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Why is it getting harder to break into the Middle Class? · The Financial Exchange Show

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by Veterans Development Corporation. This is the Financial Exchange with
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Speaker 2: Chuck, Mike and Tucker with you here.
1:18
Speaker 3: And as we get into the second hour of the program,
1:20
we've got stocks still very slightly positive, but well off
1:24
their highs from earlier in the day. The S and
1:27
P five hundred did hit a new all time intra
1:29
day high of fifty eight seventy five, but sits right
1:32
now at fifty eight to forty six, up just three
1:34
points rather than the thirty two it was up earlier
1:37
in the day. We got the Dow up sixty six
1:39
points about zero point one five percent, and the NASDAK
1:43
up twenty nine points point one six percent. The Nasdaq
1:46
at eighteen three ninety seven right now, but had been
1:49
assist eighteen five thirty seven, so giving up about one
1:51
hundred and fifty points of gains and now getting you know,
1:55
closer to flat on the day. Ten year Treasury selling
1:58
off a bit up to four point one percent, up
2:01
eight bases points, and we've got oil up twenty four
2:04
cents a barrel to seventy sixty two as it continues
2:06
to flutter around that seventy dollars per barrel mark, gas
2:10
prices nationally resuming their downward move, down eight tens of
2:13
a cent to three nineteen and six tenths so back
2:16
below three twenty. We'll see if there's any momentum in
2:19
that direction now that oil prices are back around seventy
2:21
instead of hanging out closer to seventy three to seventy
2:25
five as they were, and gold up twenty dollars and
2:27
ten cents an ounce to twenty seven to eleven and
2:30
forty cents, also a new all time high for gold
2:34
today that is holding its gains better than we're seeing
2:38
in equity markets right now, Mike, anything catching your.
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Speaker 2: Eye, no, sir?
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Speaker 3: All right, let's talk about this piece from the blooming Berg.
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Then it's titled The Math says it's getting harder to
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break into the American middle class, and specifically it's talking about,
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you know, some of the milestones that people typically thought
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of in terms of, hey, a middle class family should
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be able to afford this, things like cars, homes, vacations,
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those types of things.
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Speaker 2: And let's let's dig into it. What are we.
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Speaker 3: Seeing, Mike, in terms of, you know, is it actually
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becoming harder for the middle class to afford these things.
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Speaker 4: I think pretty clearly on the housing side, it's a
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very compelling argument, at least.
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Speaker 2: To start one hundred percent.
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Speaker 4: August of twenty sixteen, the median single family home was
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going for two hundred and forty two thousand dollars. Today
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it's four hundred and twenty two thousand dollars.
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Speaker 5: Now, you could look.
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Speaker 4: At that and obviously you know, massive price increase, but
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they do it in an interesting way, which is, Okay, well,
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if I need to come up with a down payment,
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how long is it going to take me to do that.
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The standard twenty percent down payment on a medium priced
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home now costs eighty three percent of a year's income
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for the you know, typical family. That's up from sixty
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five percent back in twenty sixteen. So, whether you look
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at it from purely a dollars perspective and inflation adjusted perspective,
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or even compare it to hey, how is my wage
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kept up with the price of housing, the clear answer
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is Americans have fallen behind in almost every way you
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can measure of somebody getting into a new home in
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twenty twenty four compared to twenty sixteen, and I think
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that's probably the one that is most relatable for people
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out there, and probably also expresses a large degree of
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the frustration out there, because few things out there are
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more connected to the American dream than buying a home.
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I'm trying to think of what else would be there.
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I mean, maybe a college or post high school education
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is another part of that American dream, but not to
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me in the same way that housing is.
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Speaker 3: Let's talk a little bit about the car side of things,
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just because I do think this is one where there's
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some meat on the bone in the other direction. According
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to data from Cox Automotive in August of twenty sixteen,
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the average monthly car payment then was four hundred and
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seventy eight dollars a month and eighty five cents. By
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August of twenty twenty four, it was seven hundred and
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thirty seven dollars and two cents. And you know, this
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is used as an illustration of Hey, like cars are
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becoming unaffordable, and I think that that's just because as Americans.
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Speaker 2: Two things are true.
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Speaker 3: The first is the Americans that buy and large buy
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new cars do tend to be wealthier.
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Speaker 2: To begin with. Yep, like it's it's if you will
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get the data.
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Speaker 3: That's just what we see, and as a result, they
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don't choose the economical options that are out there. And
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I went to Ford's website just as an example, just
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because I wanted to pull it up. Remember, the average
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transaction price for a new vehicle these days is like
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forty eight thousand dollars, which would make you think like, hey,
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like I guess like there's just really expensive stuff available.
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You go to Ford's website and just in the SUV's
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and cars page, two different models available, the Escape and
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Bronco below thirty thousand dollars. Now you have to get
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the base model. But Mike, is there anything wrong with
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the base model?
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Speaker 4: No, my first car was stick shift with roller w Yeah,
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exactly exactly.
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Speaker 3: I'd like it till year old hand me down minivan,
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you know, like it was. It was fine, It was great.
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Speaker 2: Actually.
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Speaker 3: On the truck side of things, even if you want
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F one fifty, you can get a base model for
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thirty seven thousand if you're content with a Ranger, a
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Maverick thirty two twenty three thousand, respectively. So there are
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cheaper vehicles available. You go to let's let's take a
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look at Honda, just as an example, if you go
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to their website and say, okay, what's available if you
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wanted to go buy a Honda. Fords aren't your things
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you're looking for a Honda, Okay. The HRV starts at
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twenty five, The CRV starts at thirty for cars, the
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Civic starts at twenty four, the Accords at twenty eight.
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The Accord hybrid even if you're saying, hey, I want
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to get some better gas miled, you're at thirty three.
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Sure it doesn't have the panoramic moon roof in the
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you know sut well, then forget about it, chuck. It
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doesn't have the seats that you know, massage you while
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you're driving, which I'm sure is probably not like the
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safest thing.
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Speaker 2: Maybe it's not that good of a massage, I guess.
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Speaker 3: But look, all I'm trying to say is on the
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car piece. The reason why that car payment, that average
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car payment is up isn't because there aren't cheaper vehicles
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available to because Americans are choosing the more expensive ones.
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And that's on us, not on the economy. Like, if
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you're choosing to make that payment, you're saying, I can
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do this.
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Speaker 4: Yeah, the car purchase scenarios in the United States is
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just it's stupid, and I don't think it tells you
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much about the unaffordability of the American economy. The cars
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that people are driving these days are far nicer, far
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higher quality than they were before and costly for a reason,
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and we're driving that. There's a reason that Ford decided
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not to sell sedans anymore, and it's not because they
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thought they were JUNKI cars. It's because all of us
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refused to buy them. So I'm not going to really
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go on that side of things. I think on the
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other two areas that they talk about again, I find
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these interesting. Childcare was unaffordable in twenty sixteen, remains very
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unaffordable even more so today, and is a legitimate problem
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that I don't think has much to do with choice
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type decisions other than you know, we have dual working
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households a lot more commonly today than we did sixty
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years ago, and I don't really have a market based
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solution to that problem there.
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Speaker 3: So here's one thing that like when when we look
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at a couple pieces of data here, and I'm just
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gonna look at that childcare one as an example. So
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the childcare cost again, you noted it was unaffordable in
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twenty sixteen. The prices are up about fifty percent over that.
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Speaker 2: Eight year period that we're looking at.
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Speaker 3: If you look at wage growth over the same time,
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and again, like, this is the other thing that I
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find kind of bothersome about this piece is it shows
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the price growth without showing the wage growth, right, and
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so yeah, like if you were still making the exact
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same money you were making in twenty sixteen, Okay, Like
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that's you're like, yeah, this is a real problem. But
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here's the thing.
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Speaker 2: If you look at wage growth over that time.
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Speaker 3: I'm just trying to get the exact numbers, and I
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don't have them yet, but I do know that over
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the previous three years we were around twenty percent. And
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even if we just look at you know, the historical
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average I think is like three and a half. So
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even if we just apply that average wage growth over
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that you know, sixteen seventeen, eighteen nineteen period, and I'll
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throw in twenty because again we were looking twenty one
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through twenty three, you're talking about another fifteen percent and
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change on top of that. So, yeah, the cost of
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daycare went up fifty percent, wages went up call it
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thirty five to thirty seven. So, yes, it has gotten
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more expensive. But it's not like you're sitting there saying,
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my wages haven't gone up at all since twenty sixteen
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in most cases.
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Speaker 4: Yeah, So I just ran a quick number from UH
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from the Saint Louis FED. I'm seeing through twenty twenty three,
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wages up about thirty six and a half percent since
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twenty sixty.
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Speaker 3: Thing I was right on, So thank you exactly. So, yes,
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you can make a case on childcare. Hey, in real terms,
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it's gotten like fifteen percent more expensive.
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Speaker 5: But not fifty percent more expensive.
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Speaker 3: Correct, So I'm not saying that that's good, like it's
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still bad, but this is something where you have to
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provide the context because again, wages have gone up over
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that time too. And so I think the place is
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where Americans are looking at it and saying, hey, this
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is the problem. Yeah, homes, childcare, college, healthcare. I think
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those are very reasonable places where the cost of all
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those has dramatically outstripped wages.
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Speaker 2: Real problem the.
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Speaker 3: Auto side of things, we make some bad choices, and
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on the vacation side of things, the biggest complaint that
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I hear is that like everything's just so much more
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crowded than it used to be.
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Speaker 2: But that's because there's more people.
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Speaker 3: Like you can't you can't simultaneously be like, hey, we're
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not having enough babies and then complain when Disney World's
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too crowded.
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Speaker 5: College.
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Speaker 4: I will just spend a moment, you know, going back
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the inflation that we've seen on college expenses, what's it
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average like seven percent.
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Speaker 5: A year over the last few decades.
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Speaker 2: It's been hot.
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Speaker 4: That also is a lot of choice playing into it, right, Like,
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there are tremendously affordable community colleges and state universities and
11:25
of people today. And again, the reason that Harvard and
11:29
Boston College and Boston University get to charge seventy eighty
11:33
ninety thousand dollars a year intuition is very simply because
11:36
we choose to go there one hundred percent.
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Speaker 3: Just take a quick break here when we come back,
11:40
joined by Mark Hamrick from bank Rate, talking about Americans
11:43
and their top economic issues for the twenty twenty four election.
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Speaker 4: Joining us now is Mark Hamrick from bank Rate. They've
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done a survey on the top economic issues for the
12:46
upcoming election. Mark, thanks for joining us. Appreciate it.
12:49
Speaker 7: Good to be with you, gentlemen. You were on a
12:51
roll there before the break. If I should be interrupted,
12:54
maybe you need a coffee break, a refuel.
12:57
Speaker 2: But it's all good well Mark.
12:59
Speaker 4: We're heading in to, as far as I can tell,
13:02
one of the closest elections in recent history. Here betting
13:06
markets have this thing in a dead heat. Donald Trump
13:10
slightly favored on sites like predict It according to five thirty.
13:14
Speaker 5: Eight polling averages.
13:15
Speaker 4: You've got Harris slightly ahead on national polls, but all
13:18
of the almost all of the swing states in a
13:20
dead heat as well. So one of the closest in
13:23
terms of those being polled in recent history. As always,
13:27
Americans very focused on the economy as we head into
13:30
election season, and given that seems to be an immense
13:33
amount of concern about inflation. What did your survey find
13:36
regarding Americans views on inflation right now?
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Speaker 7: Yeah, So we asked Americans to pick their top three
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economic issues from a list, and inflation comes in a
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number one from forty one percent of the participants. I
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think though, that it really bears closer examination when we
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dig beneath the surface, because indicative of these divided times
14:00
that you're talking about there, with the potential closeness of
14:05
essentially you know, when we get a result the day
14:08
after election day or do we have to wait a while.
14:10
If you go down the list, it's twenty eight percent
14:13
of Democrats putting inflation up there, twice as many among Republicans.
14:17
And then you go to the second and third issues overall,
14:21
which is related to some of the things you were
14:23
talking about before the break. Number two is healthcare costs.
14:26
Number three is the affordability or lack thereof, of housing.
14:31
You go to the Republican side. Interestingly enough, inflation, as
14:35
I mentioned, is more elevated than it is for the
14:39
broader population as a whole. A government spending Interestingly enough
14:44
is number two, which just is a bit of a
14:48
conundrum to me, given the fact that Donald Trump is
14:50
not the spokesman for fiscal responsibility, and then healthcare cost
14:55
being number three. So interesting times in which we live.
14:59
I'd also add that when we asked whether the economy
15:02
is going in the right direction, essentially Democrats said yes
15:06
and Republicans four out of five Republicans said no.
15:10
Speaker 4: Part of Harris's recent campaign has been trying to separate
15:13
herself a little bit from the Biden administration. She attempted
15:16
that with her Fox News interview recently, where do Americans
15:20
view favorability in terms of the economy Trump versus Harris?
15:25
Speaker 7: When you pulled them, yeah, it's a narrow gap, but
15:28
Trump wins in all three of the categories that we isolated,
15:33
which were the personal financial situation, which candidates best for that,
15:37
the economy and inflation. The average is about four points.
15:41
But what I would note, and I think this gets
15:43
related to something that's critical as we try to figure
15:46
out how all this turns out, is I think there
15:48
are still, believe it or not, a fair number of
15:51
people who are potentially persuadable on this question, which is
15:55
all about why the interviews are being done. So for example,
15:58
on the economy, seven percent said neither candidate, an eight
16:02
percent said don't know. That goes up to twenty one
16:05
percent in the total of neither and don't know on
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the personal financial situation. So you know, not trying to
16:13
give anybody sort of, you know, a gimme on a
16:16
putt or an extra shot on the golf course here.
16:20
But obviously Harris didn't know she was going to be
16:23
in this position until you know that happened, right, and
16:27
so you know, part of the process probably should acknowledge that,
16:31
you know, you're putting a campaign together essentially on the fly.
16:34
But we're obviously past that point now. And obviously two
16:37
both of these candidates are spending more and more time
16:41
with media sources to try to amplify their messages.
16:46
Speaker 4: Mark, you have a lot of different data here generation
16:49
wise in demographics, and you know that's important in terms
16:52
of propensity to vote, right, who's most likely to show
16:55
up this election? And historically it's been older Americans more
16:58
likely to vote than their younger counterparts.
17:00
Speaker 5: How do views diverge on that piece.
17:02
Speaker 4: Of the economy and inflation when you look at baby
17:04
boomers compared to millennials and Gen z ers for example.
17:08
Speaker 7: Yeah, well, you know, we just think about how these
17:10
issues affect people differently, right in the sense of we're
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all in a different station of our life and financial journey,
17:19
and so what might be of concern to me as
17:22
someone who's been you know, in the cohort that would
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have qualified for ARP membership for many years, as opposed
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to someone who's early in their career trajectories. It's about aspirations,
17:35
it's about needing to accomplish our financial goals. And so
17:38
if one's older, you're more concerned about health care costs
17:41
and prescription drugs because you need them, right, you're utilizing
17:45
those products. If you're younger, you're you are concerned about
17:48
those affordability issues such as healthcare costs, affordable housing of
17:53
the job market, and that's sort of the way it
17:58
breaks down. You know, as a candid date, they need
18:00
to address these issues broadly. And I would say, I think,
18:06
you know, it's easy to be a critic here sitting
18:11
on the sidelines, but I do feel as if the
18:14
level of thorough and serious discussion about, for example, the
18:18
inflation question has been you know, zero right now. The
18:22
other part of that is the president doesn't have a
18:25
lever in the Oval office to turn inflation off. So
18:28
there's both disingenuousness on that you know, oh, oh, we're going.
18:32
Speaker 1: To fix it.
18:33
Speaker 7: Both of the candidates have basically said that I don't
18:36
like this discussion about so called greedy corporations or price gouging.
18:40
That's not the primary reason that we've had inflation. And
18:43
certainly tariffs and mass deportations on the Republican side and
18:47
up to maybe seven to ten trillion dollars in government
18:50
spending on the Republican side, that's not going to help
18:53
inflation either. So I feel like the American public is
18:56
either not being talked with or being talked down to,
19:01
broadly speaking, and then it's up for Americans to decide
19:05
which box they're going to check off there.
19:07
Speaker 4: Mark Hamrick from bankret joining us for their recent survey
19:10
on Americans top economic issues heading into that twenty twenty
19:13
four election. Marks, thanks so much for joining us. Really
19:16
good piece and I enjoyed talking to you today.
19:18
Speaker 2: Always a pleasure.
19:19
Speaker 7: Thanks for having.
19:33
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Speaker 3: Mike, I had an interesting realization this morning. Did you
20:00
I did. I'm too stupid to understand the tax code anymore.
20:07
Speaker 4: I've been saying this to a lot of people recently,
20:09
but it almost seems as though Congress keeps writing rules
20:13
for the explicit purpose of keeping people like me employed.
20:19
Speaker 3: Let me put on my my it's so complicated.
20:23
Speaker 2: Let me put on my tax code hat here.
20:25
Speaker 3: Okay, So for twenty twenty five, here's what you can do.
20:30
If you're between the ages of well, if you're over
20:33
age fifty, you can contribute your extra money into a
20:36
four or one K. That's your regular ketchup contribution if
20:40
you are between age of sixty and sixty three but
20:43
not over sixty three, even if you're still working, then
20:46
you can do a super ketchup contribution that is one
20:50
hundred and fifty percent of the ketchup limit or ten
20:53
thousand dollars or ten thousand dollars, whichever is greater. And
20:58
but here's the thing starting next, Steer, the way it
21:00
works is, if you earn more than one hundred and
21:03
forty five thousand dollars from a single employer in a
21:06
single year, you're gonna have to do that into a
21:08
wrath four one K, not a traditional four one K.
21:12
And but if you earn that much from two different employers,
21:15
it's fine. I mean, Mike, what are we doing here,
21:18
aside from creating unenforceable rules that people don't understand.
21:22
Speaker 2: This is stupid.
21:24
Speaker 4: It is incredibly stupid, And I genuinely look at it
21:28
and like, I don't know who came up with this.
21:32
Speaker 2: I don't know.
21:32
Speaker 4: Why you're going to have more tax fraud because of this.
21:35
First and foremost, it makes zero sense at all. I
21:41
can understand why you would let people over the age
21:43
of fifty contribute more to a four oh one K
21:45
I can at least get there and understand it.
21:47
Speaker 5: It makes no.
21:48
Speaker 4: Sense to me at all that you would have some
21:51
narrow gap for folks between the ages of sixty to
21:54
sixty three, specifically to contribute more than everybodybody.
22:00
Speaker 3: Else plus sixty. At sixty four, it's no longer important.
22:05
Speaker 4: I guess I have no idea the logic behind this,
22:10
and I genuinely feel bad for everybody out there trying
22:13
to navigate this, Like, how is any individual who is
22:16
not some expert on the tax code supposed to follow
22:19
any of this? And frankly, how are the for one
22:23
K providers even supposed to administer and and help employees
22:27
understand all of this. It's a cluster, and like I said,
22:31
it seems it's almost as though it is designed for
22:35
the explicit purpose of making sure that accountants, four one
22:38
K providers and financial advisors have permanent job security.
22:42
Speaker 2: It's so silly.
22:43
Speaker 3: It's absolutely ridiculous that this is where we landed on this.
22:48
And look, I get that the way that this ends up,
22:52
the way they get here to this convoluted train wreck
22:57
of whatever this is is correct to point O is
23:00
what it's called whatever, the train Wreck Act two point one,
23:04
I don't care what it is. The way they get
23:06
here is they're like, well, these are the revenue targets
23:08
that we need to have each year, and here's how
23:10
we do it. But they don't think of the real
23:13
world impact in any way like that. That's how you
23:16
end up with something where yes, you can do a
23:18
super catchup from age sixty to sixty three, but not
23:22
sixty four, sixty five, sixty six or sixty seven, even
23:24
though full retirement age now is age sixty seven.
23:30
Speaker 4: They are making it so again, you know, so complicated.
23:34
They're making it complicated enough that even the IRS is
23:36
taking like two three years to interpret what the hell
23:39
they're trying to say. Four one K providers like the IRS,
23:43
this your endorser, this can't understand how it all works.
23:47
The four one K providers out there, they're like, this
23:49
is crazy. We did an extra two years to implement
23:51
what you're talking about because it's so insane what you're
23:54
trying to put together here.
23:56
Speaker 2: It is just.
23:58
Speaker 4: I mean, yeah, grateful, it's because like it gives me
24:01
permanent job security. Because no one can possibly figure this
24:05
out on their own, they delay.
24:07
Speaker 3: The implementation They delayed the implementation by two years because
24:11
they realized that no one was going to be ready
24:13
to do it because it's such a mess. Yeah, just
24:17
let people save the money.
24:21
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25:25
Speaker 3: Mike, you want to talk food prices or metastaff using
25:30
their meal creda.
25:32
Speaker 2: Okay, this this is a great one here.
25:34
Speaker 3: So from the Financial Times, Meta has fired about two
25:38
dozen staff in Los Angeles for using their twenty five
25:40
dollars daily meal credits to buy household items including acne pads, wineglasses,
25:45
and laundry detertion. Now, supposedly this was over a long
25:48
period of times, so that it wasn't like they did
25:50
this once and you know, ended up getting caught. They
25:54
indicated that this was, you know, something that was you know,
25:57
a repeated infraction. Couple things here. I don't know exactly
26:04
how much all of these employees were making, but i'd
26:08
imagine if you're working for Meta, even in you know,
26:11
a relatively low level role.
26:13
Speaker 5: Let's put it this way, the cleaning staff isn't getting.
26:16
Speaker 2: These meal vous.
26:17
Speaker 6: I think I read one salary was four hundred thousand dollars.
26:20
Speaker 2: Yeah, So here's the thing.
26:23
Speaker 3: You're making four hundred grand a year, Yeah, and you
26:27
decide to throw it away over some twenty five dollars
26:31
meal vouchers.
26:33
Speaker 2: I mean, what are you really doing here?
26:36
Speaker 5: I would fire these people totally.
26:40
Speaker 2: I'm not saying that MET is wrong, like, no, I
26:42
MET is completely right on this.
26:43
Speaker 4: It's totally justified. You are abusing a benefit that we
26:47
are trying to use to induce you to get to
26:49
the office. And it speaks to your character if you're
26:54
willing to rip off your employer like this.
26:56
Speaker 1: What in one lunch, I wasn't hungry.
26:58
Speaker 4: Yeah, so I bought pads instead for my sixteen year
27:03
old kid. You make four hundred thousand dollars a year here,
27:06
we pay you pretty well. Just use the benefit for
27:09
what it's for. Stop abusing us. Look, I mean Meta
27:12
is not exactly the most pitiable institution out there, but
27:17
one hundred percent. I would fire these people in one
27:20
post how do you trust them? In one post on
27:22
the anonymous messaging platform blind. So they went to an
27:26
anonymous internet platform and actually wrote about this, like further
27:30
proving just man, like, what are you?
27:33
Speaker 2: What are you doing?
27:35
Speaker 3: One form of metastaffer wrote that they had used twenty
27:37
five dollars credits on items such as toothpaste and tea
27:39
from the pharmacy rite aid, adding on days where I
27:42
would not be eating at the office, like if my
27:44
husband was cooking, or if I was grabbing dinner with friends,
27:46
I figured I ought to not waste the dinner credit.
27:49
The person who indicated they had a salary of about
27:52
four hundred thousand at META and work nights and weekends
27:54
wrote they had admitted to the oversight when human resources investigated,
27:57
before later being unexpectedly fired. I what are you doing.
28:06
If Meta wanted to just give you an extra twenty
28:09
five dollars a day, then they would raise your salary
28:13
by five thousand dollars a year.
28:17
Speaker 4: Just this falls into the same level of stupidity to
28:21
me as the teenagers who were.
28:26
Speaker 2: Out of checks.
28:27
Speaker 3: Yeah, the ones that were check cuting with Fidelity and Chase, Like,
28:29
I mean, I have.
28:30
Speaker 4: Lower expectations for those folks. But this, you know, you're
28:32
paid four hundred thousand dollars for META and you're ripping
28:34
them off for twenty bucks and you get fired over it.
28:37
Speaker 2: Right, Don't don't defraud your employer.
28:40
Speaker 4: Don't don't defraud it's especially not the hand that feeds you.
28:46
Speaker 3: It's right, like, man, you're making four hundred grand a year.
28:50
You just cost yourself your job over a one percent
28:52
bump in your income without Let's take a quick break
28:57
and we'll finish up with a little bit of stack
28:58
ruline after this.
29:01
Speaker 1: This is your home for the most comprehensive coverage of
29:03
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29:06
the Financial Exchange Radio Network. Find daily interviews and full
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29:14
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29:17
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29:23
Speaker 6: Trivia question today was what was the original name of
29:27
candy corn?
29:28
Speaker 5: That would be chicken feed.
29:30
Speaker 6: Steve from Middleton, New Hampshire was our winner today, taking
29:32
home a Financial Exchange.
29:34
Speaker 2: Show T shirt.
29:35
Speaker 6: Steve is also registered to win a one hundred dollars
29:38
gift card two Applebee's which you'll give away tomorrow and
29:41
trivia is brought to you by Applebee's. Enjoy half priced
29:43
leyn Out appetizers after nine pm, including Excuse Me and
29:47
joint Club Applebee's to enjoy exclusive deals and specials. You'll
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get a free appetizer just for signing up. Now that's
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eating good in the neighborhood. Boyd, we're prohibited dining only.
29:57
Speaker 2: Mike, what do you have for me for stack rules?
30:01
Speaker 4: Uber apparently explored a takeover bid for Expedia, which at
30:07
first glance made absolutely zero sense to me. But Kazushawi,
30:12
the CEO of Uber, did lead Expedia for a period
30:15
of time, for a long period of time. In fact, Expedia,
30:19
in addition to their own you know, travel search engine,
30:22
owns hotels dot Com as well as Verbo. There might
30:25
be some other brands on top of that, but those
30:28
are the two that come to mind for me. And
30:30
Uber has expressed some interest in becoming kind of an
30:33
everything app, as they have in some other countries, especially
30:38
in China, where you can you know, go to one
30:40
app for all sorts of bookings. And Uber has been
30:42
expanding over the few last few years into train bookings,
30:47
you know, other areas, and this, you know, could be
30:51
a logical next step if they're looking for other things
30:54
to add into their application in some way of shape
30:56
or form. It spoke to me because I actually just
31:00
last month opened up in Expedia credit card. I found
31:04
we weren't reliably, you know, flying on the same airlines,
31:08
and we're pretty frequently using Verbo when we travel, and
31:10
so it made sense to get some cash back via
31:14
those means. But I do wonder if this is really
31:17
where Uber wants to go into. You know, what is
31:22
a very very cyclical, cyclical business. Uber's business, for as
31:26
much as we talk about it being volatile and all
31:30
sorts of labor issues, it's not terribly cyclical. Like in
31:33
the event of a recession, I would imagine people are
31:34
still taking ubers by and large, and so this would
31:38
be a step in a very different direction for them.
31:40
Speaker 3: Like I don't know, I mean, Uber's only really existed
31:44
in a time when there hasn't been a recession. Yeah,
31:46
that's fair, And I don't know enough about how I
31:50
don't know enough about like the economics of the taxi
31:53
business to know how that would be, you know, impacted
31:56
in recessions.
31:57
Speaker 4: Now that I do, Now that I say that, I
31:58
do know that Fidelity had this famous chart room and
32:02
one of those was I think taxicab volumes in maybe
32:07
New York City, to look at that as a recession indicator,
32:10
and certainly when you think about taxicab volumes in New York.
32:13
That would be a pretty key indicator of employment and
32:16
economic activity going on in the nation. So maybe there's
32:20
more to that than I realized.
32:22
Speaker 3: I think the big thing with Uber is, look, they're
32:24
growing at growth right now of about ten percent on
32:26
the revenue side of things. Okay, that starts to look
32:30
like a fairly mature company. When you're getting into that range,
32:34
you're training thirty six times forward earnings, How are you
32:37
gonna grow revenue in earnings?
32:38
Speaker 5: Right?
32:39
Speaker 3: They need something else to get into I think is
32:43
part of it.
32:43
Speaker 2: Does all that other stuff you know, kind of fit
32:46
the bill?
32:47
Speaker 4: I don't really know, And honestly like, okay, if they
32:50
did this fold up and suddenly I was getting the
32:54
same rewards that I get from booking on other places
32:57
via Uber rides too, it probably wouldn't shoplift anymore when
33:00
I go look for a ride, So maybe there's something
33:03
to that.
33:03
Speaker 2: Sure.
33:04
Speaker 3: Sticking with kind of that travel technology space, Airbnb, they
33:10
launched a new section on their app, and basically what
33:14
it allows for people to do is if they want
33:17
to list a rental, but have someone else who's already
33:21
on the platform manage the rental and take a cut
33:24
of the revenue.
33:27
Speaker 2: You can do that now.
33:28
Speaker 3: So let's say there's a host who you know, they
33:31
own you know, two units of their own and they're saying, Hey,
33:33
I'm looking to you know, make more money, but I
33:35
can't afford to buy another unit right now. Hey, I'm
33:38
really good at you know, this hosting thing. Does anyone
33:41
need you know a host? Okay, great, they can take over. Basically,
33:45
it's it's almost like being able to hire a management
33:47
company directly on the platform, with the management companies being
33:51
you know, other users who are you know, currently hosts
33:54
of different properties.
33:56
Speaker 2: And I gotta say this is kind of interesting to me.
34:02
Speaker 5: It is to me too.
34:05
Speaker 4: My question would be the confidence and trust, right, Like,
34:08
I get that there's an Airbnb institution in between you
34:11
and that helps. But on the other hand, I probably
34:14
wouldn't hire a property manager off of Craigslist. And so,
34:18
you know, how much trust and reliability can Airbnb give
34:22
me in this transaction, because that's a tough putt compared
34:26
to hiring There's you know, dozens of other property managers.
34:30
I'm forgetting the name of them now, but you know
34:32
other property managers that do this exact thing at an
34:34
institutional level, have years of experience doing it, sure have
34:37
written reviews. So, you know, Airbnb, what can you do
34:40
for me to give me confidence that that person who
34:43
is now managing my tenants entering my home and handling
34:50
financial transactions on my behalf? How do I know I'm
34:53
not financial transactions rather, but you know, playing a key
34:57
role in them anyway, communicating with my guests for example.
35:02
What sort of guarantees can you give me that that
35:04
I can trust this person?
35:06
Speaker 3: Yeah, I mean, look, I don't think there's anything there,
35:08
but look, as a if you're a host, you'd be
35:11
able to see, you know, the reviews of the properties
35:14
that they currently host and so I think you can
35:17
get a sense of, hey, this matches with you know,
35:19
what I'm trying to use as far as communication style
35:23
and this, and that they have a variety of different
35:26
compensation options, so you can, you know, charge all different
35:30
you know, you can split the revenue in a bunch
35:32
of different ways there. So I think it's at least
35:35
something interesting for them to try. And I'm I'm generally
35:40
just a big believer in creating marketplaces where you know,
35:43
you can actually see lots of competition in in one
35:46
place and so I like the idea of this at
35:49
least in that, Hey, you can easily see a bunch
35:52
of different people that can help you with whatever your
35:55
problem is in one place, and that to me is interesting,
35:58
even if you don't know how it's gonna work out.
36:00
Speaker 5: Yeah, I'm with you.
36:01
Speaker 4: I think it's a compelling offering that they're putting together here,
36:04
and if it allows you to attract that next incremental
36:08
host on your platform because of the opportunity to do this,
36:11
then it's probably worthwhile on them. And not really a
36:14
big lift either, would be my guess.
36:16
Speaker 3: Taking a look at markets as we head towards the
36:19
top of the hour here, that was now up one
36:21
hundred and twenty five points S and P of nineteen,
36:23
Nasdaq up one oh one, so about a third to
36:26
a half percent gains now, as indices are off their
36:28
lows of the day in all three major US indices
36:31
in positive territory. The ten year Treasury continuing to sell
36:35
off now at four point h nine percent, so a
36:38
little bit of weakness and bonds after you know, it's
36:40
kind of pingpong around the low fours for the last
36:43
couple of days, and oil flat on the day, down
36:45
three cents a barrel to seventy thirty six after the
36:48
weekly Energy Information Administration report that came out a little
36:53
bit earlier in the morning. We're done for the day,
36:57
back tomorrow to finish the week, and we will see
36:59
you then on the Financial Exchange