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Why this jobs report could be the most important one in years · The Financial Exchange Show

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Speaker 2: Chuck, Mike, and Tucker with you today, and we kick
1:17
things off with a.
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Speaker 3: Piece titled.
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Speaker 2: Why this job's report could be the most pivotal one
1:27
in years? Yes, that's right, that title brought to you
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by the same people that brought you Season one hundred
1:33
and thirty two of The Bachelorette. The most dramatic conclusion ever.
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I mean, look, it's gonna be an important jobs report.
1:43
It's one data point, and ultimately it's not going to
1:48
determine whether or not the United States is going into
1:50
recession or not.
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Speaker 4: No, No, it's not. I mean, how do you judge
1:56
these things?
1:56
Speaker 3: Right?
1:57
Speaker 2: Could this I rank the most job reports in history?
2:02
I think of none of them because no one remembers them.
2:05
Speaker 4: Yeah, there's not a single one that really matters. No,
2:07
there's the trend line.
2:08
Speaker 2: There really isn't and it's not to Like, again, we
2:12
have no idea what we're gonna see tomorrow. We could
2:14
see four hundred thousand jobs gained or lost. Like, that's
2:18
probably the realistic range that you could be in.
2:20
Speaker 4: Yeah, or anywhere in between.
2:22
Speaker 2: And The other thing that you got to remember that
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Mark Vandetti talks about often is the average that you
2:26
get on the jobs report is like one hundred and
2:28
fifty thousand historically, but the margin of error is seventy
2:32
eight thousand.
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Speaker 3: So it's like, okay, so what does this even mean?
2:38
What are we doing here?
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Speaker 2: And this is why you have to look at the
2:40
trends and things like that and not put too much
2:42
stock in anyone number. But ultimately, look, people are gonna
2:47
be watching this closely because we want to see if
2:49
the labor market is weakening.
2:50
Speaker 4: Further.
2:51
Speaker 2: Hint, it is, and we know this because basically all
2:56
of the labor market data that we're getting in the
2:59
aggregate is showing us that the labor market is weakening.
3:04
Yesterday we got the Jolts date of the job openings
3:06
in the Labor Turnover Survey. It showed job openings contracting
3:10
more sharply than anyone had predicted any of the economists
3:14
surveyed by Bloomberg.
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Speaker 3: It showed that.
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Speaker 2: Basically the ratio of job openings to unemployed people continues
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to come down and now is firmly in pre pandemic levels.
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Speaker 4: I'll go a step further There are a number of
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these statistics that are looking you know, we were talking
3:33
about how they looked like twenty nineteen. These are our
3:36
stats now that are looking like twenty seventeen levels of employment.
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Speaker 3: And the other thing is they're continuing to worsen.
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Speaker 2: They're not bottoming out and below towing as you'd like
3:46
to see.
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Speaker 4: They're just Chuck's favorite word that he created.
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Speaker 3: I'm going to get there.
3:50
Speaker 4: You're trying to get it in Webster.
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Speaker 3: I got it.
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Speaker 2: Life goal below toe is going to be in the dictionary.
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Speaker 3: I'm more of a English Is that the other?
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Speaker 4: Yeah?
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Speaker 3: Yeah, I like those ones. Yeah.
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Speaker 2: In any case, I like the nerds at Oxford better
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than Webster. You know, Merriam. Webster's a dime a dozen
4:10
these days. You know, what are we really doing here?
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Speaker 4: But I'll talk about a few of these so just
4:15
for a moment here, you know, check the ratio of
4:19
unemployed to open jobs at one point zero seven. We
4:23
had talked about this when it got over two back
4:26
in March of twenty twenty two, and a few times
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in twenty twenty two it hit those level.
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Speaker 3: It was insane.
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Speaker 4: It was too hot during the late twenty tens, you know,
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we were up above the current levels that we're seeing
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from mid twenty eighteen on, so you know, we were
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at a hotter labor market from mid twenty eighteen. And
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on the unemployment rate at four point three percent, this
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is another one where hey, you know, let's let's exclude
4:50
the twenty twenty pandemic impact for a moment here. We
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haven't seen the unemployment rate that we're experiencing right now
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since late twenty seventeen. Mid twenty seven. Summer of twenty
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seventeen was with the last time we were up at
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four point three percent. A number of different ways. The
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black or African American unemployment rate that we see that
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we track six point three percent right now, haven't seen
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it that high again since the twenty eighteen range. The
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youth unemployment rates sixteen to twenty four year olds who
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are unemployed currently at nine point one percent, haven't seen
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that hit that level since early twenty eighteen. And so yeah,
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we are in a labor market that has weakened and
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why tomorrow's important. Again, one data points does not completely
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reverse things, but in recessions, you know, go take a
5:36
look at the trend on unemployment in recessions. It tends
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to trend pretty consistently upwards. And yes, you do have
5:44
here and there a dip where hey, it went to
5:46
four to three, then it went to four to one,
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but it usually doesn't last long. It usually is a
5:50
pretty persistent trend upwards in unemployment during recessions. And that's
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what I think everybody's really looking for here. There's not
5:57
a whole lot of there's not a whole you know,
6:00
we talked about the stock market during recessions of oh yeah,
6:03
you know, headfake, it went up and it went down,
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it went up four times. That doesn't really happen with
6:07
unemployment pretty commonly.
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Speaker 2: And the other thing, like you were citing a few
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things from the jobs report, but look across all different
6:14
types of surveys. You know, the New York Fed does one,
6:18
I'm sorry. University of Michigan does their consumer sentiment survey,
6:22
and one of the questions they ask is, hey, how
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easy is it to find a job these days? It's
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consistently trending harder right now. ADP does a monthly job
6:31
survey that no one pays attention to because it doesn't
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correlate with any of the other numbers in any meaningful fashion.
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Came out this morning ninety nine thousand jobs created, a
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drop from the previous number of one to eleven and
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well below the estimates of one hundred and fifteen to
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one hundred and forty five thousands. So across different numbers
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measured by different people at different times, using different methodology,
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the labor market is weakening over the last eighteen months,
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and it's weakening at a pace where if it continues
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for a couple more you kind of start to say, okay,
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are we're reaching like the point? And oh return and
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recession is baked in now and now you can't escape it.
7:12
On the other hand, you get another day to point.
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This morning on jobless claims, two hundred and twenty seven
7:18
thousand nothing Burger, jobless claims are not barking. And the
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question that Sherlock Holmes always likes to ask is how
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come the dog that always barks didn't bark? I think
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that was the first Sherlock Holmes. That was how he
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solved the case, is like, look, why didn't.
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Speaker 3: The dog bark?
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Speaker 2: And in this case we have to ask, look, why
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are jobless claims not barking? Because in every other recession
7:44
in history, as the labor market weekends, jobbles claims start
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to go up, and a couple of possibilities here, Like, again,
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none of us know, we were all figuring this out
7:55
as we go through it. One possibility, Hey, we just
7:59
haven't reached that point where jobless claims start to spike
8:02
in recessions. Possible, It might just not have happened yet,
8:07
and that doesn't mean it won't, but it's just not
8:09
there yet, right.
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Speaker 4: We're just not in a recession yet, is what that
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would possibly indicate.
8:14
Speaker 2: Possibility Number two, Hey, in a world in which you
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can go out and find different kinds of gigwork that
8:22
may pay better than unemployment, maybe people are doing that
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instead of going on unemployment the same way they used to.
8:29
Unemployment benefits don't pay particularly well. Gigwork doesn't pay great either,
8:35
but it might pay better than unemployment benefits.
8:37
Speaker 4: Let's tease that out for a minute here, Chuck, Because
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there's been surveys that have found that gigwork today in
8:43
terms of number of people doing it, is not all
8:45
that significantly different than say the early two thousands, in
8:48
terms of total workforce working in the gig economy. What
8:52
is different, however, is how that's tracked by the irs,
8:56
and so you could convince me that, Hey, in two thousand,
9:00
if you lost your job and took up a gig job,
9:03
you were paid in cash and you were whatever it
9:07
might be, you know, working at a bar, working at
9:10
a restaurant, paid in cash, not exactly tracked in the
9:12
same way as Hey, if you pick up gigwork working
9:15
for Uber, you're probably not going to be able to
9:17
also collect unemployment because you get a ten ninety nine.
9:20
Speaker 2: And it might just be easier for you to do.
9:22
All you got to do is great, I signed up
9:24
on my phone. I don't have to go and see
9:26
if there's an open job as a bartender, as a waiter, Like.
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Speaker 4: Wouldn't that be fascinating If that were a new just
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a new thing in the late twenty tens and early
9:35
twenty twenties that we didn't previously know.
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Speaker 2: About it, it's possible and we just don't know. And
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if that's the case, it means that, look, this labor
9:43
market might be weaker than we think because we're just
9:45
not getting the signal that we got previously. But maybe
9:49
things aren't really great because maybe there would be more
9:52
people claiming unemployment and they're just not right now, which
9:55
is good in one respect, but in the other it's okay,
9:59
we have to rethink what's actually going on.
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Speaker 4: Which I know we're gonna get to this, but I'll
10:03
just mention that Challenger, Gray and Christmas did a survey
10:06
and found that layoffs in August were their highest total
10:09
for the month in fifteen years, and yet we are
10:12
not seeing those people filing for unemployment. So again, when
10:15
we talk about different surveys, one survey saying yeah, no,
10:18
the layoffs are happening, But on the other hand, states
10:21
are telling us that nobody's filing for unemployment at an
10:23
increase level.
10:24
Speaker 2: So again we're at the point right now where it's
10:28
still kind of murky what's happening. But the labor market
10:32
is not trending favorably, and if it doesn't reverse itself soon,
10:38
it's gonna start becoming undeniable that there's a.
10:41
Speaker 3: Real problem there.
10:44
Speaker 4: And I think that's what does make this report, maybe
10:47
not the most significant in years. Maybe you know, it
10:51
may be a big nothing, but certainly impacts things like
10:55
what the Fed's going to do in two weeks and
10:58
certainly would convince me, you know, if we what do
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we see last time and up taken unemployment rate by
11:04
two tenths of percent. Yes, so you see another two
11:07
tenths I'm much more concerned about recession in that case
11:11
than if you see it flat line or going to
11:12
come down like economists are predicting. The economists are predicting
11:16
right now, unemployment rate goes from four to three to
11:18
four two goes to four to five instead. Well it's
11:22
a very different story, but go up.
11:24
Speaker 2: Let's take a quick break here. When we return, let's
11:28
talk a little bit more about the jobs market, specifically
11:31
as it relates to new college grads and what they
11:34
are finding as they are looking for jobs today.
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Speaker 2: All Right, so talking a little bit more about the
12:50
labor market. There's a peace from the New York Times,
12:52
specifically talking about recent college grads and what they are seeing.
12:57
And the big story that I think is con here is, look,
13:01
companies aren't necessarily laying people off very rapidly, like they're
13:07
not saying we want to get rid of people, but
13:10
they're not really backfilling a ton of jobs the same
13:13
way they normally would, and so as a result, hiring
13:17
has gotten pretty sluggish as well, and new grads are
13:20
finding it harder than the last couple of years, which
13:23
a not surprising be kind of the fed's goal. But
13:27
see you don't want to see go too much further
13:28
because then it becomes problematic and it.
13:31
Speaker 4: You know, further, I think makes people question the value
13:33
of a collegy degree, and all these trends that we've
13:35
been seeing over the last few years. You know, one
13:39
temptation here is I do just look at that you know,
13:42
sixteen to twenty four year old unemployment rate, and it
13:44
is high. It's in the nines, but it's always considerably
13:48
higher than the overall unemployment rate for a number of
13:51
structural reasons. But what this piece is specifically talking about
13:55
is not just sixteen to twenty four year olds. We're
13:57
talking about college grads, and so therefore you're talking about
13:59
a different hire. We are still seeing a fairly tight
14:03
labor market in some areas of for instance, construction. If
14:07
you want to go find a trade job working at
14:11
a semiconductor plant, you can do so in parts of
14:14
the country with quite a bit of ease and no
14:16
college degree. What we're seeing a big pullback on, as
14:21
this points out, is you know, insurance, finance, real estate
14:25
corporations really pulling back on hiring at pretty significant levels.
14:29
And those are you know, fairly big employers for new
14:31
college grads, and so, yeah, I'm not shocked to see this,
14:36
and I've been I guess I've been pushing back on
14:40
this narrative for the last year or so, Like you know,
14:43
whate was me tried graduating in two thousand and nine,
14:46
and we're still not there.
14:48
Speaker 3: Right.
14:48
Speaker 4: This is not the type of labor market that I
14:50
think anyone that graduated in you know, two thousand and
14:55
eight through let's call it twenty twelve was dealing with.
14:58
But you know, it is magnificantly weaker than anything we've
15:01
seen in the last six or seven years for college grads.
15:03
Speaker 2: Yeah, and look, you have anecdotes in here where hey,
15:07
someone finished college and said it took four months to
15:09
you know, find a job, and then other new graduates
15:12
spent six to nine months. And I have no doubt
15:16
that this is the case for some new grads. But
15:20
it also doesn't speak about the fact that in most
15:23
cases that's not necessarily what you're seeing. So things have worsened.
15:27
But I still think that when we're trying to figure
15:31
out where this economy is and where the labor market is,
15:35
it's in a place right now that I think is
15:38
fairly balanced between labor and capital. If I had to
15:42
judge it, like the most of the twenty tens, or
15:44
at least the early part of the twenty tens, like
15:47
twenty ten through twenty fourteen, was very much skewed in
15:51
favor of employers in capital. Hey, if you wanted to
15:55
hire someone, you had just a bevy of people you
15:57
could choose from. Because there's a guy was that bad? Yeah,
16:01
this guy with a PhD driving pizza delivery truck.
16:03
Speaker 3: So courreer goal.
16:05
Speaker 2: Two years ago. In twenty twenty two, it was skewed
16:09
completely in the other direction. Hey, we're Walmart, and we're
16:12
going to pay you one hundred and fifty thousand dollars
16:14
to teach you how to drive an eighteen wheeler. Today,
16:18
it's neither of those things. It's I think we're actually
16:21
at a point that is pretty close to healthy balance
16:24
in the labor market, but it is skewing fairly quickly
16:29
towards employers. And that's something that I think is problematic,
16:34
just because you want people to be employed so that
16:37
you know they can pay for their stuff and live
16:40
their life and YadA YadA.
16:42
Speaker 4: Yeah, I think the answer for a lot of college
16:44
grads right now is you may not find employment in
16:47
your field right now. You know, by one measure, the
16:49
pace of hiring in professional and business services, which let's
16:53
be clear like that that covers a lot of fields
16:55
that are a pretty commonplace to hire for college grads
16:59
is down now to levels that we have not seen
17:01
since two thousand and nine. And so I think that's
17:03
I mean, that's my message if I am a graduating
17:06
college student right now is I may not be able
17:09
to find a job in my preferred area of work.
17:14
And you're not alone in that. There have been plenty
17:16
of college graduates who have found a similar type of thing.
17:19
And that is going to be the key here, because
17:21
there are areas If we look at the overall labor market,
17:25
like you said, Chuck, it's fairly well in balance, and
17:28
there are areas where you know employers are desperate for employees. Still,
17:32
it just might not line up with what you were
17:34
hoping to do at the early stages of your college
17:37
graduation career.
17:38
Speaker 2: And also, I've said this before, first jobs are supposed
17:42
to suck. Like you, you're not going to do something
17:47
cool at first because you get to do the stuff
17:50
that no one else at your company wants to do.
17:54
That's that's kind of how first jobs are. And I'm
17:57
not saying that you should like seek out companies that are,
18:01
you know, abusive, retreat you badly, Like that's not what
18:03
I'm saying in terms of the kind of suck. But yeah,
18:06
you're gonna be doing stuff that no one wants to do.
18:09
I still remember when I started working fifteen years ago.
18:13
I was coming in on weekends licking envelopes, and you know,
18:19
that was the gig, Like that's what you had to
18:21
do because no one wanted to come in on weekends
18:22
and look envelopes. And I'm, you know, very thankful I
18:26
didn't end up like George someone nearly George Costanza. You know,
18:30
it would have been like really bad, but I made
18:33
it and I'm still here today, So it's it's it's
18:35
good to know. But look, first jobs, don't set your
18:39
expectations too high. You want to be somewhere that yeah,
18:42
you've got a path to learning and understanding the business
18:45
and growth from there. But you're gonna do a lot
18:48
of stuff that you don't like and that you don't
18:49
want to do. And that doesn't mean it's a bad
18:51
first job or a job you shouldn't take as a
18:53
college grad.
18:54
Speaker 4: And you know, furthermore, I think a lot of people
18:57
are hesitant to take jobs that don't fit their resume.
19:00
But what's worse than a job that doesn't fit your resume.
19:03
Speaker 3: Is no job.
19:04
Speaker 4: No job and a gap in that resume, even if
19:07
you're not worried about the financial piece of it, Like
19:09
the no job on the resume is a lot worse
19:12
than the Yeah, I worked at a restaurant for a
19:14
year and a half and that was my way of
19:16
making I'll hire that person all day.
19:19
Speaker 3: Let's take a quick break here.
19:21
Speaker 2: When we come back, we got Wall Street Watch coming
19:25
up next.
19:41
Speaker 1: Like us on Facebook and follow us on Twitter at
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TFE show. Breaking business news is always first right here
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on the Financial Exchange Radio Network. Time now for Wall
19:54
Street Watch, a complete look at what's moving market so
19:57
far today right here on the Financial Exchange Radio Network.
20:01
Speaker 5: The markets are a mixed territory, with the Nasdaq trying
20:03
to claw back some of its recent losses as Wall
20:07
Street readies for tomorrow mornings all Important Jobs report for August.
20:13
Right now, the Dow is down by thirty points, SMP
20:16
five hundred is up by about a third of a percent,
20:19
and the Nasdaq up by one percent, or one hundred
20:22
and sixty seven points. Russell two thousand is flat, ten
20:26
year Treasureel down by one basis point at three point
20:28
seventy five percent, and crude oil up one and a
20:31
half percent, trading just above seventy dollars a barrel. Verizon
20:36
announced it will acquire Frontier Communications in an all cash
20:39
deal valued at twenty billion dollars, where the deal is
20:42
expected to close in about eighteen months. Meanwhile, shares and
20:47
Tesla are up by seven percent after the electric car
20:49
maker said earlier today that it plans to launch fully
20:53
self driving cars in Europe and China next year. Sticking
20:57
with the auto sector, where the Wall Street Journal report
21:00
ordered that Jeep parent company Stilantis has temporarily stopped producing
21:04
two of its top selling US models, the Jeep Wrangler
21:07
and Grand Cherokee, that stock is off by one percent. Elsewhere,
21:12
Jet Blue raised its guidance for.
21:14
Speaker 3: The third quarter for its third quarter.
21:16
Speaker 5: Revenue, sending that stock up by ten percent. Shares in
21:20
C three dot AI whatever that is is, are down
21:24
by thirteen percent after the AI software maker posted lower
21:27
than expected quarterly subscription revenue and top golf Callaway shares
21:32
down by about one percent after the company announced it
21:35
will split into two separate businesses, where Callawei will focus
21:40
on golf equipment and lifestyle, while Top Golf will zone
21:43
in on golf entertainment. I'm Tucker Silvan, that's Wallstreet Watch.
21:48
Speaker 3: It's tough about that Stillantis news.
21:51
Speaker 2: I was just getting over by Jasis Stalantis yesterday and
21:56
who knows now.
21:57
Speaker 4: Recurring Stilantis jokes at the best.
22:00
Speaker 3: Is there any other kind of Stilantis?
22:02
Speaker 1: Nope? No.
22:04
Speaker 2: Let's talk a little bit about capital gains tax. The
22:07
Harris campaign rolling out yesterday a proposal for a twenty
22:13
eight percent capital gains tax rate on people earning a
22:15
million dollars or more. This differs from the Biden administration's
22:20
previous proposal to have the top capital gains rate basically
22:25
be at the top marginal tax rate of thirty nine
22:28
points six percent if the Trump tax cuts.
22:31
Speaker 3: Were to expire.
22:33
Speaker 2: And so it's a difference that is being talked about
22:37
as far as tax policy and its potential impact on
22:40
capital markets.
22:41
Speaker 4: Yeah, so let's let's jump through this because I've seen
22:44
I was asked about this by Vidi Penn this morning.
22:47
One of the affiliates down in New Haven, Connecticut who
22:51
had seen it TikTok video about this and oh, you know,
22:54
it's only going to impact people that are you know,
22:56
have hundreds of millions of dollars, and that that's not
22:58
quite the case. But I've also heard things that you know,
23:01
every American is going to be paying a twenty eight
23:03
percent capital gains tax rate. That's also not the case.
23:06
So today, the way that capital gains taxes work is
23:10
they are always taxed at a rate that is lower
23:14
than your ordinary income tax rate. Correct, right now, universally
23:17
the case. The way it works right now, if you
23:19
are single making under forty seven thousand dollars, are married
23:22
filing jointly making under ninety four thousand, you pay zero
23:25
percent on capital gains tax right now. Okay, if you're
23:28
between forty seven and five eighteen these are thousands per single,
23:32
or ninety four and five eighty three married, you pay
23:35
fifteen percent. If you are making more than five to
23:38
eighteen as a single file or more than five eighty
23:40
three is married filing jointly, you pay twenty percent on
23:42
capital gains.
23:43
Speaker 3: These are all federal numbers.
23:44
Speaker 2: Obviously, your states can differ depending on where you're listening
23:48
to us out of.
23:48
Speaker 4: In addition, after Obamacare was passed, there is another three
23:51
point eight percent net investment income tax put on top
23:56
of capital gains. And so in that case, I think
23:57
it's over a quarter million dollars in total income, then
24:01
you're getting up to another three point eight. So hypothetically,
24:04
if you're in that fifteen percent bracket, you could be
24:06
at eighteen eight. If you're at that twenty percent, you
24:09
could be at twenty three point eight. And under the
24:12
Harris proposal, if you had over a million dollars in
24:15
total income and or capital gains, you'd be looking at
24:18
something like thirty one point eight percent federal taxation on
24:22
capital gains. In this type of scenario, to your point,
24:27
then you've got state tax. And I just like explaining
24:29
this stuff because it doesn't ring true to people when
24:31
we say, well, fifteen percent capital gains. Yeah, if you
24:33
live in Massachusetts, you've automatically got another five percent on
24:36
top of that. Correct, If you live in Massachusetts and
24:39
you're more than a million dollars, you've automatically gotten another
24:41
nine percent on top of that.
24:42
Speaker 3: And so in Florida you don't have any of that
24:44
you know.
24:45
Speaker 4: Exactly, So it does run the gambit the I think
24:49
you know what's being talked about here, and you know
24:52
what's being proposed. Is it completely out of this world? Now,
24:58
this is a tax proposal that's been proposed by many
25:01
other candidates running for president. I think it's about as
25:05
likely as any other tax increase to actually go into place.
25:09
And you know, this has actually been a long standing
25:11
debate is hey, should we be taxing capital gains at
25:16
a lower rate than ordinary income? There are plenty of
25:19
arguments on either side of it.
25:20
Speaker 3: My answer is yes and no.
25:22
Speaker 4: I know your first million dollars tax free?
25:25
Speaker 3: Right.
25:25
Speaker 2: The idea that I have, and this is how I
25:28
would approach it, unify the rates, because look, long term,
25:32
why do you want to tax money that is made
25:36
buying and selling stuff at a lower rate than working.
25:41
Doesn't make sense treat capital and labor the same. But
25:44
you do want an incentive to start a business, to
25:47
buy home, to do these things that generate a lot
25:49
of economic activity. And so the way I would approach
25:52
it is, look, unify the rates. You could bring income
25:55
tax rates down a touch, you could bump capital gains
25:59
rates a little bit, and unifying where that number ends
26:02
up being. I don't know, but the first million dollars
26:06
that you get in capital gains in your lifetime you
26:10
don't pay tax on. Because I want more millionaires, I
26:12
want people having money, and so I want to make
26:17
it something where, yes, you get a significant break on
26:21
that first million dollars in capital gains.
26:24
Speaker 3: That you earn in your lifetime.
26:27
Speaker 2: Once you get past that, what are we really doing here,
26:31
you know, Like, does Jeff Bezos need preferential capital gains
26:35
tax treatment at this point?
26:38
Speaker 3: No?
26:38
Speaker 2: Like, why why should he pay a rate half as
26:41
much as if he's earning that through work.
26:45
Speaker 4: I guess my only qualification there will be so long
26:48
as we don't reach a rate that is burdensome in
26:50
comparison to other developed countries. And twenty eight percent isn't there,
26:54
but forty is, and so I would bring that up, Like, Okay,
26:58
if you want Jeff Bezez to create his next company
27:01
in the United States, don't put the capital gains tax
27:03
rate at a rate that's higher than it is in
27:05
the United Kingdom.
27:06
Speaker 2: I don't know what if we make it more advantageous
27:08
to earn the income through being paid as a worker, sure,
27:12
like wouldn't okay, great, so the company actually has to
27:15
produce income to be able to pay him out.
27:16
Speaker 3: Like, I don't know, Like these are things that I
27:19
think of.
27:20
Speaker 2: I don't want to make it burdensome, but I look
27:24
at it and the the justification for always having the
27:29
capital gains tax lower than earned income doesn't mesh with me.
27:35
Do I think there there's a reason that you want
27:37
to tax it lower, you know, at certain points, absolutely
27:42
because you want to encourage business formation and capital formation
27:45
and all these things that we know are good for
27:48
the economy. But at the same time, do you want
27:52
to bestow that tax treatment permanently just because someone's good
27:58
at trading stocks are made a billion dollars? You know,
28:01
running a company will no Like at a certain point
28:05
you say, why am I treating this person way better
28:07
than someone who's working nine to five every day?
28:09
Speaker 4: So this will be I'm sure one of many items
28:11
that's brought up in next weeks. Is it next week's
28:14
debate next Tuesday? I think, yeah, it sounds I'm sure
28:17
it won't be the highlight because there are going to
28:20
be other border issues and other things that are going
28:22
to be more commonly discussed. But I mean, my concern
28:24
from well, my concern from the Harris campaign is, you know,
28:28
we're talking about significant tax increases and significant spending increases
28:33
on you know, my economic concerns about the Trump tax policy.
28:36
We're talking about significant tax cuts with zero from what
28:40
I've been able today to tell, zero proposed corresponding cuts
28:44
in spending, and so in both cases, I think the
28:48
net result that you end up seeing for either next
28:51
president is a continued dramatic increase in the deficit. And
28:55
I know that nobody seems to actually care about that,
28:57
But that's all I'm hearing. No from either can That's
29:00
all I'm hearing.
29:01
Speaker 2: You can actually make a case that it's unclear if
29:06
any president, not even it's unclear if any party has
29:09
been really serious about deficit reduction since the nineteen twenties.
29:17
Speaker 4: You could make that case. But at least one party
29:20
previously used to talk about it.
29:23
Speaker 3: But they didn't judge anyone on their talk. I hear you.
29:26
Speaker 4: But at least that was what was run on, and
29:28
today that's not as what is being run on.
29:30
Speaker 2: It is true, like no one's even talking about this
29:34
in a borderline serious way, no at all.
29:38
Speaker 4: You know, in fact, Democrats are probably talking I don't know. Again,
29:42
I would call them on their bs on this one,
29:44
but Democrats are probably talking more seriously about fiscal responsibility
29:48
at the federal government level right now than Republicans are,
29:50
which is a shocking reversal.
29:52
Speaker 2: It's no, We're a very odd spot at the moment.
29:56
Let's take a quick break here. When we return, let's
30:01
talk a little bit about US Steel. There is a
30:03
deal that's been on the table for a Japanese company
30:07
to buy them, why the Biden administration may be trying
30:10
to veto that deal, and what it means for the
30:13
company and US Steel going forward.
30:17
Speaker 1: Business and financial news affecting the markets and your wallet.
30:20
We've got it all straight from Wall Street right here
30:23
on the Financial Exchange Radio Network. The Financial Exchange streams
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30:31
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30:54
Speaker 2: All right, let's talk a little bit about US Steel,
30:59
the steel that's made in the United States.
31:01
Speaker 3: So US Steel has a deal on.
31:04
Speaker 2: The table for to be bought by the Japanese company,
31:07
nip On Steel, and the Biden administration is saying that
31:13
they are going to try to block the deal. Yes,
31:18
few different competing things here, and trying to sort through
31:21
them is a mess, quite honestly.
31:24
Speaker 3: The first is US steal is.
31:25
Speaker 2: Saying, look, if we don't get this deal done, we're
31:30
not going to be able to invest a whole bunch
31:32
of money to modernize our mills that Nipon Steel is
31:34
going to invest into us if the deal's completed.
31:37
Speaker 4: Don't have the cash, can't be done.
31:38
Speaker 2: So basically saying, hey, we don't think our mills can
31:40
be competitive and we might have to close them and
31:43
end up losing a bunch of jobs as a result.
31:45
Speaker 4: Which, given you know steel dumping by China over the decades,
31:50
could be true.
31:51
Speaker 3: I think it's very much true.
31:54
Speaker 2: The other piece, though, is that the Biden administration is
31:57
looking at this and saying, hey, we don't want a
32:00
foreign company, even one from you know, a country that
32:04
I think we'd consider a pretty close ally.
32:06
Speaker 4: I'm trying to think of, like how many countries actually
32:08
I would consider it to be a closer political and
32:11
defense ally than Japan.
32:12
Speaker 2: Maybe three that I can think of. I would probably
32:15
go the UK, Canada and maybe maybe maybe maybe France. Yeah, yeah,
32:22
that's like about as far and you could maybe onep
32:25
Australia in that that sure in that, but Japan's central
32:29
area as well, given the sub deal with Australia that
32:33
angered the UK and France a couple of years ago.
32:35
Speaker 4: So if there is a national security block that is
32:39
put on this, then to me, what that indicates is
32:41
that there are certain companies in the United States that
32:43
can only be owned by United States corporations. There are
32:47
certain industries in the United States that can only be
32:50
owned again, because if it's not gonna be owned by
32:51
a Japanese company, then again, what are we even talking
32:55
about here? And this is my problem with this is
32:58
I have no idea what the overall message and strategy
33:02
on US trade is at this point, Like what are
33:06
those other industries now where we would say absolutely not
33:09
that cannot be done anywhere but the United States.
33:13
Speaker 2: And not even for US businesses, but even just you know,
33:17
US assets. You know the stories about China buying up
33:20
US farmland and stuff like that, and you know, oh,
33:22
we've got real estate that we're buying that's close to
33:26
military bases, Like, yeah, what are we doing about that?
33:29
There's no coherent policy on this.
33:31
Speaker 4: See, and I'm not necessarily saying that, by the way,
33:33
we should allow this deal to go through. But I
33:35
think not having some sort of public discourse puts us
33:39
in a disservice, like okay, the counterpoint would be, would
33:42
the Japanese allow for Ford to buy Toyota. Not that
33:47
they could, but would they allow that? I would think not.
33:50
I would think the same thing might be blocked in
33:52
Japan on similar types of concerns, and so that might
33:56
be the counterpoint to all this. But there's no coherent thought,
33:59
there's no go here into policy on what exactly, in
34:02
my mind, you would use as a justification for blocking
34:06
a deal like this.
34:07
Speaker 2: The United steel Workers Union has come out against the deal.
34:11
They're saying that the threats to close the mills are
34:14
the result of quote bad management of the company and
34:17
an ill conceived merger with Nippon Steel, so that the
34:20
union is saying no, we don't want this to happen,
34:23
and basically saying, look, if a Japanese company buys us,
34:26
they're going to be able to gut our operations and
34:29
benefit mills overseas. So it's I have no idea what
34:34
is actually the goal of Nippon Steel. I don't know
34:37
what is true and what is not here, But it
34:41
does seem that this deal has the potential to end
34:46
up not going through here, and if so, you know,
34:49
it would be a pretty big use of regulatory authority
34:52
in this fashion.
34:53
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34:55
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35:57
Speaker 2: Volvo abandoning its goal of sell only evs by twenty thirty.
36:02
Much like other car companies, they've realized, gee, not everyone
36:07
wants to buy an electric vehicle in the next six years,
36:09
and so this is gonna be you know, problematic for us. Instead,
36:13
they are saying that ninety to one hundred percent of
36:15
the cars sold will be fully electric or plug in
36:18
hybrid models by twenty thirty. So it appears that they're
36:21
going to be leaning heavily into that plug in hybrid
36:24
as the the other option h with that additional ten
36:28
percent potentially allowing for a limited number of conventional hybrid models.
36:31
Speaker 4: Why in twenty twenty one were we all just willing
36:34
to sop up a whole bunch of corporate lies.
36:38
Speaker 3: Sing it with me, now, money money, money, mone.
36:42
Speaker 2: Like I think about this one, say every car company
36:45
was saying, all these SPACs are getting tens of billions dollars.
36:48
Speaker 3: We want in on it.
36:50
Speaker 4: Like, think about the lie, you know, the the lies
36:53
that occurred here at Sweden's Volvo. Like I don't know,
36:57
you could pretty easily look through it and transparently know
37:00
that wasn't going to happen. But think about the lies
37:02
that occurred in the spack market during that period of
37:05
time of companies that were just saying ludicrous things like
37:08
we're going to get to revenue, we were going to
37:11
get to record revenue faster than any company in corporate history.
37:16
We're going to get to billions of dollars worth of
37:18
revenue faster than Facebook.
37:20
Speaker 3: Just all these crazy, outrageous.
37:23
Speaker 4: Claims that quite honestly just shouldn't have been allowed to
37:28
be made without massive, well in some cases, massive lawsuits
37:32
did follow them.
37:32
Speaker 2: It was one of the most fraudulent time periods in
37:35
publicly traded harkness.
37:37
Speaker 3: Really it really was.
37:39
Speaker 2: There was some very very bad stuff that was going
37:43
on in twenty twenty one and twenty twenty two in
37:47
equity markets, and.
37:48
Speaker 4: You can see, you know how easy it was to
37:51
get caught on that bandwagon of oh Man, everything that
37:56
goes public these days just goes straight through the roof.
37:58
So you know, I'll buy into this idea that they're
38:01
going to generate more revenue than any company in history,
38:03
be bigger than every car company in history. Like it,
38:06
just ludicrous claims that had no basis in reality.
38:09
Speaker 3: Let's take a quick break here. We still got.
38:13
Speaker 2: Well a whole lot more financial exchange in our second hour,
38:16
proximally an hour of it. Yeah yeah, stick around, We
38:18
got sixty more minutes coming up.