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Will markets 'settle down' after the recent chaos? · The Financial Exchange Show

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Speaker 1: and Mark Vanbetty.
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Speaker 2: Welcome back to the second hour of the Financial Exchange
1:13
Speaker 2: and what has been a very busy week on the
1:16
Speaker 2: economic front. As I mentioned earlier this morning, we covered
1:20
Speaker 2: the Joltz Report, or the Jobs Opening Report, where for
1:24
Speaker 2: the month of March we saw seven point two million
1:27
Speaker 2: jobs job openings throughout the United States. That was off
1:31
Speaker 2: of analyst estimates of a seven point five million number
1:35
Speaker 2: of jobs openings. We also talked a little bit about
1:38
Speaker 2: a story that had come out where there was concerns
1:42
Speaker 2: from the White House that Amazon was going to be
1:46
Speaker 2: listing the impact of Trump's tariffs on its website, but
1:50
Speaker 2: that has since been disputed by Amazon, so that notion
1:55
Speaker 2: is not or that change is not fully set and sown,
1:59
Speaker 2: and as a result, we've got markets in relatively mixed territory.
2:03
Speaker 2: We will have the US GDP report that's going to
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Speaker 2: come out tomorrow, We have Microsoft reporting there earning tomorrow
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Speaker 2: as well as Meta, and then on Thursday we have
2:12
Speaker 2: Apple and Amazon, and to top it off, at the
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Speaker 2: end of the week, we will have a Job Support
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Speaker 2: for the month of April, which will showcase the amount
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Speaker 2: of jobs added for that month, as well as where
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Speaker 2: we stand on the unemployment front. So a very busy week,
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Speaker 2: a lot of information to get into. We kick off
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Speaker 2: the second hour of the show with a commentary from
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Speaker 2: the CEO of Goldman Sachs, David Solomon, believing in his
2:39
Speaker 2: comments regarding a interview in Ozzo, stating rather that he
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Speaker 2: believes the amount of merger and IPO activity will settle
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Speaker 2: down once there is a little bit more clarity in
2:52
Speaker 2: terms of where we stand on a policy front. A
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Speaker 2: little bit of a self serving commentary there. Obviously, Goldman
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Speaker 2: Sachs derives a lot of its revenue from merger and
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Speaker 2: acquisition activity as well as initial public offerings, so certainly
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Speaker 2: he's not going to come out there and say that
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Speaker 2: he feels as if the transaction volume will will plummet
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Speaker 2: more coming out in reassuring economic investors who are listening
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Speaker 2: to him that we should see some capital activity resume
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Speaker 2: over the course of the second half of the year.
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Speaker 3: Here, Yeah, this the activity he's talking about tends to
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Speaker 3: ebb and flow with markets. Right, So unsettled public equity
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Speaker 3: markets translates into people holding off on the more complex
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Speaker 3: transactions that they help clients execute. So yeah, it does
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Speaker 3: make sense.
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Speaker 2: You see the biggest surge in activity twenty twenty and
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Speaker 2: twenty twenty one post COVID you had. When you had
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Speaker 2: the market rallying significantly, you tend to see a lot
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Speaker 2: more like you mentioned IPOs and mergers, though we have
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Speaker 2: had some pretty large ones in the mergers and acquisitions
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Speaker 2: front recently, but certainly on the initial public offerings to
4:00
Speaker 2: not occur as much when you have a weaker stock market.
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Speaker 2: To be fair, as much as there's been a tremendous
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Speaker 2: amount of volatility, I believe we're only off about five
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Speaker 2: percent year to date, and that comes off the heels
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Speaker 2: of a tremendous year in twenty twenty four. Speaking of
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Speaker 2: just investors in their view on the market and where
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Speaker 2: it sits year to date, I mentioned that we're off
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Speaker 2: about five percent year to date. There's some data that's
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Speaker 2: come in from the investment fung giant Vanguard, stating that
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Speaker 2: as of mid April, roughly ninety seven percent of its
4:31
Speaker 2: account holders Vanguard's one of the biggest four and K
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Speaker 2: providers out there, had not initiated any trades in twenty
4:37
Speaker 2: twenty five, holding steady with the typical average that they
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Speaker 2: see on a month to month basis. Data that's not
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Speaker 2: all that surprising. Typically with four on K investors, there doesn't.
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Speaker 2: I mean, you can tell by the percentage, there's not
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Speaker 2: a tremendous push to make drastic changes to their holdings.
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Speaker 3: Have you ever seen a big record keep With the
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Speaker 3: vang Trow Fidelity, they record keeps, so to speak, like
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Speaker 3: seventy eighty percent of all four to one K plans.
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Speaker 3: So when they make a statement, people tend to listen.
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Speaker 3: They're speaking for a big portion of savers. But have
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Speaker 3: you ever seen this is rhetorical because I haven't one
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Speaker 3: of these big record keepers come out and say other
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Speaker 3: than hardships, which they say tick up around times of
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Speaker 3: economic distress, they almost never maybe two thousand and eight,
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Speaker 3: I honestly don't worry.
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Speaker 2: That was going to be my only guest.
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Speaker 3: They never say anything's ever our four to when campasters
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Speaker 3: are staying the course, and this is by design four
5:29
Speaker 3: when K plans are set it and forget it is
5:32
Speaker 3: too loose a way of describing it, but I'll use it.
5:34
Speaker 3: You're defaulted into the plan now at a contribution rate,
5:38
Speaker 3: into an age appropriate target date fund that rebalances automatically
5:44
Speaker 3: resets you to target percentages among stocks, bawds and other
5:47
Speaker 3: stuff automatically and reallocates automatically according to a so called
5:51
Speaker 3: glipad as you get older, they're meant to be as
5:53
Speaker 3: automatic as anything out there, and that seems to have
5:56
Speaker 3: paid off in getting people to a dollar cost average
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Speaker 3: speak in because we know that trying to time markets
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Speaker 3: is kind of a to use our favorite expression, fools errant.
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Speaker 2: No, absolutely couldn't agree with you more on that front. Really,
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Speaker 2: what it comes down to is making sure that the
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Speaker 2: individual has the appropriate asset allocation that works for their
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Speaker 2: financial situation. That differs dramatically for everyone, but certainly even
6:22
Speaker 2: with those who are approaching retirement. I always like to
6:25
Speaker 2: remind clients or people who are approaching retirement that yes,
6:28
Speaker 2: you may but retire at age sixty five, but this
6:30
Speaker 2: money needs to continue to work for you for another
6:33
Speaker 2: twenty five or thirty years. So this idea that you
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Speaker 2: need to completely reshape your asset allocation entirely for someone
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Speaker 2: who's just approaching retirement is not necessarily something that would
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Speaker 2: be a focus. Perhaps making tweaks touch sure.
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Speaker 3: Never advisable, right, I mean unless a real dramatic, a
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Speaker 3: real dramatic change to time horizon or objectives or risk tolerance.
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Speaker 3: Your movement should be very gradual.
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Speaker 2: Exactly exactly and really the only thing that people should
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Speaker 2: potentially lean more focus on as if you have a
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Speaker 2: near term financial need. For example, they highlighted in a
7:10
Speaker 2: five twenty nine account for a child who is sixteen
7:14
Speaker 2: or seventeen years old, so basically they're a year or
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Speaker 2: two away from college. Of course, if there's a significant
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Speaker 2: amount some of money saved there, perhaps it makes sense
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Speaker 2: to be more conservative there because you're going to need
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Speaker 2: to outlay that capital relatively soon.
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Speaker 3: Pull me ask you a question if you don't mind
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Speaker 3: about five twenty nine, is when you take it? This
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Speaker 3: is not in the stack, Tucker, I apologize, but if
7:34
Speaker 3: I may. When you take money out of whether it's
7:37
Speaker 3: our plan here in Massachusetts or plans is commonly structured,
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Speaker 3: can you designate which fund those moneies come out of
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Speaker 3: or are they taking pro rata from your overall? Do
7:47
Speaker 3: you have to sell stocks? If if maybe it's not
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Speaker 3: a great time too, Could you take it out of
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Speaker 3: money market?
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Speaker 2: You can take it out of. It depends what funds
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Speaker 2: you're in. If you are managing your own fund selection,
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Speaker 2: then you are able to select which ones you sell
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Speaker 2: to raise funds. But if you are part of the
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Speaker 2: target date which many people are, that is the default
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Speaker 2: of just hey, here's the twenty fifty fund are here
8:08
Speaker 2: is the you know, twenty forty five college fund out there.
8:13
Speaker 2: Then ultimately, if you're just selling that fund and it's
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Speaker 2: on the fund manager to make the sales in the
8:19
Speaker 2: underlying you know, target date fund that's in place, so
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Speaker 2: there's only around of product and there's only one thing exactly,
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Speaker 2: and I would say I don't have the numbers on it.
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Speaker 2: The large majority of five twenty nine that I see
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Speaker 2: are set to the default. Similar to how four on
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Speaker 2: K holders if you looked at the majority of their
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Speaker 2: plans are in the target date funds out there.
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Speaker 3: Would you ever suggest somebody keep a little bit in
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Speaker 3: money market in a very short term bucket and the
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Speaker 3: rest in the longer can you do that and the
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Speaker 3: rest in a longer term target date fund? That question
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Speaker 3: just seems more relevant than ever in life. You've elevated volatility.
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Speaker 2: You can and for something that is of a near
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Speaker 2: term need, that would be something that would would make sense.
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Speaker 2: It Well, you probably have to switch your preferences from being,
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Speaker 2: you know, a custom target date fund investor in a
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Speaker 2: five twenty nine to two more of a individually managed
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Speaker 2: self directed in order to allow for that money market provision.
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Speaker 3: Sorry for the tangent theory.
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Speaker 2: Nor also you could also just move all to cash.
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Speaker 2: I believe in those plans. Anyway, It's not as if
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Speaker 2: there are tax ramifications within within the fund, you know,
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Speaker 2: dispersing it's a whole nother story.
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Speaker 3: You might not want to do that. You might want
9:28
Speaker 3: to put your next year's tuition and money market and
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Speaker 3: leave the rest in the longer term bucket.
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Speaker 2: Yeah, I always consult with an investment professional because it
9:34
Speaker 2: can differ based on your your situation. Here, we're going
9:38
Speaker 2: to take a quick break here on the financial exchange,
9:41
Speaker 2: taking a look around at markets. The Dow jones up
9:43
Speaker 2: about two hundred and twenty points or a half percent,
9:46
Speaker 2: the S and P five hundred only up about eleven
9:49
Speaker 2: points through early trading, and the Nasdaq is relatively flat
9:53
Speaker 2: here as well. When we come back when we're talking
9:56
Speaker 2: about core GDP, is that a signal to look at
10:00
Speaker 2: amongst all the noise as well as Scott Besson setting
10:03
Speaker 2: a July fourth tax bill goal. We'll talk about this
10:07
Speaker 2: and trivia most importantly, right after this break.
10:11
Speaker 1: Taras fears continue to grip markets, Get the latest straight
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Speaker 4: All right time for trivia here on the Financial Exchange
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Speaker 4: and today is Jerry Seinfeld's seventy first birthdays. Seinfeld and
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Speaker 4: question today, What was the original name of the sitcom Seinfeld?
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11:44
Speaker 2: As I mentioned, tomorrow, we will get a GDP report
11:48
Speaker 2: for Q one of twenty twenty five to get a
11:51
Speaker 2: gauge as to where the US stands from an economic
11:54
Speaker 2: growth perspective. And there's a piece here that's written by
11:58
Speaker 2: Jason Furman, who worked on the White House Council of
12:02
Speaker 2: Economic Advisors during the Obama administration, that rather than focus
12:08
Speaker 2: on the headline number that is to come out of
12:11
Speaker 2: this report tomorrow, which is going to be relatively weak
12:14
Speaker 2: based on some sort of I hate to use the
12:18
Speaker 2: word transtory, but some sort of near term shifts where
12:21
Speaker 2: we're going to see a tremendous amount of surge and
12:23
Speaker 2: imports that will impact some of the underlying GDP numbers,
12:26
Speaker 2: Rather that we should focus on core GDP, which I
12:30
Speaker 2: wasn't particularly familiar with. Certainly, I'm familiar with core inflation,
12:33
Speaker 2: which strips out the impact of food and energy on
12:37
Speaker 2: the monthly inflationary reports that we digest. But Mark, I'll
12:40
Speaker 2: kick it to you, because you're the resident economist. Here,
12:43
Speaker 2: is core GDP something that you look at and a
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Speaker 2: brief explanation because I didn't get into it as to
12:48
Speaker 2: what that is.
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Speaker 3: First of all, disclosure, this is a very specialized area
12:52
Speaker 3: of Furman is a tenured professor at Harvardy headed Obama's
12:55
Speaker 3: Council of Economic Advisors. This is basically his measure. I'm just,
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Speaker 3: you know, a blue collar master's level forecaster in the
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Speaker 3: private sector. But here's the thing. When you're forecasting any variable,
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Speaker 3: it could be anything, could be number three throws the
13:08
Speaker 3: Celtics going to make tomorrow night. You look at the past,
13:11
Speaker 3: and then you ask tonight, excuse me, thank.
13:13
Speaker 2: You a little later, start to mass is it really
13:16
Speaker 2: eight o'clock?
13:17
Speaker 4: Oh god, I'm sorry.
13:18
Speaker 3: So, if you're forecasting anything, you want to ask to
13:22
Speaker 3: past relationships, either with themselves, the variable itself and its
13:27
Speaker 3: own past, or other things. Do they hold up? Does
13:30
Speaker 3: that help me get it? What's really going on under
13:33
Speaker 3: the hood? And are there are things that happen month
13:36
Speaker 3: to month or quarter to quarter GDP's quarterly CPI inflation,
13:39
Speaker 3: PCE inflation, which we get tomorrow or whenever it is.
13:42
Speaker 3: I think right, those are monthly. Are there things happening
13:48
Speaker 3: that are extreme and unrepresentative? Of the underlying trend, a
13:52
Speaker 3: concept we talked about in the last hour. So what
13:54
Speaker 3: Furman is saying here is much like you don't want
13:57
Speaker 3: big relative price changes oil or insurance premiums or cell
14:02
Speaker 3: phone cell phone bills, moving inflation, moving your estimate of
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Speaker 3: what's really going on with inflation too much from month
14:10
Speaker 3: to month. You don't want the more erratic components of
14:14
Speaker 3: GDP to distract you from what's really going on in
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Speaker 3: the underlying economy. Furman's preferred measure. I already forget what
14:21
Speaker 3: it is.
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Speaker 2: For GDP, which is a final sales to private, okay,
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Speaker 2: domestic purchasers, which doesn't rattle off the tongue.
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Speaker 3: No, it really doesn't. I was unfamiliar with it to I,
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Speaker 3: So that's interesting. I wonder why he thinks every why
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Speaker 3: those are more likely to represent the trend in GDP
14:37
Speaker 3: than other components, Like when I talk about median inflation,
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Speaker 3: as we like to do from time to time, and
14:42
Speaker 3: as I do too much. Probably internally it makes sense
14:44
Speaker 3: to me because the median is a more sturdy measure
14:47
Speaker 3: of the average when you've got extremes in the so
14:50
Speaker 3: called tales. So I don't know if Furrman came up
14:52
Speaker 3: with this, but I'm gonna trust his judgment. All he's
14:55
Speaker 3: trying to do is get at the trend. There are
14:56
Speaker 3: statistical ways of doing it. We use the median for inflation.
15:00
Speaker 3: There are structural ways of doing it, model based ways
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Speaker 3: of doing it, which is how he came up with
15:04
Speaker 3: his measure. But the name of the game is just
15:06
Speaker 3: to get it what's really going on and filter out
15:09
Speaker 3: the noise. It's really that simple.
15:12
Speaker 2: To just go a little further with that. His core
15:14
Speaker 2: GDP measure, the longer name, like I said, is final
15:17
Speaker 2: sales to private domestic purchase. The series he's using too,
15:21
Speaker 2: but it's really the underlying components he's using is personal
15:23
Speaker 2: consumption and business and residential investment. Those are the ones
15:27
Speaker 2: that are most the most key components of his drilled
15:31
Speaker 2: down measure. You can make the argument, or I'll throw
15:34
Speaker 2: the theory out there that two thirds of economic growth
15:36
Speaker 2: is usually predicated on that consumer spending number there right
15:40
Speaker 2: in terms of what we're.
15:41
Speaker 3: Seeing, Yeah, most go ahead, I'll let you finish.
15:45
Speaker 2: So perhaps his view again theorizing here that some of
15:49
Speaker 2: these other inputs are going to be noisies, so focused
15:52
Speaker 2: on just the spending side of it.
15:53
Speaker 3: My guess is he looked at volatility and all the
15:55
Speaker 3: underlying components, because this is how you do it with inflation,
15:58
Speaker 3: and you want the least volatile. He don't want the
15:59
Speaker 3: stuff jumps around a lot, because those jumps are are transitory.
16:02
Speaker 3: They're fleeting. We should retire the word transitory, but we
16:05
Speaker 3: can't see you get away from it. They're fleeting. So
16:08
Speaker 3: let's lower weight those and then let's look at what
16:11
Speaker 3: among the components are better predictors of the future. So
16:15
Speaker 3: he does exercises like that, which you could do in
16:18
Speaker 3: other context too. It's not just core, it's not just GDP.
16:22
Speaker 3: To get it again, what gives you the best signal
16:24
Speaker 3: of what's really going on with GDP. It's both simple
16:29
Speaker 3: and it's hard because it requires a lot of data.
16:31
Speaker 3: So his point is, don't put too much stock in
16:34
Speaker 3: whatever we see tomorrow.
16:36
Speaker 2: Just don't worry about the headline as much because of
16:39
Speaker 2: the volatility on imports and exports government spending could be
16:42
Speaker 2: any of those other varios perhaps, and put most focus
16:44
Speaker 2: on the spending and private investment side of things.
16:47
Speaker 3: Yeah, and the nice thing about his measure is that
16:49
Speaker 3: it's very easy to replicate I can pull those series
16:52
Speaker 3: from an online database. It's free, and I can look
16:55
Speaker 3: at it myself. He'll publish it on social media as
16:58
Speaker 3: soon as it comes out, and I always have is
17:00
Speaker 3: when somebody comes up with a better mouse trap for
17:02
Speaker 3: getting it. The trend in something for whatever reason, probably
17:06
Speaker 3: because these relationships tend to not be stable. It works
17:09
Speaker 3: until it doesn't work, and then you got to find
17:11
Speaker 3: a new.
17:12
Speaker 2: A new master measure. UH Treasury Secretary Scott Besson sets
17:17
Speaker 2: a July fourth goal to pass President Trump's multi trillion
17:20
Speaker 2: dollar tax cut. I don't know how selfish I am,
17:23
Speaker 2: but as someone who probably would rather be on vacation
17:26
Speaker 2: around July fourth, I'd rather they not come out with
17:28
Speaker 2: this stuff. Then, I guess it does give us something
17:30
Speaker 2: to talk about if we are at that point of yeah,
17:35
Speaker 2: those are some slower some slower days. The July fifth show, though, yeah,
17:39
Speaker 2: that is live, so we'll welcome this, I guess we will.
17:42
Speaker 2: We need that content out there. I thought about that
17:46
Speaker 2: the wrong way, but regardless, that is the target. Two
17:49
Speaker 2: months correct, roughly two months to put together a tax bill. UH.
17:56
Speaker 2: The other UH senators and other taxi many representatives out
18:01
Speaker 2: there are disputing putting a hard deadline on putting together
18:06
Speaker 2: this tax bill, calling it aspirational to say that Independence
18:10
Speaker 2: Day is going to be when this deadline is met,
18:14
Speaker 2: Others mentioning that the idea of the budget ceiling being
18:18
Speaker 2: a much more near term focus rather than passing it
18:23
Speaker 2: this new tax bill on July fourth.
18:26
Speaker 3: It does seem ambitious. I know it took The twenty
18:28
Speaker 3: seventeen tax reform bill was passed I think in December,
18:32
Speaker 3: so it took off, and that was Paul Ryan, a
18:35
Speaker 3: very serious group of experienced legislators working on that, very
18:39
Speaker 3: accomplished group. This group doesn't yet have their act together,
18:43
Speaker 3: so that's quite an ambitious I don't have any insight
18:45
Speaker 3: other than to say that that's pretty ambitious.
18:47
Speaker 2: Particularly with some of the ambitious measures that are trying
18:50
Speaker 2: to be included in this. Yeah, not like they're saying,
18:53
Speaker 2: let's run it back, you know, they're trying to add stuff.
18:56
Speaker 3: It wanted to be epic, historical, and quick.
19:00
Speaker 2: Hard to pair all three if you've.
19:02
Speaker 3: Really got your act together, maybe, but.
19:06
Speaker 2: We will have to see how that shakes out. Fourth
19:09
Speaker 2: is a Friday, by the way, so seven, so I'm
19:13
Speaker 2: on vacation that follow so in the clear, not like
19:16
Speaker 2: anyone cares. I'm taking a look at markets. We're up
19:19
Speaker 2: two hundred and fifty points on the Dow, or two
19:22
Speaker 2: thirds of a percent, the S and P five hundred
19:25
Speaker 2: up a quarter of a percent, and the Nasdaq relatively flat.
19:28
Speaker 2: We're going to take a quick break here on the
19:30
Speaker 2: Financial Exchange. When we come back, we're gonna have the
19:32
Speaker 2: answer to our trivia question right after this break.
19:41
Speaker 1: Bringing the latest financial news straight to your radio. Every day,
19:45
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19:52
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20:02
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20:13
Speaker 4: Triviy question today was what was the original name of
20:16
Speaker 4: the sitcom Seinfeld? That would be the Seinfeld Chronicles. Winner
20:22
Speaker 4: today of the Financial Exchange Show Ta Shert was Robert
20:25
Speaker 4: from East Boston. Congrats to Robert, and we play trivia
20:29
Speaker 4: every day here on the Financial Exchange. See complete contest
20:33
Speaker 4: rules at Financial Exchange Show dot com.
20:36
Speaker 2: Sorry, a five thousand dollars baby bonus won't raise the
20:41
Speaker 2: birth rate. This is a piece here out of which
20:44
Speaker 2: one is this the Financial Times, which is discussing the
20:48
Speaker 2: idea that the federal government under President Trump is mulling
20:53
Speaker 2: a range of options to increase the birth rate, including
20:57
Speaker 2: a birth bonus of five thousand dollars. I cannot rediorate.
21:03
Speaker 2: I cannot say strongly enough how awful of a way
21:06
Speaker 2: to spend money that would be. It is just a
21:09
Speaker 2: total waste of time and effort to try and go
21:13
Speaker 2: about it from a financial perspective, particularly a number like
21:17
Speaker 2: five grand, which is so paltry relative to the amount
21:21
Speaker 2: of cost it is to raise a child, which in
21:24
Speaker 2: twenty fifteen the US government came up with the calculation
21:26
Speaker 2: to estimate what it would cost to raise a child
21:29
Speaker 2: from birth to the age of eighteen. That number in
21:31
Speaker 2: today's dollars would be three hundred and fifteen grand. And
21:34
Speaker 2: guess what that doesn't also include any type of college
21:37
Speaker 2: cost on top of that.
21:39
Speaker 3: Yeah, these types of incentives haven't. It's, first of all,
21:42
Speaker 3: it's a noble goal. Increasing lately the size of the
21:46
Speaker 3: labor force, the future labor force in this case, should
21:49
Speaker 3: increase long term economic growth. All else, assuming we can
21:53
Speaker 3: keep productivity growth rates up. Otherwise you're just adding more
21:57
Speaker 3: mouths to feed, and I think think about think about
21:59
Speaker 3: the middle age or something. People had lots of kids,
22:02
Speaker 3: but for everyone you added, it was just another mouth
22:04
Speaker 3: to feed, and nobody got any richer per capita growth.
22:07
Speaker 3: Sorry for a little lesson here, but I'm just trying
22:09
Speaker 3: to ground myself. That didn't really start until, say, the
22:12
Speaker 3: industrial revolution, so keep it. Just keep in mind, more
22:15
Speaker 3: labor for more people doesn't necessarily mean richer, but if
22:19
Speaker 3: you if you're through technology increasing productivity growth, it should.
22:22
Speaker 3: So I think that's what they're getting at.
22:24
Speaker 1: Well.
22:24
Speaker 3: Of course, let just wish they'd explain it better, like
22:27
Speaker 3: explain it the way we try to do here. It
22:30
Speaker 3: takes a little bit of work, but once you explain it,
22:33
Speaker 3: people will buy in. Like, maybe this is probably not
22:37
Speaker 3: the best nobody's ever looked at this as concluded that
22:39
Speaker 3: it works as intended. But maybe the goal is noble
22:44
Speaker 3: increasing or is a laudable is desirable increasing labor force growth.
22:49
Speaker 3: Let's let's talk about ways to do that.
22:51
Speaker 2: Oh absolutely, I'm all for that.
22:53
Speaker 3: I mean, say you weren't. I'm just saying, this is
22:54
Speaker 3: what I want from our leaders. Generally, tell me why.
22:57
Speaker 2: You're I'm all for that. Because I mean, if you're
23:00
Speaker 2: a stock investor, loosely, you you're kind of rooting for that.
23:04
Speaker 2: The idea of we continue to grow the population and
23:07
Speaker 2: keep productivity growing as well, continue to grow our economic
23:11
Speaker 2: continue to grow GDP consumption, and more of that should
23:15
Speaker 2: trickle down to companies earning more money because people are
23:18
Speaker 2: consuming more, populations growing, like, all those factors should move
23:21
Speaker 2: in line. If you're a long term stock investor, I'm
23:24
Speaker 2: all for all of those things. But the way to
23:27
Speaker 2: go about it with financial incentives, that's where I just
23:31
Speaker 2: push back that. It's just there have been studies that
23:33
Speaker 2: other countries have taken efforts to try and use financial means,
23:38
Speaker 2: and it's a social issue that cannot be resolved with
23:43
Speaker 2: financial incentives. For that is not what it comes down
23:46
Speaker 2: to for a person making a decision as to whether
23:49
Speaker 2: or not to have a kid. That those factors, they
23:54
Speaker 2: may be some of the factors to it, but subsidizing,
23:57
Speaker 2: particularly as small amount as this, is just going to
24:00
Speaker 2: get it done.
24:02
Speaker 4: Beneficiary planning an asset protection go hand in hand. Cushing
24:06
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24:11
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25:03
Speaker 1: The proceeding was paid for and the views expressed are
25:05
Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
25:07
Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
25:10
Speaker 1: Cushing and Armstrong did not endorse each other and are
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Speaker 1: not affiliated.
25:14
Speaker 2: More Americans are financing groceries with buy now, pay later loans,
25:18
Speaker 2: According to a recent survey done by lending Tree, which
25:22
Speaker 2: found that twenty five percent of by Now Pay Later
25:26
Speaker 2: users are funding grocery pace purchases with loans. That's up
25:30
Speaker 2: from fourteen percent in twenty twenty four. And the survey
25:34
Speaker 2: also said that forty one percent of its respondents say
25:37
Speaker 2: they made a late payment on a buy Now, Pay
25:40
Speaker 2: Later loan in the past year, up from thirty four
25:42
Speaker 2: percent last year. So perhaps some of the lingering inflation
25:48
Speaker 2: having some impact on American consumers out there the buy Now,
25:55
Speaker 2: Pay Later space. I wouldn't necessarily say it's the perfect
25:58
Speaker 2: pometer of you know, financial well being, but it is
26:02
Speaker 2: a factor that is interesting to study here Mark or looking.
26:05
Speaker 3: Yeah, I think the reason you wouldn't use these people
26:07
Speaker 3: as a barometer, well put is that they have a
26:11
Speaker 3: tendency to not be great with their finances to begin with,
26:14
Speaker 3: so they're gonna be an early warning sign either way.
26:19
Speaker 3: I'm not putting that quite as clearly as i'd like to.
26:23
Speaker 3: Perhaps I need to think about it a little more,
26:25
Speaker 3: but what I'm I guess what I'm saying is, yeah,
26:27
Speaker 3: this is what I would expect from people who opt
26:29
Speaker 3: for by Now, Pay Later. And by the way, I
26:32
Speaker 3: get it. We've all had a finance stuff or even
26:34
Speaker 3: put it on layaway back in the in the day.
26:36
Speaker 3: I'm saying simply that you're probably somewhat financially challenged, maybe
26:39
Speaker 3: if you're using this unfairly, or you know, you've you've
26:42
Speaker 3: had a tough break or whatever. Not definitely not judging.
26:45
Speaker 3: I'm saying only that these people were more that anyone
26:47
Speaker 3: who uses this is probably more likely.
26:50
Speaker 2: To any difficult economics and a difficult economic yeah, for
26:52
Speaker 2: for whatever reason.
26:53
Speaker 3: So I'm not sure i'd read too much into it,
26:56
Speaker 3: though obviously on its face not.
26:57
Speaker 2: This comes THEYDUS. This comes after bill Board had revealed
27:01
Speaker 2: that sixty percent of the general admission tickets for Coachella
27:04
Speaker 2: attendees were funded through buy now, pay later loans, which
27:08
Speaker 2: sparked tremendous debate online that these idiot I guess, you know,
27:13
Speaker 2: millennials are probably the generation below. You know, these people
27:16
Speaker 2: in their twenties and thirties were financing concert tickets with
27:21
Speaker 2: buy now, pay later loans, using you know, debt to
27:25
Speaker 2: try and keep up with the influencer styles of the
27:28
Speaker 2: rich and the famous.
27:29
Speaker 3: That's because shot, we get a credit card at eighteen,
27:31
Speaker 3: and we do stupid things with it, it gets canceled,
27:34
Speaker 3: and then we have to wait seven years. That's the
27:36
Speaker 3: way it goes.
27:37
Speaker 2: It is a cycle that has repeated oftentimes over the
27:40
Speaker 2: course of history. That festival. I guess I'm just not
27:44
Speaker 2: the demographic for it, but never looks like my cup
27:47
Speaker 2: of tea. Here we're going to take a quick break
27:49
Speaker 2: here on the Financial Exchange. But when we come back
27:52
Speaker 2: from break, I want to talk a little bit about
27:55
Speaker 2: the Chinese economic model for the US, trying to replicate
27:59
Speaker 2: that as follow us some other articles here from stack Roulette.
28:02
Speaker 2: Right after this break here on the Financial Exchange.
28:05
Speaker 1: Market volatility is at its highest point since the pandemic.
28:09
Speaker 1: Keep it here for the most comprehensive coverage of the
28:11
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28:16
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29:13
Speaker 2: Piece here in Bloomberg from Alison Schrager saying that the
29:18
Speaker 2: China is the wrong model for the US economy, as
29:22
Speaker 2: well as another piece from the Wall Street Journal here
29:25
Speaker 2: on why making an all American product is so hard,
29:28
Speaker 2: and it really just points to from the Chinese economic
29:33
Speaker 2: system really strictly managed by the government in place, controlling
29:38
Speaker 2: in terms of where capital is allocated, putting people in
29:42
Speaker 2: low level manufacturing jobs, and then over recent years scaling
29:46
Speaker 2: them up into higher skill manufacturing jobs. That's what their
29:50
Speaker 2: economy has been built upon over the last several decades.
29:53
Speaker 2: And while they have had success building out a manufacturing powerhouse,
29:59
Speaker 2: they have also been in the doldrums over the course
30:01
Speaker 2: of the last couple of years as their real estate
30:03
Speaker 2: market has completely fallen on its face and there are
30:06
Speaker 2: other challenges that it's facing as well. I tend to
30:10
Speaker 2: land on the side of sort of leis fair, of
30:13
Speaker 2: not having too much government intervention in letting the free
30:16
Speaker 2: economy sort of you know, dictate itself. Some of this
30:20
Speaker 2: manufacturing shift. I've tried to tell clients out there that
30:24
Speaker 2: it is so much harder than you would ever anticipate
30:27
Speaker 2: to just make the US a manufacturing powerhouse overnight. This
30:32
Speaker 2: is something that would take decades upon decades to execute.
30:36
Speaker 3: Yeah, there's a great poll. I think the Financial Times
30:38
Speaker 3: did it or the Economist, one of those sort of
30:40
Speaker 3: snooty ear overseas finance publications. Do you think that youu
30:44
Speaker 3: AC should do more manufacturing domestically? Eighty percent said yes.
30:47
Speaker 3: Do you think you'd be better off if you worked
30:49
Speaker 3: in a factory less than twenty Fewer than twenty percent
30:53
Speaker 3: said yes. Yeah, there's that that physical work is really hard.
30:58
Speaker 3: If we've all done it, either as kids or because
31:01
Speaker 3: we had to on an interim basis, say between jobs
31:05
Speaker 3: or something. And there's a reason these guys are out
31:07
Speaker 3: in women are out in their mid fifties or earlier.
31:11
Speaker 3: It's really hard. On hot days, it's especially hard, and
31:14
Speaker 3: you can't do it into advanced what i'll call advanced
31:18
Speaker 3: middle age. I don't know why anyone would romanticize that
31:24
Speaker 3: era versus this very interesting, diverse, rewarding services oriented. We
31:31
Speaker 3: do produce more by the way we manufacture more than
31:33
Speaker 3: we used to. We just do it with very few people,
31:35
Speaker 3: just like we produce more food than we used to.
31:37
Speaker 3: Only used to take seventy percent of the population. Now
31:39
Speaker 3: it takes like two or three. This is a good
31:43
Speaker 3: thing for standards of living and for welfare generally, some
31:47
Speaker 3: communities have been left behind. We figured it out here
31:51
Speaker 3: in Massachusetts. Framingham converted its economy. Going back farther than that,
31:56
Speaker 3: Loull was the shoe capital of the world, right, all
31:58
Speaker 3: those Merrimount River they all operated on millpower. We were
32:02
Speaker 3: the manufacturer capital of the world. We were wig and
32:05
Speaker 3: then Republican pro. Mass Uses was very pro tariff protect
32:08
Speaker 3: our industries. The South hated us because we were always
32:12
Speaker 3: putting tariffs on stuff because it benefited So I'm not
32:14
Speaker 3: called a history.
32:15
Speaker 2: Now Bedford and whaling back in the days, right, but.
32:18
Speaker 3: Mass Uses kind of figured it out, and we were lucky.
32:20
Speaker 3: We've got Harvard, We've got MIT and so to many
32:23
Speaker 3: of our affiliates in towns like Providence with Brown University
32:26
Speaker 3: and East Providence and many many other examples of little hubs.
32:31
Speaker 3: We figured it out. We have to help the rest
32:33
Speaker 3: of the country figure it out. Turning back the clock
32:35
Speaker 3: to laborious, difficult jobs that you have to retire from
32:41
Speaker 3: at fifty two. It's just not the way.
32:43
Speaker 2: There was a piece that was done in CNBC where
32:46
Speaker 2: it was trying to estimate what the cost of producing
32:48
Speaker 2: the iPhone domestically would look like, and it's something that
32:52
Speaker 2: can't be easily estimated. But some of the baseline things
32:56
Speaker 2: to consider is the wage for some of the lower
33:00
Speaker 2: level manufacturing workers in China who were signed with tasks
33:04
Speaker 2: or rather tasked with putting toether the iPhone was three
33:06
Speaker 2: dollars and sixty one cents an hour or something like that,
33:08
Speaker 2: with some sort of signing bonus on. Obviously, you compare
33:11
Speaker 2: that to California's state minimum wage of sixteen fifty or
33:15
Speaker 2: any of the other ones across the country. That's a
33:17
Speaker 2: huge significant difference that you're going to have to make up.
33:20
Speaker 2: And that's only on the labor cost side of things.
33:22
Speaker 2: Then you also have to incorporate the sourcing of materials
33:26
Speaker 2: from forty countries all over the world to put together
33:29
Speaker 2: the iPhone, and the estimates have been thrown out there.
33:32
Speaker 2: I believe it was Dan Ives from Webbush saying that
33:34
Speaker 2: it would potentially cost if it were to be all
33:37
Speaker 2: in the US thirty seven hundred bucks rather than where
33:40
Speaker 2: it sits today. It's just I'd like to continue to
33:43
Speaker 2: use that example just because it's something that many, the
33:46
Speaker 2: majority of us have, and that is the sacrifice. Not
33:50
Speaker 2: to mention the difficulty of the work, forget the pay differential,
33:54
Speaker 2: but also just the difficulty of it. These workers in
33:57
Speaker 2: working at the iPhone factories are busted in living dormitories,
34:02
Speaker 2: working twelve hour shift and there's not going to be
34:04
Speaker 2: a tremendous appetite for that type of work in the
34:07
Speaker 2: United States on the manufacturing If.
34:09
Speaker 3: You want to raise wages, I don't like the minimum wage,
34:12
Speaker 3: but there are ways to raise wages. One of them
34:16
Speaker 3: is education. Helping people acquire a college education, helping people
34:20
Speaker 3: acquire technical education, whether they choose a trade or college,
34:24
Speaker 3: making it more affordable. That's first best I heard. Another
34:28
Speaker 3: great statistic, since we're talking about soda anecdotes a minimum
34:31
Speaker 3: wage worker entry level in McDonald's here in Massachusetts makes
34:35
Speaker 3: more than an entry level automotive worker, and Alabama it's
34:39
Speaker 3: about institutions, including the minimum wage. In this case, I
34:42
Speaker 3: just said I hate it, but now I'm citing it
34:44
Speaker 3: as an example of maybe better ways than walling off
34:47
Speaker 3: the world and starting trade wars and making enemies of
34:51
Speaker 3: our friends. Better ways of increasing living standards. There are
34:55
Speaker 3: ways to do it.
34:58
Speaker 2: The future of a streaming tell vision is starting to
35:00
Speaker 2: look a lot like cable TV. This is something that
35:04
Speaker 2: I'm not the first person to point out a lot
35:06
Speaker 2: of people have talked about for years, is that initially
35:10
Speaker 2: there were a lot of different streaming platforms out there,
35:13
Speaker 2: and then more and more what you've seen is the
35:17
Speaker 2: idea of them gravitating back towards one another and coming
35:20
Speaker 2: back to the same bundle that many of us have
35:23
Speaker 2: used for years. With cable you had the likes of
35:27
Speaker 2: Disney Plus and Peacock and Paramount Plus, all these other
35:33
Speaker 2: streamers or all these other companies that put together on
35:35
Speaker 2: streaming service. Now, realizing how challenging it is to be
35:39
Speaker 2: profitable in this space, perhaps we should join forces together
35:44
Speaker 2: to put a library of our content all in one place.
35:48
Speaker 2: That's what would you call that paul a.
35:51
Speaker 3: Genius.
35:53
Speaker 2: It's funny how history can repeat itself. What we've seen
35:57
Speaker 2: since last summer, consumers have been able to do Disney
36:01
Speaker 2: Plus and Hulu and Max which is owned by Warner
36:05
Speaker 2: Brothers for thirty bucks a month with no ads and
36:08
Speaker 2: seventeen bucks a months with ads. It has gotten extremely
36:12
Speaker 2: frustrating to keep track of all the different streaming packages
36:16
Speaker 2: that you have. And we've talked about it before on
36:18
Speaker 2: the show that what to subscribe to, when, when to
36:22
Speaker 2: cancel it. It just becomes a huge nuisance.
36:25
Speaker 3: That's how we got cable in the first place. This
36:27
Speaker 3: is even a little bit before my time, but I
36:28
Speaker 3: vaguely remember people having HBO antennas. Correct me if I'm wrong.
36:32
Speaker 3: This is like the seventies, and they were not dishes.
36:36
Speaker 3: They were these weird arrays. I guess they look like
36:38
Speaker 3: the old aerial arrays that we all used to have
36:40
Speaker 3: on our chimneys. But to get cable, to get certain PayTV,
36:44
Speaker 3: you had to have an antenna, and then it eventually
36:46
Speaker 3: made sense to cable it in and then bundle. Of course,
36:49
Speaker 3: So history does, as you say, I have a way
36:52
Speaker 3: of repeating itself.
36:52
Speaker 2: What do you have mark in terms of streaming services.
36:55
Speaker 2: I know Tucker and I have talked about ours before.
36:57
Speaker 2: So what do you like legally?
36:58
Speaker 3: What am I not mooching off people? I watch a
37:01
Speaker 3: lot of Prime's got much better content than they used,
37:03
Speaker 3: So I rely a lot on Prime.
37:05
Speaker 4: So you don't have cable.
37:06
Speaker 3: No, I don't know, No I am I sorry, that
37:09
Speaker 3: was the question. Now I I yeah, I cut the.
37:12
Speaker 2: Cut the cord, cut the cord. Yeah, it's uh so
37:15
Speaker 2: how do your Celtic experience? So how do you got
37:18
Speaker 2: your steel?
37:19
Speaker 3: Which is getting harder. They're they're figuring me out. It's
37:21
Speaker 3: an arms race.
37:22
Speaker 4: You know, you've heard of all these streaming platforms putting
37:24
Speaker 4: restrictions on sharing. I have not come across that Netflix.
37:30
Speaker 2: I've bumped into it really okay, but not like not
37:34
Speaker 2: out of moochie. It was just my wife was on
37:36
Speaker 2: my wife's account was being used multiple places, and finally
37:39
Speaker 2: it was it caught up to us where we logged in.
37:42
Speaker 2: They said, you've got too many open.
37:45
Speaker 1: Uh.
37:45
Speaker 4: There's been another provider that has said, hey, we're going
37:48
Speaker 4: to stop the sharing thing. Max Is a year and
37:51
Speaker 4: a half ago and nothing has happened. Yeah, we're going
37:54
Speaker 4: to continue to.
37:55
Speaker 2: Share I'm sharing a Max subscription right now, and I
37:58
Speaker 2: did read recently that they were going to try and
38:00
Speaker 2: crack down on it too, But we will see if
38:04
Speaker 2: the tides will turn on those streamers there. That's all
38:08
Speaker 2: the time that we have for this episode of the
38:09
Speaker 2: Financial Exchange. A lot to go over on tomorrow's show.
38:13
Speaker 2: When we get back with you at ten am, we'll
38:15
Speaker 2: have GDP, Microsoft earnings to preview, and much much more.
38:18
Speaker 2: Thanks so much for joining us today