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What are market expectations for 2026? · The Financial Exchange Show

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  Speaker 2: Chuck, Mike, and Tucker with you here kicking off twenty
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  Speaker 2: twenty six. I hope you all had a fantastic New
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  Speaker 2: Year's Eve a good New Year's Day as well, and
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  Speaker 2: nobody actually make it to midnight? I did, did you? Yeah?
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  Speaker 1: Yeah?
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  Speaker 2: I made it to midnight London time about ten thirty. Yeah, okay,
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  Speaker 2: fair enough, seven p. I'm like you call it today, I
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  Speaker 2: know I made it to midnight. Like generally, at this
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  Speaker 2: point in my life, I get to somewhere around twelve
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  Speaker 2: thirty twelve forty five in the comfort of my own
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  Speaker 2: home without having to deal with other humans because quite honestly, look,
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  Speaker 2: I'm not really a New Year's person. I'm just I'm
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  Speaker 2: not the same. I don't believe in New Year's resolutions,
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  Speaker 2: to be completely honest, I don't think New Year's should
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  Speaker 2: be on January first.
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  Speaker 3: It's pretty pretty odd for the guy who's wearing a
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  Speaker 3: two pey on January second. Okay, fine, I don't believe
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  Speaker 3: in New Year's resolutions, Okay, Joe.
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  Speaker 2: It's fine. No, Like, I don't like I didn't make
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  Speaker 2: any I'm not. I find that it's better to try
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  Speaker 2: to build repeatable processes during the year than be like, well,
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  Speaker 2: this is the year I'm gonna change, because look, we've
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  Speaker 2: all seen the Sopranos where Tony almost dies spoiler alert,
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  Speaker 2: and you know, comes back and it's like, oh, I'm
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  Speaker 2: gonna be different, and that's you know, a whole part
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  Speaker 2: of a season and everything, and then it turns out, Gee,
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  Speaker 2: it's kind of hard to change as a human and
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  Speaker 2: so trying to have this like epiphany that wow, it's
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  Speaker 2: twenty twenty six, I'm gonna be a different person. No,
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  Speaker 2: I'm not gonna be a different person. I'm gonna keep
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  Speaker 2: being me and hopefully be a better version of me
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  Speaker 2: that I can get to through, you know, some things
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  Speaker 2: that I might actually want to do to improve my life,
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  Speaker 2: instead of like, hey, this is gonna be the year
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  Speaker 2: that I exercise. Well, no, the gym's just gonna be
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  Speaker 2: crowded with everyone today and it's gonna dissuade.
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  Speaker 3: You from going back, and you're gonna eat Dorito's in
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  Speaker 3: the car instead, right outside of the parking.
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  Speaker 2: Lot, which is why they have those vending machines there.
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  Speaker 2: So let's talk a little bit about twenty twenty five
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  Speaker 2: and big thing twenty twenty five, if we're being one
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  Speaker 2: hundred percent honest, didn't go the way most people were expecting. Yeah,
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  Speaker 2: an a year, but yeah, if you talk to people
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  Speaker 2: this time last year January tewod the stuff that people
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  Speaker 2: were talking about was, Hey, we're gonna see you know,
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  Speaker 2: a bunch of deregulations. We're gonna see a bunch of
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  Speaker 2: tax cuts. It's gonna spur a bunch of spending. And
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  Speaker 2: that's what's gonna, you know, drive the economy. In fact,
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  Speaker 2: what we ended up getting work. Yeah, I was still
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  Speaker 2: in the conversation it was, but like, yeah, there wasn't
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  Speaker 2: like a ton of conversation about it. Like the thought
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  Speaker 2: was like, hey, the Trump Administration's gonna reinvigorate the economy
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  Speaker 2: with X, Y and Z. And while it is true
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  Speaker 2: that we got the tax cut piece, okay, it was
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  Speaker 2: largely in kind of a different format than I think
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  Speaker 2: a lot of people were expecting initially. The other piece is,
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  Speaker 2: I don't think a lot of people and actually I
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  Speaker 2: know that a lot of people didn't have tariffs on
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  Speaker 2: their bingo card because the market was pretty surprised by
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  Speaker 2: all these announcements of them. In the first third of the.
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  Speaker 3: Year, twenty percent market pullback to display that pretty clearly correct.
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  Speaker 2: So I think that you know, it was something where ultimately,
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  Speaker 2: looking back, you now sit there and say, hey, the
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  Speaker 2: S and P made you know, a little bit north
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  Speaker 2: of you know, sixteen percent, and the Federal Reserve cut
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  Speaker 2: interest rates a few times, and okay, like sure, like
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  Speaker 2: that's stuff that you know is pretty close to what
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  Speaker 2: was projected. But this is why I think that the
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  Speaker 2: path matters is because if all you do is say, hey,
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  Speaker 2: SMP earnings are going to grow ten percent this year,
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  Speaker 2: stick it on your dartboard, and Okay, the S and
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  Speaker 2: P is going to get to seventy four hundred, well
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  Speaker 2: that doesn't really tell you anything about the path you
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  Speaker 2: had to take to get there. And the path is
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  Speaker 2: what matters for short term traders and for long term investors.
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  Speaker 2: The act School number from one year to the next
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  Speaker 2: doesn't matter because you're just saying no, I'm looking at
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  Speaker 2: it long term. Agreed.
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  Speaker 3: I will also say, yes, plenty of investors kind of
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  Speaker 3: missed what was going to be the theme this year. Yeah,
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  Speaker 3: have we ever done a show in the beginning of
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  Speaker 3: the year where we're looking back at the previous year
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  Speaker 3: when markets are up in the previous year, right, I
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  Speaker 3: want to know caveat that. You know, this only really
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  Speaker 3: applies to when markets are up. But has there ever
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  Speaker 3: been a year where we're talking about it like, oh, yeah,
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  Speaker 3: everything was perfect and it just stayed perfect all year.
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  Speaker 3: It's always Hey, there's these list of issues that investors
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  Speaker 3: are going to need to overcome, and it's going to
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  Speaker 3: markets are going to climb that wall of worry and
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  Speaker 3: you know, move into a different, different place and you know,
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  Speaker 3: go back and look at you know the records, Right
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  Speaker 3: we had the bank failures in is that two years ago?
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  Speaker 2: Three years ago now twenty four or three three years ago?
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  Speaker 3: Yeah, Yeah, there's always a wall of worry that you know,
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  Speaker 3: markets need to climb over in order to see this
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  Speaker 3: positive turn. And in the years where things fall apart,
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  Speaker 3: it's usually the case that, wow.
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  Speaker 2: Almost nobody saw that one coming. I'm less speaking to
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  Speaker 2: the wall of worrying more like, hey, were the things
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  Speaker 2: that we saw things that we expected to see or
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  Speaker 2: not Like R twenty twenty one was very much this
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  Speaker 2: is exactly what you expected to see. Hey, we pumped
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  Speaker 2: a bunch of money into the economy, and now we're
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  Speaker 2: going to see what happens as you know, society tries
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  Speaker 2: to reopen. It was basically what everyone expected. Markets went nuts,
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  Speaker 2: prices started rising, and like that was, you know, kind
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  Speaker 2: of what you saw in twenty twenty one. The last
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  Speaker 2: several years have had, you know, kind of a more
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  Speaker 2: complicated relationship in that. Twenty twenty two I don't think
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  Speaker 2: there were very many people, you know, heading into it
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  Speaker 2: who were like, Yeah, we're gonna see like this Russian
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  Speaker 2: invasion of Ukraine and you know, the Fed's gonna hike
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  Speaker 2: interest rates five points and you know, blah blah. Like no,
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  Speaker 2: there weren't a lot of people there twenty three. If
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  Speaker 2: you'd ask people at the beginning of twenty three, Hey,
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  Speaker 2: what are going to be the big themes, I don't
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  Speaker 2: think anyone would have said there's gonna be a bunch
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  Speaker 2: of bank failures in the first part of the year.
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  Speaker 2: Not a bunch, but like a handful of, you know,
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  Speaker 2: still sizable ones.
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  Speaker 3: They definitely thought that the inflation scenario is going to
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  Speaker 3: be worse than it turned out to be. The miraculous
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  Speaker 3: disinflation of twenty twenty three.
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  Speaker 2: Was kind of a defining factor, and no one had
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  Speaker 2: ai becoming what it is today as quickly as it
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  Speaker 2: is right as something that would affect markets, then, So yeah,
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  Speaker 2: I think that when you look at this, I think
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  Speaker 2: it's important to set the stage now for what are
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  Speaker 2: expectations for twenty six because like this is ultimately what
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  Speaker 2: matters and what influence is how markets move, because what
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  Speaker 2: everyone's talking about will be the main things in terms
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  Speaker 2: of markets.
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  Speaker 3: At least, I think that primary one continues to be
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  Speaker 3: artificial intelligence, probably followed by expected changes from the Federal Reserve.
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  Speaker 3: If you ask investors like what are they focused on?
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  Speaker 3: I tend to think those are them. I mean, unemployment
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  Speaker 3: plays into that, inflation plays into that. But those are
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  Speaker 3: kind of the major things. We're not expecting some major
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  Speaker 3: tax bill. We're not expecting some major political reform. Yes
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  Speaker 3: it's an election year, but there's no big expected changes
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  Speaker 3: there to SoC security, to other factors, and so that's
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  Speaker 3: I think kind of the expectation. And quite frankly, I'd
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  Speaker 3: be very surprised if we're sitting here this time next
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  Speaker 3: year and saying, oh, yeah, it took place kind of
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  Speaker 3: exactly the way we thought it would, right.
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  Speaker 2: The other items that I'd say, you know, are expected
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  Speaker 2: right now, it's expected that the tax changes from last
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  Speaker 2: year are going to provide a spending boost this year
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  Speaker 2: in the form of larger than normal tax refunds and
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  Speaker 2: things along those lines, business capex deductions, things like that,
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  Speaker 2: driving additional economic activity. I think that's part of it.
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  Speaker 2: I think that when we look at housing, I think
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  Speaker 2: the expectations are that housing doesn't really shift its course
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  Speaker 2: from the last couple of years in any meaningful way,
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  Speaker 2: in that it's not a driver of a ton of
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  Speaker 2: new economic activity. But it doesn't fall apart like in
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  Speaker 2: the run up to two thousand and seven two thousand
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  Speaker 2: and eight either. I think it just kind of muddles
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  Speaker 2: along as the expectation more or less. And on the
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  Speaker 2: employment side, this is the area where I do think
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  Speaker 2: you get some divergences in terms of views. There's one
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  Speaker 2: camp out there that says, because of that additional spending
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  Speaker 2: that's going to be driven by tax changes, okay, that's
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  Speaker 2: going to drive better employment. There's another group that says, hey,
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  Speaker 2: the economic data is not really showing any meaningful shift,
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  Speaker 2: and generally the best predictor of where employment's going to
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  Speaker 2: be is where it's been. And so kind of a
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  Speaker 2: continued muddling through of employment is what you might expect.
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  Speaker 2: And then there are people in the camp of, hey,
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  Speaker 2: we're on the precipice of something horrible happening in the
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  Speaker 2: labor market, and this is going to be the year
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  Speaker 2: that it finally falls apart. And I think that that's
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  Speaker 2: one place where we look at labor where there is
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  Speaker 2: a pretty big divergence of views as to how things
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  Speaker 2: can play out this year. And wait, sorry no, And
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  Speaker 2: I was just gonna say, and I think that that
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  Speaker 2: is something that unfortunately tends to have a big impact
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  Speaker 2: on the economy because consumer spending is typically driven by
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  Speaker 2: employment income, and so given the wide range of possibilities
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  Speaker 2: for labor, I think there's, you know, a case that
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  Speaker 2: this is one of the more unpredictable.
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  Speaker 3: Years that you could see for the economy. Last market
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  Speaker 3: directly related piece here. When I listen to interviews with
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  Speaker 3: major market analysts or I leadership from companies like Schwab
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  Speaker 3: or Fidelity or others that get interviewed regularly about the markets,
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  Speaker 3: what I keep hearing about is for the theme of
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  Speaker 3: twenty twenty six, very few of them saying, oh, yeah,
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  Speaker 3: AI is going to have another AI related company is
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  Speaker 3: going to have another fifty percent a year, and that's
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  Speaker 3: going to drive it. I keep hearing the broadening out
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  Speaker 3: of the stock market returns. Not sure I buy it,
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  Speaker 3: but that is definitely a theme I hear pretty consistently,
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  Speaker 3: at least through the optimists about where market returns are
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  Speaker 3: going to come from in twenty twenty six. Is Hey,
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  Speaker 3: returns are going to broaden out from what has been
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  Speaker 3: a hyper concentrated market for the next three years. And yeah,
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  Speaker 3: not sure I buy it, but that is definitely something
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  Speaker 3: that I've been hearing a lot of.
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  Speaker 2: Let's discuss that we need to take a quick break,
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  Speaker 2: but let's discuss that in a little bit more detail.
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  Speaker 2: Will we see a broadening out of this market next year?
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  Speaker 1: This year, I guess breaking business and financial news first
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  Speaker 2: All right. So Mike didn't raise the question, but he,
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  Speaker 2: you know, noted that a lot of analysts that are
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  Speaker 2: paid an awful lot of money to look at stocks
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  Speaker 2: are saying, hey, we're expecting to see a broadening out
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  Speaker 2: of equity market return. Equity market return.
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  Speaker 3: We define that by the way, because I mean it
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  Speaker 3: seems intuitive. But you know, the S and P five
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  Speaker 3: hundred for the last three years now returned what was it,
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  Speaker 3: eighty eight percent? I believe for the last three years cumulatively,
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  Speaker 3: sure over half of that has come from the mag seven.
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  Speaker 3: So it's been a it's been a narrow. If you
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  Speaker 3: own the SP five hundred, doesn't really make a difference.
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  Speaker 3: On paper. You participated in that eighty eight percent, but
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  Speaker 3: over half of it came from the magnificent seven. When
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  Speaker 3: we talk about a broadening out, you're talking about other
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  Speaker 3: participants other than the you know, top seven companies in
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  Speaker 3: the index, participating more in that overall country tribution to
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  Speaker 3: net return.
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  Speaker 2: So what I want to do is, I'm gonna look
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  Speaker 2: and this is from Facts that's Earnings Insight, published on
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  Speaker 2: the fifth of December, and I'm just gonna look at
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  Speaker 2: Q three of twenty five earnings because it's the closest
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  Speaker 2: we have to like what earning's done for the last year.
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  Speaker 2: So year over year growth rate in earnings by sector,
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  Speaker 2: got it. Infotech up twenty eight point nine percent year
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  Speaker 2: over year, Financials up twenty three point five, Utilities of
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  Speaker 2: twenty three, materials of twenty, Industrials up fifteen to seven,
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  Speaker 2: consumer discretionary of eight to one, real estate up six,
• 14:34
  Speaker 2: healthcare up five to three, consumer staples up zero nine,
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  Speaker 2: energy down zero four. Consumers I'm sorry communication service is
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  Speaker 2: down seven eight. So ultimately I'm a big believer. When
• 14:45
  Speaker 2: it's all said and done, and what Larry Cudlow has
• 14:47
  Speaker 2: always preached about stocks, which is earnings are the mother's
• 14:50
  Speaker 2: milk of stock prices. Sure, the reason why stocks in
• 14:53
  Speaker 2: the US historically have gone up is because earnings have
• 14:56
  Speaker 2: historically gone up. Generally, you look at the history of it,
• 15:00
  Speaker 2: earnings growth in the US has been around seven to
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  Speaker 2: eight percent annual growth over the long term. Stock returns
• 15:05
  Speaker 2: have been a little in excess of that, but that's
• 15:07
  Speaker 2: because multiples have expanded over the last one hundred years.
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  Speaker 2: It's just how it's gone. There are potentially valid reasons
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  Speaker 2: for that. There are reasons that you can believe it's
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  Speaker 2: not valid, but this is how we get to where
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  Speaker 2: we are. Yep. So I think that when you look
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  Speaker 2: at this and say, why would I expect markets to
• 15:27
  Speaker 2: broaden this year? Fact Set's latest earnings Insight update from
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  Speaker 2: the nineteenth of December says infotech earnings projected to grow
• 15:39
  Speaker 2: another twenty eight point six percent next year. Okay, so
• 15:42
  Speaker 2: that's the again, back to back like thirty percent earnings
• 15:46
  Speaker 2: growth yep. Again mostly driven by in video materials up
• 15:51
  Speaker 2: twenty two percent, industrials up fifteen to four, communications services
• 15:55
  Speaker 2: up eleven eight, consumer discretionarya at eleven two, Financials up nine,
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  Speaker 2: utilities nine. Now, these are the expectations expectations for next year.
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  Speaker 2: Healthcare up eight nine, consumer stable seven to three, energy
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  Speaker 2: seven to two, real estate five to two. So the
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  Speaker 2: reason that this is being said by analysts is because
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  Speaker 2: there is a broadening of earnings growth that's being forecasted
• 16:19
  Speaker 2: forecast Why might that come?
• 16:23
  Speaker 3: Again, when asked why it would happen that way, I
• 16:27
  Speaker 3: point to two things, lower interest rates and stimulus from
• 16:30
  Speaker 3: the One Big Beautiful Bill Act.
• 16:32
  Speaker 2: So this is also now when we get to go
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  Speaker 2: and do the fun thing, which is, hey, let's see
• 16:39
  Speaker 2: what they projected last year, because like, isn't that kind
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  Speaker 2: of interesting? Like what are you? You know, what did
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  Speaker 2: you project for earnings growth last year?
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  Speaker 1: Now?
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  Speaker 2: I have no idea what I'm going to find here.
• 16:52
  Speaker 2: In fact, I'm looking for last year's numbers right now
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  Speaker 2: and I'm struggling, but I know I'm going to get there.
• 16:59
  Speaker 2: So ultimately it's a question of, hey, how accurate are
• 17:05
  Speaker 2: these analysts in being able to project where earnings growth
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  Speaker 2: is going to be for the upcoming year? You know?
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  Speaker 2: Is that something that they have skill in doing? And
• 17:17
  Speaker 2: here we go. I got it. I told you i'd
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  Speaker 2: find it. So, Mike, do you know what was projected
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  Speaker 2: for the S and P five hundred technology sectors earnings
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  Speaker 2: growth this year? Twenty twenty three? Pretty close, right, and
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  Speaker 2: so we P analysts projected twenty three. They came in
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  Speaker 2: at what did I say? It was twenty eight? Something
• 17:40
  Speaker 2: like that. I really need to pull that hang on.
• 17:42
  Speaker 2: Let me pull this other one back up so that
• 17:43
  Speaker 2: we can do the math on the air, because it's
• 17:46
  Speaker 2: what we're gonna do. So we analysts projected twenty three,
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  Speaker 2: they got twenty eight. Okay, that's that's pretty close. It's
• 17:52
  Speaker 2: not perfect, but it's pretty close. Let's now take a
• 17:57
  Speaker 2: look at the sector that did second best this year.
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  Speaker 2: Financials came in with twenty three and a half percent. Again,
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  Speaker 2: this is Q three, so I know it's not full year,
• 18:05
  Speaker 2: but just hear me out. Twenty three percent. Financials projected
• 18:08
  Speaker 2: at eight point six percent year over year. Big miss
• 18:12
  Speaker 2: to the downside on financials. Okay, that's cool. Next up
• 18:16
  Speaker 2: on the list, utilities came in with twenty three percent
• 18:19
  Speaker 2: earnings growth year over year. For Q three, Utilities were
• 18:23
  Speaker 2: projected to at nine percent earnings growth for the full year. Okay,
• 18:28
  Speaker 2: A little bit light. Next on the list, Materials came
• 18:31
  Speaker 2: in at eighteen point nine, was projected I'm sorry. Came
• 18:36
  Speaker 2: in at twenty point one, projected eighteen nine. Almost spot on,
• 18:40
  Speaker 2: nailed it on that side. Industrials came in at fifteen seven.
• 18:44
  Speaker 2: Was projected at nineteen. So industrials came in a little
• 18:49
  Speaker 2: bit light, nothing huge, but a little bit light. Consumer
• 18:52
  Speaker 2: discretionary came in at eight one. Was projected at twelve
• 18:57
  Speaker 2: five light. Real estate came in at six. Was projected
• 19:03
  Speaker 2: at four to seven. Touch high, so I mean, hang on,
• 19:06
  Speaker 2: We're almost there. Healthcare came in at five p three.
• 19:10
  Speaker 2: Was projected at twenty point seven. Big miss to the
• 19:15
  Speaker 2: downside on healthcare, We've got consumer staples point nine projected
• 19:22
  Speaker 2: was up five to six. Big miss to the downside.
• 19:25
  Speaker 2: Energy was flat projected six 't one. Communications services down
• 19:29
  Speaker 2: seven to eight, projected up fifteen and a half. More
• 19:32
  Speaker 2: on this quick break, Wall Street watches next.
• 19:39
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:42
  Speaker 1: TFE show. Breaking business news is always first right here
• 19:47
  Speaker 1: on the Financial Exchange Radio Network. Time Now for Wall Street.
• 19:53
  Speaker 1: Watch a complete look at what's moving market so far
• 19:56
  Speaker 1: today right here on the Financial Exchange Radio network. Well.
• 20:00
  Speaker 4: Markets were starting off twenty twenty six on a positive
• 20:03
  Speaker 4: note in rally mode, where the Nasdaq was up over
• 20:05
  Speaker 4: one percent. However, since the open gains have been erased
• 20:10
  Speaker 4: and are in mixed territory. How about that right now
• 20:14
  Speaker 4: the Dow is off by only sixteen points. SMP five
• 20:17
  Speaker 4: hundred is up over two tenths one percent or fifteen
• 20:20
  Speaker 4: points higher, Nasdaq up four tenths of a percent or
• 20:23
  Speaker 4: ninety five points higher. Russell two thousand is up two
• 20:26
  Speaker 4: tenths of a percent, and your treasure yield is up
• 20:28
  Speaker 4: two basis points at four point one seven five percent.
• 20:32
  Speaker 4: Crude oiled down about one and a third percent, rating
• 20:35
  Speaker 4: of fifty six dollars and sixty six cents a barrel.
• 20:39
  Speaker 4: Tesla down by one percent after the ev maker reported
• 20:42
  Speaker 4: just over four hundred and eighteen thousand vehicle deliveries in
• 20:46
  Speaker 4: the fourth quarter, down sixteen percent from a year ago.
• 20:49
  Speaker 4: Wall Street analysts were expecting about four hundred and twenty
• 20:52
  Speaker 4: six thousand deliveries. Sticking with auto, where Chinese car maker
• 20:57
  Speaker 4: BYD saw its sales growth slow sick magnificantly last year,
• 21:01
  Speaker 4: but is still set to top Tesla as the world's
• 21:03
  Speaker 4: biggest ev maker BYD stock climbed over three percent higher
• 21:07
  Speaker 4: in Hong Kong. Separately, Chinese ev makers Lee Auto and
• 21:11
  Speaker 4: Neo also saw gains after reporting solid vehicle deliveries last month. Meanwhile,
• 21:16
  Speaker 4: several furniture stocks garnering attention after President Trump delayed a
• 21:20
  Speaker 4: thirty percent teriff hike. An upholstered furniture, kitchen cabinets and vanities,
• 21:26
  Speaker 4: way Fair and william Snowmer up over three percent, while
• 21:29
  Speaker 4: RIH shares are up five percent. Elsewhere, the US granted
• 21:32
  Speaker 4: Taiwan Semiconductor its annual license to import its equipment to China,
• 21:37
  Speaker 4: sending these stock up nearly four percent, and Warby Parker
• 21:42
  Speaker 4: is up about one percent after Loop Capital named the
• 21:45
  Speaker 4: eyeglass maker one of its top stock picks for twenty
• 21:49
  Speaker 4: twenty six, citing the firms expanding Ebita margins. I'm Tucker
• 21:53
  Speaker 4: Silva and that is Wall Street Watch. And remember you
• 21:55
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• 21:57
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• 21:58
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• 22:01
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• 22:03
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• 22:05
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• 22:09
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• 22:15
  Speaker 2: Do you know there is no Warby Parker. What do
• 22:19
  Speaker 2: you mean there's no man named it was not founded
• 22:22
  Speaker 2: by Warby Parker. Okay, kind of bothers me a little bit. Yeah,
• 22:26
  Speaker 2: where where did that name come from? It actually comes
• 22:29
  Speaker 2: from two characters in uh. I think it's a Carawac
• 22:33
  Speaker 2: novel hm. But it's like an amalgamation of their names.
• 22:39
  Speaker 3: I mean, honestly, I will take that name over all
• 22:42
  Speaker 3: of the other company names that we've been seeing over
• 22:46
  Speaker 3: the course of the last two years meta from Meta
• 22:49
  Speaker 3: to HBO Max plus minus.
• 22:53
  Speaker 2: Right, at least doesn't have a plus in it, And
• 22:55
  Speaker 2: then you know all of gees, Does Warby Parker have
• 22:58
  Speaker 2: a Warby Parker plus like ge Ver Nova R. Yeah,
• 23:04
  Speaker 2: I'll take this one over over those silly names that
• 23:08
  Speaker 2: it doesn't look like there's a Warby Parker plus, so,
• 23:11
  Speaker 2: which is surprising. I feel like, I actually feel like
• 23:14
  Speaker 2: eyeglasses are something where you could run a very successful
• 23:18
  Speaker 2: subscription model. Sure, you know, say those fashion enthusiasts, right,
• 23:23
  Speaker 2: like you get a new pair every year for like
• 23:25
  Speaker 2: you know, the same price or something like that. Like
• 23:27
  Speaker 2: I feel like you could do that, But I digress.
• 23:30
  Speaker 2: Do we want to do any further conversation on broadening
• 23:34
  Speaker 2: of earnings?
• 23:35
  Speaker 3: So I think the point that you were making earlier,
• 23:39
  Speaker 3: which if you missed, was that analysts, when they are
• 23:43
  Speaker 3: looking at their projections, they're oftentimes not that close to
• 23:47
  Speaker 3: what comes in and oftentimes one in the aggregate, they're
• 23:52
  Speaker 3: usually companies usually beat expectations, but when you look at
• 23:56
  Speaker 3: you know, sector bisector, that is not quite the case.
• 24:00
  Speaker 2: And if you expect I mean again, there's a few.
• 24:04
  Speaker 3: Reasons I could genuinely see for a broadening out to occur,
• 24:10
  Speaker 3: but right now the main thing that I'm hearing it
• 24:13
  Speaker 3: thrown out there for is to justify a continued market
• 24:19
  Speaker 3: rally without putting all the weight on AI shoulders, which
• 24:22
  Speaker 3: people are becoming suspicious.
• 24:23
  Speaker 2: Well, I think the case again it's it's one of
• 24:26
  Speaker 2: the ones we discussed, which is, Hey, households in the
• 24:29
  Speaker 2: aggregate are probably going to have somewhere in the ballpark
• 24:33
  Speaker 2: of an extra fifty two one hundred billion dollars to
• 24:39
  Speaker 2: spend as a result of the tax bill. In additional
• 24:43
  Speaker 2: you know, deductions and things like that that they get. Now,
• 24:47
  Speaker 2: in terms of where that shows up is a lot
• 24:50
  Speaker 2: of that going to be going to you know, the
• 24:53
  Speaker 2: family of four that makes sixty thousand dollars a year. No, like,
• 24:56
  Speaker 2: there's there's not as much going there. That money will
• 24:59
  Speaker 2: get spent. And will the person making you know, two
• 25:02
  Speaker 2: million dollars a year that gets an extra you know,
• 25:05
  Speaker 2: that gets an additional Section one ninety nine deduction on
• 25:08
  Speaker 2: their LLC that they run. Will they end up spending
• 25:11
  Speaker 2: that money?
• 25:12
  Speaker 1: Maybe?
• 25:13
  Speaker 2: And if they do, like that could still be what
• 25:15
  Speaker 2: powers the economy through has been less through this case
• 25:17
  Speaker 2: shaped you know phenomenon that we've talked about. But that's
• 25:21
  Speaker 2: the case for the broadening is consumers are going to
• 25:24
  Speaker 2: have more money to spend and they'll spend it, and
• 25:26
  Speaker 2: businesses are going to invest more because of the bonus
• 25:29
  Speaker 2: appreciation they get. And that's how you're going to see
• 25:32
  Speaker 2: a broadening.
• 25:32
  Speaker 3: One other item that you know, we will be discussing
• 25:35
  Speaker 3: later in the show would be tariff related, which again
• 25:39
  Speaker 3: I don't think tariffs are going to be the most
• 25:40
  Speaker 3: talked about it and this year, but the trend over
• 25:42
  Speaker 3: the course of the last six months has been a
• 25:45
  Speaker 3: weakening of tariffs on imports from outside the United States. Yeah,
• 25:49
  Speaker 3: and so you know, if you have this and when
• 25:52
  Speaker 3: you point to, hey, who's been really hurt by the tariffs,
• 25:54
  Speaker 3: it's been small businesses. It's been small companies, some of
• 25:57
  Speaker 3: which are probably traded, most of which probably are not. So, hey,
• 26:01
  Speaker 3: if you're going to see some broadening out, could some
• 26:02
  Speaker 3: benefit come from the cancelation or reduction of tariffs over
• 26:05
  Speaker 3: the course of the next year. Yeah, maybe maybe that's
• 26:08
  Speaker 3: a factor as well.
• 26:09
  Speaker 2: So I think that's enough on that side of things.
• 26:13
  Speaker 2: Do we want to talk a little bit about the Fed,
• 26:16
  Speaker 2: who we might mention a few times this year? Yeah?
• 26:18
  Speaker 3: I think we should so for you know, everyone's mind.
• 26:22
  Speaker 3: The May time frame is the turnover when j. Powell
• 26:26
  Speaker 3: will be ending his term and the new pick from
• 26:29
  Speaker 3: President Trump will be heading in there and leading the
• 26:33
  Speaker 3: Federal Reserve. Remember that the Federal Reserve as a committee
• 26:36
  Speaker 3: of twelve voting members who make interest rate policy. Both
• 26:40
  Speaker 3: of the major contenders for that chairperson role have been
• 26:44
  Speaker 3: very public about their desire for lower interest rates. It's
• 26:47
  Speaker 3: you know, why they were selected for the role is
• 26:50
  Speaker 3: because they tend to align with President Trump's own views
• 26:53
  Speaker 3: on interest rates. And I think I don't know what
• 26:58
  Speaker 3: the expectation is there. Chuck I'm not sure.
• 27:02
  Speaker 2: How.
• 27:02
  Speaker 3: I don't personally think that interest rate setting policy dramatically
• 27:07
  Speaker 3: changes from the new pick versus what Ja Powell has
• 27:10
  Speaker 3: already been doing. But clearly you are going to have
• 27:13
  Speaker 3: a new FED chair that is at least publicly calling
• 27:15
  Speaker 3: for much lower interest rates and pressuring other FED members.
• 27:17
  Speaker 2: To do so. Here here's the piece that's going to matter.
• 27:21
  Speaker 2: It's what happens versus what is priced in Yep, when
• 27:25
  Speaker 2: we look at the board right now for twenty twenty six,
• 27:29
  Speaker 2: by the by the last FED meeting, which is going
• 27:31
  Speaker 2: to be December ninth, good uh, colenar Yep, it's it's
• 27:34
  Speaker 2: it's on mine as well. It's a it's a great
• 27:38
  Speaker 2: day right right now. When you look at where we stand,
• 27:43
  Speaker 2: FED funds rate is at three and a half to
• 27:45
  Speaker 2: three point seventy five percent. Two cuts are projected this year.
• 27:50
  Speaker 2: So really the question that is worth asking is when
• 27:57
  Speaker 2: you get a new FED chair, who is most likely
• 28:00
  Speaker 2: going to not most likely he was almost certainly to
• 28:04
  Speaker 2: have campaigned on lowering interest rates. Do are they able
• 28:09
  Speaker 2: to convince the rest of the Open Market Committee to
• 28:12
  Speaker 2: lower rates more than is what is projected right now? Right?
• 28:16
  Speaker 2: That's what matters to markets. If you get two cuts
• 28:19
  Speaker 2: this year, but it's priced in, doesn't matter, there's nothing better, Like,
• 28:22
  Speaker 2: it doesn't do anything. It's kind of like, Okay, if
• 28:25
  Speaker 2: AI earnings had come in, if tech earnings had come
• 28:28
  Speaker 2: in at twenty three percent growth this year, Okay, that's
• 28:31
  Speaker 2: what analysts we're projecting. They've come in closer to thirty percent,
• 28:35
  Speaker 2: which has given you additional upside expectations matters. So if
• 28:41
  Speaker 2: you get a situation where the FED is able to say, yeah,
• 28:46
  Speaker 2: you know, new chair Kevin X or Kevin Y, you
• 28:49
  Speaker 2: know is in here, and is you know, able to
• 28:52
  Speaker 2: get the board to say, yeah, we want to cut
• 28:53
  Speaker 2: interest rates to you know, two and a quarter percent. Okay,
• 28:57
  Speaker 2: that's a fundamental difference. But it also with the caveat
• 29:01
  Speaker 2: Hey was the reason they were able to convince them
• 29:02
  Speaker 2: to cut rates that much because the economy weakened more
• 29:05
  Speaker 2: than people expected, and so those cuts were viewed as,
• 29:08
  Speaker 2: you know, more warranted than prior. That plays into this
• 29:12
  Speaker 2: as well. So I think that where I tend to
• 29:16
  Speaker 2: land is there is an awful lot of institutional inertia
• 29:27
  Speaker 2: at places like the FED. Institutional inertia.
• 29:31
  Speaker 1: I like that.
• 29:32
  Speaker 2: Yeah, okay, you know. And I viewed this through the
• 29:36
  Speaker 2: same lens as Hey. When Scott Bessen became Treasury Secretary
• 29:41
  Speaker 2: last year, he spent the whole year being like Janet
• 29:43
  Speaker 2: Yell and I don't like what you're doing. Janet Yell,
• 29:45
  Speaker 2: and I don't like what you're doing. And he came
• 29:47
  Speaker 2: in this year and basically he has done the exact
• 29:48
  Speaker 2: same thing that Janet Yellen was doing. As far as
• 29:51
  Speaker 2: the mix of short term versus long term treasuries, some
• 29:56
  Speaker 2: of that's inertia and some of that is you take
• 29:58
  Speaker 2: the situation you're like, oh, if I push the wrong button,
• 30:01
  Speaker 2: I'm gonna get blamed for you know, problems. Yeah, I
• 30:03
  Speaker 2: better keep doing you know, what's been working. And I
• 30:07
  Speaker 2: think there's a certain amount of that at the FED
• 30:09
  Speaker 2: two because ultimately, like, let's say that I become FED
• 30:15
  Speaker 2: chair and like, which would be horrible, congrats, you're welcome.
• 30:22
  Speaker 2: Let's say that I become FED chair. And let's say
• 30:24
  Speaker 2: that I became FED chair in twenty twenty two and
• 30:26
  Speaker 2: actually hiked interest rates five percent at the start of
• 30:29
  Speaker 2: the year. It's a big risk. Like it's fine for
• 30:33
  Speaker 2: me to say, Hey, here's what I would do when
• 30:35
  Speaker 2: I'm not sitting in the chair. Would I actually have
• 30:38
  Speaker 2: the hutzpah to go out and be like, you know what,
• 30:43
  Speaker 2: screw it, fire all the torpedoes, like we're gonna do it.
• 30:47
  Speaker 2: I don't know if I would if I'm actually in
• 30:49
  Speaker 2: the chair.
• 30:49
  Speaker 1: Yeah.
• 30:50
  Speaker 3: And it's a long running institution with a lot of
• 30:55
  Speaker 3: history of the very big mistakes that were made over
• 30:57
  Speaker 3: the course of the ear, and everyone that is going
• 30:59
  Speaker 3: to take the role is are.
• 31:00
  Speaker 2: Aware of the mistakes that were made over the year.
• 31:02
  Speaker 2: The reason we all remember Arthur Burns is because of
• 31:06
  Speaker 2: the inflation that happened on his watch, not because he
• 31:09
  Speaker 2: was a brilliant economist beforehand. It's the same as Bill Buckner.
• 31:13
  Speaker 2: We don't remember that Bill Buckner was actually a very
• 31:15
  Speaker 2: good defensive first baseman. We remember Mookie Wilson's ball going
• 31:19
  Speaker 2: under his legs and going oh no, and like That's
• 31:23
  Speaker 2: the thing about being fed chair is ultimately the ones
• 31:27
  Speaker 2: that are remembered are usually the ones that screw up.
• 31:30
  Speaker 2: It's like offensive linemen or kickers or anything else like that.
• 31:35
  Speaker 2: You want to be a fed chair who is not remembered,
• 31:38
  Speaker 2: but it's still paid very highly on the speaking circuit.
• 31:41
  Speaker 2: After you're done yeah, Ben Bernanke. No one really thinks
• 31:44
  Speaker 2: about Ben Bernanke a whole lot anymore. You know, it's
• 31:47
  Speaker 2: just like, okay, he was there. Let's take a quick
• 31:49
  Speaker 2: break when we return. Let's see we talked tariffs a
• 31:53
  Speaker 2: little bit already. We're not gonna do that. We're not
• 31:56
  Speaker 2: gonna do that. Condo market, Yeah, talk condos after this.
• 32:01
  Speaker 1: The Financial Exchange streams live on YouTube. Subscribe to our
• 32:05
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• 32:07
  Speaker 2: All morning.
• 32:08
  Speaker 1: Long Face is the Financial Exchange radio network business and
• 32:13
  Speaker 1: financial news affecting the markets and your wallet. We've got
• 32:17
  Speaker 1: it all straight from Wall Street right here on the
• 32:19
  Speaker 1: Financial Exchange Radio Network.
• 32:34
  Speaker 2: Wall Street Journal's got a piece. It's titled the condo
• 32:36
  Speaker 2: market hasn't been this bad and over a decade, and
• 32:39
  Speaker 2: conda price has had their largest annual decline since twenty twelve,
• 32:42
  Speaker 2: long one point nine percent for a year earlier in
• 32:45
  Speaker 2: September and October. Big reasons why fees, fees, that's the reason.
• 32:53
  Speaker 2: So here's the thing. If you look at where most
• 32:57
  Speaker 2: condos are just from like a pure number perspective, not
• 33:00
  Speaker 2: what place is the highest percentage of you know, dwellings
• 33:03
  Speaker 2: that are condos but it tends to be dominated by
• 33:06
  Speaker 2: the Southeast. Okay.
• 33:08
  Speaker 3: So I was gonna say that, like, are we seeing
• 33:10
  Speaker 3: a condo problem or are we seeing a Florida problem.
• 33:12
  Speaker 2: It's it's a Florida problem, okay. And but it's twofold
• 33:17
  Speaker 2: because part of it's Florida in that you know, look,
• 33:20
  Speaker 2: you've you know been over developed and people, you know,
• 33:23
  Speaker 2: built based on you know, expectations that the migrations from
• 33:25
  Speaker 2: twenty twenty and twenty one would continue and they haven't.
• 33:29
  Speaker 2: But the other piece is because of changes that have
• 33:33
  Speaker 2: happened to the laws down there, you have these monster
• 33:37
  Speaker 2: assessments that are being levied on a lot of these
• 33:40
  Speaker 2: high rise condos. It's it's not a factor if you're in,
• 33:42
  Speaker 2: you know, a condo that's just single family dwellings. But
• 33:45
  Speaker 2: the other piece that is a factor on all of
• 33:47
  Speaker 2: these is the master insurance policies for these condo communities
• 33:53
  Speaker 2: are either A going through the roof or B saying no,
• 33:56
  Speaker 2: we're not going to cover hurricanes anymore beyond like ex cost,
• 34:01
  Speaker 2: but you still have to pay up for it just
• 34:03
  Speaker 2: because you need to have a master policy of some
• 34:06
  Speaker 2: kind on the overall community.
• 34:09
  Speaker 3: Yeah, I guess The interesting piece to me would be
• 34:11
  Speaker 3: if we studied this in a city by city basis,
• 34:14
  Speaker 3: are we seeing condo prices hold up worse compared to
• 34:19
  Speaker 3: single family in Portland, Maine, and New York City and Boston?
• 34:24
  Speaker 3: Or is this a real conversation of Yeah, the Florida
• 34:27
  Speaker 3: housing market is in very rough shape, and a big
• 34:31
  Speaker 3: portion of that happens to be condos.
• 34:33
  Speaker 2: I think it's that. I tend to think so as well.
• 34:36
  Speaker 4: If you've been dreaming about a getaway that feels far
• 34:40
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• 34:42
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• 35:51
  Speaker 2: The Craft Group reaching deals with Boston and Effett to
• 35:55
  Speaker 2: be able to move forward with plans for a soccer
• 35:59
  Speaker 2: specific state for the New England Revolution. This would be
• 36:03
  Speaker 2: some money heading to those cities in order to pay
• 36:06
  Speaker 2: for improvements related to traffic and pedestrian access. But I
• 36:10
  Speaker 2: can tell you is someone I lived like for a
• 36:12
  Speaker 2: while right next to where this is going to be
• 36:15
  Speaker 2: in Somemerville built. Yeah, I was in the eastern part
• 36:18
  Speaker 2: of Somerville. And what I can tell you is you
• 36:24
  Speaker 2: cannot get twenty five thousand people to that stadium without
• 36:27
  Speaker 2: causing all kinds of problems. Right now, the mass transit
• 36:32
  Speaker 2: that goes through there is on the other side of
• 36:35
  Speaker 2: the Mystic River with no direct pedestrian bridge access right now,
• 36:40
  Speaker 2: so you basically either have to like walk like a
• 36:42
  Speaker 2: mile and a half loop then in order to get there,
• 36:45
  Speaker 2: or take like cabs or buses or something. Either way,
• 36:47
  Speaker 2: like it gets very messy, very quickly. But ultimately this
• 36:53
  Speaker 2: is solvable if you actually just spend money to build
• 36:55
  Speaker 2: the pedestrian infrastructure that you need. But I think when
• 37:00
  Speaker 2: soccer season so not anymore.
• 37:06
  Speaker 1: So.
• 37:06
  Speaker 2: MLS announced I think a couple months ago, that they
• 37:09
  Speaker 2: are moving to unify the MLS schedule with the international
• 37:14
  Speaker 2: schedule in order to basically line up windows of transfers
• 37:19
  Speaker 2: and stuff like that that you make it so that
• 37:21
  Speaker 2: it works with other leagues in the world. So I
• 37:23
  Speaker 2: think it's either beginning next season or the one after.
• 37:27
  Speaker 2: Like most European countries, it's going to be a September
• 37:31
  Speaker 2: through like May June. Event water taxis are out. Now,
• 37:37
  Speaker 2: you're not going to have games in foxbur in Boston
• 37:41
  Speaker 2: in January. My guess is they go on some lengthy
• 37:43
  Speaker 2: road trips during the month in order to avoid playing
• 37:46
  Speaker 2: in eight degree weather. Because this thing doesn't have a
• 37:49
  Speaker 2: roof from what I saw, no, but ultimately I think
• 37:51
  Speaker 2: this is a fantastic development, but there's going to need
• 37:54
  Speaker 2: to be some work done in order to be able
• 37:58
  Speaker 2: to actually get people to this location. So I think
• 38:01
  Speaker 2: it'll be a real net positive for soccer in the
• 38:05
  Speaker 2: New England area in like a decade when it's done,
• 38:07
  Speaker 2: But there's some work to be done still on this.
• 38:10
  Speaker 2: Let's take a quick break. Coming up in just a
• 38:13
  Speaker 2: little bit. We got hour two stick around