Latest / The Financial Exchange Show / If you fear recession, follow the S&P 500's historical data.

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If you fear recession, follow the S&P 500's historical data. · The Financial Exchange Show

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  Speaker 1: and Mark fan, Detti, Mark, you a.
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  Speaker 2: Big blood sweat and tears fan.
• 1:13
  Speaker 3: What is that like just generally expending blood sweat and tears?
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  Speaker 1: No?
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  Speaker 2: The band?
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  Speaker 3: Oh, I didn't know there was a band, so I
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  Speaker 3: guess not.
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  Speaker 2: Tucker, that's a band.
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  Speaker 3: Moving on.
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  Speaker 2: You guys have never heard of Blood Sweat and Tears.
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  Speaker 3: Oh no, I thought that was just the same. I
• 1:27
  Speaker 3: don't feel it as bad.
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  Speaker 2: Really, I've never heard of that band. I mean, they
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  Speaker 2: only I think they were had like a fifteen year career.
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  Speaker 2: Uh yeah, we've got one, two, three, four, five, six, seven, eight, nine, ten,
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  Speaker 2: eleven CDs. Lois is saying yes, okay, no she is not?
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  Speaker 2: Is not?
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  Speaker 3: What's well?
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  Speaker 2: Yes or no? Yeah? Yeah, Lois has heard of him.
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  Speaker 3: I can't translate our hand signals.
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  Speaker 2: Okay, well, my entire base I think my entire open
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  Speaker 2: for this segment is completely gone now. But uh no, no, no,
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  Speaker 2: Tucker's saying punt Are you saying? Oh? Whatever? I thought
• 2:09
  Speaker 2: you were saying? Punt on? What I'm talking about, which
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  Speaker 2: is what I'm gonna do Anyways, Now you'll never know
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  Speaker 2: where I was going with.
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  Speaker 3: It's like our first day working together. Nobody knows what
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  Speaker 3: anybody else is talking about this like Tower of Babel.
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  Speaker 2: Who's on first?
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  Speaker 1: Right?
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  Speaker 2: Anyways, here's the deal.
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  Speaker 1: I haven't heard of them.
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  Speaker 2: Stocks when I woke up this morning were who or first?
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  Speaker 4: Just go?
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  Speaker 2: We're gone? Stocks? When I woke up this morning, futures
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  Speaker 2: were up half a percent to three quarters of a percent.
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  Speaker 2: We got a CPI report this morning at eight thirty.
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  Speaker 2: Then that was good. It was it was fine, like
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  Speaker 2: it came in better than expected, but some of the
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  Speaker 2: underlying stuff still not quite as as strong as you'd
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  Speaker 2: like to be. And obviously the CPI report from this
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  Speaker 2: morning was pre tariff you know this is it was
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  Speaker 2: coming from mid February. To my knowledge, I don't know
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  Speaker 2: if anything had been imposed aside from ten percent China
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  Speaker 2: tariffs at that point. And so there's a lot more
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  Speaker 2: that's come into force in the last two weeks that
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  Speaker 2: clearly changes the state of play. But in any case,
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  Speaker 2: the S and P five hundred decided, hey, we like
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  Speaker 2: what we see, and so it said not it, but
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  Speaker 2: like the people buying and selling it said okay. S
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  Speaker 2: and P five hundred closed yesterday at fifty five seventy two.
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  Speaker 2: We're gonna open it fifty six twenty four and go
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  Speaker 2: up to fifty six forty two, so you had about
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  Speaker 2: a seventy point rally compared to yesterday's close. As of
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  Speaker 2: right now, the SMP is down twenty points on the day,
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  Speaker 2: so it's given back ninety points in the first hour
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  Speaker 2: and a half of trading, which is not good. Like
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  Speaker 2: that's almost two percent at this point that it has
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  Speaker 2: fallen intraday, it's only down you know, half a percent,
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  Speaker 2: because again it's you know, net net. But you got
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  Speaker 2: the Dow off four hundred points now, the S and
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  Speaker 2: P's down twenty five. Nasdaq, which was up two percent
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  Speaker 2: now up just thirteen points, or one tenth of a percent.
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  Speaker 2: So this is a market that right now is seeing
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  Speaker 2: rallies viciously sold into. At this point, no one wants
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  Speaker 2: to hold the gains for very long. It's a very
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  Speaker 2: uncertain market. Tenure US Treasury is completely flat at the
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  Speaker 2: moment at four point two eighty six percent. We have
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  Speaker 2: Oil West Texas Intermediate up a dollar forty four a
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  Speaker 2: barrel to sixty seven sixty nine. The TRIPAA national average
• 4:25
  Speaker 2: for gas prices down one tenth of a cent over
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  Speaker 2: night to three h eight even still can't get that
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  Speaker 2: below three dollars nationwide, though New Hampshire, Massachusetts, and Rhode
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  Speaker 2: Island now all three of them below three dollars in
• 4:40
  Speaker 2: the New England region at the moment. And we've got
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  Speaker 2: gold today up eight dollars and fifty cents an ounce
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  Speaker 2: to twenty nine twenty nine and forty cents mark. This
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  Speaker 2: is a great, great, great segue that I couldn't have
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  Speaker 2: planned any better to a couple of different pieces, one
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  Speaker 2: from Bloomberg. US stock skepticism deepens as Goldman cuts s
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  Speaker 2: and P five hundred target the second slow down a recession,
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  Speaker 2: It's still not clear, and that's what's got the market
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  Speaker 2: on edge. So I've had this epiphany in the last
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  Speaker 2: week to week and a half because I begin to appropriate.
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  Speaker 2: I'm beginning asked about it just left and right by
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  Speaker 2: people like is the US in recession? Like does this
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  Speaker 2: mean we're heading for recession? That the stock markets down?
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  Speaker 2: Like this my answer where I've come to. And it
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  Speaker 2: took me a while to coagulate my thoughts.
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  Speaker 3: Sorry, that's probably within the realm of reasonable uses of
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  Speaker 3: that word. I've just never I think it works. I
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  Speaker 3: think a blood coagulated exactly, plotting.
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  Speaker 2: Well, So here's the thing blood. It comes together and
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  Speaker 2: hard and so it's like, yeah, to cause of transformation
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  Speaker 2: into a soft taste.
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  Speaker 3: I'm not the arbiter. Don't pay any attention.
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  Speaker 2: I'm I'm I'm fully sticking with coagulate here because I'm
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  Speaker 2: solidifying and like and like.
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  Speaker 3: Like compounding here and coagulate.
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  Speaker 2: Yes you can. You can listen to me coagulate as well.
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  Speaker 2: So here's where I've gotten to.
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  Speaker 3: What's happening right now?
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  Speaker 2: The S and P five hundred typically sees a twelve
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  Speaker 2: a ten percent decline, usually every twelve to eighteen months.
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  Speaker 2: Sometimes it can be longer. I think we had one
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  Speaker 2: in the twenty tens where it went like three years
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  Speaker 2: without a ten percent market correction. It might have even
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  Speaker 2: been longer. I can't remember quite honestly. But you usually
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  Speaker 2: see a ten percent dip in markets every twelve to
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  Speaker 2: twenty four months like that. That's pretty standard in the
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  Speaker 2: S and P five hundred. But Mark, we don't have
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  Speaker 2: recessions every twelve to twenty four months.
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  Speaker 3: Oh thank god.
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  Speaker 2: How frequency of recessions is usually every like seven to
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  Speaker 2: ten years.
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  Speaker 3: Like that's probably what we're up to now.
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  Speaker 2: That's kind of like the norm and so where my
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  Speaker 2: thoughts are on this is that the fear of a
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  Speaker 2: recession is typically what gets you that eight to ten
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  Speaker 2: percent drop in markets. And just think back over the
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  Speaker 2: last couple of years. As an example, in the spring
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  Speaker 2: of twenty twenty three, when Silicon Valley Bank blew up
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  Speaker 2: and everyone was scrambling like, hey, what does this mean?
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  Speaker 2: What you know, what is this gonna do? Like is
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  Speaker 2: is there something bigger that's coming? The S and P
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  Speaker 2: five hundred during that time again, spring of twenty twenty
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  Speaker 2: three went from around forty two hundred think he got
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  Speaker 2: up to like forty one ninety five down to thirty
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  Speaker 2: eight hundred, nine percent drop. Recession did not materialize, and
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  Speaker 2: the S and P five hundred went on its merry
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  Speaker 2: way and continued on later on that year in the
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  Speaker 2: fall or heading into the fall, we once again had
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  Speaker 2: recession fears. I remember we were talking about the labor
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  Speaker 2: market at the end of twenty twenty three, like, hey,
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  Speaker 2: is there something that's that's building here that that's making
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  Speaker 2: us nervous? Again, the S and P five hundred fell
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  Speaker 2: from around forty six hundred down to forty one hundred
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  Speaker 2: and then bounced when recession didn't happen little more.
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  Speaker 3: Does that mean the stock mark? To you? Does that
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  Speaker 3: mean the stock market's a bad indicator?
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  Speaker 2: No, it's to me, it means that the first ten
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  Speaker 2: percent drop that you have is built on investor sentiment
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  Speaker 2: and fear. In order to get more than that, the
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  Speaker 2: economic data has to worsen. Is kind of where I'm at, because, yeah,
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  Speaker 2: let's like, let's let's think about what we're actually seeing here.
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  Speaker 2: Right before this all started, the S and P five
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  Speaker 2: hundred was trading like twenty two times forward earnings. Today
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  Speaker 2: it's trading at twenty or the other way that you
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  Speaker 2: can look at it. Maybe it's still trading at twenty
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  Speaker 2: two times forward earnings. But we're just sucking ten percent
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  Speaker 2: growth out as a possibility, like if there's a chance
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  Speaker 2: there's a recession. And so, in my mind, that first
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  Speaker 2: ten percent drop is just the fear response in markets.
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  Speaker 2: It's hey, is there something out there that we need
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  Speaker 2: to be worried about? In order to progress beyond the
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  Speaker 2: ten percent drop, the economic data has to conclusively worsen.
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  Speaker 2: Let's talk about the two most recent times that we've
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  Speaker 2: seen that data conclusively worsen. Twenty twenty two inflation went
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  Speaker 2: to nine percent, and oil prices were through the roof.
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  Speaker 2: And remember you couldn't like everything was back order delayed this,
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  Speaker 2: and that the economy was bad. We didn't technically enter
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  Speaker 2: a recession in twenty twenty two, but we made the
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  Speaker 2: argument at the time it didn't matter. It was a
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  Speaker 2: bad economy whether you formally declared a recession or not.
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  Speaker 2: The S and P five hundred ended up falling a
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  Speaker 2: little bit north of twenty percent over the course of
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  Speaker 2: the year because the economic data got bad. It wasn't
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  Speaker 2: just the fear of bad, it was the reality of bad.
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  Speaker 2: The one before that, twenty twenty all happened in a
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  Speaker 2: span of like three weeks. Twenty twenty two played out
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  Speaker 2: over the course of ten months from January through October
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  Speaker 2: twenty twenty played out in a course of March where
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  Speaker 2: the S and P five hundred lost thirty five percent
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  Speaker 2: in three weeks, the fastest ever decline of that magnitude,
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  Speaker 2: because stuff was being shut down all around the world
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  Speaker 2: because of the outbreak of COVID nineteen and so ultimately,
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  Speaker 2: you know, when we look at this and this question
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  Speaker 2: of slow down or recession, it's still not clear. The
• 10:26
  Speaker 2: answer is you're right, it still isn't clear because the
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  Speaker 2: economic data by and large is very similar to what
• 10:34
  Speaker 2: it was over the last couple months. We just got
• 10:37
  Speaker 2: the job support for February, no big meaningful change. There's
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  Speaker 2: some stuff under the hood that you look at and
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  Speaker 2: you're like, okay, like I'm concerned about this, but nothing big.
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  Speaker 2: Weekly jobless claims are still within sniffing distance of what
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  Speaker 2: they've been at in previous you know, years, and the
• 10:52
  Speaker 2: norms of what we see there the place where we've
• 10:55
  Speaker 2: seen a little bit of dodginess, retail sales maybe a
• 10:58
  Speaker 2: canary in the coal mine slowing down in February, but
• 11:00
  Speaker 2: it's unclear if that was just people at front loaded
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  Speaker 2: good purchases because of tariffs, are people actually nervous about
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  Speaker 2: the like, we don't know. And other than that, a
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  Speaker 2: lot of the other data that we get on either
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  Speaker 2: a weekly or monthly basis is not really showing any
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  Speaker 2: meaningful statistical change. It's just kind of going along. So
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  Speaker 2: the point that I get to, I think mark is
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  Speaker 2: look the next few months and how the economic data
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  Speaker 2: moves is going to determine the next move for markets here,
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  Speaker 2: because fear can only take you so far. Eventually, if
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  Speaker 2: you want to not want, if you expect to see
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  Speaker 2: a bear market for you know, the index, you have
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  Speaker 2: to actually see the bad stuff start printing in the
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  Speaker 2: economic data and earnings reports. That's kind of where I am,
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  Speaker 2: and to this point, it just hasn't been printing, not
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  Speaker 2: at a high enough frequency. At least you get some
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  Speaker 2: scattered stuff here and there. But you know, in Vidia's earnings,
• 11:56
  Speaker 2: yes the stock ended up getting punshed, but the earnings
• 11:58
  Speaker 2: were fine. You know Apple's earnings, the stock got punished,
• 12:02
  Speaker 2: the earnings were fine. Actually, the Apple was the one
• 12:04
  Speaker 2: tech company that didn't really get punished. So I think
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  Speaker 2: that where I am on this is it's unclear if
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  Speaker 2: the US is going to go into recession or not.
• 12:14
  Speaker 2: If the data continues to worsen and the worstening expands
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  Speaker 2: to new areas in the next three to four months,
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  Speaker 2: sure there's a real problem there. But we've also seen
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  Speaker 2: this story multiple times in the last two to three years,
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  Speaker 2: where you get a couple bad months of data and
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  Speaker 2: then it doesn't go anywhere. And so I, as I've
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  Speaker 2: been saying since twenty twenty two, let's just slow a
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  Speaker 2: roll a little bit on the recession call and everything,
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  Speaker 2: because it's just been so overprescribed at this point, as
• 12:45
  Speaker 2: you know, definitively happening. If it happens, you don't have
• 12:49
  Speaker 2: to be the first to say that you called a recession.
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  Speaker 2: You can sometimes just wait to see how the data
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  Speaker 2: unfolds and go from there.
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  Speaker 3: Yeah, recessions are not really predictable. Most of the post
• 12:59
  Speaker 3: war recess have been caused by monetary policy tightening, which
• 13:02
  Speaker 3: does have real effects. We talked about this in the
• 13:04
  Speaker 3: first hour. It's how the FED affects the real economy.
• 13:07
  Speaker 3: Others as was documented and worked one in the eighties,
• 13:10
  Speaker 3: caused by oil price increases. But we're far less sensitive
• 13:13
  Speaker 3: to those than we used to be.
• 13:15
  Speaker 2: It's take a quick break. When we come back, we
• 13:17
  Speaker 2: got trivia and then we're going to be talking about
• 13:19
  Speaker 2: people that hold multiple jobs. What are we seeing in
• 13:21
  Speaker 2: those trends right now? We'll let you know after this.
• 13:24
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  Speaker 5: and on this day. Back in nineteen fifty seven, the
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• 14:45
  Speaker 3: Uh.
• 14:45
  Speaker 2: Piece here from Tucker. Where where did this come from?
• 14:48
  Speaker 2: I've never seen this?
• 14:49
  Speaker 5: I have not either, but I did come across it. Okay,
• 14:52
  Speaker 5: I will confirm the source.
• 14:53
  Speaker 2: Uh in any case. So last Friday we got a
• 14:56
  Speaker 2: jobs report.
• 14:57
  Speaker 5: It's an outlook called Surewood.
• 14:59
  Speaker 2: Does the Sheriff of Nottingham lived there?
• 15:01
  Speaker 1: I don't know.
• 15:03
  Speaker 2: There's a Robinhood reference. It's it's Sherwood Forest and Robinhood, right,
• 15:07
  Speaker 2: I don't know. I think I think so's it Nottingham Forest.
• 15:12
  Speaker 2: He was the sheriff of Nottingham. But I think it
• 15:14
  Speaker 2: was Sherwood Forest.
• 15:15
  Speaker 3: I think that's where those Sherwood Forest confirmed vigilantes hung out.
• 15:22
  Speaker 2: Okay, in any case, so reporting live from Sherwood Forest.
• 15:27
  Speaker 2: Sherwood says thats that multiple job holders in the United
• 15:32
  Speaker 2: States moved up to a record eight point nine million,
• 15:34
  Speaker 2: which is five point four percent of all employed workers,
• 15:38
  Speaker 2: the highest scene since April two thousand and nine, which
• 15:41
  Speaker 2: is obviously not a time period that you want to
• 15:42
  Speaker 2: be referencing. The other thing that we saw on this
• 15:46
  Speaker 2: is that in the U six number, the underemployment number,
• 15:51
  Speaker 2: the percentage of people reporting having a part time job
• 15:55
  Speaker 2: for economic reasons, meaning they wanted full time work but
• 15:58
  Speaker 2: could only get part time I'm moved significantly higher as well.
• 16:02
  Speaker 2: So this is some of the stuff we're under the
• 16:04
  Speaker 2: hood in the labor market. Even though the headline stuff
• 16:07
  Speaker 2: is just fine, you're starting to see a few cracks
• 16:10
  Speaker 2: that may be developing, and they're the kinds of things
• 16:14
  Speaker 2: that typically start to indicate coming labor market weakness, because
• 16:20
  Speaker 2: that's the stuff that happens first.
• 16:22
  Speaker 3: Yeah, if you're a forecaster, this is why your job
• 16:25
  Speaker 3: is challenging, difficult, maybe even impossible. We've been reporting a
• 16:29
  Speaker 3: lot on the vacancy rate. That report comes out once
• 16:32
  Speaker 3: a month. We got it yesterday. We updated you on
• 16:34
  Speaker 3: it and said job opening said increased. We talk about
• 16:38
  Speaker 3: the unemployment rate. We talk about the unemployment rate for
• 16:40
  Speaker 3: people age twenty five to fifty four. We talk about
• 16:43
  Speaker 3: metrics like this which best helps you forecast inflation or
• 16:48
  Speaker 3: future growth. The short answer is it varies. These relationships change.
• 16:51
  Speaker 3: They're not stable. So we tell you we give you
• 16:55
  Speaker 3: a sort of a broad swath of potential indicators and
• 17:00
  Speaker 3: leave open the question of whether or not they're predictive
• 17:03
  Speaker 3: of anything, because even if they've worked in the past.
• 17:06
  Speaker 3: And here, the implication I think is, as you say, Chuck,
• 17:09
  Speaker 3: job market might be softer than the headline on employment
• 17:12
  Speaker 3: number indicates. So maybe there's not upward pressure on prices
• 17:16
  Speaker 3: coming from low unemployment, which is the historical relationship. It
• 17:21
  Speaker 3: would be a suggestion that the four percent ish unemployment
• 17:25
  Speaker 3: would be a strong indicator that the economy's running too hot.
• 17:30
  Speaker 3: Maybe that's not the case. We're not going to know
• 17:32
  Speaker 3: until after the fact. That's what makes the FEDS job
• 17:34
  Speaker 3: so hard.
• 17:35
  Speaker 2: When you look at the labor market. Is one of
• 17:39
  Speaker 2: the potentially weird things about this economic cycle is normally
• 17:43
  Speaker 2: labor is a lagging indicator, and in this case it's
• 17:45
  Speaker 2: almost moving as a leading indicator. It's kind of weird
• 17:48
  Speaker 2: that unemployment normally moves up as the economy has already slowed.
• 17:53
  Speaker 2: In this case, the unemployment rate moved up last year
• 17:55
  Speaker 2: even though the economy accelerated into your end. According to GDP, Yeah,
• 18:01
  Speaker 2: it's possible.
• 18:02
  Speaker 3: Kind of weird, right, Past relationships do break.
• 18:06
  Speaker 2: Down when you look at the labor market. Are there
• 18:11
  Speaker 2: any areas that you look at and say, this is
• 18:14
  Speaker 2: most concerning to me.
• 18:16
  Speaker 3: So I would use it to help forecast inflation. Oh,
• 18:20
  Speaker 3: question is sort of like I alluded to in the
• 18:22
  Speaker 3: last in my last comment, do you want to use
• 18:25
  Speaker 3: the vacancy right? Do you want to use the traditional
• 18:26
  Speaker 3: unemployment right? Do you want to use short term unemployed
• 18:29
  Speaker 3: who put pressure on wages or long term unemployed who
• 18:31
  Speaker 3: might not if they've been out of the labor force
• 18:33
  Speaker 3: for a while. Do you want to use measures like this?
• 18:35
  Speaker 3: And there are others out there. Forecasters researchers are constantly
• 18:39
  Speaker 3: updating their little models, and I belittle it a little
• 18:42
  Speaker 3: bit because models that worked well in the past tend
• 18:45
  Speaker 3: to not work well in the future, maybe because forecasts
• 18:47
  Speaker 3: are made public and then people act on them, and
• 18:50
  Speaker 3: it's expectations that cost the relationship to break down. You
• 18:53
  Speaker 3: get feedback, so to speak. There So Chuck, I don't know.
• 18:57
  Speaker 3: You do have to, as you and Mike Armstrong do
• 18:59
  Speaker 3: on this ship and Paulaine, look at a broad again
• 19:03
  Speaker 3: swath of economic indicators and make a judgment about what
• 19:07
  Speaker 3: they're telling you.
• 19:08
  Speaker 2: Taking a look at markets right now, we've got again
• 19:10
  Speaker 2: just a ton of intra day volatility. The Dow is
• 19:14
  Speaker 2: now off two hundred and forty nine points, but the
• 19:16
  Speaker 2: S and P has rallied back thirty points, are a
• 19:17
  Speaker 2: little more than half a percent in the last ten
• 19:19
  Speaker 2: minutes to now be up five points. So this is
• 19:22
  Speaker 2: a market that just does not have a lot of
• 19:25
  Speaker 2: confidence in where it's going in either direction. The nasdag
• 19:28
  Speaker 2: Al's now up one hundred and nineteen points after being
• 19:31
  Speaker 2: flat ten minutes ago. Quick Break Trivia answers.
• 19:34
  Speaker 4: Next, bringing the latest financial news straight to your radio
• 19:45
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• 20:12
  Speaker 5: Trivia question today was what was Doctor Seuss's best selling book,
• 20:17
  Speaker 5: I'll Be Green Eggs and Ham. Green Eggs and Ham
• 20:21
  Speaker 5: has sold over two hundred million copies. And again in
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• 20:28
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• 20:32
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• 20:35
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• 20:39
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• 20:41
  Speaker 2: All right, we got a piece here from market Watch.
• 20:44
  Speaker 2: It's titled why It's harder for Generation X to save
• 20:46
  Speaker 2: for retirement than it was for Baby Boomers. And quite honestly,
• 20:50
  Speaker 2: I despise these things, these pieces that you make it
• 20:55
  Speaker 2: seem like any generation has it harder. For the longest
• 20:58
  Speaker 2: time look, I'm a millennial, and all the pieces written
• 21:01
  Speaker 2: in the twenty tens were like, well, millennials are never
• 21:04
  Speaker 2: going to accumulate wealth, They're behind on homeownership, They've got.
• 21:08
  Speaker 3: It so hard.
• 21:11
  Speaker 2: How are they ever going to survive financially? And the
• 21:16
  Speaker 2: funny thing is that if you look at the data now,
• 21:18
  Speaker 2: it actually shows that in many respects, millennials are better
• 21:22
  Speaker 2: off than their parents the boomers were at the same
• 21:25
  Speaker 2: time in their respective lives. And so, like you just
• 21:31
  Speaker 2: I'm a big believer in every generation has its own
• 21:34
  Speaker 2: unique challenges that they face. Economically, They're like, it's it's
• 21:39
  Speaker 2: impossible to have any situation that's perfect. But to say, oh, like,
• 21:45
  Speaker 2: it's definitely harder for this generation to do. No, Like,
• 21:49
  Speaker 2: there's pros and cons on all of this, And yes,
• 21:52
  Speaker 2: for certain people within a generation because of their job,
• 21:55
  Speaker 2: their salary, the way that their retirement plan works, like
• 21:57
  Speaker 2: all different things that individuals could possibly be disadvantaged or advantaged.
• 22:02
  Speaker 2: But overall, I don't believe that any generation inherently has
• 22:06
  Speaker 2: it easier or harder than others when it comes to
• 22:10
  Speaker 2: securing a safe retirement for themselves. That like, one of
• 22:15
  Speaker 2: the points this makes it's like, oh, like the you know,
• 22:17
  Speaker 2: the the demise of the pension plan is you know
• 22:21
  Speaker 2: a huge thing. Well what about some of the pensions
• 22:24
  Speaker 2: that you know ended up, you know, going bust and
• 22:27
  Speaker 2: having to renegotiate with their pensioners that are out there?
• 22:30
  Speaker 2: I mean, like those are things that you saw, what
• 22:33
  Speaker 2: you know, you go back through you know retirees who
• 22:37
  Speaker 2: again like different generation, but the greatest generation retired right
• 22:42
  Speaker 2: into the tech bubble. Does that mean like they had
• 22:45
  Speaker 2: a harder time saving for retirement than ever? Not like
• 22:48
  Speaker 2: it was just different. They they had a different experience,
• 22:52
  Speaker 2: you know, the Baby Boomers that are retiring right now.
• 22:57
  Speaker 2: I don't know, Like this piece is all about like
• 23:00
  Speaker 2: how easy it is for gen X compared to boomers.
• 23:03
  Speaker 2: Boomers are retiring into a downturn, and who knows if
• 23:07
  Speaker 2: it turns into a recession, like this turns tomorrow. So
• 23:12
  Speaker 2: I guess I look at this and yeah, there are
• 23:15
  Speaker 2: some unique challenges that gen X faces, but every generation
• 23:19
  Speaker 2: has those unique challenges and just being like, well gen
• 23:22
  Speaker 2: X has it harder than everyone else. I've heard about
• 23:27
  Speaker 2: the millennials before, and they're fine.
• 23:30
  Speaker 3: In one sense, They've faced a much more severe headwind
• 23:34
  Speaker 3: in that sense is average wages before after inflation have
• 23:38
  Speaker 3: grown a lot slower than the stock market. So it's
• 23:41
  Speaker 3: more expensive to buy your own retirement today than it
• 23:45
  Speaker 3: was if you'd been born a generation or two before. Sure,
• 23:49
  Speaker 3: so in that sense it is tougher. In another sense, though,
• 23:52
  Speaker 3: if a millennial like you had started saving as you did.
• 23:57
  Speaker 2: Why'd you say that so derisively?
• 24:00
  Speaker 3: Because I wondering I want to reference him personally, or
• 24:03
  Speaker 3: is it more effective to just say a millennial? Yeah,
• 24:06
  Speaker 3: I don't know why it came out that.
• 24:08
  Speaker 2: Way, came out like you were saying as if it
• 24:12
  Speaker 2: I admit it.
• 24:12
  Speaker 3: I don't know why I need to think about the
• 24:15
  Speaker 3: way I'm feeling about millennials.
• 24:16
  Speaker 2: I guess I appreciate it. I'm sort of.
• 24:18
  Speaker 3: Sympathetic with the idea behind this article. I think they
• 24:22
  Speaker 3: could do a better job of explaining why everything has
• 24:25
  Speaker 3: grown faster than wages, home prices, stocks, all inflation has
• 24:32
  Speaker 3: almost grown faster real I'm using average hourly earnings here
• 24:36
  Speaker 3: for non manufacturing since two thousand, The real growth there
• 24:39
  Speaker 3: has been about a half a percent. That's much less.
• 24:43
  Speaker 3: I don't have it in front of me because the
• 24:44
  Speaker 3: series doesn't go back that far, but that's much less
• 24:46
  Speaker 3: than previous cohorts. So in a way, they do have
• 24:49
  Speaker 3: you millennials do have it harder. Was that as sneering, Yes,
• 24:54
  Speaker 3: I have trouble looking at you and saying, here's the
• 24:56
  Speaker 3: millennial generation in front of me, you and Tuck, because
• 25:00
  Speaker 3: everybody's experience is different. But anyway, Chuck, I guess my
• 25:02
  Speaker 3: point is, in some ways they're absolutely right. It's more
• 25:04
  Speaker 3: expensive now to fund your own retirement than it's ever been.
• 25:07
  Speaker 3: In other ways, though, that's a dumb statement because the
• 25:09
  Speaker 3: so called greatest generation born nineteen in the nineteen tens
• 25:13
  Speaker 3: or nineteen twenties fought in World War Two. My grandfather,
• 25:15
  Speaker 3: for example, lived to sixty four, had a pension. You
• 25:19
  Speaker 3: didn't have to think about funding his own retirement. And
• 25:21
  Speaker 3: you already made this point. So the challenges are different.
• 25:24
  Speaker 3: It's really hard to compare cohorts, particularly as you get
• 25:28
  Speaker 3: more distant in in time.
• 25:30
  Speaker 2: Here's the big thing is every single individual out there
• 25:33
  Speaker 2: is facing their own unique challenges when it comes to
• 25:36
  Speaker 2: saving for retirement. The Armstrong Advisory Group has a guide
• 25:40
  Speaker 2: available this month. It's titled what can a Financial Advisor
• 25:44
  Speaker 2: Do for Me? Because not everyone is the same. There
• 25:47
  Speaker 2: are plenty of baby boomers who were saying, Hey, I
• 25:50
  Speaker 2: didn't have it that easy, and I'm still trying to
• 25:52
  Speaker 2: figure out how to retire. This guide is all about
• 25:55
  Speaker 2: how regardless of who you are, there are some value
• 25:59
  Speaker 2: things that you can get from financial advisors to help
• 26:02
  Speaker 2: guide you on your retirement path. How do you request
• 26:06
  Speaker 2: the guide Call eight hundred three nine three for zero
• 26:11
  Speaker 2: zero one. Again, it's titled what can a Financial Advisor
• 26:14
  Speaker 2: do for Me? If you've got questions about can I retire?
• 26:18
  Speaker 2: Is there a path for me to retire? This is
• 26:21
  Speaker 2: the guy that can show you how an advisor can
• 26:22
  Speaker 2: help you there. The guide is titled what can a
• 26:25
  Speaker 2: Financial Advisor Do for Me? And you can request it
• 26:28
  Speaker 2: by calling eight hundred three nine three for zero zero one.
• 26:32
  Speaker 2: That number one last time is eight hundred three nine
• 26:36
  Speaker 2: three for zero zero one.
• 26:38
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 26:41
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 26:43
  Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
• 26:47
  Speaker 1: your own financial, tax into state planning advisors before making
• 26:49
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 26:52
  Speaker 1: advisory services.
• 26:54
  Speaker 2: Mark I want to touch a little bit on what
• 26:56
  Speaker 2: we are seeing from airlines here Delta earlier this week.
• 27:02
  Speaker 2: I'll give the quote from his from their CEO, we
• 27:06
  Speaker 2: just went through a little bit of a parade of horribles,
• 27:09
  Speaker 2: which is not really something that you want to hear
• 27:11
  Speaker 2: from an airline CEO. Because airlines have they've got a
• 27:15
  Speaker 2: few problems when it comes to managing their business. The
• 27:18
  Speaker 2: first is they have massive fixed costs. Mark you ever
• 27:21
  Speaker 2: buy an airplane.
• 27:23
  Speaker 3: Like a model airplane, you buy an airportledge, No.
• 27:27
  Speaker 2: Because you don't just have like ninety million dollars just
• 27:29
  Speaker 2: sitting around to buy.
• 27:30
  Speaker 3: Where'd you park it?
• 27:31
  Speaker 2: Wherever you want? It's an airplane.
• 27:33
  Speaker 3: We got a garage downstairs.
• 27:34
  Speaker 2: Yeah, it's no big deal, you know, shook clear. Yeah
• 27:39
  Speaker 2: it'll be fine, Like it'll be a little tight, but
• 27:40
  Speaker 2: you can get just don't take it down storrow and
• 27:42
  Speaker 2: it'll be okay.
• 27:44
  Speaker 3: So sorry, I'm late. I had a dog fight.
• 27:47
  Speaker 2: Okay, well played. So you've got huge costs associated with
• 27:54
  Speaker 2: just buying you know the stuff. Most air airlines don't
• 27:57
  Speaker 2: buy their planes a lot of times they're leasing them,
• 27:59
  Speaker 2: but they're still huge costs associated with that. You have
• 28:01
  Speaker 2: massive fixed costs associated with the gate space that you
• 28:06
  Speaker 2: need at airports. And this is before you even get
• 28:09
  Speaker 2: to entirely unionized workforces that you can't really downsize easily
• 28:13
  Speaker 2: in the event that you see a marginal drop in demand,
• 28:15
  Speaker 2: which leads to a huge drop in profit. Which is
• 28:18
  Speaker 2: why typically historically airlines in the United States, despite being
• 28:22
  Speaker 2: technological marvels, quite honestly, they are one of like the
• 28:26
  Speaker 2: three biggest industries that just burns, just lights money on
• 28:29
  Speaker 2: fire and burns it over the last seventy eighty years,
• 28:32
  Speaker 2: Like you go through airline bankruptcies and the list is
• 28:35
  Speaker 2: just massive because they just require so much capital. It's
• 28:39
  Speaker 2: it's basically them, Auto manufacturers and anything related to fashion
• 28:44
  Speaker 2: are like my three. Those are the three businesses I
• 28:48
  Speaker 2: be least likely.
• 28:50
  Speaker 3: I don't want to get sidetracked, but yeah, what about it?
• 28:53
  Speaker 3: What do you mean, Like, why is that the margins
• 28:56
  Speaker 3: are cost.
• 28:57
  Speaker 2: It's not a fixed cost thing, it's just the margins
• 28:58
  Speaker 2: are bad. The capital require ronments are significant, and things
• 29:01
  Speaker 2: go out of favor so quickly that you can be
• 29:03
  Speaker 2: out of business like two years after your mine on
• 29:05
  Speaker 2: cloud nine pun intended. So you've got airlines that are
• 29:08
  Speaker 2: starting to cut forecasts, and they're saying, look, it's it's
• 29:11
  Speaker 2: not just one thing. We've got reductions in government spending,
• 29:15
  Speaker 2: in corporate spending, and in consumer spending that are hitting here,
• 29:20
  Speaker 2: and it's unclear how far that is going to go.
• 29:24
  Speaker 2: They are guiding that some of the international stuff is,
• 29:27
  Speaker 2: you know, holding up a little bit better at this point.
• 29:30
  Speaker 2: But one of the questions that the University of Michigan
• 29:34
  Speaker 2: asks during any of the surveys they do on a
• 29:38
  Speaker 2: monthly basis about consumer confidences, Hey, what's the likelihood of
• 29:41
  Speaker 2: you traveling overseas in I think it's the next six months.
• 29:45
  Speaker 2: And the number was basically cut in half from like
• 29:48
  Speaker 2: forty five percent of Americans to like twenty eight I
• 29:51
  Speaker 2: think in the last month. And so there are signs
• 29:55
  Speaker 2: out there that, remember, the US economy is powered by
• 29:59
  Speaker 2: conc zomer spending. You've had a weak retail sales report,
• 30:03
  Speaker 2: you get airlines now saying hey, there's something going on here,
• 30:06
  Speaker 2: and you start to get a few things adding up.
• 30:09
  Speaker 2: And what I will tell you is if consumer spending
• 30:12
  Speaker 2: starts to falter along with a week start to the
• 30:15
  Speaker 2: housing market this year, and you know, AI starting to
• 30:19
  Speaker 2: show signs of topping out. As far as you know
• 30:21
  Speaker 2: growth rates and things like that, the question that you
• 30:23
  Speaker 2: got to be asking is where does the growth come
• 30:25
  Speaker 2: from in the US economy. Then if those engines aren't
• 30:27
  Speaker 2: moving and you're starting to get a few early warning
• 30:31
  Speaker 2: signals that are out there.
• 30:32
  Speaker 3: Yeah, recessions are hard to predict. Like we talked about
• 30:35
  Speaker 3: it earlier today.
• 30:36
  Speaker 2: This could go away two months from now and be
• 30:37
  Speaker 2: just a wiggle.
• 30:38
  Speaker 3: It does seem like though, if there were If you
• 30:43
  Speaker 3: were trying to induce a recession, one way to do
• 30:45
  Speaker 3: it might be some of the policy uncertainty that's being
• 30:50
  Speaker 3: injected into people's calculations right now could be. I mean,
• 30:54
  Speaker 3: if if you want to press your luck, freak people out.
• 30:57
  Speaker 2: Take a quick break here. When we come back, we'll
• 31:00
  Speaker 2: do a little bit of stack roulette right after this.
• 31:03
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• 32:04
  Speaker 2: Mark, what do you have for me?
• 32:05
  Speaker 3: For stack rou left Well, Chuck, this is normally a
• 32:08
  Speaker 3: lighthearted segment, so naturally I'm going to talk about the
• 32:11
  Speaker 3: whimsical subject of median CPI because we talked about it.
• 32:14
  Speaker 2: Oh, I can't wait.
• 32:20
  Speaker 3: You talked earlier in the show about how headline headline,
• 32:24
  Speaker 3: My god, your eyes rolled into the back of your
• 32:26
  Speaker 3: head when you did that. That's really unsettling, to be honest. Okay,
• 32:32
  Speaker 3: I'm going to try to center myself here. We talked
• 32:35
  Speaker 3: earlier in the show about how headline and even ex
• 32:37
  Speaker 3: food and energy so called core inflation, can be a
• 32:40
  Speaker 3: little bit misleading. They can seal what might really be
• 32:43
  Speaker 3: going on. They mask sometimes the trend in inflation. There
• 32:46
  Speaker 3: are other ways of getting it what's really going on
• 32:48
  Speaker 3: in inflation. FED follows these closely, though sadly it doesn't
• 32:52
  Speaker 3: target them. One is the median the price in the
• 32:55
  Speaker 3: middle literally and last month median CPI came in at
• 32:59
  Speaker 3: point three per month over month versus point two percent
• 33:02
  Speaker 3: for the more traditional measures that we talked about, median
• 33:05
  Speaker 3: CPI and other measures that try to get at the
• 33:07
  Speaker 3: same thing filtering outliers. Sure, kay, they've been stuck at
• 33:11
  Speaker 3: this point three percent, which is almost four percent annualized.
• 33:14
  Speaker 3: I'm doing a little bit of rounding up a few texts.
• 33:16
  Speaker 3: But you know, Chuck, we're not at two percent, is
• 33:18
  Speaker 3: my point. We're not even sniffing it based on.
• 33:20
  Speaker 2: We're in a three to three and a half percent inflation.
• 33:22
  Speaker 3: Now, I can personally live with that. You've said this
• 33:24
  Speaker 3: a bunch of times. Two percent feels like it's a
• 33:26
  Speaker 3: little bit arbitrary, even though.
• 33:28
  Speaker 2: We've never averaged it. In the long run, it's it's
• 33:30
  Speaker 2: not even realistic.
• 33:31
  Speaker 3: I'll make the arguments, so maybe a rain should be
• 33:35
  Speaker 3: what the FED targets. Ultimately we can argue about that
• 33:39
  Speaker 3: or more specialized people.
• 33:40
  Speaker 2: Can infiflation should be like pornography. You know it when
• 33:44
  Speaker 2: you see it. Yeah, okay, you know you know it's
• 33:48
  Speaker 2: too high when you see it. That's what it is.
• 33:51
  Speaker 2: That that was I forget what the Supreme Court case
• 33:54
  Speaker 2: was that that basically laid that out like.
• 33:56
  Speaker 3: Potter Stewart I think said it. I don't know what
• 33:58
  Speaker 3: case the case.
• 33:59
  Speaker 2: It ended up being in a Supreme Court case like
• 34:01
  Speaker 2: he was the just hey, like this is like we
• 34:04
  Speaker 2: don't really have a bright line here, but you know what,
• 34:06
  Speaker 2: when you see it is more or less it.
• 34:08
  Speaker 3: It's the same with high and way rising. You have
• 34:10
  Speaker 3: a problem, that's right, you know what, Yes, whether it's.
• 34:13
  Speaker 2: Two percent or two and a half or three like,
• 34:15
  Speaker 2: who cares? The specifics don't matter. It's just, hey, you
• 34:20
  Speaker 2: know it when you see it, and right now it
• 34:24
  Speaker 2: still is higher than you'd like to see.
• 34:25
  Speaker 3: So when it's not just background noise, the FED and
• 34:28
  Speaker 3: elected officials also, as we learned in the last election cycle,
• 34:31
  Speaker 3: have a problem. And I submit, and this is not
• 34:34
  Speaker 3: my assertion or even observation. Plenty of researchers feel this way.
• 34:38
  Speaker 3: Underlying inflation remains too high for the FED to seriously
• 34:40
  Speaker 3: cut absent are really absent strong evidence the economy is
• 34:45
  Speaker 3: actually going into or in recession, preemptive cuts for reasons
• 34:49
  Speaker 3: we've been talking about all morning long about the unpredictability
• 34:52
  Speaker 3: of recessions, risk a breakout of inflation.
• 34:56
  Speaker 2: Yeah, yeah, it's look, I've said this before. Hey, if
• 34:59
  Speaker 2: the energy prices falling that we saw last year reverse
• 35:03
  Speaker 2: and for some reason increase all of a sudden, you're
• 35:06
  Speaker 2: not talking about three to three and a half percent
• 35:08
  Speaker 2: inflation now, you're talking about inflation going to five.
• 35:11
  Speaker 3: That's what happened in the seventies.
• 35:12
  Speaker 2: And this is the potential issue out there now. Based
• 35:15
  Speaker 2: on everything we're seeing as far as supplying demand on energy,
• 35:17
  Speaker 2: it doesn't seem like we're heading in that direction. It
• 35:20
  Speaker 2: seems it could be food.
• 35:21
  Speaker 3: It could be supply chains because I sure could be
• 35:25
  Speaker 3: taped tariffs or something.
• 35:27
  Speaker 2: It could be a supply chain disruption because of tariffs. Right,
• 35:30
  Speaker 2: you could absolutely see something like that. I am gonna
• 35:33
  Speaker 2: go I'm gonna do something a little more whimsical if
• 35:35
  Speaker 2: it's okay, I don't know if you could top that,
• 35:37
  Speaker 2: but okay, McDonald's revamping their ranks to speed burger breakthroughs.
• 35:44
  Speaker 2: Tucker what do you think of when you think about
• 35:45
  Speaker 2: like a burger breakthrough.
• 35:49
  Speaker 5: I don't know, firing down a conveyor belt of some
• 35:51
  Speaker 5: sorts and out the window into customers hands.
• 35:54
  Speaker 2: I'll quote here from the Wall Street Journal. The burger
• 35:56
  Speaker 2: Giant is shaking up its operations and development ranks as
• 35:59
  Speaker 2: it seeks to get new menu items and technology to
• 36:01
  Speaker 2: restaurants more quickly. Recent efforts to develop new sandwiches, including
• 36:05
  Speaker 2: a year's long process to upgrade McDonald's signature burgers, have
• 36:08
  Speaker 2: taken too long, said Chief executive Chris Kemzinski. So there's
• 36:13
  Speaker 2: actually a really interesting story here. At first, you're like
• 36:15
  Speaker 2: burger development, like what are we talking about. The thing
• 36:18
  Speaker 2: that you have to realize about McDonald's is they're not
• 36:21
  Speaker 2: actually a food company. They're a logistics company. And the
• 36:27
  Speaker 2: whole premise of McDonald's is that no matter where you
• 36:32
  Speaker 2: go in the world, you are going to get the
• 36:36
  Speaker 2: same big Mac that you got elsewhere, and they do
• 36:41
  Speaker 2: it through fantastic logistics and rollout of basically everything that
• 36:47
  Speaker 2: they do. And so on one hand, you look at
• 36:49
  Speaker 2: this and you're like, like, burger breakthroughs, what are we
• 36:51
  Speaker 2: talking about there? And basically what they're talking about is
• 36:54
  Speaker 2: how can we get something that is better and cheaper
• 36:58
  Speaker 2: out to people at the same level of consistency, which
• 37:01
  Speaker 2: is a huge it's a huge undertaking because I mean, look,
• 37:06
  Speaker 2: I'll go, let's say that I have pasta twice this
• 37:09
  Speaker 2: week at my own house. The exact consistency of the
• 37:12
  Speaker 2: pasta is not the same, and I'm cooking for four
• 37:15
  Speaker 2: of us and I can't get it perfectly outdente every time. Now,
• 37:19
  Speaker 2: part of this is because I'm using different noodles and
• 37:21
  Speaker 2: different types. You know, I got the far following. Do
• 37:24
  Speaker 2: I salt the water? Do I salt the water? He asks,
• 37:28
  Speaker 2: as if I'm not a real Italian? My goodness, there's
• 37:32
  Speaker 2: a pepper shortage, you know. Oh, in any case, this
• 37:36
  Speaker 2: I know that people like to, you know, sometimes rip
• 37:39
  Speaker 2: on McDonald's and this, and that I think that what
• 37:42
  Speaker 2: they do is miraculous because any McDonald's franchise that you
• 37:45
  Speaker 2: go to anywhere, you get the exact same thing, the consistency.
• 37:49
  Speaker 2: And I just think that there's actually a lot of
• 37:53
  Speaker 2: meat here quite honestly, when we're talking about these improvements
• 37:56
  Speaker 2: and if they can do things to speed that up. Yeah,
• 37:59
  Speaker 2: I think putting a better product on the table and
• 38:01
  Speaker 2: helping to get costs down and doing so. Yeah, that's
• 38:04
  Speaker 2: the whole ball game for them. So I looked at
• 38:07
  Speaker 2: the headline here, and I was like, what are we
• 38:09
  Speaker 2: talking about here? Is this like can you quantum burger
• 38:11
  Speaker 2: build a bun out of pickles or something? No, like
• 38:15
  Speaker 2: this is actually there's there's something here not just quantum burgers.
• 38:18
  Speaker 2: Let's take a quick break for the rest of the day.
• 38:21
  Speaker 2: Tomorrow we're back. We got producer price index and weekly
• 38:23
  Speaker 2: jobless claims. Tomorrow we'll recap that all on our Thursday show.