all
8:19
Speaker 4: the negotiations in place.
8:21
Speaker 2: China in response to all this, saying that they will
8:23
Speaker 2: fight to the end after a Trump threatening the additional
8:26
Speaker 2: fifty percent terrorists. And I think the lesson from years
8:30
Speaker 2: of trade negotiations between the Trump administration and China is
8:33
Speaker 2: that China, or at least the lesson for me. A
8:36
Speaker 2: part of the lesson for me is that China does
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Speaker 2: not have a lot of great options when it comes
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Speaker 2: to slapping American goods on or stopping American goods with terrorists,
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Speaker 2: because they just don't import all that much stuff from
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Speaker 2: the United States, and.
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Speaker 4: The fifth of what they what we export to them
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Speaker 4: is based on what they export to US.
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Speaker 2: Space of twenty percent of our imports from China are
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Speaker 2: value to exports to China. Got it. The lessons from
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Speaker 2: them has been, hey, we have other tools in our belt, right,
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Speaker 2: you know, we might not be able to hit you
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Speaker 2: with tariffs, but instead we will dramatically lower our currency.
9:15
Speaker 2: You know, we will devalue our currency and make our
9:18
Speaker 2: goods look even cheaper. We will go after some of
9:21
Speaker 2: your big companies, go after some of your big tech
9:23
Speaker 2: companies and say, hey, Google, Facebook, you're not allowed to
9:26
Speaker 2: do business here or LinkedIn. We're going to heavily restrict
9:28
Speaker 2: you Microsoft product. So that's where the interesting stuff to
9:32
Speaker 2: me will happen. Is Okay, where can they actually hit
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Speaker 2: the United States hard? And then on the other side
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Speaker 2: of that coin is let's just assume that trade tariffs
9:42
Speaker 2: remain escalated with China. I don't know about the rest
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Speaker 2: of the world, but let's assume for a moment that
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Speaker 2: they do. What that means is that fewer goods coming
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Speaker 2: from China will be going to the United States. I
9:54
Speaker 2: don't believe it means that they're just going to stay
9:57
Speaker 2: in China. They're going to go somewhere else. Right, So, Apple,
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Speaker 2: for instance, will be covering later disclosed that they're planning
10:04
Speaker 2: to take a lot more of their US shipments of
10:08
Speaker 2: phones from India, and they're going to take the ones
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Speaker 2: that are done in China and put them somewhere else.
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Speaker 2: They're going to sell them to some other part of
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Speaker 2: the world that doesn't have tariffs on Chinese manufactured goods
10:18
Speaker 2: to temporarily try and get around some of these teriff issues.
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Speaker 2: What that practically means, in my mind is there's gonna
10:24
Speaker 2: be a whole bunch of dumping of stuff that this
10:27
Speaker 2: extra capacity that's in China that suddenly floods the rest
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Speaker 2: of the world with all sorts of goods if this
10:32
Speaker 2: stuff stays in place for a while, And so, how
10:37
Speaker 2: does the rest of the world behave? Right? If you're Europe,
10:39
Speaker 2: you don't necessarily want a bunch of super cheap Chinese
10:42
Speaker 2: made products flooding your markets and destroying your car companies,
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Speaker 2: all of your manufacturers in Europe, you might be putting
10:50
Speaker 2: up your own barriers to trade, or if you're quite
10:54
Speaker 2: upset with the Trump administration saying hey, okay, we're going
10:57
Speaker 2: to take this opportunity to cozy up to China and
10:59
Speaker 2: find some sort of that can be struck while they
11:01
Speaker 2: are on the rails. I genuinely don't know, but this
11:04
Speaker 2: is why it makes all of this so challenging to
11:07
Speaker 2: navigate and so complex in terms of where things turn next. Yeah,
11:11
Speaker 2: I'm the supply chain front. I'm not sure.
11:13
Speaker 4: I haven't hosted with you guys for a bit, but
11:16
Speaker 4: I can't emphasize enough. And maybe you guys have spoken
11:19
Speaker 4: to it before. It's just the complexities of the supply
11:22
Speaker 4: chains that are in place across China, and this is
11:24
Speaker 4: not something that can just be unwound easily. I mean
11:28
Speaker 4: you're talking about you talk to people in all sorts
11:30
Speaker 4: of different industries, whether it's apparel or you know, technology.
11:34
Speaker 4: The iPhones, for example, they source from Apple sources from
11:38
Speaker 4: fifty different countries to assemble the iPhones. Yes, they're manufactured
11:43
Speaker 4: primarily in China, but there are resources from.
11:46
Speaker 2: All over the all over the world that are.
11:48
Speaker 4: Used in that manufacturing process. So it's just it's not
11:51
Speaker 4: something that can be readily corrected. And even if you
11:54
Speaker 4: were to throw a ton of resources at it, you'd
11:57
Speaker 4: be lucky to pull some of this off the shift
12:00
Speaker 4: in a decade. It just is very complex, so it's
12:03
Speaker 4: not something that can be easily resolved domestically at all.
12:07
Speaker 2: Let's take a quick break. Markets continue to be focused
12:10
Speaker 2: on tomorrow's trade deadline and what may be announced from
12:13
Speaker 2: the Trump White House before that deadline hits tomorrow. Coming back,
12:17
Speaker 2: we'll start to tackle a few of the questions that
12:19
Speaker 2: we received yesterday and today from you listeners. If you
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13:27
Speaker 2: Listener question that we got. If trade agreements are reached
13:31
Speaker 2: and terraffs are removed, doesn't that mean that there'll be
13:34
Speaker 2: no incentive to produce or purchase in America since foreign
13:38
Speaker 2: prices will be at or even lower than they were
13:41
Speaker 2: before this all started. In other words, I see how
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Speaker 2: terriffs make Overseas goods pricey, driving consumption and with a
13:48
Speaker 2: production to American goods. But removing terras which seems to
13:51
Speaker 2: be our hopes, won't it reverse that strategy entirely? So
13:56
Speaker 2: great question. I think it's good to kind of walk
13:58
Speaker 2: through the dynamics of how of this, how all of
14:01
Speaker 2: this works, and you know the potential effects of all
14:04
Speaker 2: of it. But first and foremost yes, I mean the
14:08
Speaker 2: answer to your question is, if trade agreements are reached,
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Speaker 2: then that by definition does drive down the barriers and
14:18
Speaker 2: incentives to produce those goods in America at least that
14:22
Speaker 2: one financial incentive. There are plenty of others, right. There
14:25
Speaker 2: are plenty of others where companies make decisions every day
14:28
Speaker 2: to say, hey, because of domestic tax rates or because
14:33
Speaker 2: of the market that we're selling into, we want to
14:35
Speaker 2: have a presence of manufacturing in the United States. Some
14:37
Speaker 2: of those are laws, such as the USMCA that requires
14:41
Speaker 2: a certain portion of vehicles to be sourced in the
14:44
Speaker 2: United States. Others are different types of incentives. But I
14:48
Speaker 2: think the answer to the question by and large is yeah,
14:51
Speaker 2: if we do reach trade deals with other countries, it
14:56
Speaker 2: is going to remove some of the incentive to produce
14:59
Speaker 2: things is domestically in the United States. And so to me,
15:02
Speaker 2: the overarching question is do we get anything out of
15:05
Speaker 2: those other countries? Right, So let's forget about China for
15:09
Speaker 2: a moment here, because really unclear to me how that develops.
15:12
Speaker 2: But let's take the European Union, which does have tariffs
15:16
Speaker 2: in place on many American goods, and you know, allegedly,
15:19
Speaker 2: according to reporting, they are seeing a whole bunch of
15:23
Speaker 2: negotiations and you know, pushing to pass laws to potentially
15:27
Speaker 2: bring down tariffs. And if it doesn't work, then to
15:30
Speaker 2: respond to the United states with tariffs of their own
15:32
Speaker 2: on new American goods, because you know, make no mistake,
15:35
Speaker 2: the tariff rates that we have him now imposed or
15:38
Speaker 2: announced on all these other countries, in almost every case
15:41
Speaker 2: far exceed any of the barriers to trade that exist
15:45
Speaker 2: on American products going into those countries. So Israel, we've
15:48
Speaker 2: brought up the example. There are as of today, virtually
15:52
Speaker 2: no tariffs on American made goods going into Israel. We,
15:56
Speaker 2: according to these tariff announcements, will impose seventeen percent tariffs
16:00
Speaker 2: on goods coming into the United States. I think my
16:03
Speaker 2: other answer on tariffs is better summed up by actually
16:08
Speaker 2: Ronald Reagan. This speech that he gave in I think
16:12
Speaker 2: eighty seven has been going all across the internet, so
16:14
Speaker 2: I'm sure plenty of people have already read it. But
16:16
Speaker 2: I'm just going to quote Reagan for a moment here.
16:18
Speaker 2: What eventually occurs is first homegrown industries. This is with
16:23
Speaker 2: the imposition of tariffs. What eventually occurs is first homegrown
16:26
Speaker 2: industries start relying on government protection in the form of
16:30
Speaker 2: high tariffs. They stop competing and stop making the innovative
16:34
Speaker 2: management and technological changes they need to succeed in world markets.
16:39
Speaker 2: And then while all this is going on, something even
16:41
Speaker 2: worse occurs. High terraffs inevitably lead to retaliation by foreign
16:45
Speaker 2: countries and the triggering of fierce trade wars. The result
16:50
Speaker 2: is more and more teriffs, higher and higher trade barriers,
16:52
Speaker 2: and less and less competition. So soon, because of the
16:55
Speaker 2: price is made artificially high by tariffs that subsidize inefficiency,
16:59
Speaker 2: and poor men people stop buying. Then the worst happens.
17:02
Speaker 2: Markets shrink and collapse, businesses and industries shut down, and
17:06
Speaker 2: millions of people lose their jobs. This was again a
17:09
Speaker 2: speech given by President Ronald Reagan in April of eighty
17:13
Speaker 2: seven on tariffs on Japan. And you know international trade,
17:18
Speaker 2: and you know, granted, the world is substantially different than
17:21
Speaker 2: it was forty years ago when Ronald Reagan was delivering
17:24
Speaker 2: this speech. I don't think he had any idea how
17:27
Speaker 2: China would develop, and I think his attitudes towards trade
17:31
Speaker 2: with China would probably be similar towards his to his
17:33
Speaker 2: attitudes on trade with Japan at the time, which was, hey,
17:37
Speaker 2: this is an unfair agreement and we need to rectify that. However,
17:41
Speaker 2: I do agree on the overall thesis that hey, if
17:44
Speaker 2: you have trade barriers in place permanently, which I don't
17:48
Speaker 2: know if that's the goal of the Trump administration, but
17:51
Speaker 2: they've certainly talked about it as though it is. Because
17:54
Speaker 2: one of the goals was to raise tax revenue, and
17:58
Speaker 2: if you want to raise tax revenue, it has to
18:00
Speaker 2: be permanent, right, Like, you can't just raise the tax
18:03
Speaker 2: revenue one time and say job well done. My biggest
18:07
Speaker 2: concern is by doing that, you make industries and companies
18:12
Speaker 2: who oftentimes don't have to compete. And I think you
18:16
Speaker 2: can see some of that in the American auto industry,
18:18
Speaker 2: by the way, right Like, I think you already see
18:21
Speaker 2: some of that in the heavily protected American auto industry,
18:25
Speaker 2: where go take a look at price points and technology
18:32
Speaker 2: and a lot of American made cars today, and they're
18:35
Speaker 2: just not selling overseas. They're selling here fine, but they're
18:38
Speaker 2: not selling overseas because China is able to produce a
18:42
Speaker 2: cheaper car that is, frankly, according to even CEOs of
18:46
Speaker 2: American car companies like Jim Farley, a better product. And
18:50
Speaker 2: so we're just left sitting here saying, hey, you know,
18:53
Speaker 2: we've got these car companies that can sure sell into
18:55
Speaker 2: the US market. But without the protections in place, might
18:58
Speaker 2: not be competitive for the long term. Yeah.
19:00
Speaker 4: I mean, for me, they hit on some really great points.
19:02
Speaker 4: Consumption is how our economy grows. I mean, if you
19:06
Speaker 4: look at GDP, two thirds of it is tied to
19:08
Speaker 4: US consumption. If you're going to see higher prices, that's
19:11
Speaker 4: going to lead to lower consumption. And there just aren't
19:13
Speaker 4: the mechanics in place to date to really make manufacturing
19:17
Speaker 4: in the United States more cheap than it is in
19:20
Speaker 4: other countries out there. Targeted tariffs I can understand on
19:23
Speaker 4: specific industries that are tied to national security concerns, but
19:27
Speaker 4: others like apparel, I don't see it.
19:29
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19:58
Speaker 1: far today right here the Financial Exchange Radio Network.
20:03
Speaker 3: A more volatility on Wall Street Worth markets strong seeing
20:07
Speaker 3: a strong rally as traders continue to keep a close
20:10
Speaker 3: eye on tariff developments. Yesterday, President Trump said the US
20:14
Speaker 3: would slap an additional fifty percent tariff on China if
20:17
Speaker 3: the country follows through with its thirty four percent retaliation.
20:21
Speaker 3: In turn, China said it will fight to the end
20:24
Speaker 3: where It's Commerce ministry said it resolutely resolutely opposes Trump's
20:30
Speaker 3: threat of escalating tariffs. At the moment, the Dow is
20:34
Speaker 3: up by three point six percent, nearly fourteen points higher.
20:39
Speaker 3: S and P five hundred is up three point nine percent,
20:42
Speaker 3: or one hundred and ninety five points in the Nasdaq
20:45
Speaker 3: up four point three percent or six hundred and seventy
20:48
Speaker 3: one points, so Russell two thousand is up three point
20:51
Speaker 3: two percent ten You're treasurrealed up by seven basis points
20:55
Speaker 3: at four point two three percent, and crude oil up
20:57
Speaker 3: just over one percent higher, trading at sixty one dollars
21:01
Speaker 3: and forty two cents a barrel. Healthcare stocks are seeing
21:04
Speaker 3: gains after The Wall Street Journal reported that the Trump
21:07
Speaker 3: administration will increase payment rates for medicare insurers to five
21:11
Speaker 3: point zero six percent next year, compared to the two
21:14
Speaker 3: point twenty three percent increase proposed by the Biden administration.
21:18
Speaker 3: Humanased shares are up eleven percent, CBS up by ten percent,
21:22
Speaker 3: and United Health up by seven percent. Meanwhile, shares and
21:26
Speaker 3: LEVI up over one percent after the company reiterated.
21:30
Speaker 2: Its full year outlook.
21:31
Speaker 3: However, the genes maker noted that it excludes any impact
21:35
Speaker 3: from tariffs. Levi's first quarter adjusted at earnings were also
21:38
Speaker 3: fifty two percent hire versus a year ago, while its
21:41
Speaker 3: revenue climbed three percent compared to last year. Elsewhere, Broadcom
21:46
Speaker 3: announced a ten billion dollars share repurchase program authorization through
21:50
Speaker 3: year end, sending shares in the chip maker up by
21:53
Speaker 3: eight percent. Marvell shares up by nine percent after the
21:57
Speaker 3: company agreed to sell its auto ethernet business to Infinion
22:01
Speaker 3: Technologies for two and a half billion dollars in cash
22:05
Speaker 3: and is expected to close next year. And Walgreen's posted
22:08
Speaker 3: better than expected adjusted quardally earnings, sending that stock up
22:12
Speaker 3: by over one percent. The company withdrew its fiscal twenty
22:16
Speaker 3: twenty five guidance given it is preparing to go private.
22:20
Speaker 3: I'm Tucker Silvan.
22:21
Speaker 1: That's Wall Street.
22:22
Speaker 2: Watch many US companies, according to a survey, plan to
22:27
Speaker 2: keep China ties. Wall's your journal printed this story and
22:31
Speaker 2: they have some interesting stats in here and stuff to
22:34
Speaker 2: point to. They surveyed two hundred American companies in the
22:37
Speaker 2: past couple of that in the past couple of years
22:41
Speaker 2: have exposure to China. It's according to the US Chamber
22:44
Speaker 2: of Commerce Foundation. And you know interesting statistics here that hey,
22:49
Speaker 2: while they're concerned about the relationship, they plan to keep
22:53
Speaker 2: these ties. About seventy percent of forty members of the
22:56
Speaker 2: US Chamber said they plan to maintain or inse engagements
23:00
Speaker 2: in or with China. Over sixty percent of a group
23:05
Speaker 2: of legal professionals and corporations indicated the same intention. Eighty
23:08
Speaker 2: three percent of fifty six Chamber respondents cited China as
23:12
Speaker 2: the top geography of concern. I have to say, I
23:16
Speaker 2: I don't know that any of this is relevant anymore,
23:19
Speaker 2: like it unless they took the survey yesterday and then
23:25
Speaker 2: do it again like Thursday. This stuff has been so
23:29
Speaker 2: fast moving. We did not know what the tariff rate
23:32
Speaker 2: was going to be on Chinese made goods and still
23:34
Speaker 2: don't today. But the even the hints of something to
23:37
Speaker 2: the tune of fifty percent wasn't even announced until last Wednesday.
23:41
Speaker 2: Businesses don't make their plans and respond to surveys that
23:44
Speaker 2: quickly in terms of their change of plans, and so
23:48
Speaker 2: this is interesting. It's compelling to me. We know that
23:50
Speaker 2: there are many US companies with deep, deep ties to
23:53
Speaker 2: Chinese manufacturers. In particular, even whether or not you keep
23:58
Speaker 2: those and whether or not you're making contingency plans is
24:02
Speaker 2: not going to be decided ahead of time right now
24:05
Speaker 2: because you as a business don't know what those terifts
24:08
Speaker 2: are going to look like.
24:09
Speaker 4: No, and you could also make the argument, and major
24:11
Speaker 4: companies have like Walmart and Apple, that they've been trying
24:13
Speaker 4: to diversify away from China. This dates back seven or
24:17
Speaker 4: eight years ago in terms of Trump's first term in office,
24:20
Speaker 4: where Apple, like we've talked about before, has been looking
24:23
Speaker 4: to manufacture in India and other countries. But it takes,
24:26
Speaker 4: like we've said before a long time time, why the
24:28
Speaker 4: same thing applies to Walmart. But even with how it
24:36
Speaker 4: seems so clear, not so clear, but it's often so
24:40
Speaker 4: tied to negotiations that to bring up our listener text before,
24:44
Speaker 4: if you are a company, are you really going to
24:47
Speaker 4: reconsider re routing your whole manufacturing operation when the fragility
24:52
Speaker 4: of these tariffs and the potential for negotiation maybe with China,
24:55
Speaker 4: the argument could be made that we just may be
24:57
Speaker 4: locked in a trade war with them, or decouple our
24:59
Speaker 4: con me over a much longer period. That's fair, But
25:02
Speaker 4: it's just it's hard to be a CEO and commit
25:05
Speaker 4: to decouple away from China if you don't know how
25:08
Speaker 4: long you're looking at from a tariff.
25:10
Speaker 2: Perspective, at least in the short term. I mean, you know,
25:12
Speaker 2: tell me how many car jobs have come back to
25:15
Speaker 2: the United States so far, right we those tarrats are
25:17
Speaker 2: in place, right tariffs on foreign made cars are in place. Now.
25:22
Speaker 2: I've heard some rumblings of you know, shutting down manufacturing
25:26
Speaker 2: plants in Mexico or pausing them, or Volkswagen for instance,
25:30
Speaker 2: informed all of their Audi dealers that hey, you're not
25:33
Speaker 2: getting shipments of these cars because we don't want them
25:35
Speaker 2: to enter the United States. We're going to reroute them elsewhere.
25:37
Speaker 2: But none of them so far are saying, hey, we
25:39
Speaker 2: opened up a new manufacturing plant in ten thous We're
25:42
Speaker 2: hiring ten thousand people like that. Stuff may come, but
25:46
Speaker 2: it comes a lot later.
25:47
Speaker 4: Also, Mike, I don't know if you guys who wants
25:49
Speaker 4: those jobs. Who We have a prime working age in
25:52
Speaker 4: this country twenty five to fifty four. That population eighty
25:55
Speaker 4: two percent of them are working that prime population age,
26:00
Speaker 4: and from an unemployment perspective, we sit at about four
26:04
Speaker 4: point one or four point two percent. It's a pretty
26:06
Speaker 4: strong job market where I guess you could make the
26:08
Speaker 4: argument perhaps in the Midwest there is some demand for
26:12
Speaker 4: maybe manufacturing to be bought back, But I just I
26:15
Speaker 4: kind of kicked that around in my head to see
26:18
Speaker 4: it would there be the substantial demand if that was
26:21
Speaker 4: that's the route that you took.
26:22
Speaker 2: I mean, look, I don't know where it all goes.
26:24
Speaker 2: I'm suspect of whether or not you can actually create
26:26
Speaker 2: the jobs, but I do think to answer the question,
26:29
Speaker 2: are there a bunch of people that are working close
26:31
Speaker 2: to minimum wage at Walmart, Amazon fulfillment centers in other
26:35
Speaker 2: places that will either take these jobs that would probably
26:39
Speaker 2: pay a heck of a lot more to manufacture a
26:41
Speaker 2: car given the union presence, or demand a rage increase
26:45
Speaker 2: from Walmart or Amazon to stay there. You're right, unemployment's low,
26:50
Speaker 2: but we do have a lot of people working in
26:51
Speaker 2: kind of crap jobs in this economy. And so again,
26:55
Speaker 2: where then you have to fill the backfill those quote
26:58
Speaker 2: crap jobs that don't pay a whole lot wage and maybe.
27:01
Speaker 4: A perfectly But if you start to broaden out to
27:03
Speaker 4: other sectors, then your whole you want, there's a whole
27:06
Speaker 4: different level of you know, crap job when you're talking
27:08
Speaker 4: about apparel and you know, just Nike factory and stuff
27:11
Speaker 4: like that. I mean, that's a whole different level than
27:13
Speaker 4: the automn manufacturers.
27:14
Speaker 2: Market chaos could inflict its own economic damage. We talked
27:18
Speaker 2: about this a lot. The market is not the economy.
27:20
Speaker 2: The economy is not the stock market, But in times
27:23
Speaker 2: like this, I think it's worth reminding ourselves of why
27:27
Speaker 2: the two actually matter. And my answer is fairly simple.
27:31
Speaker 2: On this front. Market chaos could inflict its own economic
27:34
Speaker 2: damage because a lot of very wealthy people tie their
27:38
Speaker 2: spending habits to how their portfolio is doing right, And.
27:42
Speaker 4: In particular, we've quoted that stat before on the program,
27:45
Speaker 4: where the top ten percent of Americans by income making
27:48
Speaker 4: two hundred and fifty thousand or more are now responsible
27:51
Speaker 4: for fifty percent of the spending of the country. And
27:56
Speaker 4: so when you have a higher income population represented fifty
28:00
Speaker 4: percent of the spending, typically those people who are making
28:03
Speaker 4: two hundred and fifty thousand or more in that top
28:05
Speaker 4: ten percentile of income, they are reliant upon investing a
28:09
Speaker 4: significant amount of their savings in the market, and so
28:11
Speaker 4: if they see those balances fluctuate, I do think it's
28:14
Speaker 4: a fair argument to make that there could be some
28:19
Speaker 4: hesitancy on spending on that side of things.
28:21
Speaker 2: Let's take a quick break when we come back. Had
28:23
Speaker 2: another really good question text or it's more of a
28:26
Speaker 2: statement text from a listener about tariffs in the nineteen eighties.
28:29
Speaker 2: We'll cover that, and then piece from the Wall Street
28:31
Speaker 2: Journal why you shouldn't check your portfolio right now. We'll
28:34
Speaker 2: we tackle them that next here on the Financial Exchange.
28:37
Speaker 1: If you missed any of today's show, catch up whenever
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29:01
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29:13
Speaker 2: Listener texts came in during the last segment. Funny story.
29:16
Speaker 2: I can go back to nineteen eighty four when they
29:18
Speaker 2: put tariffs on motorcycles over seven hundred and fifty CC's.
29:22
Speaker 2: Do you know what they did? This would be foreign
29:24
Speaker 2: makers of motorcycles they made seven hundreds. I always refer
29:27
Speaker 2: to my motorcycle as a tariff baby. This is what happens.
29:30
Speaker 2: And in the eighties that did happen. It is quite
29:33
Speaker 2: different this time because in the past, generally speaking, when
29:37
Speaker 2: the United States has used tariffs, they've been ultra targeted.
29:40
Speaker 2: This example is a prime one. Hey, world only going
29:42
Speaker 2: to tariff motorcycles over a certain power. In this instance,
29:48
Speaker 2: if you make anything in India, China, Israel, anywhere across
29:54
Speaker 2: the globe, we're going to face a significant tariff for
29:56
Speaker 2: it coming in. And so this type of gaming of
29:59
Speaker 2: the system probably wouldn't work in this uh, in this space.
30:03
Speaker 2: But the question is where do they get negotiated, because yeah,
30:06
Speaker 2: once they start negotiating, then these games start being played
30:09
Speaker 2: where okay, yeah, how can we how can we tinker
30:12
Speaker 2: with our design to make sure we still meet the
30:15
Speaker 2: rules of the USMCA, For example, is a a long
30:19
Speaker 2: game of chess that's been played for decades here, uh,
30:23
Speaker 2: piece in the Wall Street Journal, Here's why you shouldn't
30:25
Speaker 2: check your portfolio right now. That is common advice that
30:29
Speaker 2: is out there, and I'm not sure I agree with it,
30:33
Speaker 2: but I do think for some people it can be
30:36
Speaker 2: the right answer. Where are the pitfalls here, Paul? Like,
30:39
Speaker 2: who should and shouldn't be checking their portfolio right now?
30:43
Speaker 4: Well, anyone who's you know, overly nervous about their portfolio
30:46
Speaker 4: checking in on a daily basis does you really no
30:49
Speaker 4: good and could actually lead to a negative impact where
30:52
Speaker 4: you see the losses continue to pile up and then
30:55
Speaker 4: you make an emotional decision, because I mean, this is
30:58
Speaker 4: always intertwined our world investing in emotions. That's hard to
31:02
Speaker 4: separate the two. The more that you're subjecting yourself to
31:06
Speaker 4: that type of emotion by watching it frequently, the more
31:09
Speaker 4: likely you are to make a decision one way or
31:12
Speaker 4: another to you know, cut the bleeding and just say, hey,
31:15
Speaker 4: I'm going to sell out entirely it it sort of
31:18
Speaker 4: negates the long term assessment that you should have in
31:21
Speaker 4: place on your portfolio.
31:23
Speaker 2: And make no mistake yesterday when you had that volatility.
31:27
Speaker 2: There are plenty of people out there, probably some listening
31:30
Speaker 2: right now, who sold everything in their portfolio because they
31:33
Speaker 2: got nervous, and then what's happening today. They're missing out
31:36
Speaker 2: on a twelve hundred point rally on the now as
31:39
Speaker 2: we speak, because you never know when it's getting ugly,
31:44
Speaker 2: when it's going to shift around, and you don't know
31:46
Speaker 2: today if this is the start of something new in
31:49
Speaker 2: terms of a market rally or just a dead cat
31:52
Speaker 2: bounce that's going to erase itself tomorrow. I genuinely have
31:55
Speaker 2: no idea. There's nothing substantial that's changed in terms of
31:59
Speaker 2: the overall in there of today. It's just been Hey,
32:01
Speaker 2: it's been a preally rough day, and some investors are
32:03
Speaker 2: piling back into stocks. The counterpoint to this is if
32:09
Speaker 2: you have a portfolio that you don't really know how
32:12
Speaker 2: it's allocated, and you don't feel prepared for what could
32:16
Speaker 2: be a substantial market draw down, then not only should
32:20
Speaker 2: you be checking your portfolio, but you'd probably be doing
32:22
Speaker 2: something about it. And that's the message that I always deliver,
32:26
Speaker 2: and I recognize that not today, but the last several
32:30
Speaker 2: days have been scary times. As I mentioned, the market
32:32
Speaker 2: drawdown that you saw on Thursday and Friday last week
32:35
Speaker 2: was the fourth largest in modern US history. So you know,
32:39
Speaker 2: we are in somewhat uncharted territory here, and so if
32:43
Speaker 2: you're sitting there evaluating where you are right now and
32:47
Speaker 2: you are nervous, it's not a good enough reason to
32:51
Speaker 2: necessarily make a whole bunch of changes. But if you
32:54
Speaker 2: could use a second opinion on how you are situated,
32:57
Speaker 2: whether or not it makes sense given your age, your
33:00
Speaker 2: personal situation, how much you're planning to spend over the
33:03
Speaker 2: next few years, whether or not you're looking to retire.
33:06
Speaker 2: Maybe it's the kid's college money, maybe it's the money
33:09
Speaker 2: for the new home, and you're not sure, Hey, is
33:11
Speaker 2: this a buying opportunity or is this something that I
33:13
Speaker 2: need to walk away from. Please let Armstrong Advisory Group
33:17
Speaker 2: be that second opinion. We'll sit down with you. We'll
33:20
Speaker 2: have a full conversation about what your goals look like,
33:22
Speaker 2: how the portfolio is supposed to be used in your
33:25
Speaker 2: scenario and how you envisioned it, and then what we
33:29
Speaker 2: see as the potential pitfalls overexposure, under exposure, and opportunities
33:33
Speaker 2: that you can take with that money as it accounts
33:36
Speaker 2: as we continue to work our way through tariff volatility.
33:41
Speaker 2: If you have those types of questions, give us a
33:43
Speaker 2: ring at eight hundred three nine three for zero zero one.
33:47
Speaker 2: If you're driving right now you can't pick up the phone.
33:49
Speaker 2: You can also go to Armstrong Advisory dot com. We've
33:52
Speaker 2: got a little blue get started button where you can
33:54
Speaker 2: book a callback right on the website. But that phone
33:57
Speaker 2: number again for the Armstrong Advisor Group for your free
34:00
Speaker 2: second opinion is eight hundred three nine three four zero
34:04
Speaker 2: zero one.
34:05
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
34:08
Speaker 1: registered investment advisor. Nothing in the ad or in any
34:10
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
34:13
Speaker 1: your own financial, tax, and estate planning advisors before making
34:16
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
34:19
Speaker 1: advisory services.
34:21
Speaker 2: Second text from another listener, Why do other countries have
34:25
Speaker 2: tariffs because they are advantageous. I've heard US ranchers, farmers,
34:29
Speaker 2: and trimpers say that tariffs will benefit them. So first
34:32
Speaker 2: things first, there are absolutely large swaths of the American
34:37
Speaker 2: working public that will benefit from tariffs. I am not
34:40
Speaker 2: blind to the idea that they are, not that I
34:43
Speaker 2: don't believe the tariffs are universally bad across the board.
34:47
Speaker 2: And yes, there are absolutely industries. The most notable one
34:51
Speaker 2: has been the auto industry. Right like you've had forget
34:54
Speaker 2: the name. Who's the head of the US the union
34:59
Speaker 2: for the UAW. I forget his name? He's he's been
35:02
Speaker 2: all over this saying, you know, this is huge fa
35:06
Speaker 2: seawan fay for American industry and workers, the implementation and
35:10
Speaker 2: the opposition of these tariffs. I would debate somewhat that
35:14
Speaker 2: other countries have tariffs purely because they're advantageous. There are
35:18
Speaker 2: plenty of countries out there where arguably the only reason
35:22
Speaker 2: they have tariffs is because of special interest groups lobbying
35:25
Speaker 2: their elected officials, bribing their elected officials to say, protect
35:30
Speaker 2: these jobs by implementing tariffs. And then you look at
35:33
Speaker 2: those companies thirty years later, and they are non competitive,
35:36
Speaker 2: not in a good place. So I don't think we
35:39
Speaker 2: fall far too often fall into this habit of assuming
35:42
Speaker 2: that every other country is so organized and efficient and
35:46
Speaker 2: good at managing their economy and we want to mimic that.
35:49
Speaker 2: Like No, there are plenty of places that have tariffs
35:51
Speaker 2: on goods because they're a corrupt politician that took a
35:54
Speaker 2: bunch of bribes from a certain industry to make sure
35:56
Speaker 2: that that one industry is protected in their country, and
36:00
Speaker 2: to that end, I do think that reciprocal tariffs to
36:04
Speaker 2: address those issues can be a good thing, like we're
36:07
Speaker 2: dealing with with China, right, like what we're seeing in China,
36:11
Speaker 2: I think is a is a reasonable approach. If there
36:14
Speaker 2: are tariffs that I'm not aware of in other certain countries.
36:17
Speaker 2: I do think that hey, tariffs, if used in that
36:20
Speaker 2: strategic way to bring down barriers to trade and make
36:23
Speaker 2: those countries actually compete with American made company American made goods,
36:28
Speaker 2: probably a good idea. But I wouldn't also universally say that, hey,
36:34
Speaker 2: countries only have tariffs in place because it's a great
36:36
Speaker 2: economic policy, Like no, plenty of time, it's because you
36:40
Speaker 2: have a correct politician or a politician that you know
36:43
Speaker 2: came up in a certain industry and says, hey, I
36:46
Speaker 2: want to make sure that German cars are always manufactured
36:50
Speaker 2: in Germany. And so even though it's a garbage policy,
36:53
Speaker 2: we're going to have huge barriers to trade and we're
36:56
Speaker 2: going to have German cars. Might not be the good
36:58
Speaker 2: example here, but you know, there are plenty of reasons
37:00
Speaker 2: that tariffs get implemented outside of pure economic prowess.
37:05
Speaker 4: Yeah, nothing in the economy is necessarily black or white
37:08
Speaker 4: where there is just a yes.
37:10
Speaker 2: Or no answer to it.
37:11
Speaker 4: In some instances, like you said, there can be strategic
37:13
Speaker 4: reasons why tariffs can be advantageous, but I wouldn't paint
37:16
Speaker 4: the broadbrush that they are always advantageous. I think that
37:20
Speaker 4: if you study most economists and the research that they
37:22
Speaker 4: put out, that typically the more free trade and the
37:25
Speaker 4: more competition that are in industries, the better off the
37:29
Speaker 4: end consumer is because you get the best product at
37:31
Speaker 4: the most efficient price out there. But there certainly are
37:34
Speaker 4: cases where you can make the argument that having those
37:36
Speaker 4: tariffs in place can help a domestic industry or can
37:40
Speaker 4: help national security concerns.
37:41
Speaker 2: I'll be the first to admit that too. I'm interested
37:44
Speaker 2: to hear about the US ranchers and farmers and such, because, again,
37:50
Speaker 2: not that I talk to them every day, but the
37:51
Speaker 2: narrative that I've been hearing from the Midwest from ranchers
37:54
Speaker 2: and farmers is, oh boy, trade war with China. They
37:59
Speaker 2: buy a ton of aggs cultural That's why I.
38:01
Speaker 4: Was wondering when I read that text. I don't know
38:03
Speaker 4: if that's that easy to say that their advantage.
38:06
Speaker 2: That's all I've been hearing from farmers is watch out
38:09
Speaker 2: because if China reciprocates here, we are in deep trouble.
38:12
Speaker 2: Quick Break markets remain strongly in positive territory. We'll have
38:15
Speaker 2: a full recap for you next year on the Financial
38:17
Speaker 2: Exchange